Exhibit
10.16


 


 


STANDARD OFFICE LEASE


 


VALLEY CORPORATE CENTER


 


By and Between


 


 


VCC INVESTORS L.P., A CALIFORNIA LIMITED PARTNERSHIP


 


 


as Landlord


 


 


and


 


 


PACIFIC CREST BANK, A CALIFORNIA CORPORATION


 


 


as Tenant


 


 


Dated: August 11, 2003


 

















 


	
  TABLE OF CONTENTS

  
	
   

  	
   

  
	
  1.

  	
  Basic
  Lease Provisions (“Basic Lease Provisions”)

  
	
  2.

  	
  Premises,
  Parking and Common Areas

  
	
  3.

  	
  Term

  
	
  4.

  	
  Rent

  
	
  5.

  	
  Security Deposit

  
	
  6.

  	
  Permitted Use

  
	
  7.

  	
  Maintenance, Repairs, Alterations and
  Common Area Services

  
	
  8.

  	
  Insurance; Indemnity

  
	
  9.

  	
  Damage or Destruction

  
	
  10.

  	
  Real Property Taxes

  
	
  11.

  	
  Utilities

  
	
  12.

  	
  Assignment and Subletting

  
	
  13.

  	
  Default; Remedies

  
	
  14.

  	
  Condemnation

  
	
  15.

  	
  Broker’s Fee

  
	
  16.

  	
  Estoppel Certificate

  
	
  17.

  	
  Landlord’s Liability

  
	
  18.

  	
  Severability

  
	
  19.

  	
  Interest on Past-due
  Obligations

  
	
  20.

  	
  Time of Essence

  
	
  21.

  	
  Additional Rent

  
	
  22.

  	
  Incorporation
  of Prior Agreements; Amendments

  
	
  23.

  	
  Notices

  
	
  24.

  	
  Waivers

  
	
  25.

  	
  Recording

  
	
  26.

  	
  Holding Over

  
	
  27.

  	
  Covenants and Conditions

  
	
  28.

  	
  Binding Effect; Choice of
  Law

  
	
  29.

  	
  Subordination

  
	
  30.

  	
  Attorneys’ Fees

  
	
  31.

  	
  Landlord’s Access

  
	
  32.

  	
  Auctions

  
	
  33.

  	
  Signs

  
	
  34.

  	
  Merger

  
	
  35.

  	
  Construction

  
	
  36.

  	
  Guarantor

  
	
  37.

  	
  Quiet Possession; Authority

  
	
  38.

  	
  Security
  Measures—Landlord’s Reservations

  
	
  39.

  	
  Easements

  
	
  40.

  	
  Building Planning

  
	
  41.

  	
  Landlord’s Right to Perform

  
	
  42.

  	
  Limitation on
  Landlord’s Liability

  
	
  43.

  	
  Toxic Materials

  
	
  44.

  	
  Authority

  
	
  45.

  	
  Conflict

  
	
  46.

  	
  No
  Offer

  
	
  47.

  	
  Lender Modification

  
	
  48.

  	
  Multiple Parties

  
	
  49.

  	
  Work Letter

  
	
  50.

  	
  Waiver of Jury Trial

  
	
  51.

  	
  Counterparts

  
	
  52.

  	
  Force Majeure

  
	
  53.

  	
  Best Efforts

  
	
  54.

  	
  Signage

  
	
  55.

  	
  Option to Extend

  
	
  56.

  	
  Attachments

  
	
   

  	
   

  
	
  EXHIBIT A PREMISES
  FLOOR PLAN

  
	
  EXHIBIT B
  LEGAL DESCRIPTION

  
	
  EXHIBIT C RULES AND
  REGULATIONS

  
	
  EXHIBIT D WORK LETTER

  
	
  EXHIBIT E ACCEPTANCE
  OF OFFICE SPACE

  
	
  EXHIBIT
  F SUBOIRDINATION, ATTORNMENT AND NON-DISTURBANCE AGREEMENT

  



 

















 


STANDARD OFFICE LEASE

Valley
Corporate Center


 


1.                                      Basic Lease Provisions (“Basic Lease
Provisions”).


 


1.1                               Parties.  This Lease (“Lease”), dated for reference
purposes August 11, 2003, is made and entered into by and between VCC
Investors, L.P., a California limited partnership (“Landlord”), and Pacific
Crest Bank, a California corporation (“Tenant”).


 


1.2                               Premises.  A total of approximately 5,178 rentable
square feet, more or less, of the building described in paragraph 1.3, as
defined further in paragraph 2 and as shown on Exhibit A hereto and known as
Suite 1010 (“Premises”).


 


1.3                               Building.  Commonly described as being located at 591
Camino de la Reina, in the City of San Diego, County of San Diego, State of
California, the legal description of which is set forth in Exhibit B hereto,
and as further defined in paragraph 2.


 


1.4                               Permitted
Use.  General office use, subject to
paragraph 6.


 


1.5                               Term.
Sixty-One (61)  months, commencing as set forth in
paragraph 3.1 (“Term”), subject to extension (see paragraph 55).


 


1.6                               Base
Rent.  Subject to the terms of
paragraphs 1.7, 1.8 and 4.1, $11,236.26 per month, payable on the 1st day of
each month, in advance, as provided in paragraph 4.1 (“Base Rent”).


 


1.7                               Base
Rent Increase.  The monthly Base
Rent payable under paragraph 1.6 above shall be adjusted as provided in
paragraph 4.1 below.


 


1.8                               Rent
Paid Upon Execution.  The second
month’s Base Rent of $11,236.26.


 


1.9                               Security
Deposit. $0.00 (“Security Deposit”); see paragraph 5.


 


1.10                        Tenant’s
Expense Share and Tenant’s Tax Share. Three and two one-hundredths percent
(3.02%), subject to paragraph 4.2, and subject to adjustment (pursuant to
paragraph 4.2.5) to the actual rentable square footage of the Premises (see
paragraph 4.2.5 for definition).


 


1.11                        Expense
Base Year.  Calendar Year 2004, see
paragraph 4.2.1.


 


1.12                        Tax Base
Year.  Calendar Year 2004; see
paragraph 4.2.2.


 


1.13                        Target
Commencement Date.  November 1,
2003; see paragraph 3.2.


 


	
  1.14                        Payee.

  	
  VCC INVESTORS, L.P.

  
	
   

  
	
  1.15                        Landlord’s
  Address.

  	
  Birtcher Anderson Properties

  
	
   

  	
  591 Camino de la Reina, Suite 104

  
	
   

  	
  San Diego, CA 92108

  
	
   

  
	
  1.16                        Brokers:

  	
  Landlord’s
  Broker:

  	
  BRE Commercial

  
	
   

  
	
   

  	
  Tenant’s
  Broker:

  	
  The Sande Company

  
				



 


2.                                      Premises, Parking and Common Areas.


 


2.1                               Premises.  The Premises are a portion of a building,
herein sometimes referred to as the “Building” identified in paragraph 1.3 of
the Basic Lease Provisions.  The
Premises, the Building, the Common Areas, the land described in Exhibit B, upon
which the same are located, along with all other buildings and improvements
thereon or thereunder, are herein collectively referred to as the
“Project”.  Landlord hereby leases to
Tenant and Tenant leases from Landlord for the term, at the rental, and upon
all of the conditions set forth herein, the real property referred to in the
Basic Lease Provisions, paragraph 1.2, as the “Premises.”


 


2.2                               Vehicle
Parking.  So long as Tenant is not
in default, and subject to the rules and regulations set forth in Exhibit C
hereto (as the same may be modified by Landlord from time to time), Tenant
shall be entitled to use, for parking for its employees and guests, its pro
rata share of parking spaces in common with other tenants at the Project, which
shall, until further notice from Landlord, be unreserved spaces.  If Tenant commits, permits or allows any of
the prohibited activities described in this Lease or the rules then in effect
with regard to the use of parking, then Landlord shall have the right, without
notice, in addition to such other rights and remedies that it may have, to
remove or tow away the vehicle involved and charge the cost to Tenant, which
cost shall be immediately payable upon demand of Landlord.  Vehicle parking shall be at no cost to
Tenant and its employees and guests.


 


2.3                               Common
Areas - Definition.  The term
“Common Areas” is defined as all areas and facilities outside the Premises and
within the exterior boundary line of the Project that are provided and


 


1

















 


designated by Landlord from time to time for the general non-exclusive
use of Landlord, Tenant and of other tenants of the Project and their
respective employees, suppliers, shippers, customers and invitees, including,
but not limited to, common entrances, lobbies, corridors, stairways and
stairwells, public restrooms, elevators, escalators, parking areas to the
extent not otherwise prohibited by this Lease, loading and unloading areas,
trash areas, roadways, sidewalks, walkways, parkways, ramps, driveways,
landscaped areas and decorative walls.


 


2.4                               Common
Areas - Rules and Regulations. 
Tenant agrees to abide by and conform to the rules and regulations set
forth in Exhibit C with respect to the Project and Common Areas as the same may
be reasonably amended from time to time, and to cause its employees, suppliers,
shippers, customers, and invitees to so abide and conform.  Landlord or such other person(s) as Landlord
may appoint shall have the exclusive control and management of the Common Areas
and shall have the right, from time to time, to modify, amend and enforce said
rules and regulations.  Landlord shall
not be responsible to Tenant for non-compliance with said rules and regulations
by other tenants of the Project or their agents, employees and invitees.


 


2.5                               Common
Areas - Changes.  Landlord shall
have the right, in Landlord’s sole discretion, from time to time:


 


2.5.1                        To make
changes to the Building interior and exterior and Common Areas, including,
without limitation, changes in the location, size, shape, number and appearance
thereof, including but not limited to the lobbies, windows, stairways, air
shafts, elevators, restrooms, driveways, entrances, parking spaces, parking
areas, loading and unloading areas, ingress, egress, direction of traffic,
decorative walls, landscaped areas and walkways;


 


2.5.2                        To close temporarily any of the
Common Areas for maintenance purposes so long as reasonable access to the
Premises, the parking areas, and the common restrooms remains available;


 


2.5.3                        To designate other land and
improvements outside the boundaries of the Project to be a part of the Common
Areas, provided that such other land and improvements have a reasonable and
functional relationship to the Project;


 


2.5.4                        To add additional buildings and
improvements to the Common Areas;


 


2.5.5                        To use the Common Areas while
engaged in making additional improvements, repairs or alterations to the
Project, or any portion thereof;


 


2.5.6                        To do and perform such other
acts and make such other changes in, to or with respect to the Common Areas and
Project as Landlord may deem to be appropriate.


 


3.                                      Term.


 


3.1                               Term.  The Term of this Lease shall be for the
number of months specified in paragraph 1.5 of the Basic Lease Provisions,
commencing upon the Commencement Date. 
The “Commencement Date” of this Lease shall be the earlier of (i) the
date on which Tenant takes possession of or commences business operations upon
the Premises or any portion thereof; or (ii) the date of the Tender of
Possession under paragraph 3.2.1 below. 
If the Commencement Date is a date other than the first day of the
calendar month, the Term shall be for the number of months specified in
paragraph 1.5 of the Basic Lease Provisions in addition to the remainder of the
month following the Commencement Date.


 


3.2                               Delay
in Possession.  Notwithstanding the
Target Commencement Date, as specified in paragraph 1.13 of the Basic Lease
Provisions, if for any reason Landlord cannot deliver possession of the
Premises to Tenant in the condition called for by the work letter of even date
herewith being entered into by and between Landlord and Tenant, a copy of which
is attached hereto as Exhibit D (the “Work Letter”), on said date and subject
to paragraph 3.2.2, Landlord shall not be subject to any liability therefor,
nor shall such failure affect the validity of this Lease or the obligations of
Tenant hereunder; but, in such case, Tenant shall not be obligated to pay rent
or perform any other obligation of Tenant under the terms of this Lease, except
as may be otherwise provided in this Lease, until possession of the Premises is
tendered to Tenant, as hereinafter defined. 
Except for Tenant’s acts or omissions and subject to “Force Majeure” (as
that term is defined in paragraph 52 below), Tenant shall have the right to
cancel this Lease in the event Landlord has not delivered the Premises to
Tenant within ninety (90) days after the Target Commencement Date, as such date
may be modified by the provisions of the “Work Letter” set forth in Exhibit “D”
hereto, which right is exercisable by Tenant by delivering written notice to
Landlord within five (5) business days following expiration of said ninety (90)
day period.  Tenant acknowledges and
agrees that Landlord has established a reasonable target date for occupancy
based upon schedule for planning, construction and/or substantial completion of
Tenant’s interior improvements (“Target Commencement Date”).  The current Target Commencement Date is as
specified in paragraph 1.13 of the Basic Lease Provisions.


 


3.2.1                     Possession
Tendered - Defined.  Provided that
Tenant shall not have cancelled this Lease as provided in paragraph 3.2,
possession of the Premises shall be deemed tendered to Tenant (“Tender of
Possession”) when (i) the improvements to be provided by Landlord under this
Lease and the Work Letter are substantially completed in accordance with the
Work Letter, except for only minor punch list items, (ii) the Building utilities
are ready for use in the Premises, 
(iii) Tenant has reasonable access to 


 


2

















 


the Premises, and (iv) if required, a Certificate of Occupancy (or its
legal equivalent) has been issued by the City of San Diego.  Notwithstanding the foregoing, if Tenant is
leasing the Premises in its “as-is” condition, then the Tender of Possession
shall be deemed to occur on the Target Commencement Date.


 


3.2.2                     Delays Caused
by Tenant.  There shall be no
abatement of rent, to the extent of any delays caused by acts or omissions of
Tenant, its agents, employees and contractors.


 


3.3                               Early
Possession.  If Tenant occupies the
Premises prior to said Target Commencement Date, such occupancy shall be
subject to all provisions of this Lease, such occupancy shall not change the
Expiration Date, and Tenant shall pay prorated rent for such occupancy based on
the actual number of days in the applicable month.


 


3.4                               Uncertain
Commencement.  Upon the
determination of the actual Commencement Date, Tenant and Landlord shall, upon
request by Landlord, execute an Acceptance of Office Space in substantially the
form of Exhibit “E” attached  hereto establishing the Commencement Date
and Expiration Date pursuant to paragraph 3.1 above.


 


4.                                      Rent.


 


4.1                               Base
Rent.  Except as may be otherwise
specifically and expressly provided in this Lease, Tenant shall pay to Landlord
the Base Rent for the Premises set forth in paragraph 1.6 of the Basic Lease
Provisions, without offset or deduction. 
Tenant shall pay Landlord upon execution hereof the advance Base Rent
described in paragraph 1.8 of the Basic Lease Provisions.  If the Commencement Date occurs on a day
other than the first day of a calendar month, Base Rent and additional rent (as
described in paragraphs 4.2 through 4.6, inclusive) shall be paid as if for a
full month and Base Rent and additional rent for the second month shall be
prorated on a daily basis based upon the actual number of days of the calendar
month involved.  Rent shall be payable in
lawful money of the United States to the Payee specified in paragraph 1.14 of
the Basic Lease Provisions and at the address specified in paragraph 1.15 of
the Basic Lease Provisions or to such other persons or at such other places as
Landlord may designate in writing.  The
monthly Base Rent shall be as follows:


 


	
  Months

  	
   

  	
  Monthly
  Base Rent

  	
   

  
	
  1

  	
   

  	
  $

  	
  0.00

  	
   

  
	
  2–13

  	
   

  	
  $

  	
  11,236.26

  	
   

  
	
  14–25

  	
   

  	
  $

  	
  11,598.72

  	
   

  
	
  26–37

  	
   

  	
  $

  	
  11,909.40

  	
   

  
	
  38–49

  	
   

  	
  $

  	
  12,271.86

  	
   

  
	
  50–61

  	
   

  	
  $

  	
  12,634.32

  	
   

  



 


Landlord and Tenant agree that no portion of the base rent paid by
Tenant after the expiration of any period during which such rent was abated
shall be allocated by Landlord or Tenant to such abatement period, nor is such
rent intended by the parties to be allocable to any abatement period.


 


In the event that Tenant is in default of this Lease and this Lease is
terminated, Tenant shall be responsible for the reimbursement of the entire
rent abatement in the amount of Eleven Thousand Two Hundred Thirty Six and
26/100 Dollars ($11,236.26).  Said sum
shall become immediately due and payable to Landlord by Tenant at the time this
Lease is terminated due to a default by the Tenant.


 


4.2                               Definitions.  The following definitions shall apply to
this Article 4:


 


4.2.1                        “Expense Base Year” shall be as
specified in paragraph 1.11 of the Basic Lease Provisions.


 


4.2.2                        “Tax Base Year” shall be as
specified in paragraph 1.12 of the Basic Lease Provisions.


 


4.2.3                        “Expense Comparison Year” shall
mean each successive calendar year after the Expense Base Year during the Lease
Term.


 


4.2.4                        “Tax Comparison Year” shall
mean each successive calendar year after the Tax Base Year during the Lease
Term.


 


4.2.5                        “Tenant’s Expense Share” shall
mean the percentage set forth in paragraph 1.10 of the Basic Lease Provisions,
which percentage has been determined by dividing the approximate rentable
square footage of the Premises by the total approximate rentable square footage
contained in the Project.  It is
understood and agreed that the square footage figures set forth in the Basic
Lease Provisions are approximations which Landlord and Tenant agree are
reasonable and shall not be subject to revision except in connection with an
actual change in the size of the Premises or a change in the space available
for lease in the Project, including a reduction in the total square footage of
the Project due to the sale or other transfer of any portion of the Project to
another party.  It is further agreed
that Tenant shall in no event be entitled to a credit to or adjustment of
Tenant’s Expense Share payable hereunder, even if the ratio of Operating
Expenses actually paid by Tenant compared to total Operating Expenses actually
paid by other tenants of the Project exceeds Tenant’s Expense Share (as it
might, by way of example only and not limitation, if some leases of the Project
are made on a “full gross” basis, in


 


3

















 


which case the tenants under such leases would not directly pay any
portion of the Operating Expenses or any increase therein).


 


4.2.6                        “Tenant’s Tax Share” shall mean
the percentage specified in paragraph 1.10 of the Basic Lease Provisions, which
percentage has been determined by dividing the approximate rentable square
footage of the Premises by the total approximate rentable square footage
contained in the Project.  It is
understood and agreed that the square footage figures set forth in the Basic
Lease Provisions are approximations which Landlord and Tenant agree are
reasonable and shall not be subject to revision except in connection with an
actual change in the size of the Premises or a change in the space available
for lease in the Project.  It is agreed
that Tenant shall in no event be entitled to a credit to or adjustment of
Tenant’s Tax Share payable hereunder, even if the ratio of Applicable Taxes
actually paid by Tenant compared to total applicable Taxes actually paid by
other tenants of the Project exceeds Tenant’s Tax Share.


 


4.2.7                        “Operating Expenses” is
defined, for purposes of this Lease, to include any and all costs and expenses
incurred or paid by Landlord for:


 


4.2.7.1               The operation, management, repair,
maintenance, and replacement, in neat, clean, safe, good order and condition,
of the Project, including, but not limited to, the following:


 


4.2.7.1.1  The
Common Areas, including, but not limited to, their surfaces, coverings,
decorative items, carpets, drapes and window coverings, and including parking
areas, loading and unloading areas, trash areas, roadways, sidewalks, walkways,
stairways, parkways, driveways, landscaped areas, striping bumpers, irrigation
systems, Common Area lighting facilities, building exteriors (including
exterior glass) and roofs, fences and gates;


 


4.2.7.1.2  All
heating, air conditioning, plumbing, electrical systems, life safety equipment,
telecommunication and other equipment used in common by, or for the benefit of,
tenants or occupants of the Project, including elevators and escalators, tenant
directories, fire detection systems including sprinkler system maintenance and
repair.


 


4.2.7.2               Trash disposal and any security services
(with respect to security services, see paragraph 38.1);


 


4.2.7.3               Any other service to be provided by
Landlord that is elsewhere in this Lease stated to be an “Operating Expense”;


 


4.2.7.4               The cost of, including the premiums for,
insurance policies to be maintained by Landlord;


 


4.2.7.5               The cost of water, sewer, gas,
electricity, and other services to the Project;


 


4.2.7.6               Subject to paragraph (o) below, labor,
salaries and applicable fringe benefits and costs, materials, supplies and
tools, used in managing, operating, maintaining and/or cleaning the Project and
accounting and a management fee attributable to the operation of the Project;


 


4.2.7.7               Replacing and/or adding improvements
mandated by any governmental agency and any repairs or removals necessitated
thereby, including without limitation, for seismic safety or compliance with
the Americans with Disabilities Act, such costs to be amortized over its useful
life according to Federal income tax regulations or guidelines for depreciation
thereof (including interest on the unamortized balance as is then reasonable in
the judgment of Landlord’s accountants);


 


4.2.7.8               Structural maintenance, replacements of
equipment or improvements, as amortized over such equipment or improvement’s
useful life for depreciation purposes according to federal income tax
guidelines;


 


For purposes of this Lease, Operating Expenses shall
not include taxes covered under paragraph 4.2.8 below, interest expense (except
as provided in paragraph 4.2.7.7 above), leasing commissions, depreciation on
the improvements contained in the Building (except as provided in paragraph
4.2.7.7 above), or any costs which are paid by any tenant directly to third
parties or as to which Landlord is otherwise reimbursed by any other tenant,
third party or by insurance proceeds. 
Notwithstanding the foregoing, Operating Expenses shall not include:


 


(a)                                  Costs
incurred by Landlord due to the violation by Landlord or any other tenant of
the terms of any other lease;


 


(b)                                 Costs
for sculpture, paintings or other objects of art;


 


(c)                                  Any
entertainment, dining or travel expenses for any purpose;


 


(d)                                 If
the Expense Base Year does not include a premium for earthquake or terrorism
insurance, and if Landlord thereafter obtains such insurance, the initial
premium shall be added to the Expense Base Year amount of Operating Expenses
and thereafter only increases in the premium over the initial premium shall be
passed through to Tenant as an Operating Expense;


 


4

















 


(e)                                  Costs
arising from the presence of hazardous materials or substances in, about or
below the Project or the land, including without limitations, hazardous
substances in the groundwater or soil;


 


(f)                                    Depreciation,
interest and principal payments on mortgages, late charges, penalties,
liquidated damages, interest, and other finance charges and debt costs;


 


(g)                                 Leasing
commissions, marketing costs, legal fees, space planners’ fees, advertising and
promotional expenses;


 


(h)                                 Bad
debt loss or rent loss;


 


(i)                                     Reserves
of any kind;


 


(j)                                     Tax
penalties;


 


(k)                                  Costs
associated with the operation of the business of the limited liability company
or entity which constitutes the Landlord, as the same are distinguished from
the costs of operation of the Project, including partnership accounting and
legal matters, costs of defending any lawsuits with any mortgagee (except as
the actions of Tenant may be in issue), costs of selling, syndicating,
financing, mortgaging or hypothecating any of Landlord’s interest in the
Project, and costs incurred in connection with any disputes between Landlord
and its employees, between Landlord and Project management, or between Landlord
and other tenants or occupants;


 


(l)                                     Landlord’s
general corporate overhead and general and administrative expenses;


 


(m)                               Costs
directly resulting from the gross negligence, willful misconduct or breach of
law or ordinance by Landlord, its employees, agents, contractors or employees;


 


(n)                                 Costs
for which Landlord receives or will receive reimbursement (from insurance,
warranties, other tenants, or other third parties);


 


(o)                                 Salaries,
wages or other compensation paid to employees of Landlord at or above the grade
of senior property manager, to employees of Landlord who are not assigned full-time
to the operation, management, maintenance or repair of the building (provided
that operating costs may include Landlord’s reasonable allocation of salaries,
wages or other compensation paid to employees who are assigned part-time to the
operation, management, maintenance or repair of the building);


 


(p)                                 Rent
for any office space occupied by Project management personnel to the extent the
size or rental rate of such office space exceeds the size or fair market rental
value of office space occupied by management personnel of the buildings
comparable to and in the vicinity of the Building, with adjustment where
appropriate for the size of the applicable project;


 


(q)                                 Charitable
or political contributions;


 


(r)                                    Legal
fees and other expenses incurred by Landlord or agents in connection with
negotiations or disputes with tenants or prospective tenants (other than with
Tenant’s sublessee or assignees) for the Project;


 


(s)                                  Costs
associated with improvements or alterations to tenant spaces; and


 


(t)                                    Costs
of providing any service directly to any single tenant, or costs incurred for
the benefit of a single tenant.


 


4.2.8                        “Applicable Taxes” shall mean
all taxes, assessments and charges levied on or with respect to the Building,
the Project, or any personal property of Landlord used in the operation thereof
and payable by Landlord.  Applicable
Taxes shall include, without limitation, all general real property taxes and
general and special assessments, fees, assessments or charges for transit,
police, fire, housing, other governmental services, or purported benefits of
the Building, service payments in lieu of taxes, and any tax, fee or excise on
the act of entering into this Lease or on the use or occupancy of the Building
or any part thereof, or on the rent payable under any lease or in connection
with the business of renting space in the Building, that are now or hereafter
levied on or assessed against Landlord by, or payable by Landlord as a result
of, the requirements of the United States of America, the State of California,
or any political subdivision, public corporation, district or other political
or public entity, and shall also include any other tax, fee or other excise,
however described, that may be levied or assessed as a substitute for, or as an
addition to, in whole or in part, any other taxes.  Applicable Taxes shall not include franchise, transfer,
inheritance or capital stock taxes or income taxes measured by the net income
of Landlord from all sources, unless, due to a change in the method of taxation,
any of such taxes are levied or assessed against Landlord as a substitute for,
in whole or in part, any other tax which would otherwise constitute an
Applicable Tax.  Applicable Taxes shall
also include reasonable legal fees, costs and disbursements incurred in
connection with proceedings to contest, determine or reduce Applicable
Taxes.  Tax refunds shall be credited
against Applicable Taxes and refunded to Tenant regardless of when received,
based on the Tax Comparison Year to which the refund is applicable.


 


5

















 


4.3                               Payment
of Increases.


 


4.3.1                        If, with respect to any Expense
Comparison Year, the Operating Expenses shall be greater than the Operating
Expenses for the Expense Base Year, Tenant shall pay to Landlord as additional
rent Tenant’s Expense Share of any such increase in Operating Expenses, in the
manner provided herein.  In the event
the Operating Expenses for any Expense Comparison Year are less than the Operating
Expenses for the Expense Base Year, Tenant shall not be entitled to any credit
or reduction in the Base Rent. 
Furthermore, in no event shall Tenant be entitled to any credit or
offset against any increase which may be due pursuant to paragraph 4.3.2
hereinbelow as a result of any such decrease in Operating Expenses.


 


4.3.2                        If, with respect to any Tax
Comparison Year, the Applicable Taxes shall be greater than the Applicable
Taxes for the Tax Base Year, Tenant shall pay to Landlord as additional rent
Tenant’s Tax Share of any such increase in Applicable Taxes, in the manner
provided herein.  In the event the
Applicable Taxes for any Tax Comparison Year are less than the Applicable Taxes
for the Tax Base Year, Tenant shall not be entitled to any credit or reduction
in the Base Rent.  Furthermore, in no
event shall Tenant be entitled to any credit or offset against any increase
which may be due pursuant to paragraphs 4.3.1 hereinabove as a result of any
such decrease in Applicable Taxes.


 


4.4                               Time
for Payment.  The payments
contemplated under paragraph 4.3 shall be made as follows:


 


4.4.1                        During each month of each
Expense Comparison Year and Tax Comparison Year, Tenant shall pay to Landlord,
with each installment of Base Rent, one-twelfth (1/12th) of the amounts as are
estimated by Landlord to be payable pursuant to paragraph 4.3 with respect to
each Tax Comparison Year and Expense Comparison Year; provided, however, that
Landlord may, at any time and from time to time, by written notice to Tenant,
revise its estimates for such year and subsequent payments shall be based upon
such revised estimate.


 


4.4.2                        Within one hundred twenty (120)
days, after the end of each Tax and/or Expense Comparison Year, Landlord shall
deliver to Tenant a statement setting forth on a line-by-line basis in
reasonable detail, the actual Operating Expenses and Applicable Taxes for the
respective Comparison Year, a comparison with the Operating Expenses and
Applicable Taxes for the Base Year and a comparison of any amounts payable
under paragraph 4.3 with the estimated payments made by Tenant.  If the amounts payable under paragraph 4.3
are less than the estimated payments made by Tenant with respect to such
Comparison Year, the statement shall be accompanied by a refund of the excess
by Landlord, or, at Landlord’s election, a notice that Landlord shall credit
the excess to the next succeeding monthly installment(s) of the Base Rent;
provided, however, that in no event shall Tenant be entitled to interest on any
such overpayment.  If the amounts
payable under paragraph 4.3 are more than the estimated payments made by Tenant
with respect to such Comparison Year, Tenant shall pay the deficiency to
Landlord within thirty (30) days after delivery of such statement.  Statements provided by Landlord shall be
final and binding upon Tenant unless, in accordance with paragraph 4.6, Tenant
contests the same within thirty (30) days after the date of delivery to
Tenant.  Tenant shall not be responsible
for any Operating Expenses or Applicable Taxes which are first billed to Tenant
more than two (2) years after the expiration of the Expense Comparison Year or
Tax Comparison Year.


 


4.5                               Partial
Year.  If this Lease expires or
terminates on a date other than the last day of a Comparison Year, Tenant’s Tax
Share and Tenant’s Expense Share for such Comparison Year shall be prorated
according to the ratio that the number of days during said Comparison Year that
the Lease was in effect bears to 365.


 


4.6                               Tenant’s
Right to Audit.  If, within thirty
(30) days following Tenant’s receipt of Landlord’s annual statement of actual
Operating Expenses and Applicable Taxes pursuant to paragraph 4.4, Tenant
notifies Landlord that Tenant desires to audit Landlord’s statement, Landlord
shall cooperate with Tenant to permit such audit during normal business hours,
at Landlord’s office where the business records are normally kept.  The audit shall be performed by an
independent certified public accountant; the accountant must be a member of a
nationally recognized accounting firm and must not charge a fee based on the
amount of additional rent that the accountant is able to save Tenant by the
audit.  The cost of such audit shall be
the sole responsibility and liability of Tenant.  Tenant shall deliver to Landlord, any report, statement or other
documents indicating the outcome of such an audit within five (5) days of
Tenant’s receipt thereof.  In the event
that such an audit discloses that Tenant has underpaid its proportionate share
of such Operating Expenses or Applicable Taxes for the relevant period, Tenant
shall pay the deficiency to Landlord within thirty (30) days of Tenant’s
receipt of the audit results.  In the
event that such an audit discloses that Tenant has overpaid its proportionate
share of such Operating Expenses or Applicable Taxes for the relevant period,
and Landlord fails to contest the same, within thirty (30) days after the date
of delivery of the (results of the) audit to Landlord, Landlord shall credit
such excess to the next succeeding monthly installment of the Base Rent due
from Tenant, but in no event shall Tenant be entitled to receive interest on
the amount of any such overpayment.  If
it is determined that Operating Expenses or Applicable Taxes were overstated by
more than five percent (5%), Landlord shall pay the cost of Tenant’s audit.  In the event Landlord disputes the results of
the audit conducted for Tenant, the Landlord shall, at Tenant’s expense, have
its independent certified public accountant provide a certified statement; the
certified statement shall be final and conclusive absent manifest error.


 


6

















 


4.7                               Vacancy
Adjustment.  Notwithstanding
anything to the contrary in the Lease, if during the Expense Base Year or any
Expense Comparison Year the Building is less than 95% occupied, for the
purposes of computing Tenant’s Expense Share for said year, those Operating
Expenses which vary based upon occupancy levels shall be adjusted as though the
Building were 95% occupied; provided, however, in no event shall the aggregate
amount collected by Landlord from all tenants in the Building exceed the actual
Operating Expenses for said year.


 


5.                                      Security Deposit.  Tenant shall
deposit with Landlord upon execution hereof the Security Deposit set forth in
paragraph 1.9 of the Basic Lease Provisions as security for Tenant’s faithful
performance of Tenant’s obligations hereunder. 
If Tenant fails to pay rent or other charges due hereunder, or otherwise
defaults with respect to any provision of this Lease, Landlord may use, apply
or retain all or any portion of said deposit for the payment of any rent or
other charge in default or for the payment of any other sum to which Landlord
may become obligated by reason of Tenant’s default, or to compensate Landlord
for any loss or damage which Landlord may suffer thereby.  If Landlord so uses or applies all or any
portion of said deposit, Tenant shall within ten (10) days after written demand
therefor deposit cash with Landlord in an amount sufficient to restore said
deposit to the full amount then required of Tenant plus an administrative fee
of One Hundred Dollars ($100). Landlord shall not be required to keep said
security deposit separate from its general accounts.  If Tenant performs all of the Tenant’s obligations hereunder,
said deposit, or so much thereof as has not heretofore been applied by
Landlord, shall be returned, without payment of interest or other increment for
its use, to Tenant (or, at Landlord’s option, to the last assignee, if any, of
Tenant’s interest hereunder) at the expiration of the term hereof, and after
Tenant has vacated the Premises.  No
trust relationship is created herein between Landlord and Tenant with respect
to said Security Deposit, and under no circumstances shall Landlord be required
to keep the Security Deposit separate from its other funds or in an
interest-bearing account, nor shall Tenant be entitled to any interest on such
amounts regardless of whether or not the Security Deposit is deposited in an
interest-bearing account.  Should
Landlord sell or transfer, voluntarily or otherwise, its interest in the
Premises during the term hereof and if Landlord deposits with the purchaser or
transferee thereof the then unappropriated funds deposited by Tenant as
aforesaid, Landlord shall thereupon be discharged from any further liability
with respect to such Security Deposit.


 


6.                                      Permitted Use.


 


6.1                               Permitted
Use.


 


6.1.1                        The Premises shall be used and
occupied only for the purpose set forth in paragraph 1.4 of the Basic Lease
Provisions and for no other purpose. 
Tenant shall control Tenant’s employee’s, agents, customers, visitors,
invitees, licensees, contractors, assignees and subtenants (collectively,
“Tenant’s Parties”) in such a manner that Tenant, and Tenant’s Parties
cumulatively do notuse more than Tenant’s pro rata share of parking at the
Project.


 


6.2                               Compliance
with Law.


 


6.2.1                        Except as is otherwise
specifically provided in this Lease ( including in the Work Letter), Landlord
makes no representation or warranty to Tenant regarding the condition of the
Premises or with respect to whether or not the Premises, or the use for which
Tenant will occupy the Premises, will violate any covenants or restrictions of
record, or any applicable building code, regulation, law or ordinance in effect
on the Lease Commencement Date or at any other time.


 


6.2.2                        Subject to paragraph 6.2.1,
Tenant shall, at Tenant’s expense, promptly comply with all applicable
statutes, ordinances, rules, regulations, orders, covenants, conditions and
restrictions of record, and requirements of any fire insurance underwriters or
rating bureaus, now in effect or which may hereafter come into effect, whether
or not they reflect a change in policy from that now existing, during the Term
or any part of the Term hereof, relating in any manner to the Premises and the
occupation and use by Tenant of the Premises. 
Tenant shall conduct its business in a lawful manner and shall not use
or permit the use of the Premises or the Common Areas in any manner that will
tend to create waste or a nuisance or shall tend to disturb other occupants of
the Project.


 


6.3                               Condition
of Premises.


 


6.3.1                        Landlord shall deliver the
Premises to Tenant on the Lease Commencement Date (unless Tenant is already in
possession), but makes no representation or warranty regarding the condition of
the Premises except as otherwise provided in this Lease.


 


6.3.2                        Except as is otherwise
specifically provided in this Lease, Tenant hereby accepts the Premises and the
Project in their condition existing as of the Lease Commencement Date or the
date that Tenant takes possession of the Premises, whichever is earlier,
subject to all applicable zoning, municipal, county and state laws, ordinances
and regulations governing and regulating the use of the Premises, and any
easements, covenants or restrictions of record, and accepts this Lease subject
thereto and to all matters disclosed thereby and by any exhibits attached
hereto.  Tenant acknowledges that it has
satisfied itself by its own independent investigation that the Premises are
suitable for its intended use, and that neither Landlord nor Landlord’s agent
or agents has made any representation or warranty as to the present or future
suitability of the Premises, Common Areas, or Project for the conduct of
Tenant’s business.


 


7

















 


7.                                      Maintenance, Repairs, Alterations and Common Area
Services.


 


7.1                               Landlord’s
Obligations.  Landlord shall keep
the roof, foundations, bearing walls (excluding surface maintenance such as
painting) building systems (including with limitation mechanical, electrical,
telephone closets, life safety, common area plumbing [not within the Premises],
sprinkler systems and HVAC systems and common areas, in good condition and
repair; and subject to paragraph 4.2.7, the cost thereof shall be included in
Operating Expenses unless the cause for such maintenance or repairs are caused
in whole or in part by any act, fault or omission by Tenant or its agents,
servants, employees, invitees or caused by breaking and entering, in which case
Tenant shall pay the actual cost of such maintenance or repairs concurrently
with the next payment of Base Rent plus an administrative fee of ten percent
(10%) of such actual costs.  Except as
provided in paragraph 8.7, 9.5 and 11.5, there shall be no abatement of rent or
liability to Landlord on account of any injury or interference with Tenant’s
business with respect to any improvements, alterations or repairs made by
Landlord to the Project or any part thereof, or on account of any interruption
of services or of access to the Premises, Building or Project.  Tenant expressly waives the benefits of any
statute now or hereafter in effect which would otherwise afford Tenant the
right to make repairs at Landlord’s expense or to terminate this Lease because
of Landlord’s failure to keep the Premises in good order, condition and repair,
including without limitation California Civil Code Sections 1941-1942.  Landlord shall maintain the Building and the
Project in good condition and repair consistent with other buildings of similar
age, type and quality in the San Diego area. 
As soon as reasonably possible after receipt of notice, Landlord shall
make all repairs, replacements, alterations or improvements needed to comply
with applicable laws, codes, statutes, ordinances, rules, regulations, orders,
covenants, conditions and restrictions of record, and requirements of any fire
insurance underwriters or ratings bureaus, etc. relating to the Building and
the Common Areas (including, without limitation the Americans with Disabilities
Act), provided that compliance with such laws is not the specific
responsibility of Tenant under this Lease, or if the compliance work is
triggered by Tenant’s occupancy, use, or alteration or addition.


 


7.2                               Tenant’s
Obligations.


 


7.2.1                        Notwithstanding Landlord’s
obligation to deliver the Premises in good condition and repair, Tenant shall
be responsible for payment of the cost thereof to Landlord as additional rent
for that portion of the cost of any maintenance and repair of the Premises, or
any equipment (wherever located) that serves only Tenant or the Premises.  Tenant shall be responsible for the cost of
painting, repairing or replacing wall coverings, and to repair or replace any
Premises improvements that are not ordinarily a part of the Building or that
are above then Building standards. 
Landlord may, at its option, upon reasonable notice, elect to have
Tenant perform any particular such maintenance or repairs the cost of which is
otherwise Tenant’s responsibility hereunder.


 


7.2.2                        Tenant hereby covenants and
agrees that Tenant shall not commit, nor shall Tenant permit, waste on the
Premises, or at any location within the Project.  On the last day of the Term hereof, or on any sooner termination,
Tenant shall surrender the Premises to Landlord in the same condition as
received, ordinary wear and tear excepted, clean and free of Tenant’s personal
property and of any debris.  Any damage
or deterioration of the Premises shall not be deemed to be ordinary wear and
tear to the extent that such damage or deterioration is the result of waste
committed on the Premises during the Term hereof or the result of negligence,
neglect, misuse or willful misconduct on the part of Tenant, its agents,
servants, employees, licensees or invitees. 
Tenant shall repair any damage to the Premises, the Building and the
Project occasioned by (a) waste committed on the Premises during the Term
hereof, (b) negligence, neglect, misuse or willful misconduct by Tenant, its
agents, servants, employees, licensees or invitees, or (c) the installation or
removal of Tenant’s trade fixtures, alterations, furnishings and
equipment.  Except as otherwise stated
in this Lease, Tenant shall leave the power panels, electrical distribution
systems, lighting fixtures, air conditioning, window coverings, carpets, wall
paneling, ceilings and plumbing on the Premises in good and clean operating
condition.


 


7.3                               Alterations
and Additions.


 


7.3.1                        Tenant shall not, without
Landlord’s prior written consent, which consent shall not be unreasonably
withheld, make any alterations, improvements additions, Utility Installations
or repairs in, on or about the Premises, or the Project.  As used in this paragraph 7.3 the term
“Utility Installation” shall mean carpeting, window and wall coverings, power
panels, electrical distribution systems, lighting fixtures, air conditioning,
plumbing, and telephone and telecommunication wiring and equipment.  At the expiration of the term, Landlord may
require the removal of any or all of said alterations, improvements, additions
or Utility Installations, and the restoration of the Premises, the Building and
the Project to their prior condition, at Tenant’s sole cost and expense.  Should Landlord permit Tenant to make its
own alterations, improvements, additions or Utility Installations, Tenant shall
use only such contractor(s) as has (have) been expressly approved by Landlord,
and Landlord may require Tenant to provide Landlord, at Tenant’s sole cost and
expense, a lien and completion bond in an amount equal to one and one-half times
the estimated cost of such improvements, to insure Landlord against any
liability for mechanic’s and materialmen’s liens and to insure completion of
the work.  Should Tenant make any
alterations, improvements, additions or Utility Installations without the prior
approval of Landlord, or use a contractor not expressly approved by Landlord,
Landlord may (in addition to the other rights and remedies provided herein or
by law or equity), at any time during the Term of this Lease, require that
Tenant remove any part or all of the same at Tenant’s sole cost and
expense.  Notwithstanding the foregoing,
Tenant shall have the right, without Landlord’s consent but upon five (5)
business days prior notice to Landlord, to make cosmetic, non-structural
additions and alterations to the Premises that do not involve the expenditure
of more than $10,000 in the aggregate in any calendar year.


 


8

















 


7.3.2                        Any alterations, improvements,
additions or Utility Installations in or about the Premises or the Project that
Tenant shall desire to make shall be presented to Landlord in written form,
with proposed detailed plans.  Tenant
agrees to reimburse Landlord upon written demand to Tenant for all reasonable
costs and expenses (including, without limitation, any architect’s and or
engineers’ fees) incurred by Landlord in approving or disapproval of Tenant’s
plans for such alteration, improvement, addition or Utility Installation.  If Landlord shall give its consent to
Tenant’s making such alteration, improvement, addition or Utility Installation,
the consent shall be deemed conditioned upon Tenant acquiring a permit or
permits to do so from the applicable governmental agency or agencies,
furnishing a copy or copies thereof to Landlord prior to the commencement of
the work, and compliance by Tenant with all conditions of said permit in a
prompt and expeditious manner.


 


7.3.3                        Tenant shall pay, when due, all
claims for labor or materials furnished or alleged to have been furnished to or
for Tenant at or for use in the Premises, which claims are or may be secured by
any mechanic’s or materialmen’s lien against the Premises, the Building or the
Project, or any interest therein.


 


7.3.4                        Tenant shall give Landlord not
less than ten (10) days’ notice prior to the commencement of any work in the
Premises by Tenant, and Landlord shall have the right to post notices of
non-responsibility in, on or about the Premises or the Building as provided by
law. Tenant shall at all times keep the Premises, the Building and the Project
free and clear of liens attributable in any way to a work of improvement
commissioned by Tenant, or to the acts or omissions of Tenant, any of Tenant’s
employees, agents, or contractors, or any of their employees, agents or sub-contractors.  If Tenant shall, in good faith, contest the
validity of any such lien, claim or demand, then Tenant shall, at its sole
expense defend itself and Landlord against the same and shall pay and satisfy
any such adverse judgment that may be rendered thereon before the enforcement
thereof against Landlord or the Premises, the Building or the Project, upon the
condition that Tenant shall furnish to Landlord a surety bond satisfactory to
Landlord in an amount not less than one hundred fifty percent (150%) of the
amount of such contested lien, claim or demand indemnifying Landlord against
liability for the same and holding the Premises, the Building and the Project,
as well as Landlord, free from the effect of such lien or claim. In addition,
Landlord may require Tenant to pay Landlord’s reasonable attorneys’ fees and
costs in participating in such action if Landlord shall decide it is to
Landlord’s best interest so to do.


 


7.3.5                        All alterations, improvements,
additions and Utility Installations (whether or not such Utility Installations
constitute trade fixtures of Tenant), which may be made to the Premises by
Tenant, including but not limited to, floor coverings, panelings, doors,
drapes, built-ins, moldings, sound attenuation, and lighting and telephone or
communication systems, conduit, wiring and outlets, shall be made and done in a
good and workmanlike manner and of good and sufficient quality and materials
and shall be the property of Landlord and remain upon and be surrendered with
the Premises at the expiration of the Lease Term, unless Landlord requires
their removal pursuant to paragraph 7.3.1. 
Provided Tenant is not in default, notwithstanding the provisions of
this paragraph 7.3.5, Tenant’s personal property and equipment, other than that
which is affixed to the Premises so that it cannot be removed without material
damage to the Premises or the Building, and other than Utility Installations,
shall remain the property of Tenant and may be removed by Tenant subject to the
provisions of paragraph 7.2.


 


7.3.6                        Tenant shall provide Landlord
with as-built plans and specifications for any alterations, improvements,
additions or Utility Installations.


 


7.4                               Utility
Additions.  Landlord reserves the
right, but shall not be obligated, to install new or additional utility
facilities throughout the Project for the benefit of Landlord or Tenant, or any
other tenant, occupant or user of the Project, including, but not by way of
limitation, such utilities as plumbing, electrical systems, security systems,
communication systems, and fire protection and detection systems, so long as
such installations do not unreasonably interfere with Tenant’s use of the
Premises.


 


8.                                      Insurance; Indemnity.


 


8.1                               Liability
Insurance-Tenant.  Tenant shall, at
Tenant’s expense, obtain and keep in force during the Term of this Lease a
policy of broad form commercial general liability insurance on an occurrence
basis, in an amount of not less than $2,000,000 per occurrence of bodily injury
and property damage combined or in such greater amount as reasonably determined
by Landlord and shall insure Tenant, together with Landlord and Landlord’s
manager as additional insureds, against liability arising out of the use,
occupancy or maintenance of the Premises. 
Compliance with the above requirement shall not, however, limit the
liability of Tenant hereunder.


 


8.2                               Liability
Insurance-Landlord.  Although
Landlord shall not be required to maintain any liability insurance, any
premiums for liability insurance maintained by Landlord relating to the Premises,
the Building or the Project shall be Operating Expenses hereunder.


 


8.3                               Property
Insurance-Tenant.  Tenant shall, at
Tenant’s expense, obtain and keep in force during the Term of this Lease for
the benefit of Tenant, replacement cost all-risks insurance, including without
limitation fire and extended coverage insurance, with vandalism and malicious
mischief, sprinkler leakage and earthquake sprinkler leakage endorsements, in
an amount sufficient to cover not less than 100% of the full replacement costs,
as the same may exist from time to time, of all of Tenant’s personal property,
fixtures, equipment and tenant improvements.


 


9

















 


8.4                               Property
Insurance-Landlord.  Landlord shall
obtain and keep in force during the Term of this Lease a policy or policies of
insurance covering loss or damage to the Project improvements, but not Tenant’s
personal property, fixtures, equipment or tenant improvements, in the amount of
the full replacement cost thereof (as reasonably determined by Landlord), as
the same may exist from time to time, utilizing Insurance Services Office
standard form, or equivalent providing protection against all perils included
within the classification of fire, extended coverage, vandalism, malicious
mischief, plate glass, and such other perils as Landlord deems advisable or may
be required by a lender having a lien on the Project.  In addition, Landlord shall obtain and keep in force, during the
Term of this Lease, a policy of rental value (or rental loss or rental
interruption) insurance covering a period of one year, with loss payable to
Landlord, which insurance shall also cover all Operating Expenses for said
period.  Tenant will not be named in any
such policies carried by Landlord and shall have no right to any proceeds
therefrom.  The policies set forth in
paragraphs 8.2 and 8.4 shall contain such deductibles as Landlord or the
aforesaid lender may determine.  Tenant
shall not do or permit to be done anything which shall invalidate the insurance
policies carried by Landlord.  Tenant
shall pay the entirety of any increase in the property insurance premium for
the Project over what it was immediately prior to the commencement of the Term
of this Lease if the increase is specified by Landlord’s insurance carrier as
being caused by the nature of Tenant’s occupancy or any act or omission of
Tenant.


 


8.5                               Insurance
Policies.


 


8.5.1                        Tenant shall obtain and
maintain in effect throughout the Term of this Lease, a policy of workers
compensation insurance in accordance with applicable California law, which
policy shall cover all employees of Tenant working on or about the
Premises.  Prior to taking possession of
the Premises, Tenant shall provide to Landlord a certificate of insurance
evidencing the insurance policy as required under this paragraph 8.


 


8.5.2                        Each policy required to be
obtained by Tenant hereunder shall (a) be issued by insurers authorized to do
business in the state of California and rated not less than financial class X,
and not less than policyholder rating A, in the most recent version of Best’s
Key Rating Guide, or the equivalent rating in any other comparable guide
selected by Landlord (provided that, in any event, the same insurance company
shall provide the coverages described in paragraphs 8.1 and 8.3 above), (b) be
in form reasonably satisfactory from time to time to Landlord, (c) name Tenant
as named insured thereunder and shall name Landlord, Landlord’s manager, and,
at Landlord’s request, Landlord’s mortgagees and ground lessors of which Tenant
has been informed in writing, as additional insureds, (d) not have a deductible
amount exceeding Twenty Five Thousand Dollars ($25,000.00), (e) specifically
provide that the insurance afforded by such policy for the benefit of Landlord,
Landlord’s manager and Landlord’s mortgagees and ground lessors shall be
primary, and any insurance carried by Landlord, Landlord’s manager or
Landlord’s mortgagees and ground lessors shall be excess and non-contributing,
(f) except for worker’s compensation insurance, contain an endorsement that the
insurer waives its right to subrogation as described in paragraph 8.6 below,
and (g) contain an undertaking by the insurer to notify Landlord and Landlord’s
manager (as well as the mortgagees and ground lessors of Landlord who are named
as additional insureds) in writing not less than thirty (30) days prior to any
material change, reduction in coverage, cancellation or other termination
thereof.  Tenant agrees to deliver to
Landlord, as soon as practicable after the placing of the required insurance,
but in any event prior to the date Tenant takes possession of all or any part
of the Premises, certificates from the insurance company evidencing the
existence of such insurance and Tenant’s compliance with the foregoing
provisions of this paragraph 8.  Tenant
shall cause certificates of replacement policies to be delivered to Landlord
not less than thirty (30) days prior to the expiration of any such policy or
policies.  If any such initial or
replacement certificates are not furnished within the time(s) specified herein,
Tenant shall be deemed to be in material default under this Lease without the
benefit of any additional notice or cure period provided herein, and Landlord
shall have the right, but not the obligation, to procure such policies and
certificates at Tenant’s expense, and Tenant shall promptly reimburse Landlord
for the costs and expenses incurred in so procuring such policies or
certificates within 10 days of Tenant’s receipt of demand therefor.  Any such sums not paid by Tenant on or
before the above referenced date shall bear interest at the maximum legal rate
(as specified in paragraph 19) until paid in full.  Tenant may fulfill its insurance obligations under this paragraph
8.5 through a blanket insurance policy covering other locations of Tenant or
its affiliates.


 


8.6                               Waiver
of Subrogation.  Tenant and Landlord
each hereby release and relieve the other, and waive their entire right of
recovery against the other, for direct or consequential loss or damage arising
out of or incident to the perils covered by property insurance carried by such
party, whether due to the negligence of Landlord or Tenant or their agents,
employees, contractors and/or invitees, to the extent (but only to the extent)
that the loss or damage is insured under the insurance policy.  All property insurance policies required of
Tenant under this Lease shall be endorsed to so provide.


 


8.7                               Indemnity.  Unless due to the gross negligence or
willful misconduct of Landlord, Tenant shall indemnify and hold harmless
Landlord and its agents, shareholders, directors, employees, partners and
lenders, from and against any and all claims for damage to the person or
property of anyone or any entity arising from Tenant’s use of the Project, or from
the conduct of Tenant’s business or from any activity, work or things done,
permitted or suffered by Tenant in or about the Premises or elsewhere and shall
further indemnify and hold harmless Landlord from and against any and all
claims, demands, losses, liabilities, damages, costs and expenses arising from
any breach or default in the performance of any obligation on Tenant’s part to
be performed under the terms of this Lease, or arising from any act or omission
of Tenant, or any of Tenant’s agents, contractors, employees or invitees and
from and against all reasonable costs, attorneys’ fees, expenses and
liabilities incurred by Landlord as the result of any such use, conduct,
activity, work, things done, permitted or suffered, breach, default or negligence,
and in


 


10

















 


dealing reasonably therewith, including but not limited to the defense
or pursuit of any claim or any action or proceeding involved therein; and in
case any action or proceeding be brought against Landlord by reason of any such
matter, Tenant upon notice from Landlord shall defend the same at Tenant’s
expense by counsel reasonably satisfactory to Landlord and Landlord shall
cooperate with Tenant in such defense. 
Landlord need not have first paid any such claim in order to be so
indemnified.  Tenant’s obligations,
liabilities and duties under this paragraph 8.7 shall survive the expiration or
earlier termination of this Lease. 
Because Landlord is required to maintain insurance on the Building and
Tenant compensates Landlord for such insurance as part of Tenant’s Share of
Operating Expenses and because of the waivers of subrogation in
section 8.6, Landlord shall, with counsel reasonably acceptable to Tenant,
indemnify, defend, and hold harmless Tenant from and against all claims for
damage to property outside the Premises to the extent that such claims are
covered by such insurance (or would have been covered had Landlord carried the
insurance required under this Lease), even if resulting from the negligent
acts, omissions, or willful misconduct of Tenant.  In addition, Landlord shall, with counsel reasonably acceptable
to Tenant, indemnify, defend, and hold harmless Tenant from and against all
claims resulting from the gross negligence or willful misconduct of Landlord in
connection with Landlord’s activities in, on, or about the Project, except to
the extent that such claim is for damage to the tenant improvements and
Tenant’s personal property, fixtures, furniture, and equipment in the Premises
and is covered by insurance that Tenant is required to obtain under this Lease
(or would have been covered had Tenant carried the insurance required under
this Lease).


 


8.8                               Exemption
of Landlord from Liability.  Tenant,
as a material part of the consideration to Landlord for the granting of this
Lease, hereby assumes all risk of damage to property of Tenant or injury to
persons, in, upon or about the Project arising from any cause and Tenant hereby
waives all claims in respect thereof against Landlord and agrees that any
claims for such damages or injuries shall be made against the policies of
insurance required to be carried by Tenant pursuant to paragraphs 8.1 and 8.3
hereinabove and any deductible amounts therein shall be deemed to be Tenant’s
“self insurance”. Tenant hereby agrees that Landlord shall not be liable for
injury to Tenant’s business or any loss of income therefrom or for loss of or
damage to the goods, wares, merchandise or other property of Tenant, Tenant’s
employees, invitees, customers, or any other person in or about the Premises or
the Project, nor shall Landlord be liable for injury to the person of Tenant,
Tenant’s employees, agents or contractors, whether such damage or injury is
caused by or results from theft, fire, steam, electricity, gas, water or rain,
or from the breakage, leakage, obstruction or other defects of pipes,
sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures,
or from any other cause, whether said damage or injury results from conditions
arising upon the Premises or upon other portions of the Project, or from other
sources or places, or from new construction or the repair, alteration or
improvement of any part of the Project, or of the equipment, fixtures or
appurtenances applicable thereto, and regardless of whether the cause of such
damage or injury or the means of repairing the same is inaccessible. Landlord
shall not be liable for any damages arising from any act or neglect of any
other tenant, occupant or user of the Project, nor from the failure of Landlord
to enforce the provisions of any other lease of any other tenant of the
Project.


 


8.9                               No
Representation of Adequate Coverage. 
Landlord makes no representation that the limits or forms of coverage of
insurance specified in this paragraph 8 are adequate to cover Tenant’s property
or obligations under this Lease.


 


9.                                      Damage or Destruction.


 


9.1                               Definitions.


 


9.1.1                        “Premises Damage” shall mean if
the Premises are damaged or destroyed to any extent.


 


9.1.2                        “Building Partial Damage” shall
mean if the Building is damaged or destroyed to the extent that the cost to
repair is less than fifty percent (50%) of the then Replacement Cost of the
Building.


 


9.1.3                        “Building Total Destruction”
shall mean if the Building is damaged or destroyed to the extent that the cost
to repair is fifty percent (50%) or more of the then Replacement Cost of the
Building.


 


9.1.4                        “Insured Loss” shall mean
damage or destruction which was caused by an event required to be covered by
the insurance described in paragraph 8. 
The fact that an Insured Loss has a deductible amount shall not make the
loss an uninsured loss.


 


9.1.5                        “Replacement Cost” shall mean
the amount of money necessary to be spent in order to repair or rebuild the
damaged area to the condition that existed immediately prior to the damage
occurring, excluding all improvements made by tenants, other than those
installed by Landlord at Tenant’s expense.


 


9.2                               Premises
Damage; Premises Building Partial Damage.


 


9.2.1                        Insured Loss:  Subject to the provisions of paragraphs 9.4
and 9.5, if at any time during the Term of this Lease there is damage which is
an Insured Loss and which falls into the classification of either Premises
Damage or Building Partial Damage, then Landlord shall, as soon as reasonably
possible and to the extent insurance proceeds are available and the required
materials and


 


11

















 


labor are readily available through usual commercial channels, at
Landlord’s expense, repair such damage (but not Tenant’s fixtures, equipment,
personal property or tenant improvements, all of which Tenant shall restore at
Tenant’s expense) to its condition existing at the time of the damage, and this
Lease shall continue in full force and effect.


 


9.2.2                        Uninsured Loss:  Subject to the provisions of paragraphs 9.4
and 9.5, if at any time during the Term of this Lease there is damage which is
not an Insured Loss and which falls within the classification of Premises
Damage or Building Partial Damage, unless caused by a negligent or willful act
of Tenant (in which event Tenant shall make the repairs at Tenant’s expense),
which damage prevents Tenant from making any substantial use of the Premises,
Landlord may at Landlord’s option either (i) repair such damage as soon as reasonably
possible at Landlord’s expense, in which event this Lease shall continue in
full force and effect, or (ii) give written notice to Tenant within thirty (30)
days after the date of the occurrence of such damage of Landlord’s intention to
cancel and terminate this Lease as of the date of the occurrence of such
damage, in which event this Lease shall terminate as of the date of the
occurrence of such damage.


 


9.3                               Building
Total Destruction.  Subject to the
provisions of paragraphs 9.4 and 9.5, if at any time during the Term of this
Lease there is damage, whether or not it is an Insured Loss, which falls into
the classification of Building Total Destruction, then Landlord may at
Landlord’s option either (i) repair such damage or destruction as soon as reasonably
possible at Landlord’s expense (to the extent the required materials are
readily available through usual commercial channels) to its condition existing
at the time of the damage, but not Tenant’s fixtures, equipment, personal
property or tenant improvements (all of which Tenant shall restore at Tenant’s
expense), and this Lease shall continue in full force and effect, or (ii) give
written notice to Tenant within thirty (30) days after the date of occurrence
of such damage of Landlord’s intention to cancel and terminate this Lease, in
which case this Lease shall terminate as of the date specified by Landlord in
such notice.  Tenant shall have the
right to terminate this Lease by giving written notice to Landlord within 5
business days of receipt of Landlord’s notice, if, in Landlord’s reasonable
judgment, the repairs will require an interruption of Tenant’s use of the
Premises for more than one hundred eighty (180) days after Landlord’s notice,
and the Lease shall terminate as of the date of Landlord’s notice.


 


9.4                               Damage
Near End of Term.


 


9.4.1                        Subject to paragraph 9.4.2, if
at any time during the last twelve (12) months of the Term of this Lease there
is substantial damage to the Premises, Landlord or Tenant may at its option,
cancel and terminate this Lease as of the date of occurrence of such damage by
giving written notice to the other party of its election to do so within 30
days after the date of occurrence of such damage.


 


9.4.2                        Notwithstanding paragraph
9.4.1, in the event that Tenant has an option to extend or renew this Lease,
and the time within which said option may be exercised has not yet expired,
Tenant shall exercise such option, if it is to be exercised at all, no later
than twenty (20) days after the occurrence of an Insured Loss falling within
the classification of Premises Damage during the last twelve (12) months of the
Term of this Lease.  If Tenant duly
exercises such option during said twenty (20) day period, Landlord shall, at
Landlord’s expense, to the extent insurance proceeds are available, and the
required materials and labor are readily available, repair such damage, but not
Tenant’s fixtures, equipment, personal property or tenant improvements (all of
which Tenant shall restore at Tenant’s expense), as soon as reasonably possible
and this Lease shall continue in full force and effect.  If Tenant fails to exercise such option
during said twenty (20) day period, then Landlord may at Landlord’s option
terminate and cancel this Lease as of the expiration of said twenty (20) day period
by giving written notice to Tenant of Landlord’s election to do so within ten
(10) days after the expiration of said twenty (20) day period, notwithstanding
any term or provision in the grant of option to the contrary.


 


9.5                               Abatement
of Rent; Tenant’s Remedies.


 


9.5.1                        If, in the event of Premises
Damages, Landlord repairs or restores the Building or Premises pursuant to the
provisions of this paragraph 9, and any part of the Premises are not usable
(including loss of use due to loss of access or essential services), the rent
payable hereunder (including Tenant’s Share of Operating Expenses) for the
period during which such damage, repair or restoration continues shall be
abated, provided (i) the damage was not the result of the negligence of Tenant,
and (ii) such abatement shall only be to the extent (i.e., shall be based upon
the proportion that the rentable square feet of the Premises which is unuseable
because of such damage bears to the total rentable square feet of the Premises)
and only for the period of time that the operation of Tenant’s business as
operated from the Premises is adversely affected.  Except for said abatement of rent, if any, Tenant shall have no
claim against Landlord for any damage suffered by reason of any such damage,
destruction, repair or restoration.


 


9.5.2                        If Landlord shall be obligated
to repair or restore the Premises or the Building under the provisions of this
paragraph 9 and shall not commence such repair or restoration within ninety
(90) days after such occurrence, or if Landlord shall not complete the
restoration and repair within six (6) months after Landlord commences such
repair or restoration, Tenant may at Tenant’s option cancel and terminate this
Lease by giving Landlord written notice of Tenant’s election to do so at any
time prior to the commencement or completion, respectively, of such repair or
restoration.  In such event this Lease
shall terminate as of the date of such notice.


 


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9.5.3                        Tenant agrees to cooperate with
Landlord in connection with any such restoration and repair, including but not
limited to the approval and/or execution of plans and specifications required.


 


9.6                               Termination-Advance
Payments.  Upon termination of this
Lease pursuant to this paragraph 9, an equitable adjustment shall be made
concerning advance rent and any advance payments made by Tenant to
Landlord.  Landlord shall, in addition,
return to Tenant so much of Tenant’s security deposit as has not theretofore
been applied by Landlord.


 


9.7                               Waiver.  Landlord and Tenant waive the provisions of
any statute which relates to termination of leases when leased property is
destroyed, including without limitation California Civil Code
Section 1932, Subsection 2, as well as Section 1933, Subsection 4,
and agree that such event shall be governed by the terms of this Lease.


 


10.                               Real Property Taxes.


 


10.1                        Payment of
Taxes.  Landlord shall pay the real
property tax, as defined in paragraph 10.3, applicable to the Project, subject
to reimbursement by Tenant of Tenant’s share of such taxes in accordance with
the provisions of paragraph 4.2 herein.


 


10.2                        Additional
Improvements.  Tenant shall pay to
Landlord, at the time that the next scheduled rental payment comes due, the
entirety of any increase in real property tax if assessed solely by reason of
additional improvements placed upon the Premises by Tenant or at Tenant’s
request.


 


10.3                        Definition
of “Real Property Tax.”  As used
herein, the term “real property tax” shall include any form of real estate tax
or assessment, general, special, ordinary or extraordinary, and any license
fee, commercial rental tax, improvement bond or bonds, levy or tax (other than
inheritance, personal income or estate taxes) imposed on the Project or any
portion thereof by any authority having the direct or indirect power to tax,
including without limitation any city, county, state or federal government, or
any school, agricultural, sanitary, fire, street, drainage or other improvement
district thereof, as against any legal or equitable interest of Landlord in the
Project or in any portion thereof, as against Landlord’s right to rent or other
income therefrom, and as against Landlord’s business of leasing the
Project.  The term “real property tax”
shall also include any tax, fee, levy, assessment or charge (i) in substitution
of, partially or totally, any tax, fee, levy, assessment or charge hereinabove
included within the definition of “real property tax,” or (ii) the nature of
which was hereinabove included within the definition of “real property tax,” or
(iii) which is imposed for a service or right not charged prior to June 1,
1978, or, if previously charged, has been increased since June 1, 1978, or
(iv) which is imposed as a result of a change in ownership, as defined by
applicable federal, state, local and other statutes for property tax purposes,
of the Project or which is added to a tax or charge hereinbefore included
within the definition of real property tax by reason of such change of
ownership, or (v) which is imposed by reason of this transaction, any
modifications or changes hereto, or any transfers hereof.


 


10.4                        Joint
Assessment.  If the improvements or
property, the taxes for which are to be paid separately by Tenant under
paragraph 10.2 or 10.5 are not separately assessed, Tenant’s portion of that
tax shall be equitably determined by Landlord from the respective valuations
assigned in the assessor’s work sheets or such other information (which may
include the cost of construction) as may be reasonably available.  Landlord’s reasonable determination thereof,
in good faith, shall be conclusive.


 


10.5                        Personal
Property Taxes.


 


10.5.1                  Tenant shall pay prior to delinquency
all taxes assessed against and levied upon trade fixtures, furnishings,
equipment and all other personal property of Tenant contained in the Premises
or elsewhere.


 


10.5.2                  If any of Tenant’s said personal
property shall be assessed with Landlord’s real property, Tenant shall pay to
Landlord the taxes attributable to Tenant within ten (10) days after receipt of
a written statement setting forth the taxes applicable to Tenant’s property.


 


11.                               Utilities.


 


11.1                        Services
Provided by Landlord.  Subject to
paragraph 11.5 and provided that Tenant is not in default hereunder, Landlord
shall provide heating, ventilation and air conditioning, electricity for
lighting and office machines, water for drinking and lavatory use, janitorial
service, and non-attended automatic elevators. Costs incurred by Landlord in
providing such services shall be Operating Expenses.  Janitorial service (including trash disposal) shall occur every
business day, excluding only Saturdays, Sundays and holidays and shall be
provided by a licensed and bonded janitorial service.  Except as otherwise provided in this Lease, Tenant shall have
access to the Premises 24 hours per day, 365 days per year.


 


11.2                        Services
Exclusive to Tenant.  Tenant shall
pay for all water, gas, heat, light, power, telephone, and other utilities and
services specially or exclusively supplied and/or metered exclusively to the
Premises or to Tenant, together with any taxes thereon and for all replacement
light bulbs and/or fluorescent tubes and ballasts for standard overhead
fixtures within the Premises.  If any
such services are not separately metered to the Premises, Tenant shall pay a
reasonable proportion to be determined


 


13

















 


by Landlord of all charges jointly metered with other premises in the
Building, and in such cases, Landlord’s determination thereof, shall be
conclusive.


 


11.3                        Hours of
Service.  Said services and
utilities shall be provided during the hours between 7:00 a.m. and 6:00 p.m. on
Monday through Friday and 8:00 a.m. and 1:00 p.m. on Saturday or such other
days or hours as may hereafter be set forth in the Rules and Regulations or any
amendments thereto.  Utilities and
services required at other times shall be subject to advance request and
reimbursement by Tenant to Landlord of the cost of forty Dollars ($40.00) per
hour, subject to change from time to time.


 


11.4                        Excess
Usage by Tenant.  Tenant shall not
make connection to the utilities except by or through existing outlets and
shall not install or use machinery or equipment in or about the Premises that
uses excess water, lighting or power, or suffer or permit any act that causes
extra burden upon the utilities or services, including but not limited to
security services, over standard office usage for the Project.  Landlord shall require Tenant to reimburse
Landlord for any excess expenses or costs that may arise out of a breach of
this subparagraph by Tenant.


 


11.5                        Interruptions.  There shall be no abatement of rent and
Landlord shall not be liable in any respect whatsoever for the inadequacy,
stoppage, interruption or discontinuance of any utility or service, regardless
of whether or not the cause thereof was within Landlord’s control.  Notwithstanding the foregoing, in the event
Tenant is prevented from using, and does not use, the Premises or any portion
thereof, for four (4) consecutive business days or ten (10) days in any
12-month period (the “Eligibility Period”) as a result of any repair,
maintenance or alteration performed by Landlord, any failure by Landlord to
make repairs which are Landlord’s responsibility, any failure by Landlord to
provide the services to the Premises described in this Paragraph 11 or
elsewhere under this Lease, or any exercise by Landlord of its rights under
Paragraph 31 of this Lease, then Tenant’s rent shall be abated or reduced, as
the case may be, after expiration of the Eligibility Period for such time that
Tenant continues to be so prevented from using the Premises or a portion
thereof, in the proportion that the rentable area of the portion of the
Premises that Tenant is prevented from using bears to the total rentable area
of the Premises.


 


11.6                        Separate
Metering.  Nothing contained in this
paragraph 11 shall restrict Landlord’s right to require at any time separate
metering of utilities furnished to the Premises.  In the event utilities are separately metered, Tenant shall pay
promptly upon demand for all utilities consumed at utility rates charged by the
local public utility plus any additional expense incurred by Landlord in
keeping account of the utilities so consumed. 
Tenant shall be responsible for the maintenance and repair of any such
meters at its sole cost.


 


12.                               Assignment and Subletting.


 


12.1                        Landlord’s
Consent Required.  Tenant shall not
voluntarily or by operation of law assign, transfer, mortgage, sublet, or
otherwise transfer or encumber all or any part of Tenant’s interest in this
Lease or in the Premises, without Landlord’s prior written consent, which
Landlord shall not unreasonably withhold, delay, or condition any attempted
assignment, transfer, mortgage, encumbrance or subletting without such consent
shall be void and, at Landlord’s election, shall constitute a material,
non-curable default and breach of this Lease without the need for notice to
Tenant under paragraph 13.1.  “Transfer”
within the meaning of this paragraph 12 shall include the transfer or transfers
aggregating (a), if Tenant is a corporation, more than twenty-five percent
(25%) of the voting stock of such corporation or more than twenty-five (25%) of
the voting stock of Tenant’s parent, (b) if Tenant is a partnership, more than
twenty-five percent (25%) of the profit and loss participation in such
partnership, or (c), if Tenant is a limited liability company, more than 25% of
the membership interests in such limited liability company.  A transfer does not include: (a) a transferee
which is the resulting entity of a merger or consolidation of Tenant with
another entity, (b) an assignment to a transferee of all or substantially all
of the assets of Tenant, and (c) an assignment or subletting of all or a
portion of the Premises to a Tenant Affiliate (so long as such transaction is
not entered into as a subterfuge to avoid the restrictions of the Lease).  “Tenant Affiliate” means (A) Pacific Crest
Capital, Inc., and (B) any other entity which is controlled by, controls, or is
under common control with Tenant.


 


12.2                        Terms and
Conditions Applicable to Assignment and Subletting.


 


12.2.1                  Regardless of Landlord’s consent, no
assignment or subletting shall release Tenant of Tenant’s obligations hereunder
or alter the primary liability of Tenant to pay the rent and other sums due
Landlord hereunder including Tenant’s Expense Share and Tenant’s Tax Share, and
to perform all other obligations to be performed by Tenant hereunder.


 


12.2.2                  Landlord may accept rent from any
person other than Tenant pending approval or disapproval of such assignment or
subletting without being deemed to have consented thereto.


 


12.2.3                  Neither a delay in the approval or
disapproval of such assignment or subletting, nor the acceptance of rent, shall
constitute a waiver or estoppel of Landlord’s right to exercise its remedies
for the breach of any of the terms or conditions of this paragraph 12 or any
other term or provision of this Lease.


 


14

















 


12.2.4                  If Tenant’s obligations
under this Lease have been guaranteed by a third party or third parties, then
an assignment or sublease, and Landlord’s consent thereto, shall not be
effective unless said guarantors give their written consent to such assignment
or sublease and the terms thereof.


 


12.2.5                  The consent by
Landlord to any assignment or subletting shall not constitute a consent to any
subsequent assignment or subletting by Tenant or to any subsequent or
successive assignment or subletting by the subtenant or assignee, as the case
may be.  However, Landlord may consent
to subsequent sublettings and assignments or any amendments or modifications
thereto without notifying Tenant or anyone else liable on the Lease or sublease
and without obtaining their consent and such action shall not relieve such
persons from liability under this Lease or said sublease; provided, however,
such persons shall not be responsible to the extent any such amendment or
modification enlarges or increases the obligations of the Tenant or subtenant under
this Lease or such sublease.


 


12.2.6                  In the event of
any default under this Lease, Landlord may proceed directly against Tenant, any
guarantors or anyone else responsible for the performance of this Lease,
including the subtenant or assignee, without first exhausting Landlord’s
remedies against any other person or entity responsible therefor to Landlord,
or any security held by Landlord.


 


12.2.7                  Landlord’s
written consent to any assignment or subletting of the Premises by Tenant shall
not constitute an acknowledgment that no default then exists under this Lease
of the obligations to be performed by Tenant nor shall such consent be deemed a
waiver of any then existing default.


 


12.2.8                  The discovery of
the fact that any financial statement or other information provided by Tenant
and intended to be relied upon by Landlord in giving its consent to an
assignment or subletting was materially false shall, at Landlord’s election,
render Landlord’s said consent null and void.


 


12.2.9                  Any disapproval
by Landlord of any proposed assignee or subtenant based on the fact that such
party is an existing tenant of the Project (“Existing Tenant”) shall be deemed
to be reasonable.  With respect to any
such proposed assignment or sublease to an Existing Tenant, Landlord shall have
the right, at its election, to recapture the Premises or a portion thereof as
applicable for the purpose of directly marketing the Premises or a portion
thereof to any third party, including the Existing Tenant, selected by
Landlord, for the length of time, in the case of a sublease, offered by
Tenant.  Such recapture shall be
effective as of the date specified by Tenant in its request for consent of
Landlord as the proposed commencement date for the assignment or sublease or,
if no date is so specified, on the date selected by Landlord.  In the event of such recapture by Landlord,
this Lease shall be amended to document the elimination of the applicable
portion of the Premises for the applicable period.  Any necessary documents in connection with such recapture shall
be prepared by Landlord.


 


12.3                        Additional
Terms and Conditions Applicable to Subletting.  Regardless of Landlord’s consent, the following terms and
conditions shall apply to any subletting by Tenant of all or any part of the
Premises and shall be deemed included in all subleases under this Lease whether
or not expressly incorporated therein:


 


12.3.1                  Tenant hereby
assigns and transfers to Landlord all of Tenant’s interest in all rentals and
income arising from any sublease heretofore or hereafter made by Tenant, and
Landlord may collect such rent and income and apply same (or the balance
thereof after application of the provisions of paragraph 12.3.6 hereinbelow)
toward Tenant’s obligations under this Lease; provided, however, that until a default
shall occur in the performance of Tenant’s obligations under this Lease, Tenant
may, subject to the provisions of paragraph 12.3.6 hereinbelow, receive,
collect and enjoy the rents accruing under such sublease.  Landlord shall not, by reason of this sublease
or any assignment of such sublease to Landlord nor by reason of the collection
of the rents from a subtenant, be deemed liable to the subtenant for any
failure of Tenant to perform and comply with any of Tenant’s obligations to
such subtenant under such sublease. 
Tenant hereby irrevocably authorizes and directs any such subtenant,
upon receipt of a written notice from Landlord stating that a default exists in
the performance of Tenant’s obligations under this Lease, to pay to Landlord
the rents due and to become due under the sublease.  Tenant agrees that such subtenant shall have the right to rely
upon any such statement and request from Landlord, and that such subtenant
shall pay such rents to Landlord without any obligation or right to inquire as
to whether such default exists and notwithstanding any notice from or claim
from Tenant to the contrary.  Tenant
shall have no right or claim against said subtenant or Landlord for any such
rents so paid by said subtenant to Landlord.


 


12.3.2                  No sublease
entered into by Tenant shall be effective unless and until it has been approved
in writing by Landlord.  Any subtenant
shall, by reason of entering into a sublease under this Lease, be deemed, for
the benefit of Landlord, to have assumed and agreed to conform and comply with
each and every obligation herein to be performed by Tenant.


 


12.3.3                  In the event
Tenant shall default in the performance of its obligations under this Lease,
Landlord, at its option and without any obligation to do so, may require any subtenant
to attorn to Landlord, in which event Landlord shall undertake the obligations
of Tenant under such sublease from the time of the exercise of said option to
the termination of such sublease; provided, however, Landlord shall not be
liable for any prepaid rents or security deposit paid by such subtenant to
Tenant or for any other prior defaults of Tenant under such sublease.


 


15

















 


12.3.4                  No subtenant
shall further assign or sublet all or any part of the Premises without
Landlord’s prior written consent.


 


12.3.5                  The subtenant
shall have the right to cure a default of Tenant within the time period
specified in said notice of default and the subtenant shall have a right of
reimbursement and offset from and against Tenant for any such defaults cured by
the subtenant.


 


12.3.6                  Notwithstanding
anything to the contrary in the foregoing, fifty percent (50%) of any rent or
other economic consideration received by Tenant as a result of an assignment or
subletting which exceeds, on a square foot basis, in the aggregate, (i) the
total rent which Tenant is obligated to pay to Landlord under the Lease
(prorated to reflect obligations allocable to any portion of the Premises
subleased), plus (ii) any reasonable and customary brokerage commissions (not
to exceed five percent (5%) of base rent payable under the assignment or
sublease) actually paid by Tenant in connection with such assignment or
subletting, reasonable tenant improvements costs, advertising costs, and reasonable
attorneys fees, shall be paid to Landlord within ten (10) days after receipt
thereof as additional rent hereunder, without altering or reducing any other
obligations of Tenant hereunder.


 


12.4                        Landlord’s
Expenses.  In the event Tenant shall
assign this Lease or sublet the Premises or request the consent of Landlord to
any assignment or subletting or if Tenant shall request the consent of Landlord
for any act Tenant proposes to do then Tenant shall pay, within ten (10) days
of Tenant’s receipt of demand therefor, (i) an administrative fee not to exceed
Five Hundred Dollars ($500.00) representing Landlord’s cost of reviewing
Tenant’s request and the information pertaining thereto and (ii) Landlord’s
reasonable costs and expenses incurred in connection therewith, including
without limitation attorneys’, architects’, engineers’ and other consultants’
fees.


 


12.5                        Conditions
to Consent.  Landlord reserves the
right to condition any approval to assign or sublet upon Landlord’s
determination that (a) the proposed assignee or subtenant shall conduct a
business on the Premises of a quality substantially equal to that of Tenant and
consistent with the general character of the other occupants of the Project and
not in violation of any exclusives or rights then held by other tenants, and
(b) the proposed assignee or subtenant be at least as financially responsible
and have a similar net worth as Tenant was expected to be at the time of the
execution of this Lease or of such assignment or subletting, whichever is greater.


 


13.                              Default; Remedies.


 


13.1                        Default.  The occurrence of any one or more of the
following events shall constitute a material default of this Lease by Tenant:


 


13.1.1                  [Intentionally
Deleted]


 


13.1.2                  The breach by
Tenant of any of the covenants, conditions or provisions of paragraphs 7.3
(alterations and additions), 12 (assignment or subletting), 13.1.5
(insolvency), 13.1.6 (false statement), 16.1 (estoppel certificate), 29.3
(subordination), 32 (auctions), or 39.1 (easements), all of which are hereby
deemed to be material, non-curable defaults without the necessity of any notice
by Landlord to Tenant thereof.  Nothing
herein shall preclude Landlord from waiving, in writing, any such default.


 


13.1.3                  The failure by
Tenant to make any payment of rent or any other payment required to be made by
Tenant hereunder, as and when due, where such failure shall continue for a
period of three (3) business days after written notice thereof from Landlord to
Tenant.  In the event that Landlord
serves Tenant with a Notice to Pay Rent or Quit pursuant to applicable Unlawful
Detainer statutes, such Notice to Pay Rent or Quit shall also constitute the
notice required by this paragraph. 
Following each second consecutive late payment of any installment of
rent or additional rent, Landlord shall have the option (i) to require that,
beginning with the first payment of rent next due, rent shall no longer be paid
in monthly installments but shall be payable quarterly three (3) months in
advance and/or (ii) to require that the Tenant increase the amount, if any, of
the Security Deposit required under paragraph 1.9 and paragraph 5 above by one
hundred percent (100%), which additional Security Deposit shall be retained by
Landlord, and may be applied by Landlord, in the manner provided in paragraph
5.


 


13.1.4                  The failure by
Tenant to observe or perform any of the covenants, conditions or provisions of
this Lease to be observed or performed by Tenant other than those referenced in
paragraphs 13.1, 13.2 and 13.3 above, where such failure shall continue for a
period of thirty (30) days after written notice thereof from Landlord to
Tenant; provided, however, that if the nature of Tenant’s noncompliance is such
that more than thirty (30) days are reasonably required for its cure, then Tenant
shall not be deemed to be in default if Tenant commences such cure within said
thirty (30) day period and thereafter diligently pursues such cure to
completion, so long as such completion occurs within ninety (90) days after the
previously referenced written notice from Landlord.  To the extent permitted by law, such thirty (30) day notice shall
constitute the sole and exclusive notice required to be given to Tenant under
applicable Unlawful Detainer statutes.


 


13.1.5                  (i) The making
by Tenant of any general arrangement or general assignment for the benefit of
creditors; (ii) Tenant becoming a “debtor” as defined in 11 U.S.C. §101 or
any successor statute thereto (unless, in the case of a petition filed against
Tenant, the same is dismissed within sixty (60) days; (iii) the appointment of
a trustee or receiver to take possession of substantially all of Tenant’s
assets located at the Premises or of Tenant’s interest in this Lease, where
possession is not restored to 


 


16

















 


Tenant within sixty (60) days; or (iv) the attachment, execution or
other judicial seizure of substantially all of Tenant’s assets located at the
Premises or of Tenant’s interest in this Lease, where such seizure is not
discharged within sixty (60) days.  In
the event that any provision of this paragraph 13.1.5 is contrary to any
applicable law, such provision shall be of no force or effect.


 


13.1.6                  The discovery by
Landlord that any financial statement or other information given to Landlord by
Tenant, or its successor in interest or by any guarantor of Tenant’s obligation
hereunder, was materially false.


 


13.2                        Landlord’s
Remedies.


 


13.2.1                  Termination.  In the event of any default by Tenant, in
addition to any other remedies available to Landlord under this Lease, at law
or in equity, Landlord shall have the immediate option to terminate this Lease
and all rights of Tenant hereunder.  In
the event that Landlord shall elect to so terminate this Lease, then Landlord
may recover from Tenant:


 


13.2.1.1  the worth at the time of award of any unpaid
rent which had been earned at the time of such termination; plus


 


13.2.1.2  the worth at the time of the award of the
amount by which the unpaid rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss that Tenant
proves could have been reasonably avoided; plus


 


13.2.1.3  the worth at the time of award of the amount
by which the unpaid rent for the balance of the Term after the time of award
exceeds the amount of such rental loss that Tenant proves could be reasonable
avoided; plus


 


13.2.1.4  Any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant’s failure to
perform its obligations under this Lease or which, in the ordinary course of
things, would be likely to result therefrom, including, but not limited
to:  “Unreimbursed Leasehold Improvement
Costs” (as defined below); attorneys’ fees; brokers’ commissions; the costs of
refurbishment, alterations, renovation and repair of the Premises; and costs of
removal (including the repair of damage caused by such removal) and storage (or
disposal) of Tenant’s personal property, equipment, fixtures, Tenant’s
alterations, additions, leasehold improvements and any other items which Tenant
is required under this Lease to remove but does not remove.  As used herein, the term “Unreimbursed
Leasehold Improvement Costs” shall mean the product obtained by multiplying (i)
the sum of any leasehold improvement allowance plus any other costs provided,
paid or incurred by Landlord in connection with the design and construction of
the initial leasehold improvements installed in the Premises on or prior to the
Commencement Date pursuant to the Work Letter, by (ii) a fraction, the numerator
of which is the number of months of the Term of this Lease not yet fully
elapsed as of the date on which this Lease is terminated (excluding any
unexercised renewal options), and the denominator of which is the total number
of months of the Term of this Lease (excluding any unexercised renewal
options).  For example, if the total
costs paid or incurred by Landlord with respect to the initial leasehold
improvements was $100,000.00, the Lease term was sixty (60) months, and the
Lease was terminated by reason of Tenant’s default at the end of twelve (12)
months, the Unreimbursed Leasehold Improvement Costs would be equal to
$80,000.00 (i.e., $80,000.00 equals $100,000.00 x 48/60).


 


13.2.1.5  As used in subparagraphs 13.2.1.1 and
13.2.1.2 above, the “worth at the time of award” is computed by allowing
interest at the lesser of (a) twelve percent (12%) or (b) the maximum interest
rate which Landlord is permitted by law to charge Tenant (the “Lease
Rate”).  As used in subparagraph
13.2.1.3 above, the “worth at the time of award” is computed by discounting
such amount at the discount rate of the Federal Reserve Bank of San Francisco
at the time of award plus one percent (1%).


 


13.2.2                  Re-Entry
Rights.  In the event of any default by
Tenant, in addition to any other remedies available to Landlord under this
Lease, at law or in equity, Landlord shall also have the right, with or without
terminating this Lease, to re-enter the Premises and remove all persons and
property from the Premises; such property may be removed, stored and/or
disposed of pursuant to this Lease or any other procedures permitted by
applicable law, all at Tenant’s expense. 
No re-entry or taking possession of the Premises by Landlord pursuant to
this paragraph 13.2.2, and no acceptance of surrender of the Premises or other
action on Landlord’s part, shall be construed as an election to terminate this
Lease unless a written notice of such intention be given to Tenant or unless
the termination thereof be decreed by a court of competent jurisdiction.


 


13.2.3                  Continuation of
Lease.  In the event of any default by
Tenant, in addition to any other remedies available to Landlord under this
Lease, at law or in equity, Landlord shall have the right to continue this
Lease in full force and effect and to recover rent as it becomes due, whether
or not Tenant shall have abandoned the Premises.  The foregoing remedy shall also be available to Landlord pursuant
to California Civil Code Section 1951.4 and any successor statute thereto
in the event Tenant has abandoned the Premises.  In the event Landlord elects to continue this Lease in full force
and effect pursuant to this paragraph 13.2.3, then Landlord shall be
entitled to enforce all of its rights and remedies under this Lease, including
the right to recover rent as it becomes due. 
Landlord’s election not to terminate this Lease pursuant to this
paragraph 13.2.3 or pursuant to any other provision of this Lease, at law
or in equity, shall not preclude Landlord from subsequently electing to
terminate this Lease or pursuing any of its other remedies.


 


17

















 


13.2.4                  In the event of
a Chronic Delinquency (as hereinafter defined), at Landlord’s option, Landlord
shall have the right, in addition to all other remedies under this Lease and at
law or equity, to require that Rent be paid by Tenant quarterly, in
advance.  This provision shall not limit
in any way nor be construed as a waiver of the rights and remedies of Landlord
provided herein or by law or equity in the event of delinquency. “Chronic
Delinquency” shall mean failure by Tenant to pay Rent, or any other payments
required to be paid by Tenant under this Lease, within three (3) days after
written notice thereof for any three (3) months (consecutive or nonconsecutive)
during any twelve (12) month period.


 


13.2.5                  Rights and
Remedies Cumulative.  All rights,
options and remedies of Landlord contained in this paragraph 13.2 and elsewhere
in this Lease shall be construed and held to be cumulative, and no one of them
shall be exclusive of the other, and Landlord shall have the right to pursue
any one or all of such remedies or any other remedy or relief which may be
provided by law or in equity, whether or not stated in this Lease.  Nothing in this paragraph 13.2 shall be deemed
to limit or otherwise affect Tenant’s indemnification of Landlord pursuant to
any provision of this Lease.


 


13.3                        Default
by Landlord.  Landlord shall not be
in default unless Landlord fails to perform obligations required of Landlord
within thirty (30) days after written notice by Tenant to Landlord and to the
holder of any first Mortgage or deed of trust covering the Premises whose name
and address shall have theretofore been furnished to Tenant in writing,
specifying wherein Landlord has failed to perform such obligation; provided,
however, that if the nature of Landlord’s obligation is such that more than
thirty (30) days are required for performance then Landlord shall not be in
default if Landlord commences performance within such 30-day period and
thereafter diligently pursues the same to completion but in all events not
beyond one hundred twenty (120) days after Tenant’s original notice to
Landlord.  In no event shall Tenant have
the right to terminate this Lease as a result of Landlord’s default and
Tenant’s remedies shall be limited to damages and/or an injunction.


 


13.4                        Late
Charges.  Tenant hereby acknowledges
that late payment by Tenant to Landlord of Base Rent, Tenant’s Expense Share,
Tenant’s Tax Share or other sums due hereunder will cause Landlord to incur
costs not contemplated by this Lease, the exact amount of which will be
extremely difficult and impractical to ascertain.  Such costs include, but are not limited to, processing and
accounting charges, loss of use of such funds by Landlord and late charges
which may be imposed on Landlord by the terms of any mortgage or trust deed
covering the Project.  Accordingly, if
any installment of Base Rent, Operating Expenses, or any other sum due from
Tenant shall not be received by Landlord or Landlord’s designee within five (5)
business days after written notice that such amount shall be due, Tenant shall
pay to Landlord a late charge equal to ten percent (10%) of such overdue
amount.  The parties hereby agree that
such late charge represents a fair and reasonable estimate of the costs
Landlord will incur by reason of late payment by Tenant.  Acceptance of such late charge by Landlord
shall in no event constitute a waiver of Tenant’s default with respect to such
overdue amount, nor prevent Landlord from exercising any of the other rights
and remedies granted hereunder. 
Notwithstanding the foregoing, Landlord shall waive the first late
charge during any 12-month period provided that payment is made within ten (10)
business days after written notice from Landlord.


 


14.                               Condemnation. 
If the Premises or any portion thereof or the Project are taken under
the power of eminent domain, or sold under the threat of the exercise of said
power (all of which are herein called “condemnation”), this Lease shall
terminate as to the part so taken as of the date the condemning authority takes
title or possession, whichever first occurs; provided, however, that, if so
much of the Premises or the Project are taken by such condemnation as would in
Landlord’s opinion substantially and adversely affect the operation and
profitability of Tenant’s business conducted from the Premises, Tenant shall
have the option, to be exercised only in writing within thirty (30) days after
Landlord shall have given Tenant written notice of such taking (or in the
absence of such notice, within thirty (30) days after the condemning authority
shall have taken possession), to terminate this Lease as of the date the
condemning authority takes such possession. 
If Tenant does not terminate this Lease in accordance with the
foregoing, this Lease shall remain in full force and effect as to the portion
of the Premises remaining, except that the rent and Tenant’s Expense Share and
Tenant’s Tax Share shall be reduced in the proportion that the rentable square
feet of the Premises taken bears to the total rentable square feet of the
Premises.  Common Areas taken shall be
excluded from the Common Areas usable by Tenant and no reduction of rent shall
occur with respect thereto or by reason thereof.  Landlord shall have the option in its sole discretion to
terminate this Lease as of the taking of possession by the condemning
authority, by giving written notice to Tenant of such election within thirty
(30) days after receipt of notice of a taking by condemnation of any part of
the Premises or the Project.  Any award
for the taking of all or any part of the Premises or the Project under the
power of eminent domain or any payment made under threat of the exercise of such
power shall be the property of Landlord, whether such award shall be made as
compensation for diminution in value of the leasehold or for the taking of the
fee, or as severance damages; provided, however, that Tenant shall be entitled
to any separate award for loss of or damage to Tenant’s trade fixtures,
removable personal property and unamortized tenant improvements that have been
paid for by Tenant.  For that purpose
the cost of such improvements shall be amortized over the original term of this
Lease excluding any options.  In the
event that this Lease is not terminated by reason of such condemnation,
Landlord shall to the extent of severance damages received by Landlord in
connection with such condemnation, repair any damage to the Premises caused by
such condemnation except to the extent that Tenant has been reimbursed therefor
by the condemning authority.  Tenant
shall pay any amount in excess of such severance damages required to complete
such repair.  Notwithstanding the
foregoing, Landlord shall only have the right to terminate this Lease if
Landlord terminates the leases of other tenants similarly affected by the
taking.


 


18

















 


15.                               Broker’s Fee.


 


15.1                           The
parties recognize as the broker(s) who negotiated this Lease the party (or
parties) whose name (or names) is (are) stated in paragraph 1.16 of the Basic
Lease Provisions.  Landlord shall pay to
Landlord’s Broker a fee as set forth in a separate agreement between Landlord
and Landlord’s Broker.


 


15.2                           Tenant
and Landlord each represents and warrants to the other that neither has had any
dealings with any person, firm, broker or finder (other than the person(s),
firm(s), broker(s) or finder(s), if any, whose names are set forth in paragraph
1.16 of the Basic Lease Provisions in connection with the negotiation of this
Lease and/or the consummation of the transaction contemplated hereby, and no
other broker or other person, firm or entity is entitled to any commission or
finder’s fee in connection with said transaction and Tenant and Landlord do each
hereby indemnify and hold the other harmless from and against any costs,
expenses, attorneys’ fees or liability for compensation or charges which may be
claimed by any such unnamed person, firm, broker, finder or other similar party
by reason of any dealings or actions of the indemnifying party; the foregoing
indemnity by Tenant shall also apply to any claim by Tenant’s Broker.


 


16.                               Estoppel Certificate.


 


16.1                           Tenant
shall at any time upon not less than ten (10) business days’ prior written
notice from Landlord execute, acknowledge and deliver to Landlord a statement
in writing (i) certifying that this Lease is unmodified and in full force and
effect (or, if modified, stating the nature of such modification and certifying
that this Lease, as so modified, is in full force and effect) and the date to
which the rent and other charges are paid in advance, if any, and (ii)
acknowledging that there are not any uncured defaults on the part of Landlord,
or specifying such defaults if any are claimed, and (iii) certifying as to such
other matters as may be reasonably requested by Landlord or by a prospective
purchaser or encumbrancer of all or any part of the Project.  Any such statement may be conclusively
relied upon by any prospective purchaser or encumbrancer of the Project.


 


16.2                           At
Landlord’s option, the failure to deliver such statement within such time shall
be a material, non-curable default of this Lease by Tenant, subject, however to
the following.  In the event that
Landlord has not received the estoppel certificate within five (5) business
days of Landlord’s written notice, Landlord shall provide Tenant a second
written notice from Landlord as set forth above.  In the event that Landlord does not receive the statement set
forth above from Tenant, than it shall be conclusive upon such party that (i)
this Lease is in full force and effect, without modification except as may be
represented by Landlord, (ii) there are no uncured defaults in Landlord’s
performance, (iii) not more than one month’s rent has been paid in advance, and
(iv) there are no remaining obligations of Landlord under this Lease yet to be
performed.


 


16.3                           Tenant shall furnish Landlord, concurrently with
any Estoppel Certificate, or, at Landlord’s discretion within ten (10) business
days following Landlord’s written reasonable request therefor, such financial
statements of Tenant and any obligor or other persons or entities legally
responsible for any of the obligations of Tenant under the Lease (collectively,
including without limitation all guarantors, co-tenants, general partners,
cosigners, sub-tenants, or assignees, and predecessors in interest to Tenant,
the “Obligor”) of the Lease as may be reasonably required by Landlord or any
lender, purchaser, or prospective lender or purchaser from or to Landlord, and
any information reasonably required by Landlord, which shall include, without
limitation, at Landlord’s request, balance sheets and profit and loss
statements of Tenant or any such Obligor, and operating statements relating to
operations at the Premises, certified by Tenant’s chief financial officer or
certified public accountant, for the last three complete fiscal years of Tenant
and any such Obligor and fiscal year-to-date through the last day of the month
preceding Landlord’s request for such statements, all prepared in accordance
with generally accepted accounting principles consistently applied.  Any failure of Tenant to deliver such
statements and certifications requested by Landlord within fifteen (15) days
following Landlord’s request therefor shall be deemed to be a non-curable event
of default under this Lease, notwithstanding any other provision of the Lease
to the contrary.


 


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


 


18.                               Severability. 
The invalidity of any provision of this Lease as determined by a court
of competent jurisdiction shall in no way affect the validity of any other
provision hereof.


 


19.                               Interest on Past-due Obligations.  Except as expressly herein provided, any
amount due to Landlord not paid when due shall bear interest at the lesser of
(i) fifteen percent (15%) per annum or (ii) the maximum rate then
permitted by law.  Payment of such
interest shall not excuse or cure any 


 


19

















 


default by Tenant under this Lease; provided, however, that interest
shall not be payable on late charges incurred by Tenant.


 


20.                              Time of Essence. 
Time is of the essence with respect to the obligations to be performed
under this Lease, including with respect to the Work Letter attached hereto.


 


21.                               Additional Rent. 
All monetary obligations of Tenant to Landlord under the terms of this
Lease, including expenses payable by Tenant hereunder, shall be deemed to be
rent.


 


22.                               Incorporation of Prior Agreements;
Amendments.  This Lease contains
all agreements of the parties with respect to any matter mentioned herein.  No prior or contemporaneous agreement or
understanding pertaining to any such matter shall be effective.  This Lease may be modified in writing only,
signed by the parties in interest at the time of the modification.  Except as otherwise stated in this Lease,
Tenant hereby acknowledges that neither Landlord, Landlord’s employees, agents
or manager, nor Landlord’s Broker nor any cooperating broker on this
transaction (including without limitation Tenant’s Broker, if any) nor any
employee or agents of any of said persons has made any oral or written
warranties or representations to Tenant relative to the condition or use by
Tenant of the Premises or the Project and Tenant acknowledges and agrees that
Tenant assumes all responsibility regarding the Occupational Safety Health Act,
the legal use and adaptability of the Premises and the compliance thereof with
all applicable laws and regulations in effect during the Term of this Lease.


 


23.                               Notices.  Any
notice required or permitted to be given hereunder shall be in writing and may
be given by personal delivery, Federal Express or other similar overnight
service, or by certified or registered mail, and shall be deemed sufficiently
given if delivered or addressed to Tenant at the Premises or to Landlord at the
address noted in paragraph 1.15 of the Basic Lease Provisions, as the case may
be.  Mailed notices shall be deemed given
upon actual receipt at the address required, or forty-eight hours following
deposit in the mail, postage prepaid, whichever first occurs.  Either party may by notice to the other
specify a different address for notice purposes except that upon Tenant’s
taking possession of the Premises, the Premises shall constitute Tenant’s
address for notice purposes.  A copy of
all notices required or permitted to be given to Landlord or Tenant hereunder
shall be concurrently transmitted to such party or parties at such addresses as
Landlord or Tenant may from time to time hereafter designate by notice to the
other party.


 


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


 


25.                               Recording. 
Tenant shall, upon request of Landlord, execute, acknowledge and deliver
to Landlord a “short form” memorandum of this Lease for recording
purposes.  At termination of this Lease,
Tenant shall execute, acknowledge and deliver to Landlord, within five (5) days
after written demand from Landlord to Tenant, any quitclaim deed or other
document as may be reasonably requested by any reputable title insurance
company to remove this Lease as a matter affecting title to the Premises.


 


26.                               Holding Over. 
If Tenant, with Landlord’s express prior written consent, remains in
possession of the Premises or any part thereof after the expiration of the term
hereof, such occupancy shall be a tenancy from month to month upon all the
provisions of this Lease pertaining to the obligations of Tenant, except that
the rent payable shall be one hundred fifty percent (150%) of the rent payable
immediately preceding the expiration of the Term of this Lease, and all options
to extend the lease term, rights of first refusal, opportunities to lease additional
space and/or other options and similar rights, if any, granted under the terms
of this Lease shall be deemed terminated and be of no further effect during
said month to month tenancy.  If Tenant,
without Landlord’s express prior written consent, remains in possession of the
Premises or any part thereof after the expiration of the Term of this Lease,
Tenant shall be responsible and liable for any and all claims, demands, losses,
liabilities, costs and expenses arising out of, resulting therefrom or in any
way connected therewith and, without limitation, the provisions of
paragraph 8.7 shall apply.


 


27.                               Covenants and Conditions.  Each provision of this Lease performable by
Tenant shall be deemed both a covenant and a condition.


 


28.                               Binding Effect; Choice of Law.  Subject to any provisions hereof restricting
assignment or subletting by Tenant and subject to the provisions of paragraphs
17 and 42, this Lease shall bind the parties, their personal representatives,
successors and assigns.  This Lease
shall be governed by the laws of the State of California applicable to
contracts to be wholly performed within such State, and any litigation
concerning this Lease between the parties shall be initiated in Orange, San
Diego or Los Angeles Counties, California.


 


29.                               Subordination.


 


29.1                           Landlord
shall have the right to subordinate this Lease, and Tenant shall, at Landlord’s
request, subordinate its rights under this Lease, to any existing or future
ground lease, covenants, conditions and restrictions, easements, rights of way
or any construction, operation and reciprocal 


 


20

















 


easement agreements,
deeds of trust or mortgages encumbering the Project, any advances made on the
security thereof and any renewals, modifications, consolidations, replacements
or extensions thereof, whenever made or recorded.  However, Tenant’s right to quiet possession of the Premises
during the Term shall not be disturbed if Tenant pays the rent and performs all
of Tenant’s obligations under this Lease and is not otherwise in default.  If any ground lessor, beneficiary or
mortgagee elects to have this Lease prior to the lien of its ground lease, deed
of trust or mortgage, and gives written notice thereof to Tenant, then this
Lease shall be deemed prior to such ground lease, deed of trust or mortgage,
whether this Lease is dated prior or subsequent to the date of said ground
lease, deed of trust or mortgage or the date of recording thereof.


 


29.2                           If
Landlord’s interest in the Premises is acquired by any ground lessor,
beneficiary under a deed of trust, mortgagee or purchaser at a foreclosure sale, Tenant shall attorn to the
transferee of or successor to Landlord’s interest in the Premises and recognize
such transferee or successor as Landlord under this Lease, provided that the
purchaser or lessor shall acquire and accept the Premises subject to this
Lease.  Tenant waives the protection of
any statute or rule of law which gives or purports to give Tenant any right to
terminate this Lease or surrender possession of the Premises upon the transfer
of Landlord’s interest.


 


29.3                           Tenant
shall sign and deliver any instrument or documents necessary or appropriate to
evidence any such attornment or subordination or agreement to do so provided
that such interests or documents recognize that Tenant’s right to quiet
possession of the Premises shall not be disturbed so long as Tenant is not in
default of its obligations pursuant to this Lease beyond any applicable notice
and cure period.  If Tenant fails to do
so within ten (10) business days after written request, such failure shall be a
material, non-curable default and Tenant hereby makes, constitutes and
irrevocably appoints Landlord, or any transferee or successor of Landlord, the
attorney-in-fact of Tenant to execute and deliver any such instrument or
document.


 


29.4                           Landlord
agrees that, prior to the Commencement Date, it will use commercially
reasonable efforts to provide Tenant with the lender’s usual form
non-disturbance agreement in favor of Tenant a copy of which is attached hereto
as Exhibit “F”.


 


30.                               Attorneys’ Fees.


 


30.1                           If
either party brings an action to enforce the terms hereof or declare rights
hereunder, the prevailing party in any such action, trial or appeal thereon,
shall be entitled to its reasonable attorneys’ fees to be paid by the losing
party as fixed by the court in the same or a separate suit, and whether or not
such action is pursued to decision or judgment.


 


30.2                           The
attorneys’ fee award shall not be computed in accordance with any court fee
schedule, but shall be such as to fully reimburse all attorneys’ fees
reasonably incurred in good faith.


 


30.3                           Landlord
shall be entitled to reasonable attorneys’ fees and all other costs and
expenses incurred in the preparation and service of notices of default and
consultations in connection therewith, whether or not a legal action is
subsequently commenced in connection with such default.


 


31.                               Landlord’s Access.


 


31.1                           Landlord
and Landlord’s agents shall have the right to enter the Premises at reasonable
times and upon reasonable notice to Tenant (except in the case of an emergency)
for the purpose of inspecting the same, performing any services required of
Landlord, showing the same to prospective purchasers, lenders, or tenants,
taking such safety measures, erecting such scaffolding or other necessary
structures, making such alterations, repairs, improvements or additions to the
Premises, the Building or the Project as Landlord may reasonably deem necessary
or desirable and the erecting, using and maintaining of utilities, services,
pipes and conduits through the Premises and/or other premises as long as there
is no material adverse effect to Tenant’s use of the Premises.  Landlord may at any time place on or about
the Premises, the Building or the Project any “For Sale” signs and Landlord may
at any time during the last 180 days of the Term hereof place on or about the
Premises any “For Lease” signs. 
Notwithstanding anything to the contrary set forth in this Lease, Tenant
may designate certain areas of the Premises as “Secured Areas” should Tenant
require such areas for the purpose of securing certain valuable property or
confidential information.  In connection
with the foregoing, Landlord shall not enter such Secured Areas except in the
event of an emergency.  Landlord need
not clean any area designated by Tenant as a Secured Area and shall only
maintain or repair such secured areas to the extent (i) such repair or
maintenance is required in order to maintain and repair the structure or
systems of the Building; (ii) as required by applicable law, or (iii) in
response to specific requests by Tenant that are Landlord’s obligation under
this Lease, and in accordance with a schedule reasonably designated by Tenant,
subject to Landlord’s reasonable approval.


 


31.2                           All
activities of Landlord pursuant to this paragraph 31 shall be without abatement
of rent, and Landlord shall not have any liability to Tenant for the same
except to the extent caused by the gross negligence of Landlord.


 


31.3                           Landlord
shall have the right to retain keys to the Premises and to unlock all doors in
or upon the Premises other than to files, vaults and safes, and in the case of
emergency to enter the Premises by any reasonably appropriate means, and any
such entry shall not be deemed a forcible or 


 


21

















 


unlawful entry or detainer of the Premises or an eviction.  Tenant waives any charges for damages or
injuries or interference with Tenant’s property or business in connection
therewith.


 


32.                               Auctions.  Tenant
shall not conduct, nor permit to be conducted, either voluntarily or
involuntarily, any auction upon the Premises or the Common Areas.  Notwithstanding anything to the contrary in
this Lease, Landlord shall not be obligated to exercise any standard of
reasonableness in determining whether to grant such consent.  The holding of any auction on the Premises
or Common Areas in violation of this paragraph shall constitute a material,
non-curable default of this Lease.


 


33.                               Signs.  Except as
provided in paragraph 54, Tenant shall not place any sign upon the Premises,
the Building or the Project without Landlord’s prior written consent.  Notwithstanding anything to the contrary in
this Lease, Landlord shall not be obligated to exercise any standard of
reasonableness in determining whether to grant such consent.  Tenant shall be entitled to one (1) of
Landlord’s standard suite entry signs, as mutually agreed upon between Landlord
and Tenant, at Landlord’s cost and expense, and in accordance with all
applicable laws, regulations, ordinances and recorded covenants, conditions and
restrictions.


 


34.                               Merger.  The
voluntary or other surrender of this Lease by Tenant, or a mutual cancellation
thereof, or a termination by Landlord, shall not work a merger, and shall, at
the option of Landlord, terminate all or any existing subtenancies or may, at
the option of Landlord, operate as an assignment to Landlord of any or all of
such subtenancies.


 


35.                               Construction. 
No remedy or election hereunder shall be deemed exclusive but shall,
wherever possible, be cumulative with all other remedies at law or in
equity.  The parties acknowledge that
the parties and their counsel have reviewed and revised this Lease and, therefore,
further acknowledge and agree that the normal rule of construction, to the
effect that any ambiguities are to be resolved against the drafting party,
shall not be employed in the interpretation of this Lease or any exhibits
hereto or amendments hereof and that this Lease shall not be interpreted in
favor or against either party.


 


36.                               Guarantor.  In the event that there is a guarantor of
this Lease, said guarantor shall have the same obligations as Tenant under this
Lease.


 


37.                               Quiet Possession; Authority.  Upon Tenant paying the rent for the Premises
and observing and performing all of the covenants, conditions and provisions on
Tenant’s part to be observed and performed hereunder, Tenant shall have quiet
possession of the Premises for the entire Term hereof, subject, however (and
always), to all of the provisions of this Lease.


 


38.                               Security Measures—Landlord’s
Reservations.


 


38.1                           Notwithstanding
any other term or provision of this Lease, Tenant hereby acknowledges and
agrees that Landlord shall have no obligation whatsoever to provide guard service
or other security measures for the benefit of Tenant, the Premises or the
Project.  Tenant assumes all
responsibility for the protection of Tenant, its agents, representatives,
employees, contractors and invitees and the property of Tenant and of Tenant’s
agents and invitees from acts of third parties.  Nothing herein contained shall prevent Landlord, at Landlord’s
sole option, from providing security protection for the Project or any part
thereof, in which event the cost thereof shall be included within the
definition of Operating Expenses, as set forth in paragraph 4.2.7.  Subject to Landlord’s approval of the method
of installation and the location of equipment that is visible from outside of
the Premises, Tenant may, at its own expense, install its own security system
in the Premises that is independent of, and which does not affect Landlord’s
security or life safety system and which does not affect Landlord’s ability to
operate the Project on a commercially reasonable basis.  Tenant shall be solely responsible, at
Tenant’s sole cost and expense, for the monitoring, operation and removal of
Tenant’s security system.  Tenant, at
its expense, may also engage the services of a company providing guard or
security personnel for the protection of the Premises, so long as such services
do not interfere with other tenants of the Building.


 


38.2                           Without
limiting its rights at law or elsewhere under this Lease, Landlord shall have
the following rights:


 


38.2.1                  To change the
name, address or title of the Project or building in which the Premises are
located;


 


38.2.2                  To provide and
install Building standard graphics on the door of the Premises and such
portions of the Common Areas as Landlord shall reasonably deem appropriate;


 


38.2.3                  To permit any
tenant the exclusive right to conduct any business as long as such exclusive
does not conflict with any rights expressly given herein;


 


38.2.4                  To place such
signs, notices or displays as Landlord reasonably deems necessary or advisable
upon the roof, exterior of the buildings or the Project or on pole signs in the
Common Areas.


 


38.3                           Tenant
shall not:


 


38.3.1                  Use a
representation (photographic or otherwise) of the Building or the Project or
their name(s) in connection with Tenant’s business;


 


22

















 


38.3.2                  Suffer or permit
anyone, except in emergency, to go upon the roof of the Building.


 


39.                               Easements.


 


39.1                           Landlord
reserves to itself the right, from time to time, to grant such easements,
rights and dedications that Landlord deems necessary or desirable, and to cause
the recordation of Parcel Maps and restrictions, so long as such easements,
rights, dedications, Parcel Maps and restrictions do not unreasonably interfere
with the use of the Premises by Tenant. 
Tenant shall sign, so long as the same are reasonable, any of the
aforementioned documents upon request of Landlord and failure to do so shall,
if Landlord so elects, constitute a material, non-curable default of this Lease
by Tenant without the need for further notice to Tenant.


 


39.2                           The
obstruction of Tenant’s view, air, or light by any structure erected in the
vicinity of the Building, whether by Landlord or third parties, shall in no way
affect this Lease or impose any liability upon Landlord.


 


40.[Intentionally
Deleted]


 


41.                               Landlord’s Right to Perform.  Except as specifically provided otherwise in
this Lease, all covenants and agreements by Tenant under this Lease shall be
performed by Tenant at Tenant’s sole cost and expense and without any abatement
or offset of rent.  If Tenant shall fail
to pay any sum of money (other than Basic Rent) or perform any other act on its
part to be paid or performed hereunder and such failure shall continue for
three (3) business days with respect to monetary obligations (or ten (10) days
with respect to non-monetary obligations) then, notwithstanding anything to the
contrary provided elsewhere herein, after Tenant’s receipt of written notice
thereof from Landlord, Landlord may, without waiving or releasing Tenant from
any of Tenant’s obligations, make such payment or perform such other act on
behalf of Tenant.  All sums so paid by
Landlord and all necessary incidental costs incurred by Landlord in performing
such other acts, together with interest at the Lease Rate (as defined in paragraph
13.2.1.5), shall be payable by Tenant to Landlord within five (5) business days
after demand therefor as additional rent. 
The foregoing rights are in addition to any and all remedies available
to Landlord upon Tenant’s default as described in paragraph13.2.


 


42.                               Limitation on Landlord’s Liability.  Notwithstanding anything contained in this
Lease to the contrary, the obligations of Landlord under this Lease (including
any actual or alleged breach or default by Landlord) do not constitute personal
obligations of the individual partners, directors, officers, employees or
shareholders of Landlord or Landlord’s partners, and Tenant shall not seek
recourse against the individual partners, directors, officers, employees or
shareholders of Landlord or Landlord’s partners, or any of their personal
assets for satisfaction of any liability with respect to this Lease.  In addition, in consideration of the
benefits accruing hereunder to Tenant and notwithstanding anything contained in
this Lease to the contrary, Tenant hereby covenants and agrees for itself and
all of its successors and assigns that the liability of Landlord for its
obligations under this Lease (including any liability as a result of any actual
or alleged failure, breach or default hereunder by Landlord), shall be limited
solely to, and Tenant’s and its successors’ and assigns’ sole and exclusive
remedy shall be against, Landlord’s interest in the Project and proceeds
therefrom, and no other assets of Landlord.


 


43.                               Toxic Materials.


 


43.1                        Definitions.


 


43.1.1                  For purposes of
this paragraph 43, “Hazardous Material” shall mean any substance:


 


(i)  the presence of which requires investigation
or remediation under any federal, state or local statute, regulation,
ordinance, order, action or policy; or


 


(ii)  which is or becomes defined as a “hazardous
waste” or “hazardous substance” under any federal, state or local statute,
regulation, ordinance or amendments thereto, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
section 9601 et seq.) and or the Resource Conservation and Recovery Act
(42 U.S.C. section 6901 et seq.); or


 


(iii)  which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous
or is or becomes regulated by any governmental authority, agency, department,
commission, board, agency or instrumentality of the United States, the State of
California or any political subdivision thereof; or


 


(iv)  the presence of which on the Premises,
Building or Project causes or threatens to cause a nuisance upon the Premises,
Building or Project or to adjacent properties or poses or threatens to pose a
hazard to the Premises, Building or Project or to the health or safety of
persons on or about the Premises, Building or Project; or


 


(v)  without limitation which contains gasoline,
diesel fuel or other petroleum hydrocarbons; or


 


23

















 


(vi)  without limitation which contains
polychlorinated bipheynols (PCBs), asbestos or urea formaldehyde foam
insulation; or


 


(vii)  which is or becomes defined as “medical
waste” under the Medical Waste Management Act (Health & Safety Code
Sections 25015-25099.3).


 


43.1.2                  For purposes of
this paragraph 43, “Environmental Requirements” means all applicable present
and future statutes, regulations, rules, ordinances, codes, licenses, permits,
orders, approvals, plans, authorizations, concessions, franchises and similar
items, of all governmental agencies, departments, commissions, boards, bureaus
or instrumentalities of the United States, states and political subdivisions
thereof and all applicable judicial and administrative and regulatory decrees,
judgments and orders relating to the protection of human health or the
environment, including without limitation:


 


(i)  all requirements, including but not limited
to those pertaining to reporting, licensing, permitting, investigation and
remediation of emissions, discharges, releases or threatened releases of
Hazardous Materials, chemical substances, pollutants, contaminants or hazardous
or toxic substances, materials or wastes, whether solid, liquid or gaseous in
nature, into the air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of chemical substances, pollutants, contaminants or
hazardous or toxic substances, materials, or wastes, whether solid, liquid or
gaseous in nature; and


 


(ii)  all requirements pertaining to the protection
of the health and safety of employees or the public.


 


43.1.3                  For purposes of
this paragraph 43, “Environmental Damages” means all claims, judgments,
damages, losses, penalties, fines, liabilities (including strict liability),
encumbrances, liens, costs and expenses of investigation and defense of any
claim, whether or not such claim is ultimately defeated, and of any good faith
settlement of judgment, of whatever kind or nature, contingent or otherwise,
matured or unmatured, foreseeable or unforeseeable, including without
limitation reasonable attorneys’ fees and disbursements and consultants’ fees,
any of which are incurred at any time as a result of the existence on or after
the date upon which Tenant takes possession of the Premises (the “Possession
Date”) of Hazardous Material upon, about, beneath the Premises, Building or
Project or migrating or threatening to migrate to or from the Premises,
Building or Project or the existence of a violation of Environmental
Requirements pertaining to the Premises, Building or Project, regardless of
whether the existence of such Hazardous Material or the violation of
Environmental Requirements arose prior to the present ownership or operation of
the Premises, Building or Project, and including without limitation:


 


(i)  damages for personal injury, or injury to
property or natural resources occurring upon or off of the Premises, Building
or Project, foreseeable or unforeseeable, including, without limitation, lost
profits, consequential damages, the cost of demolition and rebuilding of any
improvements on real property, interest and penalties including but not limited
to claims brought by or on behalf of employees of Tenant, with respect to which
Tenant waives any immunity to which it may be entitled under any industrial or
worker’s compensation laws;


 


(ii)  fees incurred for the service of attorneys,
consultants, contractors, experts, laboratories and all other costs incurred in
connection with the investigation or remediation of such Hazardous Materials or
violation of Environmental Requirements, including, but not limited to, the
preparation of any feasibility studies or reports or the performance of any
cleanup, remedial, removal, response, abatement, containment, closure,
restoration or monitoring work required by any federal, state or local
governmental agency or political subdivision, or reasonably necessary to make
full economic use of the Premises, Building or Project or any other property or
otherwise expended in connection with such conditions, and including without
limitation any attorneys’ fees, costs and expenses incurred in enforcing this
Lease or collection of any sums due hereunder;


 


(iii)  liability to any third person or
governmental agency to indemnify such person or agency for costs expended in connection
with the items referenced in subparagraph (ii) herein; and


 


(iv)  diminution in the value of the Premises,
Building or Project, and damages for the loss of business and restriction on
the use of or adverse impact on the marketing of rentable or usable space or of
any amenity of the Premises, Building or Project.


 


43.2                        Tenant’s
Obligations.                          Tenant,
at its sole cost and expense, shall comply with all Environmental Requirements
relating to the storage, use and disposal of all Hazardous Materials, including
those materials identified in Sections 66680 through 66685 of Title 22 of the
California Administrative Code, Division 4, Chapter 30 (“Title 22”), as
the same may be amended from time to time. 
If Tenant does store, use or dispose of any Hazardous Materials other
than copy machine toners or similar commonly used office supplies, Tenant shall
notify Landlord in writing at least ten (10) days prior to the first appearance
of such materials on the Premises, Building or Project, and Landlord shall have
the right to disapprove of Tenant’s use thereof on the Premises (provided that
Landlord’s failure to disapprove thereof shall not constitute Landlord’s
approval thereof or excuse Tenant from complying with the terms of this
paragraph 43), and Tenant’s failure to so notify Landlord shall constitute a
default under this Lease.  Tenant shall
be solely responsible for and shall protect, defend, indemnify, and hold
Landlord, its agents and contractors harmless from and against all
Environmental Damages arising out of 


 


24

















 


or in connection with the storage, use and disposal of Hazardous
Materials by Tenant, its officers, employees, agents, representatives,
servants, subtenants, concessionaires, licensees, contractors, invitees or
permittees.  If the presence of
Hazardous Materials on the Premises, Building or Project caused or permitted by
Tenant results in contamination or deterioration of water or soil resulting in
a level of contamination greater than the levels permitted or established by
any governmental agency having jurisdiction over such contamination, then
Tenant shall, at its sole cost and expense, promptly take any and all action
necessary to clean up such contamination if required by law or as a condition
to the issuance or continuing effectiveness of any governmental approval which
relates to the use of the Premises, Building or Project.  If at any time prior to the expiration of
the Lease Term, Landlord shall reach a reasonable good faith determination that
Tenant or its officers, employees, agents, representatives, servants,
subtenants, concessionaires, licensees, contractors, invitees or permittees
have at any time violated any Environmental Requirements, discharged any
Hazardous Material onto the Premises, Building or Project, or surrounding areas
or otherwise subjected Landlord or the Project to liability for Environmental
Damages, then Landlord shall have the right to require Tenant, at Tenant’s
expense, to conduct appropriate tests of water and soil and to deliver to
Landlord the result of such tests to demonstrate that no contamination in
excess of legally permitted levels has occurred as a result of Tenant’s
occupancy or use of the Premises, Building or Project.  If the presence of Hazardous Materials on
the Premises, Building or Project is caused, contributed to or permitted by
Tenant or its officers, employees, agents, representatives, servants,
subtenants, concessionaires, licensees, contractors, invitees or permittees
such that Landlord or Tenant becomes obligated to conduct the necessary
clean-up of such contamination as required above, then Tenant shall further be
solely responsible for, and shall protect, defend, indemnify and hold Landlord,
including Landlords’ agents, representatives, employees, lenders and
contractors, harmless from and against any and all claims, demands, losses,
costs and liabilities, including actual attorneys’ fees, expert witness fees
and costs, arising out of or in connection with any removal, cleanup and
restoration work and materials required hereunder to return the Premises,
Building or Project and any other property of whatever nature to conditions
which existed prior to Tenant’s use thereof and which are within acceptable
levels according to all Environmental Requirements or any other Federal, State,
local or other governmental requirements. 
Tenant’s obligations, liabilities and duties hereunder shall survive the
expiration or earlier termination of this Lease.


 


43.3                        Notwithstanding anything herein
to the contrary, in no event shall Tenant be responsible or liable for any
pre-existing Hazardous Materials on the Premises and Tenant shall not be
responsible for any Environmental Damages, to the extent caused by or
contributed to by Landlord or another party. 
Landlord has no actual knowledge (and with no duty to investigate) that
there is present within the Premises, Building or Project, any Hazardous
Materials.


 


44.                               Authority.  If
Tenant is a corporation, trust, limited liability company or general or limited
partnership, Tenant represents and warrants that each individual executing this
Lease on behalf of such entity, is duly authorized to execute and deliver this
Lease on behalf of said entity.  If
Tenant is a corporation, trust, limited liability company or partnership,
Tenant shall deliver to Landlord evidence of such authority satisfactory to
Landlord prior to its execution of this Lease.


 


45.                               [Intentionally Deleted]


 


46.                               No Offer. 
Preparation of this Lease by Landlord or Landlord’s agent and submission
of same to Tenant shall not be deemed an offer to Tenant to lease.  This Lease shall become binding upon
Landlord and Tenant only when fully executed by and delivery to both parties.


 


47.                               Lender Modification.  Tenant agrees to make such reasonable modifications to this Lease
as may be reasonably required by a lender in connection with the obtaining of
financing or refinancing of the Project or any part thereof provided that any
such modification will not cause an increased cost or expense to Tenant or in
any other way materially and adversely change the rights and obligations of
Tenant hereunder.


 


48.                               Multiple Parties. 
If more than one person or entity is named as either Landlord or Tenant
herein, except as otherwise expressly provided herein, the obligations of the Landlord
or Tenant herein shall be the joint and several responsibility of all persons
or entities named herein as such Landlord or Tenant, respectively.


 


49.                               Work Letter. 
This Lease is supplemented by that certain Work Letter of even date
executed by Landlord and Tenant, which Work Letter is set forth in Exhibit D
attached hereto.


 


50.                               Waiver of Jury Trial.  Landlord and Tenant hereby waive their respective rights to trial
by jury of any cause of action, claim, counter-claim or cross-complaint in any
action, proceeding and/or hearing brought by either Landlord against Tenant or
Tenant against Landlord on any matter whatsoever arising out of, or in any way
connected with, this Lease, the relationship of Landlord and Tenant, Tenant’s
use or occupancy of the Premises, or any claim of injury or damage, or the
enforcement of any remedy under any law, statute, or regulation, emergency or
otherwise, now or hereafter in effect. 
Notwithstanding the foregoing, Landlord and Tenant agree that this
waiver shall not be effective where the legal effect of such waiver would be to
invalidate, in whole or in part, or to limit or impair in any manner any policy
of insurance in force for the benefit of Landlord or Tenant or to limit or
impair any rights, remedies or coverage afforded by such policy or policies of
insurance.  Tenant agrees that any
lawsuit brought by Tenant against Landlord must be filed in a court of
competent jurisdiction in Orange County, California.


 


25

















 


51.                               Counterparts. 
This Lease may be executed in any number of counterparts, each to be an
original, but all of which shall constitute one agreement, and it shall be
sufficient if any party hereto signs any counterpart.


 


52.                               Force Majeure. 
Whenever a period of time is herein prescribed for the taking of any
action by Landlord, or a non-monetary action by Tenant, neither party shall not
be liable or responsible for, and there shall be excluded from the computation
of such period of time, any delays due to strikes, riots, acts of God,
shortages of labor or materials, war governmental laws, regulations or
restrictions, or any act, omission, delay, or neglect of Tenant or any of
Tenant’s employees or agents, or any other cause whatsoever beyond the
reasonable control of Landlord.  Nothing
contained in this paragraph 52 shall excuse or delay Tenant’s obligation to pay
rent or other charges under this Lease.


 


53.                               Best Efforts. 
Whenever in this Lease there is imposed upon Landlord the obligation to
use Landlord’s best efforts or reasonable efforts or reasonable efforts or
diligence, Landlord will be required to exert such efforts or diligence only to
the extent the same are economically feasible and will not impose upon Landlord
extraordinary financial or other burdens.


 


54.                              Signage.


 


54.1                                                   Landlord
agrees that for so long as Pacific Crest Bank, a California corporation, which
is the original Tenant under this Lease (“PCB”) leases and occupies more than
5,000 rentable square feet (measured in accordance with the ANSI/BOMA 1996
Standard) of the Building, PCB shall have the right to construct a monument
sign on the Property; provided that the design, dimensions, construction and
location of such monument signage shall be subject to Landlord’s reasonable
approval and further provided that: (1) such monument signage is not prohibited
by any applicable code, ordinance, statute, rule or regulation or by any action
or rule of any landmark commission having jurisdiction, and (2) all consents
necessary from all governmental authorities and landmark commissions having
jurisdiction are reasonably obtainable and are first obtained by PCB.  PCB shall provide Landlord with three (3)
sets of full color scale drawings showing the location and size of the monument
signage.


 


54.2                                                   PCB
will bear the costs and risk associated with creating, designing,
manufacturing, installing and insuring the monument signage set forth in
Section (a) above.  PCB shall bear
the cost of maintaining said monument signage.


 


54.3                                                   If,
and only if, PCB leases, in the aggregate, less than 5,000 rentable square feet
of the Building, then upon not less than thirty (30) days’ prior notice,
Landlord may require PCB to remove its name from the monument signage.


 


54.4                                                   Upon
termination or expiration of this Lease or of PCB’s right to possession of the
Premises set forth in Section (a) above and the monument sign is to be
removed, then at Landlord’s election, 
PCB shall, at PCB’s sole expense, remove such monument signage and
restore and repair all parts of the Property affected by the installation or
removal of said monument signage, to the condition existing prior to its
installation or to a condition reasonably acceptable to Landlord.  If Landlord does not then desire that such
monument signage be removed, then such monument signage shall remain until such
time as Landlord shall desire that such monument signage be removed, in which
event PCB shall remove such monument signage and repair and restore all damage
caused by such removal.


 


54.5                                                   PCB
shall indemnify, defend and hold Landlord free and harmless of, from and
against any and all claims, demands, losses, liabilities, damages, cost or
expenses, including reasonable attorney’s fees incurred or suffered by Landlord
arising out of, resulting from, or in any way connected to PCB’s installation,
maintenance, repair, and removal of the building monument signage or a breach,
default, or failure of performance by PCB under this paragraph 56.  Prior to installing repairing or removing
the building monument signage, PCB will give Landlord ten (10) days prior
notice and in connection with such installation, repair or removal, PCB will
either use a contractor selected by Landlord or if PCB selects the contractor,
PCB shall provide the name of the contractor for Landlord’s reasonable approval,
which approval shall not be unreasonably withheld.


 


55.                               Option to Extend.  Tenant shall have the right to extend the
Term of the Lease for two (2) additional periods of five (5) years each (each
an “Extension Period”), provided that Tenant (i) is not in default under any
provision of the lease, (ii) is occupying all of the Premises, and (iii) has
not assigned or subleased any portion of the Premises.


 


55.1                           Exercise
of Option.  Tenant shall exercise its
right to extend the Term only by delivering written notice to Landlord of
Tenant’s desire to so extend the Term no earlier than two hundred seventy (270)
days and not later than one hundred eighty (180) days prior to the commencement
of the applicable Extension Period (the “Extension Notice”).


 


55.2                           Extension
Amendment.  Within fifteen (15) business
days after receipt of the Extension Notice, Landlord shall prepare and deliver
to Tenant an amendment to this Lease (the “Extension Amendment”).  The Extension Amendment shall provide for a
Monthly Rental equal to the greater of (i) the Monthly Rental in effect during
the calendar year immediately preceding the Extension Period, or (ii) the
comparable market rental for the Premises determined by Landlord 


 


26

















 


based primarily on rental rates for recent leases
within the Project and secondarily on the then prevailing rental rates in the
immediate marketplace for properties of equivalent quality, size, utility and
location, with the length of the lease term, and credit standing of the Tenant.


 


55.3                           Objection
to Landlord’s Determination of Comparable Market Rental.  If Tenant objects to Landlord’s
determination of the comparable market rental for the Premises, Landlord shall
appoint a qualified real estate professional with at least ten (10) years
experience in commercial real estate to appraise the Premises and/or otherwise
determine the comparable market rental (the “Landlord’s Appraisal”).  The Landlord’s Appraisal shall be the comparable
market rental for the purpose of determining the Monthly Rental during the
Extension Period if Tenant does not (i) within five (5) business days after the
date of notice of the Landlord’s Appraisal employ and pay a qualified real
estate professional with at least ten (10) years experience in commercial real
estate to determine the comparable market rental for the Premises (the
“Tenant’s Appraisal”), and (ii) within twenty (20) days thereafter, submit to
Landlord, Tenant’s Appraisal together with a written summary of the methods
used and data collected to make such determination.  If Landlord’s Appraisal and Tenant’s Appraisal differ by (i) less
than ten percent (10%), the greater of the two shall be the comparable market
rental for the premises or (ii) more than ten percent (10%), Landlord and
Tenant shall promptly instruct its real estate professional to jointly appoint
a third qualified real estate professional with at least ten (10) years
experience in commercial real estate to determine the comparable market rental
for the Premises (the “Third Appraisal”). 
Landlord and Tenant shall each pay one-half (1/2) of the expenses of the
Third Appraisal.  The appraisal among
the three (3) that is furthest from the median of all of the appraisals shall
be disregarded and the average of the other two shall be the comparable market
rental for the Premises and binding upon Landlord and Tenant.  Until appraisal procedures are final,
Landlord and Tenant shall abide by the provisions of the Extension Amendment or
New Lease.


 


55.4                           Option
Personal.  It is understood and agreed
that the Option is personal to Pacific Crest Bank, a California corporation,
and is not transferable; in the event of any assignment or subleasing of any or
all of the Premises said Option shall be null and void.


 


55.5                           Time of
the Essence.  Time shall be of the
essence regarding all the periods set forth above for the exercise of the
options, execution of the Extension Amendment or New Lease and the objection to
the determination of the comparable market rental for the Premises.  The failure of Tenant to timely exercise the
options as provided in the second and third paragraph above shall cause the
option to automatically cease and terminate, and, in such event, this lease
shall terminate without extension.  If
Tenant fails to timely comply with the provisions set forth in the third
paragraph above, Tenant shall be deemed to have accepted the comparable market
rental as determined by Landlord.


 


56.                               Attachments.  Attached hereto are the following documents
which are incorporated herein and made a part of this Lease for all purposes:


 


Exhibit A - Premises Floor Plan


Exhibit B - Valley Corporate Center Project


Exhibit C - Rules and Regulations


Exhibit D - Work Letter


Exhibit E - Acceptance of Office Space


Exhibit F – Subordination, Attornment and
Non-disturbance Agreement


 


27

















 


LANDLORD AND TENANT HAVE CAREFULLY READ AND REVIEWED THIS
LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN.  THE PARTIES HAVE ALSO HAD AMPLE OPPORTUNITY TO HAVE THEIR
RESPECTIVE ATTORNEYS REVIEW THE CONTENTS HEREIN, AND, BY EXECUTION OF THIS
LEASE, SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO.  THE PARTIES HEREBY AGREE THAT, AT THE TIME
THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND
EFFECTUATE THE INTENT AND PURPOSE OF LANDLORD AND TENANT WITH RESPECT TO THE
PREMISES.


 


NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE LANDLORD,
ITS COUNSEL, ANY REAL ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION
RELATING THERETO; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN
LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.


 


 


	
  LANDLORD:

  	
  VCC INVESTORS, L.P.,

  
	
   

  	
  a California limited
  partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BIRTCHER 2, L.P., a
  California limited partnership,

  
	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  BIRTCHER 2 GP, LLC, a
  California limited liability company,
 its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  BIRTCHER ANDERSON
  PROPERTIES,

  
	
   

  	
   

  	
   

  	
  a California
  corporation, sole member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Robert M. Anderson,
  President

  	
   

  



 


 


	
  TENANT:

  
	
   

  
	
   

  	
  PACIFIC CREST BANK,

  
	
   

  	
  a California
  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Printed Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Printed Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
								



 


28

















 


EXHIBIT
A


 


PREMISES
FLOOR PLAN


 


(ATTACHED)


 


29

















 


EXHIBIT B


 


LEGAL DESCRIPTION


 


 


Parcel “A” of Parcel Map
No. 261, in the City of San Diego, County of San Diego, State of California,
according to map thereof filed in the Office of the County Recorder of San
Diego County, being a division of a portion of Lots 10 and 11 of E.W. Morse
subdivision, according to map thereof No. 5732 filed in the Office of County
Recorder of San Diego County.


 


30

















 


EXHIBIT C


 


RULES & REGULATIONS


 


STANDARD OFFICE LEASE


 


GENERAL RULES


 


1.                                       Tenant
shall not suffer or permit the obstruction of any Common Areas, including
driveways, walkways and stairways.


 


2.                                       Landlord
reserves the right to refuse access to any persons Landlord in good faith
judges to be a threat to the safety, reputation, or property of the Project and
its occupants.


 


3.                                       Tenant
shall not make or permit any noise or odors that annoy or interfere with other
tenants or persons having business within the Project.


 


4.                                       Tenant
shall not keep animals or birds within the Project, and shall not bring
bicycles, motorcycles or other vehicles into areas not designated as authorized
for same, except that Tenant shall be permitted to bring one (1) bicycle into
the Premises.


 


5.                                       Tenant
shall not make, suffer or permit litter except in appropriate receptacles for
that purpose.


 


6.                                       No
sign, advertisement or notice shall be displayed, printed or affixed on or to
the Premises or to the outside or inside of the Building or so as to be visible
from outside the Premises or Building without Landlord’s prior written
consent.  Landlord shall have the right
to remove any non-approved sign, advertisement or notice, without notice to and
at the expense of Tenant, and Landlord shall not be liable for damages for such
removal.  All approved signs or
lettering on doors and walls shall be printed, painted, affixed or inscribed by
Landlord or by a person selected by Landlord and in a manner and style
acceptable to Landlord.  Furthermore, no
storage materials, debris, artwork, banners, or similar objects shall be placed
or left in front of windows so as to be visible from outside the premises, or
otherwise be unsightly or inconsistent with a first class office environment.


 


7.                                       The
sidewalks, halls, passages, exits, entrances, elevators and stairways and other
portions of the common areas shall not be obstructed by Tenant or used for any
purpose other than for ingress and egress from Tenant’s Premises.


 


8.                                       Toilet
rooms, toilets, urinals, wash bowls and other apparatus shall not be used for
any purpose other than for which they were constructed and no foreign substance
of any kind whatsoever shall be thrown therein.


 


9.                                       Tenant
shall not overload the floor of the Premises or mark, drive nails, screw or
drill into the partitions, ceilings or floor or in any way deface the Premises
nor shall Tenant suffer or permit any thing in or around the Premises or
Building that causes excessive vibration or floor loading in any part of the
Project.


 


10.                                 Landlord
shall have the right to prescribe the weight, size and position of all safes
and other heavy equipment brought into the Building.  The times and manner of moving the same in and out of the
Building shall be prescribed by Landlord, and all such moving must be done
under the supervision of Landlord. 
Landlord may exclude from the Building any such heavy or bulky equipment
or articles, the weight of which may exceed the floor load for which the
Building is designed, or such equipment or articles as may violate any
provisions of the Lease of which these rules and regulations are a part.  Tenant shall not use any machinery or other
bulky articles on the Premises, even though its installation may have been
permitted, which may cause any noise, or jar, or tremor in the floors or walls,
or which by its weight might injure the floor of the Building.  Safes or other heavy equipment shall, as
considered necessary by Landlord, stand on a platform of such thickness as is
necessary to properly distribute the weight.


 


11.                                 Tenant
shall not use or keep in the Premises, Building or Project any kerosene,
gasoline or inflammable, explosive or combustible fluid or material, or use any
method of heating or air-conditioning other than that supplied by Landlord.


 


12.                                 Tenant
shall not lay linoleum, tile, carpet or other similar floor covering so that
the same shall be affixed to the floor of the Premises in any manner except as
approved by Landlord.


 


13.                                 Tenant
shall cooperate with Landlord in obtaining maximum effectiveness of the cooling
system by closing drapes and blinds when the sun’s rays fall directly on
windows of the Premises.  Tenant shall
not obstruct, alter, or in any way impair the efficient operation of Landlord’s
heating, ventilating and air-conditioning system.  Tenant shall not tamper with or change the setting of any
thermostats or control valves.


 


14.                                 The
Premises shall not be used for manufacturing or for the storage of
merchandise.  Tenant shall not, without
Landlord’s prior written consent, occupy or permit any portion of the Premises
to be occupied or used for the manufacture or sale of liquor or tobacco in any
form, or as a barber or


 


31

















 


manicure shop, or as an employment bureau.  The Premises shall not be used for lodging or sleeping or for any
improper, objectionable or immoral purpose. 
No auction shall be conducted on the Premises.


 


15.                                 Tenant
shall not make, or permit to be made, any unseemly or disturbing noises, or
disturb or interfere with occupants of the Building, the Project or neighboring
buildings or premises or those having business with it by the use of any
musical instrument, radio, phonographs or unusual noise, or in any other
way.  In an effort to maintain a
professional office environment, Tenant shall not permit groups (defined as
three or more individuals) of invitees and customers to gather in the Common
Areas on regular basis (defined as one class per month).


 


16.                                 No
vehicles or animals of any kind shall be brought into or kept in or about the
Premises, and no cooking shall be done or permitted by any tenant in the
Premises, except that the preparation of coffee, tea, hot chocolate and similar
items for tenants, their employees and visitors shall be permitted.  No tenant shall cause or permit any unusual
or objectionable odors to be produced in or permeate from or throughout the
Premises.


 


17.                                 The
sashes, sash doors, skylights, windows and doors that reflect or admit light
and air into the halls, passageways or other public places in the Building
shall not be covered or obstructed by any tenant, nor shall any bottles,
parcels or other articles be placed on the windowsills.


 


18.                                 No
additional locks or bolts of any kind shall be placed upon any of the doors or
windows by any tenant, nor shall any changes be made in existing locks or the
mechanisms thereof unless Landlord is first notified thereof, gives written
approval, and is furnished a key therefor. 
Each tenant must, upon the termination of its tenancy, give the Landlord
all keys of stores, offices, or toilets and toilet rooms, either furnished to,
or otherwise procured by, such tenant, and in the event of the loss of any keys
so furnished, such tenant shall pay Landlord the cost of replacing the same or
of changing the lock or locks opened by such key if Landlord shall deem it
necessary to make such change.


 


19.                                 Landlord
shall have the right to prohibit any advertising by any tenant which, in
Landlord’s opinion, tends to impair the reputation of the Building or the
Project or its desirability as an office building and upon written notice from
Landlord any tenant shall refrain from and discontinue such advertising.


 


20.                                 Any
person employed by any tenant to do janitorial work shall, while in the
Building or the Project and outside of the Premises, be subject to and under
the control and direction of the office of the Project (but not as an agent or
servant of Landlord, and the tenant shall be responsible for all acts of such
persons).


 


21.                                 No
air conditioning unit or other similar apparatus shall be installed or used by
any tenant without the prior written consent of Landlord.  Tenant shall pay the cost of all electricity
used for air conditioning in the Premises if such electrical consumption
exceeds normal office requirements or is attributable to after hours use,
regardless of whether additional apparatus is installed pursuant to the
preceding sentence.


 


22.                                 There
shall not be used in any space, or in the public halls of the Building, either
by any tenant or others, any hand trucks except those equipped with rubber
tires and side guards.


 


23.                                 All
electrical ceiling fixtures hung in offices or spaces along the perimeter of
the Building must be florescent and/or of a quality, type, design and bulb
color approved by Landlord.  Tenant
shall not permit the consumption in the Premises of more than 2 and 1/2 watts
per net usable square foot in the Premises in respect of office lighting nor
shall Tenant permit the consumption in the Premises of more than 1 and 1/2
watts per net usable square foot of space in the Premises in respect of the
power outlets therein, at any one time. 
In the event that such limits are exceeded, Landlord shall have the
right to remove any lighting fixture or any florescent tube or bulb therein as
it deems necessary and/or to charge Tenant for the cost of the additional
electricity consumed.


 


24.                                 Tenant
shall be responsible for the inappropriate use of any toilet rooms, plumbing or
other utilities by Tenant or its employees, agents, licensees or invitees.  No foreign substances of any kind are to be
inserted therein.


 


25.                                 Tenant
shall not deface the walls, partitions or other surfaces of the Premises or
Project.


 


26.                                 Furniture,
significant freight and equipment shall be moved into or out of the Building
only with Landlord’s knowledge and consent, and subject to such reasonable
limitations, techniques and timing, as may be designated by Landlord.  Tenant shall be responsible for any damage
to the Project arising from any such activity.


 


27.                                 Tenant
shall not employ any service or contractor for services or work to be performed
on or to the Building, except as approved by Landlord.


 


28.                                 Landlord
reserves the right to close and lock the Building on Saturdays, Sundays and
legal holidays, and on other days between the hours of 6 P.M. and 8:00 A.M. of
the following day, or such other hours as Landlord may determine.  If Tenant uses the Premises during such
periods (which shall require advance written notice to Landlord and Landlord’s
prior written consent), Tenant shall be responsible for securely locking any
doors it may have opened for entry.


 


32

















 


29.                                 No
window coverings, shades or awnings shall be installed or used by Tenant.


 


30.                                 No
Tenant, employee or invitee shall go upon the roof of the Building.


 


31.                                 Tenant
shall not suffer or permit smoking or carrying of lighted cigars or cigarettes
in areas reasonably designated by Landlord or by applicable governmental
agencies as non-smoking areas.


 


32.                                 Tenant
shall not use any method of heating other than as provided by Landlord.


 


33.                                 Tenant
shall not install, maintain or operate any vending machines upon the Premises
without Landlord’s written consent, which consent shall not be unreasonable
withheld.


 


34.                                 Tenant
shall comply with all safety, fire protection and evacuation regulations
established by Landlord or any applicable governmental agency.


 


35.                                 Landlord
reserves the right to waive any one of these rules or regulations, and/or as to
any particular tenant, and any such waiver shall not constitute a waiver of any
other rule or regulation or any subsequent application thereof to such tenant.


 


36.                                 Tenant
assumes all risks from theft or vandalism and agrees to keep its Premises
locked as may be required.


 


37.                                 Landlord
reserves the right to make such other reasonable rules and regulations as it
may from time to time deem necessary or appropriate for the operation or safety
of the Project and its occupants. 
Tenant agrees to abide by these and such rules and regulations.


 


38.                                 All
doors opening onto public corridors shall be kept closed, except when being
used for ingress and egress.


 


39.                                 Canvassing,
soliciting and peddling in the Building are prohibited and each tenant shall
cooperate to prevent the same.


 


40.                                 Tenant
shall be required to use chair pads at each desk under all rolling desk chairs
in the Premises.


 


41.                                 Tenant
shall fully comply with all present or future governmentally required programs
intended to manage parking, transportation or traffic in and around the Project
or Building, and in connection therewith, Tenant shall take responsible action
for the transportation planning and management of all employees located at the
Premises by working directly with Landlord, any governmental transportation
management organization or any other transportation-related committees or
entities.  Such programs may include,
without limitation: (i) restrictions on the number of peak-hour vehicle trips
generated by Tenant; (ii) increased vehicle occupancy; (iii) implementation of
an in-house ridesharing program and an employee transportation coordinator;
(iv) working with employees and any Project, Building or area-wide ridesharing
program manager; (v) instituting employer-sponsored incentives (financial or
in-kind) to encourage employees to rideshare; and (vi) utilizing flexible work
shifts for employees.


 


33

















 


PARKING RULES


 


1.                                       Parking
areas shall be used only for parking by vehicles no longer than full size
passenger automobiles herein called “Permitted Size Vehicles.”  Vehicles other than Permitted Size Vehicles
are herein referred to as “Oversized Vehicles.”


 


2.                                       Tenant
shall not permit or allow any vehicles that belong to or are controlled by
Tenant or Tenant’s employees, suppliers, shippers, customers, or invitees to be
loaded, unloaded, or parked in areas other than those designated by Landlord
for such activities.


 


3.                                       Parking
stickers or identification devices shall be the property of Landlord and be
returned to Landlord by the holder thereof upon termination of the holder’s
parking privileges.  Tenant will pay
such replacement charge as is reasonably established by Landlord for the loss
of such devices.


 


4.                                       Landlord
reserves the right to refuse the sale of monthly identification devices to any
person or entity that willfully refuses to comply with the applicable rules,
regulations, laws and/or agreements.


 


5.                                       Landlord
reserves the right to manage the parking by relocating all or a part of parking
spaces and/or to reasonably allocate them between compact and standard size
spaces reserved and unreserved, handicapped and non-handicapped.


 


6.                                       Users
of the parking area will obey all posted signs and park only in the areas
designated for vehicle parking.


 


7.                                       Unless
otherwise instructed, every person using the parking area is required to park
and lock his own vehicle.  Landlord will
not be responsible for any damage to vehicles, injury to persons or loss of
property, all of which risks are assumed by the party using the parking area.


 


8.                                       Validation,
if established, will be permissible only by such method or methods as Landlord
and/or its licensee may establish at rates generally applicable to visitor
parking.


 


9.                                       The
maintenance, washing, waxing or cleaning of vehicles in the parking structure
or Common Areas is prohibited.


 


10.                                 Tenant
shall be responsible for seeing that all of its employees, agents and invitees
comply with the applicable parking rules, regulations, laws and agreements.


 


11.                                 Landlord
reserves the right to modify these rules and/or adopt such other reasonable and
non-discriminatory rules and regulations as it may deem necessary for the
proper operation of the parking area.


 


12.                                 Such
parking use as is herein provided is intended merely as a license only and no
bailment is intended or shall be created hereby.


 


13.                                 Landlord
or its agent may tow or otherwise remove any vehicles (i) which are parked
illegally in the parking areas, (ii) which constitute a nuisance or annoyance
to other users of the Project or parking areas or (iii), if not prohibited by
law, which are in violation of paragraph 14 below.  Such towing shall be at the sole cost and expense of the tenant
which is in any way responsible for the presence of such vehicle in the parking
area (for example, if the vehicle is parked by any particular tenant’s invitee,
customer or employee, such tenant shall be responsible for the cost of towing
such vehicle).


 


14.                                 Tenant
shall not leave vehicles in the parking areas overnight.


 


15.                                 Landlord
reserves the right to designate reserved parking spaces in the parking areas.


 


16.                                 Landlord
reserves the right to require Tenant and its employees to park vehicles on
designated levels of the parking structure.


 


17.                                 Tenant
acknowledges that it is responsible and agrees to comply with existing and
future South Coast Air Quality Management District (SCAQMD) mandates and
requirements imposed on employers in Southern California.


 


34

















 


EXHIBIT
D


 


WORK LETTER


(If Plans are to be
completed)


 


By and between VCC Investors, L.P., a California
limited partnership, as “Landlord,” and Pacific Crest Bank, a California
corporation, as “Tenant.”


 


1.                                      APPLICATION
OF EXHIBIT


 


Capitalized terms used and not otherwise defined herein
shall have the same definitions as set forth in the Lease.  The provisions of this Work Letter shall
apply to the planning and completion of leasehold improvements requested by
Tenant (the “Tenant Improvements”) for the fitting out of the initial Premises,
as more fully set forth herein.


 


2.                                      LANDLORD
AND TENANT PRE-CONSTRUCTION OBLIGATIONS


 


2.1                               Preliminary
Space Plans.  Tenant’s space planner
has developed preliminary space plans for the Tenant Improvements (the
“Preliminary Space Plans”), which include, without limitation, sketches and/or
drawings showing locations of doors, partitioning, electrical fixtures, outlets
and switches, plumbing fixtures and other requirements, which are determined by
Tenant as required for its use of the Premises.  Landlord shall be entitled, in all respects, to rely upon all
information supplied by Tenant regarding the Tenant Improvements.


 


2.2                               Working
Drawings.  Within fourteen (14) days
of full execution of this Lease by both Landlord and Tenant, Tenant’s Architect
shall prepare working drawings (the “Working Drawings”) for the Tenant
Improvements based upon the approved Preliminary Space Plans.  The Working Drawings shall include
architectural drawings for the Tenant Improvements based on the Preliminary
Space Plans.  Notwithstanding the
Preliminary Space Plans, in all cases the Working Drawings (i) shall be subject
to Landlord’s final approval, which approval shall not be unreasonably
withheld, (ii) shall not be in conflict with building codes for the City,
County or other applicable authority or with insurance requirements for a fire
resistive Class A Office Tower, and (iii) shall be in a form satisfactory to
appropriate governmental authorities responsible for issuing permits and
licenses required for construction.


 


2.3                               Approval
of Working Drawings.  Tenant’s
Architect shall submit the Working Drawings to Tenant for review to confirm
compliance with the Preliminary Space Plan, and Tenant shall notify Landlord
and Tenant’s Architect within three (3) business days after delivery thereof of
any requested revisions.  Within three
(3) business days after receipt of Tenant’s notice, Tenant’s Architect shall
make all approved revisions to the Working Drawings and submit two (2) copies
thereof to Tenant and Landlord for their final review and approval, which
approval shall be given within three (3) business days thereafter.  Concurrently with the above review and
approval process, Tenant’s Architect may submit all plans and specifications to
City and other applicable governmental agencies in an attempt to expedite City
approval and issuance of all necessary permits and Licenses to construct the
Tenant Improvements as shown on the Working Drawings.  Any changes which are required by City or other governmental
agencies shall be immediately submitted to Landlord and Tenant for review and
reasonable approval.


 


2.4                               Schedule of
Critical Dates.  Set forth below is
a schedule of certain critical dates relating to Landlord’s and Tenant’s
respective obligations for the design and construction of the Tenant
Improvements.  Such dates and the
respective obligations of Landlord and Tenant are more fully described
elsewhere in this Work Letter.  The
purpose of the following schedule is to provide a reference for Landlord and
Tenant and to make certain the Final Approval Date occurs as set forth
herein.  Following the Final Approval
Date, Tenant shall be deemed to have released Landlord to commence construction
of the Tenant Improvements as set forth in Section 4 below.


 


	
  Reference

  	
   

  	
  Date Due

  	
   

  	
  Responsible
  Party

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A.

  	
   

  	
  “Preliminary Space Plan Approval”

  	
   

  	
  Completed

  	
   

  	
  Landlord & Tenant

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B.

  	
   

  	
  “Working Drawings Completion”

  	
   

  	
  Fourteen (14) days after execution of this Lease.

  	
   

  	
  Tenant’s Architect

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  C.

  	
   

  	
  “Working Drawings Review”

  	
   

  	
  Three (3) business days after Landlord submits
  Working Drawings to Tenant

  	
   

  	
  Tenant

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  D.

  	
   

  	
  “Working Drawings Revisions”

  	
   

  	
  Three (3) business days after Tenant returns the
  Working Drawings to Landlord.

  	
   

  	
  Tenant’s Architect

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  E.

  	
   

  	
  “Final Approval Date”

  	
   

  	
  Three (3) business days after Landlord’s Architect
  submits the revised Working Drawings to Tenant

  	
   

  	
  Landlord & Tenant

  



 


35

















 


3.                                      BUILDING
PERMIT


 


After the Final Approval Date has occurred, Tenant’s
Architect shall, if Tenant’s Architect has not already done so, submit the
Working Drawings to the appropriate governmental body or bodies for final plan
checking and a building permit. 
Tenant’s Architect, with Tenant’s cooperation, shall cause to be made
any change in the Working Drawings necessary to obtain the building permit;
provided, however, after the Final Approval Date, no changes shall be made to
the Working Drawings without the prior written approval of both Landlord and
Tenant, and then only after agreement by Tenant to pay any excess costs
resulting from such changes.


 


4.                                      CONSTRUCTION
OF TENANT IMPROVEMENTS


 


After the Final Approval Date has occurred and a
building permit for the work has been issued, Landlord shall, through a
construction contract (“Construction Contract”) with a reputable, licensed
contractor selected by Landlord (“Contractor”), cause the construction of the
Tenant Improvements to be carried out in substantial conformance with the
Working Drawings in a good and workmanlike manner using first-class materials.  The costs associated with the construction
of the Tenant Improvements shall be paid as set forth in Sections 5 and 6 of
this Work Letter.


 


5.                                      TENANT
IMPROVEMENT ALLOWANCE


 


5.1                                 Landlord
shall pay for the cost of the design, purchase and construction of the Tenant
Improvements, including without limitation design, engineering and consulting
fees, the cost of any changes to the Working Drawings or the Tenant
Improvements required by any applicable building codes, any increased cost
resulting from any Hazardous Materials in the Project, including without
limitation asbestos, (collectively, the “Tenant Improvement Costs”).  The Tenant Improvement Allowance shall be
used for payment of only the following Tenant Improvements Costs:


 


5.1.1                        The reasonable cost based on
charges for these services in the competitive marketplace, of the Preparation
by Tenant’s Architect of the Preliminary Space Plans and the Working Drawings
as provided in Section 2 of this Work Letter, including without limitation
all fees charged by City (including without limitation fees for building
permits and plan checks) in connection with the Tenant Improvements work in the
Premises;


 


5.1.2                        Construction work for
completion of the Tenant Improvements as reflected in the Construction Contract;


 


5.1.3                        All contractors’ charges,
general conditions, performance bond premiums and construction fees; and


 


5.1.4                        Tenant
Improvements which shall be depicted on the approved Preliminary Space Plans.


 


5.2                                 In
the event that Tenant does request modifications, changes or alterations of the
Tenant Improvements from what is shown on the approved Preliminary Space Plans,
or causes any Tenant Delays as defined in Section 7 of this Work Letter,
then all associated costs that exceed the Tenant Improvement Allowance shall be
borne by Tenant.  If Tenant does seek to
modify, change or alter the Tenant Improvements from the approved Preliminary
Space Plans, or does cause a Tenant Delay, Tenant shall pay to Landlord any
excess costs resulting therefrom in accordance with Section 6 of this Work
Letter.


 


6.                                      CHANGE
ORDERS


 


Tenant
may from time to time request and obtain change orders before or during the
course of construction provided that: 
(i) each such request shall be reasonable, shall be in writing and
signed by or on behalf of Tenant, and shall not result in any structural change
in the Building, as reasonably determined by Landlord, (ii) all additional
charges and costs, including without limitation architectural and engineering
costs, construction and material costs, and processing costs of any
governmental entity shall be the sole and exclusive obligation of Tenant, and
(iii) any resulting delay in the completion of the Tenant Improvements shall be
deemed a Tenant Delay and in no event shall extend the Commencement Date of the
Lease.  Upon Tenant’s request for a
change order, Landlord shall as soon as reasonably possible submit to Tenant a
written estimate of the increased or decreased cost and anticipated delay, if
any, attributable to such requested change. 
Within three (3) business days of the date such estimated costs
adjustment and delay are delivered to Tenant, Tenant shall advise Landlord
whether it wishes to proceed with the change order, and if Tenant elects to
proceed with the change order, Tenant shall remit, concurrently with Tenant’s
notice to proceed, the amount of the increased costs that exceed the Tenant
Improvement Allowance, if any, attributable to such change order.  Unless Tenant includes in its initial change
order request that the work in process at the time such request is made be
halted pending approval and execution of a change order, Landlord shall not be
obligated to stop construction of the Tenant Improvements, whether or not the
change order relates to the work then in process or about to be started.


 


36

















 


7.                                      TENANT
DELAYS


 


In no event shall the Commencement Date of the Lease
be extended or delayed due or attributable to delays due to the fault of Tenant
(“Tenant Delays”).  Tenant Delays shall
include, but are not limited to, delays caused by or resulting from any one or
more of the following:


 


a)                                      Tenant’s
failure to timely review and reasonably approve the Working Drawings or to
furnish information to Landlord or Landlord’s Architect for the preparation by
Landlord or Landlord’s Architect of the Working Drawings;


 


b)                                     Tenant’s
request for or use of special materials, finishes or installations which are
not readily available, provided that Landlord shall notify Tenant in writing
that the particular material, finish, or installation is not readily available
promptly upon Landlord’s discovery of same;


 


c)                                      Change
orders requested by Tenant;


 


d)                                     Interference
by Tenant or by Tenant’s Agents with Landlord’s construction activities;


 


e)                                      Tenant’s
failure to approve any other item or perform any other obligation in accordance
with and by the dates, if any, specified herein or in the Construction
Contract;


 


f)                                        Tenant’s
requested changes in the Preliminary Space Plans, Working Drawings or any other
plans and specifications after the approval thereof by Tenant or submission
thereof by Tenant to Landlord;


 


g)                                     Tenant’s
failure to approve written estimates of costs in accordance with this Work
Letter; and


 


h)                                     Tenant’s
obtaining or failure to obtain any necessary governmental approvals or permits
for Tenant’s intended use of the Premises, other than building permits that
Landlord shall obtain.


 


If (but for the operation of the foregoing provisions of this paragraph
7) the Commencement Date of the Lease is delayed by any Tenant delays, whether
or not within the control of Tenant, then the Commencement Date of the Lease
and the payment of Rent shall be accelerated by the number of days of such
delay (i.e., the Commencement Date shall occur, or be deemed to have occurred,
on the date that it would have occurred but for the occurrence of such Tenant
delays).  Landlord shall give Tenant
written notice within a reasonable time of any circumstance that Landlord
believes constitutes a Tenant Delay.


 


8.                                      TRADE
FIXTURES AND EQUIPMENT


 


Tenant acknowledges and agrees that Tenant is solely
responsible for obtaining, delivering and installing in the Premises all
necessary and desired furniture, trade fixtures, equipment and other similar
items, and that Landlord shall have no responsibility whatsoever with regard
thereto.  Tenant further acknowledges
and agrees that neither the Commencement Date of the Lease nor the payment of
Rent shall be delayed for any period of time whatsoever due to any delay in the
furnishing of the Premises with such items.


 


9.                                      FAILURE
OF TENANT TO COMPLY


 


Any failure of Tenant to comply with any of the
provisions contained in this Work Letter within the times for compliance herein
set forth shall be deemed a default under the Lease.  In addition to the remedies provided to Landlord in this Work
Letter upon the occurrence of such a default by Tenant, Landlord shall have all
remedies available at law or equity to a Landlord against a defaulting Tenant
pursuant to a written lease, including but not limited to those set forth in
the Lease.


 


10.                               CERTIFICATE
OF OCCUPANCY


 


The City of San Diego may require a new Certificate of
Occupancy to be issued for an office suite each time occupancy changes, based
both on the Tenant’s proposed activities to be performed in the suite, and the
physical characteristics of the suite. 
Landlord and Tenant shall jointly cooperate in furnishing the City with
the information required to be provided on the Application for Certificate of
Occupancy.  With Tenant Improvements
being constructed for the subject Premises, Landlord and Tenant should provide
the application to the City contemporaneously with the application for building
permit.  Upon completion of the Tenant
Improvements in conformity with the building permit, and after the City inspectors
give final approval of the Tenant Improvement construction, it has been
Landlord’s experience that a Certificate of Occupancy for the Premises will be
issued.  Landlord and Tenant agree to
cooperate in effecting the issuance of the Certificate of Occupancy should any
problems arise.


 


11.                               WARRANTY


 


Landlord shall warrant against all defects in workmanship and materials
for a period equal to the longer of (a) twelve months after full and final
completion of the Tenant Improvements(including all punch list items) and (b)
the warranty period provided by any applicable contractor or supplier.


 


37

















 


EXHIBIT E


 


ACCEPTANCE OF OFFICE SPACE


 


	
  Date

  	
   

  	
   

  
	
   

  	
   

  
	
  Tenant

  	
   

  	
   

  
	
  Address

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


Re:                               Commencement
Letter with respect to that certain Lease dated as of
                                  
by and between VCC Investors, L.P., a California limited partnership, as
Landlord, and Pacific Crest Bank, a California corporation, as Tenant, for
5,178 rentable square feet on the tenth floor of the Building located at 591
Camino de la Reina in the City of San Diego, San Diego, California.


 


Dear                                          :


 


In accordance with the terms and conditions of the
above referenced Lease, Tenant accepts possession of the Premises and agrees:


 


1.                                       The
Commencement Date of the Lease is
                                              ;


 


2.                                       The
Expiration Date of the Lease is
                                                       .


 


Tenant hereby acknowledges that Landlord has fulfilled
it obligations, if any, regarding the construction of Tenant’s initial
leasehold improvements under the above referenced Lease, subject to paragraph
11 of Exhibit “D”.


 


This Acceptance of Office Space serves to fulfill the
lease obligation of paragraph 1.13 of the Basic Lease Provisions.


 


 


Please acknowledge your acceptance of possession and
agreement to the terms set forth above by signing all 4 counterparts of this
Commencement Letter in the space provided and returning 3 fully executed
counterparts to my attention.


 


	
  Sincerely,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Property Manager

  	
   

  
	
   

  	
   

  
	
  Agreed and Accepted:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Tenant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
					



 


38

















 


EXHIBIT
F


 


SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE AGREEMENT


 


THIS INSTRUMENT PREPARED BY AND


AFTER RECORDING RETURN TO:


 


	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  



 


SUBORDINATION, ATTORNMENT AND

NON-DISTURBANCE
AGREEMENT


 


THIS SUBORDINATION,
ATTORNMENT AND NON-DISTURBANCE AGREEMENT (this “Agreement”), dated this
       day of
                         ,
200  , between
                                                                 ,
a                              
                             
(“Tenant”), and MERRILL LYNCH CAPITAL, a Division of Merrill Lynch Business
Financial Services Inc., a Delaware corporation, its successors and assigns
(“Lender”), having its principal place of business at 222 North LaSalle Street,
18th Floor, Attention: Merrill Lynch Capital Services Department,  Chicago, Illinois 60601.


 


R E C I T A L S:


 


A.  Tenant is the lessee under that certain
lease executed between Tenant and
                             ,
a                              
(“[Prior
Landlord][Landlord]”), dated
                             ,
200    (the lease and all amendments thereto are hereinafter referred
to as the “Lease”), covering all or a portion of property with a property
address of
                                                            
and legally described in Schedule I attached hereto and made a part hereof
(the “Property”).


 


B.  [Prior Landlord will transfer the Property
and Prior Landlord’s interests in the Lease to 
                             
(“Landlord”).] OR
[                             
(“Landlord”) is the successor or assignee to Prior Landlord’s interest in the
Property.] On
            ,
2002,  Lender made a loan (the “Loan”)
to Landlord which is secured, in part, by the lien of a mortgage or deed of
trust executed and delivered by Landlord to Lender encumbering the Property
(the “Mortgage”) and an assignment of all leases of and rents from the
Property.


C.  .  At
Tenant’s request, Lender has agreed to enter into this Agreement relating to
the Lease and the Loan.


 


NOW, THEREFORE, in
consideration of the covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:


 


1.                         Tenant
hereby represents, acknowledges and agrees as follows:


 


(a)                                  The
Lease has not been amended, modified or extended, except as follows:


 


	
   

  
	
   

  



 


(b)                                 The
Lease does not contain any options to purchase and/or lease additional space,
rights of first refusal to purchase and/or lease additional space or any
similar provisions regarding acquisition of ownership interests or additional
leased space in the building, except as follows:


 


	
   

  
	
   

  



 


(c)                                  The
term of the Lease commenced on
                                                         
and will terminate on
                                                                      .


 


(d)                                 The
current monthly rent payment under the Lease is
$                               .  Rent has been paid through
                               .
No advance rents have been prepaid except for the current month.


 


(e)                                  In
addition to monthly rent payments, the following amounts are also payable on a
                                       
basis for the following purposes:
                                                                                                               .


 


(f)                                    The
improvements described in the Lease have been completed and accepted by Tenant.


 


39

















 


(g)                                 Tenant
has not sublet any portion of the leased premises or assigned any of its rights
under the Lease.


 


(h)                                 The
Lease is in full force and effect, Tenant has no existing claims, defenses or
offsets under the Lease against Landlord, no uncured default exists under the
Lease, and no event has occurred that would, except for the lapse of time, the
giving of notice or both, constitute a default.


 


(i)                                     No
cancellation, modification, amendment, extension, or assignment of the Lease,
and no subletting or prepayment of more than one month’s rent shall be made
without Lender’s prior written consent.


 


(j)                                     All
rent payments shall be paid as provided under the Lease until Tenant has been
otherwise notified by Lender or its successors and assigns.  All prepayments of more than one month’s
rent and any and all termination fees paid by Tenant, or at Tenant’s direction,
shall be payable jointly to Lender and Landlord.


 


(k)                                  The
guaranty of the Lease, if any, is in full force and effect


 


(l)                                     Tenant
will deliver to Lender a copy of all notices of default that Tenant delivers to
Landlord.


 


(m)                               Tenant
will not look to Lender or its successors or assigns for the return of the
security deposit, if any, under the Lease, except to the extent that such funds
are delivered to Lender.


 


2.                                       The
Lease and all terms thereof, including, without limitation, any options to
purchase, rights of first refusal, and any similar rights, are and shall be
subject and subordinate to the Mortgage, and to all amendments, modifications,
replacements and extensions thereof, to the full extent of the principal,
interest, fees, expenses and all other amounts secured thereby, subject,
however, to the other provisions hereof.  


 


3.                                       In
the event Lender elects to foreclose the Mortgage, Lender will not join Tenant
in summary or foreclosure proceedings unless required by applicable law (and
then only to the extent so required) as long as Tenant has not amended the
Lease without Lender’s prior written consent and is not in default under the
Lease.


 


4.                                       In
the event that Lender shall succeed to the interest of Landlord under the Lease
and there exists no default by Tenant under the Lease,  which has continued beyond any applicable
periods of grace, notice, and/or cure, 
and Tenant has not amended the Lease without Lender’s prior written
consent, Lender agrees not to disturb or otherwise interfere with Tenant’s
possession of the leased premises for the unexpired term of the Lease, provided
that Lender shall not be:


 


(a)                                  liable
for any act or omission of Landlord or any prior landlord under the Lease;  unless such act or omission continues beyond
the date that Lender acquires title to the Property but only to the extent such
act or omission continues beyond such date; 


 


(b)                                 subject
to any offsets or defenses which Tenant might have against Landlord or any
prior landlord; except any offsets or defense relating to defaults of Landlord
which continue beyond the date that Lender acquires title to the Property but
only to the extent such offset or defense continues beyond such date;


 


(c)                                  bound
by any rent or additional rent which Tenant might have paid for more than the
current month to Landlord or any prior landlord;  unless and to the extent actually received by Lender;


 


(d)                                 bound
by any material amendment or modification of the Lease made without Lender’s
prior written consent; or


 


(e)                                  liable
for any security deposit Tenant might have paid to Landlord or any prior
landlord, except to the extent Lender has actually received said security
deposit.


 


5.                                       Upon
Lender’s succeeding to Landlord’s interest under the Lease, Tenant covenants
and agrees to attorn to Lender or a purchaser at a foreclosure or trustee’s
sale, to recognize such successor landlord as Tenant’s landlord under the
Lease, and to be bound by and perform all of the obligations and conditions
imposed upon Tenant by the Lease.  If
requested by Lender or any subsequent owner, Tenant shall execute a new lease
with Lender, for a term equal to the remaining term of the Lease and otherwise
containing the same provisions and covenants of the Lease.


 


6.                                       Prior
to terminating the Lease due to a default by Landlord thereunder, Tenant agrees
to notify Lender of such default and give Lender the opportunity to cure such
default within thirty (30) days of Lender’s receipt of such notice (or, if such
default cannot reasonably be cured within such thirty (30) day period, Lender
shall have such longer time as may be necessary to cure the default (but not
beyond an additional ninety (90) days); provided that Lender commences the cure
within such period and diligently pursues the cure thereafter).


 


40

















 


7.                                       This
Agreement shall be binding upon and inure to the benefit of the respective
heirs, personal representatives, successors and assigns of the parties hereto.


 


8.                                       This
Agreement can be modified only in writing duly executed by both parties.


 


IN WITNESS WHEREOF, the parties hereto have executed
this Agreement the day and year first above written.


 


	
   

  	
  TENANT:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LENDER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MERRILL
  LYNCH CAPITAL, a Division of

  Merrill Lynch Business Financial Services Inc.,

  a Delaware corporation.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  



 


41

















 


	
  STATE OF
                                   

  	
  )

  
	
   

  	
  )ss.

  
	
  COUNTY OF
                              

  	
  )

  



 


On
                                 ,
200   , before me, the undersigned, a Notary Public in and for
said State, personally appeared
                                             ,
personally known to me or proved to me on the basis of satisfactory evidence,
to be the person who executed the within instrument as the
                                
of
                                           ,
a
                               
corporation, the general partner OR managing member of
                                               and
acknowledged to me that such corporation caused the foregoing instrument to be
executed pursuant to its Bylaws or a resolution of its Board of Directors.


 


	
   

  	
  WITNESS my hand and official seal.

  
	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary Public

  
	
   

  
	
  [SEAL]

  	
  My commission Expires:

  	
   

  	
   

  
							



 


42

















 


	
  STATE OF
                                   

  	
  )

  
	
   

  	
  )ss.

  
	
  COUNTY OF
                              

  	
  )

  



 


On
                                 ,
200   , before me, the undersigned, a Notary Public in and for
said State, personally appeared
                                             ,
personally known to me or proved to me on the basis of satisfactory evidence,
to be the person who executed the within instrument as
          Vice President of
Merrill Lynch Capital, a Division of Merrill Lynch Business Financial Services
Inc., a Delaware corporation, the corporation that executed the within
instrument and acknowledged to me that such corporation caused the foregoing
instrument to be executed pursuant to its Bylaws or a resolution of its Board
of Directors.


 


	
   

  	
  WITNESS my hand and official seal.

  
	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary Public

  
	
   

  
	
  [SEAL]

  	
  My commission Expires: 

  	
   

  	
   

  
							



 


43

















 


SCHEDULE I


 


Article I.                                                                       LEGAL
DESCRIPTION


 


44