**Exhibit10.11**

** **

OFFICE LEASE

 

 

BETWEEN

 

 

METROPOLITAN LIFE INSURANCECOMPANY (LANDLORD)

 

 

AND

 

 

SOUTH BAY BANK (TENANT)

 

 

 

 

SOUTH COAST CORPORATE CENTER

 

Costa Mesa, California

 

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TABLE OF CONTENTS

 

 

 
|                                                        |   | ** **                             |
|-------------------------------------------------------------|--------|----------------------------------------|
|                                                        |   |                                   |
| ARTICLE ONE - BASIC LEASE PROVISIONS                        |   |                                   |
| 1.01                                                        |   | BASIC LEASE PROVISIONS                 |   |   |
| 1.02                                                        |   | ENUMERATION OF EXHIBITS                |   |   |
| 1.03                                                        |   | DEFINITIONS                            |   |   |
|                                                        |   |                                   |   |   |
| ARTICLE TWO - PREMISES, TERM, FAILURE TO GIVE  POSSESSION 6 |   |                                   |
| 2.01                                                        |   | LEASE OF PREMISES                      |   |   |
| 2.02                                                        |   | TERM                                   |   |   |
| 2.03                                                        |   | FAILURE TO GIVE POSSESSION             |   |   |
| 2.04                                                        |   | AREA OF PREMISES                       |   |   |
| 2.05                                                        |   | CONDITION OF PREMISES                  |   |   |
| 2.06                                                        |   | TEMPORARY SPACE                        |   |   |
| 2.07                                                        |   | ATM LICENSE                            |   |   |
|                                                        |   |                                   |   |   |
| ARTICLE  THREE - RENT                                       |   |                                   |
|                                                        |   |                                   |
| ARTICLE FOUR - RENT ADJUSTMENTS AND PAYMENTS                |   |                                   |
| 4.01                                                        |   | RENT ADJUSTMENTS                       |   |   |
| 4.02                                                        |   | STATEMENT OF LANDLORD                  |   |   |
| 4.03                                                        |   | BOOKS AND RECORDS                      |   |   |
| 4.04                                                        |   | PARTIAL OCCUPANCY                      |   |   |
| 4.05                                                        |   | TENANT OR LEASE SPECIFIC TAXES         |   |   |
|                                                        |   |                                   |   |   |
| ARTICLE FIVE - SECURITY DEPOSIT                             |   |                                   |
|                                                        |   |                                   |
| ARTICLE  SIX - SERVICES                                     |   |                                   |
| 6.01                                                        |   | LANDLORD’S GENERAL SERVICES       |   |   |
| 6.02                                                        |   | TELEPHONE SERVICES                     |   |   |
| 6.03                                                        |   | DELAYS IN FURNISHING SERVICES          |   |   |
| 6.04                                                        |   | CHOICE OF SERVICE PROVIDER             |   |   |
|                                                        |   |                                   |   |   |
| ARTICLE SEVEN - POSSESSION, USE AND CONDITION OF  PREMISES  |   |                                   |
| 7.01                                                        |   | POSSESSION AND USE OF PREMISES         |   |   |
| 7.02                                                        |   | LANDLORD ACCESS TO PREMISES; APPROVALS |   |   |
| 7.03                                                        |   | QUIET ENJOYMENT                        |   |   |
|                                                        |   |                                   |   |   |
| ARTICLE EIGHT - MAINTENANCE                                 |   |                                   |
| 8.01                                                        |   | LANDLORD’S MAINTENANCE            |   |   |
| 8.02                                                        |   | TENANT MAINTENANCE                     |   |   |
|                                                        |   |                                   |   |   |
| ARTICLE NINE - ALTERATIONS AND IMPROVEMENTS                 |   |                                   |
| 9.01                                                        |   | TENANT ALTERATIONS                     |   |   |
| 9.02                                                        |   | LIENS                                  |   |   |
|                                                        |   |                                   |   |   |
| ARTICLE TEN - ASSIGNMENT AND SUBLETTING                     |   |                                   |
| 10.01                                                       |   | ASSIGNMENT AND SUBLETTING              |   |   |
| 10.02                                                       |   | RECAPTURE                              |   |   |
| 10.03                                                       |   | EXCESS RENT                            |   |   |
| 10.04                                                       |   | TENANT LIABILITY                       |   |   |
| 10.05                                                       |   | ASSUMPTION AND ATTORNMENT              |   |   |
|                                                        |   |                                   |   |   |
| ARTICLE ELEVEN - DEFAULT AND REMEDIES                       |   |                                   |
| 11.01                                                       |   | EVENTS OF DEFAULT                      |   |   |
| 11.02                                                       |   | LANDLORD’S REMEDIES               |   |   |
| 11.03                                                       |   | ATTORNEY’S FEES                   |   |   |
| 11.04                                                       |   | BANKRUPTCY                             |   |   |
| 11.05                                                       |   | LANDLORD’S DEFAULT                |   |   |
|                                                        |   |                                   |   |   |
| ARTICLE TWELVE - SURRENDER OF PREMISES                      |   |                                   |
| 12.01                                                       |   | IN GENERAL                             |   |   |
| 12.02                                                       |   | LANDLORD’S RIGHTS                 |   |   |
|                                                        |   |                                   |   |   |
| ARTICLE THIRTEEN - HOLDING OVER                             |   |                                   |

 

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| ARTICLE FOURTEEN - DAMAGE BY FIRE OR OTHER CASUALTY |   |                                                  |
|-----------------------------------------------------|--------|-------------------------------------------------------|
| 14.01                                               |   | SUBSTANTIAL UNTENANTABILITY                           |   |   |
| 14.02                                               |   | INSUBSTANTIAL UNTENANTABILITY                         |   |   |
| 14.03                                               |   | RENT ABATEMENT                                        |   |   |
| 14.04                                               |   | WAIVER OF STATUTORY REMEDIES                          |   |   |
|                                                |   |                                                  |   |   |
| ARTICLE FIFTEEN - EMINENT DOMAIN                    |   |                                                  |
| 15.01                                               |   | TAKING OF WHOLE OR SUBSTANTIAL PART                   |   |   |
| 15.02                                               |   | TAKING OF PART                                        |   |   |
| 15.03                                               |   | COMPENSATION                                          |   |   |
|                                                |   |                                                  |   |   |
| ARTICLE SIXTEEN - INSURANCE                         |   |                                                  |
| 16.01                                               |   | TENANT’S INSURANCE                               |   |   |
| 16.02                                               |   | FORM OF POLICIES                                      |   |   |
| 16.03                                               |   | LANDLORD’S INSURANCE                             |   |   |
| 16.04                                               |   | WAIVER OF SUBROGATION                                 |   |   |
| 16.05                                               |   | NOTICE OF CASUALTY                                    |   |   |
|                                                |   |                                                  |   |   |
| ARTICLE SEVENTEEN - WAIVER OF CLAIMS AND INDEMNITY  |   |                                                  |
| 17.01                                               |   | WAIVER OF CLAIMS                                      |   |   |
| 17.02                                               |   | INDEMNITY BY TENANT                                   |   |   |
| 17.03                                               |   | WAIVER OF CONSEQUENTIAL DAMAGES                       |   |   |
|                                                |   |                                                  |   |   |
| ARTICLE EIGHTEEN - RULES AND REGULATIONS            |   |                                                  |
| 18.01                                               |   | RULES                                                 |   |   |
| 18.02                                               |   | ENFORCEMENT                                           |   |   |
|                                                |   |                                                  |   |   |
| ARTICLE NINETEEN - LANDLORD’S RESERVED RIGHTS  |   |                                                  |
|                                                |   |                                                  |
| ARTICLE TWENTY - ESTOPPEL CERTIFICATE               |   |                                                  |
|                                                |   |                                                  |
| 20.01                                               |   | IN GENERAL                                            |   |   |
| 20.02                                               |   | ENFORCEMENT                                           |   |   |
|                                                |   |                                                  |   |   |
| ARTICLE  TWENTY-ONE - INTENTIONALLY OMITTED         |   |                                                  |
|                                                |   |                                                  |
| ARTICLE TWENTY-TWO  - REAL ESTATE BROKERS           |   |                                                  |
|                                                |   |                                                  |
| ARTICLE  TWENTY-THREE - MORTGAGEE PROTECTION        |   |                                                  |
| 23.01                                               |   | SUBORDINATION  AND ATTORNMENT                         |   |   |
| 23.02                                               |   | MORTGAGEE  PROTECTION                                 |   |   |
|                                                |   |                                                  |   |   |
| ARTICLE TWENTY-FOUR -  NOTICES                      |   |                                                  |
|                                                |   |                                                  |   |   |
| ARTICLE TWENTY-FIVE -  PARKING                      |   |                                                  |
|                                                |   |                                                  |   |   |
| ARTICLE TWENTY-SIX -  MISCELLANEOUS                 |   |                                                  |
| 26.01                                               |   | LATE CHARGES                                          |   |   |
| 26.02                                               |   | NO JURY TRIAL; VENUE; JURISDICTION                    |   |   |
| 26.03                                               |   | INTENTIONALLY OMITTED                                 |   |   |
| 26.04                                               |   | OPTION                                                |   |   |
| 26.05                                               |   | TENANT AUTHORITY                                      |   |   |
| 26.06                                               |   | ENTIRE AGREEMENT                                      |   |   |
| 26.07                                               |   | MODIFICATION OF LEASE FOR BENEFIT OF MORTGAGEE        |   |   |
| 26.08                                               |   | EXCULPATION                                           |   |   |
| 26.09                                               |   | ACCORD AND SATISFACTION                               |   |   |
| 26.10                                               |   | LANDLORD’S OBLIGATIONS ON SALE OF BUILDING       |   |   |
| 26.11                                               |   | BINDING EFFECT                                        |   |   |
| 26.12                                               |   | CAPTIONS                                              |   |   |
| 26.13                                               |   | TIME; APPLICABLE LAW                                  |   |   |
| 26.14                                               |   | ABANDONMENT                                           |   |   |
| 26.15                                               |   | LANDLORD’S RIGHT TO PERFORM TENANT’S DUTIES |   |   |
| 26.16                                               |   | SECURITY SYSTEM                                       |   |   |
| 26.17                                               |   | NO LIGHT, AIR OR VIEW EASEMENTS                       |   |   |
| 26.18                                               |   | RECORDATION                                           |   |   |
| 26.19                                               |   | OPTION TO EXTEND                                      |   |   |
| 26.20                                               |   | SIGNAGE                                               |   |   |
| 26.21                                               |   | SURVIVAL                                              |   |   |

 

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OFFICELEASE

 

ARTICLE ONE

BASIC LEASE PROVISIONS

 

1.01                   BASIC LEASE PROVISIONS - In the event of any conflict between these BasicLease Provisions and any other Lease provision, such other Lease provisionshall control.

 
| (1)    |   | BUILDING AND ADDRESS:                         |
|--------|--------|-----------------------------------------------|
|   |   | 3070 Bristol Street                           |
|   |   | Costa Mesa, California 92626                  |
|   |   |                                          |
| (2)    |   | LANDLORD AND ADDRESS:                         |
|   |   |                                          |
|   |   | Metropolitan Life Insurance Company,          |
|   |   | a New York corporation                        |
|   |   |                                          |
|   |   | Notices to Landlord shall be addressed:       |
|   |   |                                          |   |   |
|   |   |                                          |   | Metropolitan Life Insurance Company |
|   |   |                                          |   | c/o South Coast Corporate Center Property Manager |
|   |   |                                          |   | 3070 Bristol Street, Suite 440 |
|   |   |                                          |   | Costa Mesa, CA 92626 |
|   |   |                                          |   |   |
|   |   |                                          |   | with copies to the following: |
|   |   |                                          |   |   |
|   |   |                                          |   |   |   | Metropolitan Life Insurance Company |
|   |   |                                          |   |   |   | 333 South Hope Street, Suite 2950 |
|   |   |                                          |   |   |   | Los Angeles, CA 90071 |
|   |   |                                          |   |   |   | Attention: Equity Investments Management |
|   |   |                                          |   |   |   |   |
|   |   |                                          |   |   |   | and |
|   |   |                                          |   |   |   |   |
|   |   |                                          |   |   |   | Metropolitan Life Insurance Company |
|   |   |                                          |   |   |   | 400 South El Camino Real, 8th Floor |
|   |   |                                          |   |   |   | San Mateo, CA 94402 |
|   |   |                                          |   |   |   | Attention: Associate General Counsel |
|   |   |                                          |   |   |   |   |
| (3)    |   | TENANT AND CURRENT ADDRESS:                   |
|   |   |                                          |   |   |   |   |
|   |   | (a)                                           |   | Name:   South Bay Bank |
|   |   | (b)                                           |   | a National Association |
|   |   | (c)                                           |   | Federal Tax Identification Number: |
|   |   |                                          |   | Tenant shall promptly notify Landlord of any change in the  foregoing items. |
|   |   |                                          |   |   |   |   |
|   |   | Notices to Tenant shall be addressed:         |
|   |   |                                          |   |   |   |   |
| (4)    |   | DATE OF LEASE: as of September 19, 2003       |
|   |   |                                          |   |   |   |   |
| (5)    |   | LEASE TERM: sixty-three (63) months           |
|   |   |                                          |   |   |   |   |
| (6)    |   | PROJECTED COMMENCEMENT DATE: December 1, 2003 |
|   |   |                                          |   |   |   |   |
| (7)    |   | PROJECTED EXPIRATION DATE: February 28, 2009  |
|   |   |                                          |   |   |   |   |
| (8)    |   | MONTHLY BASE RENT:                            |
|        |        |                                               |  |  |  |  |  |  |

 
| ** ** | **Months** | ** ** | **Monthly** | ** ** | **Monthly  Rate/SF of Rentable Area** | ** ** |
|------------|------------|------------|-------------|------------|---------------------------------------|------------|
|       |       |       |        |       |                                  |       |   |   |   |   |
|       | 01 to 03   |       |        | -0-        |                                  |       | -0-* |   |   |   |
|       | 04 to 15   |       | $           |       | 2,876.75                              |       | $ |   | 1.85 |   |   |   |
|       | 16 to 27   |       | $           |       | 2,954.50                              |       | $ |   | 1.90 |   |   |   |
|       | 28 to 39   |       | $           |       | 3,032.25                              |       | $ |   | 1.95 |   |   |   |
|       | 40 to 51   |       | $           |       | 3,110.00                              |       | $ |   | 2.00 |   |   |   |
|       | 52 to 63   |       | $           |       | 3,187.75                              |       | $ |   | 2.05 |   |   |   |

 

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| (9)    |   | BASE  BUILDING OPERATING EXPENSES:  The amount  of Building Operating Expenses for the 2004 calendar year.                                                                                                                                                                                                                                                                                                                                     |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (10)   |   | RENTABLE  AREA OF THE BUILDING:  123,420 square  feet                                                                                                                                                                                                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (11)   |   | RENTABLE  AREA OF THE PREMISES:  1,555 square  feet                                                                                                                                                                                                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (12)   |   | RENTABLE  AREA OF THE PROJECT:   362,139 square  feet                                                                                                                                                                                                                                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (13)   |   | USABLE  AREA OF THE PREMISES:    1,378 square  feet                                                                                                                                                                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (14)   |   | SECURITY  DEPOSIT:  three thousand one hundred  eighty-seven and 75/100 dollars ($3,187.75)                                                                                                                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (15)   |   | SUITE  NUMBER OF PREMISES:  160                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (16)   |   | TENANT’S  SHARE:  1.2599%                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (17)   |   | BUILDING  SHARE:  34.0%                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (18)   |   | TENANT’S  USE OF PREMISES:  General office use.                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (19)   |   | PARKING  SPACES:                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   | Starting on the Commencement Date and continuing  during the Term, Tenant shall have the use of parking stalls of the number  and type described below, for which the monthly charge shall be the  prevailing rates as described in Article 25, which as of the date of this  Lease are agreed to be the amounts set forth below, and it is understood and  agreed such rates are subject to increase from time to time as provided in  Article 25. |
|   |   | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |   | 6   unassigned single vehicle stalls (parking  a total of  6 vehicles), initially at  $30.00/stall/month for months 1-36, $40.00/stall/month for months 37-60

**0   assigned tandem stalls (parking a total  of  0 vehicles), initially at  $65.00/stall/month for months 1-36, $75.00/stall/month for months 37-60**                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (20)   |   | BROKERS:                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   | Landlord’s  Broker:     Cushman & Wakefield                                                                                                                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   | Tenant’s  Broker:     Voit Commercial Brokerage                                                                                                                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|        |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |  |

 

1.02     ENUMERATIONOF EXHIBITS

 

The Exhibits and Rider(s) set forth below and attachedto this Lease are incorporated in this Lease by this reference:

 

EXHIBIT A  Plan of Premises

EXHIBIT B  Workletter Agreement

EXHIBIT C  Current Janitorial Specifications

EXHIBIT D  Rules and Regulations

EXHIBIT E  Project

EXHIBIT F  Current Parking Rules

EXHIBIT G  Rentable Area & Usable Area

 

RIDER 1     Commencement Date Agreement

 

 

1.03     DEFINITIONS

For purposes hereof, the following terms shall havethe following meanings:

 

ADJUSTMENT YEAR: The applicable calendar year or any portion thereof after the yearspecified in the definition of Base Building Operating Expenses for which aRent Adjustment computation is being made.

 

AFFILIATE:  AnyPerson (as defined below) which is currently owned or controlled by, owns orcontrols, or is under common ownership or control with Tenant.  For purposes of this definition, the word “control,”as used above means, with respect to a Person that is a corporation, the rightto exercise, directly or indirectly, more than fifty percent (50%) of thevoting rights attributable to the shares of the controlled corporation and,with respect to a Person that is not a corporation, the possession, directly orindirectly, of the power at all times to direct or cause the direction of the managementand policies of the controlled Person. The word Person means an individual, partnership, trust, corporation,firm or other entity.

 

2

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BASE BUILDING OPERATING EXPENSES:  The amount of Building Operating Expensesspecified in Section 1.01(9).

 

BUILDING:  Theoffice building located at the address specified in Section 1.01(1).

BUILDING OPERATING EXPENSES:  Building Operating Expenses means allOperating Expenses directly and separately identifiable to the Building and theBuilding’s Share of Project Operating Expenses.

 

BUILDING SHARE: The percentage specified in Section 1.01(17), which represents the ratioof the Rentable Area of the Building to the Rentable Area of the Project.

 

COMMENCEMENT DATE: The date specified in Section 1.01(6) as the Projected CommencementDate, unless changed by operation of Article Two.

 

COMMON AREAS: All areas of the Project made available by Landlord from time to timefor the general common use or benefit of the tenants of the Building orProject, and their employees and invitees, or the public, as such areascurrently exist and as they may be changed from time to time.

 

DECORATION: Tenant Alterations which do not require a building permit and which donot involve any of the structural elements of the Building, or any of theBuilding’s systems, including its electrical, mechanical, plumbing, security,heating, ventilating, air-conditioning, communication, and fire and life safetysystems.

 

DEFAULT RATE: The lesser of fifteen percent (15%) or the maximum rate permitted byLaw.

 

ELECTRICITY USE EXPENSES: The separate category of Operating Expenses defined in the definition ofOperating Expenses below in this Section 1.03.

 

ENVIRONMENTAL LAWS: All Laws governing the use, storage, disposal or generation of anyHazardous Material, including the Comprehensive Environmental ResponseCompensation and Liability Act of 1980, as amended, and the ResourceConservation and Recovery Act of 1976, as amended.

 

EXPIRATION DATE: The date specified in Section 1.01(7) unless changed by operation ofArticle Two.

 

FORCE MAJEURE: Any accident, casualty, act of God, war or civil commotion, strike orlabor troubles, or any cause whatsoever beyond the reasonable control ofLandlord, including water shortages, energy shortages or governmentalpreemption in connection with an act of God, a national emergency, or by reasonof Law, or by reason of the conditions of supply and demand which have been orare affected by act of God, war or other emergency.

 

GENERAL EXPENSES:  Theseparate category of Operating Expenses defined in the definition of OperatingExpenses below in this Section 1.03.

 

HAZARDOUS MATERIAL: Such substances, material and wastes which are or become regulated underany Environmental Law; or which are classified as hazardous or toxic under anyEnvironmental Law; and explosives and firearms, radioactive material, asbestos,and polychlorinated biphenyls.

 

INDEMNITEES: Collectively, Landlord, any Mortgagee or ground lessor of the Property,the property manager and the leasing manager for the Property and theirrespective directors, officers, agents and employees.

 

LAND:  Theparcel(s) of real estate on which the Building and Project are located.

 

LANDLORD WORK: The construction or installation of improvements to the Premises, to befurnished by Landlord, specifically described in the Workletter or otherExhibits attached hereto.

 

LAWS OR LAW: All laws, ordinances, rules, regulations, other requirements, orders,rulings or decisions adopted or made by any governmental body, agency,department or judicial authority having jurisdiction over the Property, thePremises or Tenant’s activities at the Premises and any covenants, conditionsor restrictions of record which affect the Property.

 

LEASE:  Thisinstrument and all exhibits and riders attached hereto, as may be amended fromtime to time.

 

LEASE YEAR:  Thetwelve month period beginning on the first day of the first month following theCommencement Date (unless the Commencement Date is the first day of a calendarmonth in which case beginning on the Commencement Date), and each subsequenttwelve month, or shorter, period until the Expiration Date.

 

MONTHLY BASE RENT: The monthly rent specified in Section 1.01(8), subject to theprovisions of Section 2.04.

 

3

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MORTGAGEE:  Anyholder of a mortgage, deed of trust or other security instrument encumberingthe Property.

 

NATIONAL HOLIDAYS: New Year’s Day, President’s Day, Memorial Day, Independence Day, LaborDay, Thanksgiving Day and Christmas Day and other holidays recognized by theLandlord and the janitorial and other unions servicing the Building inaccordance with their contracts.

 

OPERATING EXPENSES: All Taxes, costs, expenses and disbursements of every kind and naturewhich Landlord shall pay or become obligated to pay in connection with theownership, management, operation, maintenance, replacement and repair of theProperty (including the amortized portion of any capital expenditure or improvement,together with interest thereon, and the cost of changing utility serviceproviders). Operating Expenses shall not include, (i) costs of alterations ofthe premises of tenants of the Project, (ii) costs of capital improvements tothe Project (except for amortized portion of capital improvements installed forthe purpose of reducing or controlling Operating Expenses or complying withapplicable Laws enacted after the Commencement Date), (iii) depreciationcharges, (iv) interest and principal payments on loans (except for loans forcapital expenditures or improvements which Landlord is allowed to include inOperating Expenses as provided above), (v) ground rental payments, (vi) realestate brokerage and leasing commissions, (vii) advertising and marketingexpenses, (viii) costs of Landlord reimbursed by insurance proceeds, (ix)expenses incurred in negotiating leases of other tenants in the Project orenforcing lease obligations of other tenants in the Project and (x) Landlord’sor Landlord’s property manager’s corporate general overhead or corporategeneral administrative expenses.  If anyOperating Expense, though paid in one year, relates to more than one calendaryear, at the option of Landlord such expense may be proportionately allocatedamong such related calendar years. Operating Expenses shall for all purposes becalculated and payable in two separate categories as follows:  (a) charges for electricity consumption (“ElectricityUse Expenses”) and all other Operating Expenses (“General Expenses”); (b) allreferences to Operating Expenses (including, for example, Building OperatingExpenses, Project Operating Expenses, Base Building Operating Expenses andTenant’s Share of Building Operating Expenses) shall mean Electricity UseExpenses and General Expenses as separate categories, and an increase in onesuch category shall not be offset by a decrease in another category; and (c) noexpense shall be double counted.

 

PREMISES:  Thespace located in the Building at the Suite Number listed in Section 1.01(15)and depicted on Exhibit A attached hereto.

 

PROJECT:  TheProject consists of (a) three buildings (including the Building) whose presentstreet addresses are 3070, 3080 and 3090 Bristol Street, Costa Mesa,California; (b) associated parking facilities, landscaping and otherimprovements; (c) the Land on which the foregoing are located and anyassociated interests in real property; and (d) the personal property, fixtures,machinery, equipment, systems and apparatus located in or used in conjunctionwith any of the foregoing.  A diagram ofcertain elements of the Project is set forth on Exhibit E hereto.

 

PROJECT OPERATING EXPENSES:  Project Operating Expenses means allOperating Expenses except those directly and separately identifiable to theBuilding or to other Project office buildings.

 

PROPERTY:  TheProject and all elements thereof.

 

REAL PROPERTY: The Property excluding any personal property.

 

RENT: Collectively, Monthly Base Rent, Rent Adjustments and Rent AdjustmentDeposits, and all other charges, payments, late fees or other amounts requiredto be paid by Tenant under this Lease.

 

RENT ADJUSTMENT: Any amounts owed by Tenant for payment of Building OperatingExpenses.  The Rent Adjustments shall bedetermined and paid as provided in Article Four.

 

RENT ADJUSTMENT DEPOSIT:  An amount equal to Landlord’s estimate of theRent Adjustment attributable to each month of the applicable AdjustmentYear.  On or before the beginning of eachAdjustment Year or with Landlord’s Statement (defined in Article Four),Landlord may estimate and notify Tenant in writing of its estimate of theexcess, if any, of Building Operating Expenses over Base Building OperatingExpenses.  Prior to the firstdetermination by Landlord of the amount of Base Building Operating Expenses,Landlord may estimate that amount in the foregoing calculation.  The last estimate by Landlord shall remain ineffect as the applicable Rent Adjustment Deposit unless and until Landlordnotifies Tenant in writing of a change.

 

RENTABLE AREA OF THE BUILDING:  The amount of square footage set forth inSection 1.01(10), which represents the sum of the rentable area of all spaceintended for occupancy in the Building. Such square footage has been determined by Landlord in accordance withthe provisions of Exhibit G hereto and is subject to the provisionsof Section 2.04.

 

RENTABLE AREA OF THE PREMISES:  The amount of square footage set forth inSection 1.01(11), subject to the provisions of Section 2.04.

 

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RENTABLE AREA OF THE PROJECT:  The amount of square footage set forth inSection 1.01(12), which represents the sum of the rentable area of all spaceintended for occupancy in the Project. Such square footage has been determined by Landlord in accordance withthe provisions of Exhibit G hereto and is subject to the provisionsof Section 2.04.

 

SECURITY DEPOSIT: The funds specified in Section 1.01(14), if any, deposited byTenant with Landlord as security for Tenant’s performance of its obligations underthis Lease.

 

STANDARD OPERATING HOURS:  Monday through Friday from 8 A.M. to6 P.M. and on Saturdays from 8 A.M. to 1 P.M., excludingNational Holidays.

 

SUBSTANTIALLY COMPLETE:  The completion of the Landlord Work or TenantWork, as the case may be, except for minor insubstantial details ofconstruction, decoration or mechanical adjustments which remain to be done.

 

TAXES:  Allfederal, state and local governmental taxes, assessments and charges  of every kind or nature, whether general,special, ordinary or extraordinary, which Landlord shall pay or becomeobligated to pay because of or in connection with the ownership, leasing,management, control or operation of the Property or any of its components(including any personal property used in connection therewith), which may alsoinclude any rental or similar taxes levied in lieu of or in addition to generalreal and/or personal property taxes.  Forpurposes hereof, Taxes for any year shall be Taxes which are assessed for anyperiod of such year, whether or not such Taxes are billed and payable in asubsequent calendar year.  There shall beincluded in Taxes for any year the amount of all fees, costs and expenses(including reasonable attorneys’ fees) paid by Landlord during such year inseeking or obtaining any refund or reduction of Taxes.  Taxes for any year shall be reduced by thenet amount of any tax refund received by Landlord attributable to suchyear.  If a special assessment payable ininstallments is levied against any part of the Property, Taxes for any yearshall include only the installment of such assessment and any interest payableor paid during such year.  Taxes shallnot include any federal or state inheritance, general income, gift or estatetaxes, except that if a change occurs in the method of taxation resulting inwhole or in part in the substitution of any such taxes, or any otherassessment, for any Taxes as above defined, such substituted taxes orassessments shall be included in the Taxes.

 

TENANT ADDITIONS: Collectively, Landlord Work, Tenant Work and Tenant Alterations.

 

TENANT ALTERATIONS: Any alterations, improvements, additions, installations or constructionin or to the Premises or any Real Property systems serving the Premises(excluding Landlord Work or Tenant Work); and any supplementary air-conditioningsystems installed by Landlord or by Tenant at Landlord’s request pursuant toSection 6.01(b).

 

TENANT DELAY: Any event or occurrence which delays the Substantial Completion of theLandlord Work which is caused by or is described as follows:

 

                                                (i)  special work, changes,alterations or additions requested or made by Tenant in the design or finish inany part of the Premises after approval of the plans and specifications (asdescribed in the Workletter);

 

                                                (ii)  Tenant’s delay in submittingplans, supplying information, approving plans, specifications or estimates,giving authorizations or otherwise;

 

                                                (iii)  failure to approve and payfor such Tenant Work as Landlord undertakes to complete at Tenant’s expense;

 

                                                (iv)  the performance or completionby Tenant or any person engaged by Tenant of any work in or about the Premises;or

 

                                                (v)  failure to perform or complywith any obligation or condition binding upon Tenant pursuant to theWorkletter, including the failure to approve and pay for such Landlord Work orother items if and to the extent the Workletter provides they are to beapproved or paid by Tenant.

 

TENANT WORK: All work installed or furnished to the Premises by Tenant pursuant tothe Workletter.

 

TENANT’S SHARE: The percentage specified in Section 1.01(16) which represents theratio of the Rentable Area of the Premises to the Rentable Area of theBuilding, subject to the provisions of Section 2.04.

 

USABLE AREA OF THE PREMISES:  The amount of square footage set forth inSection 1.01(13), subject to the provisions of Section 2.04.

 

TERM:  The termof this Lease commencing on the Commencement Date and expiring on theExpiration Date.

 

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TERMINATION DATE: The Expiration Date or such earlier date as this Lease terminates orTenant’s right to possession of the Premises terminates.

 

WORKLETTER:  TheAgreement regarding the manner of completion of Landlord Work and Tenant Workset forth on Exhibit B attached hereto.

 

ARTICLE TWO

PREMISES, TERM, FAILURE TO GIVE POSSESSION

 

2.01                           LEASE OFPREMISES

 

Landlord hereby leases to Tenant and Tenant herebyleases from Landlord the Premises for the Term and upon the terms, covenantsand conditions provided in this Lease. In the event Landlord delivers possession of the Premises to Tenantprior to the Commencement Date, Tenant shall be subject to all of the terms,covenants and conditions of this Lease (except with respect to the payment ofRent) as of the date of such possession.

 

2.02                           TERM

 

                (a)           The Commencement Date shall be thedate determined as follows:

 

                                                                (1)           If the Landlord Work is SubstantiallyComplete on or before the Projected Commencement Date then on the date which isthe earlier to occur of

 

                                                                                (i)  the Projected Commencement Date, or

 

                                                                                (ii)  the date Tenant first occupies all or part ofthe Premises for the conduct of business; or

 

                                                                (2)           If the Landlord Work is notSubstantially Complete by the Projected Commencement Date, then on the date onwhich the Landlord Work is Substantially Complete.

 

                (b)           Within thirty (30) days following theoccurrence of the Commencement Date, Landlord and Tenant shall enter into anagreement (which is attached hereto as Rider 1) confirming theCommencement Date and the Expiration Date. If Tenant fails to enter into such agreement, then the Commencement Dateand the Expiration Date shall be the dates designated by Landlord in suchagreement.

 

2.03                           FAILURE TOGIVE POSSESSION

 

If the Landlord shall be unable to give possession ofthe Premises on the Projected Commencement Date by reason of the following: (i)the Building has not been sufficiently completed to make the Premises ready foroccupancy, (ii) the Landlord Work is not Substantially Complete, (iii) theholding over or retention of possession of any tenant, tenants or occupants, or(iv) for any other reason, then Landlord shall not be subject to any liabilityfor the failure to give possession on said date.  Under such circumstances the Rent reserved andcovenanted to be paid herein shall not commence until the Premises are madeavailable to Tenant by Landlord, and no such failure to give possession on theProjected Commencement Date shall affect the validity of this Lease or theobligations of the Tenant hereunder.  Atthe option of Landlord to be exercised within thirty (30) days of the delayeddelivery of possession to Tenant, the Lease shall be amended so that the Termshall be extended by the period of time possession is delayed.  The said Premises shall be deemed to be readyfor Tenant’s occupancy and Substantially Complete in the event Landlord’s Workis Substantially Complete in fact, or if the delay in the availability of thePremises for occupancy shall be due to any Tenant Delay and/or default on thepart of Tenant and/or its subtenant or subtenants.  In the event of any dispute as to whether theLandlord Work is Substantially Complete, the decision of Landlord’s architectshall be final and binding on the parties.

 

2.04                           AREA OFPREMISES

 

Landlord and Tenant agree that for all purposes ofthis Lease the Rentable Area of the Premises, the Usable Area of the Premises,the Rentable Area of the Building and the Rentable Area of the Project as setforth in Article One are controlling, and are not subject to revision after thedate of this Lease except as otherwise provided herein.  In the event that the demising walls of thePremises are to be built or modified after the date of execution of the Lease(either upon Tenant’s initial occupancy or any subsequent change in thePremises pursuant to other provisions of this Lease), then when such demisingwalls are substantially complete, Landlord shall have the right to verify orcorrect such square footage and accordingly adjust other amounts hereunderbased upon such square footage in accordance with the provisions of Exhibit Ghereto.

 

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2.05                           CONDITIONOF PREMISES

 

Tenant shall notify Landlord in writing within thirty(30) days after the later of Substantial Completion of the Landlord Work orwhen Tenant takes possession of the Premises of any defects in the Premises orin the materials or workmanship furnished by Landlord in completing theLandlord Work.  Except for defects statedin such notice, Tenant shall be conclusively deemed to have accepted thePremises “AS IS” in the condition existing on the date Tenant first takespossession, and to have waived all claims relating to the condition of thePremises.  Landlord shall proceeddiligently to correct the defects stated in such notice unless Landlorddisputes the existence of any such defects. In the event of any dispute as to the existence of any such defects, thedecision of Landlord’s architect shall be final and binding on theparties.  No agreement of Landlord toalter, remodel, decorate, clean or improve the Premises or the Real Propertyand no representation regarding the condition of the Premises or the RealProperty has been made by or on behalf of Landlord to Tenant, except as may bespecifically stated in this Lease or in the Workletter.

 

2.06                           TEMPORARYSPACE

 

                a.             Notwithstanding anything to thecontrary contained in this Lease and as an accommodation to Tenant, pendingcompletion of the Landlord Work in the Premises, Landlord shall provide Tenantwith certain temporary space known as Suite 660 (the “Temporary Space”).  However, Landlord hereby reserves the rightto substitute temporary comparable space in the Project during the term of thetemporary use.

 

                b.             Within thirty (30) days afterexecution of this Lease, Tenant shall be entitled to possession upon mutualexecution and delivery of this Lease. Tenant shall occupy and use the Temporary Space only for the usesspecified in Section 1.01(18) to conduct Tenant’s business. Tenant shallsurrender possession of the Temporary Space no later than three (3) days afterthe Commencement Date of this Lease, unless possession is terminated earlier asprovided for herein. Upon any termination or expiration of this Lease, Tenantshall remove all its personal property from the Temporary Space and shallreturn to Landlord all keys to the Temporary Space and shall vacate andsurrender the Temporary Space in broom clean condition, reasonable wear andtear excepted.

 

                c.             Tenant understands, acknowledgesand agrees that the Temporary Space shall be delivered “AS IS” with noobligation of Landlord to do any work therein or supply any materials inconnection therewith.

 

                d.             Upon occupancy of the TemporarySpace, Tenant shall be obligated to pay to Landlord Rent in the amount of OneThousand and No/100 Dollars ($1,000.00) per month in connection with theTemporary Space, plus the parking charges set forth in this Lease, whichpayments shall be prorated for any partial months.

 

e.             Tenantshall maintain at its expense, in an amount equal to full replacement cost, fireand extended coverage insurance on all of its personal property, includingremovable trade fixtures, located in the Temporary Space.  In addition, Tenant shall maintain a policyof comprehensive general liability insurance with respect to Tenant’s activitiesin the Temporary Space, which shall provide minimum protection of not less thanOne Million and No/100 dollars ($1,000,000.00) combined single limit coverageof bodily injury, property damage, or combination thereof.  Tenant shall provide Landlord with currentcertificates of insurance evidencing Tenant’s compliance with this requirement.

 

2.07                           ATM LICENSE

 

Landlord shall grant alicense to Tenant, without charge, to establish and install one (1) automaticteller machine and night depository (collectively, the “ATM”) as set forth in ExhibitH attached hereto and made a part hereof which ATM will dispense cash andperform such other transactions as are permitted by applicable law.  Tenant shall be solely responsible for allservice, repairs and maintenance to the ATM and all costs associated therewithand agrees to manage, operate and maintain the ATM.

 

ARTICLETHREE

RENT

 

Tenant agrees to pay to Landlord at the first officespecified in Section 1.01(2), or to such other persons, or at such otherplaces designated by Landlord, without any prior demand therefor in immediatelyavailable funds and without any deduction or offset whatsoever, Rent, includingMonthly Base Rent and Rent Adjustments in accordance with Article Four, duringthe Term. Monthly Base Rent shall be paid monthly in advance on the first dayof each month of the Term, except that the first installment of Monthly BaseRent shall be paid by Tenant to Landlord concurrently with the execution ofthis Lease.  Monthly Base Rent shall beprorated for partial months within the Term. Unpaid Rent shall bear interest at the Default Rate from the date dueuntil paid.  Tenant’s covenant to payRent shall be independent of every other covenant in this Lease.

 

 

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ARTICLE FOUR

RENT ADJUSTMENTS AND PAYMENTS

 

4.01                           RENTADJUSTMENTS

 

Tenant shall pay to Landlord Rent Adjustments withrespect to each Adjustment Year as follows:

 

                                                (i)            The Rent AdjustmentDeposit representing Tenant’s Share of Building Operating Expenses for theapplicable Adjustment Year in excess of Base Building Operating Expenses,monthly during the Term with the payment of Monthly Base Rent; and

 

                                                (ii)           Any Rent Adjustmentsdue in excess of the Rent Adjustment Deposits in accordance with Section 4.02.  Rent Adjustments due from Tenant to Landlordfor any Adjustment Year shall be Tenant’s Share of Building Operating Expensesfor such year in excess of Base Building Operating Expenses.

 

4.02                           STATEMENTOF LANDLORD

 

Within one hundred and twenty (120) days after theexpiration of the year specified in the definition of Base Building OperatingExpenses and each Adjustment Year thereafter, Landlord will furnish Tenant astatement (“Landlord’s Statement”) showing the following:

 

                                                (i)  Base Building OperatingExpenses and thereafter Building Operating Expenses for the last AdjustmentYear;

 

                                                (ii)  The amount of Rent Adjustmentsdue Landlord for the last Adjustment Year, less credit for Rent AdjustmentDeposits paid, if any; and

 

                                                (iii)  Any change in the RentAdjustment Deposit due monthly in the current Adjustment Year, including theamount or revised amount due for months preceding any such change pursuant toLandlord’s Statement.

 

Tenant shall pay to Landlord within thirty (30) daysafter receipt of such statement any amounts for Rent Adjustments then due inaccordance with Landlord’s Statement. Any amounts due from Landlord to Tenant pursuant to this Section shallbe credited to the Rent Adjustment Deposit next coming due, or refunded toTenant if the Term has already expired provided Tenant is not in defaulthereunder.  No interest or penaltiesshall accrue on any amounts which Landlord is obligated to credit or refund toTenant by reason of this Section 4.02. Landlord’s failure to deliver Landlord’s Statement or to compute theamount of the Rent Adjustments shall not constitute a waiver by Landlord of itsright to deliver such items nor constitute a waiver or release of Tenant’sobligations to pay such amounts.  TheRent Adjustment Deposit shall be credited against Rent Adjustments due for theapplicable Adjustment Year.  During thelast complete calendar year or during any partial calendar year in which theLease terminates, Landlord may include in the Rent Adjustment Deposit itsestimate of Rent Adjustments which may not be finally determined until afterthe termination of this Lease.  Tenant’sobligation to pay Rent Adjustments survives the expiration or termination ofthe Lease.  Notwithstanding theforegoing, in no event shall the sum of Monthly Base Rent and the RentAdjustments be less than the Monthly Base Rent payable.

 

4.03                           BOOKS ANDRECORDS

 

Landlord shall maintain books and records showingBuilding Operating Expenses in accordance with sound accounting and managementpractices, consistently applied.  TheTenant or its representative (which representative shall be a certified publicaccountant licensed to do business in the state in which the Property islocated and whose primary business is certified public accounting) shall havethe right, for a period of thirty (30) days following the date upon whichLandlord’s Statement is delivered to Tenant, to examine the Landlord’s booksand records with respect to the items in the foregoing statement of BuildingOperating Expenses during normal business hours, upon written notice, deliveredat least three (3) business days in advance. If Tenant does not object inwriting to Landlord’s Statement within sixty (60) days of Tenant’s receiptthereof, specifying the nature of the item in dispute and the reasons therefor,then Landlord’s Statement shall be considered final and accepted byTenant.  Any amount due to the Landlordas shown on Landlord’s Statement, whether or not disputed by Tenant as providedherein shall be paid by Tenant when due as provided above, without prejudice toany such written exception.

 

4.04         PARTIAL OCCUPANCY

 

For purposes of determining Rent Adjustments, if theBuilding is not fully occupied during all or a portion of any year during theTerm, Landlord shall make appropriate adjustments to the Operating Expenses forsuch year employing sound accounting and management principles consistentlyapplied, to determine the amount of Operating Expenses that would have beenpaid or incurred by Landlord had the Building been 95% occupied, and the amountso determined shall be deemed to have been the amount includable in OperatingExpenses for such year.  In the eventthat the Real Property is not fully assessed for all or a portion of any yearduring the Term, then Taxes shall be adjusted to an amount which would havebeen payable in such year if the Real Property had been fully assessed.  In the event any other tenant in the 

 

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Building provides itself with a service of a typewhich Landlord would supply under the Lease without an additional or separatecharge to Tenant, then Operating Expenses shall be deemed to include the costLandlord would have incurred had Landlord provided such service to such othertenant.

 

4.05         TENANT OR LEASE SPECIFIC TAXES

 

In addition to Monthly Base Rent, Rent Adjustments,Rent Adjustment Deposits and other charges to be paid by Tenant, Tenant shallpay to Landlord, upon demand, any and all taxes payable by Landlord (other thanfederal or state inheritance, general income, gift or estate taxes) whether ornot now customary or within the contemplation of the parties hereto:  (a) upon, allocable to, or measured by theRent payable hereunder, including any gross receipts tax or excise tax leviedby any governmental or taxing body with respect to the receipt of such rent; or(b) upon or with respect to the possession, leasing, operation, management,maintenance, alteration, repair, use or occupancy by Tenant of the Premises orany portion thereof; or (c) upon the measured value of Tenant’s personalproperty located in the Premises or in any storeroom or any other place in thePremises or the Property, or the areas used in connection with the operation ofthe Property, it being the intention of Landlord and Tenant that, to the extentpossible, such personal property taxes shall be billed to and paid directly byTenant; or (d) resulting from Landlord Work, Tenant Work or Tenant Alterationsto the Premises, whether title thereto is in Landlord or Tenant; or (e) uponthis transaction.  Taxes paid by Tenantpursuant to this Section 4.05 shall not be included in any computation ofTaxes payable as part of Building Operating Expenses pursuant to Sections 4.01and 4.02.

 

ARTICLEFIVE

SECURITY DEPOSIT

 

Tenant concurrently with the execution of this Leaseshall pay to Landlord in immediately available funds the Security Deposit.  The Security Deposit may be applied byLandlord to cure, in whole or part, any default of Tenant under this Lease, andupon notice by Landlord of such application, Tenant shall replenish theSecurity Deposit in full by paying to Landlord within ten (10) days of demandthe amount so applied.  Landlord’sapplication of the Security Deposit shall not constitute a waiver of Tenant’sdefault to the extent that the Security Deposit does not fully compensateLandlord for all losses, damages, costs and expenses incurred by Landlord inconnection with such default and shall not prejudice any other rights orremedies available to Landlord under this Lease or by Law.  Landlord shall not pay any interest on theSecurity Deposit.  Landlord shall not berequired to keep the Security Deposit separate from its general accounts.  The Security Deposit shall not be deemed anadvance payment of Rent, nor a measure of damages for any default by Tenantunder this Lease, nor shall it be a bar or defense of any action which Landlordmay at any time commence against Tenant. In the absence of evidence satisfactory to Landlord of an assignment ofthe right to receive the Security Deposit or the remaining balance thereof,Landlord may return the Security Deposit to the original Tenant, regardless ofone or more assignments of this Lease. Upon the transfer of Landlord’s interest under this Lease, Landlord’sobligation to Tenant with respect to the Security Deposit shall terminate upontransfer to the transferee of the Security Deposit, or any balancethereof.  If Tenant shall fully andfaithfully comply with all the terms, provisions, covenants, and conditions ofthis Lease, the Security Deposit, or any balance thereof, shall be returned toTenant within thirty (30) days after Landlord recovers possession of thePremises or such longer time as may be permissible under Law.  Tenant hereby waives any and all rights ofTenant under the provisions of Section 1950.7 of the California Civil Code orother Law regarding security deposits.

 

ARTICLE SIX

SERVICES

 

6.01                           LANDLORD’SGENERAL SERVICES

 

                (a)           So long as the Lease is in full forceand effect, Landlord shall furnish or cause to be furnished to the Premises theutilities and services described below, subject to the conditions and inaccordance with the standards set forth below:

 

                                                                (1)           Landlord shall provide automaticelevator facilities 24 hours per day, seven (7) days per week.

 

                                                                (2)           Landlord shall ventilate the Premisesduring Standard Operating Hours and shall furnish heat or air conditioning whenin the judgment of Landlord it is required for the comfortable occupancy of thePremises during Standard Operating Hours, subject to any requirements or standardsrelating to, among other things, energy conservation, imposed or established bygovernmental agencies.  Upon request,Landlord shall make available at Tenant’s expense heat or air conditioning foruse at all other times, provided that such request is made at least one hourbefore the end of the Standard Operating Hours preceding such service andprovided further that the minimum use of such additional heat or airconditioning and the cost thereof shall be determined by Landlord and confirmed in writing to Tenant as the samemay change from time to time.

 

                                                                (3)           Landlord shall furnish electriccurrent to the Premises at all times. Tenant’s use of electric current shall at no time exceed the capacity ofthe feeders to the Building or the risers or wiring installation therein.  Tenant shall not install or use or permit theinstallation or use of any 

 

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computer or electronic data processing equipment inthe Premises other than personal computers without the prior written consent ofLandlord.

 

                                                                (4)           Landlord shall furnish water fordrinking, cleaning and lavatory purposes only in the Common Areas of theBuilding.

 

                                                                (5)           Provided that the Premises are usedexclusively as offices and are kept reasonably in order by Tenant, Landlordshall provide janitorial services to the Premises as specified on Exhibit Chereto, if any, as that Exhibit shall be modified by Landlord from time to timein its reasonable discretion; however, in no event materially less than such servicesthen being provided in comparable office buildings in the Costa Mesamarket.  If the Premises are not usedexclusively as offices (provided Section 1.01(18) permits such use),Tenant or persons approved by Landlord shall keep the Premises clean and inorder to the satisfaction of Landlord, but at Tenant’s sole expense. No personsother than Tenant and those persons approved by Landlord shall be permitted toenter the Premises for the purpose of keeping the Premises clean and inorder.  Tenant shall pay to Landlord thecost of removal of any of Tenant’s refuse and rubbish, to the extent that suchrefuse and rubbish removed by Landlord exceeds the refuse and rubbish usuallyattendant upon the use of premises as offices.

 

                                                                (6)           Landlord shall replace, as necessary,the light bulbs in the Building standard lighting fixtures installed byLandlord.  Tenant shall replace, asnecessary, all bulbs and fluorescent tubes in non-Building standard lightingfixtures, if any, installed in the Premises. If Tenant shall fail to make any such replacement within five (5) daysafter written notice from Landlord, Landlord may make such replacement andcharge the cost of labor and materials involved therein to Tenant, asadditional rent.

 

                (b)           In addition to any after-hours use ofthe Building’s heating, ventilation or air conditioning systems under Section6.01(a)(2) above, Landlord may impose a reasonable charge upon Tenant for allutilities and services used by Tenant or at the Premises which involves(1) any substantial recurrent use of the Premises at any time other thanStandard Operating Hours, (2) any use beyond that which Landlord isrequired to furnish under Section 6.01(a) above, (3) any special coolingor ventilating needs created in certain areas of the Premises by specialtelephone equipment, computers or other similar equipment or uses by Tenant, or(4) any use of electrical service in the Premises (including, withoutlimitation, all lighting) in excess of seven (7) watts per square foot ofUsable Area of the Premises per hour during Standard Operating Hours.  At any time and from time to time during theterm of this Lease, Landlord may in its sole discretion install meters or othersimilar devices in the Premises or the Building for the purpose of measuringthe electricity or other utilities supplied to the Premises.  If such meter or other device shows at anytime that utilities have been supplied to the Premises for which Landlord mayimpose a charge as provided in this Section 6.01(b), then the cost of such meteror similar device and the cost of installation thereof shall be borne by Tenantand Tenant shall reimburse Landlord for such costs within ten (10) days ofreceipt of Landlord’s invoice thereof.

 

                (c)           Tenant agrees to cooperate fully withLandlord and to abide by all regulations and requirements which Landlord mayprescribe for the use of the above-described utilities and services to beprovided by Landlord.  Any failure to payany excess costs as described above shall constitute a breach of the obligationto pay Rent under this Lease and shall entitle Landlord to the rights grantedherein, at law or in equity as a result of such a breach.

 

                (d)           Notwithstanding anything to thecontrary above, Landlord reserves the right from time to time to make reasonablemodifications to the above standards for utilities and services.

 

6.02         TELEPHONE SERVICES

 

All telegraph, telephone, and communicationconnections which Tenant may desire shall be subject to Landlord’s priorwritten approval, in Landlord’s sole discretion, and the location of all wiresand the work in connection therewith shall be performed by contractors approvedby Landlord and shall be subject to the direction of Landlord, except that suchapproval is not required as to Tenant’s telephone equipment (including cabling)within the Premises and from the Premises in a route designated by Landlord toany telephone cabinet or panel provided (as existing or as installed as part ofLandlord’s Work, if any) on Tenant’s floor for Tenant’s connection to thetelephone cable serving the Building, so long as Tenant’s equipment does notrequire connections different than or additional to those to the telephonecabinet or panel provided.  Except to theextent of such cabling within the Premises or from the Premises to suchtelephone cabinet or panel, Landlord reserves the right to designate andcontrol the entity or entities providing telephone or other communication cableinstallation, removal, repair and maintenance in the Building and to restrictand control access to telephone cabinets or panels.  In the event Landlord designates a particularvendor or vendors to provide such cable installation, removal, repair andmaintenance for the Building, Tenant agrees to abide by and participate in suchprogram.  Tenant shall be responsible forand shall pay all costs incurred in connection with the installation oftelephone cables and communication wiring in the Premises, including anyhook-up, access and maintenance fees related to the installation of such wiresand cables in the Premises and the commencement of service therein, and themaintenance thereafter of such wire and cables; and there shall be included inOperating Expenses for the Building all installation, removal, hook-up ormaintenance costs incurred by Landlord in connection 

 

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with telephone cables and communication wiring servingthe Building which are not allocable to any individual users of such servicebut are allocable to the Building generally. If Tenant fails to maintain all telephone cables and communicationwiring in the Premises and such failure affects or interferes with theoperation or maintenance of any other telephone cables or communication wiringserving the Building, Landlord or any vendor hired by Landlord may enter intoand upon the Premises forthwith and perform such repairs, restorations oralterations as Landlord deems necessary in order to eliminate any suchinterference (and Landlord may recover from Tenant all of Landlord’s costs inconnection therewith).  No later than theTermination Date, Tenant agrees to remove all telephone cables andcommunication wiring installed by Tenant for and during Tenant’s occupancy,which Landlord shall request Tenant to remove. Tenant agrees that neither Landlord nor any of its agents or employeesshall be liable to Tenant, or any of Tenant’s employees, agents, customers orinvitees or anyone claiming through, by or under Tenant, for any damages,injuries, losses, expenses, claims or causes of action because of anyinterruption, diminution, delay or discontinuance at any time for any reason inthe furnishing of any telephone or other communication service to the Premisesand the Building.

 

6.03                           DELAYS INFURNISHING SERVICES

 

In the event of any failure to furnish or delay in furnishingthe services, including any utilities, to be supplied by Landlord, Landlordshall use good faith efforts to have service promptly resumed.  Where the cause of any such failure, stoppageor interruption of such utilities or services is within the system or controlof a utility company or public or quasi-public entity outside Landlord’scontrol, notification to such utility or entity of such failure, stoppage orinterruption and request to remedy the same shall constitute “good faithefforts” by Landlord to have service promptly resumed.  Should any equipment or machinery furnishedby Landlord break down or for any cause cease to function properly, Landlordshall use reasonable diligence to repair same promptly, but Tenant shall haveno claim for abatement of Rent or damages on account of any interruption ofservice occasioned thereby or resulting therefrom.  Tenant agrees that Landlord shall not be inbreach of this Lease nor be liable to Tenant for damages or otherwise, for anyfailure to furnish, or a delay in furnishing, or a change in the quantity orcharacter of any service when such failure, delay or change is occasioned, inwhole or in part, by repairs, improvements or mechanical breakdowns by the actor default of Tenant or other parties or by an event of Force Majeure.  No such failure, delay or change shall bedeemed to be an eviction or disturbance of Tenant’s use and possession of thePremises, or relieve Tenant from paying Rent or from performing any otherobligations of Tenant under this Lease, without any deduction or offset.  Failure to any extent to make available, orany slowdown, stoppage, or interruption of, the specified utility servicesresulting from any cause, including changes in service provider or Landlord’s compliancewith any voluntary or similar governmental or business guidelines now orhereafter published or any requirements now or hereafter established by anygovernmental agency, board, or bureau having jurisdiction over the operation ofthe Property, shall not render Landlord liable in any respect for damages toeither persons, property, or business, nor be construed as an eviction ofTenant or work an abatement of Rent, nor relieve Tenant of Tenant’s obligationsfor fulfillment of any covenant or agreement hereof.

 

6.04             CHOICE OF SERVICE PROVIDER

 

Tenant acknowledges that Landlord may, at Landlord’s soleoption, to the extent permitted by applicable law, elect to change, from timeto time, the company or companies which provide services (including electricalservice, gas service, water, telephone and technical services) to the Building,the Premises and/or its occupants. Notwithstanding anything to the contrary set forth in this Lease, Tenantacknowledges that Landlord has not and does not make any representations orwarranties concerning the identity or identities of the company or companieswhich provide services to the Building and the Premises or its occupants andTenant acknowledges that the choice of service providers and matters concerningthe engagement and termination thereof shall be solely that of Landlord. Theforegoing provision is not intended to modify, amend, change or otherwisederogate any provision of this Lease concerning the nature or type of serviceto be provided or any specific information concerning the amount thereof to beprovided. Tenant agrees to cooperate with Landlord and each of its serviceproviders in connection with any change in service or provider.

 

ARTICLE SEVEN

POSSESSION, USE AND CONDITION OF PREMISES

 

7.01                           POSSESSION ANDUSE OF PREMISES

 

                (a)           Tenant shall be entitled topossession of the Premises when the Landlord Work is SubstantiallyComplete.  Tenant shall occupy and usethe Premises only for the uses specified in Section 1.01(18) to conductTenant’s business.  Tenant shall notoccupy or use the Premises (or permit the use or occupancy of the Premises) forany purpose or in any manner which: (1) is unlawful or in violation of anyLaw or Environmental Law; (2) may be dangerous to persons or property orwhich may increase the cost of, or invalidate, any policy of insurance carriedon the Building or covering its operations; (3) is contrary to orprohibited by the terms and conditions of this Lease or the rules andregulations of the Building set forth in Article Eighteen; or (4) would tend tocreate or continue a nuisance.

 

                (b)           Tenant shall comply with allEnvironmental Laws pertaining to Tenant’s occupancy and use of the Premises andconcerning the proper storage, handling and disposal of any Hazardous Material 

 

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introduced to the Premises, the Building or theProperty by Tenant or other occupants of the Premises, or their employees,servants, agents, contractors, customers or invitees. Landlord shall complywith all Environmental Laws applicable to the Property other than those to becomplied with by Tenant pursuant to the preceding sentence.  Tenant shall not generate, store, handle ordispose of any Hazardous Material in, on, or about the Property without theprior written consent of Landlord, which may be withheld in Landlord’s solediscretion, except that such consent shall not be required to the extent ofHazardous Material packaged and contained in office products for consumer usein general business offices in quantities for ordinary day-to-day use providedsuch use does not give rise to, or pose a risk of, exposure to or release ofHazardous Material.  In the event thatTenant is notified of any investigation or violation of any Environmental Lawarising from Tenant’s activities at the Premises, Tenant shall immediatelydeliver to Landlord a copy of such notice. In such event or in the event Landlord reasonably believes that aviolation of Environmental Law exists, Landlord may conduct such tests andstudies relating to compliance by Tenant with Environmental Laws or the allegedpresence of Hazardous Material upon the Premises as Landlord deems desirable,all of which shall be completed at Tenant’s expense.  Landlord’s inspection and testing rights arefor Landlord’s own protection only, and Landlord has not, and shall not bedeemed to have assumed any responsibility to Tenant or any other party forcompliance with Environmental Laws, as a result of the exercise, ornon-exercise of such rights.  Tenanthereby indemnifies, and agrees to defend, protect and hold harmless, theIndemnitees from any and all loss, claim, demand, action, expense, liabilityand cost (including attorneys’ fees and expenses) arising out of or in any wayrelated to the presence of any Hazardous Material introduced to the Premises orthe Property during the Lease Term by Tenant or other occupants of thePremises, or their employees, servants, agents, contractors, customers orinvitees.  In case of any action orproceeding brought against the Indemnitees by reason of any such claim, uponnotice from Landlord, Tenant covenants to defend such action or proceeding bycounsel chosen by Landlord, in Landlord’s sole discretion.  Landlord reserves the right to settle,compromise or dispose of any and all actions, claims and demands related to theforegoing indemnity.  If any HazardousMaterial is released, discharged or disposed of on or about the Property andsuch release, discharge or disposal is not caused by Tenant or other occupantsof the Premises, or their employees, servants, agents, contractors customers orinvitees, such release, discharge or disposal shall be deemed casualty damageunder Article Fourteen to the extent that the Premises are affected thereby; insuch case, Landlord and Tenant shall have the obligations and rights respectingsuch casualty damage provided under such Article.

 

                (c)           Landlordand Tenant acknowledge that the Americans With Disabilities Act of 1990 (42U.S.C. §12101 et seq.) and regulations and guidelines promulgated thereunder,as all of the same may be amended and supplemented from time to time(collectively referred to herein as the “ADA”) establish requirements forbusiness operations, accessibility and barrier removal, and that suchrequirements may or may not apply to the Premises, the Building and the Projectdepending on, among other things: (1) whether Tenant’s business is deemed a “publicaccommodation” or “commercial facility”, (2) whether such requirements are “readilyachievable”, and (3) whether a given alteration affects a “primary functionarea” or triggers “path of travel” requirements.  The parties hereby agree that: (a) Landlordshall be responsible for ADA Title III compliance in the Common Areas, exceptas provided below, (b) Tenant shall be responsible for ADA Title III compliancein the Premises, including any leasehold improvements or other work to beperformed in the Premises under or in connection with this Lease, (c) Landlordmay perform, or require that Tenant perform, and Tenant shall be responsiblefor the cost of, ADA Title III “path of travel” requirements triggered byTenant Alterations in the Premises, and (d) Landlord may perform, or requireTenant to perform, and Tenant shall be responsible for the cost of, ADA TitleIII compliance in the Common Areas necessitated by the Building being deemed tobe a “public accommodation” instead of a “commercial facility” as a result ofTenant’s use of the Premises.  Tenantshall be solely responsible for requirements under Title I of the ADA relatingto Tenant’s employees.  Notwithstanding anything to the contrary in thisSection 7.01(c), if Tenant is required to pay for the cost of ADA Title IIIcompliance in the Common Areas as a result of the Building being deemed to be a“public accommodation” as a result of Tenant’s use of the Premises, and thecost of such compliance is in excess of $75,000 , then Tenant shall have theoption of terminating this Lease in lieu of paying for such compliancecosts.  If Tenant elects to terminate theLease, Tenant shall pay to Landlord, as a termination fee, the aggregate sum of(i) the unamortized cost of tenant improvements paid for by Landlord, (ii) theunamortized cost of brokers fees paid for by Landlord, and (iii) two month’sthen escalated rent.

 

                (d)           Landlord and Tenant agree tocooperate and use commercially reasonable efforts to participate in trafficmanagement programs generally applicable to businesses located in or about theCosta Mesa, California area and Tenant shall encourage and support van and carpooling by, and staggered and flexible working hours for, its office workersand service employees to the extent reasonably permitted by the requirements ofTenant’s business.  Neither this Sectionor any other provision of this Lease is intended to or shall create any rightsor benefits in any other person, firm, company, governmental entity or thepublic.

 

                (e)           Tenant agrees to cooperate withLandlord and to comply with any and all guidelines or controls concerningenergy management imposed upon Landlord by federal or state governmentalorganizations or by any energy conservation association to which Landlord is aparty or which is applicable to the Building.

 

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7.02                           LANDLORDACCESS TO PREMISES; APPROVALS

 

                (a)           Tenant shall permit Landlord toerect, use and maintain pipes, ducts, wiring and conduits in and through thePremises, so long as Tenant’s use, layout or design of the Premises is notmaterially affected or altered.  Landlordor Landlord’s agents shall have the right to enter upon the Premises in theevent of an emergency, or to inspect the Premises, to perform janitorial andother services, to conduct safety and other testing in the Premises and to makesuch repairs, alterations, improvements or additions to the Premises or theBuilding or other parts of the Property as Landlord may deem necessary ordesirable (including all alterations, improvements and additions in connectionwith a change in service provider or providers).  Janitorial and cleaning services shall beperformed after normal business hours. Any entry or work by Landlord may be during normal business hours andLandlord may use reasonable efforts to ensure that any entry or work shall notmaterially interfere with Tenant’s occupancy of the Premises.

 

                (b)           If Tenant shall not be personallypresent to permit an entry into the Premises when for any reason an entrytherein shall be necessary or permissible, Landlord (or Landlord’s agents),after attempting to notify Tenant (unless Landlord believes an emergencysituation exists), may enter the Premises without rendering Landlord or itsagents liable therefor, and without relieving Tenant of any obligations underthis Lease.

 

                (c)           Landlord may enter the Premises forthe purpose of conducting such inspections, tests and studies as Landlord maydeem desirable or necessary to confirm Tenant’s compliance with all Laws andEnvironmental Laws or for other purposes necessary in Landlord’s reasonablejudgment to ensure the sound condition of the Property and the systems servingthe Property.  Landlord’s rights underthis Section 7.02(c) are for Landlord’s own protection only, and Landlord hasnot, and shall not be deemed to have assumed, any responsibility to Tenant orany other party, as a result of the exercise or non-exercise of such rights,for compliance with Laws or Environmental Laws or for the accuracy orsufficiency of any item or the quality or suitability of any item for itsintended use.

                (d)           Landlord may do any of the foregoing,or undertake any of the inspection or work described in the precedingparagraphs without such action constituting an actual or constructive evictionof Tenant, in whole or in part, or giving rise to an abatement of Rent byreason of loss or interruption of business of the Tenant, or otherwise.

 

                (e)           The review, approval or consent ofLandlord with respect to any item required or permitted under this Lease is forLandlord’s own protection only, and Landlord has not, and shall not be deemedto have assumed, any responsibility to Tenant or any other party, as a resultof the exercise or non-exercise of such rights, for compliance with Laws orEnvironmental Laws or for the accuracy or sufficiency of any item or thequality or suitability of any item for its intended use.

 

7.03         QUIET ENJOYMENT

 

Landlord covenants, in lieu of any implied covenant ofquiet possession or quiet enjoyment, that so long as Tenant is in compliancewith the covenants and conditions set forth in this Lease, Tenant shall havethe right to quiet enjoyment of the Premises without hindrance or interferencefrom Landlord or those claiming through Landlord, and subject to the covenantsand conditions set forth in the Lease and to the rights of any Mortgagee orground lessor.

 

ARTICLEEIGHT

MAINTENANCE

 

8.01                           LANDLORD’SMAINTENANCE

 

Subject to the provisions of Article Fourteen,Landlord shall maintain and make necessary repairs to the foundations, roofs,exterior walls, and the structural elements of the Building, the electrical,plumbing, heating, ventilating, air-conditioning, mechanical,communication, security and the fire and life safety systems of the Buildingand those corridors, washrooms and lobbies in the Common Areas of the Building,except that:  (a) Landlord shall notbe responsible for the maintenance or repair of any floor or wall coverings inthe Premises or any of such systems which are located within the Premises andare supplemental or special to the Building’s standard systems; and(b) the cost of performing any of said maintenance or repairs whether to thePremises or to the Building caused by the negligence of Tenant, its employees,agents, servants, licensees, subtenants, contractors or invitees, shall be paidby Tenant, subject to the waivers set forth in Section 16.04.  Landlord shall not be liable to Tenant forany expense, injury, loss or damage resulting from work done in or upon, or inconnection with the use of any adjacent or nearby building, land, street oralley.

 

8.02                           TENANTMAINTENANCE

 

Subject to the provisions of Article Fourteen,Tenant, at its expense, shall keep and maintain the Premises and all TenantAdditions in good order, condition and repair and in accordance with all Lawsand Environmental Laws.  Tenant shall notpermit waste and shall promptly and adequately repair all damages to thePremises and replace or repair all damaged or broken glass in the interior ofthe Premises, fixtures or appurtenances. Any repairs or maintenance shall be completed with materials of similarquality to the 

 

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original materials, all such work to be completedunder the supervision of Landlord.  Anysuch repairs or maintenance shall be performed only by contractors or mechanicsapproved by Landlord, which approval shall not be unreasonably withheld, and whosework will not cause or threaten to cause disharmony or interference withLandlord or other tenants in the Building and their respective agents andcontractors performing work in or about the Building.  If Tenant fails to perform any of itsobligations set forth in this Section 8.02, Landlord may, in its solediscretion and upon 24 hours prior notice to Tenant (except without notice inthe case of emergencies), perform the same, and Tenant shall pay to Landlordany costs or expenses incurred by Landlord upon demand.

 

ARTICLE NINE

ALTERATIONS AND IMPROVEMENTS

 

9.01                           TENANTALTERATIONS

 

                (a)           The following provisions shall applyto the completion of any Tenant Alterations:

 

(1)                                  Tenant shall not, except as provided herein, without the prior writtenconsent of Landlord, which consent shall not be unreasonably withheld, make orcause to be made any Tenant Alterations in or to the Premises or any Propertysystems serving the Premises.  Prior tomaking any Tenant Alterations, Tenant shall give Landlord ten (10) days priorwritten notice (or such earlier notice as would be necessary pursuant toapplicable Law) to permit Landlord sufficient time to post appropriate noticesof non-responsibility. Subject to all other requirements of this Article Nine,Tenant may undertake Decoration work without Landlord’s prior writtenconsent.  Tenant shall furnish Landlordwith the names and addresses of all contractors and subcontractors and copiesof all contracts.  All Tenant Alterationsshall be completed at such time and in such manner as Landlord may from time totime designate, and only by contractors or mechanics approved by Landlord,which approval shall not be unreasonably withheld, provided, however, thatLandlord may, in its sole discretion, specify the engineers and contractors toperform all work relating to the Building’s systems (including the mechanical,heating, plumbing, security, ventilating, air-conditioning, electrical,communication and the fire and life safety systems in the Building).  The contractors, mechanics and engineers whomay be used are further limited to those whose work will not cause or threatento cause disharmony or interference with Landlord or other tenants in theBuilding and their respective agents and contractors performing work in or aboutthe Building.  Landlord may furthercondition its consent upon Tenant furnishing to Landlord and Landlord approvingprior to the commencement of any work or delivery of materials to the Premisesrelated to the Tenant Alterations such of the following as specified byLandlord:  architectural plans andspecifications, opinions from Landlord’s engineers stating that the TenantAlterations will not in any way adversely affect the Building’s systems,necessary permits and licenses, certificates of insurance, and such otherdocuments in such form reasonably requested by Landlord.  Landlord may, in the exercise of reasonablejudgment, request that Tenant provide Landlord with appropriate evidence ofTenant’s ability to complete and pay for the completion of the TenantAlterations such as a performance bond or letter of credit.  Upon completion of the Tenant Alterations,Tenant shall deliver to Landlord an as-built mylar and digitized (if available)set of plans and specifications for the Tenant Alterations.

 

(2)                                  Tenant shall pay the cost of all Tenant Alterations and the cost ofdecorating the Premises and any work to the Property occasioned thereby.  In connection with completion of any TenantAlterations, Tenant shall pay Landlord a construction fee at Landlord’s thenstandard rate.  Upon completion of TenantAlterations, Tenant shall furnish Landlord with contractors’ affidavits andfull and final waivers of lien and receipted bills covering all labor andmaterials expended and used in connection therewith and such otherdocumentation reasonably requested by Landlord or Mortgagee.

 

(3)                                  Tenant agrees to complete all Tenant Alterations (i) in accordancewith all Laws, Environmental Laws, all requirements of applicable insurancecompanies and in accordance with Landlord’s standard construction rules andregulations, and (ii) in a good and workmanlike manner with the use ofgood grades of materials.  Tenant shallnotify Landlord immediately if Tenant receives any notice of violation of anyLaw in connection with completion of any Tenant Alterations and shallimmediately take such steps as are necessary to remedy such violation.  In no event shall such supervision or rightto supervise by Landlord nor shall any approvals given by Landlord under thisLease constitute any warranty by Landlord to Tenant of the adequacy of thedesign, workmanship or quality of such work or materials for Tenant’s intendeduse or of compliance with the requirements of Section 9.01(a)(3)(i) and (ii)above or impose any liability upon Landlord in connection with the performanceof such work.

 

                (b)           Except for personal property andtrade fixtures, all Tenant Additions whether installed by Landlord or Tenant,shall without compensation or credit to Tenant, become part of the Premises andthe property of Landlord at the time of their installation and shall remain inthe Premises, unless pursuant to Article Twelve, Tenant may remove them oris required to remove them at Landlord’s request.

 

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9.02                           LIENS

 

Tenant shall not permit any lien or claim for lien ofany mechanic, laborer or supplier or any other lien to be filed against theBuilding, the Land, the Premises, or any other part of the Property arising outof work performed, or alleged to have been performed by, or at the directionof, or on behalf of Tenant.  If any suchlien or claim for lien is filed, Tenant shall within ten (10) days of receivingnotice of such lien or claim (a) have such lien or claim for lien releasedof record or (b) deliver to Landlord  a bond in form, content,amount, and issued by surety, satisfactory to Landlord, indemnifying,protecting, defending and holding harmless the Indemnitees against all costsand liabilities resulting from such lien or claim for lien and theforeclosure or attempted foreclosure thereof. If Tenant fails to take any of the above actions, Landlord, in additionto its rights and remedies under Article Eleven, without investigating thevalidity of such lien or claim for lien, may pay or discharge the same andTenant shall, as payment of additional Rent hereunder, reimburse Landlord upondemand for the amount so paid by Landlord, including Landlord’s expenses andattorneys’ fees.

 

ARTICLE TEN

ASSIGNMENT AND SUBLETTING

 

10.01       ASSIGNMENT AND SUBLETTING

 

                (a)           Without the prior written consent ofLandlord, which may be withheld in Landlord’s sole discretion, Tenant may notsublease, assign, mortgage, pledge, hypothecate or otherwise transfer or permitthe transfer of this Lease or the encumbering of Tenant’s interest therein inwhole or in part, by operation of Law or otherwise or permit the use oroccupancy of the Premises, or any part thereof, by anyone other than Tenant,provided, however, if Landlord chooses not to recapture the space proposed tobe subleased or assigned as provided in Section 10.02, Landlord shall notunreasonably withhold its consent to a subletting or assignment under thisSection 10.01. Tenant agrees that the provisions governing sublease andassignment set forth in this Article Ten shall be deemed to be reasonable.  If Tenant desires to enter into any subleaseof the Premises or assignment of this Lease, Tenant shall deliver writtennotice thereof to Landlord (“Tenant’s Notice”), together with the identity ofthe proposed subtenant or assignee and the proposed principal terms thereof andfinancial and other information sufficient for Landlord to make an informedjudgment with respect to such proposed subtenant or assignee at least thirty(30) days prior to the commencement date of the term of the proposed subleaseor assignment.  If Tenant proposes tosublease less than all of the Rentable Area of the Premises, the space proposedto be sublet and the space retained by Tenant must each be a marketable unit asreasonably determined by Landlord and otherwise in compliance with allLaws.  Landlord shall notify Tenant inwriting of its approval or disapproval of the proposed sublease or assignmentor its decision to exercise its rights under Section 10.02 within fifteen (15)days after receipt of Tenant’s Notice (and all required information).  In no event may Tenant sublease any portionof the Premises or assign the Lease to any other tenant of the Building.  Tenant shall submit for Landlord’s approval(which approval shall not be unreasonably withheld) any advertising whichTenant or its agents intend to use with respect to the space proposed to besublet.

 

                (b)           With respect to Landlord’s consent toan assignment or sublease, Landlord may take into consideration any factorswhich Landlord may deem relevant, and the reasons for which Landlord’s denialshall be deemed to be reasonable shall include, without limitation, thefollowing:

 

                                                (i)            the businessreputation or creditworthiness of any proposed subtenant or assignee is notacceptable to Landlord; or

 

                                                (ii)           in Landlord’sreasonable judgment the proposed assignee or subtenant would diminish the valueor reputation of the Building or Landlord; or

 

                                                (iii)          any proposed assignee’sor subtenant’s use of the Premises would violate Section 7.01 of the Lease orwould violate the provisions of any other leases of tenants in the Project;

 

                                                (iv)          the proposed assigneeor subtenant is either a governmental agency, a school or similar operation, ora medical related practice; or

 

                                                (v)           the proposed subtenantor assignee is a bona fide prospective tenant of Landlord in the Project asdemonstrated by a written proposal dated within ninety (90) days prior to thedate of Tenant’s request; or

 

                                                (vi)          the proposed subtenantor assignee would materially increase the estimated pedestrian and vehiculartraffic to and from the Premises and the Building.

 

In no event shall Landlord be obligated to consider aconsent to any proposed assignment of the Lease which would assign less thanthe entire Premises.  In the eventLandlord wrongfully withholds its consent to any proposed sublease of thePremises or assignment of the Lease, Tenant’s sole and exclusive remedytherefor shall be to seek specific performance of Landlord’s obligations toconsent to such sublease or assignment.

 

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                (c)           Any sublease or assignment shall beexpressly subject to the terms and conditions of this Lease.  Any subtenant or assignee shall execute suchdocuments as Landlord may reasonably require to evidence such subtenant orassignee’s assumption of the obligations and liabilities of Tenant under thisLease.  Tenant shall deliver to Landlorda copy of all agreements executed by Tenant and the proposed subtenant andassignee with respect to the Premises. Landlord’s approval of a sublease, assignment, hypothecation, transferor third party use or occupancy shall not constitute a waiver of Tenant’sobligation to obtain Landlord’s consent to further assignments or subleases,hypothecations, transfers or third party use or occupancy.

 

                (d)           Forpurposes of this Article Ten, an assignment shall be considered to includea change in the majority ownership or control of Tenant unless Tenant is acorporation whose stock is traded publicly.

 

                Notwithstanding the foregoing, any sublease of thePremises or assignment of this Lease to (i) a parent or affiliate of Tenant,(ii) an entity resulting from the merger or consolidation of Tenant with athird party, or (iii) an entity purchasing all or substantially all of theassets of Tenant, shall not require the consent of Landlord, provided that theentity to whom the Premises are subleased or the Lease is assigned delivers toLandlord a written assumption of all duties, obligations of Tenant under thisLease.

 

                (e)           Notwithstanding anything to thecontrary contained in this Article Ten and provided there is no uncured defaultunder this Lease, Tenant shall have the right, without the prior writtenconsent of Landlord, to assign this Lease to an Affiliate or to sublease thePremises or any part thereof to an Affiliate, but (i) no later than fifteen(15) days prior to the effective date of the assignment or sublease, theassignee shall execute documents satisfactory to Landlord to evidence suchassignee’s assumption of the obligations and liabilities of Tenant under thisLease, unless Landlord modifies or waives such requirement in the case of anyassignment which occurs by operation of law (and without a written assignment)as a consequence of merger, consolidation or non-bankruptcy reorganization, andthe subtenant shall execute documents satisfactory to Landlord to evidence thatthe sublease is subject to the terms and conditions of this Lease and that thesubtenant shall perform and be bound by all the terms and conditions of thisLease (except payment of Monthly Base Rent and Rent Adjustments hereunder andother obligations which the sublease expressly provides are to be performed byTenant as the sublessor) to the extent applicable to the space and periodcovered by the sublease; (ii) within ten (10) days after the effective date ofsuch assignment or sublease, give notice to Landlord which notice shall includethe full name and address of the assignee or subtenant, and a copy of allagreements executed between Tenant and the assignee or subtenant with respectto the Premises or part thereof, as may be the case; and (iii) within fifteen(15) days after Landlord’s written request, provide such reasonable documentsor information which Landlord reasonably requests for the purpose of substantiatingwhether or not the assignment or sublease is to an Affiliate.

 

10.02       RECAPTURE

 

Except as provided in Section 10.01(e) Landlord shallhave the option to exclude from the Premises covered by this Lease (“recapture”),the space proposed to be sublet or subject to the assignment, effective as ofthe proposed commencement date of such sublease or assignment.  If Landlord elects to recapture, Tenant shallsurrender possession of the space proposed to be subleased or subject to theassignment to Landlord on the effective date of recapture of such space fromthe Premises, such date being the Termination Date for such space.  Effective as of the date of recapture of anyportion of the Premises pursuant to this section, the Monthly Base Rent,Rentable Area of the Premises and Tenant’s Share shall be adjusted accordingly.

 

10.03       EXCESS RENT

 

Tenant shall pay Landlord on the first day of eachmonth during the term of the sublease or assignment, fifty percent (50%) of theamount by which the sum of all rent and other consideration (direct orindirect) due from the subtenant or assignee for such month exceeds: (i) thatportion of the Monthly Base Rent and Rent Adjustments due under this Lease forsaid month which is allocable to the space sublet or assigned; and (ii) thefollowing costs and expenses for the subletting or assignment of such space:(1) brokerage commissions and attorneys’ fees and expenses; (2) the actualcosts paid in making any improvements or substitutions in the Premises requiredby any sublease or assignment; and (3) “free rent” periods, costs of anyinducements or concessions given to subtenant or assignee, moving costs, andother amounts in respect of such subtenant’s or assignee’s other leases oroccupancy arrangements.  All such costsand expenses shall be amortized over the term of the sublease or assignmentpursuant to sound accounting principles.

 

10.04       TENANT LIABILITY

 

In the event of any sublease or assignment, whether ornot with Landlord’s consent, Tenant shall not be released or discharged fromany liability, whether past, present or future, under this Lease, including anyliability arising from the exercise of any renewal or expansion option, to theextent such exercise is expressly permitted by Landlord.  Tenant’s liability shall remain primary, andin the event of default by any subtenant, assignee or successor of Tenant inperformance or observance of any of the covenants or conditions of this Lease,Landlord may proceed directly against Tenant without the necessity ofexhausting 

 

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remedies against said subtenant, assignee orsuccessor.  After any assignment,Landlord may consent to subsequent assignments or subletting of this Lease, oramendments or modifications of this Lease with assignees of Tenant, withoutnotifying Tenant, or any successor of Tenant, and without obtaining its ortheir consent thereto, and such action shall not relieve Tenant or anysuccessor of Tenant of liability under this Lease.  If Landlord grants consent to such subleaseor assignment, Tenant shall pay all reasonable attorneys’ fees and expensesincurred by Landlord with respect to such assignment or sublease.  In addition, if Tenant has any options toextend the term of this Lease or to add other space to the Premises, suchoptions shall not be available to any subtenant or assignee, directly orindirectly without Landlord’s express written consent, which may be withheld inLandlord’s sole discretion.

 

10.05       ASSUMPTION AND ATTORNMENT

 

If Tenant shall assign this Lease as permitted herein,the assignee shall expressly assume all of the obligations of Tenant hereunderin a written instrument satisfactory to Landlord and furnished to Landlord notlater than fifteen (15) days prior to the effective date of the assignment.  If Tenant shall sublease the Premises aspermitted herein, Tenant shall, at Landlord’s option, within fifteen (15) daysfollowing any request by Landlord, obtain and furnish to Landlord the writtenagreement of such subtenant to the effect that the subtenant will attorn toLandlord and will pay all subrent directly to Landlord.

 

ARTICLE ELEVEN

DEFAULT AND REMEDIES

 

11.01                     EVENTS OFDEFAULT

 

The occurrence or existence of any one or more of thefollowing shall constitute a “Default” by Tenant under this Lease:

 

                                                                (i)            Tenant fails to pay any installmentor other payment of Rent including Rent Adjustment Deposits or Rent Adjustmentswithin three (3) days after the date when due;

 

                                                                (ii)           Tenant fails to observe or performany of the other covenants, conditions or provisions of this Lease or theWorkletter and fails to cure such default within thirty (30) days afterwritten notice thereof to Tenant, unless the default involves a hazardouscondition, which shall be cured forthwith or unless the failure to perform is aDefault for which this Lease specifies there is no cure or grace period;

 

                                                                (iii)          the interest of Tenant in this Lease islevied upon under execution or other legal process;

 

                                                                (iv)          a petition is filed by or againstTenant to declare Tenant bankrupt or seeking a plan of reorganization orarrangement under any Chapter of the Bankruptcy Act, or any amendment,replacement or substitution therefor, or to delay payment of, reduce or modifyTenant’s debts, which in the case of an involuntary action is not dischargedwithin thirty (30) days;

 

                                                                (v)           Tenant is declared insolvent by Lawor any assignment of Tenant’s property is made for the benefit of creditors;

 

                                                                (vi)          a receiver is appointed for Tenant orTenant’s property, which appointment is not discharged within thirty (30) days;

 

                                                                (vii)         any action taken by or against Tenantto reorganize or modify Tenant’s capital structure in a materially adverse waywhich in the case of an involuntary action is not discharged within thirty (30)days;

 

                                                                (viii)        upon the dissolution of Tenant;

 

                                                                (ix)           upon the third occurrence within anyLease Year that Tenant fails to pay Rent when due or has breached a particularcovenant of this Lease (whether or not such failure or breach is thereaftercured within any stated cure or grace period or statutory period);

 

                                                                (x)            any vacation or abandonment of thePremises by Tenant;

 

                                                                (xi)           any warranty, representation orstatement made or furnished by Tenant to Landlord at any time in connectionwith this Lease or any other agreement to which Tenant and Landlord are partiesis determined to have been false or misleading in any material respect whenmade or furnished; or

 

                                                                (xii)          Tenant makes any sublease, assignment,mortgage, pledge, hypothecation or other transfer, or permit any transfer ofthis Lease or encumbering of Tenant’s interest, or permit the use or occupancyof the Premises or any part thereof in violation of Article Ten.

 

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11.02                     LANDLORD’SREMEDIES

 

                (a)           A Default shall constitute a breachof the Lease for which Landlord shall have the rights and remedies set forth inthis Section 11.02 and all other rights and remedies set forth in this Lease ornow or hereafter allowed by Law, whether legal or equitable, and all rights andremedies of Landlord shall be cumulative and none shall exclude any other rightor remedy.

 

                (b)           With respect to a Default, at anytime Landlord may terminate Tenant’s right to possession by written notice toTenant stating such election.  Anywritten notice required pursuant to Section 11.01 shall constitute notice ofunlawful detainer pursuant to California Code of Civil Procedure Section 1161if, at Landlord’s sole discretion, it states Landlord’s election that Tenant’sright to possession is terminated after expiration of any period required byLaw or any longer period required by Section 11.01.  Upon the expiration of the period stated inLandlord’s written notice of termination (and unless such notice provides anoption to cure within such period and Tenant cures the Default within suchperiod), Tenant’s right to possession shall terminate and this Lease shallterminate, and Tenant shall remain liable as hereinafter provided.  Upon such termination in writing of Tenant’sright to possession, Landlord shall have the right, subject to applicable Law,to re-enter the Premises and dispossess Tenant and the legal representatives ofTenant and all other occupants of the Premises by unlawful detainer or othersummary proceedings, or otherwise as permitted by Law, regain possession of thePremises and remove their property (including their trade fixtures, personalproperty and those Tenant Additions which Tenant is required or permitted toremove under Article Twelve), but Landlord shall not be obligated to effectsuch removal, and such property may, at Landlord’s option, be stored elsewhere,sold or otherwise dealt with as permitted by Law, at the risk of, expense ofand for the account of Tenant, and the proceeds of any sale shall be appliedpursuant to Law.  Landlord shall in noevent be responsible for the value, preservation or safekeeping of any suchproperty.  Tenant hereby waives allclaims for damages that may be caused by Landlord’s removing or storing Tenant’spersonal property pursuant to this Section or Section 12.01, and Tenant herebyindemnifies, and agrees to defend, protect and hold harmless, the Indemniteesfrom any and all loss, claims, demands, actions, expenses, liability and cost(including attorneys’ fees and expenses) arising out of or in any way relatedto such removal or storage.  Upon suchwritten termination of Tenant’s right to possession and this Lease, Landlordshall have the right to recover damages for Tenant’s Default as provided hereinor by Law, including the following damages provided by California Civil CodeSection 1951.2:

 

                                                                (1) the worth at thetime of award of the unpaid Rent which had been earned at the time oftermination;

 

                                                                (2) the worth at thetime of award of the amount by which the unpaid Rent which would have been earnedafter termination until the time of award exceeds the amount of such Rent lossthat Tenant proves could reasonably have been avoided;

 

                                                                (3) the worth at thetime of award of the amount by which the unpaid Rent for the balance of theterm of this Lease after the time of award exceeds the amount of such Rent lossthat Tenant proves could be reasonably avoided; and

 

                                                                (4) any other amountnecessary to compensate Landlord for all the detriment proximately caused byTenant’s failure to perform its obligations under this Lease or which in theordinary course of things would be likely to result therefrom.  The word “rent” as used in this Section 11.02shall have the same meaning as the defined term Rent in this Lease.  The “worth at the time of award” of theamount referred to in clauses (1) and (2) above is computed by allowinginterest at the Default Rate.  The worthat the time of award of the amount referred to in clause (3) above is computedby discounting such amount at the discount rate of the Federal Reserve Bank ofSan Francisco at the time of award plus one percent (1%).  For the purpose of determining unpaid Rentunder clause (3) above, the monthly Rent reserved in this Lease shall be deemedto be the sum of the Monthly Base Rent, monthly storage space rent (if any),and the amounts last payable by Tenant as Rent Adjustments for the calendaryear in which Landlord terminated this Lease as provided hereinabove.

 

                (c)           Even if Tenant is in Default and/orhas abandoned the Premises, this Lease shall continue in effect for so long asLandlord does not terminate Tenant’s right to possession by written notice asprovided in Section 11.02(b) above, and Landlord may enforce all its rights andremedies under this Lease, including the right to recover Rent as it becomesdue under this Lease.  In such event,Landlord shall have all of the rights and remedies of a landlord underCalifornia Civil Code Section 1951.4 (lessor may continue Lease in effect afterTenant’s Default and abandonment and recover Rent as it becomes due, if Tenanthas the right to sublet or assign, subject only to reasonable limitations), orany successor statute.  During such timeas Tenant is in Default, if Landlord has not terminated this Lease by writtennotice and if Tenant requests Landlord’s consent to an assignment of this Leaseor a sublease of the Premises, subject to Landlord’s option to recapturepursuant to Section 10.02, Landlord shall not unreasonably withhold its consentto such assignment or sublease.  Tenantacknowledges and agrees that the provisions of Article Ten shall be deemed toconstitute reasonable limitations of Tenant’s right to assign or sublet.  Tenant acknowledges and agrees that in theabsence of written notice pursuant to Section 11.02(b) above terminating Tenant’sright to possession, no other act of Landlord shall constitute a termination ofTenant’s right to possession or an acceptance of Tenant’s surrender of thePremises,

 

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including acts of maintenance or preservation orefforts to relet the Premises or the appointment of a receiver upon initiativeof Landlord to protect Landlord’s interest under this Lease or the withholdingof consent to a subletting or assignment, or terminating a subletting orassignment, if in accordance with other provisions of this Lease.

 

                (d)           In the event that Landlord seeks aninjunction with respect to a breach or threatened breach by Tenant of any ofthe covenants, conditions or provisions of this Lease, Tenant agrees to pay thepremium for any bond required in connection with such injunction.

 

                (e)           Tenant hereby waives any and allrights to relief from forfeiture, redemption or reinstatement granted by Law(including California Civil Code of Procedure Sections 1174 and 1179) in the eventof Tenant being evicted or dispossessed for any cause or in the event ofLandlord obtaining possession of the Premises by reason of Tenant’s Default orotherwise.

 

                (f)            When this Lease requires giving orservice of a notice, that notice shall replace rather than supplement anyequivalent or similar statutory notice, including any equivalent or similarnotices required by California Code of Civil Procedure Section 1161 or anysimilar or successor statute.  When a statuterequires service of a notice in a particular manner, service of that notice (ora similar notice required by this Lease) in the manner required by ArticleTwenty-four shall replace and satisfy the statutory service—of—noticeprocedures, including those required by Code of Civil Procedure section 1162 orany similar or successor statute.

 

                (g)           The voluntary or other surrender ortermination of this Lease, or a mutual termination or cancellation thereof,shall not work a merger and shall terminate all or any existing assignments,subleases, subtenancies or occupancies permitted by Tenant, except if and asotherwise specified in writing by Landlord.

 

                (h)           No delay or omission in the exerciseof any right or remedy of Landlord upon any default by Tenant, and no exerciseby Landlord of its rights pursuant to Section 26.15 to perform any duty whichTenant fails timely to perform, shall impair any right or remedy or beconstrued as a waiver.  No provision ofthis Lease shall be deemed waived by Landlord unless such waiver is in awriting signed by Landlord.  The waiverby Landlord of any breach of any provision of this Lease shall not be deemed awaiver of any subsequent breach of the same or any other provision of thisLease.

 

11.03                     ATTORNEY’SFEES

 

In the event any party brings any suit or other proceedingwith respect to the subject matter or enforcement of this Lease, the prevailingparty (as determined by the court, agency or other authority before which suchsuit or proceeding is commenced) shall, in addition to such other relief as maybe awarded, be entitled to recover attorneys’ fees, expenses and costs ofinvestigation as actually incurred, including court costs, expert witness fees,costs and expenses of investigation, and all attorneys’ fees, costs andexpenses in any such suit or proceeding (including in any action orparticipation in or in connection with any case or proceeding under theBankruptcy Code, 11 United States Code Sections 101 et seq., or anysuccessor statutes, in establishing or enforcing the right to indemnification,in appellate proceedings, or in connection with the enforcement or collectionof any judgment obtained in any such suit or proceeding).

 

11.04       BANKRUPTCY

 

The following provisions shall apply in the event ofthe bankruptcy or insolvency of Tenant:

 

                (a)           In connection with any proceedingunder Chapter 7 of the Bankruptcy Code where the trustee of Tenant electsto assume this Lease for the purposes of assigning it, such election orassignment, may only be made upon compliance with the provisions of (b) and (c)below, which conditions Landlord and Tenant acknowledge to be commerciallyreasonable.  In the event the trusteeelects to reject this Lease then Landlord shall immediately be entitled topossession of the Premises without further obligation to Tenant or the trustee.

 

                (b)           Any election to assume this Leaseunder Chapter 11 or 13 of the Bankruptcy Code by Tenant as debtor-in-possessionor by Tenant’s trustee (the “Electing Party”) must provide for:

 

                                                The Electing Party to cure or provide to Landlord adequate assurance thatit will cure all monetary defaults under this Lease within fifteen (15) daysfrom the date of assumption and it will cure all nonmonetary defaults underthis Lease within thirty (30) days from the date of assumption.  Landlord and Tenant acknowledge suchcondition to be commercially reasonable.

 

                (c)           If the Electing Party has assumedthis Lease or elects to assign Tenant’s interest under this Lease to any otherperson, such interest may be assigned only if the intended assignee hasprovided adequate assurance of future performance (as herein defined), of allof the obligations imposed on Tenant under this Lease.

 

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                                                For the purposes hereof, “adequate assurance of future performance” meansthat Landlord has ascertained that each of the following conditions has beensatisfied:

 

                                                                (i)  The assignee has submitted a currentfinancial statement, certified by its chief financial officer, which shows anet worth and working capital in amounts sufficient to assure the futureperformance by the assignee of Tenant’s obligations under this Lease; and

 

                                                                (ii)  Landlord has obtained consents or waiversfrom any third parties which may be required under a lease, mortgage, financingarrangement, or other agreement by which Landlord is bound, to enable Landlordto permit such assignment.

 

                (d)           Landlord’s acceptance of Rent or anyother payment from any trustee, receiver, assignee, person, or other entitywill not be deemed to have waived, or waive, the requirement of Landlord’sconsent, Landlord’s right to terminate this Lease for any transfer of Tenant’sinterest under this Lease without such consent, or Landlord’s claim for anyamount of Rent due from Tenant.

 

11.05           LANDLORD’S DEFAULT

 

Landlord shall be in default hereunder in the event Landlordhas not begun and pursued with reasonable diligence the cure of any failure ofLandlord to meet its obligations hereunder within thirty (30) days after thereceipt by Landlord of written notice from Tenant of the alleged failure toperform. In no event shall Tenant have the right to terminate or rescind thisLease as a result of Landlord’s default as to any covenant or agreementcontained in this Lease. Tenant hereby waives such remedies of termination andrescission and hereby agrees that Tenant’s remedies for default hereunder andfor breach of any promise or inducement shall be limited to a suit for damagesand/or injunction. In addition, Tenant hereby covenants that, prior to theexercise of any such remedies, it will give the Mortgagee notice and areasonable time to cure any default by Landlord.

ARTICLE TWELVE

SURRENDER OF PREMISES

 

12.01       IN GENERAL

 

Upon the Termination Date, Tenant shall surrender andvacate the Premises immediately and deliver possession thereof to Landlord in aclean, good and tenantable condition, ordinary wear and tear, and damage causedby Landlord excepted.  Tenant shalldeliver to Landlord all keys to the Premises. Tenant shall remove from the Premises all movable personal property ofTenant and Tenant’s trade fixtures, including, subject to Section 6.02, cablingfor any of the foregoing.  Tenant shallbe entitled to remove such Tenant Additions which at the time of theirinstallation Landlord and Tenant agreed may be removed by Tenant.  Tenant shall also remove such other TenantAdditions as required by Landlord, including any Tenant Additions containingHazardous Material.  Tenant immediatelyshall repair all damage resulting from removal of any of Tenant’s property,furnishings or Tenant Additions, shall close all floor, ceiling and roofopenings and shall restore the Premises to a tenantable condition as reasonablydetermined by Landlord.  If any of theTenant Additions which were installed by Tenant involved the lowering ofceilings, raising of floors or the installation of specialized wall or floorcoverings or lights, then Tenant shall also be obligated to return suchsurfaces to their condition prior to the commencement of this Lease.   Tenant shall also be required to close anystaircases or other openings between floors. In the event possession of thePremises is not delivered to Landlord when required hereunder, or if Tenantshall fail to remove those items described above, Landlord may (but shall notbe obligated to), at Tenant’s expense, remove any of such property and store,sell or otherwise deal with such property as provided in Section 11.02(b),including the waiver and indemnity obligations provided in that Section, andundertake, at Tenant’s expense, such restoration work as Landlord deemsnecessary or advisable.

 

12.02       LANDLORD’S RIGHTS

 

All property which may be removed from the Premises byLandlord shall be conclusively presumed to have been abandoned by Tenant andLandlord may deal with such property as provided in Section 11.02(b), includingthe waiver and indemnity obligations provided in that Section.  Tenant shall also reimburse Landlord for allcosts and expenses incurred by Landlord in removing any of Tenant Additions andin restoring the Premises to the condition required by this Lease at theTermination Date.

 

ARTICLETHIRTEEN

HOLDING OVER

 

Tenant shall pay Landlord one hundred and fiftypercent (150%) of the fair market rental value of the Premises as reasonablydetermined by Landlord for each month or portion thereof that Tenant retainspossession of the Premises, or any portion thereof, after the Termination Date(without reduction for any partial month that Tenant retains possession).  Tenant shall also pay all damages sustainedby Landlord by reason of such retention of possession.  The provisions of this Article shall notconstitute a waiver by Landlord of any re-entry rights of Landlord andTenant’s continued occupancy of the Premises shall be as a tenancy insufferance.

 

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ARTICLE FOURTEEN

DAMAGE BY FIRE OR OTHER CASUALTY

 

14.01                     SUBSTANTIALUNTENANTABILITY

 

                (a)           If any fire or other casualty(whether insured or uninsured) renders all or a substantial portion of thePremises or the Building untenantable, Landlord shall, with reasonablepromptness after the occurrence of such damage, estimate the length of timethat will be required to substantially complete the repair and restoration andshall by notice advise Tenant of such estimate (“Landlord’s Notice”).  If Landlord estimates that the amount of timerequired to substantially complete such repair and restoration will exceed oneyear from the date such damage occurred, then Landlord, or Tenant if all or asubstantial portion of the Premises is rendered untenantable, shall have theright to terminate this Lease as of the date of such damage upon giving writtennotice to the other at any time within twenty (20) days after delivery ofLandlord’s Notice, provided that if Landlord so chooses, Landlord’s Notice mayalso constitute such notice of termination. Further, in the event that the Building is damaged or destroyed to theextent of more than twenty-five percent (25%) of its replacement cost or to anyextent if no insurance proceeds or insufficient insurance proceeds are receivableby Landlord, Landlord may elect by written notice to Tenant given within thirty(30) days after the occurrence of the casualty to terminate this Lease in lieuof so restoring the Premises and Building, in which event this Lease shallterminate as of the date of such damage.

 

                (b)           Unless this Lease is terminated asprovided in the preceding subparagraph, Landlord shall proceed with reasonablepromptness to repair and restore the Premises to its condition as existed priorto such casualty, subject to reasonable delays for insurance adjustments andForce Majeure delays, and also subject to zoning Laws and building codes thenin effect.  Landlord shall have noliability to Tenant, and Tenant shall not be entitled to terminate this Leaseif such repairs and restoration are not in fact completed within the timeperiod estimated by Landlord so long as Landlord shall proceed with reasonablediligence to complete such repairs and restoration.

 

                (c)           Tenant acknowledges that Landlordshall be entitled to the full proceeds of any insurance coverage, whethercarried by Landlord or Tenant, for damages to the Premises, except for thoseproceeds of Tenant’s insurance of its own personal property and equipment whichwould be removable by Tenant at the Termination Date.  All such insurance proceeds shall be payableto Landlord whether or not the Premises are to be repaired and restored,provided, however, if this Lease is not terminated and the parties proceed torepair and restore Tenant Additions at Tenant’s cost, to the extent Landlordreceived proceeds of Tenant’s insurance covering Tenant Additions, suchproceeds shall be applied to reimburse Tenant for its cost of repairing andrestoring Tenant Additions.

 

                (d)           Notwithstanding anything to thecontrary herein set forth: (i) Landlord shall have no duty pursuant to this Section to repairor restore any portion of any Tenant Additions or to expend for any repair orrestoration of the Premises or Building amounts in excess of insurance proceedspaid to Landlord and available for repair or restoration; and (ii) Tenantshall not have the right to terminate this Lease pursuant to this Section ifany damage or destruction was caused by the act or neglect of Tenant, its agentor employees.  Whether or not the Leaseis terminated pursuant to this Article Fourteen, in no event shall Tenant beentitled to any compensation or damages for loss of the use of the whole or anypart of the Premises or for any inconvenience or annoyance occasioned by anysuch damage, destruction, rebuilding or restoration of the Premises or theBuilding or access thereto.

 

                (e)           Any repair or restoration of thePremises performed by Tenant shall be in accordance with the provisions ofArticle Nine hereof.

 

14.02       INSUBSTANTIAL UNTENANTABILITY

 

If the Premises or the Building is damaged by acasualty but neither is rendered substantially untenantable and Landlordestimates that the time to substantially complete the repair or restorationwill not exceed one hundred eighty (180) days from the date such damage occurred,then Landlord shall proceed to repair and restore the Building or the Premisesother than Tenant Additions, with reasonable promptness, unless such damage isto the Premises and occurs during the last six (6) months of the Term, in whichevent either Tenant or Landlord shall have the right to terminate this Lease asof the date of such casualty by giving written notice thereof to the otherwithin twenty (20) days after the date of such casualty.  Notwithstanding the foregoing, Landlord’sobligation to repair shall be limited in accordance with the provisions ofSection 14.01 above.

 

14.03                     RENTABATEMENT

 

Except for the negligence or willful act of Tenant orits agents, employees, contractors or invitees, if all or any part of thePremises are rendered untenantable by fire or other casualty and this Lease isnot terminated, Monthly Base Rent and Rent Adjustments shall abate for thatpart of the Premises which is untenantable on a per diem basis fromthe date of the casualty until Landlord has Substantially Completed therepair and restoration work in the Premises which it is required to perform,provided, that as a result of such casualty, Tenant does not occupy the portionof the Premises which is untenantable during such period.

 

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14.04       WAIVER OF STATUTORY REMEDIES

 

The provisions of this Lease, including thisArticle Fourteen, constitute an express agreement between Landlord andTenant with respect to any and all damage to, or destruction of, the Premisesor the Property or any part of either, and any Law, includingSections 1932(2), 1933(4), 1941 and 1942 of the California Civil Code,with respect to any rights or obligations concerning damage or destructionshall have no application to this Lease or to any damage to or destruction ofall or any part of the Premises or the Property or any part of either, and arehereby waived.

 

ARTICLEFIFTEEN

EMINENT DOMAIN

 

15.01                     TAKING OFWHOLE OR SUBSTANTIAL PART

 

In the event the whole or any substantial part of theBuilding or of the Premises is taken or condemned by any competent authorityfor any public use or purpose (including a deed given in lieu of condemnation)and is thereby rendered untenantable, this Lease shall terminate as of the datetitle vests in such authority, and Monthly Base Rent and Rent Adjustments shallbe apportioned as of the Termination Date. Notwithstanding anything to the contrary herein set forth, in the eventthe taking is temporary (for less than the remaining term of the Lease), Landlordmay elect either (i) to terminate this Lease or (ii) permit Tenant to receivethe entire award attributable to the Premises in which case Tenant shallcontinue to pay Rent and this Lease shall not terminate.

 

15.02                     TAKING OFPART

 

In the event a part of the Building or the Premises istaken or condemned by any competent authority (or a deed is delivered in lieuof condemnation) and this Lease is not terminated, the Lease shall be amendedto reduce or increase, as the case may be, the Monthly Base Rent and Tenant’sShare to reflect the Rentable Area of the Premises or Building, as the case maybe, remaining after any such taking or condemnation.  Landlord, upon receipt and to the extent ofthe award in condemnation (or proceeds of sale) shall make necessary repairsand restorations to the Premises (exclusive of Tenant Additions) and to theBuilding to the extent necessary to constitute the portion of the Building notso taken or condemned as a complete architectural and economically efficientunit.  Notwithstanding the foregoing, ifas a result of any taking, or a governmental order that the grade of any streetor alley adjacent to the Building is to be changed and such taking or change ofgrade makes it necessary or desirable to substantially remodel or restore theBuilding or prevents the economical operation of the Building, Landlord shallhave the right to terminate this Lease upon ninety (90) days prior writtennotice to Tenant.

 

15.03       COMPENSATION

 

Landlord shall be entitled to receive the entire award(or sale proceeds) from any such taking, condemnation or sale without anypayment to Tenant, and Tenant hereby assigns to Landlord Tenant’s interest, ifany, in such award; provided, however, Tenant shall have the right separatelyto pursue against the condemning authority a separate award in respect of theloss, if any, to Tenant Additions paid for by Tenant without any credit orallowance from Landlord so long as there is no diminution of Landlord’s awardas a result.

 

ARTICLESIXTEEN

INSURANCE

 

16.01       TENANT’S INSURANCE

 

Tenant, at Tenant’s expense, agrees to maintain inforce, with a company or companies acceptable to Landlord, during the Term:(a) Commercial General Liability Insurance on a primary basis and withoutany right of contribution from any insurance carried by Landlord covering thePremises on an occurrence basis against all claims for personal injury, bodilyinjury, death and property damage, including contractual liability covering theindemnification provisions in this Lease. Such insurance shall be for such limits that are reasonably required byLandlord from time to time but not less than a combined single limit of TwoMillion Dollars ($2,000,000.00); (b) Workers’ Compensation and Employers’Liability Insurance to the extent required by and in accordance with the Lawsof the State of California; (c) “All Risks” property insurance in an amountadequate to cover the full replacement cost of all Tenant Additions, equipment,installations, fixtures and contents of the Premises in the event of loss; and(d) business interruption or loss of income insurance in an amount equal to theMonthly Base Rent for a period of at least one year commencing with the date ofloss (and the proceeds of such insurance shall be paid to Landlord to theextent of any abatement of Rent under the Lease).

 

16.02       FORM OF POLICIES

 

Each policy referred to in 16.01 shall satisfy thefollowing requirements.  Each policyshall (i) name Landlord and the Indemnitees as additional insureds (exceptWorkers’ Compensation and Employers’ Liability Insurance), (ii) be issued byone or more responsible insurance companies licensed to do 

 

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business in the State of California reasonablysatisfactory to Landlord, (iii) where applicable, provide for deductibleamounts satisfactory to Landlord and not permit co-insurance, (iv) shallprovide that such insurance may not be canceled or amended without thirty (30)days’ prior written notice to the Landlord, and (v) each policy of “All-Risks”property insurance shall provide that the policy shall not be invalidatedshould the insured waive in writing prior to a loss, any or all rights ofrecovery against any other party for losses covered by such policies.  Tenant shall deliver to Landlord, certificatesof insurance and at Landlord’s request, copies of all policies and renewalsthereof to be maintained by Tenant hereunder, not less than ten (10) days priorto the Commencement Date and not less than ten (10) days prior to theexpiration date of each policy.

 

16.03       LANDLORD’S INSURANCE

 

Landlord agrees to purchase and keep in full force andeffect during the Term hereof, including any extensions or renewals thereof,insurance under policies issued by insurers of recognized responsibility,qualified to do business in the State of California on the Building in amountsnot less than the greater of eighty (80%) percent of the then full replacementcost (without depreciation) of the Building (above foundations and excludingTenant Additions) or an amount sufficient to prevent Landlord from becoming aco-insurer under the terms of the applicable policies, against fire and suchother risks as may be included in standard forms of all risk coverage insurancereasonably available from time to time. Landlord agrees to maintain in force during the Term, Commercial GeneralLiability Insurance covering the Building on an occurrence basis against allclaims for personal injury, bodily injury, death and property damage.  Such insurance shall be for a combined singlelimit of Five Million Dollars ($5,000,000.00). Neither Landlord’s obligation to carry such insurance nor the carryingof such insurance shall be deemed to be an indemnity by Landlord with respectto any claim, liability, loss, cost or expense due, in whole or in part, toTenant’s negligent acts or omissions or willful misconduct.  Without obligation to do so, Landlord may, inits sole discretion from time to time, carry insurance in amounts greaterand/or for coverage additional to the coverage and amounts set forth above.

 

16.04       WAIVER OF SUBROGATION

 

                (a)           Landlord agrees that, if obtainableat no, or minimal, additional cost, and so long as the same is permitted underthe laws of the State of California, it will include in its “All Risks”policies appropriate clauses pursuant to which the insurance companies (i)waive all right of subrogation against Tenant with respect to losses payableunder such policies and/or (ii) agree that such policies shall not beinvalidated should the insured waive in writing prior to a loss any or allright of recovery against any party for losses covered by such policies.

 

                (b)           Tenant agrees to include, ifobtainable at no, or minimal, additional cost, and so long as the same ispermitted under the laws of the State of California, in its “All Risks”insurance policy or policies on Tenant Additions, whether or not removable, andon Tenant’s furniture, furnishings, fixtures and other property removable byTenant under the provisions of this Lease appropriate clauses pursuant to whichthe insurance company or companies (i) waive the right of subrogation againstLandlord and/or any tenant of space in the Building with respect to lossespayable under such policy or policies and/or (ii) agree that such policy orpolicies shall not be invalidated should the insured waive in writing prior toa loss any or all right of recovery against any party for losses covered bysuch policy or policies.  If Tenant isunable to obtain in such policy or policies either of the clauses described inthe preceding sentence, Tenant shall, if legally possible and withoutnecessitating a change in insurance carriers, have Landlord named in suchpolicy or policies as an additional insured. If Landlord shall be named as an additional insured in accordance withthe foregoing, Landlord agrees to endorse promptly to the order of Tenant,without recourse, any check, draft, or order for the payment of moneyrepresenting the proceeds of any such policy or representing any other paymentgrowing out of or connected with said policies, and Landlord does herebyirrevocably waive any and all rights in and to such proceeds and payments.

 

                (c)           Provided that Landlord’s right offull recovery under its policy or policies aforesaid is not adversely affectedor prejudiced thereby, Landlord hereby waives any and all right of recoverywhich it might otherwise have against Tenant, its servants, agents andemployees, for loss or damage occurring to the Real Property and the fixtures,appurtenances and equipment therein, except Tenant Additions, to the extent thesame is covered by Landlord’s insurance, notwithstanding that such loss ordamage may result from the negligence or fault of Tenant, its servants, agentsor employees.  Provided that Tenant’sright of full recovery under its aforesaid policy or policies is not adverselyaffected or prejudiced thereby, Tenant hereby waives any and all right ofrecovery which it might otherwise have against Landlord, its servants, andemployees and against every other tenant of the Real Property who shall haveexecuted a similar waiver as set forth in this Section 16.04(c) for loss ordamage to Tenant Additions, whether or not removable, and to Tenant’sfurniture, furnishings, fixtures and other property removable by Tenant underthe provisions hereof to the extent the same is coverable by Tenant’s insurancerequired under this Lease, notwithstanding that such loss or damage may resultfrom the negligence or fault of Landlord, its servants, agents or employees, orsuch other tenant and the servants, agents or employees thereof.

 

                (d)           Landlord and Tenant hereby agree toadvise the other promptly if the clauses to be included in their respectiveinsurance policies pursuant to Sections (a) and (b) above cannot be obtained onthe terms hereinbefore provided and thereafter to furnish the other with acertificate of insurance or copy of such policies showing the naming of theother as an additional insured, as aforesaid. Landlord 

 

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and Tenant hereby also agree to notify the otherpromptly of any cancellation or change of the terms of any such policy whichwould affect such clauses or naming.  Allsuch policies which name both Landlord and Tenant as additional insureds shall,to the extent obtainable, contain agreements by the insurers to the effect thatno act or omission of any additional insured will invalidate the policy as tothe other additional insureds.

 

16.05       NOTICE OF CASUALTY

 

Tenant shall give Landlord notice in case of a fire oraccident in the Premises promptly after Tenant is aware of such event.

 

ARTICLE SEVENTEEN

WAIVER OF CLAIMS AND INDEMNITY

 

17.01                     WAIVER OFCLAIMS

 

To the extent permitted by Law, Tenant releases theIndemnitees from, and waives all claims for, damage to person or property sustainedby the Tenant or any occupant of the Premises or the Property resultingdirectly or indirectly from any existing or future condition, defect, matter orthing in and about the Premises or the Property, or any part of either, or anyequipment or appurtenance therein, or resulting from any accident in or aboutthe Premises or the Property, or resulting directly or indirectly from any actor neglect of any tenant or occupant of the Property or of any other person,including Landlord’s agents and servants, except to the extent caused by thegross negligence or willful misconduct of any of the Indemnitees. If any suchdamage, whether to the Premises or the Property or any part of either, orwhether to Landlord or to other tenants in the Property, results from any actor neglect of Tenant, its employees, servants, agents, contractors, invitees orcustomers, Tenant shall be liable therefor and Landlord may, at Landlord’soption, repair such damage and Tenant shall, upon demand by Landlord, aspayment of additional Rent hereunder, reimburse Landlord within ten (10) daysof demand for the total cost of such repairs, in excess of amounts, if any,paid to Landlord under insurance covering such damages.  Tenant shall not be liable for any suchdamage caused by its acts or neglect if Landlord or a tenant has recovered thefull amount of the damage from proceeds of insurance policies and the insurancecompany has waived its right of subrogation against Tenant.

 

17.02                     INDEMNITYBY TENANT

 

To the extent permitted by Law, Tenant herebyindemnifies, and agrees to protect, defend and hold the Indemnitees harmless,against any and all actions, claims, demands, liability, costs and expenses,including attorneys’ fees and expenses for the defense thereof, arising fromTenant’s occupancy of the Premises, from the undertaking of any TenantAdditions or repairs to the Premises, from the conduct of Tenant’s business onthe Premises, or from any breach or default on the part of Tenant in theperformance of any covenant or agreement on the part of Tenant to be performedpursuant to the terms of this Lease, or from any willful act or negligence ofTenant, its agents, contractors, servants, employees, customers or invitees, inor about the Premises or the Property or any part of either.  In case of any action or proceeding broughtagainst the Indemnitees by reason of any such claim, upon notice from Landlord,Tenant covenants to defend such action or proceeding by counsel chosen byLandlord, in Landlord’s sole discretion. Landlord reserves the right to settle, compromise or dispose of any andall actions, claims and demands related to the foregoing indemnity.  The foregoing indemnity shall not operate torelieve Indemnitees of liability to the extent such liability is caused by thewillful and wrongful act of Indemnitees. Further, the foregoing indemnity is subject to and shall not diminishany waivers in effect in accordance with Section 16.04 by Landlord or itsinsurers to the extent of amounts, if any, paid to Landlord under its “All-Risks”property insurance.

 

17.03                     WAIVER OFCONSEQUENTIAL DAMAGES 

 

To the extent permitted by law, Tenant hereby waives andreleases the Indemnitees from any consequential damages, compensation or claimsfor inconvenience or loss of business, rents or profits as a result of anyinjury or damage, whether or not caused by the willful and wrongful act of anyof the Indemnitees.

 

 

ARTICLE EIGHTEEN

RULES AND REGULATIONS

 

18.01       RULES

 

Tenant agrees for itself and for its subtenants,employees, agents, and invitees to comply with the rules and regulations listedon Exhibit D attached hereto and with all reasonable modificationsand additions thereto which Landlord may make from time to time.

 

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18.02       ENFORCEMENT

 

Nothing in this Lease shall be construed to imposeupon the Landlord any duty or obligation to enforce the rules and regulationsas set forth on Exhibit D or as hereafter adopted, or the terms,covenants or conditions of any other lease as against any other tenant, and theLandlord shall not be liable to the Tenant for violation of the same by anyother tenant, its servants, employees, agents, visitors or licensees.

 

ARTICLE NINETEEN

LANDLORD’S RESERVED RIGHTS

 

Landlord shall have the following rights exercisablewithout notice to Tenant and without liability to Tenant for damage or injuryto persons, property or business and without being deemed an eviction ordisturbance of Tenant’s use or possession of the Premises or giving rise to anyclaim for offset or abatement of Rent: (1) to change the Building’s name or street address upon thirty(30) days’ prior written notice to Tenant; (2) to install, affix andmaintain all signs on the exterior and/or interior of the Building; (3) todesignate and/or approve prior to installation, all types of signs, windowshades, blinds, drapes, awnings or other similar items, and all internallighting that may be visible from the exterior of the Premises; (4) uponreasonable notice to Tenant, to display the Premises to prospective purchasersat reasonable hours at any time during the Term and to prospective tenants atreasonable hours during the last twelve (12) months of the Term; (5) togrant to any party the exclusive right to conduct any business or render anyservice in or to the Building, provided such exclusive right shall not operateto prohibit Tenant from using the Premises for the purpose permitted hereunder;(6) to change the arrangement and/or location of entrances or passageways,doors and doorways, corridors, elevators, stairs, washrooms or public portionsof the Building, and to close entrances, doors, corridors, elevators or otherfacilities, provided that such action shall not materially and adverselyinterfere with Tenant’s access to the Premises or the Building; (7) tohave access for Landlord and other tenants of the Building to any mail chutesand boxes located in or on the Premises as required by any applicable rules ofthe United States Post Office; and (8) to close the Building afterStandard Operating Hours, except that Tenant and its employees and inviteesshall be entitled to admission at all times, under such regulations as Landlordprescribes for security purposes.

 

ARTICLE TWENTY

ESTOPPEL CERTIFICATE

 

20.01                     IN GENERAL

 

Within fifteen (15) days after request therefor byLandlord, Mortgagee or any prospective mortgagee or owner, Tenant agrees asdirected in such request to execute an Estoppel Certificate in recordable form,binding upon Tenant, certifying (i) that this Lease is unmodified and infull force and effect (or if there have been modifications, a description ofsuch modifications and that this Lease as modified is in full force andeffect); (ii) the dates to which Rent has been paid; (iii) that Tenant isin the possession of the Premises if that is the case; (iv) that Landlord isnot in default under this Lease, or, if Tenant believes Landlord is in default,the nature thereof in detail; (v) that Tenant has no offsets or defensesto the performance of its obligations under this Lease (or if Tenant believesthere are any offsets or defenses, a full and complete explanation thereof);(vi) that the Premises have been completed in accordance with the terms andprovisions hereof, that Tenant has accepted the Premises and the conditionthereof and of all improvements thereto and has no claims against Landlord orany other party with respect thereto; (vii) that if an assignment of rentsor leases has been served upon the Tenant by a Mortgagee, Tenant willacknowledge receipt thereof and agree to be bound by the provisions thereof;(viii) that Tenant will give to the Mortgagee copies of all noticesrequired or permitted to be given by Tenant to Landlord; and (ix) to anyother information reasonably requested.

 

20.02                     ENFORCEMENT

 

In the event that Tenant fails to deliver an EstoppelCertificate, then such failure shall be a Default for which there shall be nocure or grace period. In addition to any other remedy available to Landlord,Landlord may impose a charge equal to Five Hundred Dollars ($500.00) for eachday that Tenant fails to deliver an Estoppel Certificate and Tenant shall bedeemed to have irrevocably appointed Landlord as Tenant’s attorney-in-fact toexecute and deliver such Estoppel Certificate.

 

ARTICLE TWENTY-ONE

INTENTIONALLY OMITTED

 

ARTICLE TWENTY-TWO

REAL ESTATE BROKERS

 

Tenant represents that, except for the broker(s)listed in Section 1.01(20) Tenant has not dealt with any real estate broker,sales person, or finder in connection with this Lease, and no such personinitiated or participated in the negotiation of this Lease, or showed thePremises to Tenant.  Tenant hereby agreesto indemnify, protect, defend and hold Landlord and the Indemnitees, harmlessfrom and against any and all liabilities and claims for commissions and feesarising out of a breach of the foregoing representation.  Landlord agrees to pay any commission towhich Landlord’s Broker listed in Section 1.01(20) is entitled in 

 

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connection with this Lease pursuant to Landlord’swritten agreement with such broker. Landlord and Tenant agree that any commission payable to Tenant’s Brokershall be paid by Tenant except to the extent that Tenant’s Broker and Landlord’sBroker have entered into a separate agreement between themselves to share thecommission paid to Landlord’s Broker by Landlord.

 

ARTICLE TWENTY-THREE

MORTGAGEE PROTECTION

 

23.01       SUBORDINATION AND ATTORNMENT

 

This Lease is and shall be expressly subject andsubordinate at all times to (i) any ground or underlying lease of the RealProperty, now or hereafter existing, and all amendments, extensions, renewalsand modifications to any such lease, and (ii) the lien of any mortgage or trustdeed now or hereafter encumbering fee title to the Real Property and/or theleasehold estate under any such lease, and all amendments, extensions,renewals, replacements and modifications of such mortgage or trust deed and/orthe obligation secured thereby, unless such ground lease or ground lessor, ormortgage, trust deed or Mortgagee, expressly provides or elects that the Leaseshall be superior to such lease or mortgage or trust deed.  If any such mortgage or trust deed isforeclosed (including any sale of the Real Property pursuant to a power of sale),or if any such lease is terminated, upon request of the Mortgagee or groundlessor, as the case may be, Tenant shall attorn to the purchaser at theforeclosure sale or to the ground lessor under such lease, as the case may be,provided, however, that such purchaser or ground lessor shall not be(i) bound by any payment of Rent for more than one month in advance exceptpayments in the nature of security for the performance by Tenant of itsobligations under this Lease; (ii) subject to any offset, defense ordamages arising out of a default of any obligations of any preceding Landlord;or (iii) bound by any amendment or modification of this Lease made withoutthe written consent of the Mortgagee or ground lessor; or (iv) liable for anysecurity deposits not actually received in cash by such purchaser or groundlessor.  This subordination shall be self-operativeand no further certificate or instrument of subordination need be required byany such Mortgagee or ground lessor.  Inconfirmation of such subordination, however, Tenant shall execute promptly anyreasonable certificate or instrument that Landlord, Mortgagee or ground lessormay request.  Tenant hereby constitutesLandlord as Tenant’s attorney-in-fact to execute such certificateor instrument for and on behalf of Tenant upon Tenant’s failure to do so withinfifteen (15) days of a request to do so. Upon request by such successor in interest, Tenant shall execute anddeliver reasonable instruments confirming the attornment provided for herein.

 

23.02       MORTGAGEE PROTECTION

 

Tenant agrees to give any Mortgagee or ground lessor,by registered or certified mail, a copy of any notice of default served uponthe Landlord by Tenant, provided that prior to such notice Tenant has receivednotice (by way of service on Tenant of a copy of an assignment of rents andleases, or otherwise) of the address of such Mortgagee or ground lessor.  Tenant further agrees that if Landlord shallhave failed to cure such default within the time provided for in this Lease,then the Mortgagee or ground lessor shall have an additional thirty (30) daysafter receipt of notice thereof within which to cure such default or if suchdefault cannot be cured within that time, then such additional notice time asmay be necessary, if, within such thirty (30) days, any Mortgagee or groundlessor has commenced and is diligently pursuing the remedies necessary to curesuch default (including commencement of foreclosure proceedings or otherproceedings to acquire possession of the Real Property, if necessary to effectsuch cure).  Such period of time shall beextended by any period within which such Mortgagee or ground lessor isprevented from commencing or pursuing such foreclosure proceedings or otherproceedings to acquire possession of the Real Property by reason of Landlord’sbankruptcy.  Until the time allowed asaforesaid for Mortgagee or ground lessor to cure such defaults has expiredwithout cure, Tenant shall have no right to, and shall not, terminate thisLease on account of default.  This Leasemay not be modified or amended so as to reduce the Rent or shorten the Term, orso as to adversely affect in any other respect to any material extent therights of the Landlord, nor shall this Lease be canceled or surrendered,without the prior written consent, in each instance, of the ground lessor orthe Mortgagee.

 

ARTICLETWENTY-FOUR

NOTICES

 

                (a)           All notices, demands or requestsprovided for or permitted to be given pursuant to this Lease must be in writingand shall be personally delivered, sent by Federal Express or other reputable overnightcourier service, or mailed by first class, registered or certified UnitedStates mail, return receipt requested, postage prepaid.

 

                (b)           All notices, demands or requests tobe sent pursuant to this Lease shall be deemed to have been properly given orserved by delivering or sending the same in accordance with this Section,addressed to the parties hereto at their respective addresses listed inSections 1.01(2) and (3).

 

                (c)           Notices, demands or requests sent bymail or overnight courier service as described above shall be effective upondeposit in the mail or with such courier service.  However, the time period in which a responseto any such notice, demand or request must be given shall commence to run from(i) in the case of delivery by mail, the date of receipt on the return receiptof the notice, demand or request by the addressee thereof, or (ii) in the caseof delivery by Federal Express or other overnight courier service, 

 

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the date of acceptance of delivery by an employee,officer, director or partner of Landlord or Tenant.  Rejection or other refusal to accept or theinability to deliver because of changed address of which no notice was given,as indicated by advice from Federal Express or other overnight courier serviceor by mail return receipt, shall be deemed to be receipt of notice, demand orrequest sent.  Notices may also be servedby personal service upon any officer, director or partner of Landlord orTenant, and shall be effective upon such service.

 

                (d)           By giving to the other party at leastthirty (30) days written notice thereof, either party shall have the right fromtime to time during the term of this Lease to change their respective addressesfor notices, statements, demands and requests, provided such new address shallbe within the United States of America.

 

ARTICLETWENTY-FIVE

PARKING

 

                (a)           Tenant shall be entitled to use up tothe total number of parking spaces specified in Section 1.01(19), includingunreserved as well as any reserved spaces, at Landlord’s then current rates, inparking facilities of the Project, subject to the terms, covenants andconditions set forth below.  Landlord’scurrent monthly parking charges at the Project are Thirty Dollars ($30.00)per automobile for unreserved parking and are Sixty-Five Dollars ($65.00)per automobile for reserved parking.  Allof the payments and charges provided in this Article shall be collectable asadditional Rent under the Lease. Notwithstanding any provision of the foregoing to the contrary, uponwritten request by Tenant to Landlord, Tenant may convert one (1) unreservedparking space to one (1) reserved parking space and pay the then-current ratetherefore and Landlord shall designate as reserved for Tenant said space.

 

                (b)           Tenant and its employees and businessinvitees shall not park any vehicle in any stall designated for the exclusiveuse of any other person and Tenant further agrees to employ reasonable measuresto assure that its employees do not park in any such stall.  Tenant shall furnish Landlord with a list ofits and its employees’ vehicle license numbers within fifteen (15) days afterthe Commencement Date and thereafter notify Landlord of any change in such listwithin fifteen (15) days after such change occurs.  Tenant agrees to assume responsibility forcompliance by its employees with all Parking Rules and for all losses(including the loss of parking entrance key-cards, if any) and other damagescaused by Tenant or Tenant’s agents, servants, employees, contractors, visitorsor licensees occurring during or relating to any use of the Building’s parkingfacilities.  In addition to all otherremedies available to Landlord under the Lease, at law or in equity, in theevent any of Tenant’s employees park in violation of the Parking Rules,Landlord may charge Tenant a “violation fee” therefor set by Landlord from timeto time.  Landlord’s current violationfee is Fifteen Dollars ($15.00) per automobile for each day or partial day eachsuch vehicle is so parked in violation of the Parking Rules.  Tenant hereby authorizes Landlord to tow awayfrom the Project or attach violation stickers, devices or notices to anyvehicle belonging to Tenant or its employees which Landlord in good faithdetermines is parked in violation of the Parking Rules.  All costs of any such towing or violationdevice and all applicable violation fees shall be payable by Tenant immediatelyupon demand by Landlord and, at Landlord’s option, such payment may be requiredprior to the release of the towed vehicle to its owner.

 

                (c)           A condition of any parking shall becompliance by the vehicle operator with all Parking Rules, including, withoutlimitation, displaying any sticker or complying with any other identificationsystem from time to time established by Landlord.  The current Parking Rules are set forth on Exhibit Fhereto, and the Parking Rules are subject to change by Landlord from time totime.  Landlord expressly reserves theright to refuse to permit any person or vehicle in violation of the ParkingRules to enter or remain in the parking areas of the Project and to demandreturn therefrom of all parking stickers or other identification supplied byLandlord and Tenant hereby agrees to assist Landlord in enforcing all ParkingRules.

 

                (d)           In the event any surcharge,regulatory fee or parking tax is at any time imposed by any governmentalauthority, Tenant shall pay all such amounts applicable to Tenant’s parkingprivileges hereunder to Landlord either in advance on the first day of eachcalendar month concurrently with its installments of Monthly Base Rent or asotherwise billed from time to time by Landlord.

 

                (e)           All parking privileges hereunder arepersonal to Tenant and, accordingly, in the event Tenant assigns or sublets allor any portion of the Premises, all of the same shall be reducedproportionately based on the Usable Area so assigned or sublet and any assigneeor subtenant of Tenant shall receive only then prevailing parking privileges atthe full then prevailing rates therefor.

 

                (f)            Landlord shall not be responsiblefor enforcing Tenant’s exclusive right to use any of its reserved parkingstalls under the Lease nor shall Tenant have any right to impound, tow orimpose any penalty on vehicles occupying such spaces.

 

                (g)           Landlord makes available a number ofparking spaces for visitors to the Project at Landlord’s then current rates,and Tenant’s shall have the non-exclusive right, in common with others, to theuse of such spaces by its visitors, to the extent such spaces are available ona first-come, first-served basis subject to payment at Landlord’s then currentrates for such use.  Tenant may purchasevalidation coupons, stamps or tickets in the manner made available by Landlordfor Tenant to give its visitors to present at the time payment of parkingcharges is due to defray such charges. Any visitor not presenting 

 

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the appropriate validation shall pay the then currentrate for parking.  Notwithstanding theforegoing, Landlord shall provide Tenant, at no charge to Tenant, with fifty(50) hours of parking validation per month on a non-cumulative basis for Tenant’svisitor parking use

.

ARTICLETWENTY-SIX

MISCELLANEOUS

 

26.01                     LATECHARGES

 

                (a)           The Monthly Base Rent, Rent Adjustments,Rent Adjustment Deposits and Parking charges shall be due when specificallyprovided above.  Except for such paymentsand late charges described below, which late charge shall be due when providedbelow (without notice or demand), all other payments required hereunder toLandlord shall be paid within ten (10) days after Landlord’s demandtherefor.  All Rent and charges, exceptlate charges, not paid when due shall bear interest from the date due until thedate paid at the Default Rate in effect on the date such payment was due.

 

                (b)           In the event Tenant is more than five(5) days late in paying any installment of Rent due under this Lease, Tenantshall pay Landlord a late charge equal to five percent (5%) of the delinquentinstallment of Rent.  The parties agreethat (i) such delinquency will cause Landlord to incur costs and expenses notcontemplated herein, the exact amount of which will be difficult to calculate,including the cost and expense that will be incurred by Landlord in processingeach delinquent payment of rent by Tenant, (ii) the amount of such late chargerepresents a reasonable estimate of such costs and expenses and (iii) that suchlate charge shall be paid to Landlord for each delinquent payment in additionto all Rent otherwise due hereunder.  Theparties further agree that the payment of late charges and the payment ofinterest provided for in subparagraph (a) above are distinct and separatefrom one another in that the payment of interest is to compensate Landlord forits inability to use the money improperly withheld by Tenant, while the paymentof late charges is to compensate Landlord for its additional administrativeexpenses in handling and processing delinquent payments.

 

                (c)           Payment of interest at the DefaultRate and/or of late charges shall not excuse or cure any default by Tenantunder this Lease, nor shall the foregoing provisions of this Article or anysuch payments prevent Landlord from exercising any right or remedy available toLandlord upon Tenant’s failure to pay Rent when due, including the right toterminate this Lease.

 

26.02       NO JURY TRIAL; VENUE; JURISDICTION

 

Each party hereto (which includes any assignee,successor, heir or personal representative of a party) shall not seek a jurytrial, hereby waives trial by jury, and hereby further waives any objection tovenue in the County in which the Project is located, and agrees and consents topersonal jurisdiction of the courts of the State of California, in any actionor proceeding or counterclaim brought by any party hereto against the other onany matter whatsoever arising out of or in any way connected with this Lease,the relationship of Landlord and Tenant, Tenant’s use or occupancy of thePremises, or any claim of injury or damage, or the enforcement of any remedy underany statute, emergency or otherwise, whether any of the foregoing is based onthis Lease or on tort law.  No party willseek to consolidate any such action in which a jury has been waived with anyother action in which a jury trial cannot or has not been waived.  It is the intention of the parties that theseprovisions shall be subject to no exceptions. By execution of this Lease the parties agree that this provision may befiled by any party hereto with the clerk or judge before whom any action is instituted,which filing shall constitute the written consent to a waiver of jury trialpursuant to and in accordance with Section 631 of the California Code of CivilProcedure.  No party has in any wayagreed with or represented to any other party that the provisions of thisSection will not be fully enforced in all instances.  The provisions of this Section shall survivethe expiration or earlier termination of this Lease.

 

26.03       INTENTIONALLY OMITTED

 

26.04       OPTION

 

This Lease shall not become effective as a lease orotherwise until executed and delivered by both Landlord and Tenant. Thesubmission of the Lease to Tenant does not constitute a reservation of oroption for the Premises, but when executed by Tenant and delivered to Landlord,the Lease shall constitute an irrevocable offer by Tenant in effect for fifteen(15) days to lease the Premises on the terms and conditions herein contained.

 

26.05       TENANT AUTHORITY

 

Tenant represents and warrants to Landlord that it hasfull authority and power to enter into and perform its obligations under thisLease, that the person executing this Lease is fully empowered to do so, andthat no consent or authorization is necessary from any third party.  Landlord may request that Tenant provideLandlord evidence of Tenant’s authority.

 

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26.06                     ENTIREAGREEMENT

 

This Lease, the Exhibits and Rider(s) attached heretocontain the entire agreement between Landlord and Tenant concerning thePremises and there are no other agreements, either oral or written, and noother representations or statements, either oral or written, on which Tenanthas relied.  This Lease shall not bemodified except by a writing executed by Landlord and Tenant.

 

26.07       MODIFICATION OF LEASE FOR BENEFIT OF MORTGAGEE

 

If any Mortgagee requires a modification of this Leasewhich shall not result in any increased cost or expense to Tenant or in anyother substantial and adverse change in the rights and obligations of Tenanthereunder, then Tenant agrees that the Lease may be so modified.

 

26.08       EXCULPATION

 

Tenant agrees, on its behalf and on behalf of itssuccessors and assigns, that any liability or obligation of Landlord inconnection with this Lease shall only be enforced against Landlord’s equityinterest in the Building up to a maximum of Three Million Dollars($3,000,000.00) and in no event against any other assets of the Landlord, orLandlord’s officers or directors, partners or members, and that any liabilityof Landlord with respect to this Lease shall be so limited and Tenant shall notbe entitled to any judgment in excess of such amount.

 

26.09                     ACCORD ANDSATISFACTION

 

No payment by Tenant or receipt by Landlord of alesser amount than any installment or payment of Rent due shall be deemed to beother than on account of the amount due, and no endorsement or statement on anycheck or any letter accompanying any check or payment of Rent shall be deemedan accord and satisfaction, and Landlord may accept such check or paymentwithout prejudice to Landlord’s right to recover the balance of suchinstallment or payment of Rent or pursue any other remedies available toLandlord.  No receipt of money byLandlord from Tenant after the termination of this Lease or Tenant’s right ofpossession of the Premises shall reinstate, continue or extend the Term.  Receipt or acceptance of payment from anyoneother than Tenant, including an assignee of Tenant, is not a waiver of anybreach of Article Ten, and Landlord may accept such payment on account of theamount due without prejudice to Landlord’s right to pursue any remediesavailable to Landlord.

 

26.10                     LANDLORD’SOBLIGATIONS ON SALE OF BUILDING

 

In the event of any sale or other transfer of theBuilding, Landlord shall be entirely freed and relieved of all agreements andobligations of Landlord hereunder accruing or to be performed after the date ofsuch sale or transfer; provided that all of Landlord’s obligations hereunderare specifically assumed by the buyer or transferee; and further provided thatany remaining liability of Landlord with respect to this Lease shall be limitedto Three Million Dollars ($3,000,000.00) and Tenant shall not be entitled toany judgment in excess of such amount.

 

26.11                     BINDINGEFFECT

 

Subject to the provisions of Article Ten, this Leaseshall be binding upon and inure to the benefit of Landlord and Tenant and theirrespective heirs, legal representatives, successors and permitted assigns.

 

26.12                     CAPTIONS

 

The Article and Section captions in this Lease areinserted only as a matter of convenience and in no way define, limit, construe,or describe the scope or intent of such Articles and Sections.

 

26.13                     TIME;APPLICABLE LAW; CONSTRUCTION

 

Time is of the essence of this Lease and each and allof its provisions.  This Lease shall beconstrued in accordance with the Laws of the State of California.  If more than one person signs this Lease asTenant, the obligations hereunder imposed shall be joint and several.  If any term, covenant or condition of thisLease or the application thereof to any person or circumstance shall, to anyextent, be invalid or unenforceable, the remainder of this Lease, or theapplication of such term, covenant or condition to persons or circumstancesother than those as to which it is held invalid or unenforceable, shall not beaffected thereby and each item, covenant or condition of this Lease shall bevalid and be enforced to the fullest extent permitted by Law.  Wherever the term “including” or “includes”is used in this Lease, it shall have the same meaning as if followed by thephrase “but not limited to”.  Thelanguage in all parts of this Lease shall be construed according to its normaland usual meaning and not strictly for or against either Landlord or Tenant.

 

26.14                     ABANDONMENT

 

In the event Tenant vacates or abandons the Premisesbut is otherwise in compliance with all the terms, covenants and conditions ofthis Lease, Landlord shall have the right to enter into the Premises in orderto 

 

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show the space to prospective tenants.  Tenant expressly acknowledges that in theabsence of written notice pursuant to Section 11.02(b) or pursuant toCalifornia Civil Code Section 1951.3 terminating Tenant’s right to possession,none of the foregoing acts of Landlord or any other act of Landlord shallconstitute a termination of Tenant’s right to possession or an acceptance ofTenant’s surrender of the Premises, and the Lease shall continue in effect.

 

26.15                     LANDLORD’SRIGHT TO PERFORM TENANT’S DUTIES

 

If Tenant fails timely to perform any of its dutiesunder this Lease, Landlord shall have the right (but not the obligation), toperform such duty on behalf and at the expense of Tenant without prior noticeto Tenant, and all sums expended or expenses incurred by Landlord in performingsuch duty shall be deemed to be additional Rent under this Lease and shall bedue and payable upon demand by Landlord.

 

26.16       SECURITY SYSTEM

 

Landlord shall not be obligated to provide or maintainany security patrol or security system. Landlord shall not be responsible for the quality of any such patrol orsystem which may be provided hereunder or for damage or injury to Tenant, itsemployees, invitees or others due to the failure, action or inaction of suchpatrol or system.

 

26.17       NO LIGHT, AIR OR VIEW EASEMENTS

 

Any diminution or shutting off of light, air or viewby any structure which may be erected on lands of or adjacent to the Projectshall in no way affect this Lease or impose any liability on Landlord.

 

26.18       RECORDATION

 

Neither this Lease, nor any notice nor memorandumregarding the terms hereof, shall be recorded by Tenant.  Any such unauthorized recording shall be aDefault for which there shall be no cure or grace period. Tenant agrees toexecute and acknowledge, at the request of Landlord, a memorandum of thisLease, in recordable form.

 

26.19       OPTION TO EXTEND

 

                (a)           Landlordhereby grants Tenant a single option to extend the initial Term of the Leasefor an additional period of five (5) years (such period may be referred to asthe “Option Term”), as to the entire Premises as it may then exist, upon andsubject to the terms and conditions of this Section (the “Option To Extend”),and provided that at the time of exercise of such right:  (i) Tenant must be in occupancy of the entirePremises; and (ii) there has been no material adverse change in Tenant’sfinancial position from such position as of the date of execution of the Lease,as certified by Tenant’s independent certified public accountants, and assupported by Tenant’s certified financial statements, copies of which shall bedelivered to Landlord with Tenant’s written notice exercising its righthereunder.

 

                (b)           Tenant’selection (the “Election Notice”) to exercise the Option To Extend must be givento Landlord in writing no later than the date which is nine (9) months beforethe Expiration Date.  If Tenant eitherfails or elects not to exercise its Option to Extend by not timely giving itsElection Notice, then the Option to Extend shall be null and void.

 

                (c)           TheOption Term shall commence immediately after the expiration of the initial Termof the Lease.  Tenant’s leasing of thePremises during the Option Term shall be upon and subject to the same terms andconditions contained in the Lease except that: (i) the Monthly Base Rent shall be amended to an amount to equal the “OptionTerm Rent”, defined and determined in the manner set forth in the immediatelyfollowing Subsection (and otherwise, Tenant shall continue to pay RentAdjustments, all other Rent and all other charges pursuant to the Lease); (ii)the Security Deposit, if any, shall be increased within fifteen (15) days afterthe Prevailing Market Rent has been determined to equal one hundred percent(100%) of the highest monthly installment of Monthly Base Rent thereunder, butin no event shall the Security Deposit be decreased; (iii) Tenant shall acceptthe Premises in its “AS-IS” condition without any obligation of Landlord torepaint, remodel, repair, improve or alter the Premises or to provide Tenantany allowance therefor; and (iv) there shall be no further option or right toextend the term of the Lease.  If Tenanttimely and properly exercises the Option To Extend, references in the Lease tothe Term shall be deemed to mean the initial Term as extended by the OptionTerm unless the context clearly requires otherwise.

 

                (d)           TheOption Term Rent shall mean the “Prevailing Market Rent” (defined below). Asused herein, “Prevailing Market Rent” shall mean the base rent and all othermonetary payments and escalations, including consumer price increases, payableby a tenant that Landlord could obtain from a third party desiring to lease thePremises for a term equal to the Option Term and commencing when the OptionTerm is to commence under market leasing conditions, and taking into accountthe following:  the size, location andfloor levels of the Premises; the type and quality of tenant improvements; ageand location of the Project; quality of construction of the Project; servicesto be provided by Landlord or by tenant; the rent, all other monetary paymentsand escalations obtainable for new leases of space comparable to the Premisesin the Project and in comparable buildings in the surrounding geographic 

 

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submarkets, and other factorsthat would be relevant to such a third party in determining what such partywould be willing to pay therefor.  Thedetermination of Prevailing Market Rent based upon the foregoing criteria shallbe made by Landlord, in the good faith exercise of Landlord’s businessjudgment.  Within thirty (30) days afterTenant’s exercise of the Option To Extend, Landlord shall notify Tenant ofLandlord’s determination of Option Term Rent for the Premises.  If Tenant, in Tenant’s sole discretion,disagrees with the amount of Prevailing Market Rent determined by Landlord,Tenant may elect to revoke and rescind the exercise of the option by givingwritten notice thereof to Landlord within thirty (30) days after notice ofLandlord’s determination of Prevailing Market Rent.

 

                (e)           ThisOption to Extend is personal to South Bay Bank and may not be used by, andshall not be transferable or assignable (voluntarily or involuntarily) to anyperson or entity.

 

                (f)            Uponthe occurrence of any of the following events, Landlord shall have the option,exercisable at any time prior to commencement of the Option Term, to terminateall of the provisions of this Section with respect to the Option to Extend,with the effect of canceling and voiding any prior or subsequent exercise sothis Option to Extend is of no force or effect:

 

                                                                (i)   Tenant’sfailure to timely exercise the Option to Extend in accordance with theprovisions of this Section.

 

                                                                (ii)  Theexistence at the time Tenant exercises the Option to Extend or at thecommencement of the Option Term of any default on the part of Tenant under theLease or of any state of facts which with the passage of time or the giving ofnotice, or both, would constitute such a default.

 

                                                                (iii) Tenant’sthird monetary default under the Lease prior to the commencement of the OptionTerm, notwithstanding that all such defaults may subsequently be cured.

 

(g)           Without limiting the generality ofany provision of the Lease, time shall be of the essence with respect to all ofthe provisions of this Section.

 

26.20       SIGNAGE

 

Tenant shall have the right toBuilding standard directory listing and suite signage at Tenant’s cost. Exceptas hereinprovided, Tenant shall not display, maintain or affix on any place onor about the Building any sign, notice, legend or advertisement.

 

26.21       SURVIVAL

 

The waivers of the right ofjury trial, the other waivers of claims or rights, the releases and theobligations of Tenant under this Lease to indemnify, protect, defend and holdharmless Landlord and/or Indemnitees shall survive the expiration ortermination of this Lease, and so shall all other obligations or agreementswhich by their terms survive expiration or termination of the Lease.

 

IN WITNESS WHEREOF, this Leasehas been executed as of the date set forth in Section 1.01(4) hereof.

 
| TENANT:                                                       |   | LANDLORD:                            |
|---------------------------------------------------------------|--------|--------------------------------------|
|                                                          |   |                                 |
| South Bay Bank,                                               |   | Metropolitan Life Insurance Company, |
| a National Association                                        |   | a New York corporation               |
|                                                          |   |                                 |
|                                                          |   |                                 |
| By                                                            |   |                                 | By |   |
|                                                          |   |                                 |
|                                                          |   | (Print Name)                         |   |   |   | (Print Name) |
|                                                          |   |                                 |   |   |   |
| Its                                                           |   |                                 | Its |   |
| (Chairman of Board, President or Vice President)              |   |                                 |
|                                                          |   |                                 |
| By                                                            |   |                                 |   |
|                                                          |   |                                 |
|                                                          |   | (Print Name)                         |   |   |
| Its                                                           |   |                                 |   |
| (Secretary, Assistant Secretary, CFO or Assistant  Treasurer) |
|                                                               |        |                                      |  |  |  |  |  |  |

 

 

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EXHIBIT A

PLAN OFPREMISES

 

 

 

 

 

 

 

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EXHIBIT B

WORKLETTERAGREEMENT

(Allowance)

 

                ThisWorkletter Agreement (“Workletter”) is attached to and a part of a certainOffice Lease dated as of September 19, 2003 by and between Metropolitan LifeInsurance Company, a New York corporation, as Landlord, and South Bay Bank, aNational Association, as Tenant, for the Premises (the “Lease”).

 

                1.            Defined Terms.  Capitalized terms used in this Worklettershall have the same meanings set forth in the Lease except as otherwisespecified herein and except for terms capitalized in the ordinary course of punctuation.  For purposes of this Workletter the followingcapitalized terms have the following meanings:

 

                1.1.          “Design Documents” means the layoutplans and specifications for the real property improvements to be constructedby Landlord in the Premises which are the final product of the preliminaryspace planning and which (i) include, among other things, all partitions,doors, HVAC (heating, ventilating and air conditioning systems) distribution,ceiling systems, light fixtures, plumbing installations, electricalinstallations and outlets, telephone installations and outlets, any otherinstallations required by Tenant, fire and life-safety systems, wall finishesand floor coverings, whether to be newly installed or requiring changes fromthe as-is condition of the Premises as of the date of execution of the Lease,all in sufficient detail for Landlord to commence preparation of theConstruction Drawings (as defined below); and (ii) comply with all Law asapplicable and as interpreted at the time of construction of the TenantImprovements (as defined below), including all building codes and the ADA (asdefined in the Lease);

 

                1.2           “Construction Drawings” means thefinal architectural plans and specifications, and engineering plans andspecifications, for the real property improvements to be constructed byLandlord in the Premises in sufficient detail to be submitted for governmentalapprovals and building permits and to serve as the detailed constructiondrawings and specifications for the contractor, and shall (i) include, amongother things, all partitions, doors, HVAC (heating, ventilating and airconditioning systems) distribution, ceiling systems, light fixtures, plumbinginstallations, electrical installations and outlets, telephone installationsand outlets, any other installations required by Tenant, fire and life-safetysystems, wall finishes and floor coverings, whether to be newly installed orrequiring changes from the as-is condition of the Premises as of the date ofexecution of the Lease; and (ii) comply with all Law as applicable and asinterpreted at the time of construction of the Tenant Improvements, includingall building codes and the ADA;

 

                1.3           “Tenant Improvements” means all realproperty improvements to be constructed by Landlord as shown on theConstruction Drawings, as they may be modified as provided herein; and

 

                1.4           “Landlord Work” means theconstruction and installation of the Tenant Improvements.

 

                2.             Design Matters.

 

                2.1.          Landlord, through its architectsand/or space planners (“Landlord’s Architect”), shall prepare the DesignDocuments and the Construction Drawings, as they may be modified as providedherein, in accordance with the design specified by Tenant and reasonablyapproved by Landlord.

 

                2.2.          Tenant shall be responsible for thesuitability for the Tenant’s needs and business of the design and function ofall Tenant Improvements.  Tenant, at itsown expense, shall devote such time and provide such instructions as may benecessary to enable Landlord to complete the matters described below, andTenant shall approve such matters, within the times described below:

 

                                (a)  to provide no later than                 ,2003, all information necessary or appropriate for Landlord’s Architect toprepare the Design Documents;

 

                                (b)  toprovide Tenant’s written approval of the Design Documents within five (5) daysafter receipt of the proposed Design Documents;

 

                                (c)  toprovide Tenant’s written approval of a nonbinding preliminary estimate (“Landlord’sPreliminary Estimate”) provided by Landlord of the cost of the TenantImprovements shown on the Design Documents within three (3) days after receiptof such estimate; and

 

                                (d)  toprovide Tenant’s written approval of the Construction Drawings within five (5)days after receipt of the proposed Construction Drawings.

 

                3.             Construction; Landlord’s  Contribution; Tenant Improvement Costs.

 

                3.1.          Construction; Landlord’sContribution.  Landlord, through itscontractor, shall complete the construction of the Tenant Improvements in agood and workmanlike manner, up to a maximum cost to Landlord of Thirty-FourThousand Four Hundred Fifty and No/100 Dollars ($34,450.00), which shall bebinding upon the parties unless and until Landlord measures the Premisespursuant to Exhibit G of the Lease and such measurement shows thePremises is larger or smaller than 1,378 square feet of Usable Area, in whichevent Landlord shall recalculate such amount at the rate of Twenty-Five andNo/100 Dollars 

 

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($25.00) per square foot of Usable Area of thePremises (“Landlord’s Maximum Contribution”), and within ten days afterLandlord’s notice of such measurement (if any), recalculation (if any) andamount owing (if any) from either party with respect to the Landlord’s MaximumContribution and the Tenant Improvement Costs (as defined below), the owingparty shall credit (if Landlord owes Tenant) or pay (if Tenant owes Landlord)the other the amount due.

 

                3.2.          Tenant Improvement Costs.  The cost of the Tenant Improvements (“TenantImprovement Costs”) to be paid by Landlord from, but not in excess of, Landlord’sMaximum Contribution shall include:

 

                                (a)  Thecosts of Landlord’s Architect and any other consultants retained by Landlord inconnection with the preparation of Design Documents and Constructions Drawings,and engineering costs associated with completion of the State of Californiaenergy utilization calculations under Title 24 legislation;

 

                                (b)  Allcosts of obtaining from the City of Costa Mesa and any other governmentalauthority, approvals, building permits and occupancy permits, if any;

 

                                (c)  Allcosts of interior design and finish schedule plans and specifications includingas-built drawings;

 

                                (d)  Alldirect and indirect costs of procuring, installing and constructing the TenantImprovements, including:  (i) theconstruction fee in the amount of three percent (3%) of the total constructioncosts for overhead and profit and the cost of all on-site supervisory and administrativestaff, office, equipment and temporary services rendered or provided byLandlord’s contractor in connection with construction of the TenantImprovements; (ii) the cost of any services or utilities made available byLandlord; and (iii) a construction management fee payable to Landlord of no more than three percent (3%);

 

                                (e)  Withoutlimiting the generality of the foregoing, the Tenant Improvement Costs includeall costs of designing, procuring, constructing and installing TenantImprovements in compliance with Law as applicable and as interpreted at thetime of construction of the Tenant Improvements, including all building codesand the ADA; and

 

                                (f)  Allfees payable to Landlord’s architectural and engineering firm if it is requiredby Tenant to redesign any portion of the Tenant Improvements following Tenant’sapproval of the Construction Drawings, and all costs in connection with anyapproved Change Order (as defined below) in accordance with the provisions ofthis Workletter.

 

In no event shall the Tenant Improvement Costs include(i) any costs of procuring or installing in the Premises any trade fixtures,equipment, furniture, furnishings, telephone equipment, cabling for any of theforegoing or other personal property (“Personal Property”) to be used in thePremises by Tenant, and the cost of such Personal Property shall be paid byTenant, or (ii) any costs or expenses of any consultants retained by Tenantwith respect to design, procurement, installation or construction ofimprovements or installations, whether real or personal property, for thePremises.

 

                3.3.          Limitations of Landlord’sObligations.  Upon SubstantialCompletion of the Tenant Improvements, Landlord shall have no furtherobligation to construct improvements or construct modifications to or changesin the Tenant Improvements, except to complete the punchlist of Landlord Workremaining to be completed or correct any part thereof not in compliance withthe Construction Drawings and any approved modifications thereof, as providedin the Lease.  If Landlord’s Maximum Contributionexceeds the Tenant Improvement Costs, then Landlord shall retain such excessand shall have no obligation or liability to Tenant with respect to suchexcess.

 

                4.             Costs of Tenant Improvements inExcess of Landlord’s  MaximumContribution.  As soon as reasonablyavailable after completion and approval by both parties of the ConstructionDrawings, Landlord shall notify Tenant in writing of the costs, if any, of theTenant Improvements in excess of the Landlord’s Maximum Contribution (suchnotification shall be referred to as “Landlord’s Cost Statement”).  Within five (5) business days after receiptof Landlord’s Cost Statement, Tenant shall, in writing, give Landlordauthorization to complete the Tenant Improvements in accordance with theConstruction Drawings, and to the extent that there remain any costs of theTenant Improvements in excess of the Landlord’s Maximum Contribution, Tenantshall accompany said authorization with a good check made payable to the orderof Landlord in the amount of the excess cost authorized by Tenant of the TenantImprovements over Landlord’s Maximum Contribution.  In such authorization, Tenant may, pursuantto the provisions of this Workletter, request a Change Order to the approvedConstruction Drawings to reduce or delete all or part of such excess costs, butany delay in completion of the Premises resulting from such request for aChange Order or from the changes so made or necessitated shall be chargeable asTenant Delay.  If such writtenauthorization and check (if applicable) are not received by Landlord, Landlordshall not be obligated to commence work on the Premises and any resulting delayin the completion of the Premises shall be chargeable against Tenant as TenantDelay as provided in Section 6 of this Workletter and in the Lease.

 

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                5.             Changes. If Tenant shallrequest any change, addition or alteration in the approved ConstructionDrawings, any such request and Change Order pursuant thereto shall be subject toLandlord’s approval, which shall not unreasonably be withheld, and subject tosuch approval, Landlord shall promptly give Tenant a written estimate of (a)the cost of engineering and design services and the construction contractorservices to prepare a change order (the “Change Order”) in accordance with suchrequest, (b) the cost of work to be performed pursuant to such Change Order,and (c) the time delay expected because of such requested Change Order.  Within three (3) business days followingTenant’s receipt of the foregoing written estimate, Tenant shall notifyLandlord in writing whether it approves such written estimate.  If Tenant approves such written estimate andif such cost is in excess of Landlord’s Maximum Contribution, Tenant shallaccompany such approval with a good check made payable to the order of Landlordin the amount of the estimated cost of preparing the Change Order andperforming the work thereto, and the foregoing shall constitute Landlord’sauthorization to proceed.  If such writtenauthorization, and check if required, are not received by Landlord within suchthree (3) business day period, Landlord shall not be obligated to prepare theChange Order or perform any work in connection therewith.  Upon completion of the work of the ChangeOrder and submission of the final cost thereof by Landlord to Tenant, Tenantshall promptly pay to Landlord any such additional amounts in excess ofLandlord’s Maximum Contribution.

 

                6.             Tenant Delay.  If the Substantial Completion of the TenantImprovements in the Premises is delayed due to Tenant Delay, then Tenant shallbe responsible for all costs and any expenses occasioned by such delay,including any costs and expenses attributable to increases in labor ormaterials, and the provisions of Article Two of the Lease shall apply.

 

                7.             Entry by Tenant.  Tenant may, with Landlord’s consent, whichwill not unreasonably be withheld, enter the Premises during construction andprior to the Commencement Date for the Premises solely for the purpose of installingTenant’s Personal Property (defined in Section 3.2 above) as long as such entrywill not interfere with the timely and orderly construction and completion ofthe Premises.  Tenant shall notifyLandlord of its desired time(s) of entry and shall submit for Landlord’sapproval the scope of the work to be performed and the name(s) of thecontractor(s) who will perform such work. Such work and such contractors shall be subject to Landlord’s approvalin the same manner as for work subject to Section 9.01(a) of the Lease.  Such entry shall be without payment ofMonthly Base Rent or Rent Adjustments, but such entry and all acts andomissions in connection with it are subject to and governed by all otherprovisions of the Lease, including Tenant’s indemnification obligations,insurance obligations, obligations under Article Seven and the provisions ofSection 9.02.

 

                8.             Force and Effect.  The terms and conditions of this Worklettersupplement the Lease and shall be construed to be a part of the Lease and are incorporatedin the Lease.  Should any inconsistencyarise between this Workletter and the Lease as to the specific matters whichare the subject of this Workletter, the terms and conditions of this Worklettershall control.

 

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EXHIBIT C

CURRENTJANITORIAL SPECIFICATIONS

 

                ThisExhibit is attached to and a part of a certain Office Lease dated as ofSeptember 19, 2003 by and between Metropolitan Life Insurance Company, a NewYork corporation, as Landlord, and South Bay Bank, a National Association, asTenant, for the Premises (the “Lease”).

 

I.  Five times per week, excluding NationalHolidays:

 

                                                (1)                                  Sweep and damp mop all hard flooring and vacuum all carpeted areas.  Spot clean as necessary.

 

                                                (2)                                  Empty and clean all wastepaper containers, ash trays, receptacles, etc.,and damp wipe as necessary.

 

                                                (3)                                  Remove wastepaper and waste materials to a designated area or areas.

 

                                                (4)                                  Dust and wipe clean all furniture, hand reached fixtures, baseboards, andwindow sills.

 

                                                (5)                                  When applicable, clean restrooms and water fountains.

 

II.  One time per week (and as necessary):

 

                                                (1)                                  Remove all finger marks, smudges, and other marks from walls, doors,windows and other surfaces.

 

III.  One time per month (and as necessary):

 

                                                (1)                                  Scrub and wax hard flooring.

 

                                                (2)                                  High dust.

 

IV.  Two times per year (and as necessary):

 

                                                (1)                                  Clean all windows inside, including sills and frames, and outside.

 

V.  One time per year (and as necessary):

 

                                                (1)                                  Wash, clean, and dust ceiling fixtures and light panels.

 

 

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EXHIBIT D

RULES ANDREGULATIONS

 

                ThisExhibit is attached to and a part of a certain Office Lease dated as ofSeptember 19, 2003 by and between Metropolitan Life Insurance Company, a NewYork corporation, as Landlord, and South Bay Bank, a National Association, asTenant, for the Premises (the “Lease”).

 

                1.             No sidewalks, entrance, passages,courts, elevators, vestibules, stairways, corridors or halls shall beobstructed or encumbered by Tenant or used for any purpose other than ingressand egress to and from the Premises or the Project.

 

                2.             No awning or other projection shallbe attached to the outside walls or windows of the Project without the priorwritten consent of Landlord.  Nocurtains, blinds, shades, drapes or screens shall be attached to or hung in, orused in connection with any window or door of the Premises, without the priorwritten consent of Landlord.  Suchawnings, projections, curtains, blinds, shades, drapes, screens and other fixturesmust be of a quality, type, design, color, material and general appearanceapproved by Landlord, and shall be attached in the manner approved byLandlord.  All electrical fixtures hungin offices or spaces along the perimeter of the Premises must be fluorescent,of a quality, type, design, bulb color, size and general appearance approved byLandlord, which approval shall not be unreasonably withheld.

 

                3.             No sign, advertisement, notice orother lettering shall be exhibited, inscribed, painted or affixed by Tenant onany part of the outside or inside of the Premises or of the Project without theprior written consent of Landlord.  Inthe event of the violation of the foregoing by Tenant, Landlord may remove samewithout liability, and may charge the expense incurred by such removal to Tenant.  Interior signs on doors and directly tabletshall be inscribed, painted or affixed for Tenant by Landlord at the expense ofTenant, and shall be of a quality, quantity, type, design, color, size style,composition, material, location and general appearance acceptable to Landlord.

 

                4.             The sashes, sash doors, skylights,windows, and doors that reflect or admit light or air into the hallspassageways or other public places in the Project shall not be covered orobstructed by Tenant, nor shall any bottles, parcels, or other articles beplaced on the window sills, or in the public portions of the Project.

 

                5.             No show cases or other articlesshall be put in front of or affixed to any part of the exterior of the Project,nor placed in public portions thereof without the prior written consent ofLandlord.

 

                6.             The water and wash closets andother plumbing fixtures shall not be used for any purposes other than those forwhich they were constructed, and no sweepings, rubbish, rags or othersubstances shall be thrown therein.  Alldamages resulting from any misuse of the fixtures by Tenant shall be borne byTenant to the extent that Tenant or Tenant’s agents, servants, employees,contractors, visitors, or licensees shall have caused the same.

 

                7.             Tenant shall not paint, mark, drillinto or in any way deface any part of the Premises or the Project.  No boring or cutting shall be permitted,except with the prior written consent of Landlord, and as Landlord may direct.

 

                8.             No animal or bird of any kind shallbe brought into or kept in or about the Premises or the Project.

 

                9.             Prior to leaving the Premises forthe day, Tenant shall reasonably draw or lower window coverings and extinguishall lights.

 

                10.           Tenant shall not make, or permit tobe made, any unseemly or disturbing noises or interfere with occupants of theProject or neighboring buildings or premises or those having business withthem.  Tenant shall not throw anythingout of the doors, windows or skylights or down the passageways.

 

                11.           Except as otherwise permitted underSection 9 of the Lease, neither Tenant nor any of Tenant’s agents, servants,employees, contractors, visitors or licensees shall at any time bring or keepupon the Premises any flammable, combustible or explosive fluid, chemical orsubstance.

 

                12.           No additional locks, bolts or mailslots of any kind shall be placed upon any of the doors or windows by Tenant,nor shall any change be made in existing locks or the mechanism thereof;however, the foregoing shall not apply to any card key system which Tenantinstalls in full compliance with all other provisions of the Lease at its soleexpense and with respect to which Landlord is provided with all access cardsnecessary to fully exercise all of its entry rights under the Lease withrespect to the Premises.  Tenant must,upon the termination of the tenancy, restore to Landlord all keys of stores,offices and toilet rooms either furnished to or otherwise procured by Tenantand, in the event of the loss of any keys so furnished, Tenant shall pay to Landlordthe cost thereof.

 

                13.           All removals, or the carrying in orout of any safes, freight, furniture, fixtures, bulky matter or heavy equipmentof any description must take place during the hours which Landlord or its agentmay determine from time to time. Landlord reserves the right to prescribe the weight and position of allsafes, which must be placed upon two-inch thick plank strips to distribute theweight.  The moving of safes, 

 

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freight, furniture, fixtures, bulky matter or heavyequipment of any kind must be made upon previous notice to the Superintendentof the Building and in a manner and at the time prescribed by him, and thepersons employed by Tenant for such work are subject to Landlord’s priorapproval.  Landlord reserves the right toinspect all safes, freight or other bulky articles to be brought into theProject and to exclude from the Project all safes, freight or other bulkyarticles which violate any of these Rules and Regulations or the lease of whichthese Rules and Regulations are a part.

 

                14.           Tenant shall not occupy or permit anyportion of the Premises to be occupied as an office that is not generallyconsistent with the character and nature of an ordinary desk-type office.  Nor shall Tenant permit any portion of thePremises to be used (a) for an employment agency, a public stenographer ortypist, a labor union  office, aphysician’s or dentist’s office, a dance or music studio, a school, a beautysalon or barber shop, the business of photographic or multilith or multigraph reproductionsor offset printing (not precluding using any part of the Premises forphotographic, multilith or multigraph reproductions solely in connection withTenant’s own business and/or activities), a restaurant or bar, an establishmentfor the sale of confectionery or soda or beverages or sandwiches or ice creamor baked goods, an establishment for the preparation or dispensing orconsumption of food or beverages (of any kind) in any manner whatsoever, or asa news or cigar stand, or as a radio or television or recording studio, theateror exhibition hall, for manufacturing, for the storage of merchandise or forthe sale of merchandise, goods or property of any kind at auction, or forlodging, sleeping or for any immoral purpose, or for any business which wouldtend to generate a large amount of foot traffic in or about the Project or anyof the areas used in connection with the operation thereof, including but notlimited to any use (i) as a government office or foreign embassy or consulate,or (vi) as a tourist or travel bureau, or (b) a use which conflicts with anyso-called “exclusive” then in favor of, or is for any use the same as thatstated in any percentage lease to, another tenant of the Project, or (c) ause which would be prohibited by any other portion of the Lease (including butnot limited to any Rules and Regulations then in effect) or in violation ofLaw.  Tenant shall not engage or pay forany employees on the Premises other than those working at the Premises, norshall Tenant advertise for laborers giving an address at the Premises.

 

                15.           Tenant shall not purchase springwater, towels, janitorial or maintenance or other like service from any companyor persons not reasonably approved by Landlord. Landlord shall approve a sufficient number of sources of such service toprovide Tenant with a reasonable selection, but only in such instances and tosuch extent as Landlord in its judgment shall consider consistent with securityand proper operation of the Project.

 

                16.           Landlord shall have the right toprohibit any advertising or business conducted by Tenant referring to theProject which, in Landlord’s opinion, tends to impair the reputation of theProject or its desirability as a first class building for offices and, uponnotice from Landlord, Tenant shall refrain from or discontinue suchadvertising.

 

                17.           Landlord reserves the right toexclude from the Project between the hours of 6:00 P.M. and 8:00 A.M. on alldays, and at all hours on Saturdays, Sundays and National Holidays, all personswho do not present a pass to the Project issued by Landlord.  Landlord may furnish passes to Tenant so thatTenant may validate and issue same. Tenant shall safeguard said passes and shall be responsible for all actsof persons in or about the Project who possess a pass issued to Tenant.

 

                18.           Tenant’s contractors shall, while inthe Project, be subject to and under the control and direction of theSuperintendent of the Building (but not as agent or servant of saidSuperintendent or of Landlord) except for supervision of work.

 

                19.           If the Premises is or becomesinfested with vermin as a result of the use or any misuse or neglect of thePremises by Tenant, its agents, servants, employees, contractors, visitors, orlicensees, Tenant shall forthwith at Tenant’s expense cause the same to beexterminated from time to time to the satisfaction of Landlord and shall employsuch licensed exterminators as shall be approved in writing in advance byLandlord.

 

                20.           The requirements of Tenant will beattended to only upon application at or call to the office of the Project.  Project personnel shall not perform any workor do anything outside of their regular duties, unless under specialinstructions from the office of the Landlord.

 

                21.           Canvassing, soliciting and peddlingin the Project are prohibited and Tenant shall cooperate to prevent the same.

 

                22.           No water cooler, air conditioningunit or system or other apparatus shall be installed or used by Tenant withoutthe written consent of Landlord.

 

                23.           There shall not be used in any CommonAreas, public halls, plaza areas, lobbies or other space in the Project, eitherby Tenant or by jobbers or others, in the delivery or receipt of merchandise,any hand trucks or dollies, except those equipped with rubber tires and side guards.

 

                24.           Tenant, Tenant’s agents, servants,employees, licensees or visitors shall not park any vehicles in any driveways,service entrances, or areas posted “No Parking.”

 

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                25.           Tenant shall install and maintain, atTenant’s sole cost and expense, an adequate visibly marked (at all timesproperty operational) fire extinguisher next to any duplicating or photocopyingmachine or similar heat producing equipment, which may or may not containcombustible material, in the Premises.

 

                26.           Tenant shall reasonably keep itswindow coverings closed during any period of the day when the sun is shiningdirectly on the windows of the Premises.

 

                27.           Tenant shall not use the name of theProject for any purpose other than as the address of the business to beconducted by Tenant in the Premises, nor shall Tenant use any picture of theProject in its advertising, stationary or in any other manner without the priorwritten permission of Landlord.  Landlordexpressly reserves the right at any time to change said name without in anymanner being liable to Tenant therefor.

 

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EXHIBIT E

PROJECT

 

 

 

 

 

 

 

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EXHIBIT F

CURRENTPARKING RULES

 

                ThisExhibit is attached to and a part of a certain Office Lease dated as ofSeptember 19, 2003 by and between Metropolitan Life Insurance Company, a NewYork corporation, as Landlord, and South Bay Bank, a National Association, asTenant, for the Premises (the “Lease”).

 

                1.  Carsmust be parked entirely within painted stall lines.

 

                2.  Alldirectional signs and arrows must be observed.

 

                3.  Allposted speed limits for the parking areas shall be observed.  If no speed limit is posted for an area, thespeed limit shall be five (5) miles per hour.

 

                4. Parking is prohibited:

 

                                (a)  inareas not striped for parking;

                                (b)  inaisles;

                                (c)  where“no parking” signs are posted;

                                (d)  onramps;

                                (e)  incross-hatched areas; and

                                (f)  insuch other areas as may be designated by Landlord.

 

                5.  Handicapand visitor stalls shall be used only by handicapped persons or visitors, asapplicable.

 

                6.  Parkingstickers or any other device or form of identification supplied by Landlordfrom time to time (if any) shall remain the property of Landlord.  Such parking identification device must bedisplayed as requested and may not be mutilated in any manner.  The serial number of the parkingidentification device may not be obliterated. Devices are not transferable and any device may not be obliterated.  Devices are not transferable and any devicein the possession of an unauthorized holder will be void.  There will be a replacement charge payable bythe parker and such parker’s appropriate tenant equal to the amount posted fromtime to time by Landlord for loss of any magnetic parking card or any parkingsticker.

 

                7.  Everyparker is required to park and lock his or her own car.  All responsibility for damage to cars orpersons is assumed by the parker.

 

                8.  Lossor theft of parking identification devices must be reported to Landlord, and areport of such loss or theft must be filed by the parker at that time.  Any parking identification devices reportedlost or stolen found on any unauthorized car will be confiscated and theillegal holder will be subject to prosecution. Lost or stolen devices found by the parker must be reported to Landlordimmediately to avoid confusion.

 

                9.  Parkingspaces are for the express purpose of parking one automobile per space.  Washing, waxing, cleaning or servicing of anyvehicle by the parker and/or such person’s agents is prohibited.  The parking areas shall not be used forovernight or other storage for vehicles of any type.

 

                10. Landlordreserves the right to refuse the issuance of parking identification or accessdevices to any tenant and/or such tenant’s agents or representatives whowillfully refuse to comply with the Parking Rules and/or all applicablegovernmental ordinances, laws or agreements.

 

                11. Tenantshall acquaint its employees and visitors with the Parking Rules, as they maybe in effect from time to time.

 

                12. Anymonthly rate for rental of a parking space shall be paid one month in advanceprior to the first day of such month. Failure to do so will automatically cancel parking privileges, and acharge of the prevailing daily rate will be due.  No deductions or allowances from the monthlyrate will be made for days a parker does not use the parking facilities.

 

                13. Eachparker shall pay a reasonable deposit for any parking card issued to suchperson.  Such deposit shall be paid atthe time the parking card is issued and shall be forfeited if the parking cardis lost.  Such deposit shall be returnedwithout interest, at the time such person ceases to utilize the parkingfacilities, upon surrender of the parking card. A reasonable replacement charge shall be paid to replace a lost card andan amount in excess of the initial deposit may be charged as the replacementfee.

 

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EXHIBIT G

RENTABLEAREA & USABLE AREA

 

                ThisExhibit is attached to and a part of a certain Office Lease dated as ofSeptember 19, 2003 by and between Metropolitan Life Insurance Company, a NewYork corporation, as Landlord, and South Bay Bank, a National Association, asTenant, for the Premises (the “Lease”).

 

                “RentableArea” and “Usable Area” under the Lease shall be determined by Landlord in anyreasonable fashion consistently applied throughout the Project whichsubstantially conforms with BOMA standards, modified as follows:

 

                (a)           As to each floor of the Building onwhich the entire space rentable to tenants is or will be leased to one tenant,the Rentable Area attributable to such tenant shall be the total of(i) the entire area bounded by the interior surface of the exterior wallsof the Building on such floor, including all areas used for elevator lobbies,corridors, special stairways and elevators, restrooms, mechanical rooms,electrical rooms and telephone closets; however, excluding the area containedwithin the Building stairs, fire towers, vertical ducts, elevator shafts,flues, vents, stacks and pipe shafts, but without deduction for columns orother structural portions of the Building or any other vertical penetrations;and (ii) that portion of the covered or enclosed Common Areas whichconstitute a part of the Building and which are maintained by Landlord for thecommon benefit of all tenants of the Building which bears the same proportionto the total area of such Common Areas as the Rentable Area of such tenantunder (i) above bears to the Rentable Area of the Building (excluding suchcommon facilities).

 

                (b)           As to each floor of the Building onwhich space is or will be leased to more than one tenant, the Rentable Areaattributable to each such tenant shall be the total of (i) the entire areaincluded within such tenant’s premises, as bounded by the interior surface ofany exterior walls of the Building bounding such premises, the exterior surfaceof all walls separating such premises from any public corridors or other publicareas on such floor, and the centerline of all walls separating such premisesfrom other areas leased or to be leased to other tenants on such floor;however, excluding the area contained within the Building stairs, fire towers,vertical ducts, elevator shafts, flues, vents, stacks and pipe shafts, but withoutdeduction for columns or other structural portions of the Building or any othervertical penetrations; (ii) that portion of the area used for elevatorlobbies, corridors, restrooms, mechanical rooms, electrical rooms and telephoneclosets situated on such floor which bears the same proportion to the totalarea of such facilities as the Rentable Area of such tenant under (i)above bears to the Rentable Area of such floor (excluding such facilities); and(iii) that portion of the covered or enclosed Common Areas whichconstitute a part of the Building and which are maintained by Landlord for thecommon benefit of all tenants of the Building which bears the same proportionto the total area of such Common Areas as the Rentable Area of such tenantunder (i) and (ii) above bears to the Rentable Area of the Building(excluding such common facilities).

 

                (c)           For purposes of establishing theMonthly Base Rent, Tenant’s Share, Building Share and Landlord’s MaximumContribution, if any, pursuant to the Workletter as of the date of the Lease,the Rentable Area of the Premises is deemed to be as set forth in Section1.01(11), the Usable Area of the Premises is deemed to be as set forth inSection 1.01(13), the Rentable Area of the Building is deemed to be as setforth in Section 1.01(10), and the Rentable Area of the Project is deemed to beas set forth in Section 1.01(12), which on a per building basis is deemed to be123,420 square feet for Building A, 3070 Bristol Street, and 123,420 squarefeet for Building B, 3090 Bristol, and 115,299 square feet for Building C, 3080Bristol.  In the event that the demisingwalls of the Premises are to be built or modified after the date of executionof the Lease (either upon Tenant’s initial occupancy or any subsequent changein the Premises pursuant to other provisions of this Lease), then when suchdemising walls are substantially complete, Landlord shall have the right toverify or correct the square footage of the Rentable Area of the Premises andthe Usable Area of the Premises and accordingly adjust other amounts under theLease based upon such square footage.  Atsuch time(s) at Landlord’s option, Landlord’s architect shall determine andcertify in writing to Tenant and Landlord the actual Rentable Area of thePremises and Usable Area of the Premises, which such determinations andcertifications shall be conclusive, and thereupon Landlord shall accordinglyadjust other amounts under the Lease based upon such square footage, includingthe Monthly Base Rent,  Tenant’s Shareand Landlord’s Maximum Contribution, if any, pursuant to the Workletter.

 

                (d)           The term “Usable Area” shall meanonly that portion of the Rentable Area determined under subsection (a)(i) or(b)(i) above, as the case may be, subject to the provisions of subsection (c)above.

 

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EXHIBIT H

ATM LICENSE

 

                ThisExhibit is attached to and a part of a certain Office Lease dated as ofSeptember 19, 2003 by and between Metropolitan Life Insurance Company, a NewYork corporation, as Landlord, and South Bay Bank, a National Association, asTenant, for the Premises (the “Lease”).

 

**LICENSEAGREEMENT**

**FOR**

**AUTOMATED TELLER MACHINE**

 

 

                This agreement (the “Agreement”) dated                  ,2003, is made by and between **METROPOLITANLIFE INSURANCE COMPANY**, a New York corporation (“Licensor”), and **SOUTH BAY BANK**, a                                   (“Licensee”).

 

1.             **Premises**.  Licensor hereby grants a license to Licenseeto establish and install one (1) automatic teller machine and night depository(collectively, the “ATM”) on the exterior wall or window adjacent to the frontdoor of the building commonly known as South Coast Corporate Center (the “Building”),located at 3070 Bristol Street, Costa Mesa, California as shown on Exhibit Aattached hereto and made a part hereof (the “Premises”) which ATM will dispensecash and perform such other transactions as are permitted by applicablelaw.  Licensee is solely responsible forall service, repairs and maintenance to the ATM and all costs associated therewithand agrees to manage, operate and maintain the ATM.  Without limiting the foregoing, Licenseeshall:

 

(a)                                  Handle mechanical malfunctions in a timely manner;

 

(b)                                 Dealdirectly with ATM service providers such as ATM repair persons (Licensor shallnot be required to handle these relationships except as incidental to itsownership or control of the Building); and

 

(c)                                  Shall havethe right to install such additional, ancillary improvements that may berequired by Law or as deemed necessary by Tenant such as security cameras andlights.

 

2.             **Term**.  The term of this Agreement shall commence on                       ,2003 and shall be coterminous with that certain lease between Licensor andLicensee dated                    ,2003 (the “Lease”) including any extension of the term of the Lease.

 

3.             **Installation andMaintenance**.  Installationand maintenance of the ATM shall be at Licensee’s sole cost  The selection of contractors chosen byLicensee to install the ATM must be approved by Licensor prior to installationof the ATM.  Licensee shall submit itsplans (including plans for the proposed design and location of signs on theATM) for installation which shall also include the estimated weight of the ATMto be installed to Licensor prior to the commencement of the installationthereof for Licensor’s review and approval. Licensee shall not make any alterations, additions or improvements tothe Premises without the prior written consent of Licensor.  Installation process, installation locationand maintenance shall be coordinated with Licensor and subject to supervisionby Licensor or its building staff, without charge.  Contractors must abide by the building rulesand regulations, provide adequate insurance and evidence of such insurance uponrequest of Licensor and hold harmless Licensor, except for Licensor’s grossnegligence or willful misconduct. Licensee shall avoid and minimize anydisturbance to the operation of the Building and to the tenants of the Buildingduring installation, alteration or maintenance of the ATM.

 

4.             **Licensee Covenants**.  Licensee shall at all times observe thefollowing rules and regulations with respect to the Premises: (a) Licenseeshall maintain the ATM in a clean, sanitary, attractive and safe condition andin good repair; (b) Licensee shall not perform any act or carry on any practicewhich may injure the Premises or any portion of the Building or any person atthe Building, or which may void any of Licensor’s insurance on the Building orincrease the premium rate therefor; (c) Licensee shall not keep or display anymerchandise in the floor area adjacent to the Premises or otherwise obstructsaid area; (d) Licensee shall not overload the floor of the Premises; (e)Licensee shall at all times comply with all laws pertaining to the Premises orthe conduct of Licensee’s business thereat; and (f) Licensee shall perform allloading and unloading of goods only at such times and in such places as isdesignated by Licensor for such purpose. Licensee shall comply with such other reasonable rules and regulationsas Licensor may from time to time adopt with respect to the Building.

 

5.             **Liens**.  Licensee shall promptly pay for any work doneor material furnished by or on behalf of Licensee in or about the Premises orBuilding and shall not permit or suffer any lien to attach to the Premises orall or any part of the Building and Licensee shall have no authority or power,express or implied, to create or cause any lien, charge or encumbrance of anykind against the Premises or all or any part of the Building.  If any lien shall at any time be filedagainst the Premises or against any part of the Building by reason of work,labor, services or materials alleged to have been performed or furnished by,for or to Licensee or to anyone holding the Premises through or under Licensee,Licensee shall forthwith cause the same to be discharged of record or bonded tothe satisfaction of Licensor.  IfLicensee shall fail to cause such lien forthwith to be so discharged or bondedafter being notified of the filing thereof, then, in 

 

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addition to any other rightor remedy of Licensor, Licensor may discharge the same by paying the amountclaimed to be due, and the amount so paid by Licensor and all costs andexpenses, including reasonable attorneys’ fees incurred by Licensor, inprocuring the discharge of such lien, shall be due and payable by Licensee toLicensor as an additional amount on the first day of the next followingmonth.  Licensor shall take allreasonable steps necessary to maintain the ATM free from any mortgage, securityagreement, lien or encumbrance, except liens arising by operation of law fortaxes not yet due and payable.

 

6.             **GovernmentalRegulation**.  Licensee hasthe sole obligation to secure, and shall secure without expense to Licensor,any building permits, changes in zoning variances and approvals which are ormay be required for the ATM from local, state and any governmental agency whichregulates such systems.  Licensor’sapproval of the design or installation of the ATM does not constitute agreementthat any of the requisite governmental permits or approvals have been issued orgranted.  Licensee shall comply with anyand all laws, ordinances and/or regulations applicable to the ownership,deployment, operation or maintenance of the ATM, including without limitationFederal Regulation E and any such laws, ordinances and/or regulations which areapplicable to financial settlement of ATM transactions, electronic transfers offunds or the operation of so-called “electronic branches” or ATMs generally.

 

7.             **FinancialSettlement**.  Licenseeshall be solely responsible for all financial settlements of, and any and allobligations or liabilities arising from or with respect to, all ATMtransactions.  Without limiting thegenerality of the foregoing, Licensee shall be responsible for daily financialsettlement with electronic funds transfer (EFT) networks and any other relevantthird party payers, obligors or their respective agents, and Licensee shallbear sole responsibility with respect to any shortages of cash or other ATMinventory in connection with any such financial settlements.

 

8.             **Interference**.  Licensee must modify or remove the ATM andLicensor may terminate this Agreement if the ATM, in Licensor’s sole judgment,causes any interference or disturbs the operation of any other equipment ofLicensor or any tenants of the Building or creates or maintains any noise, odoror nuisance tending to disturb any occupant of the Building or areas adjacentthereto.  Licensee must immediately shutthe ATM off upon notification of interference and may be allowed to restart amodified ATM to test for interference only with Licensor’s permission.

 

9.             **Interruption**.  Licensor may from time to time and onreasonable advance notice to Licensee (except in the event of an emergency),require temporary interruption of service for repairs, maintenance,modification of the Premises or Building, including, but not limited to,roofing, structural, electrical or mechanical repairs.

 

10.           **Damage**.  Licensee is solely responsible for damage tothe Premises, Building, equipment, property, or bodily personal injury relatedto or caused by the ATM, except for damage due to the negligent or intentionalacts of Licensor, its agents, employees or contractors.  Licensee agrees that Licensor shall not beliable, responsible or accountable for any loss, injury, death or damage topersons or property which at any time may be suffered or sustained by Licenseeor by any person occurring in, on or about the Premises or as a consequence,direct or indirect, of the existence, installation, repairs to, maintenance orremoval of the ATM, and Licensee agrees to protect, defend, indemnify and saveLicensor harmless from any and all claims, liabilities, losses, damages, costs,attorneys’ fees and expenses arising out of any such loss, injury, death ordamage, except where such claims, liabilities, losses, damages, costs,attorneys’ fees and expenses are due to the negligent or intentional acts ofLicensor, its agents, employees or contractors. Licensee agrees to pay for all damage done to the Premises or Buildingby Licensee, or any person or persons brought onto the Premises or into theBuilding by Licensee in connection with the ATM.

 

11.           **License**.

 

(a)                                  Licensee, Repair people, etc.  Licensor hereby grants Licensee and Licensee’sagents, officers and employees a non-exclusive right to enter upon the Premisesduring normal business hours with prior notice to Licensor and approval byLicensor of the date and time of entry in each instance (which approval willnot be unreasonably withheld) for the purpose of performing Licensee’s dutiesunder this Agreement, including, without limitation, the installation,management and maintenance of the ATM and any cameras or other securityequipment.

 

(b)                                 Regulators. Licensor shall also permit any and all regulators, examiners andauditors of Licensee or any automatic teller machine network, as well asofficers, employees and agents of any such automatic teller machine networkitself, to have access to the ATM during normal business hours, upon presentationof proper identification.

 

12.                                 **Covenants of Licensor**.  Provided Licensee complies with all of theterms, covenants and conditions of this Agreement, Licensor shall:

 

(a)                                  Site Maintenance.  Maintain the Premises in a clean conditionand in good repair.

 

(b)                                 Utilities. Pay all electrical bills associated with the installation, maintenanceand operation of the ATM and any related security cameras.

 

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13.           **Restoration.**  Upon termination of this Agreement, Licensee,at Licensee’s expense, must remove the ATM and promptly restore the Premises tothe condition as existed on the date of installation of the ATM.  Licensee shall also promptly repair anydamage to the Premises or any other areas caused by removal of the ATM.  Any part of the ATM which Licensee fails toremove from the Premises at the expiration of the term of this Agreement shallbe deemed abandoned by Licensee and shall become the property of Licensor.

 

14.           **Cost Recovery**.  If Licensee does not comply with the termshereof, Licensor may elect to hire its own contractor to remedy any conditionafter ten (10) days written notice to Licensee and may charge related costs toLicensee which shall be payable by Licensee to Licensor within thirty (30) daysafter Licensor renders a statement to Licensee therefor.

 

15.           **Insurance**.  Licensee shall carry insurance during theentire term of this agreement insuring Licensee and Licensor as their interestmay appear with terms, coverages and limits and with companies satisfactory toLicensor.  Licensee shall maintain thefollowing coverages in the following amounts:

 

(a)                                  In case ofpersonal injury to or death of any person or persons, not less than One MillionDollars ($1,000,000.00) for each injury to or death of a person and ThreeMillion Dollars ($3,000,000.00) for each occurrence; and in case of propertydamage, not less than One Million Dollars ($1,000,000.00) for any one (1)occurrence; and

 

(b)                                 In case offire, sprinkler leakage, malicious mischief, vandalism and other extendedcoverage perils, for the full replacement value of all additions, improvementsand alterations to the Premises.

 

                Licensee  shall, prior to the commencement of thisagreement and thereafter during the term of this agreement, upon request byLicensor, furnish to Licensor certificates evidencing such coverage, whichcertificates shall state that such insurance coverage may not be changes orcanceled without at least thirty (30) days prior written notice to Licensor andLicensee.

 

                Licensor and Licensee each hereby waive any and everyclaim for recovery from the other for any and all loss or damage to thePremises or the contents thereof, which loss or damage is covered by valid andcollectable fire and extended coverage insurance policies to the extent thatsuch loss or damage is recoverable under said insurance policies.  Inasmuch as this mutual waiver will precludethe assignment of any such claim by subrogation (or otherwise) to an insurancecompany (or any other person), Licensor and Licensee each agree to give to eachinsurance company which has issued, or in the future may issue, its policies offire and extended coverage insurance, written notice of the terms of thismutual waiver and to have said insurance policies properly endorse, ifnecessary, to prevent the invalidation of said insurance coverage by reason ofsaid waiver.

 

16.           **Signs**.  Except as maybe approved by Licensor pursuantto Paragraph 4, Licensee shall not inscribe, paint or affix any sign,advertisement, display or notice on any part of the Premises, ATM or theBuilding without obtaining Licensor’s prior written consent in each instance.

 

17.           **Representations**.  Licensee represents as follows:  Any servicing other than routinereplenishment of currency in the ATM will be coordinated with Licensor; the ATMis UL approved; the ATM will not emit radiation; and the ATM will not interferewith other existing building equipment.

 

18.           **Termination**.  Either party shall have the right toterminate this agreement at any time for cause on not less than thirty (30)days written notice to the other party, it being understood that “cause” shall be limited toa default under this agreement past any applicable cure period.

 

19.           **Assignment**.  Licensee shall not assign this Agreement orotherwise transfer all or a portion of its rights hereunder without the priorwritten consent of Licensor which may be granted or denied in Licensor’s soleand absolute discretion, it being understood that Licensee may, in connectionwith a similar assignment of the Lease, assign this Agreement to (i) a parentor affiliate of Licensee, (ii) an entity resulting from the merger orconsolidation of Licensee with a third party, or (iii) an entity purchasing allor substantially all of the assets of Licensee. Licensor shall have the right to assign this Agreement to any party whobecomes an owner of the Building or otherwise obtains an interest in theBuilding, and upon such assignment, the assignee shall be deemed to have fullyassumed all liabilities and obligations of Licensor hereunder, and the originalLicensor shall be free from all liabilities and obligations accruing after thedate of said assignment.  Licensor shallalso have the right to collaterally assign this Agreement to any lender or forother security purposes.

 

20.           **Exculpation**.  Licensee agrees, on its behalf and on behalfof its successors and any permitted assigns, that any liability of Licensorwith respect to this Agreement shall never exceed the amount of Five Millionand No/100 Dollars ($5,000,000) and Licensee shall not be entitled to anyjudgment in excess of such amount.

 

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21.           **Notices**.

 

(a)                                  All notices, demands or requests provided for or permitted to be givenpursuant to this Agreement must be in writing and shall be personallydelivered, sent by Federal Express or other overnight courier service, ormailed by first class, registered or certified mail, return receipt requested,postage prepaid.

 

(b)                                 All notices, demands or requests to be sent pursuant to this Agreementshall be deemed to have been properly given or served by delivering or sendingthe same in accordance with this Section, addressed to the parties hereto attheir respective addresses listed in the Lease.

 

(c)                                  If notices, demands or requests are sent by registered or certified mail,said notices, demands or requests shall be effective upon being deposited inthe United States mail.  However, thetime period in which a response to any such notice, demand or request must begiven shall commence to run from the date of receipt on the return receipt ofthe notice, demand or request by the addressee thereof.  Rejection or other refusal to accept or theinability to deliver because of changed address of which no notice was givenshall be deemed to be receipt of notice, demand or request sent.

 

Notices mayalso be served by personal service upon any officer, director or partner ofLicensor or Licensee or in the case of delivery by Federal Express or otherovernight courier service, notices shall be effective upon acceptance ofdelivery by an employee, officer, director or partner of Licensor or Licensee.

 

(d)                                 By giving to the other party at least thirty (30) days written noticethereof, either party shall have the right from time to time during the term ofthis Agreement to change their respective addresses for notices, statements,demands and requests, provided such new address shall be within the UnitedStates of America.

 

22.                                 **Miscellaneous**.

 

(a)                                  Independent Contractors.  The parties hereto agree that they areindependent contractors and that neither party is an agent of the other.

 

(b)                                 Successors. This Agreement shall bind and inure to the benefit of the parties andtheir respective successors and permitted assigns.

 

(c)                                  Captions. Captions in this Agreement are for convenience of reference only andshall not define or limit any of the terms or provisions hereof.  References herein to Sections or provisionswithout reference to the document in which they are contained are references tothis Agreement.

 

(d)                                 Singular and Plural.  Unless the context requires otherwise,wherever used herein the singular shall include the plural and vice versa, andthe use of one gender shall also denote the other.

 

(e)                                  Construction. This Agreement and any document or instrument executed in connectionherewith shall be governed by, and construed and interpreted in accordancewith, the laws of the State of California and any applicable federal law, andshall be deemed to have been executed in the State of California.  If any term, covenant or condition of thisAgreement or the application thereof to any person or circumstance shall, toany extent, be invalid or unenforceable, the remainder of this Agreement, orthe application of such term, covenant or condition to persons or circumstancesother than those as to which it is held invalid or unenforceable, shall not beaffected thereby and each item, covenant or condition of this Agreement shallbe valid and be enforced to the fullest extent permitted by law.

 

(f)                                    Authorization. Each party represents and warrants to the other that the execution,delivery and performance of this Agreement and its obligations hereunder havebeen duly authorized and are within such party’s rights and powers.

 

(g)                                 Submissionto Jurisdiction; Venue.  The parties irrevocably agree that all suits,actions or other proceedings (including without limitation ancillaryproceedings) in any way, manner or respect arising out of or from or related tothis Agreement or any document or instrument executed in connection herewithshall be subject to litigation in courts having situs within                        ,California.  The parties hereby consentand submit to the jurisdiction of any local, state or federal court locatedwithin said city and state.  **IN CONNECTION WITH ANY SUIT, ACTION OR OTHERPROCEEDING BROUGHT IN ACCORDANCE WITH THIS SECTION THE PARTIES HEREBY WAIVE ANYRIGHT TO (i) REQUEST OR DEMAND TRIAL BY JURY, (ii) TRANSFER OR CHANGE VENUE, OR(iii) CLAIM THAT SUCH PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.**

 

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(h)                                 Access. The general public shall have access to the ATM during StandardOperating Hours.

 

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(i)                                     Entire Agreement.  This Agreement and the Lease contain theentire agreement between Licensor and Licensee concerning the Premises andthere are no other agreements, either oral or written between Licensor andLicensee concerning the Premises.  This Agreementshall not be modified except by a writing executed by Licensor and Licensee.

 

                **IN WITNESS WHEREOF**, the parties hereto havecaused this Agreement to be duly executed as of the day and year first abovewritten.

 
| **LICENSOR:**                                                 |   | **LICENSEE:**                        |
|---------------------------------------------------------------|--------|--------------------------------------|
|                                                          |   |                                 |
| South Bay Bank,                                               |   | Metropolitan Life Insurance Company, |
| a National Association                                        |   | a New York corporation               |
|                                                          |   |                                 |
|                                                          |   |                                 |
| By                                                            |   |                                 | By |   |
|                                                          |   |                                 |
|                                                          |   | (Print Name)                         |   |   |   | (Print Name) |
|                                                          |   |                                 |   |   |   |
| Its                                                           |   |                                 | Its |   |
| (Chairman of Board, President or Vice President)              |   |                                 |
|                                                          |   |                                 |
| By                                                            |   |                                 |   |
|                                                          |   |                                 |
|                                                          |   | (Print Name)                         |   |   |
| Its                                                           |   |                                 |   |
| (Secretary, Assistant Secretary, CFO or Assistant  Treasurer) |
|                                                               |        |                                      |  |  |  |  |  |  |

 

 

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RIDER 1

COMMENCEMENTDATE AGREEMENT

 

Metropolitan Life Insurance Company, a New Yorkcorporation (“Landlord”), and South Bay Bank, a National Association (“Tenant”),have entered into a certain Office Lease dated as of September 19, 2003 (the “Lease”).

 

                WHEREAS,Landlord and Tenant wish to confirm and memorialize the Commencement Date andExpiration Date of the Lease as provided for in Section 2.02(b) of the Lease;

 

                NOW,THEREFORE, in consideration of the foregoing and the mutual covenants containedherein and contained in the Lease, Landlord and Tenant agree as follows:

 

                1.             Unless otherwise defined herein,all capitalized terms shall have the same meaning ascribed to them in theLease.

 

                2.             The Commencement Date (as definedin the Lease) of the Lease is                         .

 

                3.             The Expiration Date (as defined inthe Lease) of the Lease is                           .

 

                4.             Tenant hereby confirms thefollowing:

 

                                                                (a)           That it has accepted possession ofthe Premises pursuant to the terms of the Lease;

 

                                                                (b)           That the Landlord Work isSubstantially Complete;

 

                                                                (c)           That the Rentable Area of thePremises is        ; and

 

                                                                (d)           That the Lease is in full force andeffect.

 

                5.             Except as expressly modifiedhereby, all terms and provisions of the Lease are hereby ratified and confirmedand shall remain in full force and effect and binding on the parties hereto.

 

                6.             The Lease and this CommencementDate Agreement contain all of the terms, covenants, conditions and agreementsbetween the Landlord and the Tenant relating to the subject matter herein.  No prior other agreements or understandingspertaining to such matters are valid or of any force and effect.

 
| TENANT:                                                       |   | LANDLORD:                            |
|---------------------------------------------------------------|--------|--------------------------------------|
|                                                          |   |                                 |
| South Bay Bank,                                               |   | Metropolitan Life Insurance Company, |
| a National Association                                        |   | a New York corporation               |
|                                                          |   |                                 |
|                                                          |   |                                 |
| By                                                            |   |                                 | By |   |
|                                                          |   |                                 |
|                                                          |   | (Print Name)                         |   |   |   | (Print Name) |
|                                                          |   |                                 |   |   |   |
| Its                                                           |   |                                 | Its |   |
| (Chairman of Board, President or Vice President)              |   |                                 |
|                                                          |   |                                 |
| By                                                            |   |                                 |   |
|                                                          |   |                                 |
|                                                          |   | (Print Name)                         |   |   |
| Its                                                           |   |                                 |   |
| (Secretary, Assistant Secretary, CFO or Assistant  Treasurer) |
|                                                               |        |                                      |  |  |  |  |  |  |

 

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