Exhibit
10.12


LEASE


 


THIS LEASE (“Lease”),
dated for reference purposes only as of November 12, 2003,
is made by and between Century Park, a California Limited Partnership
(“Landlord”) and Mercantile National Bank,
N.A., a national bank (“Tenant”), upon the following terms and
conditions:


 


	
  1.

  	
   

  	
  Premises and Basic Lease
  Information

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.

  	
   

  	
  Landlord hereby leases
  to Tenant and Tenant hereby leases from Landlord, upon the terms and conditions
  set 

  	 

	
  forth in this Lease,
  those certain premises (the “Premises”) described in Article 1.1.1 below and
  diagrammed in Exhibit “A” attached hereto and hereby made a part hereof, as
  well as the right to use, in common with others, the Common Areas (as
  hereinafter defined). The Premises are situated in that certain office building
  (the “Building”) located at 1880 Century Park East, Los Angeles, California
  90067. The land upon which the Building is located together with the Building
  and related facilities and appurtenances and Common Areas shall hereinafter
  be referred to as the “Project.” The terms and conditions of this Lease
  include, without limitation, the following:

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.1

  	
   

  	
  Premises:

  	
   

  	
  Suite 110  consisting of approximately 2,118 rentable
  square feet on the 

  	 

	
  ground floor of the Building (see the
  attached Exhibit “A”). The exact area of the Premises shall be determined by
  applying the BOMA method of measurement (ANSI Z65.1-1996) to calculate the
  square footage per the final space plan for the Premises. Should the square
  footage measured from the space plan vary from that set forth in this Article
  1.1.1, Landlord shall revise all figures in this Lease that are affected by
  the square footage, and Landlord and Tenant shall amend this Lease
  accordingly. Landlord may re-measure the Premises once within twenty (20)
  days of the Commencement Date of the Initial Term. Landlord may re-measure
  the Premises thereafter; provided, however that such re-measurement does
  affect the economics specified in Article 1.1.4 or Article 1.1.7 herein.

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.2

  	
   

  	
  Lease Term:

  	
   

  	
  Except for Tenant’s
  occupancy of the Temporary Space pursuant to the 

  	 

	
  terms and conditions of
  this Lease as set forth in Article 41 of the Lease Addendum, the term of this
  Lease (the “Lease Term” or “Term”) shall begin on the earlier of the following dates (the
  “Commencement Date”): (a) October 1, 2004,
  or, where applicable, (b) upon Substantial Completion of the Tenant
  Improvements, as defined in the construction agreement attached hereto as
  Exhibit “B” and herein incorporated by reference, and, unless terminated pursuant to Article 42 in the
  Lease Addendum, shall expire on the last day of the month that
  is one hundred twenty (120)
  months after the first day of the month after the Commencement Date, unless
  sooner terminated pursuant to this Lease.

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.3

  	
   

  	
  Holding Over.

  	
   

  	
  If Tenant, with or
  without Landlord’s written consent, remains in 

  	 

	
  possession of all or
  any portion of the Premises after the expiration or sooner termination of the
  Lease, such holding over (“Holdover”) shall constitute and be construed as a
  tenancy from month-to-month only, subject to such terms and conditions
  contained herein as may reasonably and logically be construed to apply to the
  Holdover, and any and all options or other preferential rights of Tenant
  shall be deemed to have lapsed and to be of no further force or effect.
  Either party may terminate such month-to-month tenancy by giving the other
  party at least thirty (30) days written notice thereof. During such Holdover,
  Base Rent (as defined below) shall be one hundred fifty percent (150%) of the
  Base Rent in effect immediately prior to such Holdover. Acceptance by
  Landlord of any Rent after the expiration or termination of the Lease shall
  not be deemed to constitute Landlord’s consent to such Holdover.

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.4

  	
   

  	
  Base Rent:

  	
   

  	
  The base rent (“Base
  Rent”) for the Premises shall be $2.55  per
  rentable 

  	 

	
  square foot ($5,400.90) per month, subject to
  an annual CPI adjustment (see Article
  3.2; see also Article 41 relating to the payment of rent in the Temporary Space.).

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.5

  	
   

  	
  Additional Rent:

  	
   

  	
  Amounts which are due
  as Additional Rent by reason of increases in 

  	 

	
  Estimated Pass-through
  Costs (as both capitalized terms are defined in Article 4 below) and all
  other amounts payable by Tenant pursuant to the provisions of this Lease.

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.6

  	
   

  	
  Base Year:

  	
   

  	
  2004 is the Base Year.

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.7

  	
   

  	
  Tenant’s Percentage Share:

  	
   

  	
  0.68% “Tenant’s Percentage Share” shall be a
  fraction, the numerator of 

  	 

	
  which shall be the
  rentable square footage of the Premises and the denominator of which shall be
  311,400 approximate rentable square feet for the Building.

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.8

  	
   

  	
  Security Deposit:

  	
   

  	
  None

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.9

  	
   

  	
  Permitted Use:

  	
   

  	
  General offices and
  uses related thereto that do not conflict with the 

  	 

	
  Building’s certificate
  of occupancy, that comply with all applicable codes and statutes, and that
  are uses commonly found in similar office buildings in the Project vicinity.

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.10

  	
   

  	
  Address For Notices:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	 
	
  Tenant (prior to Commencement Date)

  	
  Tenant (after Commencement Date)

  
	 
	
  Mercantile National Bank

  1840 Century Park East

  Los Angeles, CA 
  90067

    

  	
  Mercantile National
  Bank

  1880 Century Park East,
  Suite 800

  Los Angeles, CA 90067

  
	 
	
  Contact: Mr.
  Scott A. Montgomery

  Phone:  310/282-6778

  	
  Contact: Mr.
  Scott A. Montgomery

  Phone: 310/
  282-6778

  
	 
	
   

  	
  With a Copy to:

  
	 
	
   

  	
  Ted Simpson

  
	 
	
   

  	
  Cushman &
  Wakefield

  
	 
	
   

  	
  601 Figueroa
  Street, Suite 4700

  
	 
	
   

  	
  Los Angeles, CA
  90017

  
	 
	
   

  	
  Telephone:  213/955-5100

  
																				



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Landlord                                               Century Park, a California limited
partnership, c/o Held Properties, Inc., 1880 Century Park East, Suite 500, Los
Angeles, CA 90067.                     See
also Article 25 of this Lease.


1.1.11      Parking Rights:  Two and
One-Half automobile spaces per 1,000 rentable square feet, currently calculated
as Six (6) automobile spaces at the Building’s prevailing
parking rates.  See also Article 31
herein.  See also Article 46 of the Lease Addendum.


1.1.12      Guarantor(s):                        N/A


1.1.13      Broker:                                 Cushman
& Wakefield of California, Inc.


1.2           Common Areas.   The term “Common Area(s)” as used in this
Lease shall mean all areas and facilities in the Project which are provided and
designated from time to time by Landlord for the general use and convenience of
Tenant and other tenants of the Project and their respective employees and
invitees. Common Areas include, without limitation, the lobby areas, walkways,
parking facilities, landscaped areas, sidewalks, corridors, washrooms (if not
part of the Premises), stairways, elevators, walls, common telephone and
electrical closets, loading docks, plazas, service areas, and all other areas
of the Project intended for common use. 
Floors wholly occupied by Tenant or any other tenant shall not have any
facilities which shall be used in common with other tenants, except for
elevators, fire stairs, shafts, utility and service closets, and similar
installations.  Tenant, its employees and
invitees shall have a nonexclusive right to use the Common Areas, subject to
Landlord’s rights and duties as hereinafter set forth.  Without Tenant’s consent and without
liability to Tenant, so long as Tenant’s access to the Premises and parking area or Tenant’s ability to
conduct business therefrom is not materially impaired and provided that Landlord
uses reasonable effort (including performing such work after normal business
hours, if reasonably required) to minimize any interference with Tenant’s use
and access of the Premises and parking areas during normal business hours,
Landlord shall have the right to do the following:


1.2.1        Establish and enforce in a
nondiscriminatory, consistently applied manner, reasonable rules and
regulations concerning the maintenance, management, use and operation of the
Common Areas;


1.2.2        Temporarily close any Common Area for
maintenance, alterations or improvements;


1.2.3        Select, appoint and/or contract with any
person or entity for the purpose of operating and maintaining the Common Areas;
and


1.2.4        Change, except for the number and location of parking spaces, the
size, use, shape or nature of the Common Area provided that doing so does not
materially affect the existing ingress and egress to the Building, or change
the character of the Building to less than a first class office building.


2.             Commencement Date; Early Entry


2.1           Except
as set forth in Article 42, this Lease shall not be void or
voidable, nor shall Landlord be subject to any liability as a result of any
delay in the Commencement Date for any reason. 
Except for Tenant Delays, as defined in the Construction Agreement,
payment of rent shall not commence until the Premises are available for
occupancy by Tenant with all work to be performed pursuant to the Construction
Agreement substantially completed and the
Department of Building and Safety has signed the permit card, indicating that
occupancy is permitted.


2.2           Within thirty (30) business days
after Tenant’s occupancy of the Premises, or as soon thereafter as possible,
the Landlord shall draft a statement,
and the parties hereto shall execute a written statement setting forth the
Commencement Date and the date of expiration of this Lease; provided, however,
the enforceability of this Lease and the Commencement Date shall not be
affected should either party fail or refuse to execute such statement.


2.3           Provided that Tenant or Tenant’s
agents do not interfere with or delay the Substantial Completion of Landlord’s
Work in the Premises, or otherwise cause additional cost or expense to
Landlord, Tenant and Tenant’s agents shall be permitted to enter the Premises
up to fourteen (14) days prior to the Commencement Date for the purpose of
installing telephones, cabling, fixtures and equipment.  Such early entry shall be subject to all the
terms of such permission and all the provisions of this Lease which could be
reasonably and logically construed as applying thereto, except that Tenant
shall not be required to pay Rent.


 


3.             Base Rent; Adjustments;
General Rent Provisions.


3.1           Tenant shall pay to Landlord as Base
Rent for the Premises, without prior notice or demand, the amount specified in
Article 1.1.4, in advance, on or before the first day of each and every
calendar month during the Lease Term. 
All payments received by Landlord from Tenant shall be applied to the
oldest payment obligation owed by Tenant to Landlord.


3.2           Base Rent as set forth in Section
1.1.4 above shall be increased effective as of each anniversary of the
Commencement Date during the term (“Adjustment Date”) to an amount which shall
be determined by adding to the Base Rent an amount equal to the Base Rent
multiplied by the percentage of increase, if any, of the “Consumer Price Index
for All Urban Consumers, Los Angeles-Anaheim-Riverside, California, Subgroup
All Items (1982-1984=100)”, published by the United States Department of Labor,
Bureau of Labor Statistics (the “CPI”) for the calendar month which is four (4)
months immediately preceding the month in which the Adjustment Date occurs (the
“Adjustment Index”) as compared with the CPI for the calendar month which is
four (4) months immediately preceding the Commencement Date (the “Base Index”);
provided, however, that in no event shall the adjusted and then current rent be
decreased.


 


                For example, if (i) the Base Rent as of the
Commencement Date is $1,000; (ii) the Base Index is 300; (iii) the Adjustment
Index for the first Adjustment Date is 315; (iv) the Adjustment Index for the
Second Adjustment Date is 327; and (v) the Adjustment Index for the third
Adjustment Date is 330; the Base Rent shall be increased as follows:


 


                                                                                                A)                                  As of the first Adjustment Date —   315/300 = 1.05 x $1,000 = $1,050


                                                                                                B)                                    As of the second Adjustment Date —
327/300 = 1.09 x $1,000 = $1,090


                                                                                                C)                                    As of the third Adjustment Date — 330/300
= 1.10 x $1,000 = $1,100


 


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                If the Adjustment Index is
unavailable on the date on which the first installment of Base Rent as adjusted
shall become due, Tenant shall continue to pay the then effective Rent payable
by Tenant until the Adjustment Index is available, and the adjustment, if any,
shall be paid retroactively with Base Rent for the first month in which the
Adjustment Index is available.  If the
Bureau of Labor Statistics ceases to use the 1982-1984 base of 100 as the basis
of calculation for the CPI, then the Base Index and the Adjustment Index shall
be adjusted in accordance with the conversion formula published by the Bureau
of Labor Statistics.  If, at any time
required for the determination of the amount of any adjustment in Base Rent,
the CPI is no longer published or issued, Landlord shall reasonably select a
reliable governmental or other non-partisan publication evaluating the
information theretofore used in determining the CPI.


 


3.3           For any period during the Lease Term
which is less than one (1) month, Base Rent, Additional Rent (defined in
Article 4.1), and any other sums which are payable by Tenant under the Lease
(all of which shall be deemed “Rent”) shall be prorated based upon a thirty
(30) day month.


3.4           Rent under this Lease shall be paid
to Landlord, without deduction, offset or abatement (except as otherwise may be
specifically set forth in this Lease) at Landlord’s address as specified in
Article 1.1.10 above. Landlord shall have the right to accept all payments of
Rent and other payments, whether full or partial, and to negotiate checks in
payment thereof without any waiver of its rights, irrespective of any
conditions to the contrary sought to be imposed by Tenant.  Rent paid by check shall not be deemed paid
to Landlord until funds clear and the check is honored.  If any noncash payment is not paid by the
bank or other financial institution on which it is drawn, Landlord shall have
the right to require Tenant to make future payments by certified funds.


 


4.             Additional Rent.


4.1           Computation of Additional
Rent  During each December of
the Lease Term, or as soon thereafter as reasonably practical, Landlord shall
provide Tenant with its good faith written estimate of the amount, if any, by
which the Tax Costs (as defined in Article 4.3 below) and/or the Operating Costs
(as defined in Article 4.4 below) for the coming calendar year are projected to
exceed those of the Base Year (collectively referred to as “Estimated
Pass-through Costs”).  On or before the
first day of each month during the ensuing calendar year, Tenant shall pay to
Landlord as additional rent (“Additional Rent”), in addition to and at the time
provided for payment of Base Rent, one-twelfth (1/12th) of the
amount computed by multiplying Tenant’s Percentage Share by the amount of the
Estimated Pass-through Costs for Taxes and/or one-twelfth (1/12th)
of the amount computed separately with respect to Operating Costs.  In the event that Landlord does not provide
Tenant with such written estimate in December, Tenant shall continue to make
monthly payments of Additional Rent on the basis of the prior year’s Estimated
Pass-through Costs until the first day of the month after Landlord provides
such written estimate to Tenant, at which time Tenant shall commence making
monthly Additional Rent payments based upon the revised Estimated Pass-through
Costs, and additionally shall pay to Landlord a one-time retroactive sum for
each month that has elapsed since December the amount by which the Additional
Rent payable pursuant to the revised Estimated Pass-through Costs exceeds the
amount Tenant paid based on the prior year’s Estimated Pass-through Costs.  Landlord
shall use its commercially best efforts to deliver its written estimate within
six (6) months of the end of the calendar year.  Under no circumstances shall the provisions
of this Article 4 cause the Base Rent to be reduced.  Neither Landlord’s failure to deliver, nor
the late delivery of such statement or statements shall constitute a default by
Landlord hereunder, nor a waiver of Landlord’s right to receive any Additional
Rent or to later collect Additional Rent accrued as provided hereinabove.  The Tax Costs and Operating Costs for the
Base Year shall be deemed to constitute Landlord’s agreed contribution to
Operating Costs and Tax Costs and is neither a representation nor a warranty
that such Base Year costs will reflect actual Operating Costs or Tax Costs for
any succeeding year.  If, during any
calendar year including the Base Year, the Building is less than ninety-five percent
(95%) occupied, then for the purpose of computing Additional Rent due
hereunder, the variable components of the Operating Costs and Tax Costs
actually incurred during such calendar year shall be increased to approximate
the amounts which would have been payable if the Building had been ninety-five
percent (95%) occupied.


4.2           Reconciliation of
Estimated Pass-through Costs to Actual  By July 1st of each year, Landlord
shall furnish to Tenant a written statement of reconciliation (the
“Reconciliation”), showing Landlord’s actual Operating Costs and Taxes for the
preceding calendar year, together with a statement of adjustments necessary to
reconcile any sums paid by Tenant hereunder during such calendar year pursuant
to Article 4.1 with those sums actually payable and due hereunder for such calendar
year.  Any reference to Landlord’s
“actual” Operating Costs or Tax Costs in this Article 4 shall be deemed to
include an allowance for adjustment to reflect the level of occupancy of the
Building to the extent provided above. 
If the Reconciliation shows that Tenant owes additional sums hereunder,
Tenant shall pay such sums to Landlord within thirty (30) days after receipt of
the Reconciliation.  If the
Reconciliation shows that Tenant overpaid Additional Rent, such overpayment
shall be refunded or credited to Tenant within thirty (30) days after Tenant’s
receipt of the Reconciliation. Landlord’s obligation to reconcile, Tenant’s
obligation to pay, and Landlord’s obligation to credit or refund shall survive
the expiration or sooner termination of the Lease. Landlord’s failure to
deliver the Reconciliation to Tenant as provided herein shall not constitute a
default by Landlord nor waive Landlord’s right to collect all Additional Rent
and other sums due hereunder.  Where only
a portion of a calendar year falls within the Lease Term, Landlord shall
reasonably prorate the estimated (or actual) Operating Costs and/or Tax Costs
for such calendar year.


4.3           Tax Costs.  “Tax Costs” shall mean the sum of
the following: any and all real property taxes, assessments (including, but not
limited to, general and special assessments and possessory interests), charges,
surcharges, license and other fees, levies, cost of improvement bonds and any
and all other taxes (other than income, franchise, inheritance and estate or
gift taxes of Landlord) on or relating to all or a portion of the Project
including any legal or equitable interest of Landlord therein, that may be
imposed, levied, assessed or charged for any reason by any authority having the
direct or indirect power to tax including, but not limited to, the United
States or the state, county or city in which the Project is located, or any
other local governmental authority, agency, district or political subdivision
thereof, together with personal property taxes, assessments, fees and charges
(other than those paid by Tenant pursuant to Article 26 below) and fees of tax
consultants and attorneys retained to seek a reduction, to contest or to act in
some other manner in connection with any of the foregoing Tax Costs, together
with any tax, assessment or other amounts (including, without limitation,
commercial rental taxes) imposed, levied or charged as a substitute for or a
supplement to the foregoing.  Except as provided in Article 45 in the Lease Addendum,
Tax Costs shall


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include increases caused
by increases in tax rates as well as increases caused by additional or
increased assessed values for any reason including transfers of title to the
Building or the Project, to the extent not precluded elsewhere in this
Lease.   See also, Paragraph 48 of the Lease Addendum.


4.4           Operating Costs.


4.4.1        Definition of Operating
Costs.   “Operating Costs”
shall mean the sum of any and all costs, expenses and disbursements of any kind
paid or incurred by Landlord in connection with the management, operation,
security, maintenance, and repair of the Project, calculated in accordance with
the audited financial statements of Landlord, including, but not be limited to,
salaries, wages, benefits and related costs for employees; management fees,
either as charged to Landlord by outside management companies or not exceeding
the amount typically charged by outside management companies if Landlord or
Landlord’s affiliate manages the Project; charges for utilities and services
provided to all tenants in accordance with Article 13.1 herein, including but
not limited to janitorial services, window cleaning, elevator services, HVAC
services, security services (including any taxes thereon); the cost of insurance
as specified in Article 12.6 herein; outside accounting fees; office supplies;
building cleaning supplies and materials; garbage and waste collection; and a
reasonable allowance for depreciation (or amortization) with respect to
machinery and equipment and other capital expenditures and improvements;
provided, however, that the only depreciation (or amortization and
expenditures) includable in Operating Costs shall be a reasonable allowance for
depreciation (or amortization) over the useful life of the improvements, as
determined by Landlord’s accountants to conform with applicable tax laws.  See
Paragraph 49 of the Lease Addendum.


4.4.2        Definition of Required
Alterations  “Required
Alterations” are any changes, alterations or improvements to the Project
(excluding those attributable exclusively to Tenant’s specific use and
occupancy of the Premises, which alterations shall be Tenant’s sole
responsibility), including, but not limited to, the installation or
modification of electrical, mechanical, water sprinkler, or other energy or
life safety systems or components, required by any rule, regulation or law
which became enacted and effective after the Commencement Date.  The capital costs relating to such Required
Alterations, including all related financing costs, shall be amortized over the
useful life of the Required Alterations, as determined by Landlord’s
accountants to conform with applicable tax laws.


4.5           Audit.     If Tenant disputes the amount of any
Additional Rent due under Article 4, Tenant shall have the right, after
reasonable notice, to inspect Landlord’s accounting records at Landlord’s
accounting office during its normal business hours and, if after such
inspection Tenant still disputes the amount of Additional Rent owed, Tenant may
retain a mutually-acceptable national or regionally-recognized independent
certified public accounting firm to certify to the parties its determination of
the proper amount of Operating Costs and Tax Costs payable by Tenant.  After such determination has been made, and
if a dispute continues to exist between Tenant and Landlord, an independent
accountant mutually-agreed upon by both Landlord and Tenant may be retained to
determine the amount of any Additional Rent due or credited.  If the
certification discloses that the Operating Costs and Tax Costs charged to
Tenant exceed the audited operating costs by more than five percent (5%), the
cost of such certification shall be borne by Landlord. Otherwise, the cost of
the certification shall be borne by Tenant.


5.             Security Deposit. [Intentionally
Deleted]


 


6.             Restrictions on Use;
Compliance with Laws.


6.1           Tenant shall use and occupy the
Premises only for the specific uses, and those related thereto, specified in
Article 1.1.9 above for no other uses whatsoever.  Tenant shall use and occupy the Premises in
accordance with Article 36, Rules and Regulations.  In addition to the rules and regulations in
Article 36, Tenant shall not: (a) do or permit anything to be done in or about
the Premises which will in any way obstruct or materially interfere with the
rights of other tenants or occupants of the Building or injure or annoy them;
(b) use or allow the Premises to be used for any unlawful purpose; (c) cause or
maintain or permit any nuisance in or about the Premises; (d) cause or permit
any hazardous or toxic waste, substance or material, other than generally used
office materials, to be brought to the Premises or used, handled, stored or
disposed of in or about the Premises; (e) conduct business or other activity in
or about the Premises that places an unreasonable or excessive burden upon the
public and Common Areas or the utility systems of the Project; or (f) commit or
suffer the commission of any waste in or about the Premises.


6.2           Tenant shall not place a load upon
any floor that exceeds 70 pounds per square foot, without Landlord’s prior
written approval.  Tenant shall not
install any equipment, apparatus or device in the Premises which causes
vibrations or excessive noise.


6.3           Tenant shall not use the Premises or
permit anything to be done in or about the Premises which in any way conflicts
with any law, statute, ordinance or governmental rule or regulation now in
force or which may hereafter be enacted or promulgated.  With
respect to the condition of the Premises, Tenant shall, at its
sole cost and expense, promptly comply with all applicable laws, statutes,
ordinances and governmental rules, regulations and requirements now in force or
which may hereafter be in force and with the requirements of any board of fire
underwriters or other similar body now or hereafter constituted relating to or
affecting Tenant’s specific nature of use
of the Premises and to all building codes
requiring modifications to the Premises due to the improvements made by or for
Tenant in the Premises.  Notwithstanding
anything to the contrary in this Lease, except for grandfathered rights and
variances, it shall be Landlord’s obligation, at Landlord’s cost and expense,
to comply with all applicable laws relating to the Building and the Building’s
systems in general, without regard to specific use, including modifications
required to obtain the necessary building permits for the Work to be performed
in accordance with the Construction Agreement attached hereto as Exhibit B.  Tenant shall not knowingly do or permit
anything to be done in or about the Premises or bring or keep anything therein
which will in any way increase the rate of any insurance upon the Building or
any of its contents, or cause cancellation of said insurance or otherwise
affect said insurance in any manner. 
Tenant shall be responsible for any increase in cost of Landlord’s
insurance caused by or resulting from Tenant’s breach of the obligations
contained herein.


6.4           Pursuant to Article 6.1(d) above,
other than commonly used business office supplies, Tenant shall not permit nor
use, generate, store, transport or dispense on the Premises any flammable,
radioactive materials, hazardous wastes, chemicals, environmental poisons,
pollutants, contaminants, or other substances demonstrated as hazardous or
toxic pursuant to the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended; the Hazardous Materials 


4





















Transportation
Act; the Resource Conservation and Recovery Act; the California Health and
Safety Code, or regulations issued under any of said acts (collectively,
“Applicable Environmental Laws”) without the prior written consent of
Landlord.  Any such Landlord consent shall
be conditioned upon (a) Tenant’s separate written agreement to handle, store,
use and dispose of such materials in accordance with all applicable
environmental laws, and (b) Tenant’s separate written agreement to indemnify
and hold Landlord harmless from any and all liability including consequential
damages directly or indirectly arising out of Tenant’s storage, use, or
disposal of such materials, including without limitation the cost of any
required or necessary repair, clean up or detoxification as a result thereof.  Tenant’s failure to provide a separate
written agreement to handle, store, use and dispose and to indemnify Landlord
shall not abrogate or eliminate Tenant’s obligations hereunder.


6.5           As used herein, the term “Hazardous
Material” means any hazardous or toxic substance, material or waste which is or
becomes regulated by any local governmental authority, the state in which the
Project is located or the United States government.  The term “Hazardous Material” includes,
without limitation, any material or substance that is (i) defined as a
“Hazardous Substance” under appropriate state law provisions, (ii) petroleum,
(iii) asbestos, (iv) designated as a “Hazardous Substance” pursuant to Section
311 of the Federal Water Pollution Control Act (33 U.S.C. section 1321), (v)
defined as a “Hazardous Waste” pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act, 42 U.S.C. section 6901 et seq.
(42 U.S.C. section 6903), (vi) defined as a “Hazardous Substance” pursuant to
Section 101 of the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. sections 9601 et seq. (42
U.S.C. section 9601), or (vii) defined as a “Regulated Substance” pursuant to
Subchapter IX, Solid Waste Disposal Act (Regulation of Underground Storage
Tanks), 42, U.S.C. sections 6991 et seq.


6.6           Excluding commonly used business
office supplies, as well as any preexisting asbestos and asbestos containing
materials (“ACMs”) in the Building, Tenant shall, at Tenant’s sole expense and
with counsel reasonably acceptable to Landlord, indemnify, defend and hold
harmless Landlord and Landlord’s shareholders, directors, officers, employees,
partners, affiliates, and agents (“Landlord Indemnities”) with respect to all
losses arising out of or resulting from the release of any Hazardous Material
in or about the Premises or the Project, by
Tenant, Tenant’s Agents, contractors or invitees other than Landlord or
Landlord’s Indemnitees or the violation of any Applicable
Environmental Law, by Tenant or Tenant’s agents, contractors or invitees (other
than Landlord and Landlord Indemnities) pursuant to Article 6.4(b) above.  This indemnification includes all losses,
liabilities, obligations, penalties, fines, claims, actions (including remedial
or enforcement actions of any kind and administrative or judicial proceedings,
orders or judgments), damages (including consequential damages and punitive
damages) and costs (including attorney, consultant and expert fees and
expenses) resulting from the release of any Hazardous Substances or violation
of any Applicable Environmental Law by
Tenant or Tenant’s agents, contractors or invitees other than Landlord and
Landlord’s Indemnitees. 
This indemnification shall survive the expiration or sooner termination
of the Lease. (See Lease Addendum
Paragraph 50 and 51.)


 


7.             Improvements and
Alterations.


7.1           Alterations, Additions or
Improvements.  Without the prior written consent of
Landlord, and except for non-structural, cosmetic alterations costing less than
Fifty Thousand Dollars ($50,000) (“Cosmetic Alterations”),
Tenant shall not make nor cause alterations, additions, or improvements in, on
or to any part of the Premises or the Project, except to install freestanding
furniture and floor coverings, where such freestanding furniture does not place
a load on the floor that exceeds 70 pounds per square foot.  Except as provided above, any alterations,
additions or improvements to the Premises desired by Tenant shall be made in
accordance with plans and specifications approved in advance in writing by
Landlord and pursuant to any applicable governmental permits.  Landlord’s approval of Tenant’s plans and
specifications shall not constitute Landlord’s representation or warranty as to
the adequacy of the plans and specifications or their compliance with
applicable laws.


7.2           Contractors for
Improvements.  Except for any Cosmetic Alterations,
any alterations, additions or improvements to the Premises desired by Tenant,
other than any specified in the Approved Plans as defined in Exhibit B, if any,
shall be made by Landlord or contractors selected by Landlord for Tenant’s
account.  Landlord’s contractor shall
have all major work items bid by three subcontractors or vendors.  Landlord’s
contractor and Tenant shall mutually approve subcontractors for major work
items (i.e., items that cost more than Thirty Thousand Dollars ($30,000).  Landlord’s contractor shall use its best
efforts to hire such mutually approved qualified subcontractors with the lowest
bids.


7.3           Landlord’s Consent to
Improvements.  Landlord may
impose as a condition to its consent to alterations, additions or improvements
to the Premises desired by Tenant such requirements as Landlord may reasonably
deem necessary including, without limitation, requirements relating to the
manner in which the work is done and the times during which the work is to be
accomplished so long as such requirements
do not impose additional costs. 
At Landlord’s request, but at Tenant’s sole cost and expense, at the
expiration or sooner termination of this Lease, Tenant shall have Landlord’s
contractor remove any and all improvements, additions or personal property that are not typical in comparable first class
buildings in the Premises caused to be installed by Tenant other
than the initial Tenant Improvements described in Article 7.5 below. At the time Landlord approves such improvements,
Landlord shall specify which improvements it will require Tenant to remove at
the end of the Lease Term. 
Landlord’s contractor at Tenant’s sole cost and expense shall repair any
damage done to the Premises in connection with such removal.


7.4           Changes to Structure or
Mechanical or Electrical Systems. 
Notwithstanding any provision herein that permits Tenant to make its own
alterations, additions or improvements to the Premises, Tenant shall not make
any alterations, additions or improvements to the Premises which would
negatively affect the Building’s structure or its mechanical or electrical
systems, or which would materially interfere with or disrupt other tenants in
the Building or any work then being carried out therein by Landlord or its
contractors.


7.5           Initial Tenant
Improvements.  Landlord shall
construct or have Landlord’s contractor construct the improvements in the
Premises (the “Tenant Improvements”), if any, pursuant to Exhibit B, if
any.  Tenant may install certain movable
personal property (e.g., file
systems, furniture) in the Premises, which Tenant shall remove upon the
expiration or earlier termination of the Lease.


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7.6           Standard for Improvements.  Any alterations, additions or improvements to
the Premises shall be manufactured and installed in a good, workmanlike,
diligent, prompt and expeditious manner in compliance with all Building
specifications, applicable laws and Applicable Environmental Laws.


 


8.             Repairs and Maintenance.


8.1           The Premises at Tenant’s move-in will
be in good operating condition, free of debris and structurally sound in
accordance with industry standards in the Project area.  By taking possession of the Premises, Tenant
shall be deemed to have conclusively agreed to accept the Premises as being in
good order, condition and repair, subject to “punchlist” items and latent
defects and any representations or
warranties that may be set forth elsewhere in this Lease.  Except as required by Article 20 below and
ordinary wear and tear and subject to
Article 8.2 with regard to any Building Systems in or about the Premises,
Tenant shall, at all times during the Lease Term hereof and at Tenant’s sole
cost and expense, keep the Premises and every part thereof in good condition,
order and repair except repairs resulting from the negligence, recklessness or
willful wrongful act of Landlord or Landlord’s representatives, employees or
other agents (collectively, “Landlord’s Agents”).  Landlord shall have no obligation to alter,
remodel, improve, repair, decorate or paint the Premises or any part thereof,
or maintain any nonstandard items installed in the Premises by or at the
request of Tenant, except as specified in Articles 13 and 20 below or in
Exhibit B, if any.  No representations
relating to the condition of the Premises, the Building or the Project have
been made by Landlord or Landlord’s Agents to Tenant, except as may be
specifically set forth in this Lease.


8.2           Subject to the provisions of Article
8.1 above and Article 20 below, Landlord shall maintain the Common Areas, the
foundation and structural portions of the Building (which shall include but not limited to floor/ceiling
slabs, roof, curtain wall, exterior glass and mullions, columns, beams, shafts
(including elevator shafts) parking areas, plazas, pavement and curbs
(collectively, “Building Structures”), and the plumbing,
heating, ventilation and air conditioning (“HVAC”), fire, life, safety,
mechanical and electrical systems (collectively,
“Building Systems”) providing the services and utilities to be
furnished by Landlord pursuant to Article 13.1 below, in good order and
condition; provided, however if any maintenance and repairs are caused by the
act, neglect, fault, or omission of any duty by Tenant or Tenant’s agents,
servants, employees, or invitees (collectively, “Tenant’s Agents”), Tenant
shall pay to Landlord the reasonable cost of such maintenance and repairs.  Landlord shall not be liable for any failure
to make any such repairs or to perform any maintenance unless such failure
persists for an unreasonable time after Tenant gives written notice to Landlord
of the need for such repairs or maintenance. 
Notwithstanding anything in this Lease to the contrary, in the event of
an interruption in essential services to the Premises (defined for these
purposes as the failure to provide HVAC service, electrical service, elevator
service, water or restroom facilities) or Tenant’s access to Premises is
materially impaired, and such interruption or impairment continues for a period
of five (5) consecutive days or twenty (20) days in any one calendar year,
Tenant shall be entitled to an abatement of Rent for the period that such
services are not provided where such interruption or impairment materially
interferes with the normal business conduct of Tenant in the Premises.  If any such interruption occurs during a
period when Tenant is not otherwise required to pay Rent, Tenant’s free rent
period shall be extended for the number of days that the services were not
provided.  Tenant waives the right to
make repairs at Landlord’s expense under any law, statute or ordinance now or
hereafter in effect.


 


9.             Liens.     Tenant shall keep the Project free from any
liens arising out of any work performed, materials furnished or obligations
incurred by Tenant.  If within twenty
(20) days following the imposition of any lien and written notice thereof to
Tenant, Tenant does not cause the lien to be released of record by payment or
posting of a proper bond, Landlord shall have, in addition to all other
remedies provided herein and at law or in equity, the right to cause the lien
to be released by such means as it deems proper including, but not limited to,
payment of the claim giving rise to such lien. 
All such sums paid by Landlord and all expenses incurred in connection
therewith shall be considered Additional Rent and shall be payable to Landlord
by Tenant within thirty (30) days after receipt of notice from Landlord, with
interest at the Interest Rate (as defined in Article 27 below).  Landlord shall have the right at all times to
post and keep posted on the Premises, any notices permitted or required by law,
or which Landlord shall deem proper, for the protection of Landlord, the
Project and by other parties having an interest therein from mechanic’s and
materialmen’s liens.  Tenant shall give
Landlord at least 15 business days prior written notice of commencement of any
work on the Premises.


 


10.           Assignment and Subletting.


10.1         Tenant shall not have the right to
assign the Lease, or sublease all or any portion of the Premises without
Landlord’s consent, which shall not be
unreasonably withheld, conditioned or delayed.  If Landlord consents to an assignment or
sublease, such assignment or sublease shall be subject to all the terms and
conditions of the Lease, and on Landlord-approved forms.  Any assignment, sublease or other transfer
without Landlord’s prior written consent shall be void.


10.2         In determining
whether to consent to an assignment or a sublease, Landlord may consider the
nature of the proposed use and business and the financial stature of the
proposed transferee.  In addition,
Landlord reserves the right to condition any such consent upon its reasonable
determination that the proposed assignee’s or subtenant’s use of the Premises
will not adversely materially impact on the Common Areas or utility systems of
the Building.


10.3         Tenant shall not
enter into any proposed assignment, sublease or other transfer of any interest
herein or in the Premises which would (a) detract from the first-class
character or image of the Building, or (b) cause a breach by Landlord of any
loan obligation or agreement, any covenants, conditions, restrictions and lease
obligations of record, or any insurance policy. 
(Upon Tenant’s request, Landlord shall provide Tenant with a list of any
existing rights in favor of any other tenant in the Building.)


10.4         Tenant shall give
Landlord fifteen (15) days prior written notice of its intention to assign,
sublease or otherwise transfer its Lease. 
Tenant shall submit the following information on Landlord-approved forms
with such notice and with a written request for Landlord’s consent to any
assignment, sublease or transfer: (a) all transfer and related documents, (b)
financial statements or other financial information, certified by a certified
public accountant or officer of the
Company, sufficient to enable Landlord to make an informed
judgment as to the financial capabilities of the proposed transferee, and (c)
such other information, related to the proposed transfer and the parties
involved therein as Landlord reasonably requests in writing.  Landlord, at its option, may void any
transaction that does not comply with provisions of this Article 10.


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10.5         If Landlord does not
consent to the proposed sublease or assignment, or other transfer, within fifteen (15) days, Tenant shall
not complete such proposed assignment or sublease.  On the other hand, if Landlord consents to
such proposed sublease or assignment, or other transfer, Tenant shall be
required to pay Landlord’s reasonable legal and administrative fees not to
exceed $1,000 for any assignment or sublease. 
In addition, if Landlord consents to the proposed assignment or
sublease: (a) any subtenant shall agree that if Landlord gives such subtenant
notice that Tenant is in default under this Lease, such subtenant shall
thereafter make all sublease or other payments directly to Landlord, which
sublease payments will be received by Landlord without any liability to honor
the sublease (except to credit such payments against sums due under the Lease)
and any subtenant shall agree to attorn to Landlord or its successors and
assigns should the Lease be terminated for any reason, voluntarily, or
otherwise, except that in no event shall Landlord or its successors or assigns
be obligated to accept such attornment and (b) Landlord may require that
subtenant not then be in default hereunder in any respect.


10.6         The parties
acknowledge that Landlord’s economic stake in the Project is significantly
greater than Tenant’s economic stake in this Lease.  Accordingly, the parties have expressly
bargained for the following allocation of any “Profits” (as defined in Article 59 in the Lease Addendum)
to be derived by Tenant from any assignment or subletting or other transfer of
this Lease.  Except in the case of a Permitted Transferee as
defined in Article 10.9 below (in which case no Transfer Premium is due),
in the event Tenant assigns or subleases
more than fifty percent (50%) of the Premises, Tenant shall be
required to pay Landlord fifty percent (50%) of any rent, key money, transfer
consideration, or other premiums of any kind or nature on the sublease,
assignment or transfer in excess of the Base Rent payable by Tenant under this
Lease on a per rentable square foot basis net of Tenant’s costs incurred to
facilitate the transfer (the “Transfer Premium”).  Such payments shall be paid, in the same
manner and at the same time as Tenant receives such Transfer Premium, whether
such Transfer Premium is in the form of an increased rental, a lump sum payment
or any other form of consideration.  If
such sublease, assignment or transfer pertains to a portion of the Premises only,
any Transfer Premium shall be computed on the assumption that Tenant’s Rent and
other sums due hereunder are allocable on a pro rata per square foot
basis.  [See Lease Addendum Article 52]


10.7         The provisions of
this Article 10 shall apply regardless of whether such assignment, sublease or
other transfer is made in compliance with the provisions of this Lease.  Any payments made to Landlord pursuant to
this Article 10 shall not cure any default under this Lease arising from such
assignment, sublease or transfer. Tenant shall not artificially structure any
sublease, assignment or other transfer or take any other steps to circumvent or
to reduce the amount payable to Landlord under this Article 10.  The amount payable to Landlord under this
Article 10 shall be the amount that would have been payable to Landlord had the
Tenant not artificially structured the sublease, assignment or transfer or
otherwise tried to circumvent this Article 10.


10.8         No assignment, sublease or other
transfer shall release Tenant from any of its obligations hereunder.  Landlord’s consent to any one transfer shall
apply only to the specific transaction thereby authorized and such consent
shall not waive the duty of Tenant or any transferee to obtain Landlord’s
consent to any other or subsequent transfer, or modify or limit Landlord’s
rights hereunder in any way.  Landlord’s
acceptance of Rent directly from any assignee, subtenant or other transferee
shall not be construed as Landlord’s consent thereto nor Landlord’s agreement
to accept the attornment of any subtenant in the event of any termination of
this Lease.  In no event shall Landlord’s
enforcement of any provision of this Lease against transferee be deemed a
waiver of Landlord’s right to enforce any Lease provision against Tenant or
other person.


10.9         If Tenant is a
corporation, an unincorporated association or a partnership (including, without
limitation, a limited liability company (“LLC”) or a limited liability
partnership (“LLP”)), any cumulative transfer, assignment or hypothecation of
any stock or interest in such corporation, association or partnership greater
than forty-nine percent (49%) thereof, or any cumulative transfer, assignment
or hypothecation (other than in the ordinary course of business) of any asset
of such corporation, association, partnership, LLC or LLP greater than
forty-nine percent (49%) thereof (“Change in Control”), shall be deemed an
assignment within the meaning and provisions of this Article 10.  The foregoing shall not apply to
corporations, where forty-nine percent (49%) or more of the stock is traded
through a regional, national or over-the-counter exchange.  Provided that the transferee’s use is
permitted under the Lease and provided that Tenant notifies Landlord of its
intention at least thirty (30) days prior to such assignment or sublease, then
notwithstanding anything in this Lease to the contrary, Tenant shall have the
right, without obtaining Landlord’s consent or paying any Transfer Premium, to
do the following: (a) assign this Lease or sublet all or any part of the
Premises to a parent, wholly-owned subsidiary or affiliate of Tenant; (b)
transfer a majority or controlling interest in the Tenant to an entity with a
financial strength sufficient to meet the
obligations set forth in this Lease; (c) assign this Lease or
sublet all or any part of the Premises to an entity into which Tenant is merged
or by which it has been acquired; (d) 
assign this Lease or sublet all or any part of the Premises to an entity
or entities of the Tenant created by the division of Tenant into one or more
separate corporations and/or partnerships (collectively,
a “Permitted Transferee”).


10.10       Notwithstanding
any of the foregoing provisions, covenants and conditions to the contrary, in
the event that this Lease is assigned to any person or entity pursuant to the
provisions of the Bankruptcy Code, 11 U.S.C. 101 et seq. (the “Bankruptcy
Code”), any and all moneys or other consideration payable or otherwise to be
delivered in connection with such assignment shall be paid or delivered to
Landlord, shall be and remain the exclusive property of the Landlord and shall
not constitute property of Tenant or of the estate of Tenant within the meaning
of the Bankruptcy Code. Any and all moneys or other consideration constituting
Landlord’s property under the preceding sentence not paid or delivered to
Landlord shall be held in trust by the bankruptcy trustee in possession or
debtor in possession for the benefit of the Landlord and shall promptly be paid
to or turned over to Landlord.  If Tenant
proposes to assign this Lease pursuant to the provisions of the Bankruptcy Code
to any person or entity who shall have made a bona fide offer to accept an
assignment of this Lease on terms acceptable to Tenant, then notice of such
proposed assignment setting forth (a) the name and address of such person, (b)
all of the terms and conditions of such offer, (c) the adequate assurance
provided by Tenant to assure such person’s future performance under the Lease
including, without limitation, the assurance referred to in Section 365 of the
Bankruptcy Code, or any such successor or substitute legislation or rule
thereto, shall be given to Landlord by Tenant no later than twenty (20) days
after receipt of such bona fide offer by Tenant.  Tenant shall make application to a court of
competent jurisdiction for authority and approval to enter into such assignment
and assumption.  Landlord shall thereupon
have the prior right and option, to be exercised by notice to Tenant given at
any time prior to the effective date of such proposed assignment, to accept an
assignment of this Lease upon the same terms and conditions and for the same
consideration, if any, as the bona fide offer made by such person, less any
brokerage commissions, attorneys’ fees, tenant improvement costs or other
charges which may be payable out of the consideration to be paid by such person
for the assignment of this Lease.  Any
person or entity to which this Lease is assigned 


 


7





















pursuant to the
provisions of the Bankruptcy Code shall be deemed without further act or deed
to have assumed all of the obligations arising under this Lease on and after
the date of such assignment.  Any such
assignee shall upon demand execute and deliver to Landlord an instrument
confirming such assumption.  Subject to
this Article 10 and Article 20 below, the Lease provisions shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, successors and assigns.


 


11.           Waiver; Indemnity.


11.1         Tenant, as a material part of the
consideration to Landlord, hereby assumes all risk of damage to personal
property of Tenant, or injury to persons in or about the Premises, except to the extent caused by the negligence,
recklessness or willful misconduct of Landlord or Landlord’s Agents.  Notwithstanding any contrary provision
herein, and except to the extent arising from the negligence, recklessness or
willful misconduct of the Landlord, or Landlord’s Agents, Landlord shall not be
liable and Tenant hereby waives all claims against Landlord for any injury or
damage to any person or property or any other loss (including, but not limited
to loss of income), which may be sustained by the person, goods, wares,
merchandise or property of Tenant, or Tenant’s Agents, or any other person in
or about the Premises, the Building, or the Project by or from any cause
whatsoever.  Without limiting the
generality of the foregoing, except to the
extent caused by negligence, recklessness or willful misconduct of the Landlord
or Landlord’s Agents, Landlord shall not be liable for any
damage caused by or resulting from: (a) water leakage of any character from the
roof, walls, windows, basement, or any other portion of the Premises or the
Project; (b) fire, steam, electricity, gas or oil, or by any interruption of
utilities or services, or by any tenant, occupant, or other person; or (c) any
other cause whatsoever, in, on or about the Premises or the Project.  Notwithstanding any contrary provision in
this Lease, Landlord shall not in any event be liable for consequential damages
hereunder.


11.2         Subject to Article 12.7 below, except
to the extent that claims arise from the negligence, recklessness or willful
misconduct of Landlord, Tenant shall indemnify and hold Landlord (as used in
this Article 11.2, “Landlord” shall refer to Landlord and Landlord’s Agents)
harmless from and against any and all claims, demands, losses, damages,
liabilities, costs and expenses (including, but not limited to, reasonable
attorney’s fees) arising from Tenant’s use or occupancy of the Premises, from the conduct of Tenant’s
business, from any act or omission, work or thing done, permitted or suffered
by Tenant (or any officer, employee, agent, contractor, representative,
licensee, guest, invitee or visitor thereof) in or about the Project, or from
any default under this Lease by Tenant. If any action or proceeding is brought
against Landlord by reason of any such matter, Tenant shall, upon notice from
Landlord, defend Landlord in such action or proceeding at Tenant’s
expense.  The provisions of this Article
11 shall survive the expiration or termination of this Lease for a period of
ninety (90) days with respect to any claims or liability arising from events
occurring prior to such expiration or termination.


11.3         Notwithstanding anything in this Lease
to the contrary, except to the extent that claims arise from the negligence,
recklessness or willful misconduct of Tenant, Tenant (as used in this
Article 11.3, “Tenant” shall refer to Tenant and Tenant’s Agents) shall
not be liable for and Landlord shall indemnify Tenant and hold Tenant harmless
from and against all suits, actions, damages, liability and expense in
connection with loss of life, bodily or personal injury or property damage
arising from or out of any occurrence, in, upon, at or from the Project.


 


12.           Insurance.


12.1         Throughout the Lease Term hereof,
Tenant shall carry and maintain, at its own expense, the following types,
amounts and forms of insurance:


12.1.1      Commercial General
Liability Insurance.  A policy of commercial general
liability insurance with a combined single limit of One Million Dollars
($1,000,000) per occurrence with Two Million Dollars ($2,000,000) aggregate
coverage, in the name of Tenant (naming, as additional insureds, Landlord, its
management company Held Properties, Inc., and, if requested by Landlord, any
mortgagee, trust deed holder, or secured party with an interest in this
Lease).  Tenant’s liability coverage
shall include, without limitation, all coverage typically provided by the Broad
Form Comprehensive General Liability Endorsement, including broad form property
damage, and premises-operations coverage, products-completed operations
coverage, owners and contractors protective coverage, and the broadest form of
contractual liability coverage, the last of which shall cover the insuring
provisions of this Lease and the performance by Tenant of the indemnity
agreements in Article 11 above. Such policy shall provide coverage on an
occurrence basis.  The amount of such insurance
required hereunder shall be subject to adjustment from time to time as
reasonably requested by Landlord, but Landlord shall not raise such coverage
amounts to an extent where they materially exceed that customarily carried by
prudent tenants in first class office buildings in the Project area.


12.1.2      Tenant’s Property
Insurance.  Tenant shall
procure and maintain property insurance coverage for: (a) all office furniture,
trade fixtures, office equipment, merchandise and all other items of Tenant’s
property in, on or about the Premises and the Project, including property
installed by, for or at the expense of Tenant and (b) Tenant Improvements.  Tenant’s property insurance shall be written
on the broadest available “all risk” (special causes of loss) policy form and
shall include an agreed amount endorsement for no less than one hundred percent
(100%) of the full replacement cost (new, without deduction for depreciation)
of the covered items and property.  The
property insurance coverage shall include vandalism and malicious mischief
coverage, sprinkler leakage coverage and earthquake sprinkler leakage coverage.


12.1.3     Plate Glass
Insurance.       Tenant shall, at Tenant’s
cost and expense, procure and maintain insurance coverage for all plate glass.


12.2         Recovery for Tenant’s
Negligence.  All of the
policies that Tenant is required to obtain pursuant to the provisions of
Article 12.1 above shall be issued by companies legally authorized to do
business in California.  Although named
as an additional insured and subject to the provisions of Article 12.7 of this
Lease, Landlord shall be entitled to recover under said policies for any loss
occasioned to it, its servants, agents and employees, by reason of the
negligence, recklessness or willful misconduct of Tenant.


12.3         Delivery of Certificate,
Policy and Endorsements. 
Prior to Tenant’s occupancy of the Premises, Tenant shall provide
Landlord with evidence of compliance with Tenant’s insurance requirements under
the Lease, including the endorsements specified in Article 12.1, and, as
available, certified certificates for all insurance policies regarding the
Premises, executed by an authorized agent of the insurer or insurers.  Each insurance policy shall provide that it
may not be modified or 


8





















canceled without ten (10) days prior written notice to
Landlord (by any means described in Article 27 below) and to any other
additional insureds.  At least ten (10) days prior to the expiration
of any of such policies, Tenant shall furnish Landlord with a renewal or binder
therefor.


12.4         Blanket Insurance.  Tenant may carry insurance by a combination
of primary, excess and umbrella policies, provided that the policies are
absolutely concurrent in all respects regarding the coverage afforded by the
policies.  The coverage of any excess or
umbrella policy must be at least as broad as the coverage of the primary
policy.  All insurance policies carried
by Tenant for Tenant’s Premises and personal property shall be primary and
non-contributory with respect to any other insurance available to and purchased
by Landlord.


12.5         Tenant’s Failure to Obtain
Insurance.  If Tenant fails to
carry any insurance policy required hereunder or to furnish certificates
pursuant hereto, Landlord may, upon no less than ten (10) business days prior
written notice, and without waiving Tenant’s default, obtain such
insurance.  In such case, Tenant, with
the next month’s Rent due hereunder, shall reimburse Landlord for the cost
thereof including interest at the Interest Rate specified in Article 27.


12.6         Landlord’s Insurance.  During the Lease Term, Landlord shall procure
and maintain property and liability insurance for the Project in such
reasonable amounts, and with such reasonable coverage, as would be carried by a
prudent owner of a similar building in the Project area, or as any lienholder
may require.  Tenant acknowledges that it
shall not be a named insured or an additional insured in such policies, and
that it has no right to receive any proceeds from any such insurance policies
carried by Landlord.  Landlord may but
shall not be required to carry insurance coverage for damages caused by flood
or earthquake.


12.7         Waiver of Subrogation.  Landlord and Tenant hereby waive all causes
of action and rights of recovery against each other, against all subtenants or
assignees of Tenant and against any other person or entity holding an interest
in the Project (together, the “Affected Parties”) and against the agents,
officers and employees of the Affected Parties for any loss occurring to the
property of the Affected Parties resulting from any of the perils insured
against under any and all insurance policies (including self-insurance) in
effect at the time of any such loss or which, under this Lease, were required
to be insured against, regardless of cause or origin of such loss, including
the negligence, recklessness or willful misconduct of the Affected Parties or
the agents, officers or employees of the Affected Parties.  Landlord and Tenant shall each use commercially
reasonably efforts to cause their respective insurers to issue an endorsement
denying such insurer any rights of subrogation against the other party.


12.8         Increases in Premiums due
to Tenant’s Use or Occupancy. 
If, after Landlord provides notice to Tenant that the insurance carrier
is proposing increased premiums to the Project due to Tenant’s use or occupancy
of the Premises, and Tenant fails to cease the offending use within ten (10)
business days after receipt of such notice, Tenant shall pay said increases in
insurance premiums.


 


13.           Services and Utilities.     13.1            Throughout
the Lease Term, Landlord shall provide the following services and utilities
twenty-four (24) hours per day on every day during the Lease Term, unless
otherwise stated below.


 


13.1.1      Subject to all governmental rules,
regulations and guidelines applicable thereto, Landlord shall provide heating,
ventilation and air conditioning (“HVAC”) to the Premises in a manner
consistent with a first class office building from Monday through Friday, from
8:00 a.m. to 6:00 p.m. and on Saturday from 9:00 a.m. to 1:00 p.m., except for
the celebratory days of the following holidays: New Year’s Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas (collectively “Business
Hours”).   After hours HVAC is currently available to Tenant at no direct charge for
the first five (5) years of the Lease Term but shall be included in Operating
Costs under Article 4.  Thereafter,
Landlord may charge Tenant for after-hours HVAC cost, at Landlord’s actual
cost, calculated to include wear and tear and amortization of equipment and
electrical.


13.1.2      Landlord shall at all times provide
electricity to the Premises for lighting and power of not less than three (3)
watts per rentable square foot demand load on a continuous annualized
basis.  Landlord shall also provide
electrical lighting in all Common Areas, parking facilities or storage areas
and replace building standard lamps and ballasts as required.


13.1.3      Landlord shall provide hot and cold water
to the Building’s rest rooms (and, as applicable, to any sink, refrigerator or
dishwasher in the Premises).


13.1.4      Landlord shall provide passenger elevator
service at all times; provided, however, after Business Hours, Landlord may
decrease the availability of passenger elevator service so long as at least one
car services the floor on which the Premises are located.


13.1.5      Landlord shall provide non-exclusive
freight elevator service to Tenant, subject to reasonable and
non-discriminatory scheduling by Landlord. After Business Hours, Tenant may be
charged at a rate equal to Landlord’s cost of providing such freight elevator
service.


13.1.6      Landlord shall provide 24-hour security for the Project in a
manner consistent with the security systems, equipment and procedures
maintained in comparable first class
office buildings in the Project area. In addition to Landlord’s covenant to provide 24-hour
security to the Project, Tenant shall provide to the Premises its own security
system.


13.1.7      Landlord shall provide normal janitorial
services five (5) days per week, similar to that furnished in comparable first
class office buildings in the Project area and in accordance with the building
standard janitorial and cleaning service specifications.


13.1.8      Landlord shall provide grounds care,
including the sweeping of walkways and parking areas, removal of rainwater (as
may be required) and maintenance of the landscaping in an attractive manner
consistent with other office buildings in the Project area.


13.1.9      Landlord shall operate and maintain the
Project in accordance with the standards of maintenance and operation as are
customary for other comparable first class buildings in the Project area.


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13.1.10    Landlord shall provide controlled access to
the Premises 24 hours a day, every day.


13.2         Without the prior written consent of
Landlord, Tenant shall not use in the Premises any apparatus, device, machine
or equipment that uses excess lighting, heating, ventilation or air
conditioning, electricity or water; nor shall Tenant connect any apparatus or
device to sources of electrical current or water except through existing
electrical outlets or water pipes in the Premises.  If Tenant requires electricity in excess of
the amount provided pursuant to Article 13.1.2 herein, or any other resource in
excess of that customarily supplied for use of similar premises in comparable
first class buildings in the Project area, Tenant shall first request the
consent of Landlord.  As a condition to
its consent, Landlord may cause a separate metering device to be installed in
the Premises, at Tenant’s cost and expense. 
Tenant shall promptly pay the cost of all excess resources consumed
within the Premises, together with any additional administrative expenses
incurred by Landlord in connection therewith. 
Any sums payable by Tenant to Landlord under this Article 13 also shall
be considered Additional Rent and may be included in any installment of Rent
thereafter becoming due.  Landlord shall
have the same remedies for a default in payment of such sums as for a default
in the payment of Rent.


13.3         Except as provided otherwise in this
Lease, Landlord shall not be in default or be liable for any damages directly
or indirectly resulting from any interruption of utilities or services caused
by: (a) the installation or repair of any equipment in connection with the
furnishing of utilities or services; (b) acts of God or the elements, labor
disturbances of any character, any other accidents or any other conditions
beyond the reasonable control of Landlord, or due to repairs or improvements to
the Premises or the Project; or (c) the limitation, curtailment, rationing or
restriction imposed by any governmental agency or service or utility supplier on
use of water or electricity, gas or any other form of energy or any other
service or utility whatsoever serving the Premises or the Project.  .


 


14.           Estoppel Certificate            Within twenty (20) days after any written
request from Landlord, Tenant shall execute and deliver to Landlord a
certificate (the “Estoppel Certificate”) provided by Landlord’s current or
prospective lender or prospective purchaser stating: (a) that this Lease is
then in full force and effect and has not been modified (or if modified, setting
forth all modifications or attaching all amendments to the Lease), (b) the then
current Base Rent and the date to which said Rent has been paid, and (c)
whether or not Landlord is then under default of this Lease and if so, the
nature of such default and date notice of default was given Landlord. Landlord
and Tenant intend that any existing or prospective lender or any prospective
purchaser or assignee of Tenant may rely on such Estoppel Certificate.  Failure of Tenant to provide, within five (5) days after notice and opportunity to
cure, Landlord with a Estoppel Certificate as provided above
shall be a default under the Lease.


 


15.           Subordination;
Requirements of Lenders.


15.1         This Lease shall be subject and
subordinate at all times to (a) all ground leases or underlying leases which
may now exist affecting all or any portion of the Project, and (b) the lien of
any mortgage or deed of trust which may now exist affecting all or any portion
of the Project.


15.2         If any ground lease or underlying lease
terminates for any reason or any mortgage or deed of trust is foreclosed or a
deed in lieu of foreclosure is made for any reason, then Tenant shall,
notwithstanding any subordination, attorn to and become the tenant of the
successor-in-interest.   It shall be a condition
to any future subordination of this Lease that the ground lessor, air space
lessor, or mortgagee or beneficiary requesting such subordination shall agree
that so long as Tenant is not in default under this Lease as defined Article 17, Tenant’s possession
of the Premises shall not be disturbed as a result of such termination,
foreclosure or deed in lieu of foreclosure. Tenant shall execute and deliver,
within thirty (30) days of demand by Landlord, any additional, commercially
reasonable documents evidencing the priority or subordination of this Lease and
the attornment of Tenant with respect to any such ground leases or underlying
leases or the lien of any such mortgage or deed of trust. [See Article 44 of the Lease Addendum.]


 


16.           Access by Landlord.


16.1         Landlord (and its agents, contractors
and employees) reserves the right, without abatement of Rent, to enter the
Premises at reasonable times and after reasonable advance notice (except in
cases of emergency) to inspect it, to supply janitorial services and any other
service to be provided by Landlord to Tenant hereunder, to show the Premises to
any prospective purchaser, beneficiary, mortgagee, to post notices of
non-responsibility, to make any alteration, improvement or repair to the
Premises required by law or consented to by Tenant, or, during the last six (6)
months of the Lease Term, to show it to prospective tenants.  For the purpose of making any alterations,
improvement or repair to the Premises or any portion of the Project, Landlord
may erect, use and maintain scaffolding, pipes, conduits and other necessary
structures in and through the Project and the Premises where reasonably
required by the character of the work to be performed and in conformance with
good construction practices, provided that entrance to the Premises shall not
be blocked thereby, and provided further that Landlord works expeditiously and
uses its best efforts to minimize any interference with Tenant’s use of and
access to the Premises.  At Tenant’s
election, Tenant may accompany Landlord and all persons entering under the
authority or right of Landlord, during any such entry.  Tenant hereby waives any claim for damages or
abatement of Rent for any injury or inconvenience to or interference with
Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises,
and any other loss occasioned thereby, except as otherwise set forth in the
Lease or to the extent arising from the negligence, recklessness or willful
misconduct of Landlord or Landlord’s employees, agents, representatives,
contractors, or invitees.


16.2         For each of the aforesaid purposes,
Landlord shall at all times have and retain a key to all of the doors in, upon
and about the Premises, excluding Tenant’s vaults and safes, and Landlord shall
have the right to use any and all means which Landlord may deem reasonably
necessary or proper to open said doors in any emergency, and any such entry to
the Premises or portions thereof by Landlord shall not under any circumstances
be construed or deemed to be a forcible or unlawful entry into, or a detainer
of, the Premises, or an eviction, actual or constructive, of Tenant from the
Premises or any portion thereof. If at any time during the Lease Term Tenant
wishes to re-key its Premises, all such re-keying shall be done by Landlord
with locks and hardware supplied by Landlord all at Tenant’s sole cost and
expense.


 


10





















17.           Default by Tenant.



17.1         The occurrence of any of the following
shall constitute a breach of the Lease, and a default if not cured by Tenant
after notice and a reasonable opportunity to cure such breach:


17.1.1      Failure by Tenant to pay Rent or any
amount due hereunder when such amount becomes payable in accordance with this
Lease, or to duly, promptly and completely perform any obligation of Tenant
under Articles 14 or 15 above, and continuation of such failure for a period of
three (3) business days after receipt of the written statutory notice from
Landlord to Tenant specifying the nature of such failure.


17.1.2      Failure by Tenant in the due, prompt and
complete performance or observance of any other express or implied covenant,
agreement or obligation of Tenant contained in this Lease, and the continuation
of such failure for a period of thirty (30) days after written notice from
Landlord to Tenant specifying the nature of such failure; provided, however,
that if any such failure cannot reasonably be cured within such period, Tenant
shall not be deemed to be in default hereunder if Tenant promptly commences
such cure within such period and thereafter diligently pursues such cure to
completion.


17.1.3      Tenant’s abandoning the Premises, which
shall mean for these purposes, Tenant’s absence for a period of more than two
(2) weeks from the Premises while otherwise in default of this Lease as described in this Article 17.


17.1.4      Tenant, its assignee, sublessee, other
transferee, successor or any guarantor of this Lease gives to Landlord any
financial statement or representation which proves to be materially false or
materially misleading.


17.1.5      The insolvency of Tenant; the making by
Tenant of any assignment for the benefit of creditors; the filing by or against
Tenant of a petition to have Tenant adjudged bankrupt or of a petition for
reorganization or arrangement under any law relating to bankruptcy, insolvency
or creditors’ rights in general (unless in the case of a petition filed against
Tenant, the same is dismissed within sixty (60) days); the appointment of a
trustee or receiver to take possession of all or a substantial part of Tenant’s
assets or of Tenant’s interest under this Lease, where such seizure is not
discharged within sixty (60) days.  The
occurrence of any of the acts or events referred to in this Article with
respect to any Guarantor of this Lease shall also constitute a default
hereunder.


17.1.6      The attachment, execution or other
judicial seizure of a substantial portion of Tenant’s assets or of Tenant’s
interest in this Lease, where such seizure is not discharged within sixty (60)
days.


17.2         The notices referred to in Article
17.1.1 and 17.1.2 above shall be in lieu of, and not in addition to, any notice
required under Section 1161 et seq. of the California Code of Civil Procedure.


 


18.           Remedies of Landlord.


18.1         In
the event of Tenant’s default under this Lease as provided in Article 17 above,
Landlord, at Landlord’s option, and without limiting Landlord in the exercise
of any other right or remedy Landlord may have on account of such default, and
without any further demand or notice, may terminate this Lease, recover
possession of the Premises and/or, to the extent permitted by California Civil
Code Section 1951.3 or any other law, remove all persons and property from the
Premises, which property shall be stored by Landlord at a warehouse or elsewhere
at the risk, expense and for the account of Tenant.


18.2         On termination of this Lease as
provided in Article 18.1 above, Landlord shall be entitled to recover from
Tenant the aggregate of:


18.2.1      The worth at the time of the award of the
unpaid Rent, as defined in Article 3.2, late charges and interest earned as of
the date of the termination hereof;


18.2.2       The worth at the time of the award of the
amount by which the unpaid Rent, late charges, interest and other amounts due
hereunder, which would have been earned after the date of termination hereof
until the time of the award, exceeds the amount of such unpaid Rent, late
charges and interest that Tenant proves could have been reasonably avoided by
Landlord mitigating its damages;


18.2.3      The worth at the time of the award of the
amount by which the unpaid Rent for the balance of the term hereof after the
time of the award exceeds the amount of such unpaid Rent, interest and late
charges that Tenant proves could have been reasonably avoided by Landlord
mitigating its damages; and


18.2.4      Any other amount necessary to compensate
Landlord for the detriment proximately caused by Tenant’s uncured default under
this Lease, including but not limited to brokerage commissions and advertising
expenses, expenses incurred for removing and storing any of Tenant’s property
remaining on the Premises, expenses of remodeling the Premises for a new tenant
and any special concessions made to obtain a new tenant.


18.3         For the purposes of this Article 18,
the “time of the award” shall mean the date upon which the judgment in any
action brought by Landlord against Tenant by reason of such default is entered
or such earlier date as the court may determine; the “worth at the time of
award” (referred to in Articles 18.2.1 and 18.2.2) shall be computed by
including interest at the Interest Rate and late charges set forth in Article
27 below; and the “worth at the time of award” (referred to in Article 18.2.3)
shall be computed by applying the discount rate of the Federal Reserve Bank of
San Francisco at the time of the award plus one percent (1%) per annum.


18.4         Nothing in this Article 18 shall be
deemed to alter Landlord’s right to indemnification under the indemnification
clause or clauses contained in this Lease for claims or liabilities arising
from events occurring prior to the termination of this Lease.


18.5         Notwithstanding anything to the
contrary set forth herein, Landlord’s reentry into the Premises to perform acts
of maintenance or preservation of, or in connection with efforts to relet the
Premises, or any portion thereof, or the appointment of a receiver upon
Landlord’s initiative to protect Landlord’s interest under this Lease shall not
terminate Tenant’s right to possession of the Premises or any portion thereof
and, until Landlord does elect to terminate this Lease, this Lease shall
continue in full force and Landlord may pursue all its remedies hereunder
including, without limitation, the right to recover from Tenant as they become
due hereunder all Rent and other charges required to be paid by Tenant under
the terms of this Lease.


11





















18.6         If Tenant abandons the Premises, or if
Landlord elects to reenter or take possession of the Premises pursuant to any
legal proceeding or pursuant to any notice provided by law, and until Landlord
elects to terminate this Lease, Landlord may, from time to time, without
terminating this Lease, recover all Rent as it becomes due under Article 18.5
above, subject to interest and late charges as set forth in Article 27, and/or
relet the Premises or any part thereof for the account of and on behalf of
Tenant, on any terms, for any term (whether or not longer than the Lease Term)
and at any rental rate as Landlord in its reasonable discretion may deem
advisable, and Landlord may make any alterations and repairs to the Premises in
connection therewith.  In the event that
Landlord shall elect to so relet the Premises on behalf of Tenant, then base
rent and additional rent received by Landlord from such reletting shall be
applied:


18.6.1      First, to reimburse Landlord for the
reasonable costs and expenses of such reletting (including, without limitation,
legal and other costs and expenses of repossessing the Premises, removing
persons and property therefrom, obtaining new tenants, brokerage fees, costs of
preparing the Premises for occupancy by such new tenants, and, if Landlord
maintains and operates the Premises, the costs thereof).


18.6.2      Second, to the payment of any indebtedness
of Tenant to Landlord other than Base Rent, adjustments to Base Rent,
Additional Rent and other sums due and unpaid hereunder.


18.6.3      Third, to the payment of Rent and other
sums due and unpaid hereunder; the residue, if any, shall be held by Landlord
and applied in payment of other or future obligations of Tenant to Landlord as
they may become due and payable.


18.7         Should the rent received from such
reletting, when applied in the manner and order indicated above, be less than
the total amount owing from Tenant pursuant to this Lease, then Tenant shall
pay such deficiency to Landlord, and if Tenant does not pay such deficiency
within five (5) days of its receipt of written notice, Landlord may bring an
action against Tenant for recovery of such deficiency or pursue its other
remedies hereunder or under California Civil Code Section 1951.8, California
Code of Civil Procedure Section 1161 et seq., or any similar, successor or
related provision of law.


18.8         All rights, powers and remedies of
Landlord under the Lease and any other agreement between Landlord and Tenant
shall be cumulative and not alternative and shall be in addition to all rights,
powers and remedies given to Landlord at law or in equity.  The exercise of any one or more of such
rights or remedies shall not impair Landlord’s right to exercise any other
right or remedy, including, without limitation, any and all rights and remedies
of Landlord under California Civil Code Section 1951.8, California Code of
Civil Procedure Section 1161 et seq., or any similar, successor or related
provision of law.


18.9         [Intentionally
Deleted]


18.10       If Tenant abandons the Premises and
leaves behind any items of personal property, then Landlord shall store such
property at Tenant’s cost and expense at a warehouse or any other location at
the risk of Tenant, and Tenant’s property shall be released only upon Tenant’s
payment of any and all moving and storage charges, as well as any expense or
damages incurred as a result of the removal, moving and storage of such
property, together with all sums due and owing under this Lease. If Tenant does
not reclaim such property within the period permitted by law, Landlord may sell
such property in accordance with law and apply the proceeds of such sale to any
sums due and owing hereunder, or retain said property, granting Tenant credit
against sums due and owing hereunder for the reasonable value of such property.


18.11       To the extent permitted by law, Tenant
and Landlord each hereby waive all provisions of, and protection under, any
decisions, statutes, rules, regulations and other laws of the State of
California to the extent same are inconsistent and in conflict with specific
terms and provisions of this Article 18.


19.           Default by Landlord;
Limitation of Liability.


19.1         Landlord shall not be deemed to be in
default hereunder unless Landlord does not perform its material obligations
under the Lease after written notice of Landlord’s breach by Tenant to Landlord
and to such other parties whose names and addresses are furnished to Tenant.  The notice shall specify that Landlord has
failed to perform such obligations; provided, however, that if the nature of
such obligations is such that more than thirty (30) days are reasonably
required for their cure, Landlord shall not be deemed to be in default hereunder
if Landlord or any such other party(ies) commences such cure within such thirty
(30) day period and thereafter diligently pursues such cure to completion.


19.2         If Landlord is in default hereunder
and, as a consequence thereof, Tenant recovers a judgment against Landlord,
such judgment may be satisfied only out of the right, title and interest of
Landlord in the Project and out of the rent or other revenue receivable by
Landlord from the Project, or out of the proceeds receivable by Landlord from
the sale or other disposition of all or any portion of Landlord’s right, title
and interest in the Project. Neither Landlord nor any of the partners of
Landlord shall be personally liable for any deficiency or otherwise.


20.           Damage and Destruction.


20.1         If the Project (whether or not
including the Premises) is damaged by an insured casualty (or a casualty for
which Landlord is required to insure under the terms of this Lease) occurring
more than six (6) months prior to the expiration of this Lease and any
extensions thereof, Landlord shall forthwith repair same, or cause same to be
repaired, to the extent that insurance proceeds are made available to Landlord
therefor and provided that such repairs can, in Landlord’s reasonable opinion,
be made within one hundred eighty (180) days from the date of such damage  under the laws and regulations of the
federal, state and local governmental authorities having jurisdiction
thereof.  Landlord agrees to repair any
casualty damage as long as the uninsured portion of such casualty damage does
not exceed $15.00 per rentable square foot.


20.2         If (a) the Premises or the Project is
damaged by an uninsured casualty which costs more than $15.00 per rentable
square foot to repair, (b) the casualty repair requires more than one hundred
eighty (180) days to complete without payment of overtime or other premium or
(c) if the Premises, or the Project is damaged by a casualty as described in
Article 20.1 above within the last six (6) months of this Lease and any
extensions thereof, then Landlord shall have the option within thirty (30) days from the date of such damage either to (1) notify
the Tenant of its election to continue the Lease, in which event Landlord shall
thereafter repair such damage; or (2) notify the Tenant of its election to immediately
terminate this Lease, in which event this Lease shall be so terminated.  Landlord shall refund to Tenant any Rent
previously paid for any period of 


 


12





















time subsequent to the
earlier of such termination or untenantability of the Premises.  Notwithstanding any contrary provision
herein, Landlord shall not be required to repair any casualty damage to the
property of Tenant or to repair or replace any paneling, decorations, railings,
floor coverings, alterations, additions, fixtures or improvements installed on
the Premises by or at the expense of Tenant. 
To the extent permitted by law,
Tenant hereby waives the provisions of Section 1932, subdivision 2, and Section
1933, subdivision 4, of the Civil Code of California, and any similar law,
statute or ordinance now or hereafter in effect.


20.3         Until the Premises are restored, Rent
shall be abated in the proportion that the area of the Premises rendered
unusable by Tenant bears to the total area of the Premises.  Except for abatement of Rent, Tenant shall
have no claim against the Landlord for any damage suffered by reason of (a) any
damage to the Premises, (b) such repairs, or (c) any inconvenience,
interruption, annoyance, loss of business, or continued expense of operation
caused by such damage or repair, except to the extent resulting from the
negligence, recklessness or willful misconduct of Landlord, its employees
agents, representatives, contractors or invitees.


20.4         Should the Premises be damaged or destroyed
by fire or other casualty insured under a standard fire and casualty insurance
policy (or which could be insured under a standard fire and casualty insurance
policy), Landlord shall within forty-five
(45) days of the date of
the casualty, notify Tenant in writing of Landlord’s good faith estimate of the
time necessary to repair and rebuild the Premises.  If such estimate sets forth a period of one
hundred eighty (180) days or less, Landlord shall, except as otherwise provided
herein this Article, repair and/or rebuild the same with reasonable
diligence.  Landlord’s obligation
hereunder shall be limited to the Building and Tenant Improvements originally
provided by Landlord at the Commencement Date, and any alterations provided by
Landlord that Landlord has not requested Tenant to remove upon expiration of
the Lease Term.


 


21.           Eminent Domain.


21.1         If the entire Premises, or enough
thereof so as to render the balance thereof not reasonably usable for the
conduct of Tenant’s business, is taken or appropriated by a governmental agency
under the power of eminent domain or conveyed in lieu thereof, either party
hereto may terminate this Lease by serving written notice upon the other party
hereto within thirty (30) days thereafter. 
If any substantial part of the Project excluding the Premises is taken
or appropriated by a governmental agency under the power of eminent domain or
conveyed in lieu thereof, Landlord may so terminate this Lease.  In either event, Landlord shall receive (and
Tenant shall assign to Landlord upon demand by Landlord) any income, Rent,
award or any interest therein which may be paid in connection therewith, and
Tenant shall have no claim for any part of any sum so paid, whether or not
attributable to the value of the unexpired Lease Term; provided, however, that
nothing herein shall prevent Tenant from pursuing a separate award in
connection with the taking of Tenant’s removable tangible personal property
placed in the Premises solely at Tenant’s expense, for Tenant’s relocation costs
and for loss of goodwill.


21.2         If a part of the Premises is so taken,
appropriated or conveyed by a governmental agency, and neither party hereto
elects to terminate this Lease, then Base Rent and Additional Rent payable
hereunder shall be abated in the proportion that the portion of the Premises so
taken, appropriated or conveyed bears to the area of the entire Premises.


21.3         Notwithstanding anything to the
contrary contained in this Article 21, if the temporary use or occupancy of any
part of the Premises (for a period not to exceed 60 days) is taken or
appropriated by a governmental agency under the power of eminent domain or
conveyed in lieu thereof during the Lease Term, this Lease shall be and remain
unaffected by such taking, appropriation or conveyance and Tenant shall
continue to pay in full all Rent payable by Tenant.  In the event of any such temporary taking,
appropriation or conveyance, Tenant shall be entitled to receive that portion
of any award that represents compensation for loss of this use or occupancy of
the Premises during the Lease Term, and Landlord shall be entitled to receive
the balance of such award.  To the extent
that it is inconsistent with the above, each party hereto hereby waives the provisions
of Section 1265.130 of the California Code of Civil Procedure allowing either
party to petition a court to terminate this Lease in the event of a partial
taking of the Premises.


 


22.           Sale by Landlord.  If Landlord sells or transfers all or any
portion of the Project including the Premises, Landlord shall, upon
consummation of the sale or transfer, be released from any liability relating
to its obligations or covenants thereafter to be performed or observed under
this Lease, and Tenant agrees to look solely to Landlord’s successor-in-interest
with respect to such liability.  If
Landlord transfers or credits any security deposit or prepaid Rent to
Landlord’s successor-in-interest, then upon such transfer Landlord shall be
discharged from any further liability therefor.


 


23.           Surrender of Premises.  Upon the expiration or sooner termination of
the Lease, Tenant shall surrender to Landlord the Premises broom clean and free
of debris, with all repairs, changes, alterations, additions and improvements
thereto, in good order, condition and repair, ordinary wear and tear and damage
from insured casualty excepted.  At
Tenant’s sole cost and expense, Tenant shall upon expiration or sooner
termination of the Lease: (a) remove its personal property from the Premises;
(b) remove any improvements to the Premises caused to be installed by Tenant
that Landlord may require Tenant to remove pursuant to Article 7.3; and (c)
repair any damage caused by the removal of any such property or
improvements.  If Tenant leaves any personal
property at the Premises, Landlord may remove such personal property and
dispose of it, at Tenant’s expense.


 


24.           Quiet Enjoyment.  So long as Tenant is not in default
hereunder, Tenant shall have the right to the quiet peaceful enjoyment and
possession of the Premises and the use of the Common Areas during the Lease
Term, subject to the terms and conditions of this Lease.


 


25.           Notices.  Any notice, demand or other communication to
be given under the provisions of this Lease shall be in writing to the
appropriate address set forth in Article 1.1.10 (or such address furnished by
either party hereto to the other party hereto in writing) and shall be (a)
personally served, (b) mailed by United States registered or certified mail,
return receipt requested, postage prepaid, (c) sent by a nationally recognized
courier service (e.g. Federal Express) for next day delivery, to be confirmed
in writing by such courier or (d) sent by electronic facsimile with appropriate
provisions for confirmation of receipt.  Service
by mail shall be deemed complete on the day of actual delivery as shown by the
addressee’s registered or certified mail receipt or at the expiration of the
third business day after the date of mailing, whichever first occurs.  Service by personal service or 


 


13





















courier shall be deemed
complete on receipt.  Service by
electronic facsimile shall be deemed complete on confirmation of receipt if
received prior to the close of business, and on the next business day if
received after the close of business.


 


26.           Personal Property Taxes.  Tenant shall pay before delinquency all
taxes, assessments, license fees and other charges (collectively, “Tenant’s
Taxes”) that are levied and assessed against Tenant’s trade fixtures and other
personal property installed or located in or on the Premises that become
payable during the Lease Term.  On demand
by Landlord, Tenant shall furnish Landlord with satisfactory evidence of such
payments.  If any taxes on Tenant’s
personal property are levied against Landlord or Landlord’s property, or if the
assessed value of the Building is increased by the inclusion of a value placed
on Tenant’s personal property or above-standard leasehold improvements, Tenant,
on demand, shall immediately reimburse Landlord for any such taxes.  Landlord shall have the right to pay these
taxes regardless of the validity of the levy. 
Notwithstanding the foregoing, Landlord agrees to: (a) notify Tenant in
writing prior to paying any taxes under this Article 26 on Tenant’s behalf
(“Landlord’s Tax Notice”), and (b) not pay any such taxes on Tenant’s behalf if
Tenant notifies Landlord in writing within five (5) business days after it
receives Landlord’s Tax Notice that Tenant, in good faith, disputes that the
assessed taxes are properly due and owing by Tenant, provided that Tenant
diligently pursues such dispute with the appropriate taxing authority in good
faith within thirty (30) days from notice.


 


27.           Interest and Late Charges.  Any Rent, Additional Rent or other amount not
paid by Tenant to Landlord when due hereunder shall bear interest from the due
date until paid, unless otherwise specifically provided herein, at a rate (the
“Interest Rate”) equal to the lesser of (a) the rate per annum announced from
time to time by Bank of America, N.A. as its prime rate (or, if such bank fails
to announce such rate, then the prime rate announced by the Chase Manhattan
Bank, USA, N.A.) plus two (2) percentage points, or (b) the maximum rate
permitted by law.  The payment of such
interest shall not excuse or cure any such default by Tenant under this
Lease.  In addition to such interest, if
any Rent, Additional Rent or other amount is not paid within ten (10) days of
when due, a late charge equal to five percent (5%) of such amount shall be
assessed against Tenant, which late charge Tenant hereby agrees is a reasonable
estimate of the damages Landlord would suffer as a result of Tenant’s late
payment.  The parties agree that it would
be impracticable and extremely difficult to fix Landlord’s actual damages in
such event.  Such interest and late
charges are separate and cumulative and are in addition to and shall not
diminish or substitute for any or all of Landlord’s rights or remedies under
any other provision of this Lease.


 


28.           Collection Agency and
Attorneys’ Fees.  Tenant shall pay the costs
incurred by Landlord if Landlord uses a collection agency or attorneys to
collect any moneys unpaid by Tenant or to enforce the terms of this Lease. In
any action to enforce or interpret this Lease, including any suit by Landlord
for the recovery of Rent or possession of the Premises, the non-prevailing
party shall pay to the prevailing party its actual attorneys’ fees.  The prevailing party will be determined by
the court, arbitrator or arbitration panel before whom the action was brought
based upon an assessment of which party’s major arguments or positions could
fairly be said to have prevailed. Any attorneys’ fees and other costs and
expenses incurred by the prevailing party in enforcing a judgment under this
Lease shall be recoverable separately from and in addition to any other amount
included in such judgment in favor or the prevailing party.


 


29.           Light and Air.  Tenant covenants and agrees that no
diminution of light, air or view by any structure that may hereafter be erected
shall entitle Tenant to any reduction of Rent under this Lease, result in any
liability of Landlord to Tenant, or in any other way affect this Lease or
Tenant’s obligations hereunder.


 


30.           Signs and Directory.


30.1         Without the prior written consent of
Landlord, Tenant shall not place, construct or maintain any sign,
advertisement, awning, banner or other decoration on or visible from, or
otherwise use, the exterior of the Premises or any other portion of the
Project.  All door signs on the exterior
of the Premises must be installed by Landlord, at Tenant’s sole cost and
expense or as part of any tenant improvement allowance, that the Landlord
provides for installation of improvements to the Premises, and must conform to
standards of the Project as to size, style, placement, color and number of the
names, and other matters as reasonably determined by Landlord.  In the event that Tenant violates the
foregoing, Landlord may remove the sign without any liability, and may charge
Tenant the expense incurred, including but not limited to the cost incurred for
the repair of the wall, door surface or other area on which the sign was
mounted.


30.2         Landlord shall place, construct and
maintain a directory in the Building lobby and in such other locations, if any,
as Landlord, in its sole discretion, may determine, which directory(ies) shall
be for the display of the business names of Building tenants and their
respective suite numbers.  Landlord shall
have the sole right to determine and change from time to time the type of such
directory(ies) and all common Project signage, including, but not limited to,
size of letters, style, color content and placement.  Tenant shall have the right at Landlord’s
cost to three (3) lines per directory per 1,000 rentable square feet of the
Premises, but listings on such directory(ies) shall be limited to professional
personnel of Tenant located principally at the Premises.  Tenant shall notify Landlord in writing of
the business names that it desires to include on any such directory and shall,
upon demand by Landlord, pay the cost associated with any subsequent changes to
such names on the directory.


 


31.           Parking.  Subject to applicable rules and
regulations any other charges, fees and taxes to be collected by Landlord, or
other parking operator, Tenant shall have the right, but not the obligation,
throughout the Lease Term to lease the number of parking spaces in the parking
facility that serves the Building at such parking rate(s) and upon such other
terms as may be specified in Article 1.1.11. 
Notwithstanding anything to the contrary contained herein, Tenant shall
be obligated to lease at least fifty percent (50%) of the parking spaces
designated in Article 1.1.11 for the entire Lease Term.    Tenant may lease additional parking spaces
on an “as available” monthly basis.  If
Tenant desires to relinquish any of the spaces that Tenant is leasing, Tenant
shall give not less than thirty (30) days notice thereof to Landlord.  Tenant may not sell, assign or transfer its
parking rights hereunder, except pursuant to a permitted sublease or assignment
of this Lease.  Except as may otherwise
be specifically provided elsewhere in this Lease, Tenant shall not be entitled
to any designated, reserved, assigned or valet parking. Landlord reserves the
right to establish and alter, from time to time, on a non-discriminatory basis,
all parking rates, rules and regulations, provided said rates shall be
comparable to rates charged by other similar buildings in the Project area.  Tenant may purchase validation stickers at
the prevailing rate then charged by the Project. See also Article 46 of the Lease Addendum.


 


14





















32.           Brokerage Fees.  Landlord shall have no obligation
to pay commissions or fees to any real estate broker, finder or intermediary
other than Tenant’s Broker, if any, listed in Article 1.1.13 and Held
Properties, Inc., who represents Landlord. 
Landlord and Tenant each warrant that with respect to this Lease neither
has dealt with any other real estate broker, finder or intermediary.  To the extent that Tenant breaches the
foregoing, any commissions or fees payable with respect to this Lease shall be
paid exclusively by Tenant, and Landlord shall have no obligation of any kind
with respect to such commissions or fees. 
Landlord agrees to pay a commission to Tenant’s Broker pursuant to a
separate agreement.


 


33.           Relocation Right.                [Intentionally Deleted] 


 


34.           Authority.  If Tenant is a corporation, trust or
partnership, each individual executing this Lease on behalf of Tenant
represents and warrants that he or she is duly authorized to so execute and
deliver this Lease, and within ten (10) days after its execution shall deliver
to Landlord satisfactory evidence of such authority.  If Tenant or Guarantor is a corporation, it
shall, upon demand, also deliver satisfactory evidence of (a) good standing in
California, and in Tenant’s or Guarantor’s state of incorporation, (b)
qualification to do business in California, and (c) a corporate resolution duly
certified by the secretary of Tenant or Guarantor authorizing execution and
delivery of this Lease or Guarantee, as the case may be, by the parties who
have signed it on behalf of Tenant or Guarantor.


 


35.           Miscellaneous.


35.1         If either Landlord or Tenant waives the
performance of any term, covenant or condition contained in this Lease, such
waiver shall not be deemed to waive any other breach of the same or of any
other term, covenant or condition contained herein.  Furthermore, the acceptance of Rent by
Landlord shall not constitute a waiver of any preceding breach by Tenant of any
term, covenant or condition of this Lease, other than the failure of Tenant to
pay the particular Rent so accepted, regardless of Landlord’s knowledge of such
breach at the time of Landlord’s acceptance of such Rent.  Failure by Landlord to enforce any of the
terms, covenants or conditions of this Lease for any length of time shall not
be deemed to waive or to affect the right of Landlord to insist thereafter upon
strict performance by Tenant.  Landlord’s
or Tenant’s waiver of any term, covenant or condition of this Lease may only be
made by a written document signed by the waiving party.


35.2         Any voluntary or other early surrender
of this Lease by Tenant, mutual termination hereof or prior termination hereof
by Landlord shall not work a merger, and shall, at the option of Landlord,
terminate all or any existing subleases or sub-tenancies.  If Landlord elects to assume any sublease or
enter into a lease with any subtenant, such assumption shall not relieve Tenant
of any remaining liability under this Lease.


35.3         This Lease shall not be recorded; and
no memorandum of lease shall be recorded without Landlord’s prior written
consent.


35.4         Rent, Additional Rent and all other
sums payable under this Lease must be paid in lawful money of the United States
of America.


35.5         This Lease may be executed in
counterparts with the same effect as if both parties hereto had executed the
same document.  Both counterparts shall
be construed together and shall constitute a single lease.


35.6         Nothing contained in this Lease shall
be construed to create the relationship of principal and agent, partnership,
joint venture or any other relationship between the parties hereto, other than
the relationship of Landlord and Tenant.


35.7         Any provision of this Lease that proves
to be invalid, void or illegal shall in no way affect, impair or invalidate any
other provision hereof, and such other provisions shall remain in full force
and effect.


35.8         The term “Premises” shall be deemed to
include (unless, based on the context, such meaning would clearly be
unintended) the space hereby demised and all improvements on or at any time
hereafter constructed or built in such space.


35.9         The term “Tenant” or any pronoun used
in place thereof shall indicate and include the masculine or feminine, the
singular or plural number, individual, firms or corporations, and any Tenant’s
successor in interest.


35.10       The section headings herein are for
convenience of reference only and shall in no way define, increase, limit or
describe the scope or intent of any provision of this Lease.


35.11       If this Lease is entered into by
co-tenants, the obligations of such co-tenants hereunder shall be joint and
several.


35.12       Time is of the essence of this Lease and
all of its provisions.


35.13       The laws of California shall in all
respects govern this Lease.  The parties
acknowledge that the laws of California may change by virtue of legislative
enactment or judicial decision.  The
parties further acknowledge that they have entered into this Lease based on the
laws of California at the time of the execution of this Lease, and each hereby
expressly waives any future rights, benefits, or advantages derived from or as
a result of any future changes in the law of California to the extent not
inconsistent with the terms of the Lease. 
In any action or proceeding arising therefrom, Tenant hereby consents to
(a) the jurisdiction of any competent court within the state of California, (b)
service of process by any means authorized by the laws of the state of
California, and (c) trial without a jury except for actions primarily based
upon personal injury.


35.14       This Lease contains the entire agreement
of the parties hereto with respect to the subject matter hereof and supersedes
any previous negotiations, and may not be modified, except by a written
document executed by the parties hereto. 
There have been no representations or understandings made between the
parties other than those set forth in this Lease.  Without limiting the generality of the
foregoing, Tenant specifically acknowledges and agrees that neither Landlord
nor any broker, agent or representative thereof has made any warranty or
representation with respect to the tenant mix of the Building, the identity of
prospective tenants or other tenants of the Building, profitability or
suitability of the Premises for Tenant’s use, the state of repair of the
Project and the Premises, or the amount and extent of provided services, except
as otherwise specifically set forth herein.


15





















35.15       If any guarantee of this Lease is
required by Landlord, such guarantee shall be in the form and content attached
hereto or, if none, as supplied and/or approved by Landlord.


35.16       The words “person” and “persons” as used
herein shall include individuals, firms, partnerships, associations and
corporations.


35.17       The language in all parts of this Lease
shall be construed simply according to its fair meaning, and not strictly for
or against Landlord or Tenant.  Any
reference to any Article herein shall be deemed to include all subsections
thereof unless otherwise specified or reasonably required from the
context.  Any reference to “days” or
“months” herein shall refer to calendar days or months, respectively, unless
specifically provided to the contrary. 
Unless clearly inconsistent with the context, any reference herein to
the “term hereof” or “the Lease Term” shall refer to the term of this Lease as
the same may be extended pursuant to any extension option(s) contained
herein.  The terms “herein”, “hereunder”
and “hereof” as used in this Lease shall mean “in this Lease” and “under this
Lease” or “of this Lease” respectively, except as otherwise specifically set
forth in this Lease.


35.18       All exhibits and the addendum referred to
in this Lease are incorporated herein as a part hereof.


35.19       Tenant hereby acknowledges and agrees
that the exterior walls of the Building and the area between the demising walls
of premises and the finished ceilings and floors of the Premises and the slab
of the floor above or below have not been demised hereby and that the use
thereof, together with the right to install, maintain, use, repair and replace
pipes, ducts, conduits and wires leading through, under, above or alongside the
Premises, is hereby reserved unto Landlord.


35.20       The submittal of this Lease by Landlord
or its agent or representative for examination or execution by Tenant does not
constitute an option or offer to lease the Premises upon the terms and
conditions contained herein or a reservation of the Premises in favor of
Tenant.  This Lease shall become
effective only upon the execution hereof by Landlord and Tenant and delivery of
a fully executed counterpart hereof to Tenant.


35.21       Tenant warrants and represents that
neither its execution of this Lease nor its performance hereunder will violate
any agreement, instrument, contract, law, rule or regulation by which Tenant is
bound.  Tenant shall indemnify Landlord
against any loss, cost, damage or liability including, without limitation,
reasonable attorneys’ fees and related costs arising out of Tenant’s breach of
this warranty and representation.


 


36.           Rules and Regulations.  Tenant shall observe and comply with the
rules and regulations set forth in this Article 36 and any and all reasonable
modifications thereof and additions thereto established in writing by Landlord
written notice of which has been given to Tenant.  Landlord shall not be responsible for the
non-observance of, or noncompliance with, any of said rules and regulations by
any other tenant or occupant of the Building, but Landlord shall use its
reasonable efforts to enforce the rules and regulations in a non-discriminatory
and consistent manner.  In the event of
any conflict between said rules and regulations and other provisions hereof,
the latter shall control.


36.1         Tenant shall not obstruct, encumber or
use any sidewalks, entrance, passages, courts, elevators, vestibules,
stairways, corridors or halls or Common Area for any purpose other than ingress
and egress to and from the Premises or the Building.


36.2         Tenant shall neither attach any awning
or other projection to the outside walls or windows of the Building, nor attach
or hang any curtains, blinds, shades, drapes or screen to, in or on any window
or door of the Premises without the prior written consent of Landlord.  Such awnings, projections, curtains, blinds,
shades, drapes, screens and other fixtures must be of a quality, type, design,
color, material, installation and general appearance approved by Landlord.  All electrical fixtures hung in offices or
spaces along the window perimeter of the Premises must be of a quality, type,
design, bulb color, size and general appearance approved by Landlord and must
be installed by Landlord at Tenant’s cost.


36.3         Tenant shall not cover or obstruct the
sashes, sash doors, skylights, windows, and doors that admit light or air into
the interior Common Areas, nor shall any articles be placed on the windowsills
of the Project.


36.4         No articles or signs shall be placed in
front of or affixed to any part of the exterior of the Building, nor placed in
public portions thereof without the prior written consent of Landlord.


36.5         The water and janitorial closets and
other plumbing fixtures shall not be used for any purposes other than those for
which they were constructed, and no sweepings, rubbish, rags or other
substances shall be thrown or stored therein. 
All damages resulting from any misuse of the fixtures shall be borne by
Tenant to the extent caused by Tenant or Tenant’s agents, servants, employees,
contractors, visitors or licensees.


36.6         Except
for Cosmetic Alterations, Tenant shall not mark, paint, drill
into or in any way deface any part of the Premises or the Project, or string
any wires except with the prior written consent of Landlord and as Landlord may
direct. Notwithstanding the foregoing, Landlord hereby consents to the hanging
of normal office decorations.


3.67         No animal (except for seeing-eye dogs
or other ADA-approved animals), bird of any kind, or bicycles shall be brought
into or kept in or about the Premises or the Building.


36.8         Prior to leaving the Premises for the
day, Tenant shall use its best efforts to conserve energy and electricity,
including but not limited to drawing or lowering window coverings and
extinguishing all lights.


36.9         Tenant shall not make, or permit to be
made, any unseemly or disturbing noises or smells, or disturb or interfere with
occupants of or visitors to the Building or neighboring buildings.  Tenant shall not throw anything out of the
doors, windows or skylights or down the passageways.  Tenant shall at all times keep the doors
closed from Tenant’s suite into the Common Areas of the Project except upon
prior written approval of Landlord.


36.10       Tenant shall not permit any principal,
agent, servant, employee, contractor, visitor or licensee to smoke any tobacco
products or any non-tobacco products.  No
smoking of any substance will be allowed in the Building at any time.  Landlord reserves the right to exclude or
expel from the Building any person who, in Landlord’s judgment, is smoking any
tobacco or non-tobacco products.  If, in
Landlord’s judgment, Tenant, or Tenant’s principals, agents, servants,
employees, 


 


16





















contractors, visitors or
licensee continue to smoke after adequate warning continues to smoke any
tobacco or non-tobacco product, then Landlord may provide Tenant with a notice
of default and give Tenant 30 days to cure or quit the premises.


36.11       Neither Tenant nor any of Tenant’s
agents, servants, employees, contractors, visitors or licensees shall at any
time bring or keep upon the Premises any inflammable, combustible or explosive
fluid, chemical or substance except in such small quantities and in original
manufacturer’s containers as may reasonably be required for the proper
operation and maintenance of Tenant’s office equipment.  All quantities of the inflammable,
combustible or explosive fluids, chemicals or substances shall be stored as per
guidelines set forth on their containers in a safe manner. After use, any
hazardous wastes shall be disposed of by certified hazardous waste methods in
accordance with the manufacturers’ instructions.


36.12       Landlord shall deliver keys to Tenant
upon Tenant’s occupancy.  Tenant shall
not place any additional locks, bolts or mail slots of any kind upon any of the
doors or windows, nor shall Tenant change any existing locks or the mechanism
thereof without Landlord’s prior written consent.  Upon the termination of the tenancy, Tenant
must turn over to Landlord all keys for the Premises or the Project and, in the
event of the loss of any keys so furnished, Tenant shall pay to Landlord the
cost thereof.


36.13       Delivery or removal of any safes,
freight, furniture, fixtures, bulky matter or heavy equipment of any
description must take place during the hours which Landlord or its agent may
reasonably determine from time to time, upon previous notice to the Landlord
and in a manner and at times reasonably prescribed by Landlord, and the persons
employed by Tenant for such work are subject to Landlord’s reasonable prior
approval.  Landlord reserves the right to
prescribe the weight and position of all safes, or other extra heavy equipment
or furniture or improvements so as to distribute the weight or to require
reinforcing at the cost of Tenant. 
Landlord reserves the right to inspect all safes, freight or other bulky
articles to be brought into the Building and to exclude from the Building all
safes, freight or other bulky articles which violate any of these Rules and
Regulations of this Lease, normal office equipment excluded.


36.14       Tenant shall not occupy or permit any
portion of the Premises to be occupied in a way that is not otherwise permitted
by and consistent with Article 1.1.9, or is not generally consistent with the
character and nature of all other tenancies in the Building.


36.15       Tenant shall not purchase janitorial or
maintenance or other like service from any company or persons not approved by
Landlord, except that Landlord’s approval shall not be required in connection
with any maintenance or other like service that does not affect the structure
or other major systems of the Building. 
Landlord shall approve a sufficient number of sources of such services to
provide Tenant with a reasonable selection, but only in such instances and to
such extent, as Landlord in its judgment considers consistent with security and
proper operation of the Building.


36.16       Landlord shall have the right to prohibit
any advertising or business conducted by Tenant referring to the Building
which, in Landlord’s opinion, tends to impair the reputation of the Building or
its desirability as a first class office building, and upon notice from
Landlord, Tenant shall refrain from or cease such advertising.


36.17       Outside of Business Hours, Landlord
reserves the right to exclude from the Building all persons who are not
otherwise authorized by Tenant to enter the Premises.


36.18       Tenant’s interior designers and
installers of Tenant’s decoration, furniture, carpentry, wall coverings, and
window coverings, shall, while in the Building or elsewhere in the Project, be
subject to and under the control and direction of the Building manager (but not
as agent or servant of said manager or of Landlord).


36.19       If the Premises is or becomes infested
with vermin as a result of the use or any misuse or neglect by Tenant, its
agents, servants, employees, contractors, visitors or licensees, then Landlord
shall forthwith at Tenant’s expense cause the same to be exterminated by
licensed exterminators to the satisfaction of Landlord and, as necessary, from
time to time thereafter.


36.20       Tenant shall make requests for services
at and as instructed by the office of the Building.


36.21       Canvassing, soliciting and peddling in
the Building are prohibited and Tenant shall cooperate to prevent the same.


36.22       No air conditioning unit(s) shall be
installed or used by Tenant without Landlord’s written consent.


36.23       No hand trucks or dollies, except those
equipped with rubber tires and side guards, may be used in any space in the
Project, either by Tenant or by jobbers or others. Tenant shall not permit its
customers, clients or invitees to wait in the public corridors of the
Building.  Tenant shall not permit its
employees to loiter or smoke in the interior Common Areas.


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


36.25       Landlord shall install and maintain for
the Premises, at Landlord’s sole cost and expense, such safety equipment as may
be mandated by applicable governmental authority.


36.26       Tenant shall not use the name of the
Building for any purpose other than as the address of the Tenant’s business in
the Premises, nor shall Tenant use any picture of the Building in its
advertising, stationery or in any other manner without the prior written
permission of Landlord.  Landlord
expressly reserves the right at any time to change name of the Building or
Project without in any manner being liable to Tenant therefor.


 


37.           Compliance with Laws.  Landlord shall pay the cost of any
repairs, capital additions, replacements or take any other actions necessary to
cause the Building to comply with governmental laws, statutes or regulations
that are in effect, applicable to and enforced with respect to the Building
and/or the Premises as of the Commencement Date, including but not limited to
American with Disabilities Act (“ADA”).


 


38.           Good Faith.  Without regard to any references to the terms
“sole” or “absolute”, except for matters which could adversely affect the
Building’s plumbing, HVAC or electrical systems, or its exterior appearance (in
which case Landlord shall have the right to act in its sole and absolute
discretion, exercised in good faith), any time the consent of Landlord or
Tenant is 


 


17





















required, such consent
shall not be unreasonably withheld or delayed. 
Whenever the Lease grants Landlord or Tenant the right to take action,
exercise discretion, establish rules and regulations or make allocations or
other determinations, Landlord and Tenant shall act reasonably and in good
faith and take no action which might result in the frustration of the
reasonable expectations of a sophisticated tenant or landlord concerning the
Lease.


 


IN WITNESS WHEREOF, the parties hereto have executed
this Lease as of                                            ,
2003.


	
  LANDLORD

  	
   

  	
  TENANT

  
	
   

  	
   

  	
   

  
	
  Century Park, 

  	
   

  	
  Mercantile National Bank, N.A., a National Bank 

  
	
  a California limited partnership

  	
   

  	
   

  
	
  By: 

  	
  Held Properties, Inc.

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Director of Leasing

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Joel R. Delman 

  	
   

  	
   

  	
  Scott A. Montgomery

  
	
  Its:

  	
  Management Company

  	
   

  	
  Its:

  	
  President and Chief Executive Officer

  



 


18





















LEASE ADDENDUM


 


This
Addendum is attached to and made a part of that certain office lease (this
“Lease”) dated November 12, 2003 between Century Park, a California limited
partnership, as Landlord (“Landlord”) and Mercantile
National Bank, N.A., a National Bank, as Tenant (“Tenant”)
relating to the premises (“Premises”) known as Suite 110 consisting of approximately 2,118 rentable square feet on the 1st floor of the Building located
at 1880 Century Park East, Los Angeles, California.  The provisions set forth below shall
supersede any inconsistent provisions set forth in the Lease.  Except as otherwise provided below,
capitalized items used below shall have their respective meaning set forth in
the Lease.


 


39.           Option
to Renew.  Provided that
Tenant is not in default under this Lease and provided that the Lease has not
been terminated as a result of Tenant’s default or other acts or failures to
act by Tenant, Tenant shall have an option to renew the Lease for two additional five (5) year terms (each
an “Extended Term”). 
Tenant shall provide Landlord with at least six (6) months but not more
than twelve (12) months prior written notice indicating its intention to
exercise such option to renew.  The
rights contained in this Article 39
shall be personal to the originally named Tenant and may not be assigned nor
transferred except with Landlord’s written consent.


                                39.1         The
monthly base rent during the Extended Term shall be an amount equal to the
Prevailing Rate (as hereinafter defined) at the time of the commencement of the
Extended Term for space leased within the previous six months that are
Comparable Transactions, as defined below. 
The term “Prevailing Rate” shall mean the monthly rent per rentable
square foot that Landlord has accepted in contemporaneous transactions between
nonaffiliated parties for non-expansion, renewal and non-equity tenants of
comparable creditworthiness, for comparable space, comparable use and comparable
lease terms (collectively, “Comparable Transactions”) in the Building.  If there are no Comparable Transactions in
the Building, then the Prevailing Rate shall be prevailing fair market rental
value for Comparable Transactions in the Project area.  In any determination of Comparable
Transactions, appropriate consideration shall be given to the rental rates,
abatement provisions or other concessions, brokerage commissions, if any, that
actually have been paid by Landlord (or other landlords) in similar
transactions, length of the lease term, size and location of the premises being
leased, building standard tenant improvement allowances, if any, and other
generally applicable conditions of tenancy. 
The intent is that Tenant will obtain the same rent and other economic
benefits that Landlord would otherwise give in Comparable Transactions and that
Landlord will make and receive the same economic payments and concessions that
Landlord would otherwise make and receive in Comparable Transactions.


                                39.2         If
Landlord and Tenant are unable to agree on the Prevailing Rate, then Landlord
and Tenant shall agree upon, and jointly appoint, one arbitrator who shall be
an active real estate broker in the Project area over the most recent 5-year
period.  If the Landlord and Tenant fail
to agree upon and appoint an arbitrator, then the appointment of the arbitrator
shall be made by the Presiding Judge of the Superior Court, or if he or she
refuses to act, by any judge having jurisdiction over the parties.  Within five (5) business days after said
appointment, Landlord and Tenant may submit to the arbitrator (with a copy to
the other party) any market data and additional information that such party
deems relevant to the determination of the Prevailing Rate and the other party
may submit a reply in writing within five (5) business days thereafter.  The determination of the arbitrator shall be
limited solely to the issue of whether Landlord’s or Tenant’s submitted
Prevailing Rate is the closest to the actual fair market rent for the Premises,
taking into account the criteria of Comparable Transactions.  Neither Landlord nor Tenant may consult with
such arbitrator as to his or her opinion of the fair market rent prior to the
appointment or resolution of the issue regarding Prevailing Rate for the
Premises.


                                39.3         Within
fifteen (15) days of being appointed, the arbitrator shall decide whether the
parties shall use Landlord’s or Tenant’s submitted Prevailing Rate, and shall
so notify Landlord and Tenant.  The
decision of the arbitrator shall be binding upon the Landlord and Tenant.  The cost of the arbitration shall be paid by
the Landlord and Tenant equally.


                                39.4         Rent
during the Extended Term shall continue to be subject to adjustment based upon
Tenant’s pro-rata share of increases in Recurring Operating Costs except that
the new base year shall be the calendar year in which the Extended Term
commences.


                                39.5         If
Tenant fails to exercise in a timely manner the option to renew herein
provided, said option to renew shall expire and have no further force and
effect.  Tenant’s exercise of said option
to renew shall not operate to cure any uncured default by Tenant under this
Lease, nor to extinguish or impair any rights or remedies of Landlord arising
by virtue of such default.  If the Lease
or Tenant’s right to possession of the Premises terminates in any manner
whatsoever before Tenant exercises the option to renew herein provided, such
option to renew shall terminate; or if Tenant has assigned the Premises to an
unaffiliated, independent third party, then immediately upon such assignment,
the transferability of the option to renew shall be reasonably approved by
Landlord, provided Tenant notifies Landlord in writing at the time of such
assignment of its desire to transfer the option provided hereunder.


40.           Tenant
Improvements.  In the event Tenant does not use the entire
allowance, Tenant shall have the right to use up to $15.00 per usable square
foot as a rent credit amortized over the first sixty (60) months of the Lease
Term.


 


41.           First
Class Financial Institute Use Provisions.


 


41.1.1      During the Lease Term, Tenant shall not:
(a) do or permit anything to be done in or about the Premises, the Building or
the Project that has been prohibited or may hereafter be enacted or promulgated
by governmental authorities to be prohibited, or in any way obstruct or
interfere with the rights of others;  (b)
use or allow the Premises to be used for any improper, immoral or objectionable
purpose or do any act tending to injure the reputation of the Building or the
Project; or (c) commit or allow to be committed any waste upon the Premises, or
any nuisance or other act or thing that may disturb the quiet enjoyment of any
other occupant or tenant of the Project.


 


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41.1.2      In the event Landlord has approved
Tenant’s remaining open for business after normal business hours, the, unless
otherwise provided herein, such approval shall be conditioned upon Tenant
paying, as Additional Rent, all additional costs incurred by Landlord as a
result thereof.


 


41.1.3      Tenant shall, at Tenant’s cost and
expense, keep the Premises orderly, neat, safe, clean and free from rubbish and
dirt, shall provide, at its cost and expense, for janitorial services in
furtherance thereof, and shall store all trash, garbage and other solid waste
within the Premises in such areas as Landlord may designate for such storage.


 


                41.1.4      Tenant shall, at its own cost and expense, provide its own
security system, including separate keys for the Premises.  Tenant shall provide Landlord with copies of
the main keys for use in event of emergency only.


 


                41.1.5      Tenant shall, at its own cost and expense, provide for its
plate glass windows to be washed and cleaned on a regular basis.


 


42.           Option to Terminate.


 


                42.1         Option
to Terminate (Ground Floor). 
Landlord will use its best efforts
to reach and execute, by April 1, 2004, an agreement with Krueger International
(the “Ground Floor Tenant”) an agreement to amend the Ground Floor Tenant’s
lease to reduce its space, which reduced space will become the subject of a
lease (the “Ground Floor Lease”) between Tenant and Landlord.  If Landlord and Ground Floor Tenant fail to
execute by April 1, 2004, such amendment of the Ground Floor Tenant’s Lease, or
if Landlord fails to deliver the Ground Floor Premises by October 1, 2004,
Tenant shall have the right to terminate this Lease by written notice.  If Tenant terminates this Lease pursuant to
this Article 42.1, this Lease shall become null and void.  Furthermore, Landlord and Tenant have entered
into that certain Lease of even date herewith under which Tenant is to lease
Suite 800 in the Building (the “Suite 800 Lease”).  Pursuant to Paragraph 42.2 of the Suite 800
Lease, Tenant may terminate the Suite 800 Lease if Landlord or Landlord’s
contractor is unable to deliver Suite 800 to Tenant in accordance with the
terms of the Suite 800 Lease.  If Tenant
terminates the Suite 800 Lease, this Lease will terminate on the same day as
the Suite 800 Lease, and as of such date, this Lease shall become null and
void, and Tenant shall have no further obligation or liability hereunder.


 


42.2         Option
to Terminate (Fifth Year Anniversary).  At any time prior to the date nine months
prior to the fifth (5th) anniversary date of the Commencement Date, Tenant shall have the option, with written notice
to Landlord, to terminate the Lease.  The
Premises subject to the termination notice shall be referred to as the
“Canceled Premises.”  The termination
shall be effective as of the day before the fifth (5th) anniversary
date of the Commencement Date.  Tenant’s
delivery of the Termination Notice to Landlord shall be accompanied by an
amount equal to the Lease Termination Fee, which will be equal to the
unamortized Tenant Improvement Allowance and leasing commissions plus three (3)
months Base Rent, which amount shall be
Sixty-One Thousand One Hundred Fifty-Seven Dollars ($61,157.00)


 


43.           Signage.


 


43.1         Tenant’s
Monument Sign. Tenant shall
have the non-exclusive right to have its name (including its logo) displayed,
at Landlord’s sole cost and expense, on a monument sign located in the front of
the Building (the “Monument Sign”).   Such signage shall be no smaller than any other
tenant’s sign.  Until the Monument Sign has been installed, Tenant
shall have the right at Tenant’s cost and expense to have a temporary sign to
be installed at a mutually agreed location that is visible by a passing vehicle
from Century Park East.


 


43.2         Requirements.  Tenant’s right to maintain its name on the
Monument Sign shall be subject to the following requirements:


 


a.                                       All expenses in
connection with the construction, installation and maintenance of Tenant’s sign
shall be paid by Landlord.


 


b.                                      The design,
size, location, materials, colors and lighting of the Monument Sign shall be
determined by Tenant and Landlord.


 


c.                                       Landlord shall
have the right to relocate, redesign or reconstruct the Monument Sign from time
to time so long
as the Monument Sign is visible by a passing vehicle, as described in
sub-section (e).


 


d.                                       The cost of
graphics related to Tenant’s portion of sign will be part of the Tenant
Improvement Allowance.


 


e.             The Monument Sign shall be visible by a passing
vehicle on Century Park East.


 


Tenant
shall also have the right to install tasteful signage, similar to that used by
other banks in the geographic area, regarding its services in its windows
facing the lobby and exterior of the building.


 


44.           Non-Disturbance.  Landlord
shall use its best efforts to secure as soon as commercially possible a commercially
reasonable Non-Disturbance Agreement from the Lender, the form of which shall
be provided to Tenant prior to lease execution.


 


45.           Proposition
13.  [See Article 48.1]


 


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46.           Parking.  Tenant shall have the right, during the Lease
Term or any extension thereof, to lease two and one-half (2.5) parking spaces
per every 1,000 rentable square foot leased, at the then current prevailing
rates.  However, the parking rates shall
not be increased during the first twelve (12) months of the Lease Term.  Tenant shall be entitled to lease twenty-five
percent (25%) of such parking spaces as “VIP Call-Down” spaces.  Tenant shall receive a twenty percent (20%)
discount on parking validation sticker books purchased in quantities of Five
Thousand Dollars ($5,000.00) or more.


47.           Option to Negotiate for
Additional Space.      Subject to the rights of existing tenants
that have been granted as of the date hereof, Tenant shall have an option
during the Lease Term to negotiate for additional space (“ONAS”) on the ground floor (“ONAS Space”) by
giving Landlord written notice of Tenant’s desire for additional space.  Provided that Tenant is not in default under
the Lease, and subject to availability of ground
floor space, Landlord shall offer ONAS Space to Tenant (subject
to Tenant’s right of renewal set forth in this Lease) at a prevailing rent and
base year determined in the same manner as during the Extended Term as set
forth in Article 39;
provided, however, that if Tenant exercises its option in the first year of the
Lease Term, the terms and conditions for the ONAS Space shall be the same as
those contained in this Lease.  Tenant
shall have a period of ten (10) business days in which to either accept or
reject Landlord’s offer.  If Tenant does
not timely accept the ONAS Space specified in Landlord’s notice, Landlord may
lease the ONAS Space to any third party. 
If Tenant exercises the ONAS, Landlord and Tenant promptly shall execute
and deliver an amendment to this Lease reflecting the terms of the ONAS Space.
This ONAS shall be personal to Tenant or any entity described in Article 10 and
may not be assigned nor otherwise transferred to any assignee or sub-tenant
without Landlord’s consent.


 


48.           Exclusions from Tax Costs.  Notwithstanding anything in this Lease to the
contrary, the following items shall be excluded from the definition of Tax
Costs.


                                48.1         Any
increases in Tax Costs resulting from a reassessment due to a sale or change of
ownership in the Project occurring during the Initial Lease Term, except for change in ownership
resulting from a non-voluntary foreclosure sale, deed in lieu of foreclosure or
similar transfer of interest.


                                48.2         Tax
Costs for the Base Year and any subsequent year shall be calculated without
taking into account any decreases in real estate taxes that may be obtained in
connection with Revenue and Taxation Code Section 51 (“Proposition 8”).


                                48.3         Any
excess profits taxes, franchise taxes, gift taxes, capital stock taxes,
inheritance and succession taxes, estate taxes, federal and state income taxes
and other taxes to the extent applicable to Landlord’s general or net income
(as opposed to rents or receipts);


                                48.4         Any
Tax Costs based on taxes on tenant improvements in any space in the Building
based upon an assessed level in excess of Building standard improvements, to
the extent that the related taxes are separately designated on the tax bill;


                                48.5         Any
Tax Costs based on penalties incurred as a result of Landlord’s negligence,
inability or unwillingness to pay, and/or to file any tax or informational
returns with respect to, any real property taxes when due, and any additional
costs arising as a result of Landlord’s failure to pay taxes in the maximum
number of installments;


                                48.6         Any Tax Costs based on increase of, or
reassessment in, real property taxes and assessments resulting from major
alterations, improvements, modifications or renovations to the Project, to the
extent that the related taxes are separately designated on the tax bill;


                                48.7         Any
costs or expenses incurred by Landlord for personal property taxes, leasehold
taxes in lieu thereof, or taxes or assessments levied in lieu thereof, or in
addition thereto;


                                48.8         Any
other taxes or assessments charged or levied against Landlord that are not
directly incurred as a result of the operation of the Building.


49.           Exclusions from Operating
Costs.   Notwithstanding
anything in this Lease to the contrary, the following items shall be excluded
from the definition of Operating Costs:


                                49.1.        Costs
incurred for repairs or other work to the Project occasioned by fire, windstorm
or other insurable casualty or by the exercise of eminent domain or any
expenditures for which Landlord is reimbursed.


                                49.2         Marketing
costs, advertising costs, promotional expenses, leasing commissions, attorneys’
fees, space planning costs, and other costs and expenses incurred in connection
with any lease, sublease and/or assignment negotiations and transactions with
current or prospective tenants or other occupants of the Building.


                                49.3         Costs
incurred for renovating or otherwise improving or decorating, painting or
redecorating space for other tenants or occupants of the Building.


                                49.4         The
cost incurred for special services or utilities separately chargeable to other
tenants.


                                49.5         Depreciation
and amortization except as provided above.


                                49.6         Expenses
incurred for services or other benefits that are not offered to Tenant but
which are provided to another tenant or occupant of the Building.


                                49.7         Legal
fees and related costs, together with any damages awarded by a court of law or
arbitration panel to Tenant or any other tenants, or any repair and maintenance
costs incurred by Landlord due to the violation by Landlord or any tenant of
the terms and conditions of any lease in the Building.


                                49.8         Overhead
and profit increment paid to subsidiaries or affiliates of Landlord for
services on or to the Project, to the extent that the costs of such services
exceed competitive costs of such services for similar buildings in the Project
area.


 


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                                49.9         Interest
on debt or amortization payments on any mortgage or mortgages, and rental under
any ground or underlying lease or leases, or other financing costs, including
points, commitment fees, or legal costs related thereto.


                                49.10       Landlord’s
in-house accounting or legal costs, general overhead and executive salaries,
except for salaries of project manager, project engineer or other employees to
the extent directly related to the operation and management of the Project.


                                49.11       Any
compensation paid to clerks, attendants or other persons in commercial
concessions operated by Landlord.


                                49.12       All
items and services for which Tenant reimburses Landlord or pays directly to
third parties.


                                49.13       Any costs, fines or penalties incurred
due to violations by Landlord of any governmental rule or authority, or due to
Landlord’s negligence, recklessness or willful misconduct.


                                49.14       Costs
incurred for sculpture, paintings or other objects of art.


                                49.15       Rentals
and other related expenses incurred in leasing air-conditioning systems,
elevators or other equipment ordinarily considered of a capital nature, except
equipment which is used in providing janitorial services and which is not
affixed to the Building.


                                49.16       Costs
incurred in the testing, encapsulation or other treatment or removal of
asbestos, Hazardous Materials as defined herein, or other substances considered
detrimental to the health or the environment of occupants of the Building including,
without limitation, the cost and expense incurred by or on behalf of Landlord
in removing and disposing any cooling or chilling system and the chemicals used
in the HVAC system from either (1) the Building or (2) another tenant’s
premises within the Building, or (3)
Tenant’s Premises.


                                49.17       The
value of any lost income to Landlord of any office space in the Project that is
utilized for the management of the Building.


                                49.18       Costs
incurred by Landlord to remedy any defects in the design, installation,
construction, or materials used in any part of the Project.


                                49.19       Costs
incurred by Landlord in compliance with the Americans with Disabilities Act
(the “ADA”) or statutes, laws regulations or other legislation of similar
import.


                                49.20       Costs
of Landlord’s charitable or political contributions.


                                49.21       Insurance
premiums to the extent any tenant causes Landlord’s existing insurance premiums
to increase or requires Landlord to purchase additional insurance, to the
extent that any related premiums are separately designated on the insurance
bill.


                                49.22       Increases
in reserves not presently being maintained for future expenses.


                                49.23       Costs
associated with the ownership of the Project or Landlord or Landlord’s property
manager, as distinguished from the cost of Building operations, including the
costs of partnership or corporate accounting (other than partnership tax
preparation) and legal matters, selling or syndicating any of Landlord’s
interest in the Project; and disputes between Landlord and Landlord’s property
manager.


                                49.24       Maintenance
to or replacement of any utility, mechanical or other system solely dedicated
to the single use of any other tenant.


                                49.25       Costs
relating to any areas leased on a triple net basis.


                                49.26       Premiums
for earthquake or flood insurance, unless included in recalculating the
Operating Costs for the Base Year, or other costs relating to expansion in
scope of services or addition of new services not included in the Base Year.


                                49.27      Costs of items considered capital repairs,
replacements, improvements and equipment under generally accepted accounting
principles consistently applied or otherwise (“Capital Items”) except for (i)
the annual amortization (amortized as provided in Article 4.4) of costs,
including financing costs, if any, incurred by Landlord after the Commencement
Date for any capital improvements installed or paid for by Landlord and
required by any new (or change in) laws, rules or regulations of any
governmental or quasi-governmental authority which are enacted after the
Commencement Date; (ii)  the annual
amortization (amortized as provided in Article 4.4) of costs, including
financing costs, if any, of any equipment, device or capital improvement
purchased or incurred as a labor-saving measure or to affect other economics in
the operation or maintenance of the Building (provided the annual amortized
costs does not exceed the actual cost savings realized and such savings do not
redound primarily to the benefit of any particular tenant.


                50.           Tenant acknowledges that Landlord has advised Tenant that
the Building contains or, because of its age, is likely to contain
asbestos-containing materials (“ACMs”). 
If Tenant undertakes any alterations, additions, or improvements to the
Premises, as permitted by Article 7, Tenant shall, in addition to complying
with the requirements of Article 7, undertake the alterations, additions, or
improvements in a manner that avoids disturbing ACMs in the Building.  If ACMs are likely to be disturbed in the
course of such work, Tenant shall notify Landlord, and Landlord shall, at its
sole cost, encapsulate or remove the ACMs in accordance with an approved
asbestos-removal plan and otherwise in accordance with all applicable
Environmental Laws, including giving all notices required by Health and Safety
Code sections 2591-25919.7.


 


51.           Landlord
has removed or has caused to be removed all accessible, friable ACMs in the
Premises.  Landlord shall
use its best efforts to comply with all Applicable Environmental Laws in the
Premises, and throughout the Project during the Lease Term. Landlord shall, at
Landlord’s sole expense and with counsel reasonably acceptable to Tenant,
indemnify, defend and hold harmless Tenant and Tenant’s shareholders,
directors, officers, employees, partners, affiliates and agents (“Tenant
Indemnitees”) with respect to all losses arising out of or resulting from the
release of any Hazardous Material in or about the Premises or the Project, or
the violation of any Applicable Environmental Laws, existing prior to the 


 


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Commencement Date or brought onto the Premises
or Project by Landlord, or Landlord’s agents, employees, contractors or
invitees (other than Tenant and Tenant Indemnitees).  This indemnification includes all losses,
liabilities, obligations, penalties, fines, claims, actions (including remedial
or enforcement actions of any kind and administrative or judicial proceedings,
orders or judgments), damages (including consequential damages and punitive
damages), and costs (including attorneys, consultants or experts fees and
expenses) resulting from the release or violation. This indemnification shall
survive the expiration or sooner termination of the Lease.


 


                52.          Profits (Article 10.6).         For the purposes of Article 10.6, “Profits” shall mean
the gross revenue received from the assignee or sublessee during the assignment
or the sublease term with respect to the space covered by the assignment or
sublease (“Transferred Space”) less: (i) the gross revenue paid to Landlord by
Tenant during the period of the assignment or sublease term with respect to the
Transferred Space; (b) any improvement allowance or other economic concession
(planning allowance, moving expenses, etc.) paid by Tenant to sublessee or
assignee; (c) brokers’ commissions; (d) attorneys’ fees; (e) costs of
advertising the space for sublease or assignment; (f) unamortized cost of
initial and subsequent improvements to the Premises by Tenant; and (g) any
other costs actually paid in assigning or subletting the Transferred Space or
in negotiating or effectuating the assignment or sublease. \


 


                53.  Night Depository and ATM.  Landlord grants to Tenant the
exclusive right to install and maintain an automated teller machine (“ATM”) at
the Building during the term of this Lease and any extensions hereof.  The ATM shall be located in a mutually agreed
to location on the exterior of the Building adjacent to the Premises such that
deposits will go directly into the Tenant’s safe in the interior of the
Premises.  Tenant shall also have the
right to install a night depository window into its Premises.  Tenant shall pay the cost of the installation
and maintenance of the ATM and night depository, including installation of any
required lighting; provided, however, that Tenant may use a portion of the
Tenant Improvement Allowance for such purposes. 
Tenant shall comply with all regulations and laws related to the
installation, maintenance, and use of the ATM and night depository.


 


 


IN WITNESS WHEREOF, the
parties hereto have executed this Lease as of                                          ,
2003.


 


	
  LANDLORD

  	
   

  	
  TENANT

  
	
   

  	
   

  	
   

  
	
  Century Park, 

  	
   

  	
  Mercantile National Bank, N.A., a National Bank 

  
	
  a California limited partnership

  	
   

  	
   

  
	
  By: 

  	
  Held Properties, Inc.

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Management Company

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Joel R. Delman 

  	
   

  	
   

  	
  Scott A. Montgomery

  
	
  Its:

  	
  Director of Leasing

  	
   

  	
  Its:

  	
  President and Chief Executive Officer

  



 


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