**Exhibit 10.4**
| **** | SHOPPING CENTER  LEASE  BROKERAGE AND MANAGEMENT  LICENSED REAL ESTATE BROKER |
|------|-------------------------------------------------------------------------------|

 

**TABLE OFCONTENTS**
|            | ** **                                              | **PAGE** |
|------------|---------------------------------------------------------|----------|
| Article 1  | LEASE OF PREMISES                                       | 1        |
| Article 2  | LEASE REVIEW OBLIGATIONS OF LANDLORD AND TENANT         | 1        |
| Article 3  | DEFINITIONS                                             | 1        |
| Article 4  | EXHIBITS AND ADDENDA                                    | 2        |
| Article 5  | SHOPPING CENTER PLAN                                    | 3        |
| Article 6  | OTHER TENANCIES                                         | 3        |
| Article 7  | DELIVERY OF POSSESSION                                  | 3        |
| Article 8  | TENANT’S WORK                                      | 3        |
| Article 9  | RENT                                                    | 3        |
| Article 10 | NET SALES                                               | 4        |
| Article 11 | POSSESSION AND USE                                      | 5        |
| Article 12 | UTILITIES SERVICES                                      | 5        |
| Article 13 | INDEMNITY BY TENANT                                     | 6        |
| Article 14 | INSURANCE – WAVER OF SUBROGATION                   | 6        |
| Article 15 | TITLE OF LANDLORD                                       | 7        |
| Article 16 | TENANT’S RIGHT TO MAKE ALTERATIONS                 | 7        |
| Article 17 | MECHANICS’ LIENS                                   | 8        |
| Article 18 | ADVERTISING MEDIA                                       | 8        |
| Article 19 | FIXTURES AND PERSONAL PROPERTY                          | 8        |
| Article 20 | ASSIGNING, MORTGAGING, SUBLETTING, CHANGE IN  OWNERSHIP | 9        |
| Article 21 | TENANT’S CONDUCT OF BUSINESS                       | 10       |
| Article 22 | REPAIR AND MAINTENANCE OF THE PREMISES                  | 10       |
| Article 23 | CASUALTY DAMAGE AND RECONSTRUCTION                      | 11       |
| Article 24 | EMINENT DOMAIN                                          | 11       |
| Article 25 | COMMON AREAS                                            | 12       |
| Article 26 | DEFAULTS BY TENANT                                      | 13       |
| Article 27 | DEFAULTS BY LANDLORD                                    | 14       |
| Article 28 | ATTORNEYS’ FEES                                    | 15       |
| Article 29 | SUBORDINATION – ATTORNMENT                         | 15       |
| Article 30 | QUIET POSSESSION                                        | 15       |
| Article 31 | MERCHANTS’ ASSOCIATION                             | 15       |
| Article 32 | CAPTIONS; JOINT AND SEVERAL LIABILITY                   | 15       |
| Article 33 | NOTICES                                                 | 16       |
| Article 34 | OBLIGATIONS OF SUCCESSORS                               | 16       |
| Article 35 | CONSENT OF LANDLORD AND TENANT                          | 16       |
| Article 36 | SECURITY DEPOSIT                                        | 16       |
| Article 37 | MISCELLANEOUS                                           | 16       |
| Article 38 | BROKERS                                                 | 18       |

 

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| **** | SHOPPING CENTER  LEASE  Richard Ellis, Inc.  BROKERAGE AND MANAGEMENT  LICENSED REAL ESTATE BROKER |
|------|----------------------------------------------------------------------------------------------------|

 

This Lease between College Plaza, Ltd, a CaliforniaLimited Partnership (“Landlord”), and 1st Pacific Bank, a State BankingOrganization and La Jolla Association (“Tenant”), is dated November 1, 1999.

**1.**        LEASE OF PREMISES.

In consideration of the Rent (as defined at Section9.5) to be paid by Tenant and the provisions of this Lease, Landlord leases toTenant and Tenant leases from Landlord the Premises shown by diagonal lines onthe plan attached hereto as Exhibit “A”, and further described at Section 3.j.The Premises are located within the Shopping Center described in Section 3.l.Tenant shall have the non-exclusive right (unless otherwise provided herein) incommon with Landlord and other tenants, subtenants and invitees of the ShoppingCenter, to use of the Common Areas (as defined at Section 3.d.).

**2.**        LEASE REVIEW OBLIGATIONS OF LANDLORD ANDTENANT.

Landlord and Tenant acknowledge and agree that eachhas the responsibility to personally review and approve the contents of thisLease and to have this Lease reviewed, approved, and modified as needed by itsattorneys before the Lease is signed.

**3.**        DEFINITIONS.

As used in this Lease, the following terms shall have the followingmeanings:

**b.**        *Broker(s)*

Landlord’s Broker: CB Richard Ellis, Inc.

Tenant’s Broker: CB Richard Ellis, Inc.

Commision Payable to Landlord’s Broker (Section 38.1):$ per agreement.

Landlord’s Broker hereby discloses to Landlord andTenant that Landlord’s Broker is acting in this transaction as the agent of(check applicable box below):

oLandlord exclusively; or x both Landlord and Tenant.

Landlord and Tenant each consent to such representation by Landlord’sBroker.

c.         ***Commencement Date:***Thedate following Tenant’s waiver of its contingency. (Letter dated 1/27/00)

d.*        **Common Areas:***All areas, structural portions, facilitiesand equipment of the Shopping Center outside the Premises and the premises ofother tenants, but within the exterior boundaries of the Shopping Center thatare provided and designated by Landlord from time to time for the general use,benefit and/or convenience of Tenant and/or other tenants of the ShoppingCenter and/or their respective authorized representatives and invitees. CommonAreas include without limitation, pedestrian walkways and patios, landscapedareas, sidewalks, service corridors, public restrooms, stairways, roofs, walls,plazas, malls (including any enclosed malls where climate control is provided),throughways, loading areas, parking areas, and roads, all as generally shown onthe plan attached hereto as Exhibit “A”. Landlord shall have the right toregulate or restrict the use of the Common Areas.

e.         ***Floor Area:***As toboth the Premises and the Shopping Center, the respective measurements of floorarea as are from time to time subject to lease by Tenant and all tenants of theShopping Center, respectively, as determined and applied by Landlord on aconsistent basis throughout the Shopping Center.

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g.        **Landlord’s Mailing Address:** 9466 Black Mountain Road, Suite230, San Diego, CA 92126

***Tenant’s MailingAddress:***______________________________________________________

_____________________________________________________________________________..

h.        ***Minimum Annual Rent (Initial)(Section 9.1):*****$72,000per year, payable in twelve (12) equal monthly installments each year. Minimum rent shall commence March 1, 2000.

i.          _________________________________________________________________________________..

j.          ***Premises:*****That portion of the Shopping Centercontaining approximately 2838 square feet of Floor Area, shown by diagonal lines on Exhibit “A”.

k.         ***Security Deposit (Article 36):*****$6,000 which shall be payable upon waiverof Tenant’s Contingency.

l.          ***Shopping Center:*****The building of which the Premises is apart (the “Building”) and any other buildings and improvements on the realproperty (the “Property”) located at 3500 College Boulevard, Oceanside, CA**and further described on Exhibit “A”. TheShopping Center is known as College Plaza.

m.        ***Tenant’s First Adjustment Date(Section 9.2):*****Thefirst day of the calendar month following the Commencement Day plus 12 months.(i.e. 2/1/01)

n.        ***Tenant’s Proportionate Share(initial):*** 3.6%.

Such share is a fraction, the numerator of which is the Floor Area ofthe Premises, and the denominator of which is the Floor Area of the buildingsin the Shopping Center available for exclusive use and occupancy by tenants(excluding the Floor Area of those areas, if any, designated by Landlord on Exhibit“A” as “Major Stores”), as determined by Landlord from time to time on aconsistent basis. As of the date of this Lease the Shopping Center contains atotal Floor Area of 79,109 square feet.

o.        ***Tenant’s Radius***

p.        ________________________.

q.        Tenant’s TradeName (Article 11):  1st Pacific Bank.

r.         ***Tenant’s Use Clause (Article 11):*****The Premises shall be used and occupiedonly for the purpose of the operation of a bank and general office uses relatedthereto, and for no other use or purpose.

s.         ***Term:*****The Term of this Lease shall begin as ofthe date of waiver of contingency and shall continue thereafter for a period of5 years and**0 months (plus anypartial month) following the Commencement Date. The Commencement Date andexpiration date of the Lease shall be set forth in Landlord’s Notice of LeaseTerm Dates (the “Notice”), which shall be substantially in the form set forthat Exhibit “F”. The Notice shall be served on Tenant promptly followingdetermination of the Commencement Date under Section 3.c.

t.         **CONTINGENCY:** See Addendum

**4.**        **EXHIBITS ANDADDENDA.**

The exhibits and addenda listed below (unless lined out) areincorporated by reference in this Lease:

a.         Exhibit “A”— Plan Showing the Premises and Shopping Center (See Sections 3.j, 3.i andArticle 5)

c.         Exhibit “C”— Landlord’s Work and Tenant’s Work

f.         Exhibit “F”— Landlord’s Notice of Lease Term Dates (See Section 3.s)

i.          Addenda:

_______________________________________________________________________________________

_______________________________________________________________________________________

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**5.**        SHOPPING CENTER PLAN

The plan of the Shopping Center attached as Exhibit “A”shows, among other things, the principal improvements which initially compriseor will initially comprise the Shopping Center. Tenant agrees that Landlord mayat any time and from time to time, change the shape, size, location, number,and extent of the improvements now shown on Exhibit “A” and may eliminate oradd any improvements to any portion of the Shopping Center, but Landlord agrees(i) not to materially change the size or location of the Premises withoutTenant’s consent, and (ii) that any such changes will not materially adverselyaffect ingress to and egress from the Premises, visibility of the Premises orparking availability in the Shopping Center.

**6.**        OTHER TENANCIES.

Landlord reserves the absolute right to effect suchother tenancies and uses in the Shopping Center as Landlord, in its solebusiness judgment, determines best promotes the interests of the Shopping Center.Landlord and Landlord’s Broker do not represent, and Tenant does not rely onthe possibility, that any specific tenant or number of tenants will occupyspace in the Shopping Center during the Term.

**7.**        DELIVERY OF POSSESSION.

Following Tenant waiving its contingency Landlordagrees to deliver to Tenant and Tenant agrees to accept from Landlordpossession of the Premises. Iffor any reason Landlord does not deliver possession of the Premises to Tenantwith Landlord’s Work substantially complete at least 30 days before Tenant’sTentative Commencement Date, Landlord shall not be subject to any liability forsuch failure, and the validity of this Lease shall not be impaired, but theCommencement Date shall be delayed by the number of days delivery is delayed andRent shall be abated until 30 days following the date of substantial completionof Landlord’s Work in the Premises. Notwithstanding anything to the contrarycontained herein, if Landlord does not deliver possession of the Premises toTenant on or before the Outside Date for Delivery of Possession, this Leaseshall terminate and be of no further force or effect, and Landlord and Tenantshall have no further obligations hereunder.

**8.**        TENANT’S WORK.

Tenant shall commence construction of Tenant’s Work as defined inExhibit “C”.

**9.**        RENT.

9.1       ***Payment of Minimum Annual Rent.*****Tenant agrees to pay the Minimum AnnualRent during the Term for its use and occupancy of the Premises. Minimum AnnualRent shall be payable in advance on the first day of each calendar month of theTerm without notice, setoff or deduction, in twelve (12) equal monthlyinstallments during each year of the Term. If the Term begins (or ends) onother than the first (or last) day of a calendar month, the Minimum Annual Rentfor the partial month shall be prorated on a daily basis, based on a 30 daymonth. Tenant shall pay Landlord the first installment of Minimum Annual Rentwhen Tenant executes this Lease, which shall be held and applied or disposed ofas provided in the section entitled Non-refundable Deposit set forth inAddendum to Lease attached hereto.

9.2       ***Adjusted Minimum Annual Rent.*****MinimumRent shall increase annually by four (4%) percent on the anniversary date ofTenant’s waiver of its contigency.

9.3       ***Property Taxes.***

a. Beginning with the Commencement Date and for thebalance of the Term, Tenant shall pay to Landlord as “additional rent” theamount of taxes and assessments levied and assessed for any year upon thePremises and the underlying Property (the “Premises Property Taxes”). Such sumshall be prorated for any partial year of the Term on a daily basis, based on a360 day year. Tenant shall also pay 5.28% of the taxes and assessments for taxparcel 168-012-32

If the Premises and the underlying Property are notseparately assessed, but are assessed as part of the land and improvements on alarger parcel (hereinafter the “Larger Parcel”), Tenant’s share of PremisesProperty Taxes shall be a fractional portion of the property taxes on theLarger Parcel, the numerator of which is the Floor Area of the Premises and thedenominator of which is the Floor Area of all the areas available for exclusiveuse and occupancy by tenants of the Larger Parcel. Tenant shall pay PremisesProperty Taxes to Landlord as part of Common Area Costs at the times and in themanner provided for the payment of Common Area Costs at Section 25.3 of thisLease. For purposes hereof, an equitable adjustment shall be made for buildingswhich are only partially completed on the date such property taxes become alien.

If any Premises Property Taxes (including anyassessments which may be evidenced by improvement or other bonds) due hereundermay be paid in annual installments, only the amount of such annual installment(with an appropriate

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proration for any partial year) and statutory interestthereon shall be included in the computation of annual Premises Property Taxes.

b. The term “Premises Property Taxes” shall mean: (i)any fee, license fee, license tax, business license fee, commercial rental tax,levy, charge, assessment, penalty or tax imposed by any taxing authorityagainst the Premises, Property or the Shopping Center; (ii) any tax on Landlord’sright to receive, or the receipt of, rent or income from the Premises, Propertyor the Shopping Center or against Landlord’s business of leasing space in theShopping Center; (iii) any tax or charge for fire protection, streets,sidewalks, road maintenance, refuse or other services provided to the Premises,Property or Shopping Center by or through any governmental agency; (iv) any taximposed upon this transaction or based upon a re-assessment of the Premises,Property or Shopping Center due to a change in ownership or transfer of all orpart of Landlord’s interest in the Premises, Property or Shopping Center; and(v) any charge or fee replacing any tax previously included within thedefinition of real property tax. “Premises Property Taxes” do not, however,include Landlord’s federal or state income, franchise, inheritance or estatetaxes.

9.4       ***Percentage Rental.***

9.5       ***Additional Rent.*****Upon waiver of Tenant’s Contingency,Tenant shall pay, as additional rent, all sums of money required to be paidpursuant to the terms of this Article 9, the sums to be paid pursuant toArticles 12, 22, 25 and Exhibit “C”, and all other sums of money or chargesrequired to be paid by Tenant under this Lease, whether or not such sums arespecifically designated as “additional rent.” All amounts required to be paidby Tenant hereunder are sometimes collectively referred to as “Rent.”

9.6       ***Interest and Late Charges.***IfTenant fails to pay when due and payable, any Rent, additional rent, or othersums due from Tenant under this Lease, the unpaid amounts shall bear interestat the rate of 10% per annum commencing 30 days after the delinquency occured.

Tenant acknowledges that its late payment of anymonthly installment of Minimum Annual Rent will cause Landlord to incur certaincosts and expenses not contemplated under this Lease, the exact amount of whichis extremely difficult or impractical to fix. Such costs and expenses willinclude, without limitation, loss of use of money, administrative andcollection costs, and processing and accounting expenses. Therefore, if anyInstallment of Minimum Annual Rent is not received by Landlord from Tenant bythe fifth (5th) business day of the month for which such installment is due,Tenant shall immediately pay to Landlord a late charge equal to 10% of suchinstallment. Such late charge is in addition to any interest due pursuant tothe preceding paragraph of this Section 9.6. Landlord and Tenant agree thatthis late charge represents a reasonable estimate of costs and expensesincurred by Landlord from, and is fair compensation to Landlord for its losssuffered by, such nonpayment by Tenant. Acceptance of this late charge shallnot constitute a waiver of Tenant’s default with respect to such nonpayment byTenant nor prevent Landlord from exercising any other rights and remediesavailable to Landlord under this Lease.

9.7       ***Payment of Rent.*****All Rent and other payments due underthis Lease shall be paid by Tenant to Landlord at Landlord’s management officein the Shopping Center, or at such other place as may from time to time bedesignated by Landlord in writing at least 10 days prior to the next ensuingpayment date.

**10.**      NET SALES.

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**11.**      POSSESSION AND USE.

11.1     ***Permitted Uses and ProhibitedConduct******.*****Possession of the Premises shall bedelivered to Tenant free and clear of all tenants and occupants and the rightsof either, and free of liens and encumbrances other than those specified inArticle 15 hereof. Tenant shall use the Premises solely for the purposes setforth in Tenant’s Use Clause and shall operate its business only under thetrade name specified as Tenant’s Trade Name. Tenant shall not use or permit thePremises to be used for any other purposes or under any other trade name.Tenant shall not, without the prior written consent of Landlord, sellmerchandise from vending machines or allow any coin operated vending or gamingmachines on the Premises. Tenant shall not use or permit any person to use thePremises for conducting a second-hand store, auction, distress or fire sale orbankruptcy or going-out-of-business sale, or for any use or purpose inviolation of the laws, ordinances, regulations and requirements of the UnitedStates or the State, County and City where the Shopping Center is located, orany other lawful authority. Tenant shall, during the Term, keep the Premises ina clean and wholesome condition, free of any objectionable noises, odors ornuisances, and shall comply with all health and police regulations. All trashand rubbish of Tenant shall be deposited only in receptacles provided byLandlord and no other trash receptacles shall be permitted to remain outsidethe Premises or Building. Landlord shall cause such receptacles to be emptiedand trash removed at Tenant’s expense. Tenant shall not cause or permit wasteto occur in the Premises and shall not overload any floor or abuse the plumbingin the Premises.

Tenant may not display or sell merchandise or allowcarts, portable signs, devices or any other objects to be stored or to remainoutside the defined exterior walls, roof or permanent doorways of the Premises,or in Building hallways. No aerials or antennae shall be erected on the roof orexterior walls of the Premises or Building without first obtaining, in eachinstance, the written consent of Landlord. Any aerial or antenna so installedwithout Landlord’s written consent may be removed without notice at any time,at Tenant’s expense. Tenant shall not solicit or distribute materials in anymanner in any of the Common Areas (including automobile parking facilities andany enclosed mall of the Shopping Center).

11.2     ***Insurance Coverage Use Restrictions.*****Tenant shall not carry any stock or goodsor do anything in or about the Premises which tends to increase theinsurance rates on the Building or Shopping Center or impairs Landlord’sability to maintain insurance coverage on the Building or Shopping Center.Tenant agrees to pay to Landlord promptly upon demand the amount of anyincreases in Landlord’s insurance premiums caused by Tenant’s violation ofthese restrictions, whether or not Landlord has consented to such act(s) byTenant. If Tenant installs any electrical equipment in the Premises which overloadsthe electrical lines of the Premises, Tenant shall, at its expense, make anychanges and install any fire extinguishing equipment required by Landlord’sinsurance underwriters or applicable fire, safety and building codes andregulations. Nothing herein contained constitutes Landlord’s consent to suchoverloading.

11.3     ***Deliveries******.*****Tenant shall use its best efforts tocomplete all deliveries, loading, unloading and services to the Premises before10:00 a.m. each day. Tenant shall attempt to prevent any delivery trucks orother vehicles servicing the Premises from parking or standing in front of, orat the rear of, the Premises from 10:00 a.m. to 9:00 p.m. of each day. Landlordreserves the right to further regulate the activities of Tenant in regard todeliveries to and servicing of the Premises, and Tenant agrees to abide by suchfurther non-discriminatory regulations of Landlord. Notwithstanding the foregoing,there shall be no limitation on the times for delivery by any armored carservice.

**12.****      UTILITIES SERVICES.**

12.1     ***Utilities Installation******.*****Landlord agrees that to the extentprovided for in Exhibit “C” hereof, it will initially make available to Tenant(i) facilities for the removal of sewage and the delivery to and distributionwithin the Premises of water, electricity, telephone service and natural gas(which shall be used by Tenant for cooking and demonstration of gas operatedsales items only) [these facilities are collectively referred to in thisArticle 12 as “utilities”], and (ii) a heating, ventilation and airconditioning

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system (the “HVAC system”). Unless Landlord agreesotherwise, Tenant shall use only those utilities and any HVAC system providedfor under Exhibit “C” to Serve the Premises. If required under Exhibit “C” aseparate meter shall measure the consumption of utilities and/or the HVACsystem.

If not required to be furnished by Landlord underExhibit “C”, Tenant shall be responsible for obtaining any utilities and/orHVAC system required for Tenant’s business operations in the Premises.

12.2     ***Utilities and HVAC System Charges.*****Tenant shall pay for all utilities usedby Tenant on the Premises from and after substantial completion of Landlord’sWork in the Premises. If Tenant’s utilities and/or HVAC system are separatelymetered, Tenant shall pay directly to the appropriate utility company the costof all such utilities used on the Premises. If any of Tenant’s utilities and/orHVAC system are furnished by Landlord without separate metering, then duringthe Term Tenant shall pay as additional rent, monthly in advance, a utilitiescharge to reimburse Landlord for any such utilities furnished by Landlord tothe Premises. This utilities charge shall, at Landlord’s election, beestablished (a) by an estimate of usage made from time to time by Landlord’sengineer or the appropriate utility company, and initially based on a typicalstore layout comparable to Tenant’s proposed use of the Premises, or (b) apercentage of such total utility costs equal to a fraction, the numerator ofwhich is the Floor Area of the Premises, and the denominator of which is theFloor Area of Shopping Center actually being furnished with utility service byLandlord at the time of billing. If Tenant’s Premises is not separatelymetered, such utilities and/or HVAC charges may be billed with Tenant’s shareof Common Area Costs under Section 25.3. The utilities charge to Tenanthereunder for utilities furnished by Landlord shall be based on utility rateswhich do not exceed those charged by the local public utility company forservices it would otherwise furnish directly to Tenant. If the Premises are notinitially separately metered, Landlord shall have the right, at its expense, toinstall separate meters for the Premises at any time during the Term.

12.3     ***Failure to Pay.*****If Tenant fails to pay any amount due toLandlord hereunder within 10 days after receipt by Tenant of a bill therefor,Landlord may (in addition to all other rights and remedies provided herein forbreach of this Lease and if permitted by law) cut off and discontinue, upon 5days’ advance notice to Tenant and opportunity to cure, any such utilitiesfurnished to the Premises by Landlord until all such amounts are paid in full.

12.4     ***No Landlord Liability.*****Landlord shall not be liable in damagesor otherwise for any failure or interruption of (i) any utility service beingfurnished to the Premises, or (ii) operation of the HVAC system, if any. Nosuch failure or interruption shall entitle Tenant to terminate this Lease orstop making any Rent or other payments due hereunder.

**13.**      INDEMNITY BY TENANT.

Tenant shall indemnify and hold Landlord harmless fromany and all costs, claims or liability of any kind arising out of: (a) Tenant’suse and occupancy of the Premises, (b) the conduct of Tenant’s business or anywork, activity or other things allowed or permitted by Tenant to be done in oron the Premises; (c) any breach or default in the performance of any of Tenant’sobligations under this Lease; (d) any misrepresentation or breach of warrantyby Tenant under this Lease; and/or (e) any other acts or omissions of Tenant,its agents, employees, invitees or contractors. Tenant shall, at Tenant’sexpense, and by counsel satisfactory to Landlord, defend Landlord in any actionor proceeding arising from any such claim or liability and shall indemnifyLandlord from and against all costs, attorney’s fees, expert witness fees andany other expenses incurred in such action or proceeding. As a material part ofthe consideration for Landlord’s execution of this Lease, Tenant hereby assumesall risk of damage to property or injury to persons in, on or about thePremises from any cause, and Tenant hereby waives all claims in respect thereofagainst Landlord, except for any claim arising out of Landlord’s grossnegligence or willful misconduct.

**14.**      INSURANCE — WAIVER OF SUBROGATION.

14.1     ***Tenant’s Insurance Obligations.*****Tenant shall, from and after the earlierof (a) substantial completion of Landlord’s Work in the Premises, or (b)commencement of any of Tenant’s Work in the Premises, and for the reminder ofthe Lease Term maintain, at its expense, the following types of insurancecoverage, in the amounts specified and in the forms hereinafter provided for:

(i)        LIABILITYINSURANCE. Commercial general liability insurance (sometimes known ascomprehensive general liability insurance) insuring Tenant against liabilityfor bodily injury, property damage (including loss of use of property) andpersonal injury arising out of the operation, use or occupancy of the Premises.Such policy shall be an occurrence form and shall include Owner’s andContractor’s Protective Liability with respect to construction of improvementsby Tenant on the Premises. Tenant shall name Landlord as an additional insuredunder such policy. The initial amount of such insurance shall be not less than$1,000,000 per occurrence. The liability insurance obtained by Tenant underthis Section 14.1 (i) shall (1) be primary and non-contributing; (2) containcross-liability endorsements; and (3) Insure Landlord against Tenant’sperformance under Article 13(a), (b) and (e) if the matters giving rise to theindemnity under Article 13 result from the negligence of Tenant. The amount andcoverage of such insurance shall not limit Tenant’s liability nor relieveTenant of any other obligation under this Lease.

(ii)       PLATEGLASS. Insurance covering the full replacement cost of all plate glass on thePremises. Tenant shall have the option to self-insure this risk.

(iii)      TENANT IMPROVEMENTS. Insurance covering all ofthe items specified as “Tenant’s Work” in Exhibit “C”, Tenant’s leaseholdimprovements, alterations, additions or improvements permitted under Article16, and trade fixtures, merchandise and personal property from time to time in,on or upon the Premises. Such insurance shall cover not less than 100% of thefull replacement cost of the foregoing from time to time during the Term, andshall provide protection against any peril included within the classificationof fire, extended coverage, sprinkler leakage, vandalism, theft, maliciousmischief and special extended perils (all risk). Any policy proceeds shall beused for the repair or replacement of the property damaged or destroyed unlessthis Lease is terminated under the provisions of Article 23 hereof.

(iv)      GENERALINSURANCE PROVISIONS.

(a) Any insurance required to be maintained by Tenanthereunder shall include a provision which requires the insurance carrier togive Landlord not less than thirty (30) days’ written notice prior to anycancellation or modification of such coverage.

(b) A certificate of theinsurer or the insurer’s legal representative evidencing the existence andamount of each insurance policy required of Tenant hereunder shall be deliveredto Landlord before the date Tenant is first given the right of possession ofthe Premises, and thereafter at least 30 days prior to the expiration of anysuch policy. Landlord may, at any time and from time to time, inspect and/orcopy any insurance policies required to be maintained by Tenant hereunder. Nosuch policy shall be cancellable except after 30 days’ written notice toLandlord. If Tenant fails to deliver any such

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evidence of insurance to Landlord required under thisLease within the prescribed time period or if any such policy is cancelled ormodified during the Lease Term without Landlord’s consent, Landlord may obtainsuch insurance coverage, in which case Tenant shall reimburse Landlord for thecost of such insurance within fifteen (15) days after receipt of a statementtherefor.

(c) All insurance shall be maintained with companiesholding a “General Policy Rating” of A-XII or better, as set forth in the mostcurrent issue of “Best’s Key Rating Guide.” Landlord and Tenant acknowledge theinsurance markets are rapidly changing and that insurance in the form and amountsdescribed in this Section 14.1 may not be available in the future. Tenantacknowledges that the insurance described in this Section 14.1 is for theprimary benefit of Landlord. If at any time during the Lease Term, Tenant isunable to maintain the insurance required under the Lease, Tenant shallnevertheless maintain insurance coverage which is customary and commerciallyreasonable in the insurance industry for Tenant’s type of business, as thatcoverage may change from time to time. Landlord makes no representation as tothe adequacy of such insurance to protect Landlord’s or Tenant’s interests.Therefore, Tenant shall be responsible for obtaining any such additionalproperty or liability insurance which Tenant deems necessary to protectLandlord and Tenant.

14.2     ***Landlord’s Insurance Obligations.*****Landlord shall, in connection with itsownership and operation of the Shopping Center, at all times from and aftercommencement of Landlord’s Work in the Premises, maintain in effect policies ofinsurance providing protection against the following liabilities and/or risks:(a) commercial general liability insurance in an amount not less than$1,000,000.00 combined single limit for bodily injury and property damage, and(b) fire and extended coverage insurance (including coverage for Common Areasprinkler damage, vandalism and malicious mischief, and, if required by anylender holding a security interest in the Shopping Center or if deemednecessary by Landlord, flood and earthquake insurance) on the Building and ShoppingCenter in an amount not less than their full replacement cost (exclusive of thecost of excavations, foundations and footings) from time to time during theTerm. The types and coverages of insurance maintained by Landlord hereundershall be subject to such further requirements as may be imposed by Landlord’slender. Landlord shall also have the right to maintain such additional typesand coverages of insurance (including business interruption insurance) as arecustomary, prudent or reasonable for shopping centers similar to the ShoppingCenter. Landlord’s obligation to carry the insurance provided for herein may besatisfied by blanket policies if the coverage required hereunder is satisfied.

14.3     ***Waiver of Subrogation.*****Landlord and Tenant (for themselves andtheir insurers) each hereby waive all rights of recovery against the other andagainst the officers, employees, agents and representatives of the other,against any of the parties to the REA referred to in Article 15 hereof (the “Parties”)and against other tenants of the Shopping Center (provided such Parties andother tenants have waived such rights against Landlord and Tenant), on accountof any loss by or damage to the waiving party or its property or the propertyof others under its control (including as to Tenant the Premises and itscontents, and as to Landlord the other portions of the Shopping Center),arising from any risk generally covered by fire and extended coverageinsurance. The foregoing waivers of subrogation shall be required hereunderonly if (a) then available in the State where the Shopping Center is located,and (b) such waiver does not invalidate the applicable policy.

**15.**      TITLE OF LANDLORD.

Landlord’s estate in the Shopping Center and Tenant’sleasehold estate in the Premises is subject to the liens or restrictions of (a)any matters or documents of record (the “Matters of Record”), including theeffect of any covenants, conditions, restrictions, easements, mortgages ordeeds of trust, ground leases, rights of way or any construction, operation andreciprocal easement agreement (the “REA”); and (b) the effect of any zoninglaws of the City, County and State where the Shopping Center is located. Tenantagrees that (i) Tenant and all persons in possession of Tenant’s leasehold estateor holding under Tenant will conform to and will not violate the terms of anyREA or any other Matters of Record, and (ii) this Lease is subordinate to theREA, if any, and any amendments or modifications thereto. If the REA, if any,is not of record as of the date of this Lease, then this Lease shallautomatically become subordinate to the REA upon recordation of the REA. Tenantagrees to execute and return to Landlord within 10 days after written demandtherefor by Landlord, an agreement in recordable form satisfactory to Landlordsubordinating this Lease to the REA. Any REA shall not prevent Tenant fromusing the Premises for the purposes set forth in Tenant’s Use Clause.

**16.**      TENANT’S RIGHT TO MAKE ALTERATIONS.

16.1     ***Permitted Improvements.*****Subject to the terms of this Article 16,Tenant may from time to time after completion of Tenant’s Work and at its ownexpense, make alterations, additions, Improvements and changes (individuallyand collectively referred to in this Article 16 as “improvement(s)” In and tothe interior of the Premises after first giving notice to Landlord of the improvementwork proposed to be done and providing Landlord with all plans for suchproposed improvement work. Tenant may not make any improvement which reducesthe value of the Premises or is of a structural nature. No single improvementcosting more than $500.00 may be made without first obtaining the writtenapproval of Landlord. In addition, no improvement shall be made to anystorefront, mechanical system, or exterior wall or to the roof of the Premises,nor shall Tenant erect any mezzanine or increase the size of an existingmezzanine, unless and until the written consent and approval of Landlord isfirst obtained.

No penetration into or through the roof or floor ofthe Premises may be made without Landlord’s prior written approval of thereason for such penetration and the method by which it is to be done. IfLandlord approves any such penetration, Landlord shall have the absolute rightto select and supervise the contractor performing such penetration. Tenantshall be liable for any damage caused by any such penetration, whether or notso approved by Landlord.

Tenant shall reimburse Landlord for all costs incurredby Landlord (including architect’s and/or engineer’s fees) in approving Tenant’splans for improvements and for reasonable costs incurred by Landlord insupervising any improvement work required to be approved by Landlord hereunder.

16.2     ***Construction Requirements.*****All improvements to be made to thePremises which require the approval of Landlord shall be performed under thesupervision of a competent architect or competent licensed structural engineerand shall be made in accordance with plans and specifications first approved inwriting by Landlord before the commencement of work. All improvements shall beconstructed in a good and workmanlike manner in accordance with all applicablelaws (including any laws relating to the use of hazardous materials, such asasbestos containing materials) and diligently completed. Before commencement ofany construction, Tenant shall deliver a copy of the building permit toLandlord and shall provide Landlord with a list of all contractors orsubcontractors being used. Upon completion of such improvements, Tenant shallfile a Notice of Completion for record in the office of the County Recorderwhere the Shopping Center is located, as required or permitted

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by law. Tenant shall provide Landlord with “as built”plans, copies of all construction contracts, and proof of payment for all laborand materials in connection with any improvements made to the Premises. Uponexpiration or earlier termination of this Lease, such improvements shall becomea part of the Premises and shall not be removed by Tenant. In constructing suchimprovements, Tenant shall have the work performed in such a manner as not toobstruct access to the premises of any other tenant in the Shopping Center.

16.3     ***Insurance Requirements.*****If Tenant makes any permittedimprovements to the Premises under the provisions of this Article 16, Tenantshall carry insurance covering any such improvements satisfying therequirements of Section 14.1(III). It is expressly understood and agreed thatno such improvements will be insured by Landlord under the insurance it maycarry upon the Building or Shopping Center, nor shall Landlord be required toreinstall any such improvements made by Tenant under any provision of Article23 for reconstruction of the Premises.

**17.**      MECHANICS’ LIENS.

17.1     ***Tenant’s Covenants.*****Tenant shall pay all costs for work doneby or for Tenant in the Premises (other than Landlord’s Work), and Tenant shallkeep the Premises, Building and Shopping Center free of all mechanics’ liensand other liens on account of work done for Tenant. Tenant shall indemnify,defend and hold Landlord harmless from and against any and all liability, loss,damage, costs, attorneys’ fees and all other expenses on account of claims oflien of laborers or materialmen or others for work performed or materials orsupplies furnished to or for Tenant or persons claiming under Tenant. Inaddition, Tenant shall keep Tenant’s leasehold interest and any of thoseimprovements to the Premises which are or become property of Landlord pursuantto this Lease free of all attachment or judgment liens. Prior to commencing anywork in or to the Premises (including the supply of any labor, services ormaterials for the construction of improvements in the Premises under Article 16or Exhibit “C”), Landlord may require Tenant to provide demolition and/or lien andcompletion bonds in form and amount satisfactory to Landlord.

17.2     ***Tenant’s Contest of Lien.*****If Tenant desires to contest any claim oflien arising from work done by or for Tenant in the Premises, Tenant shallfirst furnish Landlord adequate security in the amount of the claim, plusestimated costs and interest, or a bond of a responsible corporate surety insuch amount, conditioned on the discharge of the lien. If a final judgmentestablishing the validity or existence of any such lien for any amount isentered. Tenant shall immediately pay and satisfy such judgment.

17.3     ***Landlord’s Right to Cure.*****If Tenant is in default in paying anycharge for which a lien claim and suit to foreclose the lien have been filed,and Tenant has not given Landlord adequate security to protect the Premises,the property therein, and the Building, Shopping Center and Landlord fromliability for such claim of lien, Landlord may (but shall not be required to)pay the claim and any associated costs, and the amount so paid, together withreasonable attorneys’ fees incurred in connection with such payment shall beimmediately due and owing from Tenant to Landlord. Tenant shall pay the amountsso owed to Landlord with interest at the maximum lawful rate from the date ofLandlord’s payment.

17.4     ***Notice of Lien.*****If any claim of lien is filed against thePremises or any action affecting the title to the Premises or the propertytherein is commenced, the party receiving notice of such lien or action shallimmediately give the other party written notice thereof.

17.5     ***Notice of Non-Responsibility.*****Landlord or its representatives shallhave the right to enter and inspect the Premises at all reasonable times andshall have the right to post and keep posted thereon notices ofnon-responsibility, or such other notices which Landlord deems proper for theprotection of Landlord’s interest in the Premises. Tenant shall, beforecommencing any work which might result in the filing of a lien, give Landlordwritten notice of its intention to so commence work in sufficient time toenable Landlord to post such notices.

**18.**      ADVERTISING MEDIA.

**19.**      FIXTURES AND PERSONAL PROPERTY.

19.1     ***Removal and Replacement******.*****All of Tenant’s trade fixtures,furnishings, furniture, signs and other personal property not permanentlyaffixed to the Premises (collectively referred to as “Personal Property”) shallbe in good condition when installed in or attached to the Premises by Tenantand shall remain the property of Tenant. If Tenant is not then in default underthe terms of this Lease, Tenant shall have the right to remove its PersonalProperty from the Premises, including without limitation, counters, shelving,showcases, mirrors and other movable Personal Property, but prior to theexpiration of the Term Tenant may not remove so much of its Personal Propertywithout immediately replacing it with comparable or better quality PersonalProperty, as to render the Premises unsuitable for conducting the businessspecified in Tenant’s Use Clause. Tenant shall, at its expense, immediatelyrepair any damage to the Premises resulting from removal of its PersonalProperty, and on the expiration or earlier termination of the Term shall leavethe Premises in a neat and clean condition, free of debris.

19.2     ***Fixtures.*****All improvements to the Premises made byor for Tenant, excluding Tenant’s Personal Property, but including mechanicalsystems, light fixtures, floor coverings and partitions and all other itemscomprising Tenant’s Work pursuant to Exhibit “C” (collectively referred to as “Fixtures”),shall become the property of Landlord upon expiration or earlier termination ofthis Lease.

19.3     ***Personal Property Taxes.*****Tenant shall pay before delinquency alltaxes (including sales and use taxes), assessments, license fees and publiccharges levied, assessed or imposed upon its business operations, merchandise,trade fixtures and/or Personal Property. If any such items of property areassessed with any Larger Parcel as defined in Section 9.3, Tenant shall payLandlord the taxes attributable to Tenant’s personal property within 15 daysafter Tenant’s receipt of a written statement from Landlord setting forth suchpersonal property taxes. Landlord shall reasonably determine the basis ofprorating any such

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assessments and such determination shall be binding onLandlord and Tenant.  No taxes,assessments, fees or charges referred to and billed to Tenant under thisparagraph shall be considered to be taxes under the provisions of Section 9.3hereof.

**20.**      ASSIGNING, MORTGAGING, SUBLETTING, CHANGE IN OWNERSHIP.

20.1     ***One Year Prohibition AgainstTransfer******.*****Landlord and Tenant acknowledge that theShopping Center is an interdependent enterprise and that each party’srealization of the benefits of this Lease depends upon Tenant’s creating andmaintaining a successful and profitable retail operation in the Premises.Landlord and Tenant further acknowledge that the character and quality ofTenant’s operation, and of the Shopping Center, will be enhanced by Tenant’suse of its best efforts, for a reasonable period of time, to establish asuccessful business and business image. Landlord and Tenant further agree thatone year is a reasonable period of time to attempt to achieve this goal.Accordingly, Tenant agrees that for a period of one year from the date Tenant initiallyopens to the public for business in the Premises (the “Occupancy Period”),Tenant shall not, and shall not have the power to, transfer or assign thisLease, sublet the Premises, enter into license or concession agreements, orchange ownership (such transactions are hereinafter individually andcollectively referred to as a “Transfer”), without first procuring the writtenconsent of Landlord, which may be given or withheld in Landlord’s solediscretion. After the expiration of the Occupancy Period, Landlord’s consent toany Transfer shall not be unreasonably withheld, subject to the terms,covenants and conditions contained below.

20.2     ***Restrictions on Transfer******.*****If after expiration of the OccupancyPeriod Tenant desires to effect a Transfer to anyone (a “Transferee”) otherthan a successor, subsidiary, affiliated or controlling corporation of Tenant(an “Affiliate”), Tenant shall give written notice (“Transfer Notice”) toLandlord at least 60 days before the effective date of any such proposedTransfer. The Transfer Notice shall state (a) whether Tenant proposes to assignthe Lease, sublet the Premises, enter into a license or concession agreement orchange ownership, (b) the proposed effective date of the Transfer, (c) theidentity of the proposed Transferee, (d) all other material terms of theproposed Transfer, and (e) in detail the type of business operation theproposed Transferee Intends to conduct on the Premises. The Transfer Noticeshall be accompanied by a copy of the proposed agreement documenting theTransfer, or if none, a copy of any offers, draft agreements, letters ofcommitment or intent and other documents pertaining to the proposed Transfer.In addition, the Transfer Notice shall be accompanied by the proposedTransferee’s income statements and balance sheets covering the preceding36-month period, and each shall be certified as accurate by the Transferee.Landlord may, at any time within 30 days after its receipt of Transfer Notice,grant or withhold consent to such proposed Transfer (which consent shall not beunreasonably withheld under the business judgment standards set forth inSection 20.3 below) by mailing written notice to Tenant of its decision (“DecisionNotice”). If Landlord consents to the proposed Transfer Tenant may thereafterpromptly effect a Transfer in accordance with the terms of Tenant’s TransferNotice.

If Landlord consents to the proposed Transfer andTenant does not consummate the proposed Transfer within 30 days after receiptof Decision Notice, the provisions of the first paragraph of this Section 20.2shall again apply.

20.3     ***Grounds for Withholding Consent******.*****Landlord may withhold consent to aproposed Transfer if, in Landlord’s reasonable business judgment, any of thefollowing is the case: (i) the proposed Transfer may result in deterioration inthe quality of merchandising operation conducted in the Premises, as comparedto the merchandising operation conducted by Tenant prior to the date ofTransfer Notice; (ii) the proposed Transferee lacks a good business reputationor sufficient relevant business experience; (iii) the financial worth of theproposed Transferee as of the date of Transfer Notice is less than the combinedfinancial worth of Tenant and Tenant’s guarantor (if any) as of either the dateof this Lease or the date of Transfer Notice; (iv) the proposed Transferee’sproposed use of the Premises conflicts with Tenant’s Use Clause or is otherwiseincompatible with the tenant mix of the Shopping Center; (v) the annualpercentage rent Landlord reasonably anticipates receiving from the proposedTransferee is significantly less than the annual percentage rent Landlord couldreasonably anticipate receiving from Tenant; or (vi) the proposed Transferwould breach any covenant of Landlord respecting radius restrictions, use orexclusivity rights in any other lease, or any financing or other agreementrelating to the Shopping Center. Any attempted or purported Transfer withoutLandlord’s written consent shall be void and of no force or effect.

20.4     **No *Release from Liability******.*****No Transfer, whether with or withoutLandlord’s consent, shall relieve Tenant or any guarantor of Tenant’sobligations under this Lease, from its covenants and obligations hereunderduring the Term. Tenant shall, promptly upon demand, reimburse Landlord forLandlord’s reasonable attorneys’ fees incurred in conjunction with theprocessing and documentation of any requested Transfer. Landlord’s cost forconsent shall not exceed $750.00.

20.5     ***Transferee’s Obligations******.*****Each Transfer to which Landlord hasconsented shall be evidenced by a written instrument in form satisfactory toLandlord, and executed by Tenant and the Transferee. Each such Transferee shallagree in writing for the benefit of Landlord to assume, be bound by, andperform the terms, covenants and conditions of this Lease to be performed, keptor satisfied by Tenant, including the obligation to pay to Landlord all amountscoming due under this Lease. One fully executed copy of such written instrumentshall be delivered to Landlord. Failure to obtain in writing Landlord’s priorconsent or otherwise comply with the provisions of this Article 20 shallprevent any Transfer from becoming effective.

20.6     ***Division of Profit Between Landlordand Tenant.*****Anysums or other economic consideration received by Tenant as a result of aTransfer, however denominated, which exceed, in the aggregate, (i) the totalsums which Tenant is obligated to pay Landlord under this Lease (prorated toreflect obligations allocable to any portion of the Premises subleased), plus(ii) the unamortized value of leasehold improvements to the Premises paid forby Tenant prior to the date of Transfer Notice, depreciated on a straight-linebasis over the Term, plus (iii) any real estate brokerage commissions or feespayable by Tenant in connection with such Transfer, plus (iv) costs ofrenovation or construction of improvements to the Premises for the benefit ofthe Transferee required to be paid for by Tenant as a part of the Transfer,shall be divided equally between Landlord and Tenant. Landlord’s share of suchprofit shall be paid to Landlord promptly following its receipt, as additionalrent under this Lease. Such payments shall not affect or reduce any otherobligations of Tenant hereunder. Landlord shall have the right to audit Tenant’sbooks and records during normal business hours at either the Premises or Tenant’sprincipal place of business upon 48 hours’ advance written notice for thepurpose of verifying Tenant’s compliance with its obligations hereunder.Notwithstanding the foregoing, no profit shall be due Landlord for a subleaseof 200sf or less.

20.7     ***Further Restrictions******.*****Tenant shall not, without the priorwritten consent of Landlord (which consent may be granted or withheld inLandlord’s sole discretion), mortage or hypothecate this Lease or any interestherein. Tenant shall not permit the Premises to be used by any party other thanTenant or a permitted Transferee. Any of the foregoing acts without suchconsent shall be void and shall, at the option of Landlord, terminate thisLease. For purposes of this Article 20, if Tenant is a partnership, anywithdrawal(s) or change(s) of partners cumulatively owning a 50% or moreinterest in the partnership, or if Tenant is a corporation, any transfer(s)cumulating 50% or more of its stock, shall constitute a voluntary Transfer andshall be subject to the provisions hereof. This Lease shall not, nor shall anyinterest of Tenant herein, be assignable by operation of law without thewritten consent of Landlord.

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**21.**      TENANT’S CONDUCT OF BUSINESS.

21.1     ***Tenant’s Operating Covenants******.*****Tenant agrees that from and after its initialopening for business it shall, subject to the provisions of Section 23.5hereof, operate and conduct its business in the Premises during all ShoppingCenter Business Hours (as hereinafter defined) and in accordance with theprovisions of this Lease. Tenant shall at all times keep and maintain in thePremises an adequate stock of merchandise and trade fixtures to satisfy theusual and ordinary demands and requirements of its customers and shall keep thePremises in a neat, clean and orderly condition.

21.2     ***Hours and Days of Operation******.*****Tenant shallmaintain hours of operation which are customary in the banking industry.

21.3     ***Radius Provision******.***

**22.****     ****REPAIR AND MAINTENANCE OF THEPREMISES.**

22.1     ***Tenant’s Obligations****.*Tenant shall, at its expense and at all timesfrom and after substantial completion of the Premises, repair, replace andmaintain in good and tenantable condition, the Premises and every part thereof(except portions of the Premises to be maintained by Landlord under Section22.2), including without limitation, the utility meters, pipes and conduitsserving the interior of the Premises, all fixtures, the storefront, plateglass, all signs, locks and closing devices, all window sashes, casements orframes, doors and door frames, security grilles or similar enclosures, floorcoverings, including carpeting, terrazzo or other special flooring, all otherequipment installed in the Premises, and all such items of repair, maintenance,alteration and improvement or reconstruction to the Premises as may at any timeor from time to time be required by any governmental agency having jurisdictionthereof. All exterior and interior glass in the Premises shall be maintained byTenant and any glass broken shall be promptly replaced by Tenant at its expensewith glass of the same kind, size and quality.

Tenant**shall, at Tenant’s expense, contract witha qualified service company for the monthly maintenance of the HVAC system servingthe Premises. Promptly after entering into a maintenance contract with aqualified HVAC system service company, Tenant shall deliver to Landlord a trueand correct copy of such maintenance contract.

Upon surrender of thePremises, Tenant shall deliver the Premises to Landlord in good order,condition and repair, but Tenant shall not be responsible for ordinary wear andtear to the Premises, damage due to insured casualty losses covered by Article23 or for any items of repair which are Landlord’s obligation under Section22.2.

22.2     ***Landlord’s Obligations******.*****Subject to Tenant’s obligations under Section22.1 and Landlord’s further obligations, if any, under Section 25.2, Landlordshall, at the expense of Tenant and all other tenants of the Shopping Center,repair and maintain in good and tenantable condition the roof, exterior walls,structural parts of the Premises and Building (including the structural floor)serving the Premises. Landlord shall bill Tenant for Tenant’s ProportionateShare of the cost of such repairs and maintenance as a part of Common AreaCosts under Article 25 hereof, except for any costs or expenses relating toHVAC.

Notwithstanding anything tothe contrary contained herein, (1) Tenant shall be responsible for the cost ofrepairs to the HVAC system serving the Premises (which Landlord may bill toTenant as a part of Common Area Costs under Article 25 hereof), and (2) Tenantshall be responsible at its expense for making any repairs necessitated byreason of the negligence of Tenant, or by reason of the failure of Tenant toperform or observe any of its obligations under this Lease or by reason ofalterations, additions, or improvements to the Premises made by Tenant.Notwithstanding the foregoing, Landlord shall have the right (but shall not berequired to) make such repairs so necessitated by Tenant. If Landlord elects tomake such repairs on Tenant’s behalf, Tenant shall pay to Landlord any suchcosts incurred by Landlord promptly following receipt of a bill therefor.

It is understood and agreedthat Landlord is under no obligation to make any repairs, alterations,replacements or improvements to the Premises or the mechanical equipmentexclusively serving the Premises at any time except as expressly set forth inthis Lease.

Notwithstanding anything tothe contrary contained in this Lease, Landlord shall not be liable to Tenantfor failure to make repairs required of Landlord hereunder unless Tenant haspreviously notified Landlord in writing of the need for such repairs andLandlord has failed to commence and complete those repairs within a reasonableperiod of time following receipt of Tenant’s notice.

22.3     ***Tenant’s Failure to Maintain Premises******.*****If Tenant fails to repair or maintain thePremises, or any part thereof, in a manner reasonably satisfactory to Landlord,Landlord shall have the right (in addition to all other rights and remediesprovided herein for breach of this Lease), upon giving Tenant reasonablewritten notice of its election to do so (and opportunity to cure), to make

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such repairs or perform such maintenance on behalf ofand for the account of Tenant. In such event the cost of such work shall bepaid to Landlord by Tenant promptly following receipt of a bill therefore.

22.4     ***Landlord’s Right of Entry******.*****Landlord or its authorizedrepresentatives may enter the Premises at all times during Shopping CenterBusiness Hours to inspect the Premises, make repairs to the Premises authorizedhereunder or perform any work therein (i) needed to comply with any laws,ordinances, rules or regulations of any public authority or the InsuranceServices Office or any similar body, (ii) that Landlord deems necessary toprevent waste or deterioration in or to the Premises if Tenant fails to makerepairs or perform required work promptly after receipt of written demand fromLandlord, or (iii) that Landlord deems necessary in connection with theexpansion, reduction, remodeling, or renovation of any portion of the ShoppingCenter. Nothing herein implies any duty of Landlord to do any such work which,under any provision of this Lease, Tenant is required to do, nor shall Landlord’sperformance of any repairs on behalf of Tenant constitute a waiver of Tenant’sdefault in failing to do such work. No exercise by Landlord of any rightshereunder shall entitle Tenant to any compensation, damages or abatement ofRent for any injury or inconvenience occasioned by such exercise. If Landlordmakes or performs any repairs provided for in (i) or (ii) above, Tenant shallpay the cost thereof to Landlord as additional rent promptly upon receipt of abill therefor. SEE ADDENDUM.

**23.****      CASUALTY DAMAGE ANDRECONSTRUCTION****.**

23.1     ***Insured Casualty******.*****If the Premises are damaged by fire orother perils covered by Landlord’s fire and extended coverage insurance, thenwithin 90 days after the date of such damage Landlord shall commence repair,reconstruction and restoration of the Premises and diligently complete suchrepairs, in which event this Lease shall continue in full force and effect.Notwithstanding the foregoing, if there is partial or total destruction of thePremises during the last 1 year of the Term, Landlord and Tenant shall eachhave the option to terminate this Lease by written notice to the other givenwithin 30 days after such destruction. For purposes of this option “partialdestruction” shall mean destruction to the extent of 50% or more of the fullreplacement cost of the Premises as of the date of destruction.

23.2     ***Uninsured Casualty******.*****If the Premises are damaged to any extentby act of war, nuclear reaction, nuclear radiation or radioactivecontamination, or from any other casualty not covered by Landlord’s fire andextended coverage insurance (including flood or earthquake damage if notcovered under insurance maintained by Landlord), Landlord may within 90 daysfollowing the date of such damage, either (a) commence repair, reconstructionor restoration of the Premises and diligently complete it, in which event thisLease shall continue in full force and effect, or (b) elect not to repair,reconstruct or restore the Premises, in which event this Lease shall cease andterminate as of the date of destruction. In either such event Landlord shallgive Tenant written notice of its election hereunder within said 90 day period.

23.3     ***Reconstruction Responsibilities******.*****Any reconstruction of the Premises underthis Article 23 shall conform to the provisions of Exhibit “C” and shall coverall work set forth therein as “Landlord’s Work” and “Tenant’s Work”. Landlordshall reconstruct the Premises only to the extent of Landlord’s Work. Tenant,at its expense, shall reconstruct all items set forth as Tenant’s Work, andshall replace its merchandise, trade fixtures, furniture, furnishings andequipment. SEE ADDENDUM Tenant shall commence reconstruction of Tenant’s Workpromptly upon delivery to it of possession of the Premises by Landlord withLandlord’s Work substantially completed and shall diligently complete Tenant’sWork, replace its merchandise, trade fixtures, furniture, furnishings andequipment, and resume normal business operations in the Premises.

23.4     ***Release from Liability******.*****Upon any termination of this Lease underany of the provisions of this Article 23 each party shall be released fromfurther obligations to the other party under this Lease, except for anyobligations which have previously accrued. In the event of termination of thisLease, all proceeds from Tenant’s fire and extended coverage insurance underSection 14.1 covering the items set forth as “Tenant’s Work” in Exhibit “C” andTenant’s leasehold improvements, but excluding proceeds for trade fixtures,furnishings, furniture, merchandise, signs and other personal property, shallbe paid to Landlord.

23.5     ***Abatement of Rent******.*****In the event of reconstruction of thePremises under this Article 23, the Minimum Annual Rent otherwise payable underthis Lease shall be abated proportionately with the degree to which Tenant’suse of the Premises is impaired. Such abatement shall commence on the date ofdestruction and continue during any period of reconstruction and replacementprovided for in Section 23.3. Tenant shall continue to operate its business onthe Premises during any such abatement period to the extent practical as amatter of prudent business management, and the obligation of Tenant to paypercentage rental and additional rent hereunder shall remain in full force andeffect. Tenant shall not be entitled to any compensation or damages fromLandlord for loss of the use of the whole or any part of the Premises,Building, Shopping Center or Tenant’s personal property, or for anyinconvenience or annoyance suffered by reason of damage or destruction thereto,or the reconstruction or replacement thereof.

23.6     ***Waiver of Statutory Rights ofTermination******.*****Tenant hereby waives any statutory rightsof termination which may arise by reason of any partial or total destruction ofthe Premises, Building or Shopping Center which Landlord is obligated torestore or may restore under any of the provisions of this Lease.

**24.**      EMINENT DOMAIN.

24.1     ***Takings Resulting in Termination******.*****If the entire Premises is appropriated ortaken (a “taking”) under the power of eminent domain by any public orquasi-public authority (an “authority”), this Lease shall terminate as of thedate of such taking. SEE ADDEND

If 25% or more of the Floor Area of the Premises istaken under the power of eminent domain by any authority, or if by reason ofany taking, regardless of the amount taken, the remainder of the Premises isnot one undivided parcel of property, either Landlord or Tenant may terminatethis Lease as of the date Tenant is required to vacate a portion of thePremises, upon giving notice in writing of such election within 30 days afterreceipt by Tenant from Landlord of written notice that the Premises have beenso taken. Landlord shall promptly give Tenant notice in writing of any takingafter learning of it.

If more than 25% of the Floor Area of the ShoppingCenter or of the Common Areas is taken (whether or not the Premises are sotaken) under the power of eminent domain by any authority, Landlord shall havethe right to terminate this Lease as of the date any such areas are to beinitially vacated by giving Tenant written notice of such election within 30days of the date of such taking.

If this Lease is terminated as provided in thisSection 24.1 Landlord and Tenant shall each be released from any furtherobligations to the other party under this Lease, except for any obligationswhich have previously accrued.

24.2     ***Takings Not Resulting In Termination****.*If both Landlord and Tenant elect not toexercise any right granted hereunder to terminate this Lease in connection witha taking, or the Lease is not terminable in connection with a taking, Tenantshall continue to occupy that portion of the Premises which was not taken, and(a) at Landlord’s cost and expense and as soon as reasonably possible, Landlordwill restore the Premises on the land remaining to a complete unit of likequality and character as existed

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prior to such taking; and (b) the Minimum AnnualRental provided for in Section 3.h. and Article 9 shall be reduced on anequitable basis, taking into account the relative value of the portion of thePremises taken as compared to the portion remaining. Tenant hereby waives anystatutory rights of termination which may arise by reason of any partial takingof the Premises under the power of eminent domain.

24.3     ***Award******.*****If this Lease is terminated under Section24.1, or modified under Section 24.2, Landlord shall be entitled to receive theentire condemnation award for the taking of all real property interests in thePremises except to the extent any portion of the award may be allocable toTenant’s Work or any property of Tenant. The Rent and other charges for thelast month of Tenant’s occupancy shall be prorated and Landlord shall refund toTenant any Rent or other charges paid in advance. Notwithstanding the foregoingand provided Tenant’s award does not reduce or affect Landlord’s award, Tenant’sright to receive a condemnation award for the taking of its merchandise,Personal Property, goodwill, relocation expenses and/or interests in other thanthe real property taken shall not be affected in any manner by the provisionsof this Section 24.3. 

24.4     ***Transfer Under Threat of Taking.*****For the purposes of this Article 24, avoluntary sale or conveyance under threat of and in lieu of condemnation shallbe deemed a taking under the power of eminent domain.

**25.**      COMMON AREAS.

25.1     ***Use of Common Areas.*****Tenant and its employees and inviteesare, except as otherwise specifically provided in this Lease or the ShoppingCenter rules and regulations or as otherwise designated from time to time byLandlord, authorized to use the Common Areas in common with other personsduring the Term. Landlord agrees that the Common Areas shall be initiallyconstructed on the areas generally shown on Exhibit “A”, and, subject tothe preceding sentence, shall be maintained and operated at all times followingcompletion thereof for the benefit and/or use of the customers and patrons ofTenant and of other tenants, owners and occupants of the Shopping Center. Theoriginal construction and installation of the Common Areas shall be at Landlord’sexpense.

25.2     ***Landlord’s MaintenanceResponsibilities; Common Area Costs.*****Landlord shall keep the Common Areas and Shopping Centerneat, clean and orderly, properly lighted and landscaped, and shall repair anydamage to Common Area and Shopping Center facilities. Notwithstanding theforegoing, all expenses incurred by Landlord in connection with the operation,repair, cleaning and maintenance of the Common Areas and the Shopping Center (“CommonArea Costs”) shall be charged and prorated in the manner set forth in thisArticle 25.

Common Area Costs shall include without limitation,all sums expended in connection with the Common Areas and Shopping Center for:general maintenance and repairs; resurfacing; painting; restriping; cleaning;trash removal; snow and ice removal; sweeping and janitorial services;lighting, HVAC and other utility expenses; maintenance, repair, cleaning andreplacement of public toilets, music program equipment and loudspeakers,sidewalks, stairways, curbs, Shopping Center signs, sprinkler systems, plantingand landscaping, floors, walls, ceilings, roofs, skylights, windows,directional signs, markers and bumpers, fire protection systems and equipment(including fire sprinklers), security systems, lighting systems and fixtures(including replacement of tubes and bulbs), storm drainage systems, plumbing,electrical, HVAC and other utility systems which do not exclusively serve theinterior of tenants’ premises, and all mechanical equipment (includingautomatic door openers, escalators and elevators); personnel to implement theforegoing services, including, if Landlord deems necessary, the cost ofsecurity guards; all on-site costs and personnel expenses of Landlord incurredto manage the Shopping Center (which may be contracted for with third parties);all real (as generally defined in Section 9.3b of this Lease) and personal (asgenerally defined in Section 19.3 of this Lease) property taxes and assessmentson the improvements and land comprising the Common Areas and Shopping Center orany personality in use on the Common Areas or Shopping Center; any sums paid tothird parties for the purpose of seeking reduction of property taxes; anygovernmental imposition or surcharge imposed upon Landlord or assessed againstany portion of the Common Areas or Shopping Center; depreciation on maintenanceand operating machinery and equipment (if owned) and rental paid for suchmachinery and equipment (if rented); and premiums for adequate comprehensivegeneral liability and property damage insurance covering Landlord’s ownershipand operation of the Common Areas and Shopping Center, fire and extendedcoverage insurance on the Common Areas and the Shopping Center (which mayinclude earthquake and flood damage endorsements) and vandalism and plate glassinsurance covering the Common Areas and Shopping Center. Common Area Costsshall also include a charge for appropriate reserves for the costs ofrepainting, re-roofing and resurfacing Common Areas. In addition, Common AreaCosts shall include a sum to be payable to Landlord for supervision of theCommon Areas and for accounting, bookkeeping and collection of Common AreaCosts, in an amount equal to 10% of the total of all of the foregoing CommonArea Costs incurred in each calendar year. Landlord may have any or allservices and management performed in connection with the Common Areas andShopping Center provided by an independent contractor(s). Landlord represents thatit does not presently carry earthquake insurance. If in the future earthquake insuranceis required by law or lender, premiums shall be prorated as set forth herein. 

If Landlord acquires, constructs or makes availablefor Common Area purposes land or improvements not shown as part of the ShoppingCenter on Exhibit “A”, then Common Areas Costs shall also include all of theexpenses itemized above incurred and paid in connection with such additionalland or improvements.

25.3     ***Method of Payment.*****Portions of the Shopping Center may beowned or leased by the occupants of those buildings designated by Landlord as a“Major Store” on Exhibit “A” (hereinafter referred to as the “Major StoreOccupants”). The contributions of the Major Store Occupants towards the CommonArea Costs shall be credited toward payment of the entirety of the Common AreaCosts and the balance of the Common Area Costs shall be prorated among theother tenants of the Shopping Center in the following manner:

(i)        Fromand after the date Rent has commenced, and thereafter during the Term, Tenantshall pay to Landlord, on the first day of each calendar month, an amountestimated by Landlord to be Tenant’s Proportionate Share of Common Area Costsfor the period covered by such estimate. This estimated monthly charge may beadjusted by Landlord at the end of any calendar month on the basis of Landlord’sexperience and reasonably anticipated Common Area Costs.

(ii)       Within60 days following the end of each calendar year (or as soon thereafter aspossible), Landlord shall furnish Tenant with a statement showing the actualtotal of Common Area Costs for the preceding year, the actual amount of Tenant’sProportionate Share of Common Area Costs for that year and the payments made byTenant for that year under subparagraph (i) above. If Tenant’s ProportionateShare of Common Area Costs exceeds the estimated payments made by Tenant undersubparagraph (i) above, Tenant shall pay Landlord the deficiency within 10 daysafter receipt of such statement. If Tenant’s estimated payments exceed Tenant’sProportionate Share of Common Area Costs, Tenant may offset the excess againstpayments thereafter coming due under subparagraph (i) above or receive a refundfollowing the expiration of the Term. There shall be an appropriate adjustmentof Tenant’s Proportionate Share of Common Area Costs as of the commencement ofRent and expiration of the Term. Landlord’s and Tenant’s obligations hereundershall survive expiration of the Term.

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Tenant’s failure to pay any sums due hereunder shallconstitute a default under this Lease equivalent to a failure to pay MinimumAnnual Rent when due.

 

25.4     ***Control of Common Areas.*****Landlord shall have the right at alltimes to determine the nature and extent of the Common Areas and to makechanges from time to time which in Landlord’s opinion are desirable and in thebest interests of all persons using the Common Areas. Landlord’s rightshereunder include without limitation, the right to install, remove, relocateand change driveways, entrances, exits, automobile parking spaces, thedirection and flow of traffic, prohibited areas, landscaped areas, utilitiesand all facilities of the foregoing.

Landlord shall have exclusive control of the CommonAreas, and may, without limitation, lease space within the Common Areas totenants for the sale of merchandise or services, and permit advertisingdisplays, educational displays and entertainment in the Common Areas; provided,however, none of the foregoing shall materially adversely affect the visibilityor accessibility of the Premises. Landlord may at any time and from time totime during the Term exclude and restrain any person from use or occupancy ofthe Common Areas, except for bona fide customers, patrons and service suppliersof Tenant and other tenants and occupants of the Shopping Center who use theCommon Areas in accordance with the rules and regulations then established byLandlord. The rights of Tenant under this Article 25 shall at all times besubject to the rights of Landlord, the other tenants of Landlord and the otherowners and occupants of the Shopping Center to use the Common Areas in commonwith Tenant. Tenant shall not create or permit any obstructions in the CommonAreas and shall permit its customers, patrons and service suppliers to use theCommon Areas only for normal parking and ingress and egress to and from theBuilding occupied by Tenant.

25.5     ***Rules and Regulations.*****Landlord shall have the right toestablish, and from time to time change, alter and amend, and to enforceagainst Tenant and the other users of the Common Areas, such reasonable rulesand regulations (including the exclusion of employees’ parking from CommonAreas) as Landlord may deem necessary or advisable for the proper and efficientoperation and maintenance of the Common Areas and Shopping Center. The rulesand regulations may include, without limitation, the hours during which theCommon Areas, including any enclosed mall, shall be open for use. Ifincorporated as a part of this Lease as of the effective date of this Lease,Tenant shall comply with the Rules and Regulations attached to this Lease asExhibit “B”.

25.6     ***Employee Parking****.*Landlord shall at all times have theright to designate a particular parking area to be used by employees of Tenantand other occupants of the Shopping Center and any such designation may bechanged by Landlord from time to time. Tenant and its employees shall parktheir cars only in those portions of the Common Areas, if any, designated forthat purpose by Landlord. Tenant shall furnish Landlord from time to time withan accurate current list of its and all its employees’ automobile license platenumbers within 15 days after taking possession of the Premises and thereafterwithin 5 days after any change in the accuracy of the list. If Tenant or itsemployees fail to park their cars in designated parking areas, Landlord maycharge Tenant $25.00 per day per car for each such violation and shall have theright to have any such car towed away. All amounts due under the provisions ofthis Section 25.6 shall be payable by Tenant within 10 days after demand byLandlord.

**26.**      DEFAULTS BY TENANT.

26.1     ***Events of Default.*****Each of the following shall constitute amaterial default and breach under this Lease:

(a)       IfTenant is at any time in default of its obligation to pay any Rent or othercharges, and such default continues for more than 10 days after written noticeof such default;

(b)       IfTenant is in default in the prompt and full performance of any other of itsobligations under this Lease and such default continues more than 30 days afterwritten notice specifying the particulars of such default;

(c)       IfTenant vacates or abandons the Premises or otherwise fails to occupy andoperate the Premises in accordance with Article 21;

(d)       (i)If Tenant or any guarantor of this Lease makes a general assignment or generalarrangement for the benefit of creditors; or (ii) if a petition foradjudication of bankruptcy or for reorganization or rearrangement is filed byor against Tenant or any guarantor and is not dismissed within thirty (30)days; or (iii) if a trustee or receiver is appointed to take possession ofsubstantially all of Tenant’s assets located at the Premises or of Tenant’sinterest in this Lease and possession is not restored to Tenant within thirty(30) days; or (iv) if substantially all of Tenant’s assets located at thePremises or of Tenant’s interest in this Lease is subjected to attachment,execution or other judicial seizure which is not discharged within thirty (30)days. If a court of competent jurisdiction determines that any of the actsdescribed in this subparagraph (d) is not a default under this Lease, and atrustee is appointed to take possession of Tenant’s assets or if Tenant remainsa debtor in possession and such trustee or Tenant transfers Tenant’s interestin this Lease, then Landlord shall receive, as additional rent, the excess, ifany, of the rent (or any other consideration) paid in connection with suchassignment or sublease over the Rent payable by Tenant hereunder; or

(e)       Ifany guarantor of the Lease revokes or otherwise terminates, or purports torevoke or otherwise terminate, any guaranty of all or any portion of Tenant’sobligations under the Lease. Unless otherwise expressly provided, no guarantyof the Lease is revocable.

26.2     ***Remedies Upon Breach of Lease.*****On the occurrence of any breach of thisLease by Tenant, Landlord may, at any time thereafter, with or without noticeor demand and without limiting Landlord in the exercise of any right or remedywhich Landlord may have:

(a)       TerminateTenant’s right to possession of the Premises and reenter the Premises by anylawful means, in which case this Lease shall terminate. In such case Tenantshall immediately surrender possession of the Premises to Landlord; or

(b)       MaintainTenant’s right to possession of the Premises, in which case this Lease shallcontinue in effect whether or not Tenant has abandoned the Premises. In suchevent Landlord shall be entitled to enforce all Landlord’s rights and remediesunder this Lease, including the right to recover the Rent as it becomes due andLandlord shall have the right to occupy or re-let the whole or any part of thePremises for the account of Tenant; or

(c)       Pursueany other remedy now or hereafter available to Landlord under the laws orjudicial decisions of the state in which the Shopping Center is located.

If Landlord reenters thePremises under the provisions of subparagraph (b) above, Landlord shall not bedeemed to have terminated this Lease, or the liability of Tenant to pay anyRent or other charges that are due or thereafter accruing, or Tenant’sliability for damages under any of the provisions hereof. In the event of anyentry or taking possession of the Premises as

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aforesaid, Landlord shall have in addition to itsrights under Section 26.4 hereof, the right, but not the obligation, to removefrom the Premises any personal property located therein and to place it instorage at a public warehouse at the expense and risk of Tenant.

Notwithstanding any other term or provision hereof tothe contrary, this Lease shall terminate on the occurrence of any act whichaffirms Landlord’s intention to terminate this Lease as provided in thisSection 26.2, including the filing of an unlawful detainer action againstTenant. On such termination, Landlord’s damages for default shall include allcosts and fees, including reasonable attorneys’ fees, incurred by Landlord inconnection with the filing, commencement, pursuing or defending of any actionin any bankruptcy court or other court with respect to the Lease, the obtainingof relief from any stay in bankruptcy restraining any action to evict Tenant,or the pursuing of any action with respect to Landlord’s right to possession ofthe Property. All such damages suffered (apart from Minimum Annual Rent andother Rent payable hereunder) shall constitute pecuniary damages which must bereimbursed to Landlord prior to assumption of the Lease by Tenant or**any successor to Tenant in any bankruptcyor other proceeding.

Landlord’s exercise of any right or remedy shall notprevent it from exercising any other right or remedy.

It is understood and agreed that this Lease is a leaseof real property in a shopping center within the meaning of 11 U.S.C. Section365(b)(3) of the Bankruptcy Code.

26.3     ***Landlord’s Damages.*****If Landlord elects to terminate thisLease and Tenant’s right to possession of the Premises in accordance with theprovisions of this Lease, Landlord may recover from Tenant as damages, all ofthe following:

(i)        Theworth at the time of award of any unpaid Rent and other charges which has beenearned at the time of such termination; plus

(ii)       Theworth at the time of award of the amount by which the unpaid Rent and othercharges which would have been earned after termination until the time of awardexceeds the amount of such rental loss Tenant proves Landlord could havereasonably avoided; plus

(iii)      The worth at the time of award of the amount bywhich the unpaid Rent and other charges which Tenant would have paid for thebalance of the Term after the time of award exceeds the amount of such rentalloss that Tenant proves Landlord could have reasonably avoided; plus

(iv)      Anyother amount necessary to compensate Landlord for all the detriment proximatelycaused by Tenant’s failure to perform its obligations under this Lease or whichin the ordinary course of things would be likely to result therefrom, includingwithout limitation, any costs or expenses incurred by Landlord in (a)maintaining or preserving the Premises after such default, (b) recoveringpossession of the Premises, including reasonable attorneys’ fees therefor, (c)expenses of reletting the Premises to a new tenant, including necessaryrenovations or alterations of the Premises, reasonable attorneys’ fees incurred,and leasing commissions incurred; plus

(v)       Suchother amounts in addition to or in lieu of the foregoing as may be permittedfrom time to time by the laws of the State where the Shopping Center islocated.

As used in subparagraphs (i) and (ii) above, the “worthat the time of award” is computed by allowing interest on unpaid amounts at therate of 10% per annum. As used in subparagraph (iii) above, the “worth at thetime of award” is computed by discounting such amount at the discount rate ofthe Federal Reserve Bank located nearest to the Shopping Center in effect atthe time of award, plus 1%.

For purposes of this Article 26, all Rent other thanMinimum Annual Rent, shall, for purposes of calculating any amount due underthe provisions of subparagraph (iii) above, be computed on the basis of theaverage monthly amount of Rent payable by Tenant during the immediatelypreceding 36 month period, except that if it becomes necessary to compute suchrental before such 36 months of the Term has expired, then such Rent shall becomputed on the basis of the average monthly amount of Rent payable during suchshorter period.

26.4     ***Fixtures and Personal Property******.*** In the event ofTenant’s default, all of Tenant’s merchandise, Fixtures and other PersonalProperty shall remain on the Premises, and during the period of defaultLandlord shall have the right to take the exclusive possession of such itemsand to use them free of charge until all defaults are cured, or, at Landlord’soption, to require Tenant to forthwith remove such items.

The rights and remedies given to Landlord in thisArticle shall be in addition and supplemental to all other rights or remedieswhich Landlord may have under the laws in force when the default occurs.

26.5     ***No**Waiver.*****The waiver by Landlord of any breach by Tenant of any term,covenant or condition contained in this Lease shall not be deemed to be awaiver of such term, covenant or condition, of any subsequent breach thereof,or of any other term, covenant or condition of this Lease. The subsequentacceptance of Rent hereunder by Landlord shall not be deemed to be a waiver ofany preceding breach by Tenant of any term, covenant or condition of this Leaseor of any right of Landlord to a forfeiture of the Lease by reason of suchbreach, regardless of Landlord’s knowledge of such preceding breach at the timeof acceptance of such Rent. No term, covenant or condition of this Lease shallbe deemed to have been waived by Landlord unless such waiver is in writing andsigned by Landlord.

**27.**      DEFAULTS BY LANDLORD.

If Landlord fails toperform any covenant, condition, or agreement contained in this Lease within 30days after receipt of written notice from Tenant specifying such failure (or ifsuch failure cannot reasonably be cured within 30 days, if Landlord does notcommence to cure the failure within that 30 day period), then such failureshall constitute a default hereunder and Landlord shall be liable to Tenant forany damages sustained by Tenant as a result of Landlord’s default; provided,however, it is expressly understood and agreed that if Tenant obtains a moneyjudgment against Landlord resulting from any default or other claim arisingunder this Lease, that judgment shall be satisfied only out of the rents,issues, profits, and other income actually received on account of Landlord’sright, title and interest in the Premises, Building and/or Shopping Center, andno other real, personal or mixed property of Landlord (or of any of thepartners which comprise Landlord, or of partners or principals of such partnerscomprising Landlord, if any, or of Landlord’s officers, shareholders ordirectors, if any) wherever situated, shall be subject to levy, attachment orexecution, or otherwise used to satisfy any such judgment. Tenant hereby waivesany right to satisfy a judgment against Landlord except from the rents, issues,profits and other income actually received on account of Landlord’s right,title and interest in the Premises, Building and/or Shopping Center.

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If, after notice to Landlord of default, Landlord (or any firstmortgagee or first deed of trust beneficiary of Landlord) fails to cure thedefault as provided below, then (subject to the provisions of Section 22.2.hereof) Tenant shall have the right to cure that default at Landlord’s expense.In such case Landlord shall pay the reasonable cost of such cure promptlyfollowing receipt of a bill from Tenant itemizing the cost of such cure. Tenantshall not have the right to terminate this Lease or to withhold, reduce oroffset any cost of such cure against any payments of Rent or any other chargesdue and payable to Landlord under this Lease, except as otherwise specificallyprovided in this Lease.

Tenant agrees to send by certified or registered mail to any mortgageeor deed of trust beneficiary of the Shopping Center whose address has beenfurnished to Tenant, a copy of any notice of default served by Tenant onLandlord. If Landlord fails to cure such default within the time provided forin this Lease, Tenant shall provide any such mortgagee or beneficiary withnotice of such failure and such mortgagee or beneficiary shall have anadditional 30 days following receipt of such notice to cure such default;provided that if such default cannot reasonably be cured within that additional30 day period, then such mortgagee or beneficiary shall have such additionaltime to cure the default as is reasonably necessary under the circumstances.

**28.****      ATTORNEYS’ FEES.**

If at any time after the date hereof either Landlord or Tenantinstitutes any action or proceeding against the other relating to theprovisions of this Lease or any default hereunder, the losing party in suchaction or proceeding shall reimburse the winning party for its reasonableexpenses of attorneys’ fees and all costs and disbursements incurred, including,without limitation, any such fees, costs or disbursements incurred on anyappeal from such action or proceeding. Subject to the provisions of local law,the winning party shall recover all such fees, costs or disbursements as coststaxable by the court or arbiter in the action or proceeding itself without thenecessity for a cross-action by the winning party.

**29.****      SUBORDINATION — ATTORNMENT.**

29.1     ***Subordination.*****Within 10 days after receipt of a writtenrequest from Landlord, any first mortgagee or first deed of trust trustee orbeneficiary of Landlord, or any lessor of Landlord, Tenant shall, in writing,subordinate its rights under this Lease to the lien or security interest of thefirst mortgage or deed of trust (including all future advances made thereundersubsequent to the effective date of this Lease), the interest of any lease inwhich Landlord is the lessee, or any REA that may burden the Premises,Building, Shopping Center, Property or any future improvements made to theProperty.

29.2     ***Attornment.*****If Landlord’s interest in the Premises isacquired by any ground lessor, beneficiary under a deed of trust, mortgagee orpurchaser at a foreclosure sale, then Tenant shall upon request, attorn to suchtransferee of or successor to Landlord’s interest in the Premises and recognizesuch transferee or successor as Landlord under this Lease, provided suchtransferee or successor accepts the Premises subject to this Lease.

29.3     ***Estoppel Certificate.*****Tenant shall, at any time and from timeto time, upon not less than 10 days’ prior written notice from Landlord,execute, acknowledge and deliver to Landlord a written statement substantiallyin the form of Exhibit “D” certifying (i) that this Lease represents the entireagreement between Landlord and Tenant, and is unmodified and in full force andeffect (or, if modified, stating the nature of such modification and certifyingthat this Lease, as so modified, is in full force and effect), (ii) the datesto which the Rent and other charges are paid in advance, If any; (iii) theCommencement Date and expiration date of the Lease Term, (iv) whether Tenanthas assigned or transferred this Lease or any interest of Tenant therein; and(v) that there are not, to Tenant’s knowledge, any uncured defaults on the partof Landlord hereunder and that Tenant has no right of offset, counterclaim ordeduction against Rent, or specifying such defaults if any are claimed togetherwith the amount of any offset, counterclaim or deduction alleged by Tenant. Anysuch statement may be relied upon by any prospective purchaser or lender uponthe security of the real property of which the Building and the Premises are apart. Tenant’s failure to deliver such statement within the time required shallbe conclusive and binding upon Tenant that (a) this Lease is in full force andeffect, without modification except as may be represented by Landlord, (b)there are no uncured defaults in Landlord’s performance and that Tenant has noright of offset, counterclaim or deduction against Rent, and (c) no more thanone month’s Rent has been paid in advance.

**30.****      QUIET POSSESSION.**

Landlord agrees that Tenant, upon paying the Rent and timely performingits obligations under this Lease, may quietly have, hold and enjoy the Premisesduring the Term or any extension thereof; subject, however, to any rights ofentry specifically granted to Landlord hereunder, any REA and any mortgages,deeds of trust, ground or underlying leases, agreements, encumbrances and/orother Matters of Record to which this Lease is subordinate.

**31.****      MERCHANTS’ ASSOCIATION.**

31.2     ***Grand Opening Promotional Fund.*****Tenant shall separately pay when billedits prorata share, not to exeed $2,838 to provide Landlord with funds topromote the “grand opening” of the Shopping Center, and/or Tenant’s business.Tenant shall only incurr this cost one time. Also, SEE ADDENDUM.

**32.****      CAPTIONS; JOINT AND SEVERALLIABILITY.**

32.1.    ***Captions.*****The captions of the Articles and Sectionsof this Lease are for convenience only, are not operative parts of this Leaseand do not in any way limit or amplify the terms and provisions of this Lease.

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32.2     ***Joint and Several Liability.*** If twoor more persons or entities execute this Lease as Landlord or Tenant then such personsor entities shall be jointly and severally liable for compliance with andperformance of all the terms, covenants and provisions of this Lease.

**33.****      NOTICES.**

Wherever this Lease requires or permits notice or demand to be given byeither party to the other, such notice or demand shall be in writing and givenor served either personally or in writing forwarded by certified mail, returnreceipt requested, addressed to the parties at the addresses specified inSection 3.g. hereof. Either party may change such address by written notice tothe other as herein provided.

**34.****      OBLIGATIONS OF SUCCESSORS.**

Except as otherwise provided herein, all of the provisions of thisLease shall bind and inure to the benefit of the parties hereto, and theirrespective heirs, legal representatives, successors and assigns.

**35.****      CONSENT OF LANDLORD ANDTENANT.**

Wherever in this Lease consent or approval is required from eitherparty to any action by the other, such consent or approval shall be given inwriting and shall not be unreasonably withheld, unless otherwise expresslypermitted in this Lease. Landlord shall not be deemed to have withheld itsconsent unreasonably where Landlord’s right to give its consent is dependent onLandlord obtaining the consent of any other person, agency or authority havingthe right to withhold its consent pursuant to any agreement or law and suchperson, agency or authority does withhold its consent.

If Landlord or Tenant unreasonably fails to give any such consent, theother party shall be entitled to specific performance in equity and shall havesuch other remedies as are reserved to it under this Lease, but in no eventshall Landlord or Tenant be responsible in monetary damages for failure to giveconsent unless such consent is withheld maliciously or in bad faith.

**36.****      SECURITY DEPOSIT.**

36.1     ***Payment of Security Deposit.*****Tenant has deposited with Landlord thesum specified in Section 2.k. hereof as the “Security Deposit”, receipt ofwhich is hereby acknowledged. The Security Deposit shall be held by Landlordwithout liability for interest as security for the faithful performance byTenant of all of its obligations under this Lease. The Security Deposit shallnot be mortgaged, assigned, transferred or encumbered by Tenant without theprior written consent of Landlord and any such action by Tenant without suchconsent shall be without force and effect and not binding on Landlord.

36.2     ***Application of Security Deposit.*****If any Rent herein reserved or any othersum payable by Tenant to Landlord is overdue and unpaid or paid by Landlord onTenant’s behalf, or if Tenant fails to perform any of its obligations underthis Lease, then Landlord may, at its option and without prejudice to any otherremedy which Landlord may have, appropriate and apply the entire SecurityDeposit or so much as is necessary to compensate Landlord for loss of MinimumAnnual Rent or additional rent, or other damages sustained by Landlord due tosuch default by Tenant. Tenant shall forthwith upon demand restore the SecurityDeposit to the original sum deposited. If Tenant complies with all of the termsof the Lease and promptly pays when due all Rent and all other sums payable byTenant under this Lease, the Security Deposit (or the balance thereofremaining) shall be returned in full to Tenant not later than 14 days followingthe end of the Term and delivery of possession of the Premises to Landlord.

36.3     ***Bankruptcy.*** In theevent of bankruptcy or other debtor-creditor proceedings against Tenant, theSecurity Deposit shall be deemed to be applied first to the payment of Rent andother charges due Landlord for the earliest periods prior to the filing of suchproceedings.

36.4     ***Transfer of Landlord’s Interest.*****Landlord may deliver the funds depositedhereunder by Tenant to the purchaser of Landlord’s interest in the Premises andLandlord shall thereupon be discharged from any further liability to Tenant forthe Security Deposit. This provision shall also apply to any subsequenttransfers of Landlord’s interest in the Premises. In the case of such transferof the Security Deposit, Landlord shall give written notice to Tenant of anyexisting claims against the Security Deposit and of the name and address ofLandlord’s successor.

**37.****      MISCELLANEOUS****.**

37.1     ***Relationship of the Parties.*****Nothing contained in this Lease shall bedeemed or construed to create a partnership or joint venture between Landlordand Tenant or between Landlord and any other party, or cause Landlord to beresponsible in any way for the debts or obligations of Tenant or anyone else.

37.2     ***Severability.*****If any provision of this Lease isdetermined to be void by any court of competent jurisdiction, suchdetermination shall not affect any other provision of this Lease and all suchother provisions shall remain in full force and effect. It is the intention ofthe parties that if any provision of this Lease is capable of twoconstructions, one of which would render the provision void and the other ofwhich would render the provision valid, then the provision shall have themeaning which renders it valid.

37.3     ***Corporate Authority; PartnershipAuthority.*****IfTenant is a corporation, each person signing this Lease on behalf of Tenantrepresents and warrants that he has full authority to do so and that this Leasebinds the corporation. Within thirty (30) days after this Lease is signed, Tenantshall deliver to Landlord a certified copy of a resolution of Tenant’s Board ofDirectors authorizing the execution of this Lease or other evidence of suchauthority reasonably acceptable to Landlord. If Tenant is a partnership, eachperson or entity signing this Lease for Tenant represents and warrants that heor it is a general partner of the partnership, that he or it has full authorityto sign for the partnership and that this Lease binds the partnership and allgeneral partner’s of the partnership. Tenant shall give written notice toLandlord of any general partner’s withdrawal or addition. Within thirty (30)days after this Lease is signed, Tenant shall deliver to Landlord a copy ofTenant’s recorded statement of partnership, certificate of limited partnershipor other evidence of partnership satisfactory to Landlord.

37.4     ***Entire Agreement.*****It is understood that there are no oralor written agreements or representations between the parties hereto affectingthis Lease, and that this Lease supersedes and cancels any and all previousnegotiations, arrangements, representations, brochures, displays, projections,estimates, agreements and understandings, If any, made by or between Landlordand Tenant with respect to the subject mailer thereof, and none thereof shallbe used to Interpret, construe, supplement or contradict this Lease. ThisLease, and all amendments hereto, are the only agreement between the partieshereto. All negotiations and oral agreements acceptable to both parties havebeen merged into and are included in this Lease.

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There are no other representations, covenants or warranties between theparties and any reliance on representations of a party is based solely upon theexpress representations, covenants and warranties contained in this Lease.Although the printed provisions of this Lease were drawn by Landlord, theparties agree that this circumstance alone shall not create any presumption,canon of construction or implication favoring the position of either Landlordor Tenant. The parties agree that any deletion of language from this Leaseprior to its mutual execution by Landlord and Tenant shall not be construed tohave any particular meaning or to raise any presumption, canon of constructionor implication, including, without limitation, any implication that the partiesintended thereby to state the converse, obverse or opposite of the deletedlanguage.

37.5     ***Governing Law.*****The laws of the state where the ShoppingCenter is located shall govern the validity, performance and enforcement of thisLease.

37.6     ***Waiver or Consent Limitations.*****A waiver of any breach or default underthe Lease shall not be a waiver of any other breach or default. Landlord’sconsent to or approval of any act by Tenant requiring Landlord’s consent orapproval shall not be deemed to waive or render unnecessary Landlord’s consentto or approval of any subsequent similar act by Tenant.

37.7     ***Force Majeure.*****The occurrence of any of the followingevents shall excuse performance of such obligations of Landlord or Tenant as arerendered impossible or reasonably impracticable to perform while such eventcontinues: strikes; lockouts; labor disputes; acts of God; inability to obtainlabor, materials or reasonable substitutes therefor; governmental restrictions,regulations or controls; judicial orders; enemy or hostile governmental action;civil commotion; fire or other casualty; and other causes beyond the reasonablecontrol of the party obligated to perform. Notwithstanding the foregoing, theoccurrence of such events shall not excuse Tenant’s obligations to pay MinimumAnnual Rent and additional rent (unless the provisions of Article 23 apply) orexcuse such obligations as this Lease may nevertheless otherwise impose on theparty to obey, remedy or avoid, despite such event. If any work performed byTenant or Tenant’s contractor results in a strike, lockout and/or labordispute, such strike, lockout and/or labor dispute shall not excuse Tenant’sperformance hereunder.

37.8     ***Waiver of Redemption Rights.*****Tenant hereby expressly waives any andall rights of redemption granted by or under any present or future laws in theevent Tenant is evicted from or dispossessed of the Premises for any cause, orin the event Landlord obtains possession of the Premises by reason of theviolation by Tenant of any of the covenants and conditions of this Lease orotherwise. The rights given to Landlord herein are in addition to any rightsthat may be given to Landlord by any statute or otherwise.

37.9     ***Amendments.*****To be effective and binding on Landlord andTenant, any amendment, modification, addition or deletion to the provisions ofthis Lease must be in writing and executed by both parties in the same manneras the Lease itself.

37.10   ***Right to Enter.*****Landlord and/or its authorizedrepresentatives shall have the right to enter the Premises at all reasonabletimes for the purpose of showing the Premises to prospective purchasers orlenders.

37.11   ***Definition of Landlord.*****As used in this Lease, the term “Landlord”means only the current owner of the fee title to the Shopping Center or theleasehold estate under a ground lease of the Shopping Center at the time inquestion. Each Landlord is obligated to perform the obligations of Landlordunder this Lease only during the time such Landlord owns such interest ortitle. Any Landlord who transfers its title or interest in the Shopping Centeris relieved of all liabilities for the obligations of Landlord under this Leaseto be performed on or after the date of transfer.

37.12   ***Tenant’s Financial Condition.*****Within ten (10) days after writtenrequest from Landlord, Tenant shall deliver to Landlord such financialstatements as Landlord reasonably requires to verify the net worth of Tenant orany guarantor of Tenant. In addition, Tenant shall deliver to any lender designatedby Landlord any financial statements required by such lender to facilitate thefinancing or refinancing of the Shopping Center. Tenant represents and warrantsto Landlord that each such financial statement is a true and accurate statementas of the date of such statement. All financial statements shall beconfidential and shall be used only for the purposes set forth in this Lease.

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**38.**      BROKERS.

38.1     ***Broker’s******Commission.***Uponexecution and delivery of this Lease by Landlord and Tenant, Landlord shall payto Landlord’s Broker the commission set forth at Section 3.b hereof, if any, orthe commission provided for in the written agreement (the “Agreement”) betweenLandlord and Landlord’s Broker covering brokerage services rendered in thistransaction. Landlord shall also pay Landlord’s Broker a further commission asprovided in the Agreement if Tenant exercises any option to extend the Term ofthis Lease or to renew the Lease or to expand the Premises. If a Tenant’sBroker is named at Section 3.b, Landlord’s Broker shall pay an appropriateportion of its commission to Tenant’s Broker if Landlord’s Broker and Tenant’sBroker have so agreed between them. Landlord shall have no obligation to pay acommission or fee to anyone other than Landlord’s Broker in connection withthis Lease.

38.2     ***Protection of Brokers.***IfLandlord sells its interest in the Premises or assigns Landlord’s interest inthis Lease, the buyer or assignee shall, by accepting such conveyance of thePremises or assignment of the Lease, be conclusively deemed to have agreed tomake all payments to Landlord’s Broker thereafter required of Landlord underthis Article 38 or the Agreement. Landlord’s Broker shall have the right tobring a legal action to enforce or declare rights under this Article 38. Theprevailing party in such action shall be entitled to reasonable attorneys’ feesto be paid by the losing party. Such attorneys’ fees shall be fixed by thecourt in such action. This Section is included in this Lease for the benefit ofLandlord’s Broker.

38.3     ***No Other Brokers.***Tenantrepresents and warrants to Landlord that the brokers named in Section 3.b ofthis Lease are the only agents, brokers, finders or other parties with whomTenant has dealt who are or may be entitled to any commission or fee withrespect to this Lease.

**39.**      COMPLIANCE.

The parties hereto agree to comply with all applicablefederal, state and local laws, regulations, codes, ordinances andadministrative orders having jurisdiction over the parties, property or thesubject matter of this Agreement, including, but not limited to, the 1964 CivilRights Act and all amendments thereto, the Foreign Investment in Real PropertyTax Act, the Comprehensive Environmental Response Compensation and LiabilityAct, and The Americans With Disabilities Act.

**40.**      RATIFICATION OF LEASE - SEE ADDENDUM

LANDLORD AND TENANT have signed this Lease on the dates set forthbelow.
| Date:                            | 1/5/2000                  |                         |                      |                  |
|----------------------------------|---------------------------|------------------------------|---------------------------|-----------------------|
|                             |                      | After Receipt of Approvals:  |
| Landlord:                        | 95, College Plaza, Ltd.   |                         | Tenant: 1st Pacific Bank, |
|                             |                      |                         |                      |
| a California Limited Partnership |                      | a State Banking Organization |
|                             |                      |                         |
| By:                              | Cal. Diego Builders, Inc. |                         | By:                       |                  |
|                             | a California Corporation  |                         |                      |
|                             |                      |                         |                      |
| Its:                             | General Partner           |                         | Date:                     |                  |
|                             |                      |                         |                      |
| By:                              | /s/ Harki Parekh          |                         | Title:                    |                  |
|                             | Harki Parekh              |                         |                      |                  |
|                             |                      |                         | By:                       | La Jolla Association  |
| Its:                             | President                 |                         |                      |                  |
|                             |                      |                         |
| Print Name:                      |                      |                         | Print Name:               | Rob Hildt             |
|                             |                      |                         | Rob Hildt                 |
| Title:                           |                      |                         | Title:                    | Co-Manager            |
|                             |                      |                         |                      | /s/ Donald McVay |
|                             |                      |                         |                      | Donald McVay          |
|                                  |                           |                              |                           |                       |  |  |  |  |  |  |  |

 

**SEE YOUR ATTORNEY**—THIS LEASE IS TO BE GIVEN TO YOUR ATTORNEY FOR REVIEW AND APPROVAL BEFORE YOUSIGN IT. BECAUSE EACH LEASE TRANSACTION IS UNIQUE, AND THE BUSINESS AND LEGALCONCERNS OF EACH PART ARE UNIQUE, CB COMMERCIAL CANNOT AND DOES NOT MAKE ANYREPRESENTATION OR RECOMMENDATION CONCERNING THE LEGAL EFFECT, LEGALSUFFICIENCY, OR TAX CONSEQUENCES OF THIS LEASE. THESE ARE QUESTIONS FOR YOURATTORNEY AND FINANCIAL ADVISORS.

IN ANY REAL ESTATE TRANSACTION IT IS RECOMMENDED THATYOU CONSULT WITH A PROFESSIONAL, SUCH AS A CIVIL ENGINEER, INDUSTRIAL HYGIENISTOR OTHER PERSON WITH EXPERIENCE IN EVALUATING THE CONDITION OF THE PROPERTY,INCLUDING THE POSSIBLE PRESENCE OF ASBESTOS, HAZARDOUS MATERIALS ANDUNDERGROUND STORAGE TANKS.

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**ADDENDUM TO LEASE**

ADDENDUM TO LEASE DATED NOVEMBER 1, 1999, BY ANDBETWEEN COLLEGE PLAZA, LTD., A CALIFORNIA LIMITED PARTNERSHIP (“LANDLORD”) AND 1ST PACIFICBANK, A STATE BANKING ORGANIZATION AND LA JOLLA ASSOCIATES (“TENANT”) FOR THEPROPERTY LOCATED AT 3500 COLLEGE BOULEVARD, OCEANSIDE, CA.

3.                          **DEFINITIONS:**

1.                         ***Contingency:*****This lease shall be contingent uponTenant’s receipt of all regulatory approvals to operate Tenant’s business inthe premises from any and all authorities from which approval may be necessary.This contingency shall expire January 31, 2000. Tenant’s waiver of thiscontingency on or before January 31, 2000 shall cause this lease to commenceand the obligations of Landlord and Tenant shall be binding. Tenant shalldeliver written notice of its waiver to landlord in writing on or before 5:00PM, January 31, 2000. Failure to deliver timely written waiver of itscontingency shall be deemed non-waiver, and this lease shall be deemed to havenever commenced, and Landlord and Tenant shall have no obligation to the other.This contingency for Tenant is solely for receipt of any and all regulatoryapprovals. Upon receipt of same, Tenant shall immediately waive its contingencyand the term shall commence. Nothing herein shall prevent Tenant from waivingthis contingency regardless of whether all regulatory approvals have beenobtained by January 31, 2000.

**NON-REFUNDABLE DEPOSIT:**

In consideration for Landlord not entering into anybinding lease with any other tenant during Tenant’s contingency period, Tenantshall pay to Landlord ten thousand dollars ($10,000) upon execution of thislease. Said deposit shall be non-refundable to Tenant. In the event Tenantfails to timely waive its contingency, the deposit shall be forfeited by Tenantand retained by Landlord as its sole compensation for not having previouslyentering into a lease with any other tenant. In the event Tenant timely waivesits contingency, its deposit shall apply to rent as it becomes due.

**OPTION TO EXTEND:**

Provided Tenant is not in default and is in possessionof the premises, Tenant shall have the option to extend the term of this leasefor one additional five (5) year period. Tenant shall exercise this option byproviding Landlord not less than one hundred eighty (180) days prior written notice.Rent during the option period shall be established based on comparablefree-standing building within the market. Rent during the option period shalladjust annually as set forth in the primary term based upon re-establishedmarket rent. In no event shall minimum rent be decreased below the last year ofthe Lease Term as a result of the exercise of option.

22.4              **LANDLORD’S RIGHT OF ENTRY**(continued):

To the greatest extent practicable, whenever Landlorddesires to enter the Premises for the purposes described in this paragraph,Landlord shall contact Tenant prior to such entry and coordinate Tenantproviding Landlord such access at mutually agreeable times so as to minimizeinterference with Tenant’s business.

23.3              **RECONSTRUCTION RESPONSIBILITIES** (continued):

To the extent necessary to put the Premises in thecondition existing at the commencement of the Term of this Lease so that Tenant’sWork may be commenced and completed.

24.1              **TAKINGS RESULTING IN TERMINATION**(continued):

If 25% or more of the Floor Area of the Premises or ofthe Floor Area of the Shopping Center or of the Common Area is taken underpower of eminent domain by any person, and such taking results in thesubstantial dinimution of the use of the Premises by Tenant for the purposesleased under this Lease, then Tenant may terminate this Lease upon givingLandlord 30 days notice of termination of this Lease within 30 days of receiptby Tenant of notice from Landlord of any such taking.

31.2              **GRAND OPENING PROMOTIONAL FUND** (continued):

Said contribution by Tenant shall be in connectionwith the renovation of the center to include not less than 20,000 square feetof new Tenant’s. In the event Tenant is prohibited from participating bybanking regulators, it shall not be required to do so.

**40**.                  **RATIFICATIONOF LEASE** (continued):

As 1st Pacific Bank is,as of the date first written above, an entity that does not yet have therequisite approvals to transact business in its name, this sublease is beingexecuted by La Jolla Association, its precursor entity, on behalf of 1st Pacific Bank. La JollaAssociation and 1st Pacific Bank hereby agree that lst Pacific Bank will execute the Lease inthe space provided below once it receives such approvals. La Jolla Associationhereby agrees that it will indemnify Landlord for any and all damages, costs orexpenses incurred by Landlord in the event that 1st Pacific Bank fails to so execute this Leaseafter the receipt of such approvals.
|     |   |   |   |
|----------|--------|--------|--------|
| Landlord | Tenant |

 

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**EXHIBIT “A”**

****
|     |   |   |   |
|----------|--------|--------|--------|
| Landlord | Tenant |

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EXHIBIT “F”

LANDLORD’S NOTICE OFLEASE TERM DATES

A.       Date of Tenant’s waiverof contingency: ______________________________________________________

B.        Date of LeaseCommencement (next day following “A” above):      ___________________________________

C.        Date of Commencement ofMinimum Rent: March 1, 2000

D.        Date of Annual MinimumRent increase (one year following “A” above): ____________________________

E.        Date of Expiration ofLease Term (5 years following “A” above): __________________________________

F.        Date of Notice ofExercise of Option (54 months following “A” above):_____________________________
|     |   |   |   |
|----------|--------|--------|--------|
| Landlord | Tenant |

 

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EXHIBITC

LANDLORD’SWORK AND TENANT’S WORK

The Premises shall bedelivered in its “as is, where is, with all faults” condition. Landlord is notobligated to make any repairs or contribution to the Building. All work to bedome in the Premises shall be completed by Tenant. In the event Tenant’simprovements require Landlord’s consent as set forth in Article 16, Tenantshall submit its plans to Landlord for consent of Landlord, which consent shallnot be unreasonably withheld. Tenant may install such business signage as maybe permitted by local ordinances and building codes, subject to obtaining suchpermits and other governmental approvals as may be required and further subjectto Landlord’s consent, which shall not be unreasonably withheld.

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**CB RICHARD ELLIS, INC. SALE/LEASE DISCLOSURES**

Property: 3500 College Blvd., Oceanside, CA

**Flood Zones**.According to Federal Emergency Management Agency. (Fidelity National FloodMap No. Map #6073C-766F dated 6/19/97)*[specifysource],*the Property o is / xmay or may not be located in an A or V flood zone and/or a dam inundation zone(Government Code Section 8589.5). Many lenders require flood insurance forproperties located in flood zones, and government authorities may regulatedevelopment and construction in flood zones. Whether or not located in a floodzone, properties can be subject to flooding and moisture problems, especiallyproperties on a slope or in low-lying areas. Buyers and tenants should havetheir experts confirm whether the Property is in a flood zone and otherwiseinvestigate and evaluate these matters. Flood Zone Designation: Zone X

**Earthquakes**.Earthquakes occur throughout California. According to Alquist-PrioloEarthquake Fault Zoning Act Fault-Rupture Hazard Zones in Calfornia(Publication 42, revised 1994)*[specifysource],*the Property ois / x may or may not be situated in an EarthquakeFault Zone and/or a Seismic Hazard Zone (Sections 2621 et seq. and Sections2690 et seq. of the Public Resources Code, respectively). Property developmentand construction in such zones generally are subject to the findings of ageologic report prepared by a state-registered geologist. Whether or notlocated in such a zone, all properties in California are subject to earthquakerisks and may be subject to a variety of state and local earthquake-relatedrequirements, including retrofit requirements. Among other items, all new andexisting water heaters must be braced, anchored or strapped to resist fallingor horizontal displacement, and in sales transactions, sellers must execute awritten certification that the water heaters are so braced, anchored orstrapped (Health and Safety Code Section 19211). If this is the sale of anunreinforced masonry building or a precast or reinforced masonry building withwood frame floors or roofs built before 1975, the buyer must be given a copy ofThe Commercial Property Owner’s Guide to Earthquake Safety (Government CodeSections 8875.6 and 8893.2). Buyers and tenants should have their expertsconfirm whether the Property is in any earthquake zone and otherwiseinvestigate and evaluate these matters.

**Hazardous Materials and UndergroundStorage Tanks**. Due to prior or current uses of theProperty or in the area or the construction materials used, the Property mayhave hazardous or undesirable metals (including lead-based paint), minerals(including asbestos), chemicals, hydrocarbons, petroleum-related compounds, orbiological or radioactive/emissive items (including electrical and magneticfields) in soils, water, building components, above or below-groundtanks/containers or elsewhere in areas that may or may not be accessible ornoticeable. Such Items may leak or otherwise be released. Asbestos has beenused in items such as fireproofing, heating/cooling systems, insulation,spray-on and tile acoustical materials, floor tiles and coverings, roofing,drywall and plaster. If the Property was built before 1978 and has aresidential unit, sellers/landlords must disclose all reports, surveys andother information known to them regarding lead-based paint to buyers andtenants and allow for inspections (42 United States Code Sections 4851 etseq.). Sellers/landlords are required to advise buyers/tenants if they have anyreasonable cause to believe that any hazardous substance has come to be locatedon or beneath the Property (Health and Safety Code Section 25359.7), and sellers/landlordsmust disclose reports and surveys regarding asbestos to certain persons,including their employees, contractors, buyers and tenants (Health and SafetyCode Sections 25915 et seq.); buyers/tenants have similar obligations. Haveyour experts investigate and evaluate these matters.

**Americans with Disabilities Act (ADA)**.The Americans With Disabilities Act (42 United States Code Sections 12101 etseq.) and other federal, state and local requirements may require changes tothe Property. Have your experts investigate and evaluate these matters.

**Taxes**. Sales,leases and other real estate transactions can have federal, state and local taxconsequences. In sales transactions, Internal Revenue Code Section 1446requires buyers to withhold and pay to the IRS 10% of the gross sales pricewithin 10 days of the date of a sale unless the buyers can establish that thesellers are not foreigners, generally by having the sellers sign a Non-ForeignSeller Affidavit. Depending on the structure of the transaction, the taxwithholding liability can exceed the net cash proceeds to be paid to thesellers at closing. California imposes an additional withholding requirementequal to 3 1/3% of the gross sales price not only on foreign sellers but alsoout-of-state sellers and sellers leaving the state if the sales price exceeds$100,000. Withholding generally is required if the last known address of aseller is outside California, if the proceeds are disbursed outside ofCalifornia or if a financial intermediary is used. Have your expertsinvestigate and evaluate these mattes.

**Fires**.California Public Resources Codes Sections 4125 et seq. require sellers of realproperty located within state responsibility areas to advise buyers that theproperty is located within such a wildland zone, that the state does not havethe responsibility to provide fire protection services to any structure withinsuch a zone and that such zones may contain substantial forest/wildland firerisks. Government Code Sections 51178 et seq. require sellers of real propertylocated within certain fire hazard zones to disclose that the property islocated in such a zone. Sellers must disclose that a property located in awildland or fire hazard zone is subject to the fire prevention requirements ofPublic Resources Code Section 4291 and Government Code Section 51182,respectively. Sellers must make such disclosures if either the sellers haveactual knowledge that a property is in such a zone or a map showing theproperty to be in such a zone has been provided to the county assessor.Properties, whether or not located in such a zone, are subject to fire/lifesafety risks and may be subject to state and local fire/life safety-relatedrequirements, including retrofit requirements. Have your experts investigateand evaluate these matters.

**Broker Representation**.CB Richard Ellis, inc. is a national brokerage firm representing a variety ofclients. Depending on the circumstances, CB Richard Ellis, Inc. may representboth the seller/landlord and the buyer/tenant in a transaction, or you may beinterested in a property that may be of interest to other CB Richard Ellis, Inc.clients. If CB Richard Ellis, Inc. represents more than one party with respectto a property, CB Richard Ellis, Inc. will not disclose the confidentialinformation of one principal to the other.

**Seller/Landlord Disclosure, Deliveryof Reports, Pest Control Reports and Compliance with Laws**.Sellers/landlords are hereby requested to disclose directly to buyers/tenantsall information known to sellers/landlords regarding the Property, includingbut not limited to, hazardous materials, zoning, construction, design,engineering, soils, title; survey, fire/life safety, and other matters, and toprovide buyers/tenants with copies of all reports in the possession of oraccessible to sellers/landlords regarding the Property. Sellers/landlords andbuyers/tenants must comply with all applicable federal, state and local laws,regulations, codes, ordinances and administrative orders, including, but notlimited to, the 1964 Civil Rights Act and all amendments thereto, the Foreign Investmentin Real Property Tax Act, the Comprehensive Environmental Response Compensationand Liability Act, and The Americans With Disabilities Act. If a pest controlreport is a condition of the purchase contract, buyers are entitled to receivea copy of the report and any certification and notice of work completed.

**Property Inspections and Evaluations**.Buyers/tenants should have the Property thoroughly inspected and all partiesshould have the transaction thoroughly evaluated by the experts of theirchoice. Ask your experts what investigations and evaluations may be appropriateas well as the risks of not performing any such investigations or evaluations.Information regarding the Property supplied by the real estate brokers has beenreceived from third party sources and has not been independently verified bythe brokers. Have your experts verify all information regarding the Property,including any linear or area measurements and the availability of allutilities. All work should be inspected and evaluated by your experts, as theydeem appropriate. Any projections or estimates are for example only, are basedon assumptions that may not occur and do not represent the current or future performanceof the property. Real estate brokers are not experts concerning nor can theydetermine if any expert is qualified to provide advice on legal, tax, design,ADA, engineering, construction, zoning building code, soils, title, survey,fire/life safety, insurance, hazardous materials, or other such matters. Suchareas require specia education and, generally, special licenses not possessedby real estate brokers. Consult with the experts of your choice regarding thesematters.

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