**Exhibit 10.14**

**OFFICE BUILDING LEASE**

 

This Lease, dated, for reference purposes only, on this    10th      day of    September  20 04  , is made between LANDLORD and TENANT,

**WITNESSETH:**

 

**1.**** TERMS AND DEFINITIONS****.**  For the purpose of thisLease, the following terms shall have the following definitions and eanings:

**a.**             ******LANDLORD****:**   Encino Corporate Plaza,L.P.                                                                            

 

**b.**                       **LANDLORD’s Representative:**(The authorizedrepresentative of LANDLORD for all rental payments and all notices as providedherein)     Milbank Real Estate Services, Inc. 

727 West 7th Street, Suite 800, Los Angeles, California90017

 

**c.**                       **TENANT:**   Mercantile National Bank,N.A., a national bank**                                                 **

 

**d.**             ******TENANT’sAddress:**

                   16661 Ventura Boulevard, Suite 110, Encino,California  91436                                                       

 

**e.**             **Building’s Name and Address:**  Encino Corporate Plaza,    16661 Ventura Blvd., Encino, California91436     

 

**f.**              ******SuiteNumber:**110, consisting of approximately1650 rentable square feet   

 

**g.**             ******Floor(s)upon which the Premises are located:**   First   

 

**h.**             **Premises:**Those certain Premisesdescribed in Paragraph 2.

 

**i.**              ******Term:**   Sixty (60)     months and    -0-  days.

 

**j.**              ******CommencementDate:**    June 1, 2004                               

 

**k.**            ******ExpirationDate:**        May 31, 2009                                  

 

**l.**              ******MonthlyBasic Rent:**    FourThousand Five Hundred and No/100 Dollars ($4,500.00)                               

 

**m.**            ******TENANT’sPercentage Share****:**          1.01%                             

 

**n.**             ******SecurityDeposit:**   FourThousand Five Hundred and No/100 Dollars ($4,500.00)                                   

 

**o.**             ******Permitted Use:**     Commercial Bank Branch, including ATMand Night Depository    

 

**p.**             **Parking:******   See Paragraph 1 of the Exhibit“B”

 

**q.****         ****Brokers:**   Milbank Real EstateServices, Inc., for the Landlord, and Cushman Wakefield for the Tenant

 

**r.**             **Initial Payment Upon Execution of Lease:**
| ** ** | **i.**   |   | 1st Month Basic Rent:  |   | $ | 4,500.00 |   |
|------------|----------|--------|------------------------|--------|---|----------|--------|
| ** ** | **ii.**  |   | Last Month Basic Rent: |   | $ | 0.00     |   |
| ** ** | **iii.** |   | Security Deposit:      |   | $ | 4,500.00 |   |
| ** ** | **iv.**  |   | 1st Month Parking:     |   | $ | 0.00     |   |
| ** ** | **v.**   |   | Miscellaneous:         |   | $ | 0.00     |   |
|       |     |   | Total:                 |   | $ | 9,000.00 |   |

**s.**             **Additional documents:** Attached tothis Lease and incorporated herein by reference are:   Exhibits “A” and “B”

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |
| ** ** | ** ** |                          |       |       |

 

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**2.**  ** PREMISES LEASED.**  For and in consideration of the covenantshereinafter mentioned, LANDLORD leases to TENANT and TENANT hereby leases fromLANDLORD the Premises contained within suite designated in Paragraph 1.f.  The rent hereunder is a negotiated sum determinedby a number of factors including but not limited to:  (i) the location of the Premises within inthe Building, (ii) the extent of the improvements in the Premises,(iii) thelength of the Lease term, (iv) the intended use of the Premises, (v) the creditworthiness of the TENANT, (vi) LANDLORD’s prior business dealings with theTENANT,  and (vii) the approximaterentable square footage of the Premises. The term “approximate rentable squarefootage” contained in this Lease, includes a portion of all common areas in theBuilding and areas dedicated to the service of the Building which essentiallycomprises the whole floor upon which the premises are located, withoutdeduction for columns and projections necessary to the Buildings structure,plus the ground floor common areas located within the Building.  The rentable square footage of the Premisesand the Building are determined by LANDLORD’s architect, which suchdetermination shall be conclusive and binding upon the parties herein.

 

**3.**  **  TERM.**The term of this Lease shall be for the period designated in Paragraph 1.i,commencing on the Commencement Date and ending on the Expiration Date, unlessthe term hereby demised shall be sooner terminated as hereinafterprovided.  If TENANT, with LANDLORD’sconsent, takes possession of the Premises prior to the commencement of thisLease, then TENANT shall be subject to all the covenants and conditions hereof,and shall pay rent for the period beginning with the date TENANT takespossession at the monthly rate prescribed in Paragraph 1.l.

 

**4.**  ** MONTHLY BASIC RENT.** The TENANT agrees to pay the LANDLORD asbasic rent for said leased Premises, for the initial period of the Lease as setforth in Paragraph 1.i, in monthly installments as set forth in Paragraph 1.l(the basic monthly rental) subject to adjustments as hereinafter provided (plussuch other sums as are hereinafter provided for), each installment payable inadvance on the first day of each and every calendar month during the termhereof, commencing on the Commencement Date as set forth in Paragraph 1.j ofthis Lease in lawful money of the United States of America, which the TENANTagrees to pay to the LANDLORD without deduction or offset, prior notice ordemand, at the office of the Building or such other place as the LANDLORD maydesignate, except that if the Commencement Date occurs on a day other than thefirst day of the month, then the Basic Rent for the fraction  of the month starting with the CommencementDate shall be paid on said Commencement Date, prorated on the basis of theactual number of days in said month.  Ifthe term hereof ends on a day other than the last day of a month, then theBasic Rent for the month during which said expiration occurs shall be proratedon the basis of the actual number of days TENANT occupies the Premises and a 30day month.  In addition to said BasicRent, TENANT agrees to pay “Additional Rent” as and when hereinafter providedin this Lease.  Basic Rent and AdditionalRent are hereinafter sometimes referred to collectively as the “rent”.

 

           Upon execution of thislease, TENANT shall pay the LANDLORD the sums as set forth in Paragraph 1.r.The time of payment of Basic Rent and additional rent hereunder is of theessence of this Lease and, in addition to all of the other remedies availableto LANDLORD, hereunder shall bear interest at the maximum rate permitted by lawafter due date until paid in full.

 

**5.****  LATE CHARGES.**  TENANT hereby acknowledges that late paymentby TENANT to LANDLORD of rent and other sums due hereunder will cause LANDLORDto incur costs not contemplated by this Lease, the exact amount of which willbe impractical or extremely difficult to ascertain.  Such costs include, but are not limited to,processing and accounting charges and late charges which may be imposed onLANDLORD by the terms of the trust deed encumbering the Premises.  Accordingly, if any installment of rent orany other sum due from TENANT shall not be received by LANDLORD within five (5)days after such amount shall be due, TENANT shall pay to LANDLORD a late chargeequal to 10% of such overdue amount.  Theparties hereby agree that such late charge represents a fair and reasonableestimate of the costs LANDLORD will incur by reason of late payment. TENANTacknowledges that the aforesaid amount of 10% is not a penalty, but is anamount that is acknowledged by the parties as the amount representing theliquidated damages that LANDLORD will suffer as a result of the late payment,taking into consideration all facts and circumstances known to the parties atthis time and represents a fair and reasonable estimate of the costs theLANDLORD will incur by reason of the late payment. The parties further agreethat proof of actual damage would be costly or inconvenient.  The late charge shall be consideredAdditional Rent as defined in Paragraph 4 of this Lease, and shall be inaddition to all of LANDLORD’s other rights and remedies hereunder or at law. Inaddition to the late charge described herein, any Monthly Basic Rent, or otheramounts owed by TENANT to LANDLORD which are not paid on or before the datethey are due, shall thereafter bear interest until paid in full at a rate equalto twelve percent (12%) per annum, provided that in no event shall such rateexceed the highest rate permitted by applicable law.  The Late Charge and interest payablehereunder shall be considered Rent.  IfTENANT’s check is returned by the bank, in addition to the late charge of 10%as specified above, TENANT shall also pay to LANDLORD the charge made by thebank for the returned check and LANDLORD’s return check charge of $15.00 percheck returned.** **Notwithstandinganything to the contrary in this Paragraph 5, LANDLORD shall not imposeinterest or late charges unless 3 days’ prior written notice has been given toTENANT of late rent; provided further, that such notice shall only be requiredonce in every 12 month period.

 

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |
| ** ** | ** ** |                          |       |       |

 

 

**6.  C.P.I.ADJUSTMENTS.**  LANDLORDshall have the additional right to increase each year the monthly basic rent asspecified in Paragraph 1.l on the first day of the month following theanniversary date of the commencement of the term and in accordance with thefollowing formula:

 

           The Consumer Price Indexfor all Urban Consumers for the Los Angeles-Long Beach metropolitan area,published in the U.S. Department of Labor, Bureau of Labor Statistics (Index)which is published for the month which is three (3) months prior to suchanniversary date (the “Extension Index”) shall be compared with the Index (the“Beginning Index”) published for the month which is three (3) months prior tothe “Beginning Month”.  For the purposesof this Paragraph 6, the “Beginning Month” shall be defined as the month of thelatest adjustment made in accordance with this Paragraph 6, or, if there hasbeen no previous adjustment, the month in which the original Lease Termcommenced.

 

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |
| ** ** | ** ** |                          |       |       |

 

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           If the Extension Indexhas increased over the Beginning Index, the monthly rent payable during thenext year shall be set by multiplying the monthly basic rent for the BeginningMonth by a fraction, the numerator of which is the Extension Index anddenominator of which is the Beginning Index. As soon as the monthly basic rentis set, LANDLORD shall notify TENANT of the amount of the increase of therental, if any, for the next year of the term. The failure of LANDLORD to notifyTENANT of an increase shall not preclude LANDLORD from enforcing its rightshereunder for such year or any subsequent year.

 

           If the Index is changedso that the base year differs from that used in the Beginning Month, the Indexshall be converted in accordance with the conversion factor published by theU.S. Department of Labor, Bureau of Labor Statistics.  If the index is discontinued or revisedduring the Term, such other government index, as selected by LANDLORD in itsreasonable discretion,  or computationwith which it is replaced shall be used in order to obtain substantially thesame result as would be obtained if the Index had not been discontinued orrevised.

 

**7.  OPERATINGEXPENSES AND REAL PROPERTY TAX ADJUSTMENTS.**  TENANT shall pay to LANDLORD upon receipt ofa statement therefor, as additional rent, such proportion of the followingitems as the rentable square footage rented by TENANT bears to the totalrentable square footage of the Building as set forth in Paragraph 1.m of thisLease:

 

**i.** Any increase in expenses paid or incurred byLANDLORD in the operation or maintenance of the Building, above such expensespaid or incurred by LANDLORD during the base year (hereinafter defined); and

**ii.** Any increase in the city, county, specialdistrict and state “real estate taxes” in excess of the real estate taxeslevied against the land and Building (including parking structure ancillarythereto) of which the Premises are a part, for the base year (hereinafterdefined).

 

**                 a. Definition of Terms.**For the purposesof this Paragraph 7, the following terms are defined as follows:

 

**                     i.** **Expenses:**Expenses shall consist of all direct costs of operation and maintenance of theBuilding, including parking structure ancillary thereto and the common areas asdetermined by standard accounting practices, including the following costs byway of illustration, but not limitation: water and sewer charges; the net costand expense of insurance for which LANDLORD is responsible hereunder or whichLANDLORD or any mortgagee with a lien affecting the Premises reasonably deemsnecessary in connection with the operation of the Building; utilities;janitorial services; security; labor, parking expenses; utilities surcharges;or any other costs levied, assessed or imposed by, or at the direction of, orresulting from statutes or regulation or interpretations thereof, promulgatedby any federal, state, regional, municipal or local government authority inconnection with the use or occupancy of the Building or the Premises or theparking facilities serving the Building or the Premises; the cost (amortizedover such reasonable period as LANDLORD shall determine together with interestat the maximum rate allowed by law on the unamortized balance) of (A) anycapital improvements made to the Building by the LANDLORD after the first yearof the term of the Lease that reduce other Expenses, or made to the Building byLANDLORD after the date of the Lease that are required under any governmentallaw or regulation that was not applicable to the Building as of theCommencement Date of this Lease, or (B) replacement of any Building equipmentneeded to operate the Building at the same quality levels as prior to thereplacement; costs incurred in the management of the Building, if any (includingsupplies, wages and salaries of employees used in the management, operation andmaintenance of the Building, payroll taxes and similar governmental chargeswith respect thereto, Building management office rental if said office islocated in the Building, and a management fee); air-conditioning; wastedisposal; heating; ventilating; elevator maintenance; supplies; materials;equipment; tools; repair and maintenance of the structural portions of theBuilding, plumbing, heating, ventilating, air-conditioning and electricalsystems installed or furnished by LANDLORD; maintenance costs and upkeep of allparking and commons areas, including rental of personal property used in suchmaintenance and upkeep; costs and expenses of gardening and landscaping; maintenanceof signs (other than TENANT’s signs); personal property taxes levied on orattributable to personal property used in connection with the entire Building,including the Common Areas and ancillary parking structure; reasonable audit orverification fees; and costs and expenses of repairs, resurfacing, repairing,maintenance, painting, lighting, cleaning, refuse removal, security and similaritems, including appropriate reserves. Expenses shall not include depreciation on the Building or equipmenttherein; LANDLORD’s executive salaries; the commission of real estate brokersor leasing agents, and other costs related to leasing the Building**,**including marketing expenses and tenantimprovements; interest expense on Building financing; amortization of the costof Leasehold Improvements in the Building; ground rent; income and franchisetaxes; dividends; and attorney’s fees and expenses which are not related to theoperation of the Building; amounts paid to LANDLORD or subsidiaries oraffiliates of LANDLORD for goods or services provided for the Building to theextent that such costs exceed competitive costs of such goods or servicesprovided by unaffiliated third parties; costs paid or reimbursed by insuranceor other tenants.

 

                     **ii.****Real Estate Taxes.**  As used herein, the “real estate taxes” shallinclude any form of assessment, license fee, license tax, business license fee,commercial rental tax, levy, charge, penalty, tax or similar imposition imposedby any authority having the direct power to tax, including any city, country,state or federal government, or any school, agricultural, lighting drainage orother improvements or special assessment district thereof, as against any legalor equitable interest of LANDLORD in the Premises, including, but not limitedto, the following:

**(1) **Any tax onLANDLORD’s “right” to rent or “right” to other income from the Premises or asagainst LANDLORD’s business of leasing the Premises;

**(2)**** **Any assessment, tax,fee, levy or charge in substitution, partially or totally, of any assessment,tax, fee, levy or charge previously included within the definition of realestate tax, it being acknowledged by TENANT and LANDLORD that Proposition 13was adopted by the voters of the State of California in the June, 1978 Electionand that assessments, taxes, fees, levies and charges may be imposed bygovernmental agencies for such services as fire protection, street, sidewalkand road maintenance, refuse removal and for other governmental servicesformerly provided without charge to property owners or occupants.  It is the intention of TENANT and LANDLORDthat all such new and increased assessments, taxes, fees, levies and charges tobe included within the definition of “real property taxes” for the purposes ofthis Lease;

**(3)** Any assessment, tax, fee,levy or charge allocable to or measured by the area of the Premises or the rentpayable hereunder, including, without limitation, any gross income tax orexcise tax levied by the state, city or federal government, or any politicalsubdivision thereof, with respect to the receipt of such rent, or upon or withrespect to the possession, leasing, operating, management, maintenance,alteration, repair, use or occupancy by TENANTS of the Premises, or any portionthereof;

**(4)** Any assessment, tax, fee, levy or charge upon thistransaction or any document to which TENANT is a party creating or transferringan interest or an estate in the Premises;

 

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |
| ** ** | ** ** |                          |       |       |

 

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**(5)** Any assessment, tax, fee,levy or charge by any governmental agency related to any transportation plan,fund or system instituted within the geographic area of which the Building is apart; or

**(6)** Reasonable legal and otherprofessional fees, costs and disbursements incurred in connection withproceedings to contest, determine or reduce real property taxes.

 

           Notwithstanding anyprovision of this Paragraph 7 expressed or implied to the contrary, “realestate taxes” shall not include LANDLORD’s federal or state income, franchise,inheritance or estate taxes

 

**iii.** **Base Yearfor Expenses. **The base yearfor the determination of any increase in expenses incurred by LANDLORD in theoperation or maintenance of the Building, is the calendar year commencingJanuary 1, and ending December 31 in which the term of this Lease commenced.

 

**iv.**** Base Year for Real Estate Taxes.**The base year for thedetermination of any increase in the city, county, special district and state“real estate taxes” in excess of the real estate taxes levied against the land,Building, common areas (including parking structure ancillary thereto) of whichthe Premises are a part is the fiscal tax year commencing July 1 and ending thefollowing June 30 in which the term of this Lease commences.

           With respect to anyportion of a Lease year which does not conform to a fiscal tax year (a tax yearends June 30th), the additional payments provided under this Paragraph 7 shallbe prorated accordingly.

 

                     **b.****Estimate Statement andActual Statement.**At the time of making and entering into of thisLease and by the first day of March of each calendar year during the term ofthis Lease, LANDLORD shall endeavor to deliver to TENANT a statement (“EstimateStatement”) wherein LANDLORD shall estimate the Expenses and Real Estate Taxesfor the current calendar year; provided, however, that if LANDLORD determinesthat TENANT’s Percentage Share of the Expenses for such current calendar yearis greater than that set forth in the Estimate Statement, then LANDLORD maydeliver on the first day of June, September, or December, as appropriate, arevised Estimate Statement and TENANT shall pay to LANDLORD, within ten (10)days of the delivery of such revised Estimate Statement, the difference betweensuch revised Estimate Statement and the original Estimate Statement for theportion of the current calendar year which has then expired, and TENANT shallpay during the balance of such current calendar year through February of thesucceeding calendar year a fraction of the balance of such difference as wouldfully amortize such excess over the remaining months of the then currentcalendar year through and including February of the succeeding calendaryear.  Subsequent installments shall be paidconcurrently with the regular monthly rent payments for the balance of thecalendar year and shall continue until the next calendar year’s EstimateStatement is rendered.  By the first dayof March of each succeeding calendar year during the term of this Lease,LANDLORD shall endeavor to deliver to TENANT a statement (“Actual Statement”)wherein LANDLORD shall state the actual Expenses for the preceding calendaryear.  If the Actual Statement reveals agreater increase in TENANT’s Percentage Share of Expenses than was estimated byLANDLORD in the Estimated Statement delivered as provided herein, then uponreceipt of the Actual Statement from LANDLORD, TENANT shall pay a lump sumequal to said total increase over the Expenses and Real Estate Taxes, less thetotal of the monthly installments of increases set forth on the EstimateStatement which were paid in the previous calendar year. If, in any calendaryear, TENANT’s Percentage Share of Expenses is less than the preceding calendaryear, then upon receipt of LANDLORD’s Actual Statement, any overpayment made byTENANT on the monthly installment basis provided above shall be credited towardthe next monthly rent falling due and the monthly installment of TENANT’sPercentage Share of Expenses to be paid pursuant to the then current EstimateStatement shall be adjusted to reflect such lower expenses for the most recentcalendar year, or if this Lease has been terminated, such excess shall becredited against any amount which TENANT owes LANDLORD pursuant to this Leaseand, to the extent all amounts which TENANT owes LANDLORD pursuant to thisLease have been paid, LANDLORD shall promptly pay such excess to TENANT.  Any delay or failure by LANDLORD indelivering any Estimate or Actual Statement pursuant to this Paragraph 7 shallnot constitute a waiver of its right to require an increase in rent nor shallit relieve TENANT of its obligations pursuant to this Paragraph 7, except thatTENANT shall not be obligated to make any payments based on such Estimate orActual Statement until ten (10) days after receipt of such Estimate or Actualstatement.

           Even though the term hasexpired and TENANT has vacated the Premises, when the final determination ismade of TENANT’s Percentage Share of Expenses for the year in which this Leaseterminates, TENANT shall immediately pay any increase due over the estimatedexpenses paid and conversely any overpayment made in the event said expensesdecrease shall be immediately rebated by LANDLORD to TENANT.

           Notwithstanding anythingcontained in this Paragraph 7, the rental payable by TENANT shall in no eventbe less than the rent specified in Paragraph 1.l  hereof.

 

**   c.  Disputes Regarding Actual Statement.**  In the event TENANT disputes any and allamounts set forth in the Actual Statement, TENANT shall provide LANDLORD withwritten notice of same within sixty (60) days of receipt of the ActualStatement. As a condition precedent to contesting the amount set forth in theActual Statement shall be the payment by TENANT in a timely manner of theamount claimed due and owing by LANDLORD. Failure to provide such notice in said timely fashion and pay in thefull the amounts claimed due and owing by LANDLORD will constitute a waiver byTENANT of the right to dispute the validity of the Actual Statement amounts soset forth. After TENANT has timely given the written notice and paid the amountclaimed by LANDLORD in full, TENANT shall have the right no later than sixty(60) days after such notice and payment, to cause LANDLORD’s books and records withrespect to the preceding calendar year to be audited by a certified publicaccountant mutually acceptable to LANDLORD and TENANT. The amounts payableunder this Paragraph 7 by LANDLORD to TENANT or by TENANT to LANDLORD, as thecase may be, shall be appropriately adjusted on the basis of such audit. Ifsuch audit discloses a liability for further refund by LANDLORD to TENANT inexcess of **fifteen(15**%) of the payments previously made by TENANT forsuch calendar year, the cost of such audit shall be borne by LANDLORD;otherwise, the cost of such audit shall be borne by TENANT.

 

**8**.  **DELAY IN OCCUPANCY.**  TENANT agrees that in the event of theinability of LANDLORD to deliver to TENANT possession of the Premises at thecommencement of said term, LANDLORD shall not be liable for any damage causedthereby, nor shall this Lease be void or voidable if possession is given toTENANT within 180 days after the date set for commencement of this Lease, butin no event shall TENANT be liable for rent until such time as LANDLORD offersto deliver possession of the Premises to TENANT.  However, the term hereof shall not beextended by such delay.

 

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |
| ** ** | ** ** |                          |       |       |

 

 

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  **9. TERMINATION.** Except if terminatedas otherwise provided in this Lease, this Lease shall terminate on theExpiration date set forth in Paragraph 1.k without the necessity of notice fromeither party to the other party.

 

**                 10.****HOLDING OVER.** If TENANT holds over after the termination ofthis Lease without the express written consent of the LANDLORD, TENANT shall bea tenant-at-sufferance, and TENANT shall pay to LANDLORD rent at the rate of **o****ne and one half** times the amount of rental paid byTENANT for the last month of the lease term, in addition to all other paymentsrequired to be made by TENANT for the time during which TENANT retainspossession of the Premises, but this shall not waive any of the LANDLORD’sother rights and remedies therefore.  **TENANT EXPRESSLY ACKNOWLEDGES THAT THE ACCEPTANCE BYTHE LANDLORD OF ANY LESSER****AMOUNTFOR RENT DURING SUCH PERIOD THE TENANT IS A TENANT-AT-SUFFERANCE,****SHALL NOT AFFECT LANDLORD’s RIGHT TO THE BALANCE OFTHE RENT PROVIDED FOR IN THIS PARAGRAPH AND SHALL NOT BE CONSTRUED AS CREATINGAN ACCOUNT STATED BETWEEN LANDLORD AND TENANT AS TO THE AMOUNT OF RENT DUE ANDOWING DURING THE HOLDING OVER PERIOD.** The foregoing provisions ofthis Paragraph 10 are in addition to and do not affect LANDLORD’s right ofreentry or any rights of LANDLORD hereunder or as otherwise provided bylaw.  If TENANT fails to surrender thePremises upon the expiration of this lease**.**TENANTshall indemnify and hold LANDLORD harmless from all loss, cost or damage(including reasonable attorney fees and court costs), including withoutlimitation, any claim made by any succeeding Tenant founded on or resultingfrom such failure to surrender.

 

**11.****** **TAXES ONTENANT’s PROPERTY.**

 

**a.**  **Payment of Personal Property Taxes.** TENANTshall be liable for and shall pay before delinquency taxes levied against anypersonal property or trade fixtures placed by TENANT in or about the Premises.If any such taxes on TENANT’s personal or trade fixtures are levied againstLANDLORD or LANDLORD’s property or if the assessed value of the Premises isincreased by the inclusion therein of a value placed upon such personalproperty or trade fixtures of TENANT and if LANDLORD, after written notice toTENANT, pays the taxes based upon such increased assessments, which LANDLORDshall have the right to do regardless of the validity thereof, but only underproper protest if requested by TENANT. TENANT shall upon demand repay to LANDLORD the taxes levied againstLANDLORD, or the proportion of such taxes resulting from such increase in theassessment, provided however,  that insuch event, at TENANT’s sole cost and expense, TENANT shall have the right, inthe name of LANDLORD and with LANDLORD’s full cooperation, to bring suit in anycourt of competent jurisdiction to recover the amount of any such taxes so paidunder protest, any amount so recovered to belong to TENANT.

 

**b.**     **Taxation of LeaseholdImprovements.**If the Leasehold Improvements in the Premises, whetherinstalled and/or paid for by LANDLORD or TENANT and whether or not affixed tothe real property so as to become a part thereof, are assessed for realproperty tax purposes at a valuation higher than the valuation at whichLeasehold Improvements conforming to LANDLORD’s “Building Standard” in other  space in the Building are assessed, then thereal property taxes and assessment levied against LANDLORD or the property byreason of such excess assessed valuation shall be deemed to be taxes leviedagainst personal property of TENANT and shall be governed by the provisions ofParagraph 11.a above.  If the records ofthe County Assessor are available and sufficiently detailed as same as a basisfor determining whether said Leasehold Improvements are assessed at a highervaluation than LANDLORD’s “Building Standard” such records shall be bindingon  both LANDLORD and TENANT.  If the records of the County Assessors arenot available or sufficiently detailed to serve as a basis for making saiddetermination, the actual cost of construction shall be used.

 

**12**.**SECURITY DEPOSIT.**   Upon execution of this lease, TENANT shalldeposit with the LANDLORD the sum as set forth in Paragraph 1.n of this Lease,which sum shall be held by LANDLORD for security for the faithful performanceby TENANT of all of the terms, covenants, and conditions of this Lease byTENANT to be kept and performed during the term hereof or any extension hereof.

 

           If TENANT defaults **beyondany applicable notice and cure period**with respect toany provision of this lease, including but not limited to, the provisionsrelating the payment of rent, LANDLORD may (but shall not be required to) use,apply or retain all or any part of this security deposit for the payment of anyrent or any other sum in default, or for the payment of any amount whichLANDLORD may spend or become obligated to spend by reason of TENANT’s default,or to compensate LANDLORD for any other loss or damage which LANDLORD maysuffer by reason of TENANT’s default.  Ifany portion of said deposit is so used or applied, TENANT shall, within **thirty**days after written demand therefor, deposit cash with LANDLORD in an amountsufficient to restore the security deposit to its original~~~~amount, andTENANT’s failure to do so shall be in default under this lease.  LANDLORD shall not be required to keep thissecurity deposit separate from its general funds and TENANT shall not beentitled to interest on such deposit.

 

           If TENANT **is notin default of the terms** of this Lease **beyondany applicable notice and cure period as****of thelast day of the Term (as it may******be**extended)****,** the security deposit or any balance thereof shall bereturned to TENANT (or, at LANDLORD’s option, to the last assignee of TENANT’sinterest hereunder) within ninety days from expiration of the Lease term,provided that the LANDLORD may retain the security deposit **for aperiod not to exceed the longer of six months or**untilsuch time as any amount due from TENANT in accordance with different provisionsof this Lease has been determined and paid in full. TENANT shall not apply thesecurity deposit to the last month’s rent. TENANTexpressly agrees that if it should attempt to apply the security deposit to thelast month’s rent, then the last month’s rent shall be increased to 150% of theamount otherwise scheduled as the last month’s rent. LANDLORD and TENANT herebyagree that the increase of rent set forth above will be considered asliquidated damages for the failure to pay the last month’s rent and not apenalty. At the time of the making and entering into of this Lease, LANDLORDand TENANT agree that it would be difficult, costly, and inconvenient todetermine the amount of damages that LANDLORD would sustain as a result of thefailure of TENANT to pay the last month’s rent. Therefore, LANDLORD and TENANT hereby agree that the increase in rent asset forth in this Paragraph 12 is a fair and reasonable estimation of thedamages that LANDLORD would suffer. In the event of bankruptcy or otherdebtor-creditor proceedings against TENANT, TENANT’s security deposit shall bedeemed to be applied first to the payment of rent, and other sums due LANDLORDfor all periods prior to filing of such proceedings.

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |
| ** ** | ** ** |                          |       |       |

 

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**13.  USE OFPREMISES**.** **In addition to the useprovided for in Paragraph 1.o, TENANT shall use the Premises for general officepurposes and shall not use or permit the Premises to be used for any otherpurposes without consent of LANDLORD.**,****which consent shall not be unreasonably withheld,conditioned, or delayed  Notwithstandinganything to the contrary in this Lease,  During the term of this Lease and any extensions thereof, LANDLORDhereby grants to TENANT the right to maintain the existing night depositorywindow into the Premises, and further to install and maintain an automatedteller machine (“ATM”) including installation of any required lighting.  The location for installation of the ATMshall be as set forth in attached Exhibit “A”.**

 

           TENANTshall not do or permit anything to be done in or about the Premises nor bringor keep anything therein which will in any way increase the existing rate of oraffect any fire or other insurance upon the Premises or any of its contents orcause cancellation of any insurance policy covering the Premises or any partthereof or any of its contents and TENANT shall comply with all rules orders,regulations and requirements of any organization which sets out standards,requirements, or recommendations commonly referred to by major fire insuranceunderwriters including without limitation thereto, the installation of fireextinguishers or an automatic dry chemical extinguishing system.  TENANT shall within five days upon demand,reimburse LANDLORD as additional rent for any additional premiums charged forinsurance policies by reason of TENANT’s failure to comply with the provisionsof this Paragraph 13.

 

           TENANTshall not do or permit anything to be done in or about the Premises which willin any way obstruct or interfere with the rights of other TENANTS or occupantsof the Building or injure or annoy them or use or allow the Premises to be usedfor any improper, immoral, unlawful or objectionable purpose nor shall TENANTcause, maintain or permit any nuisance in, on or about the Premises.

 

           TENANTshall not commit or suffer to be committed any waste in or upon the Premisesand shall keep the Premises in first class repair and appearance.  The Premises shall not be used for cooking****(provided,however, that TENANT may use small kitchen devices typically used in offices,such as coffee makers, microwave ovens, toaster ovens), lodging, sleeping or for immoral purposes and no objectionable noise,vibration or odor shall be permitted to escape from the Premises.

 

           TENANTwarrants that it is not a political organization, and agrees that the Premisesshall not be used for political offices or political meetings.  TENANT shall at its sole cost and expensepromptly comply with all laws, statutes, ordinances and governmentalregulations or requirements now in force or which may hereafter be in forcerelating to or affecting TENANT’s specific and unique use of thePremises or the Building.  Nothingcontained herein shall require TENANT to make any structural changes, capitalimprovements, or other alterations, additions or improvements to the Premises,unless such changes are required due to either TENANT or TENANT’s agents,clients, contractors, directors, employees, invitees, licensees, officers,partners or shareholders use of the Premises for purposes other than generaloffice purposes.

 

           TENANTmay not solicit TENANT’s services, such as but not limited totelecommunications, data processing, or word processing, to any unaffiliatedtenant in the Building without LANDLORD’s prior written consent which consentmay be withheld by LANDLORD at its sole and absolute discretion; provided,however, that TENANT may serve as a bank to any other tenant of the Buildingwithout obtaining LANDLORD’s consent.  TENANT shall not install any radio ortelevision antenna, loudspeaker or other device on the roof or exterior wallsof the Building. TENANT shall be responsible for any and all acts incontravention to the provisions of this Paragraph 13 committed by TENANT, itsagents, servants, employees, customers, contractors, clients, visitors,patients and invitees.  TENANT shall notbe allowed to use name of the Building in which the Premises are located, orwords to that effect, in connection with any business carried on in the Premises(except as TENANT’s address) without consent of LANDLORD.

 

**14.****CONDITION OF THE PREMISES.**TENANT herebyaccepts the Premises “AS IS”, with all faults, and without any representationor warranties by LANDLORD. TENANT acknowledges that LANDLORD has not promisedto make any changes or improvements to the Premises, except for thoseimprovements described in writing and signed by LANDLORD.

 

           Theentry of the TENANT into the possession of the Premises shall be a conclusiveacknowledgment on TENANT’s part that the Premises are in good and tenantable conditionas far as visual inspection discloses. At the expiration, or sooner termination of this lease, TENANT shalldeliver the Premises to LANDLORD in a state of repair in which the Premisesexisted at the commencement of the term hereof, reasonable wear and tearexcepted.

 

TENANT warrants that it has inspected the Premises andthe suitability of the same for TENANT’s purposes, and that neither LANDLORD,nor any agent or employee of LANDLORD, has made any representation or warrantywith respect to the Premises, the size of the suite, or the Building withrespect to the suitability of the Building or the Premises for the conduct ofthe TENANT’s BUSINESS.

 

**15.****  ALTERATIONS AND REPAIRS DURING OCCUPANCY.**  The Premises shall not be altered,repaired, or changed without the written consent of the LANDLORD first had andobtained, which consent shall not be unreasonably withheld or delayed, and allsuch alterations, improvements or changes shall be at the sole cost of theTENANT. Notwithstanding the foregoing, TENANT shall have the right, withoutLANDLORD’s consent but upon ten (10) days prior notice to LANDLORD, to makenon-structural additions and alterations (“Cosmetic Alterations”) to thePremises that do not (i) involve the expenditure of more than $25,000.00 in theaggregate in any twelve (12) month period during the Term, (ii) affect theexterior appearance of the Building, or (iii) affect the Building systems(electrical, plumbing or mechanical) or the Building structure.  After LANDLORD’s written consent has beenobtained by the TENANT (except for Cosmetic Alterations), TENANT shall enterinto an agreement for the performance of the work to be done pursuant to thisParagraph 15 with LANDLORD’s contractor or a contractor selected by TENANT andapproved by LANDLORD, in LANDLORD’s reasonable judgment.  In any event, TENANT agrees to pay toLANDLORD, as additional rent, the cost of such construction, within 30 daysfollowing receipt from LANDLORD of invoice from time to time during the courseof such construction.  All costs andexpenses incurred in changes shall be paid by TENANT within thirty (30) daysafter each billing by LANDLORD or any such contractor(s).  If LANDLORD approves the construction of thespecific interior improvements in the Premises by other contractors chosen byTENANT from a list prepared by LANDLORD at TENANT’s request, then TENANT’scontractors shall obtain on behalf of TENANT and at TENANT’s sole cost andexpense all necessary governmental permits and certificates for thecommencement and prosecution of TENANT’s 

 

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |
| ** ** | ** ** |                          |       |       |

 

6

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changes and for final approval thereof uponcompletion and a completion and lien indemnity bond, or other surety,satisfactory to LANDLORD, for the changes.; provided that the completion andlien bond shall only be required if the proposed improvements exceed$25,000.  In the event TENANT shall request any changes in the work to beperformed after the submission of plans referred to in this Paragraph 15 suchadditional changes shall be subject to the same approvals and notices as thechanges initially submitted by the TENANT. TENANT shall pay to LANDLORD for LANDLORD’s services in the event LANDLORDperforms as a general contractor in connection with the work performed pursuantto this Paragraph 15, a fee equal to fifteen percent (**15**%)of the total cost the changes and LANDLORD’s reasonable overhead relatedthereto.  Such fee shall be five percent(**5**%)in order to cover LANDLORD’s reasonable overhead if LANDLORD or its agent doesnot perform as such general contractor. All such alterations, repairs, additions or improvements, except tradefixtures, counters, appliances, shelving**, bookcases and other personalproperty that is attached to the walls for seismic safety purposes only,**and movable partitions placed therein by the LANDLORD for the requirement ofTENANT’s business, shall, unless otherwise provided by written agreement,become the property of the LANDLORD and shall remain upon and be surrenderedwith the Premises upon the expiration of this lease or any sooner terminationthereof.

 

**16. DUTYOF TENANT WITH REGARD TO PREMISES**. TENANT shall take good careof the Premises and fixtures therein and shall make, as and when needed, as aresult of misuse or neglect by TENANT, all repairs in and about the Premisesnecessary to preserve them in good order and condition, which repairs shall bein quality and class equal to the original work.  However, LANDLORD may repair, at the expenseof TENANT, **afternotice to TENANT, if TENANT fails to make the repairs,**alldamage or injury to the Premises, or to the Building or to its fixtures,appurtenances or equipment, done by TENANT or by TENANT’s agents, servants,employees, contractors, visitors or licensees or caused by moving property ofTENANT in or out of the Building, or by installation or removal of furniture orother property, or resulting from fire, heating, ventilating or airconditioning unit or system, short circuits, overflow or leakage of water,steam, gas, sewer gas, sewage or odors, or by frost or by bursting or leakingpipes or plumbing works or gas, or from any other cause**,******ifdue to the carelessness, negligence or improperconduct of TENANT, or TENANT’s agents, servants, employees, contractors,visitors or licensees.  LANDLORD shallhave the right to replace, at the expense of TENANT, any and all plate andother glass damages or broken from any cause whatsoever in or about thePremises unless caused by or due to the negligence of LANDLORD, LANDLORD’sagents, servants or employees.  Except asotherwise specifically provided in Paragraph 26.c hereof, there shall be noallowance to TENANT for diminution of rental value, and no liability of the partof LANDLORD by reason of inconvenience, annoyance, or injury to TENANT’sbusiness arising from the making of any repairs, alterations, decorations,additions or improvements in or to any portion of the Building or Premises  (so long as there is no materialinterference with TENANT’s and TENANT’s customers, employees, and visitors,access to and use of the Premises and the parking facility, or in or tofixtures, appurtenances or equipment, and no liability upon LANDLORD (except inthe event of Landlord’s gross negligence or willful misconduct) for failure tomake any repairs, alterations, decorations, additions or improvements in or to any portion of the Building orPremises, or in or to the fixtures, appurtenances or equipment or by reason ofthe act or neglect of TENANT or any other TENANT or occupant of the Building.

 

**17.****WAIVER OF RIGHT TO MAKE REPAIRS AT EXPENSE OFLANDLORD. **TENANT herebywaives all rights under the provisions of Sections 1932, 1933, 1941, and 1942of the Civil Code of the State of California, and all rights under any law inexistence during the term of this Lease authorizing a TENANT to make repairs atthe expense of a LANDLORD or to terminate a Lease upon the complete or partialdestruction of the leased Premises.

 

**18.**          **** **LIENS. **TENANT shall hold the LANDLORD,the Premises, and the Building harmless and free from any liens or any claimstherefor, and all other liabilities, claims and demands arising out of any workperformed, materials furnished or obligations incurred by TENANT, and from allactions, suits, and costs of suits by any person to enforce any such lien orclaim of lien, liability, claims or demands, together with the costs of suitsand attorney’s fees incurred by LANDLORD in connection therewith.  If any such liens are filed, LANDLORD may,but in no way is obligated to, without waiving its rights and remedies based onsuch breach of TENANT and without releasing TENANT from any of its obligations,cause such liens to be released by any means it shall deem proper, including paymentin satisfaction of the claim giving rise to such lien.  TENANT shall pay to LANDLORD at once, uponnotice by LANDLORD, any sum paid by LANDLORD to remove such liens, togetherwith interest at the maximum rate per annum permitted by law from the date ofsuch payment by LANDLORD.  Any amountpayable by TENANT pursuant to this Paragraph 18, shall be deemed additionalrent, and LANDLORD shall be entitled to exercise the same rights and remediesupon default in these payments as for a default in payment of basic rent.

 

**19.**            ** AUTOMOBILE PARKING.** LANDLORD hereby grants to the TENANT, incommon with other TENANTS in said Building, of which the Premises are a partthereof, the right to use during normal business hours, certain designatedspace for automobile parking purposes. The designated space for automobile parking purposes to be selected atthe discretion of the LANDLORD. TENANT and its designated employees will belimited to the number of cars designated in Paragraph 1.p at the prevailingrates in the Building, payable in advance on the 1st of each month, said ratesbeing subject to change by LANDLORD applicable to all TENANTS during the termupon thirty (30) days written notice. LANDLORD’s right to change said ratesbeing limited to once in any one calendar year, except that LANDLORD shall havethe right to change said rates at any time to include in said rates the paymentof any and all amounts levied, assessed, imposed or required to be paid by anygovernmental authority upon the parking of motor vehicles, including withoutlimiting the generality of the foregoing, all sums required to be paid pursuantto transportation controls imposed by the Environmental Protection Agency underthe Clean Air Act of 1970, or otherwise required to be paid pursuant to anyother law, ordinance, rule or regulation imposed by the State of California orany City, County or any authority thereof, or by any authority of the UnitedStates of America with respect to the parking, use, or transportation of motorvehicles, or the reduction or control of motor vehicle traffic, and/or motorvehicle pollution.  TENANT shall not usemore parking spaces than said number. In the event LANDLORD has not assignedspecific parking spaces to TENANT, TENANT shall not use any spaces which havebeen so specifically assigned by LANDLORD to other TENANTS or for such otheruses as visitor parking or which have been designated by governmental entitieswith competent jurisdiction as being restricted to certain uses.

 

           TENANTshall not permit or allow any vehicles that belong to or are controlled byTENANT or TENANT’s employees, suppliers, shipper, customers, or invitees to beloaded, unloaded, or parked in areas other than those designated by LANDLORDfor such activities.

 

           IfTENANT permits or allows any of the prohibited activities described in thisParagraph 19, then LANDLORD shall have the right without notice, in addition tosuch other rights and remedies that it may have, to remove or tow away thevehicle involved and charge the cost to TENANT, 

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |
| ** ** | ** ** |                          |       |       |

 

7

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which cost shall be immediately payable upon demand byLANDLORD. TENANT and Authorized Users shall comply with all rules andregulations for Parking Structure. LANDLORD reserves the right to modify, add to, or delete from time totime such Parking Rules and Regulations as it deems reasonably necessary forthe operations of said parking.  LANDLORDmay refuse to permit any person who violates with unreasonable frequency theParking Rules and Regulations to park in the Building parking facility, and anyviolation of the rules shall subject the car to removal.  TENANT agrees to use its best efforts toacquaint all Authorized Users and visitors with the Parking Rules andRegulations. TENANT agrees that it will use its best efforts to cooperate inprograms which **are**required by the localmunicipalities or governmental agencies to reduce peak levels of consumertraffic.  Such programs may include, butshall not be limited to, carpools, vanpools and other ride sharing programs,public and private transit, and flexible work hours, if required by law.

 

           TENANTshall submit a written notice in a form reasonably specified by LANDLORD,containing the names, home and office addresses and telephone numbers of thosepersons who are authorized by TENANT to use the parking spaces on a monthlybasis (the “Authorized Users”) and shall use its best efforts to identify eachautomobile by make, model and license number. Such notice shall be served upon LANDLORD prior to the beginning of theterm of this Lease.  Such notice, asamended from time to time, is hereafter referred to as the “ParkingNotice.”  No person whose name andaddress is not contained in the Parking Notice shall have any right to park anautomobile in the area of the Building parking facilities designated formonthly parking and no person whether or not his name is included in theParking Notice shall have any right to park an automobile not identified in theParking Notice without (in either case) paying the parking charge thenapplicable for daily parking in the Building parking facilities and parking inthe area designated for daily parking.

 

           Theautomobiles entitled to such parking shall be designated to LANDLORD by TENANTand shall be identified by LANDLORD’s automobile window stickers and only suchdesignated cars will be permitted the use of such automobile parkingspace.  Additional automobile parkingspace, subject to availability, shall be extended to TENANT’s invitees atreasonable parking rates to be established by LANDLORD.  LANDLORD reserves the sole right and optionas to whether or not an attendant will be furnished for such automobile parkingarea or areas.  If no attendant isfurnished, LANDLORD will provide suitable designation of the parking spacegranted to TENANT.

 

           Theseparking spaces will be solely for the accommodation of the TENANT and TENANTexpressly agrees that LANDLORD assumes no responsibility of any kind whatsoeverin reference to such automobile parking areas or the use thereof by the TENANT,its designated employees or invitees. TENANT shall repair or cause to berepaired at its sole cost and expense any and all damages to the Buildingparking facility or any part thereof caused by TENANT or its Authorized Usersor resulting from vehicles of Authorized Users.

 

**20.****  UTILITIES.**

**a.**    LANDLORD agrees to furnish to the Premises, at its expense, so long asTENANT is not in default hereunder, during the usual business hours on businessdays, air conditioning and heat, electric current for normal lighting andfractional horsepower for office machines and, on the same floor as thePremises, water for lavatory, all in such reasonable quantities as in the judgmentor LANDLORD is reasonably necessary for the comfortable occupancy of thePremises.  Maintenance service will befurnished 5 days per week.  LANDLORDshall not be liable for, and there shall be no rent abatement as a result ofany stoppage, reduction or interruption of any such services caused bygovernmental rules, regulations or ordinances, riot, strike, labor disputes,breakdowns, accidents, necessary repairs or any other causes.  Except as specifically provided in thisParagraph 20, TENANT agrees to pay for all utilities and other servicesutilized by TENANT for all overtime or additional building services furnishedto TENANT not uniformly furnished to all TENANTS of the Building at LANDLORD’sexpense.  LANDLORD’s obligation to renderto the Premises the services set forth in this Paragraph 20 is conditional uponthe payment by TENANT of all sums due under this Lease, including but notlimited to sum which are in dispute.

 

**b.**   TENANTshall not permit the consumption at any one time in the Premises of more than **5******watts per net usable square foot in the Premises for allpurposes including lighting and power outlets. If such limits are exceeded, LANDLORD shall have the right to remove anylighting fixture or any fluorescent tube or bulb therein as it deems necessaryand/or to charge TENANT for the cost of the additional electricityconsumed.  TENANT will not withoutconsent of LANDLORD use any apparatus or devise in the Premises, includingwithout limitation electronic data processing machines, punch card machines andmachines using current in excess of 110 volts, which will in any way increasethe amount of electricity or water usually furnished or supplied for use of thePremises as general office space; nor connect any apparatus, machine or devicewith water pipes or electric current (except through existing electricaloutlets in the Premises), for the purposes of using electric current or water.

 

**c.**  If TENANT shall require electriccurrent in excess of that which LANDLORD is obligated to furnish under Paragraphs20.a, 20.b herein, TENANT shall first obtain the consent of LANDLORD, whichLANDLORD may refuse, to the use thereof and LANDLORD may cause an electriccurrent meter to be installed in the Premises to measure the amount of electriccurrent consumed for any such other use. The cost of any meter and/or installation, maintenance and repairthereof shall be paid for by TENANT and TENANT agrees to pay to LANDLORDpromptly upon demand therefor by LANDLORD for all such electric currentconsumed by any such use as shown by said meter, at the rates charged for suchservices by the public utility providing the service.

 

** d.**** ** If any lights, machines or equipment(including but not limited to computers) are used by TENANT in the Premiseswhich materially affect the temperature otherwise maintained by the airconditioning system, or generate substantially more heat in the Premises thanwould be generated by the Building Standard lights and usual fractionalhorsepower office equipment, LANDLORD shall have the right to install anymachinery and equipment which LANDLORD reasonably deems necessary to restoretemperature balance, including but not limited to modifications to the standardair conditioning equipment, and cost thereof, including the cost of installationand any additional cost of operation and maintenance occasioned thereby, shallbe paid by TENANT to LANDLORD upon demand by LANDLORD.  LANDLORD shall not be liable under anycircumstance for loss of or injury to property, however occurring, through or inconnection with or incidental to failure of any of the foregoing.

 

**e.**    If TENANT requires heating, ventilationand/or air conditioning during times other than provided in Paragraph 20.aabove, TENANT shall give LANDLORD such advance notice as LANDLORD shallreasonably require and shall pay for the use of such equipment, at reasonablefee or charge as LANDLORD shall require.

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |
| ** ** | ** ** |                          |       |       |

 

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**21.**          **  ASSIGNMENT.**

                                **a.** TENANT shall not, either voluntarily or by operation of law, sell,hypothecate, assign, transfer, or otherwise encumber its interest in this Leaseor in the Premises, or sublease all or any part of the Premises, or allow anyother person or entity (except TENANT’s authorized representatives) to occupyor use all or any part of the Premises, without first obtaining LANDLORD’swritten consent**,**which consent shall not beunreasonably withheld or delayed.  IfLANDLORD does not respond to a written request for consent within 30 days afterLANDLORD’s receipt thereof, LANDLORD shall be deemed to have consented to theproposed assignment or sublease.  Anysale, assignment, mortgage, transfer or subletting of this Lease which is not incompliance with the provisions of this Paragraph 21 shall be voidable and, atLANDLORD’s election, shall constitute a default.  No consent to any assignment, encumbrance, orsublease shall constitute a further waiver of the  provisions of this Paragraph 21.Notwithstanding the consent of the LANDLORD to a subletting or assignment ofthe Premises, in the event that the assignment or sublease by the TENANT shouldbe for a rental rate which is greater than that paid to the LANDLORD by TENANT,such 50% of such excess shall be paid to the LANDLORD, after deduction forTENANT’s costs of obtaining the assignment or sublease, including brokers’ feesand attorneys’ fees.

 

           IfTENANT is a partnership, a withdrawal or change, voluntary or involuntary, orby operation of law, of partners owning 25% or more of the partnership, or thedissolution of the partnership, shall be deemed a voluntary assignment.  If TENANT consists of more than one person, apurported assignment, voluntary, involuntary, or by operation of law, from oneperson to the other shall be deemed a voluntary assignment.

 

**          **If TENANT is a corporation, any dissolution, merger, consolidation or otherreorganization of TENANT, or the sale or other transfer of a controllingpercentage of the capital stock of TENANT or the sale of 51% of the value ofthe assets of TENANT, shall be deemed a voluntary assignment.  The phrase “controlling percentage” means theownership of, and the right to vote, stock possessing at least 51% of the totalcombined voting power of all classes of TENANT’s capital stock issued,outstanding and entitled to vote for the election of directors.  This paragraph shall not apply tocorporations, the stock of which is traded through an exchange or over thecounter, and shall not apply to a change in the stock ownership of TENANT, iffollowing the change in ownership, TENANT remains a national bank and TENANT’snetworth after the change in ownership remains at least as much as it was priorto the change of ownership, but in no event less than $25,000,000.

 

**b.****  Except in thecase of an Affiliate (as defined in the First Amendment to this Lease), where** LANDLORD’sconsent to a proposed subletting of greater than 50% of the total squarefootage of the Premises or where assignment of the Lease is sought hereunder,LANDLORD, at its option, may grant such consent, in which case TENANT’sfinancial obligations under this Lease shall not be affected, refuse to grantsame or, in the alternative, may cancel this Lease upon providing TENANT thirtydays’ written notice of LANDLORD’s cancellation.  In the event of cancellation, this Leaseshall be deemed to terminate **effective as of**the**commencement** date of the **proposed assignmentor sublease**.

 

Without limiting LANDLORD’s grounds fordisapproval, LANDLORD’s disapproval shall be deemed reasonable if it is basedon LANDLORD’s analysis of the following:

                                                **i**.              Aconflict with other uses in the Building;

                                                **ii.**            Incompatibilityof the proposed use with others within the Building;

                                                **iii.**           Financialinadequacy of the proposed sublessee or assignee;

                                                **iv**.            Aproposed use or user which would cause a diminution in the reputation of theBuilding or the other businesses located therein;

                                                **v.**             Aproposed user whose impact on the common facilities or the other TENANTS in theBuilding would be disadvantageous;

                                                **vi.**            Aproposed assignee or sublessee who is an existing tenant of LANDLORD in theBuilding, or has negotiated with LANDLORD concerning the leasing of premisesfrom LANDLORD within the prior **120 days, and LANDLORD has availablespace that meets the needs of the proposed assignee or sublessee**.

**c.**  Notwithstanding the foregoing, the followingconditions shall apply to any proposed assignment or sublease hereunder(including but not limited to this Paragraph 21 or any other provision of thisLease affecting assignment.

                                          **i.** Each and every covenant, condition, or obligation imposed upon TENANT bythis Lease and each and every right, remedy, or benefit afforded LANDLORD bythis Lease shall not be impaired or diminished as a result of such assignmentor sublease;

                                          **ii.** TENANT shall assign to LANDLORD 50% of****any and all consideration paid directly or indirectlyfor the assignment by TENANT to the assignee of TENANT’s leasehold interest or 50%of any and all sub-rentals payable bysubtenants which are in excess of the Minimum Rental provided herein (computedon a square footage basis) after deduction of TENANT’s costs of theassignment or sublease;

                                          **iii.** TENANT shall reimburse LANDLORD as additional rent for LANDLORD’s reasonablecosts and attorney’s fees incurred in conjunction with the processing anddocumentation of any such requested assignment, subletting, transfer, change ofownership, or hypothecation of this Lease or LANDLORD’s interest in and to thePremises; not to exceed $1,000.00, which includes the payment by TENANT of$500.00 as hereinafter set forth; As a condition precedent to LANDLORD’S dutyto consider a request for consent to a proposed assignment or subletting by aTENANT, shall be the payment of $500.00 for the reasonable costs and attorneyfees to be incurred by LANDLORD in considering such request for consent toassignment or subletting, which amount shall be non refundable and paid byTENANT at the time of the request.

                                          **iv.** Intentionally deleted.

                                          **v.** No subletting or assignment, even with the consent of LANDLORD, shallrelieve TENANT of its obligation to pay the rent and to perform all otherobligations to be performed by TENANT hereunder.  The acceptance of rent by LANDLORD from anyperson shall not be deemed to be a waiver by LANDLORD of any provision of thisLease or to be consent to any assignment or subletting;

                                          **vi.** Notwithstanding anything to the contrary contained herein, at LANDLORD’selection, the following provisions shall be in effect:

                                                     **a.**  Except in thecase of an Affiliate (as defined in the First Amendment to this Lease), in the event that at any time or from time to timeduring the term of this Lease, TENANT desires to assign or sublet all or partof the Premises, TENANT shall notify LANDLORD in writing (hereinafter referredto as “Transfer Notice”) of the terms of the proposed assignment or sublet andshall give the LANDLORD the right to accept an assignment or to sublet fromTENANT such space (hereinafter referred to as “Transfer Space”) on the sameterms as those contained in this Lease, including the rent which TENANT is thenpaying for such space.  Such option shallbe exercisable by LANDLORD in writing for a period of thirty (30) days afterreceipt of the Transfer Notice.

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |

 

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                                                     **b.** If LANDLORD fails to exercise such option, and TENANT fails to completenegotiations for a valid and bona fide assignment to or sublease with a thirdparty within ninety (90) daysthereafter in accordance with the terms of the Transfer Notice, TENANT shallagain comply with all the conditions of this Paragraph 21, as if the notice andoption hereinabove referred to had not been given and received.

 

                                                     **c.** In the event LANDLORD does not exercise its option and TENANT completesnegotiations for an assignment or sublease with a third party within the ninety (90) day period, TENANT shall deliver an executed copy ofsuch assignment or sublease to LANDLORD to obtain its consent as required bythe provisions of this Paragraph 21.  Ifthe LANDLORD consents to a sublease, then such sublease shall be subject andmade upon the following terms:

 

**(1)****                    **Any such sublease shall be subject to the terms of this Lease and the termthereof may not extend beyond the expiration of the terms of this Lease;

 

**(2)****                    **The use to be made of the Transferred Space shall be in keeping with thecharacter of the Building;

 

**(3)****                    **Such assignment or sublease shall not violate any negative covenant as touse contained in any deed of trust affecting Building and shall not violate anyexclusives granted by LANDLORD to any other TENANTS in the Building;

 

**(4)****                    ****No Sublessee shall have a right to further sublet;**

**(5)****                    **No permitted assignment or sublease shall be valid and no assignee orsublessee shall take possession of the Premises assigned or sublet unless,within ten (10) days after the execution thereof, TENANT shall deliver toLANDLORD a duly executed duplicate original of such assignment of sublease inform satisfactory to LANDLORD which provides that (i) the assignee (sublessee)assumes TENANT’s obligations for the payment of rent and for the full andfaithful observance and performance of the covenants, terms and conditionscontained herein, and (ii) that said assignee or sublessee will, at LANDLORD’selection, attorn directly to LANDLORD in the event TENANT’s Lease is terminatedfor any reason.

 

                                                     **d.** TENANT shall have the right without the consent of LANDLORD, but uponprior written notice to LANDLORD, to assign this Lease to a companyincorporated or to be incorporated by TENANT provided that TENANT owns orbeneficially controls 50% or more of the issued and outstanding shares in thecapital stock of the corporation.  Suchassignment shall not, however, relieve TENANT from its obligations for thepayment of rent and for the full and faithful observance of the covenants,terms and conditions contained herein.

 

**22.**          **  BANKRUPTCY. **It is further agreed that if at any time during the term ofthis Lease, through any judicial action or proceeding in any Court againstTENANT or any of the TENANT’s heirs or assigns, a receiver or other officer or agent be appointed to take charge of thePremises or the business conducted therein, and shall be in possession thereof,or if this Lease or the interest or estate created thereby vests in any otherperson or persons by operations of law or otherwise, except by consent, asaforesaid, of LANDLORD, or in the event of any action taken by or againstTENANT under Federal Bankruptcy Laws or other applicable statutes of the UnitedStates, or any State, or if TENANT shall make an assignment for the benefit ofcreditors, or if an attachment or execution is levied upon the TENANT’s propertyor interest under this Lease which is not satisfied or released within thirty(30) days thereafter, the occurrence of any such event shall be deemed to be abreach of this Lease by TENANT, and LANDLORD shall have all the rights hereinprovided in the event of any such breach, including the right at LANDLORD’soption to terminate this Lease immediately and enter the Premises and removeall persons and remove all persons and property therefrom.

 

**23.**          **  RIGHTS OF LANDLORD.**  So long as the LANDLORD’s exerciseof these rights does not materially interfere with TENANT’s or TENANT’scustomers, employees, or visitors access to and use of the Premises and theparking facility, the LANDLORD reserves thefollowing rights: (a) to change the name of the Building without notice orliability to TENANT; (b) to designate all sources furnishing sign painting orlettering, ice, bottled water and toilet supplies used on the Premises; (c)constantly to have pass keys to the Premises; (d) to grant to anyone the exclusive right to conduct anyparticular business or undertaking in the Building in which Premises aresituated; (e) to enter the Premises at any time for inspections, repairs,alterations or additions to the Premises or the Building in which the Premisesare situated, to exhibit the Premises to others, to affix and display “ForRent” signs, and for any purpose whatsoever related to the safety, protection,preservation or improvement of the Premises, the said Building, or theLANDLORD’s interest, without being deemed guilty of an eviction or disturbanceof TENANT’s use and possession, and without being liable in any manner to theTENANT on account thereof; (f) at any time, and from time to time, whether atthe instance of LANDLORD or pursuant to government requirements, at LANDLORD’sexpense, to make repairs, alterations, additions, improvements or decorating,whether structural or otherwise, in or to the Building or any part thereof,including the Premises.  Without limitingthe generality of the foregoing rights LANDLORD shall specifically have theright to remove, alter, improve or rebuild the lobby of the Building as thesame is presently or shall hereafter be constructed, or the light court of saidBuilding as the same is presently or shall hereafter be constituted, or anypart or parts thereof.  LANDLORD shallnot be liable to TENANT for any expense, injury, loss, or damage resulting fromany work so done in or about the Premises or the Building or any adjacent ornearby the Building, land, street or alley. All claims against LANDLORD for any and all such liability being herebyexpressly released by TENANT.  Inconnection with making repairs, alterations, decorating, additions orimprovements under the terms of this Paragraph 23, the LANDLORD shall have theright to access through the Premises as well as the right to take into and uponand through the Premises of any other part of the Building, all material thatmay be required to make such repairs, alterations, decorating, additions orimprovements, as well as the right in the course of such work to closeentrances, doors, corridors, elevators, or other Building facilities, withoutbeing deemed or held guilty of an eviction of TENANT and without liability fordamages to TENANT’s property, business or person and without liability toTENANT by reason of interference with the business of TENANT or inconvenienceor annoyance to the TENANT or the customers of the TENANT.  The rent reserved herein shall in no waysabate while said repairs, alterations, decorating, additions or improvementsare being made and TENANT shall not be entitled to maintain any set-off orcounter-claim for damages of any kind against LANDLORD by reason thereof, allsuch claims being hereby expressly released by the TENANT. LANDLORD reservesand shall have the right to enter upon the Premises for the purpose of postingand maintaining such notices on the Premises as may be necessary to protectLANDLORD against mechanic’s, material-men’s or other liens and any othernotices that may be proper and necessary.

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |

 

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**24.**                                           **INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY.**

 

**a.**    TENANT shall indemnify, defend and holdLANDLORD harmless from any activity, work or thing which may be permitted orsuffered by TENANT in or about the Premises and shall further indemnify, defendand hold harmless from and against any and all claims arising from any breachor default in the performance of any obligation on TENANT’s part to beperformed under this Lease or arising from any negligence of TENANT or any ofits agents, contractors, employees or invitees, patrons, customers or membersand from any and all costs, attorney’s fees, expenses and liabilities incurredin the defense of any claim or any action or proceeding brought thereon,including negotiations in connection therewith. TENANT hereby assumes all risk of damage to property or injury topersons in or about the Premises from any cause, and TENANT hereby waives allclaims in respect thereof against LANDLORD, excepting where the damage iscaused solely by a willful or gross negligence of LANDLORD.

 

**b.**    LANDLORD shall not be liable for injury toTENANT’s business, or loss of income therefrom, or for damage that may besustained by the person, or property of TENANT, its employees, invitees,customers, agents, or contractors, or any other person in, on or about thePremises directly or indirectly caused by or resulting from fire, steam,electricity, gas, water, or rain which may leak or flow from or into any partof the Premises, or from the breakage, leakage, obstruction or other defects ofthe pipes, sprinklers, wires, appliances, plumbing, air conditioning, lightfixtures, or mechanical or electrical systems, or from any other causewhatsoever, whether such damage or injury results from conditions arising uponthe Premises or upon other portions of the Building or from other sources orplaces; and regardless of whether the cause of such damage or injury or themeans of repairing the same is inaccessible to TENANT, except in connectionwith damage or injury resulting from the gross negligence or willful misconductof LANDLORD, or its authorized agents. LANDLORD shall not be liable to TENANT for any damages arising from anyact or neglect of any other TENANT of the Building.  LANDLORD shall not be liable for any damageto property entrusted to employees of the Building.  LANDLORD shall not be liable for losses dueto theft, vandalism, or like causes.  TENANT shall defend, indemnify, and holdLANDLORD harmless from any such claims made by any employee, licensee, invitee,contractor, agent or person whose presence in, on or about the Premises or theBuilding is attendant to the business of TENANT.

 

**c.****** TENANT acknowledges that LANDLORD’s electionto provide mechanical surveillance or to post security guards in the Buildingis solely at LANDLORD’s discretion; LANDLORD shall have no liability in connection with the decision whetheror not to provide such services and TENANT hereby waives all claims basedthereon.

 

**25.**            ** INSURANCE.**

**a.****** **TENANT’sInsurance.**  TENANT shall payat all times during the term of this Lease, and at its own cost and expense,procure and continue in force the following insurance coverage: (i)Comprehensive General Liability Insurance with a combined single limit forbodily injury and property damages of not less than $1,000,000.00 including theBroad Form comprehensive General Liability endorsement, covering the insuringprovisions of this Lease and the performance by TENANT of the indemnityagreements of TENANT as set forth in Paragraph 24 of this Lease, and otherindemnity agreement of TENANT contained in this Lease; (ii) a policy ofstandard fire, extended coverage and special extended coverage insurance (allrisks), including a vandalism and malicious mischief endorsement, sprinklerleakage coverage, where sprinklers are provided, in an amount equal to the fullreplacement value new without deduction for depreciation of all fixtures,furniture, and leasehold improvements installed by or at the expense of TENANT;(iii) insurance on all plate or tempered glass in or enclosing the Premises;for the replacement cost of such glass. Additionally, TENANT shall maintain Worker’s Compensation insurance asrequired by law and shall provide LANDLORD with evidence of coverage.

**b.**   **Form ofPolicies.**  The aforementionedminimum limits of policies shall in no event limit the liability of TENANThereunder.  Such Insurance shall nameLANDLORD and such other persons or firms with insurable interests, as LANDLORDspecifies from time to time, as additional insured and shall be with companieshaving a rating of not less than the A+ in Best’s Insurance Guide.  No such policy shall be cancelable or subjectto reduction of coverage or other modification or cancellation except after 30 days prior written notice to LANDLORD by theinsurer.  All such policies shall beendorsed to agree that TENANT’s policy is primary and that any insurancecovered by LANDLORD is excess and not contributing with any insurancerequirement hereunder.  TENANT shallfurnish to LANDLORD, from the insurance companies, or cause the insurancecompanies to furnish, certificates of coverage. TENANT shall, at least 20 days prior to the expiration of such policiesfurnish LANDLORD with renewals or binders. TENANT agrees that if TENANT does not take out and maintain suchinsurance or furnish LANDLORD with renewals or binders, LANDLORD may (but shallnot be required to) procure said insurance on TENANT’s behalf and charge TENANTthe cost thereof, which amount shall be payable by TENANT upon demand withinterest from the date such sums are extended. TENANT shall have the right to provide such insurance coverage, pursuantto blanket policies obtained by TENANT, provided such blanket policiesexpressly afford coverage to the Premises and to TENANT as required by thisLease.

**c.**     **LANDLORD’sInsurance.**  The cost ofInsurance carried by LANDLORD shall be included in Operating Costs.  TENANT understands that LANDLORD will notcarry insurance of any kind on TENANT’s furniture, furnishings, fixtures, orequipment, and that LANDLORD shall not be obligated to repair any damagethereto or replace the same.

**d.**     **Waiver ofSubrogation.**  The partiesrelease each other and their respective authorized representatives from anyclaims for damage to any person or the Premises, and to the fixtures, personalproperty, improvements, and alterations of either LANDLORD or TENANT, in or onthe Premises and the Building, to the extent that they are covered by anyinsurance polices in force at the time of any such damage.  Each party shall cause each insurance policyobtained by it to provide that the insurance company waives its rights ofsubrogation.

 

**26.**          **  DAMAGE OR DESTRUCTION (PARTIAL OR TOTAL).**

**a.**    In the event the Building, the Premises orany insured alterations, are damaged by fire or other perils covered byLANDLORD’s extended coverage insurance to an extent not exceeding twenty-fivepercent (25%) of the full insurable value thereof, and if the damage thereto issuch that the Building, and any insured alterations may be repaired,reconstructed or restored within a period of ninety (90) days from the date ofthe happening of such casualty and LANDLORD will receive insurance proceedssufficient to cover the cost of such repairs, LANDLORD shall commence andproceed diligently with the work or repair, reconstruction and restoration andthe Lease shall continue in full force and effect.  If such work or repair, reconstruction andrestoration is such as to require a period longer than ninety (90) days tocomplete or exceeds twenty-five percent (25%) of the full insurable value ofthe Building and any insured alterations, or if said insurance proceeds willnot be sufficient to 

 

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |
| ** ** | ** ** |                          |       |       |

 

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cover the cost of such repairs, reconstruction, orrestoration, LANDLORD either  may electto so repair, reconstruct or restore the Building, the Premises and any insuredalterations and the Lease shall continue in full force and effect or  not to repair, reconstruct or restore theBuilding, the Premises and any insured alterations and the Lease shall in suchevent terminate.  Under any of theconditions of this Paragraph 26.a, LANDLORD shall give written notice to TENANTof its intention within thirty (30) days from the date of such event of damageor destruction.  In the event LANDLORDelects not to restore said Building and any insured alterations, this Leaseshall be deemed to have terminated as of the date of such partial destruction.

**b.**   Upon any termination of this Lease under anyof the provisions of this Paragraph, the parties shall be released therebywithout further obligation to the other from the date the possession of thePremises is surrendered to LANDLORD except for items which have theretoforeaccrued and are then unpaid.

**c.**    In the event of repair, reconstruction andrestoration by LANDLORD as herein provided in this Paragraph 26, the rentprovided to be paid under this Lease shall be abated proportionately with thedegree to which TENANT’s use of the Premises is impaired during the period ofsuch repair, reconstruction or restoration. TENANT shall not be entitled to any compensation or damages for loss inthe use of the whole or any part of the Premises and/or any inconvenience orannoyance occasioned by such damage, repair, reconstruction or restoration.

**d.**    TENANT shall be released from any of its obligationsunder this Lease except to the extent and upon the conditions expressly statedin this Paragraph 26.  Notwithstandinganything to the contrary contained in this Paragraph 26 should LANDLORD bedelayed or prevented from repairing or restoring the damaged Premises withinsix (6) months after the occurrence of such damage or destruction, by reason ofacts of God, war, governmental restrictions, inability to procure the necessarylabor or materials, or other cause beyond the control of LANDLORD, LANDLORDshall be relieved of its obligation to make such repairs or restoration andTENANT shall be released from its obligations under this Lease as of the end ofsaid six (6) month period.

**e.**    In the event that damages is due to anycause other than fire or other peril covered by extended coverage insurance,LANDLORD may elect to terminate this Lease.

**f.**     It is hereby understood that if LANDLORD isobligated to or elects to repair or restore as herein provided, LANDLORD shallbe obligated to make repairs or restoration only of those portions of theBuilding and the Premises which were originally provided at LANDLORD’s expenseor which were insured by either party and the proceeds of such insurance havebeen received by LANDLORD, and the repair and restoration of items not providedat LANDLORD’s expense shall be the obligation of TENANT.

**g.**    Notwithstanding anything to the contrarycontained in this Paragraph 26, LANDLORD shall not have any obligationwhatsoever to repair, reconstruct or restore the Premises when the damageresulting from any casualty covered under this Paragraph 26 occurs during thelast twelve (12) months of the term of this Lease or any extension hereof.

 

**27.**          **  DAMAGE TO TENANT’S PROPERTY.**  Subject to the provisions of Paragraph 24,LANDLORD or its agents shall not be liable for any damage to property entrustedto employees of the Building, nor for loss of or damage to any property bytheft or otherwise, nor for any injury or damage to persons or propertyresulting from fire, explosion, falling plaster, steam, gas, electricity, wateror rain which may leak from any part of the Building or from the pipes,appliances or plumbing works therein or from the roof, street or sub-surface orfrom any other place or resulting from dampness or any other patent or latentcause whatsoever.  LANDLORD or its agentsshall not be liable for interference with the light or other incorporealhereditaments.  TENANT shall give promptnotice to LANDLORD in case of fire or accidents in the Premises or in theBuilding or of defects therein or in the fixtures or equipment located therein.

 

**28.**          **  EMINENT DOMAIN.**

**a.**    Should LANDLORD at any time during thecontinuance in force of this Lease be deprived of the Building in which thePremises are situated, or any part thereof, or any part of the land on which itis situated by condemnation or eminent domain proceedings, this Lease shallterminate, at LANDLORD’s option, on the date when LANDLORD is actually deprivedof possession of said land or Building, or some part thereof, and thereupon theparties hereto shall be released from all further obligations hereunder, andLANDLORD shall thereupon repay to TENANT any rental theretofore paid by TENANTand unearned at the date of such termination. TENANT shall not be entitled toany compensation, allowance, claim or offset of any kind against the LANDLORD,as damages, or otherwise, by reason of such condemnation or eminent domainproceedings or by reason of being deprived of the Premises or the terminationof this lease, and said TENANT does hereby waive, renounce and quit-claim toLANDLORD any right in and to any award, judgment, payment or compensation whichshall or may be made or given because of the taking of the Premises, or anyportion thereof, by virtue of any such condemnation or eminent domainproceedings, whether received in any such action or in settlement or compromisethereof by said LANDLORD.

**b.**    In the event of taking of the Premises orany part thereof for temporary use, this Lease shall be and remain unaffectedthereby and rent shall not abate, and TENANT shall be entitled to receive foritself such portions of any award made for such use with respect to the periodof the taking which is within the term, provided that if such taking shallremain in force at the expiration or earlier termination of this Lease, TENANTshall then pay to LANDLORD a sum equal to the reasonable cost of performingTENANT’s obligations under Paragraph 36 with respect  to surrender of the Premises and upon suchpayment shall be excused from such obligations. For the purposes of thissubparagraph b, a temporary taking shall be defined as a taking for a period of270 days or less.

 

**29.**          **  RIGHT OF REPOSSESSION.**  If, in compliance with any law or ordinancenow or hereafter enacted, or if required to comply with the directions orrequirements of any public officer, board or commission, it becomes necessaryfor LANDLORD to acquire permanently all or any portion of the Premises,LANDLORD or its assigns shall have the right to repossess the Premises, or anyportion thereof, at any time upon thirty days written notice to TENANT, andwhen said space shall have been so permanently repossessed, the LANDLORD shall,in lieu of any and all claims for damages, allow TENANT a credit on TENANT rentin the proportion that space taken bears to the whole of the Premises;  provided, however, that if the space taken isof such an amount or size as to make the remaining space undesirable to TENANT,then the LANDLORD, upon thirty (30) days written notice from TENANT, will endeavor,if available, to furnish TENANT with comparable space elsewhere in the Building****(which must be on the groundfloor), and to place TENANT in such new spaceand this Lease and each and all of the terms, covenants and conditionstherefore, shall thereupon remain in full force and effect and be deemedapplicable to such new space; provided, however, that if the LANDLORD shall beunable to provide TENANT with such other space, then this Lease shall thereuponcease and terminate.  No exercise byLANDLORD of any right herein reserved shall entitle TENANT to damages for anyinjury or inconvenience occasioned thereby, nor shall TENANT by reason thereofbe entitled to any abatement in rent (except as above set forth in case oftaking of space permanently).

 

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |
| ** ** | ** ** |                          |       |       |

 

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**30.**          **  DEFAULT- REMEDIES OF LANDLORD.**  In the event of default at any time by TENANTin the payment of the rent herein provided for, or any part thereof, or in theperformance of any other terms, covenants or conditions to be kept or performedby TENANT, or if TENANT shall abandon or vacate the Premises (as definedbelow)****without the written consent of LANDLORD, then after three days’written notice of any default in payment of rent and after fifteen days’written notice of any default other than payment of rent (if such default isnot cured within such period; provided, however, that if the cure cannotreasonably be accomplished within 15 days, TENANT shall not be in default solong as TENANT has commenced the cure within the 15 day period and diligentlyprosecutes it to completion), the LANDLORD, atits option, shall have the right to deem this Lease to be in default and LANDLORDshall have the right, at its option, to enter upon the Premises or any partthereof, either with or without process of law, and to expel, remove or put outTENANT or any other person or persons who may be thereon, together with allpersonal property found therein; and in event of TENANT’s default, LANDLORDshall have the following cumulative remedies:

 

**a.**    The right to terminate TENANT’s right topossession in any manner permitted by law;

**b.**     Upontermination of such right to possession or upon abandonment of the property byTENANT, the remedies prescribed by Civil Code Section 1951.2(a), Paragraphs(1), (2), (3), and (4).  In connectionwith such Paragraph (3), it is hereby provided that damages that LANDLORD mayrecover include the worth at the time of award of the amount by which theunpaid rent for the balance of the term after the time of award exceeds theamount of rental loss for the same period that the TENANT proves could bereasonably avoided;

**c.**    If there be such abandonment but not such terminationof such right to possession, this Lease shall continue in effect (unless anduntil there be such a termination) and LANDLORD may enforce all rights andremedies under this lease, including, without limitation, the right to recoverthe rent as it becomes due under this lease. In this connection, it is hereby expressly provided that TENANT maysublet the property, assign TENANT’s interest in this lease, or both, with theconsent of the LANDLORD, and such consent to be as provided in Paragraph 21 hereof.  Such abandonment as an event of default shallbe grounds for determination at LANDLORD’s option of such right to possessionat any time unless and until (i) such default be cured by occupancy by anassignee or sublessee so consented to by LANDLORD or re-occupancy by TENANT,and (ii) any other events of default be cured;

**d.**    Such other remedies, legal and equitable, asthe law may, from time to time, provide or allow.

     As usedabove “abandonment” shall be deemed to occur only if:

**(i)**  TENANT ceased to regularly occupy theproperty during business hours and gives written notice to LANDLORD ofabandonment; or

**(ii)** TENANT ceased to regularly occupy the propertyduring business hours during the term of the Lease or any extension or renewalsthereof, for a cumulative period of six (6) months or longer

           Theparties have, by such definition of “abandonment,” tried to make more certainthe application of the remedies hereunder. If it should be held invalid for them to have so contracted as to suchdefinition, such invalidity shall not affect the enforceability of theprovision hereof which shall then be read as if there were no such definitionin this lease.  A waiver by LANDLORD ofany default by TENANT in the performance of any of the covenants, terms orconditions hereof shall not be considered or treated as a waiver of anysubsequent or other default as to the same or any other matter.

           Anyand all of the following actions shall constitute a default of this lease****following the expiration ofthe notice and cure period described above:

**i.**   Use of the Premises for any purpose otherthan as authorized in this lease, or

**ii.****      **Default in the payment of rent or any other sums owing when due; or

**iii.****                                ** Abandonment or vacation (as defined above)****of TENANT from the Premises; or

**iv.****   ** Assignmentof the Premises by TENANT, either voluntarily or by operation of law, whetherby judgment, execution, death or any other means, without the consent ofLANDLORD; or

**v.****  **A filing byTENANT or any other person of a voluntary or involuntary petition in bankruptcyor

an arrangement by or against TENANT; the adjudicationof TENANT as a bankrupt or insolvent; the appointment of a receiver of thebusiness or of the assets of TENANT, except a receiver appointed at theinstance or request of LANDLORD; the general or any other assignment by TENANTfor the benefits of its creditors; or

**vi.**   A default in the performance of any of theterms, covenants, and conditions herein contained; or

**vii**.****TENANT’s failure to pay the rent herein or to perform any of theterms, covenants, or conditions herein by him to be kept or performed; or

**viii.** A defaultby TENANT in the payment of rent or the performance of any other terms,covenants or conditions to be kept or performed by TENANT under any other leaseor tenancy wherein this LANDLORD is also LANDLORD therein, whether or not saidlease has terminated, expired, or been replaced.

 

**31.**          **  SUBORDINATION.**   TENANT expressly agrees that at the soleoption of the LANDLORD this Lease may be subject and subordinate or paramountto all mortgages, Deeds of Trust or any other encumbrances now placed or whichmay be placed in the future upon the said real property, of which the Premisesare a part, by the owners thereof, and TENANT further agrees that whenever requestedto do so by LANDLORD, TENANT will execute, sign, acknowledge and deliver anydocuments required to effectuate such subordination or superiority.  Should TENANT fail to execute, acknowledgeand deliver such instruments within five (5) days after written notice so todo, TENANT hereby appoints the LANDLORD and LANDLORD’s successors and assignsthe TENANT’s attorney in fact irrevocably, to execute, acknowledge and deliverany such instrument or instruments for and on behalf of TENANT.

 

 

**32.**          **  ESTOPPEL CERTIFICATE.  **TENANT agrees during the term ofthis Lease and any extension or renewal of the term hereof, within ten (10)days after request therefor by LANDLORD, from time to time, to execute,acknowledge and deliver a certificate or certificates in recordable form toLANDLORD or to any mortgagee, trust deed beneficiary or proposed mortgagee, orpurchaser, certifying that TENANT has accepted its Premises, the commencementdate of the Lease term, that it is in occupancy under this Lease, that theLease is unmodified and in full force and effect (or, if modified, stating thenature of such modification and certifying that this Lease, as so modified isin full force and effect), and that there are no defenses or offsets theretoand no rental offsets or claims by TENANT, the date to which the rental andother sums payable under this Lease have been paid, the amount of securitydeposit held by LANDLORD, the fact that there are no current defaults under 

 

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |
| ** ** | ** ** |                          |       |       |

 

13

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this Lease by LANDLORD, except as specified inTENANT’s statement, and such other matters requested by LANDLORD.

 

           ShouldTENANT fail to deliver such statement within said ten (10) days, LANDLORD, atits option, following:****the termination of theapplicable notice and cure period (provided, however, that such cure periodshall not, in this case, be more than 10 days following notice of default)

declare TENANT in default under this Lease, andLANDLORD may, at its option, terminate the Lease, provided written notice ofsuch termination is received by TENANT prior to LANDLORD’s receipt of saidstatement.

 

**If TENANT fails to deliver thestatement within said ten (10) days, Landlord, after service of a five (5) daynotice on TENANT, may complete the statement and execute and deliver thestatement to a third party.  In suchevent the statement prepared and executed by LANDLORD on behalf of the TENANTshall be in full force and effect and TENANT shall be governed by it.**

 

           If this Lease is assigned by LANDLORDto any mortgagee or trust deed beneficiary or purchaser, within ten (10) daysof written request by LANDLORD, TENANT shall acknowledge in writing receipt ofsuch assignment to the assignee upon receipt of a copy of notice thereof.

 

**33.**          **  MODIFICATION FOR LENDER.**  If in connection with obtaining construction,interim or permanent financing for the Building, the lender shall requestreasonable modifications in this Lease as a condition to such financing, TENANTwill not unreasonably withhold or delay its consent thereto, provided that suchmodifications do not increase the obligations of TENANT hereunder or materiallyadversely affect the leasehold interest hereby created or TENANT’s rightshereunder.

 

**34.**           **PLANNING PROGRAM****.**  **Intentionally Deleted**.

 

**35.**          **  BUILDING RULES.**  TENANT hereby promises and agrees to keep andperform each and all of the rules and regulations of said Building hereinafterset forth which are hereby referred to and made a part hereof.  LANDLORD shall have the right to amend saidrules and to make other and different reasonable rules, and regulationslimiting, restricting and regulating the privileges of TENANTS in the saidBuilding, and all such rules and regulations so made by LANDLORD, after noticethereof to TENANT, shall be binding upon TENANT and become conditions ofTENANT’s tenancy and covenants on the part of and to be performed by TENANT.

 

**36.**          **  SURRENDER OF PREMISES; REMOVAL OF PROPERTY.**  Upon the expiration of the term of thisLease, or upon any earlier termination of this Lease, TENANT shall: (i)surrender possession of the Premises to LANDLORD in as good order and conditionas they were as of the Commencement Date hereof and hereafter may be improved byLANDLORD, ordinary wear and tear excepted (ii) remove from the Premises alldebris and rubbish, and (iii)  removefrom the Premises, all furniture, equipment, business and trade fixtures,freestanding cabinet work, moveable partitioning and other articles of personalproperty owned by TENANT or installed or placed by TENANT in the Premises, andall similar articles of any other persons claiming under TENANT unless (i)LANDLORD exercises its option to have any subleases or subtenancies assigned toit. TENANT shall repair all damage to the Premises resulting from theinstallation and removal of such items. Any floor covering and/or windowcovering whether or not allowance is given by LANDLORD to TENANT, shall becomethe property of the LANDLORD and remain in the Premises**.****  Allcabling shall become the property of LANDLORD and shall not be removed from thePremises, unless LANDLORD requests the removal thereof.**

 

           Thevoluntary or other surrender of this Lease by TENANT to LANDLORD, or a mutualtermination hereof, shall not work a merger, and shall at the option ofLANDLORD, operate as an assignment to it of any or all subleases orsubtenancies affecting the Premises. TENANT shall also surrender all keys for the Premises to LANDLORD,properly sorted and labeled, at the place then fixed for payment of rent andshall inform LANDLORD of all combinations on locks, safes and vaults, if any,in the Premises.  If TENANT fails toproperly identify the keys or fails to provide LANDLORD with the combinations,LANDLORD may deduct the cost of identifying or replacing the keys andre-setting the combinations from TENANT’s security deposit.  The delivery of keys to LANDLORD, anyemployee of LANDLORD, or LANDLORD’s agent or any employee thereof, shall not besufficient to constitute a termination of this Lease or a surrender of thePremises.

 

**37.**          **  ATTORNEY FEES.**  If any action is commenced for the breach ofany covenants or conditions of this lease, or for any rent or for thepossession of the Premises, or if the LANDLORD necessarily intervenes in, orbecomes a party to, any action or actions occurring out of this Lease in orderto protect its rights, then the TENANT will pay to the LANDLORD a reasonableattorney’s fees in such action or actions, which fees shall be fixed by theCourt as a part of the costs thereof.  IfTENANT is successful in the aforesaid litigation with LANDLORD (except in aDeclaratory Relief Action), LANDLORD shall pay to TENANT reasonable attorney’sfees as fixed by court as part of the costs hereof.

 

**38.**          **  CONDITIONS AND COVENANTS - TIME. **It is further expressly understoodand agreed that each and all of the provisions of this Lease are conditionsprecedent to be faithfully and fully performed and observed by said TENANT toentitle TENANT to continue in possession of the Premises hereunder; that saidconditions are also covenants on the part of TENANT; that time of performanceof each is of the essence of this agreement.

 

**39.**          **  WAIVER. **No modification, alteration or waiver of any term, covenantor condition of this Lease shall be valid unless in writing, subscribed by theLANDLORD or by an officer of LANDLORD, authorized in writing.  No waiver of a breach of any covenant orcondition shall be construed to be a waiver of any other provisions hereof orany succeeding breach by TENANT of the same or any other provision.  No act, delay or omission done, suffered orpermitted by the LANDLORD shall be deemed to exhaust or impair any right,remedy or power of the LANDLORD hereunder.

            No act or thing done by LANDLORD or LANDLORD’sagents during the term of this Lease shall be deemed as acceptance of asurrender of Premises, and no agreement to accept such surrender shall be validunless in writing and signed by LANDLORD.

 

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |
| ** ** | ** ** |                          |       |       |

 

14

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           Thefailure of LANDLORD to seek redress for violation of, or to insist upon strictperformance of, any term, covenant or condition of this Lease or the Rules andRegulations attached hereto shall not be deemed a waiver of such violation orprevent a subsequent act which would have originally constituted a violationfrom having all the force and effect of any original violations, nor shall thefailure of LANDLORD to enforce any of said Rules and Regulations against anyother TENANT of the Building be deemed a waiver of any such Rule or Regulation,nor shall any custom or practice which may become established between theparties in the administration of the terms hereof be deemed a waiver of, or inany way affect, the right of LANDLORD to insist upon the performance by TENANTin strict accordance with said terms.

 

**40.**           **JOINT AND SEVERAL LIABILITY OF TENANT.**If more than one person executes this Lease as TENANT, (a) each of them isjointly and severally liable for the keeping, observing and performing of allof the terms, conditions, covenants, provisions, and agreements of this Leaseto be kept, observed and performed by TENANT, and (b) the term “TENANT” as usedin this Lease shall mean and include each of them jointly and severally and theact of or notice from, or notice or refund to, or the signature of, any one ormore of them, with respect to the tenancy of this Lease, including, but notlimited to any renewal, extension, expiration, termination or modification ofthis Lease shall be binding upon each and all of the persons executing thisLease as TENANT with the same force and effect as if each and all of them hadso acted or so given or received such notice or refund or so signed.

 

**41.**          **  PARTNERSHIP AND CORPORATION AUTHORIZATION.**  If TENANT executes this Lease as acorporation, trust, or general partnership each individual executing this Leaseon behalf of TENANT represents and warrants that the individuals executing thisLease on TENANT’s behalf are duly authorized to execute and deliver this Leaseon behalf of the TENANT.

 

**42.**          **  FINANCIAL STATEMENT.**  At any time during the term of this Lease,TENANT shall, upon ten (10) days prior written notice from LANDLORD provideLANDLORD with current financial statements and financial statements of the two(2) years prior to the current financial statement year.  Such statement shall be prepared inaccordance with generally accepted accounting principles in a manner consistentlyapplied in all financial statements and, if such is the normal practice ofTENANT, shall be audited by an independent certified public accountant.

 

**43.**          **  COVENANT BY TENANT. **TENANT covenants to hold LANDLORDfree and harmless from all loss, cost or damage (including reasonable attorneyfees and court costs) resulting from TENANT’s violation of any term orprovisions of this lease, the use, misuse or neglect of the Premises orappurtenances and from all claims arising out of any alleged defective orunsafe condition thereof.

 

           TENANTagrees to pay for all loss, cost or damages (including reasonable attorney feesand court costs) which may be caused to the LANDLORD or the Building in whichthe Premises are situated, or any TENANT or occupant thereof by any act orfailure to act of the TENANT or any of TENANT’s invitees, guests, visitors oremployees, and TENANT further agrees not to use or suffer to be used thePremises in any manner which will increase the present rate of premium forinsurance on said Building, or cause a cancellation of any insurance policyrelating to said Building, or keep or suffer to be kept therein any gasoline,distillate, petroleum or explosive products. TENANT and TENANT’s officers, agents and employees shall not cause any corrosiveacids or caustic substances of any kind to be emptied or discharged into anybasins, drains, toilets or other plumbing facilities installed in the Premiseswhich might cause injury or damage to same; and agrees during the term to takegood care of the Premises and to keep the interior thereof in good order,repair and condition, natural deterioration with careful use and injury byfire, the elements or acts of God excepted. TENANT and TENANT’s officers, agents, and employees shall not cause orpermit any noxious or offensive odors to be emitted from the Premises duringthe term of this lease.

 

**44.**           **COMPLIANCE. **Subject to the terms ofParagraph 13 of this Lease,****TENANT agrees to comply with all laws, ordinances and all regulations andrequirements of Municipal, State and Federal governments, boards, andauthorities relative to the TENANT’s occupancy of the Premises or to thebusiness to be conducted therein and will keep the said Premises in a clean andorderly condition according to all laws and ordinances and the direction of allpublic officers, and, as far as reasonably possible will keep all immoral anddisreputable persons out of the Premises to the end that the reputation of thePremises and the said Building as a first class office building may bepreserved.

 

**45.**           **HAZARDOUS WASTE.**

**a.**   Except for small quantitiesof ordinary office supplies, which shall be used and disposed of in accordancewith law, TENANT shall not cause or permit anyHazardous Material (as defined in Paragraph 45.c below) to be brought, kept orused in or about the Building by TENANT, its agents, employees, contractors, orinvitees.  TENANT shall indemnifyLANDLORD from and against any  breach by TENANTof the obligations stated in the preceding sentence, and agrees to defend andhold LANDLORD harmless from and against any and all claims, judgments, damages,penalties, fines, costs, liabilities, or losses, (including without limitation,diminution in value of the Building, damages for the loss or restriction on useof rentable or usable space or of any amenity of the Building, damages arisingfrom any adverse impact on marketing of space in the Building, and sums paid insettlement of claims, attorney’s fees, consultant fees, and expert fees) whicharise during or after the term of this Lease as a result of such breach.  This indemnification of LANDLORD by TENANTincludes, without limitation, costs incurred in connection with anyinvestigation of site conditions of any cleanup, remedial removal, orrestoration work required by any federal, state, or local governmental agencyor political subdivision because of Hazardous Material present in the soil orground water on or under the Building. Without the limiting the foregoing, ifthe presence of any Hazardous Material in the Building caused or permitted byTENANT results in any contamination of the Building, TENANT shall promptly takeall actions, at its sole expense, as are necessary to return the Building tothe condition existing prior to the introduction of any such Hazardous Material.

 

**b.**    LANDLORD and TENANT acknowledge thatLANDLORD may become legally liable for the costs of complying with Laws (asdefined in Paragraph 45.d below) relating to Hazardous Material which are notthe responsibility of LANDLORD or the responsibility of TENANT, including thefollowing: (i) Hazardous Material present in the soil or ground water on theBuilding of which LANDLORD has no knowledge as of the effective date of thisLease; (ii) a change in Laws which relate to Hazardous Material which make thatHazardous Material which is present on the Property as of the effective date ofthis Lease, whether known or unknown to LANDLORD, a violation of such newLaws:  (iii) Hazardous Material thatmigrates, flows, percolates, diffuses, or in any way moves on, to, or under theBuilding after the effective date of this Lease; or Hazardous Material presenton or under the Building as a result of any discharge, dumping or spilling(whether accidental or otherwise) on 

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |

 

15

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the Building by other TENANTS of the Building or their agents, employees, contractors, orinvitees, or by others.  Accordingly,LANDLORD and TENANT agree that the cost of complying with Laws relating toHazardous Material in or under the Building for which LANDLORD is legallyliable and which are paid or incurred by LANDLORD shall be an Operating Cost(and TENANT shall pay TENANT’s Percentage Share thereof in accordance withParagraph 1.m); unless the cost of such compliance, as between LANDLORD andTENANT, is made the responsibility of TENANT pursuant to Paragraphs 45.aabove.  To the extent any such OperatingCost relating to Hazardous Material is subsequently recovered or reimbursed,TENANT shall be entitled to a proportionate reimbursement to the extent it haspaid its share of such Operating Cost to which such recovery or reimbursementrelates.

**c.**    As used herein, the term “HazardousMaterial” means any hazardous or toxic substance, material, or waste which isor becomes regulated by any local governmental authority, the State ofCalifornia or the United States Government. The term “Hazardous Material” includes, without limitation, any materialor substance which is (i) defined as “hazardous waste”, “extremely hazardouswaste”, or “restricted Hazardous Waste” under Section 25115, 25117, or 25122.7, or listed pursuant to Section25140 of the California Health and Safety Code, Division 20, Chapter 6.5(Hazardous Waste Control Law), (ii) defined as “hazardous substance” underSection 25316 of the California Health and Safety Code, Division 20, Chapter6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) definedas a “hazardous material”, “hazardous substance”, or “hazardous waste” underSection 25501 of the California Health and Safety Code, Division 20, Chapter6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) definedas a “hazardous substance” under Section 25281 of the California Health andSafety Code, Division 20, chapter 6.7 (Underground Storage of HazardousSubstances), (v) petroleum, (vi) asbestos, (vii) listed under Article 9 ordefined hazardous or extremely hazardous pursuant to Article 11 of Title 22 ofthe California Administrative Code, Division 4, Chapter 20, (viii) designatedas a “hazardous substance” pursuant to section 311 of the Federal WaterPollution control Act (33 U.S.C. & 1317), (ix) defined as a “hazardouswaste” pursuant to Section 1004 of the Federal Resource Conservation andRecovery Act, 42 U.S.C. & 6901) et seq. (42 U.S.C. & 6903), or (x)defined as a “hazardous substance” pursuant to Section 101 of the ComprehensiveEnvironmental Response, Compensation and Liability Act, 42 U.S.C. & 6901 etseq. (42 U.S.C. & 9601).

**d.**    As used herein, the term “Laws” mean anyapplicable federal, state or local laws, ordinances, or regulation relating toany Hazardous Material affecting the Building including, without limitation,the laws, ordinances, and regulations referred to in Paragraph 45.c above.

 

**46.**            ** ACCORD AND SATISFACTION.**  Any payment by TENANT or receipt by LANDLORDof an amount less than the total amount then due hereunder shall be deemed tobe in partial payment only thereof and not a waiver of the balance due or anaccord and satisfaction, notwithstanding any statement or endorsement to thecontrary on any check or any other instrument delivered concurrently herewithor in reference thereto.  Accordingly,LANDLORD may accept any such amount, and negotiate any such check withoutprejudice to LANDLORD’s right to recover all balances due and owing and topursue its rights against TENANT under this Lease, regardless of whetherLANDLORD makes any notation on such instrument of payment or otherwise notifiesTENANT that such acceptance or negotiation is without prejudice to LANDLORD’sright to recover all balances due an owing and to pursue its other rightsagainst TENANT under this Lease. TENANT agrees that the foregoing shall beapplicable to any covenant or agreement either expressly contained in thisLease or imposed by any statute or at common law.

 

**47.**          **  ATTORNMENT. **In the event of the exercise of power of sale or theforeclosure under any deed of trust or mortgage placed by LANDLORD against allor any portion of the Premises, or upon the Building and real estate of whichthe Premises are a part or in which the Premises are located, TENANT shall upondemand attorn to the purchaser upon any such foreclosure or sale and recognizesuch purchaser as the LANDLORD under this Lease.

 

**48.**** BROKERS.**  The parties recognize that the brokers whonegotiated this Lease are the brokers whose names are stated in Paragraph 1.qand agree that LANDLORD shall be solely responsible for the payment ofbrokerage commissions to said brokers, and that TENANT shall have noresponsibility therefor.  As part of theconsideration for the granting of this Lease, TENANT represents and warrants toLANDLORD that to TENANT’s knowledge no other broker, agent or finder negotiatedor was instrumental in negotiating or consummating this Lease and that TENANTknows of no other real estate broker, agent or finder who is, or might beentitled to a commission or compensation in connection with this Lease. Anybroker, agent, or finder of TENANT whom TENANT has failed to disclose hereinshall be paid by TENANT.  TENANT shallhold LANDLORD harmless from all loss, cost or damages (including reasonableattorney fees and court costs) and indemnify LANDLORD for all loss, cost ordamages (including reasonable attorney’s fees and court costs) paid or incurredby LANDLORD resulting from any claims that may be asserted against LANDLORD byany broker, agent, or finder undisclosed by TENANT herein.

 

**49.**            ** TRANSFER OF LANDLORD’s INTEREST.**  If LANDLORD transfers its interest in thePremises or in the real property of which the Premises are a part, other than atransfer for security purposes only, the transferor shall be automaticallyrelieved of any and all obligations and liabilities on the part of LANDLORDfrom and after the date of such transfer. LANDLORD shall transferTENANT’s Security Deposit hereunder to the purchaser of the property.  Upon such transfer, LANDLORD shall berelieved from any further liability with respect to said security deposit.  In the event of an assignment or subleaseconsented to by LANDLORD, the assigning TENANT’s interest in the securitydeposit shall be deemed transferred to such assignee or sublessee (to the prorata extent applicable).  Neither LANDLORDor any successor in interest of LANDLORD shall be personally liable withrespect to any of the terms, covenants and conditions of this Lease, and TENANTshall look solely to the equity of LANDLORD in the Building and the rentpayable by TENANT for the satisfaction of each and every remedy by TENANT, suchexculpation of liability to be absolute and without any exception whatsoever.

 

**50.**            ** EXAMINATION OF LEASE.**  The submission of this Lease to TENANT forexamination by TENANT does not constitute an option or offer to lease thePremises upon the terms and conditions contained herein or a reservation of thePremises for TENANT.  This Lease shallonly become effective upon the execution hereof by LANDLORD.  The negotiation of checks tendered by TENANTand delivery of a copy of this Lease signed by TENANT to LANDLORD, shall notconstitute an acceptance of TENANT’s offer to lease as contained herein untilsuch time as LANDLORD makes and executes this Lease and delivers a signed copythereof to TENANT.

 

**51.**            ** ETHICS.** If the TENANT is a memberof any profession, he agrees to abide by the Code of Ethics of the Associationrecognized as representing that particular profession in the County of LosAngeles, State of California.

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |

 

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**52.**          **  GENERAL PROVISIONS.**

 

**a.**     ** Prior Agreements.**  This Lease contains all of the agreements ofthe parties hereto with respect to any matter covered or mentioned in thislease, and no prior agreements or understanding pertaining to any such mattersshall be effective for any purpose.  Noprovisions of this Lease may be amended or added to except by an agreement inwriting signed by the parties hereto or their respective successors ininterest.  This Lease shall not beeffective or binding on any party until fully executed by both partieshereto.  This paragraph is subject to theprovisions of Paragraph 30 concerning default by TENANT in any other lease ortenancy wherein the LANDLORD is also LANDLORD therein.

 

**b.**     ** Inability to Perform.**  This Lease and the obligations of the TENANThereunder shall not be affected or impaired because the LANDLORD is unable tofulfill any of its obligations hereunder or is delayed in doing so, if suchinability or delay is caused by reason of strike, labor troubles, acts of God,or any other cause beyond the reasonable control of LANDLORD.

 

**c.**     ** Partial Invalidity**.  Any provisions of this Lease which shallprove to be invalid, void, or illegal shall in no way affect, impair orinvalidate any other provisions hereof and such other provisions shall remainin full force and effect.

 

**d.****    CumulativeRemedies.**  No remedy orelection hereunder shall be deemed exclusive but shall, whenever possible, becumulative with all other remedies at law or in equity.

** **

**e.    Successors.** The words “LANDLORD” and “TENANT” as used herein, shall include, applyto, and bind and benefit the heirs, executors, administrators, assigns andsuccessors of the LANDLORD and TENANT, subject to the aforementionedrestrictions on assignment of this Lease on the part of the TENANT.

 

**f.    Gender.** In this lease, whenever the context so requires, the masculine genderherein used shall include the feminine or neuter and the singular number shallinclude the plural.

 

**g.****   ParagraphHeadings. **Paragraph headingsdo not constitute part of the text of this lease, but are inserted in thisLease for paragraph identification only.

 

**h.     Notices.**  All notices to be given hereunderby LANDLORD to TENANT shall be in writing, and may be served either personallyor by depositing the same in the United States mail, postage fully prepaid,either by ordinary, registered or certified mail, and addressed to TENANT atthe Premises,******with a copy, at the same time, mailed to:**

 

**Chief Financial Officer**

**Mercantile National Bank, N.A.**

**1880 Century Park East, Suite 800**

**Los Angeles, California 90067.**

 

**If there may be more than one TENANT, then notice on anyone of them shall constitute notice to all.**

 

           Anynotices desired to be served on LANDLORD by TENANT must be sent by UnitedStates registered mail to the LANDLORD at the address set forth in Paragraph1.b, which may be changed from time to time upon giving of written notice toTENANT.

 

     **53.  SPECIALCONDITIONS.**         Exhibit “A”(Floor Plan) and Exhibit “B”(First Amendment to Office Building Lease) areattached hereto and incorporated herein by this reference.

 
| **LANDLORD:**                    | ** **                                    |   | **TENANT:**                                            |
|----------------------------------|-----------------------------------------------|--------|--------------------------------------------------------|
|                             |                                          |   |                                                   |   |   |
| **Encino Corporate Plaza, L.P.** | ** **                                    |   | **Mercantile National Bank, N.A****.,  national bank** |
| **By:**                          | ** Milbank Real Estate  Services, Inc.** |   |                                                   |   |   |
| **Its:**                         | ** Authorized Agent**                    |   |                                                   |   |   |
|                             |                                          |   |                                                   |   |   |
| By:                              |                                          |   |                                                   | By: |   |
|                             | Solyman Yashouafar, COO                       |   |                                                   |   | Scott A. Montgomery |
|                             |                                          |   |                                                   | For: | Mercantile  National Bank |
|                             |                                          |   |                                                   | Its: | President  and CEO |
|                             |                                          |   |                                                   |   |   |
|                             |                                          |   |                                                   |   |   |
|                             |                                          |   |                                                   | By: |   |
|                             |                                          |   |                                                   |   | David Brown |
|                             |                                          |   |                                                   | For: | Mercantile National Bank |
|                             |                                          |   |                                                   | Its: | Vice President and Chief  Financial Officer |

 

17

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**RULES AND REGULATIONS OF THE BUILDINGREFERRED TO HEREIN**

**WHICH CONSTITUTE A PART OF THIS LEASE**

 

**In the event of a conflict between these Rules and Regulationsand the Lease, the terms of the Lease shall control.**

 

           **1.** TENANT, and TENANT’s employees, shall not loiter in the entrance orcorridors, or in any way obstruct the sidewalks, entry passages, halls,stairways and elevators, and shall use the same only as passage ways and meansof passage to and from their respective offices.  The entry and exit doors of all suites are tobe kept closed at all times except as required for the orderly passage to andfrom the suite.

           **2.** The sash doors, sashes, windows, glass doors, lights and skylights thatreflect or admit light into the halls or other places of the Building, shallnot be covered or obstructed, nor shall any bottles, parcels, or other articlesbe placed on the windowsills.

           **3.** TENANT shall not mark, drive nails, screw or drill into, paint, or inany way deface the wall, ceilings, partitions, floors, wood, stone or ironwork, except with the written consent of LANDLORD.  The expenses of any breakage, stoppage ordamage resulting from a violation of this rule shall be borne by TENANT who hascaused such breakage, stoppage or damage.

           **4.** No awning, shade, sign, advertisement, or notice shall be inscribed,painted or affixed on or to any part of the outside or inside of the Buildingexcept by the written consent of LANDLORD, and except it be of such color, sizeand style and in such place upon or in the Building as may be designated byLANDLORD. If TENANT desires window coverings in addition to those already inand owned by LANDLORD, they must be of such uniform shape, color, material andmake as may be prescribed by LANDLORD and must be put up in the manner asdirected by LANDLORD and paid for by TENANT. All signs on doors will be provided for TENANT by LANDLORD, but the costof providing same shall be paid by TENANT. There will be no signs on the windows or the roof.

           **5.** Electric wiring of every kind shall be introduced and connected byLANDLORD, and no boring or cutting for wires shall be allowed except with thewritten consent of LANDLORD.

           **6.** LANDLORD shall prescribe the weight, size and position of all safes usedin the Building and such safes shall in all cases stand on wood or metal ofsuch size as shall be designated by LANDLORD. All damage done to the Building by putting in, taking out, or maintaininga safe shall be repaired at the expense of TENANT.

           **7.** TENANT shall not conduct any auction on the Premises and shall not storegoods, wares or merchandise on the leased Premises without the prior writtenconsent of LANDLORD, which consent shall be granted or withheld in LANDLORD’ssole and uncontrolled discretion. Articles of unusual size and weights are not permitted in the Building.

           **8.** All freight, furniture and fixtures must be moved into, within and outof the Building under the supervision of LANDLORD, and according to suchregulations, and at such hours as set by LANDLORD, which might change from timeto time, but LANDLORD will not be responsible for loss or damage to suchfreight from any cause.  TENANT shall beresponsible for any damages to the hallways, elevators and other parts of theBuilding resulting from move of such furniture or fixture. TENANT may only usethe freight elevator after 6:00 p.m., but before 7:30 a.m. during the weekdays,and during weekends and holidays, with prior written approval of LANDLORD.However, should TENANT’s use of the freight elevator be one load or less, thenTENANT may use the freight elevator outside the hours stated above, except thatunder no circumstances may TENANT use the freight elevator between the hours of8:00 a.m. to 9:30 a.m., 12:00 noon to 1:00 p.m., and 4:30 p.m. to 5:30 p.m. onweekdays.

           **9.** The requirements of TENANT will be attended to only upon application atthe office of the Building. LANDLORD’s employees shall not perform any work ordo anything outside of their regular duties unless under special instructionfrom the office, and no such employee shall admit any person (TENANT orotherwise) to any office without specific instructions from the office of theBuilding.

           **10.** TENANT shall promptly notify LANDLORD of any accident to, or defect inthe Building, including plumbing, water pipes, electric wires or heatingapparatus so that such defects can be promptly fixed.

           **11.** All keys shall be obtained from LANDLORD and all keys shall be returnedto LANDLORD upon the termination of this lease. If the keys are not returned to LANDLORD immediately upon termination ofthis lease, LANDLORD may replace all of the locks in the Premises with newlocks, all at TENANT’s sole expense.  Noadditional locks or bolts of any kind shall be placed upon any of the doors byTENANT, nor shall any changes be made in existing locks or the mechanismsthereof unless LANDLORD is first notified thereof, gives written approval, andthe mechanism thereof is placed on LANDLORD’s Master Key.

           **12.** It is understood and agreed between LANDLORD and TENANT that no assentor consent to any waiver of any provision of this Lease, or any part thereof byLANDLORD, shall be deemed or taken as made except if such assent or consent isdone in writing and attached to or endorsed hereon by LANDLORD.

           **13.** TENANT shall comply with all safety, fireprotection and evacuation procedures and regulations instituted by LANDLORD orany governmental agency.  TENANT shallcomply with all relevant non-smoking laws applicable to the Building.

           **14.** TENANT shall not obtain for use on the Premises cleaning, interior glasspolishing, rubbish removal, towel or other similar services, or acceptbarbering or bootblacking, or coffee cart services, milk, soft drinks or otherlike services on the Premises, except from persons authorized by LANDLORD andat the hours and under regulations fixed by LANDLORD.  No vending machines or machines of anydescription shall be installed, maintained or operated upon the Premiseswithout LANDLORD’s prior written consent.

           **15.** Toilet rooms, toilets, urinals, wash bowls and other apparatus shall notbe used for any purpose other than for which they were constructed and noforeign substance of any kind whatsoever (ie. cigarette butts, sanitarynapkins, or paper), shall be thrown therein.

           **16.** Before TENANT or the last employee to leave the Premises, suchindividual shall see that the doors of the Premises are closed and locked andbe sure that all water faucets, coffee pots, heat generating objects, lightsand appliances are turned off to prevent waste and damage.  TENANT shall avoid all situations which couldbe fire hazards including placing trash near or on wires and the carelessdisposal of cigarettes, or other pipes.

           **17.** No graffiti or writing on any walls, or toiletpartitions are tolerated. LANDLORD at its sole discretion may either cancel theLease of TENANT, or charge TENANT the cost of restoring the damaged area to itsoriginal condition prior to damage, plus an overhead cost of 15%.

           **18.** TENANT shall not use or keep in the Premises or Building any kerosene,gasoline, or flammable, explosive or combustible fluid or material, or use anymethod of heating or air-conditioning other than that supplied by LANDLORD.  TENANT may not tamper with any electric orair conditioning repair or installation.

 

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |
| ** ** | ** ** |                          |       |       |

 

18

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           **19.** TENANT shall not lay linoleum, tile, carpet, or other similar floorcovering so that the same shall be affixed to the floor of the Premises in anymanner except as approved by LANDLORD.

           **20.** TENANT shall cooperate with LANDLORD in obtaining maximum effectivenessof the cooling system by closing drapes or blinds when the sun’s rays falldirectly on windows of the Premises and by keeping the windows closed.  TENANT shall not obstruct, alter, or in anyway impair the efficient operation of LANDLORD’s heating, ventilating and air-conditioningsystem.  TENANT shall not tamper with orchange the setting of any thermostats or control valves.  No heating or air conditioning unit or othersimilar apparatus shall be installed or used by any TENANT without the priorwritten consent of LANDLORD.

           **21.** TENANT shall not make, or permit to be made, any unseemly or disturbingnoises, or disturb or interfere with occupants of Building or neighboringbuildings or premises or those having business with it by the use of any  musical instrument, radio, photographs orunusual noise, or in any other way. If TENANT does not eliminate objectionablenoise coming from the Premises after notice from LANDLORD, LANDLORD may, in itssole discretion, cancel this Lease or enter the Premises and add such soundproofingmaterial and take such other steps as may be necessary to prevent such noisefrom being heard outside the Premises. The cost of such soundproofing shall be paid by TENANT to LANDLORD upondemand.

           **22.** No bicycles, vehicles or animals of any kind shall be brought into orkept in or about the Premises, and no cooking shall be done or permitted by anyTENANT in the Premises, except that the preparation of coffee, tea, hotchocolate and similar items for TENANT’s, their employees and visitors shall bepermitted.  No TENANT shall cause orpermit any unusual or objectionable odors to be produced in or permeate from orthroughout the Premises.

           **23.** LANDLORD shall have the right to prohibit any advertising by any TENANTwhich, in LANDLORD’s opinion, tends to impair the reputation of the Building orits desirability as an office building and upon written notice from LANDLORD,any TENANT shall immediately refrain from and discontinue said advertising.

           **24.** All areas of the Building other than those leased to TENANTS, includingthe public halls, lobby and stairs, shall be under the sole and absolutecontrol of LANDLORD who shall have the exclusive right to regulate and controlthese areas.  LANDLORD may exclude fromsuch areas all persons whose presence LANDLORD considers, in its solediscretion, to be prejudicial to the safety, character, reputation andinterests of the Building and the TENANTS. LANDLORD reserves the right toexclude or expel from the Building any person who, in the judgement of LANDLORDis intoxicated or under the influence of drugs or liquor, or who shall in anymanner act in violation of the rules of the Building.  The hours the Building shall be open are 7:00AM to 6:00 PM, Monday through Friday, excluding legal holidays.  LANDLORD reserves the right to control accessto the Building by all persons after reasonable hours of generally recognizedbusiness days and at all hours on Saturdays and Sundays and legalholidays.  Each TENANT shall beresponsible for all persons for whom he requests after-hours access and shallbe liable to LANDLORD for all acts of such persons.  LANDLORD shall not be liable for damages forany error with regard to the admission or exclusion from the Building of anyperson.  In the case of invasion, mob,riot, public excitement, or any other circumstances rendering such actionadvisable in LANDLORD’s sole and absolute discretion, LANDLORD reserves theright to prevent access to the Building during the continuances thereof by suchactions as LANDLORD deems appropriate, including closing and locking the doors.

           **25.** Any person employed by TENANT to do janitorial work shall be, while inthe Building and outside of the Premises, subject to and under the control anddiscretion of the Office of the Building (but not as an agent or servant ofLANDLORD, and TENANT shall be responsible for all acts of such persons).

           **26.** Canvassing, soliciting and peddling in the Building are prohibited andeach TENANT and its employees shall not buy from such peddlers and shallcooperate to prevent and discourage the same. Any solicitors must be asked by TENANTS to leave the Buildingimmediately, and notify Building’s manager.

           **27.** There shall not be used in any space, or in the public halls of theBuilding, either by any TENANT or others, any hand trucks or dollies exceptthose equipped with rubber tires and side guards.

           **28.** TENANT shall not go on the roof of the Building nor shall TENANT installany type of antenna on the roof or walls of the Building.  TENANT shall not operate any equipment in thePremises which causes electromagnetic interference with the equipment of anyother person.

           **29.** LANDLORD reserves the right at any time to change or rescind any one ormore of these rules and regulations or to make such other and furtherreasonable rules and regulations as in LANDLORD’s judgment may from time totime be necessary for the safety, care and cleanliness of the Premises, and forthe preservation of good order therein.

           **30.** TENANT shall faithfully comply with any nondiscriminatory rules andregulations that LANDLORD shall from time to time promulgate.  Any such new rules and regulations shall bebinding upon TENANT upon delivery of a copy of the rules to TENANT.  LANDLORD shall not be responsible for thenoncompliance with any rules and regulations by any other TENANT.

 

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |
| ** ** | ** ** |                          |       |       |

 

 

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**Exhibit “A”**

 

 

Floor Plan

 

 

 

 

 

 

 

 

 

 

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |
| ** ** | ** ** |                          |       |       |

 

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**Exhibit “B”**

 

**First Amendment to Office Building Lease**

                     

On this 30th day of August 2004, thisExhibit “B” shall serve as the First Amendment (“1st Amendment”) tothat certain Office Building Lease, dated May 24, 2004 (“Lease”), by andbetween ENCINO CORPORATE PLAZA, LP (“LANDLORD”) and MERCANTILE NATIONAL BANK,N.A., a national bank (“TENANT”) forthe premises located at 16661 Ventura Boulevard, Suite 110, Encino, California91436 (“Premises”).  In the event of aconflict, the provisions of this 1st Amendment shall supersede theprovisions of the Lease.

 

**1.**                      ***Parking***.  Throughout the Term (as itmay be extended),TENANT shall have the right tolease seven (7) parking spaces in the Building’s parking structure **plus**two (2) **additional**parking spaces to be used by TENANT’s visitors**, all at prevailingrates in the Building**. All of these spaces are rented on a monthly basis, and TENANT may onlycancel a parking space upon at least thirty (30) days’ prior written notice toLANDLORD, which notice shall be effective to cancel a parking space on thefirst (1st) day of the month which is at least thirty (30) daysafter LANDLORD’s receipt of the notice.

 

**2.**                      ***HVAC.***  Notwithstanding anything to the contrary inthe provisions of Paragraph 20 of the Lease, LANDLORD shall furnish to thePremises heating, ventilating and air conditioning Monday through Friday, from8:00 a.m. to 6:00 p.m, and Saturdays from 9:00 a.m. to 1:00 p.m.**at no additionalcharge.**

 

**3**.                      ***Condition of Premises******.*** TENANT hereby accepts the Premises in its“AS-IS” and present condition without any improvements to be performed byLANDLORD.

 

**4.**                      ***Rent Credit***.  Provided TENANT is **not in default of any of** the terms andconditions of the Lease**beyond any applicable notice and cure period**,**at**the **timeof** the **applicable rent credit**,then, TENANTshall be entitled to the total of six (6) monthly credits, each credit shall beequal to the then Monthly Basic Rent payable hereunder and shall be appliedduring the months of **August 2004, December 2004, July 2005, July 2006, July 2007 and July2008.**

 

**5.**                      ***Signage***.  TENANT shall have the right to maintain itsexisting signage on the facade**of the Building.  In addition, LANDLORD, at TENANT’s cost,shall provide TENANT with space for two (2) designated names per one thousandsquare feet of rentable square footage leased by TENANT on the buildingdirectory board in the lobby** of the Building.

 

**6.**                      ***Optionto Extend Term***.

           i) TENANT **and itsAffiliates (as defined in Paragraph 8 of this First Amendment**,but not any******third party** assigneeof TENANT)  is given the option to extendthe term of this Lease for a five (5) year period (“Extended Term”) followingexpiration of the initial term by giving written notice of exercise of theoption (“Option Notice”) to LANDLORD at least nine (9) months but not more thantwelve (12) months prior to the expiration of the initial term.  Provided that, if the TENANT is in default **beyondany applicable notice and cure period**on the date ofgiving the Option Notice or if the TENANT is in default******beyond any applicable notice and cure period**on the date the Extended Term is commenced, the Option Notice shall be totallyineffective, the Extended Term shall not commence and the Lease shall expire atthe end of the initial term. Similarly, in the event TENANT, during the initialterm, failed to cure******a monetary** defaultwithin the applicable cure period as defined in the Lease, then the OptionNotice shall be totally ineffective, the Extended Term shall not commence andthe Lease shall expire at end of the initial term.

 

The rent for the Extended Term shall be ninety-five percent (95%) of thethen prevailing Market Rent as defined below.  In each and every other respect the remaining terms, covenants,conditions and provisions of the Lease shall remain in full force and effectduring the Extended Term.

 ii)  Within sixty days after receipt of TENANT’snotice of its intention to exercise its option to renew

the Lease, LANDLORD shall notify TENANT in writing as to the thenprevailing Market Rent for the Premises. The Market Rent for the purposes ofthis Paragraph 6.ii shall be defined as rent for a space substantially similarto the demised premises as to size and visibility, located on the ground floorof a high rise building on Ventura Boulevard, in Encino between SepulvedaBoulevard and Balboa Boulevard.  IfTENANT does not agree with the Market Rent, TENANT shall notify LANDLORD as toits disagreement within 10 **business**daysfrom receipt of LANDLORD’s notice, in which case both LANDLORD and TENANT shalleach appoint an experienced real estate broker (for the purposes of the Lease,an experienced broker shall be defined as one who has had at least five yearsof experience in leasing and marketing of office/retail space in Encino.) Suchtwo brokers shall within thirty days from their appointment attempt to agree onthe then Market Rent.  If the twoappointed brokers are unable to agree on the Market Rent, then the matter shallbe submitted to American Arbitration Association in******Los Angeles,California** for **arbitration**.  The appointed **arbitrator**shall choose between the rents each party claimed to be the Market Rent asdefined in this Paragraph 6.ii, and select the rent which to the **arbitrator’**smind is closer to the Market Rent.  BothLANDLORD and TENANT agree to be bound by the decision of the appointed **arbitrator**.  Each party shall advance one half of the costof the **arbitration**,and the party whose rate has been selected by the **arbitrator**shall recover its advance costs by the other party.

 

          iii)  In the event that at the commencement date ofthe Extended Term, the new rent has not been established, TENANT shall commencemaking rental payments as provided in Paragraph 10 of the Lease, **for a hold overtenant**.  At suchtime as the Market Rent is established, if the amount is in excess of theamount paid as rent by TENANT, then TENANTshall pay to LANDLORD within 15 days after determination of the Market Rent theexcess of the Market Rent over the rent provided in Paragraph 10.  In the event the Market Rent is less than theholdover rate, then TENANT shall receive credit on its future rental payments.

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |
| ** ** | ** ** |                          |       |       |

 

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**7.*****      Rightof First Acceptance***.

 

           i) At any time during the term of theLease, upon prior written notice to LANDLORD (“Expansion Notice”), TENANT shallhave the Right of First Acceptance to lease any contiguous space (“AdditionalPremises”)  that is then available forlease or becomes available for lease within two (2) months of the **date of the**Expansion Notice**(the “AdditionalPremises Period”)**.  Within ten (10) **business**days from receipt of ExpansionNotice, **orwithin ten (10) business days after any Additional Premises becomes availableduring Additional Premises Period, the **LANDLORDshall provide TENANT with a letter  whichshall set forth the description of Additional Premises and LANDLORD’s proposedmaterial terms and conditions (“Economic Terms”) applicable to TENANT’s leaseof the Additional Premises (“First Acceptance Notice”)**.  Except for the Economic Terms and the numberof parking spaces, all of the terms for the lease of the Additional Premisesshall be the terms of this Lease, as amended by this First Amendment**.

 

           ii) If TENANT wishes to exercise TENANT’sRight of First Acceptance with respect to the Additional Premises, then withinten (10) **business**days after **LANDLORD’s**deliveryof the First Acceptance Notice to TENANT, TENANT shall deliver notice toLANDLORD of TENANT’s unconditional and irrevocable exercise of its Right ofFirst Acceptance with respect to the entire Additional Premises and****theEconomic Terms set forth in the First Acceptance Notice.  TENANT may not elect to lease only a portionof the Additional Premises.  If TENANTdoes not unconditionally and irrevocably exercise its Right of First Acceptancewithin the ten (10) day period, or if TENANT exercises its Right of FirstAcceptance but objects to LANDLORD’s proposed Economic Terms, then LANDLORDshall be free to lease the Additional Premises, or any portion thereof, toanyone to whom LANDLORD desires**; provided, however, that if theEconomic Terms** on **which LANDLORD is willing to leasethe Additional Premises to a third party are more favorable than the**terms **offeredto** TENANT**(as adjusted for the differencein the term of the proposed lease). then LANDLORD**shall **againoffer** the Additional Premises **to TENANT on suchterms**. Unless otherwise expressly set forth to thecontrary in LANDLORD’s**First Acceptance Notice**, TENANT shall acceptthe Additional Premises in its “AS-IS” condition.   Any space leased by TENANT under theprovisions of this Paragraph 7 shall be for a term that is co-terminous withthe term of the Lease, however, in no event less than 24 months.

 

          iii) The rights contained in thisParagraph 7 shall be personal to TENANT **or an Affiliate of TENANT (asdefined in Paragraph 8 below)**and may only beexercised by TENANT**or an Affiliate of TENANT**, and not any**third party**assignee or subtenant.  TENANT shall nothave the right to lease the Additional Premises if as of the date of the Expansion Notice, or, at LANDLORD’s option, as of thescheduled date of delivery of the Additional Premises to TENANT, TENANT is indefault of the Lease or has been previoiusly in default of the Leasebeyond a**ny******applicable **notice and**cureperiod.

 

**8.**                   ***Assignmentand Sublease.*** Notwithstanding anything to the contrarycontained in Paragraph 21 of the Lease, LANDLORD’s prior consent to assignmentor sublease shall not be required for any transfer to TENANT’s affiliatedefined as (i) a corporation or entity into or with which all of TENANT ismerged or consolidated, or (ii) a corporation or entity which controls theTENANT or is controlled by TENANT,******or isunder common control with TENANT, or (iii) a corporation which acquires all ofthe stock or assets of TENANT;** provided however, that TENANT (a) notifies LANDLORD of anysuch assignment or sublease at least 15 days prior to the effective date ofsuch assignment or sublease, (b) promptly supplies LANDLORD with any documentsor information requested by LANDLORD regarding such assignment or sublease, (c)the proposed assignee assumes in writing for the express benefit of LANDLORDall of the liabilities and obligations of TENANT under the Lease, in a form andsubstance satisfactory to LANDLORD, and (d) such assignment or sublease is nota subterfuge by TENANT to avoid its obligations under the Lease.  “Control” as used in this Paragraph 8 shallmean the ownership, directly or indirectly, of at least fifty-one percent (51%)of the voting securities of, or possession of the right to vote, in theordinary direction of its affairs, of at least fifty-one percent (51%) of thevoting interest in, any person or entity.

 

 

| ** ** | ** ** | **LANDLORD’s Initials:** | ** ** | ** ** | **TENANT’s Initials:** |   |
|------------|------------|-------------------------------|------------|------------|-----------------------------|--------|
| ** ** | ** ** | ** **                    | ** ** | ** ** | ** **                  |   |
| ** ** | ** ** | ** **                    | ** ** | ** ** | **TENANT’s Initials:** |   |
| ** ** | ** ** |                          |       |       |

 

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