Document:

Exhibit
10.13

 

 

OFFICE LEASE

 

Between

 

BRIGHTON ENTERPRISES, LLC,

a California limited liability company

 

 

as
Landlord

and

 

MERCANTILE NATIONAL BANK, N.A., 

a California “C” corporation

 

 

 

as Tenant

Dated

March 30, 2005

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Initial

  	
   

  	
  Initial

  	
   

  	
  Initial

  	
   

  	
  Initial

  	
   

  

 

 

OFFICE LEASE

BASIC LEASE INFORMATION

                                                

	
   

  	
   

  	
  Date:

  	
   

  	
  March 29,
  2005

  
	
   

  	
   

  	
  Landlord:

  	
   

  	
  BRIGHTON ENTERPRISES,
  LLC, a California limited liability company

  
	
   

  	
   

  	
  Tenant:

  	
   

  	
  MERCANTILE NATIONAL
  BANK, N.A., a California “C” corporation

   

  
	
  SECTION

  	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Premises:

  	
   

  	
  9601 Wilshire
  Boulevard, Suite 250 Beverly Hills, California 90210

  
	
  1.4

  	
   

  	
  Rentable Area of
  Premises:

  	
   

  	
  approximately 2,559
  square feet

  
	
  1.4

  	
   

  	
  Usable Area of
  Premises:

  	
   

  	
  approximately 2,084
  square feet

  
	
  2.1

  	
   

  	
  Term:

  	
   

  	
  Five (5) Years and
  Three (3) Months

  
	
   

  	
   

  	
  Anticipated
  Commencement Date:

  	
   

  	
  April 1, 2004 (as
  modified by Section 2.1)

  
	
   

  	
   

  	
  Anticipated Expiration
  Date:

  	
   

  	
  June 30, 2009 (as
  modified by Section 2.1)

  
	
  3.1

  	
   

  	
  Fixed Monthly Rent:

  	
   

  	
  $7,369.92

  
	
  3.3

  	
   

  	
  Fixed Monthly Rent
  Increase

  	
   

  	
  Three percent (3%)

  
	
   

  	
   

  	
  Date of First Increase:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  SEE SECTION 3.3

  
	
   

  	
   

  	
  Frequency of Increase:

  	
   

  	
  SEE SECTION 3.3

  
	
  3.7

  	
   

  	
  Security Deposit:

  	
   

  	
  $0.00

  
	
  4.1

  	
   

  	
  Tenant’s Share

  	
   

  	
  .79%

  
	
  4.2

  	
   

  	
  Base Year for Operating
  Expenses:

  	
   

  	
  2004

  
	
  6.1

  	
   

  	
  Use of Premises:

  	
   

  	
  General office use
  consistent with the operation of a first-class office building in the Beverly
  Hills area

  
	
  16.1

  	
   

  	
  Tenant’s Address for
  Notices:

  	
   

  	
   

  
	
   

  	
   

  	
  Before the Commencement
  Date:

  	
   

  	
  9601 Wilshire
  Boulevard, Suite 600

  Beverly Hills, California 90210

  With a copy to:

  Mr. David Brown

  Chief Financial Officer

  Mercantile National Bank, N.A.

  1880 Century Park East, Suite 1200

  Los Angeles, California 90067

  
	
   

  	
   

  	
  After the Commencement
  Date:

  	
   

  	
  9601 Wilshire
  Boulevard, Suite 250

  Beverly Hills, California 90210

  With a copy to:

  Mr. David Brown

  Chief Financial Officer

  Mercantile National Bank, N.A.

  1880 Century Park East, Suite 1200

  Los Angeles, California 90067

  
	
   

  	
   

  	
  Contact:

  	
   

  	
  Mr. Chuck Avis

  
	
   

  	
   

  	
  Landlord’s Address for
  Notices:

  	
   

  	
  BRIGHTON ENTERPRISES,
  LLC

  c/o Douglas, Emmett and Company

  Director of Property Management

  808 Wilshire Boulevard, Suite 200

  Santa Monica, California 90401

  

 

ii

 

	
  20.5

  	
   

  	
  Brokers:

  	
   

  	
  Douglas, Emmett and
  Company

  808 Wilshire Boulevard, Suite 200

  Santa Monica, California 90401 and

  First Property Realty Corporation

  350 South Beverly Drive, Suite 340

  Beverly Hills, California 90212-4820

  
	
  21.1

  	
   

  	
  Parking Permits:

  	
   

  	
  Five (5) permits for
  unreserved spaces

  

Except as noted hereinbelow, the foregoing Basic
Lease Information is hereby incorporated into and made a part of the
Lease.  The Section reference in the left
margin of the Basic Lease Information exists solely to indicate where such
reference initially appears in the Lease document.  Except as specified hereinbelow, each such
reference in the Lease document shall incorporate the applicable Basic Lease
Information.  However, in the event of
any conflict between any reference contained in the Basic Lease Information and
the specific wording of the Lease, the wording of the Lease shall control.

 

iii

 

OFFICE LEASE

TABLE OF CONTENTS

	
  ARTICLE

  	
   

  	
   

  
	
  ARTICLE 1

  	
   

  	
  DEMISE OF PREMISES

  
	
  ARTICLE 2

  	
   

  	
  COMMENCEMENT DATE AND
  TERM

  
	
  ARTICLE 3

  	
   

  	
  PAYMENT OF RENT, LATE
  CHARGE

  
	
  ARTICLE 4

  	
   

  	
  ADDITIONAL RENT

  
	
  ARTICLE 5

  	
   

  	
  ETHICS

  
	
  ARTICLE 6

  	
   

  	
  USE OF PREMISES

  
	
  ARTICLE 7

  	
   

  	
  CONDITION UPON
  VACATING & REMOVAL OF PROPERTY

  
	
  ARTICLE 8

  	
   

  	
  UTILITIES AND
  SERVICES

  
	
  ARTICLE 9

  	
   

  	
  TENANT’S
  INDEMNIFICATION AND LIMITATION ON LANDLORD’S LIABILITY

  
	
  ARTICLE 10

  	
   

  	
  COMPLIANCE WITH
  LAWS

  
	
  ARTICLE 11

  	
   

  	
  ASSIGNMENT AND
  SUBLETTING

  
	
  ARTICLE 12

  	
   

  	
  MAINTENANCE,
  REPAIRS, DAMAGE, DESTRUCTION, RENOVATION AND/OR ALTERATION

  
	
  ARTICLE 13

  	
   

  	
  CONDEMNATION

  
	
  ARTICLE 14

  	
   

  	
  MORTGAGE
  SUBORDINATION; ATTORNMENT AND MODIFICATION OF LEASE

  
	
  ARTICLE 15

  	
   

  	
  ESTOPPEL
  CERTIFICATES

  
	
  ARTICLE 16

  	
   

  	
  NOTICES

  
	
  ARTICLE 17

  	
   

  	
  DEFAULT AND
  LANDLORD’S OPTION TO CURE

  
	
  ARTICLE 18

  	
   

  	
  DAMAGES; REMEDIES;
  RE-ENTRY BY LANDLORD; ETC.

  
	
  ARTICLE 19

  	
   

  	
  INSURANCE

  
	
  ARTICLE 20

  	
   

  	
  MISCELLANEOUS

  
	
  ARTICLE 21

  	
   

  	
  PARKING

  
	
  ARTICLE 22

  	
   

  	
  CONCIERGE SERVICES

  
	
  ARTICLE 23

  	
   

  	
  OPTION TO EXTEND
  TERM

  
	
  ARTICLE 24

  	
   

  	
  RIGHT OF FIRST
  OFFER

  

 

	
  Exhibits

  	
   

  
	
   

  	
  A —

  	
  Premises Plan

  
	
   

  	
  B —

  	
  Improvement
  Construction Agreement

  
	
   

  	
  B-1 —

  	
  Construction by
  Tenant During Term

  
	
   

  	
  C —

  	
  Rules and Regulations

  
	
   

  	
  D —

  	
  First Amendment —
  Commencement Date and Term

  
	
   

  	
  E —

  	
  Guaranty of Lease — INTENTIONALLY DELETED

  
	
   

  	
  F —

  	
  Asbestos Rider

  
	
   

  	
  G —

  	
  Form of Letter of
  Credit —
  INTENTIONALLY DELETED

  
	
   

  	
  H —

  	
  Form of
  Subordination, Non-Disturbance and Attornment Agreement

  

 

iv

 

OFFICE LEASE

        This Office Lease,
dated March 30, 2005, is by and between
BRIGHTON ENTERPRISES, LLC, a California limited liability company (“Landlord”),
with an office at 808 Wilshire Boulevard, Suite 200, Santa Monica,
California  90401, and MERCANTILE
NATIONAL BANK, N.A., a California “C” corporation (“Tenant”), with an office at
1880 Century Park East, Suite 1200, Los Angeles, California 90067.

ARTICLE 1

DEMISE OF PREMISES

Section
1.1.  Demise. 
Subject to the covenants and agreements contained in this Lease,
Landlord leases to Tenant and Tenant hires from Landlord, Suite Number 250 (the
“Premises”) on the second (2nd) floor, in the building located at
9601 Wilshire Boulevard, Los Angeles, California  90210 (the “Building”). The configuration of
the Premises is shown on Exhibit A, attached hereto and made a part hereof by
reference, and Landlord and Tenant acknowledge and agree that the intent of
both parties hereto is that said configuration shall not be materially altered
by construction of the demising walls separating the same from the balance of
the space from which it is being demised.

        Tenant acknowledges that it has made its
own inspection of and inquiries regarding the Premises, which are already
improved.  Therefore, except for the
improvements to be completed pursuant to Exhibit B, attached hereto and made a
part hereof by reference, Tenant accepts the Premises in their “as-is”
condition, subject to the representations and warranties contained in this Lease
and its Exhibits, and to any latent defects. 
Tenant further acknowledges that Landlord has made no representation or
warranty, express or implied, except as are contained in this Lease and its
Exhibits, regarding the condition, suitability or usability of the Premises or
the Building for the purposes intended by Tenant.    Landlord hereby represents and
warrants to Tenant that to the best of Landlord’s knowledge as of the date
hereof: (i) the existing structure of the Building (including, without limitation,
the roof, foundations and the exterior walls) and all building systems serving
the Premises (including, without limitation, the plumbing, electrical, and
heating, ventilating and air conditioning systems) are in good operating
condition and repair, (ii) the second (2nd) floor of the Building
(including, without limitation, the Premises and the common areas thereof) are
(x) in compliance with all applicable Codes (as such term is defined in Section
10.1 of this Lease), including, without limitation, all applicable covenants or
restrictions of record and all applicable building codes, regulations and
ordinances in effect as of the Commencement Date, and (y) free of all hazardous
substances, including, but not limited to, any asbestos-containing materials
(whether or not friable) and lead-based paint.

        The Building, the Building’s parking
facilities, any outside plaza areas, land and other improvements surrounding
the Building which are designated from time to time by Landlord as common areas
appurtenant to or servicing the Building, and the land upon which any of the
foregoing are situated, are herein sometimes collectively referred to as the “Real
Property.”

Section
1.2.  Tenant’s Non-Exclusive Use.  Subject to the contingencies contained herein, Tenant
is granted the nonexclusive use of the common corridors and hallways,
stairwells, elevators, restrooms, parking facilities, lobbies and other public
or common areas located on the Real Property. 
However, the manner in which such public and common areas are maintained
and operated shall be at the reasonable discretion of Landlord, and Tenant’s
use thereof shall be subject to such reasonable and non-discriminatory rules,
regulations and restrictions as Landlord may make from time to time.

Section
1.3.  Landlord’s Reservation of
Rights.  Landlord specifically reserves to itself use, control
and repair of the structural portions of all perimeter walls of the Premises,
any balconies, terraces or roofs adjacent to the Premises (including any
flagpoles or other installations on said walls, balconies, terraces or roofs)
and any space in and/or adjacent to the Premises used for shafts, stairways,
pipes, conduits, ducts, mail chutes, conveyors, pneumatic tubes, electric or
other utilities, sinks, fan rooms or other Building facilities, and the use
thereof, as well as access thereto through the Premises.  Landlord also specifically reserves to itself
the following rights:

a)              To designate all sources furnishing sign
painting or lettering;

b)              To constantly have pass keys to the
Premises;

c)              To grant to anyone the exclusive right to
conduct any particular business or undertaking in the Building, so long as
Landlord’s granting of the same does not prohibit Tenant’s use of the Premises
for Tenant’s Specified Use or Particular Usage, each as defined in Article 6;

d)              To enter the Premises at any reasonable
time with reasonable notice (except for emergencies) to inspect, repair, alter,
improve, update or make additions to the Premises or the Building, so long as
Tenant’s access to and use of the Premises is not materially impaired thereby;

e)              During the last six (6) months of the
Term, to exhibit the Premises to prospective future tenants upon not less than
24 hours prior notice and accompanied by a representative of Tenant;

 

 

f)                Subject to the provisions of Article 12,
to, at any time, and from time to time, whether at Tenant’s request or pursuant
to governmental requirement, repair, alter, make additions to, improve, or
decorate all or any portion of the Real Property, Building or Premises at any
reasonable time with reasonable notice (except for emergencies), so long as
Tenant’s access to and use of the Premises and the parking facilities is not
materially impaired thereby.  In
connection therewith, and without limiting the generality of the foregoing
rights, Landlord shall specifically have the right to remove, alter, improve or
rebuild all or any part of the lobby of the Building as the same is presently
or shall hereafter be constituted, so long as following any such alteration or
rebuilding, the Building has a first-class lobby;

g)             Subject to the provisions of
Article 12, Landlord reserves the right to make alterations or additions
to or change the location of elements of the Real Property and any common areas
appurtenant thereto at any reasonable time with reasonable notice (except for
emergencies), so long as Tenant’s access to and use of the Premises and the
parking facilities is not materially impaired thereby; and/or

h)             To take such other actions as may
reasonably be necessary when the same are required to preserve, protect or
improve the Premises, the Building, or Landlord’s interest therein at any
reasonable time with reasonable notice (except for emergencies), so long as
Tenant’s access to and use of Premises and the parking facilities is not
materially impaired thereby.

Section 1.4.  Area.  Since the
Premises are not yet fully demised, once the exact location of the demising
walls is established, Landlord and Tenant agree that a one-time recalculation
of the Rentable Area of the Premises shall be made by Stevenson Systems, Inc.,
an independent planning firm, in accordance with the June, 1996 standards set
forth by the Building Owners and Managers Association (the “Premises
Remeasurement”).  Such determination
shall be determinative unless patently unreasonable.  Tenant and Landlord agree to execute an
amendment to this Lease, documenting the revised Usable Area and Rentable Area
as documented by Stevenson Systems, it being expressly understood and agreed
that there shall be no further re-measurement of the Premises following the
Premises Remeasurement.  The parties
further expressly acknowledge and agree that there shall be no increase or
decrease in the Fixed Monthly Rent or Tenant’s Share as a result of the
Premises Re-measurement.

        Landlord and Tenant further agree that
the Rentable Area of the Premises shall be calculated on the basis of 1.2277
times the estimated Usable Area, regardless of what actual common areas of the
Building may be, or whether they may be more or less than 22.77% of the total
estimated Usable Area of the Building, and is provided solely to give a general
basis for comparison and pricing of this space in relation to other spaces in
the market area.

        Landlord and Tenant further agree that
once the Rentable Area and Usable Area of the Premises have been determined by
the Premises Remeasurement as specified hereinabove, even if later either party
alleges that the actual Rentable Area or Usable Area of the Premises is more or
less than the figures stated herein; and whether or not such figures are
inaccurate, the Rentable and Usable figures agreed upon shall be conclusively
deemed to be the Rentable Area or Usable Area of the Premises, as the case may
be; provided, however, that if the Usable Area and the Rentable Area are
increased pursuant to this Section 1.4, it is expressly understood and agreed
that there shall be no change in the initial Fixed Monthly Rent payable for the
Premises and  there shall be no change in
Tenant’s Share (as described in Section 4.2 d) below).

Section
1.5.  Quiet Enjoyment. 
So long as Tenant is not in default beyond any applicable notice and/or
cure period set forth in this Lease, and subject to the limitations imposed
under Article 14 of this Lease, Tenant shall lawfully and quietly hold,
occupy and enjoy the Premises during the Term.

Section
1.6.  No Light, Air or View Easement. 
Any diminution or shutting off of light, air or view by any structure
which is now or may hereafter be erected on lands adjacent to the Building shall
in no way affect this Lease or impose any liability on Landlord.  Noise, dust or vibration or other ordinary
incidents to new construction of improvements on lands adjacent to the
Building, whether or not by Landlord, shall in no way affect this Lease or
impose any liability on Landlord.

Section
1.7.  Relocation. 
Landlord shall have the one-time right at any time, except during the
last six (6) months of the Term, and after giving Tenant a minimum of ninety
(90) days prior written notice, to:

a)              provide and furnish Tenant with space
elsewhere in the Building (but not on a lower floor) of approximately the same
size, views, configuration and quality of tenant improvements as the Premises
(the “Substitute Premises”) and

b)              relocate Tenant to such Substitute
Premises.

        Landlord shall pay all costs and
expenses incurred as a result of such relocation (including (i) Tenant’s
reasonable reprinting costs for announcements, stationery and business cards,
and (ii) costs incurred in connection with the relocation of Tenant’s telephone
and data cabling equipment.  If Landlord
moves Tenant to the Substitute Premises, each and every term, covenant and
condition of this Lease shall remain in full force and effect and be deemed
applicable to the Substitute Premises, as though Landlord and Tenant had
entered into an express written amendment of this Lease with respect thereto,
except that if the approximate Rentable square footage of the Substitute
Premises is less than that of the Premises, the Fixed Monthly Rent and Tenant’s
Share  shall be appropriately reduced,
and if the approximate Rentable square footage of the Substitute Premises is
more than that of the Premises, the Fixed Monthly Rent and Tenant’s Share shall
be based on the square footage of the Premises prior to the relocation, and
shall not increase.

 

2

 

        If Tenant refuses to permit Landlord to
relocate Tenant as specified above, Landlord shall have the right to terminate
this Lease effective ninety (90) days from the date Landlord provided Tenant
with the original notification of intent to relocate.

ARTICLE
2           

COMMENCEMENT DATE AND TERM

Section 2.1. 
Commencement Date and Term.  This Lease
shall commence five (5) business days following the date Landlord substantially
completes the Improvements contemplated under Exhibit B (the “Commencement Date”),
and shall end, unless sooner terminated as otherwise provided herein, at
midnight on the last calendar day of the calendar month which occurs five (5)
years and three (3) months after the Commencement Date (the “Termination Date”).
The anticipated Commencement Date is April 1, 2004.  Landlord and Tenant shall promptly execute an
amendment to this Lease (the “First Amendment”) substantially in the form
attached hereto as Exhibit D, confirming the finalized Commencement Date and
Term as soon as they are determined.

        For
purposes of establishing the Commencement Date, substantial completion shall be
defined as that point in the construction process when all of the structural,
mechanical, plumbing and electrical work specified herein has been performed;
the paint, carpet, hard flooring materials, base moldings, and millwork, if
any, have been installed, and a majority of the other finish work specified in
Tenant’s plans has been completed in such a manner that Tenant could, if it
took possession of the Premises, enjoy beneficial occupancy thereof.

        Tenant’s taking possession of the
Premises for the purpose of conducting Tenant’s normal business operations in
the Premises shall be deemed conclusive evidence that, as of the Commencement
Date:

a)              Landlord has substantially completed the
Tenant Improvements contemplated hereunder, except for any minor punchlist
items to be completed; and

b)              the Premises are in good order and repair,
subject to latent defects and the representations and warranties set forth in
this Lease.

        Provided that Tenant does not delay
Landlord’s completion of the Improvements that Landlord is required to
complete, Tenant may take possession of the Premises up to two (2) weeks (but
not less than one (1) week) prior to the anticipated Commencement Date, solely
for the purpose of installing Tenant’s furniture, fixtures and equipment,
computer and telephone cabling.  Said
early possession shall be subject to Tenant complying with all of the
provisions and covenants contained herein, except that Tenant shall not be
obligated to pay Fixed Monthly Rent or Additional Rent until the Commencement
Date.  If Tenant’s early possession does
so delay completion of the Improvements, the Commencement Date shall be the
date the Improvements would have been completed had no such delay occurred.

        If for any reason (including Landlord’s
inability to complete the Improvements called for hereunder) Landlord is unable
to deliver possession of the Premises to Tenant on the anticipated Commencement
Date, this Lease shall not be void or voidable, nor shall Landlord be liable to
Tenant for any damage resulting from Landlord’s inability to deliver such
possession.  However, Tenant shall not be
obligated to pay the Fixed Monthly Rent or Additional Rent that Tenant is
required to pay pursuant to Section 3.1 until such possession of the
Premises has been delivered to Tenant by Landlord.  Except for such delay in the commencement of
Rent, Landlord’s failure to give possession on the anticipated Commencement
Date shall in no way affect Tenant’s obligations hereunder.

        If possession of the Premises is not
tendered by Landlord within ninety (90) days after the anticipated Commencement
Date, then Tenant shall have the right to terminate this Lease by giving
written notice to Landlord within ten (10) days after such failure.  If such notice of termination is not so given
by Tenant within said ten (10) day time period, then this Lease shall continue
in full force and effect.

        Section 2.2.  Holding Over.  If Tenant fails to deliver possession of the
Premises on the Termination Date, but holds over after the expiration or
earlier termination of this Lease without the express prior written consent of
Landlord, such tenancy shall be construed as a tenancy from month-to-month on
the same terms and conditions as are contained herein, except that the Fixed
Monthly Rent payable by Tenant during the first thirty (30) days of holding
over (the “Initial Holdover Period”) shall automatically increase as of the
Termination Date to an amount equal to one hundred twenty-five  percent (125%) of the Fixed Monthly Rent
payable by Tenant for the calendar month immediately prior to the date when
Tenant commences such holding over (the “Holdover Rent”).  After the expiration of the Initial Holdover
Period, the Holdover Rent shall be increased to one hundred fifty percent
(150%) of the Fixed Monthly Rent payable by Tenant for the calendar month
immediately prior to the date when Tenant commenced such holding over.  Such Holdover Rent shall be paid during such
period as Tenant retains possession of the Premises.  However, Tenant’s payment of such Holdover
Rent, and Landlord’s acceptance thereof, shall not constitute a waiver by Landlord
of any of Landlord’s rights or remedies with respect to such holding over, nor
shall it be deemed to be a consent by Landlord to Tenant’s continued occupancy
or possession of the Premises past the time period covered Tenant’s payment of
the Holdover Rent.

        Furthermore, if Tenant fails to deliver
possession of the Premises to Landlord upon the expiration or earlier
termination of this Lease, and Landlord has theretofore notified Tenant in
writing that Landlord requires possession of the Premises for a succeeding
tenant, then, in addition to any other liabilities to Landlord accruing
therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless
from all loss, costs (including reasonable attorneys’ fees and expenses) and
liability resulting from such failure, including without limiting the
foregoing, any claims made by any succeeding tenant arising out of Tenant’s
failure to so surrender, and any lost profits to Landlord resulting therefrom.

 

3

 

        Notwithstanding the provisions contained
hereinabove regarding Tenant’s liability for a continuing holdover, Landlord
agrees to use commercially reasonable efforts to insert into any future lease
of another tenant proposing to occupy the Premises provisions  permitting mitigation of Tenant’s damages
arising out of Tenant’s temporary holdover.

ARTICLE 3           

PAYMENT OF RENT, LATE CHARGE

Section
3.1.  Payment of Fixed Monthly Rent and
Additional Rent.  “Rent” shall mean: all payments of monies in
any form whatsoever required under the terms and provisions of this Lease, and
shall consist of:

a)              “Fixed Monthly Rent,” which shall be
payable in equal monthly installments of $7,369.92; plus

b)              Additional Rent as provided in
Article 4 and elsewhere in this Lease.

Section
3.2.  Manner of Payment. 
Tenant shall pay Fixed Monthly Rent and Additional Rent immediately upon
the same becoming due and payable, without demand therefor, and without any
abatement, set off or deduction whatsoever, except as may be expressly provided
in this Lease.  Landlord’s failure to
submit statements to Tenant stating the amount of Fixed Monthly Rent or
Additional Rent then due, including Landlord’s failure to provide to Tenant a
calculation of the adjustment as required in Section 3.3 or the Escalation
Statement referred to in Article 4, shall not constitute Landlord’s waiver
of Tenant’s requirement to pay the Rent called for herein, unless Landlord
fails to provide the Escalation Statement described in Article 4 within one (1)
year after the expiration of the calendar year to which such Escalation
Statement is applicable, in which event Landlord shall be deemed to have waived
its right to collect any Additional Rent for such calendar year for which
Tenant had not theretofore been billed. 
Tenant’s failure to pay Additional Rent as provided herein shall
constitute a material default equal to Tenant’s failure to pay Fixed Monthly
Rent when due.

        Rent shall be payable in advance on the
first day of each and every calendar month throughout the Term, in lawful money
of the United States of America, to Landlord at 9601 Wilshire Boulevard, Suite
GL-25, Beverly Hills, California  90210,
or at such other place(s) as Landlord designates in writing to Tenant.  Tenant’s obligation to pay Rent shall begin on
the Commencement Date and continue throughout the Term, without abatement,
setoff or deduction, except as otherwise specified hereinbelow.

        On or before April 1, 2004, Tenant shall
pay to Landlord the Fixed Monthly Rent due for the first month of the Term.

Section
3.3.  Fixed Monthly Rent Increase.  Commencing on the date that is ninety (90) days
following the Commencement Date, and continuing through the last calendar day
of the twelfth (12th) calendar month of the Term, the Fixed Monthly
Rent payable by Tenant shall increase from $7,369.92 per month to $7,753.77 per
month.

        Commencing the first calendar day of the
thirteenth (13th) calendar month of the Term, and continuing through
the last calendar day of the twenty-fourth (24th) calendar month of
the Term, the Fixed Monthly Rent payable by Tenant shall increase from
$7,753.77 per month to $7,986.38 per month.

        Commencing the first calendar day of the
twenty-fifth (25th) calendar month of the Term, and continuing
through the last calendar day of the thirty-sixth (36th) calendar
month of the Term, the Fixed Monthly Rent payable by Tenant shall increase from
$7,986.38 per month to $8,225.97 per month.

        Commencing the first calendar day of the
thirty-seventh (37th) calendar month of the Term, and continuing the
last calendar day of the forty-eighth (48th) calendar month of the
Term, the Fixed Monthly Rent payable by Tenant shall increase from $8,225.97
per month to $8,472.75 per month.

        Commencing the first calendar day of the
forty-ninth (49th) calendar month of the Term, and continuing the
last calendar day of the sixtieth (60th) calendar month of the Term,
the Fixed Monthly Rent payable by Tenant shall increase from $8,472.75 per
month to $8,726.94 per month.

        Commencing the first calendar day of the
sixty-first (61st) calendar month of the Term, and continuing
throughout the remainder of the initial Term, the Fixed Monthly Rent payable by
Tenant shall increase from $8,726.94 per month to $8,988.74 per month.

        Landlord and Tenant shall, in the First
Amendment, confirm the actual dates upon which the changes in Fixed Monthly
Rent specified above shall occur.

        Notwithstanding the foregoing, Tenant
shall be permitted to defer one hundred percent (100%) of the Fixed Monthly
Rent due for the second (2nd), third (3rd), thirteenth
(13th), twenty-fifth (25th) and thirty-seventh (37th)
months of the Term (collectively, the “Rent Deferral Amount”).  So long as Tenant does not commit a material,
uncured default during the Term that has resulted in Landlord filing an unlawful
detainer action against Tenant, the entire Rent Deferral Amount shall be abated
and forgiven as of the Termination Date.

Section
3.4.  Tenant’s Payment of Certain Taxes. 
Tenant shall, within thirty (30) days following Tenant’s receipt of
substantiating documentation from Landlord, reimburse Landlord, as Additional
Rent, for any and all taxes, surcharges, levies, assessments, fees and charges
payable by Landlord when:

a)              assessed on, measured by, or reasonably
attributable to

the cost or value of Tenant’s equipment, furniture,
fixtures and other personal property located in the Premises;

 

4

 

b)              on or measured by any rent payable
hereunder, including, without limitation, any gross income tax, gross receipts
tax, or excise tax levied by the City of Beverly Hills or the County of Los
Angeles or any other governmental body with respect to the receipt of such rent
(computed as if such rent were the only income of Landlord), but solely when
levied by the appropriate City or County agency in lieu of, or as an adjunct
to, such business license(s), fees or taxes as would otherwise have been
payable by Tenant directly to such taxing authority. Notwithstanding the
foregoing, the Beverly Hills City Rental Tax shall be paid by Landlord and
included in Operating Expenses.  Tenant
shall not be billed directly for such tax; or

c)              upon or with respect to the possession,
leasing, operating, management, maintenance, alteration, repair, use or
occupancy by Tenant of the Premises or any portion thereof. If it becomes
unlawful for Tenant so to reimburse Landlord, the rent payable to Landlord
under this Lease shall be revised to net Landlord the same rent after
imposition of any such tax as would have been payable to Landlord prior to the
imposition of any such tax.

        Said taxes shall be due and payable
whether or not now customary or within the contemplation of Landlord and
Tenant.  Notwithstanding the above, in no
event shall the provisions of this Section 3.4 serve to entitle Landlord
to reimbursement from Tenant for any federal, state, county or city income tax
payable by Landlord or the managing agent of Landlord.

Section 3.5. 
Certain Adjustments.  If:

a)              the Commencement Date occurs on other than January 1st
of a calendar year, or the Lease expires or terminates on other than December
31st of a calendar year;

b)              the size of the Premises or the Building changes
during a calendar year;

c)              or any abatement of Fixed Monthly Rent or
Additional Rent occurs during a calendar year,

then the amount
payable by Tenant or reimbursable by Landlord during such year shall be
adjusted proportionately on a daily basis, and the obligation to pay such
amount shall survive the expiration or earlier termination of this Lease.

        If the Commencement Date occurs on other
than the first day of a calendar month, or the Lease expires on a day other
than the last day of a calendar month, then the Fixed Monthly Rent and
Additional Rent payable by Tenant shall be appropriately apportioned on a
prorata basis for the number of days remaining in the month of the Term for
which such proration is calculated.

        If the amount of Fixed Monthly Rent or
Additional Rent due is modified pursuant to the terms of this Lease, such
modification shall take effect the first day of the calendar month immediately
following the date such modification would have been scheduled.

Section
3.6.  Late Charge and Interest. 
Tenant acknowledges that late payment by Tenant to Landlord of Fixed
Monthly Rent or Additional Rent will cause Landlord to incur costs not
contemplated by this Lease, the exact amount of which are extremely difficult
and impracticable to fix.  Such costs
include, without limitation, processing and accounting charges and late charges
that may be imposed on Landlord by the terms of any encumbrance and note
secured by any encumbrance covering the Premises.  Therefore, if any installment of Fixed
Monthly Rent or Additional Rent and other payment due from Tenant hereunder is
not received by Landlord within five (5) days of the date it becomes due,
Tenant shall pay to Landlord on demand an additional sum equal to five percent
(5%) of the overdue amount as a late charge. 
The parties agree that this late charge represents a fair and reasonable
settlement against the costs that Landlord will incur by reason of Tenant’s
late payment.  Acceptance of any late
charge shall not constitute a waiver of Tenant’s default with respect to the
overdue amount, or prevent Landlord from exercising any of the other rights and
remedies available to Landlord.

        Every installment of Fixed Monthly Rent
and Additional Rent and any other payment due hereunder from Tenant to Landlord
which is not paid within twelve (12) days after the same becomes due and
payable shall, in addition to any Late Charge already paid by Tenant, bear
interest at the rate of ten percent (10%) per annum from the date that the same
originally became due and payable until the date it is paid.  Landlord shall bill Tenant for said interest,
and Tenant shall pay the same within five (5) days of receipt of Landlord’s
billing.

        Notwithstanding the foregoing, Tenant
shall not be assessed any late charge or interest for the first two (2) late
payments in each twelve (12) month period of the Term so long as Tenant pays
such amount within five (5) days of Tenant’s receipt of written notice that
such amount has not been paid.

Section 3.7.  Security Deposit.  INTENTIONALLY
DELETED

ARTICLE 4

ADDITIONAL RENT

Section
4.1.  Certain Definitions.  As used in this Lease:

a)              “Escalation Statement” means a statement
by Landlord, setting forth the amount payable by Tenant or by Landlord, as the
case may be, for a specified calendar year pursuant to this Article 4.

b)              “Operating Expenses” means the following
in a referenced calendar year, including the Base Year as hereinafter defined,
calculated, as to expenses that vary with occupancy, assuming the Building is
at least ninety-five percent (95%) occupied: 
all costs of management, operation, maintenance, and repair of the
Building.

 

5

 

                                By
way of illustration only, Operating Expenses shall include, but not be limited
to: management fees paid by Landlord to any third-party, which shall not exceed
those reasonable and customary in the geographic area in which the Building is
located; water and sewer charges; any and all insurance premiums not otherwise
directly payable by Tenant; license, permit and inspection fees; air
conditioning (including repair of same); heat; light; power and other
utilities; steam; labor; cleaning and janitorial services; guard services;
supplies; materials; equipment and tools.

                        Operating Expenses shall also include the
cost or portion thereof of those capital improvements made to the Building by
Landlord during the Term:

i)                to the extent that such capital improvements reduce
other direct expenses, when the same were made to the Building by Landlord
after the Commencement Date, or

ii)            that are required under any governmental law or
regulation that was not applicable to the Building as of the Commencement Date.

                                Said
capital improvement costs, or the allocable portion thereof (as referred to in
clauses (i) and (ii) above), shall be amortized on a straight-line basis over
the useful life of any such capital improvement pursuant to generally-accepted
accounting principles, together with interest on the unamortized balance at the
rate of ten percent (10%) per annum.

                                Operating
Expenses shall also include all general and special real estate taxes,
increases in assessments or special assessments and any other ad valorem taxes,
rates, levies and assessments paid during a calendar year (or portion thereof)
upon or with respect to the Building and the personal property used by Landlord
to operate the Building, whether paid to any governmental or quasi-governmental
authority, and all taxes specifically imposed in lieu of any such taxes (but
excluding taxes referred to in Section 3.4 for which Tenant or other
tenants in the Building are liable) including fees of counsel and experts,
reasonably incurred by, or reimbursable by Landlord in connection with any
application for a reduction in the assessed valuation of the Building and/or
the land thereunder or for a judicial review thereof, (collectively “Appeal
Fees”), but solely to the extent that the Appeal Fees result directly in a
reduction of taxes otherwise payable by Tenant. 
However, in no event shall the portion of Operating Expenses used to
calculate any billing to Tenant attributable to real estate taxes and assessments
for any expense year be less than the billing for real estate taxes and
assessments during the Base Year.

                                Operating
Expenses shall also include, but not be limited to, the premiums for the
following insurance coverage: all-risk, structural, fire, boiler and machinery,
liability, earthquake and for replacement of tenant improvements to a maximum
of $35.00 per usable square foot, and for such other coverage(s), and at such
policy limit(s) as Landlord deems reasonably prudent and/or are required by any
lender or ground lessor, which coverage and limits Landlord may, in Landlord’s
reasonable discretion, change from time to time.

                                If, in
any calendar year following the Base Year, as defined hereinbelow (a “Subsequent
Year”), a new expense item (e.g. earthquake insurance, concierge services;
entry card systems), is included in Operating Expenses which was not included
in the Base Year Operating Expenses, then the cost of such new item shall be
added to the Base Year Operating Expenses for purposes of determining the
Additional Rent payable under this Article 4 for such Subsequent Year.  During each Subsequent Year, the same amount
shall continue to be included in the computation of Operating Expenses for the
Base Year, resulting in each such Subsequent Year Operating Expenses only
including the increase in the cost of such new item over the Base Year, as so
adjusted.  However, if in any Subsequent
Year thereafter, such new item is not included in Operating Expenses, no such
addition shall be made to Base Year Operating Expenses.

                                Conversely,
as reasonably determined by Landlord, when an expense item that was originally
included in the Base Year Operating Expenses is, in any Subsequent Year, no
longer included in Operating Expenses, then the cost of such item shall be
deleted from the Base Year Operating Expenses for purposes of determining the
Additional Rent payable under this Article 4 for such Subsequent Year.  The same amount shall continue to be deleted
from the Base Year Operating Expenses for each Subsequent Year thereafter that
the item is not included.  However, if
such expense item is again included in the Operating Expenses for any
Subsequent Year, then the amount of said expense item originally included in
the Base Year Operating Expenses shall again be added back to the Base Year Operating
Expenses.

c)              Exclusions from Operating
Expenses.  Notwithstanding anything contained in the
definition of Operating Expenses as set forth in Subsection 4.1 b) of this
Lease, Operating Expenses shall not include the following:

                        i)             Any ground lease rental;

                        ii)            The costs of repairs to the Building, if the costs of such repairs is
reimbursed by the insurance carried by Landlord or subject to award under any
eminent domain proceeding;

                        iii)           Costs, including permit, license and inspection costs, incurred with
respect to the installation of Tenant’s or other occupant’s improvements or
incurred in renovating or otherwise improving, decorating, painting or
redecorating vacant space for Tenant or other occupants of the Building;

 

6

 

                        iv)            Depreciation, amortization and interest payments, except as
specifically permitted herein or except on materials, tools supplies and
vendor-type equipment purchased by Landlord to enable Landlord to supply
services Landlord might otherwise contract for with a third party where such
depreciation, amortization and interest payments would otherwise have been
included in the charge for such third party’s services.  In such a circumstance, the inclusion of all
depreciation, amortization and interest payments shall be determined pursuant
to generally accepted accounting principles, consistently applied, amortized
over the reasonably anticipated useful life of the capital item for which such
amortization, depreciation or interest allocation was calculated;

                        v)             Marketing
costs, including leasing commissions, attorneys’ fees incurred in connection
with the negotiation and preparation of letters, deal memos, letters of intent,
leases subleases and/or assignments, space planning costs, and other costs and
expenses incurred in connection with lease, sublease and/or assignment
negotiations and transactions with present or prospective tenants or other
occupants of the Building;

                        vi)            Expenses
for services not offered to Tenant or for which Tenant is charged directly,
whether or not such services or other benefits are provided to another tenant
or occupant of the Building;

                        vii)          Costs
incurred due to Landlord’s or any tenant of the Building’s violation, other
than Tenant, of the terms and conditions of any lease or rental agreement in
the Building;

                        viii)         That portion of any billing by Landlord,
its subsidiaries or affiliates for goods and/or services in the Building, to
the extent that such billing exceeds the costs of such goods and/or services if
rendered by an unaffiliated third parties on a competitive basis;

                        ix)           Costs
incurred by Landlord for structural earthquake repairs necessitated by the
January 17, 1994 earthquake that occurred in the vicinity of the Building;

                        x)             Interest,
principal, points and fees on debts or amortization on any mortgage or
mortgages or any other debt instrument encumbering the Building or the land
thereunder;

                        xi)           Costs
associated with operating the entity which constitutes Landlord, as the same
are distinguished from the costs of operation of the Building, including
partnership accounting and legal matters, costs of defending any lawsuits with
any mortgagee (except as the actions of Tenant may be in issue), costs of
selling, syndicating, financing, mortgaging or hypothecating any of Landlord’s
interest in the Building, costs (including attorneys’ fees and costs of
settlement judgments and payments in lieu thereof) arising from claims,
disputes or potential disputes in connection with potential or actual claims,
litigation or arbitration pertaining to Landlord’s ownership of the Building;

                        xii)          Advertising
and promotional expenditures, and costs of signs in or on the Building
identifying the owner of the Building, or other tenants signs;

                        xiii)         Electric, gas or other power costs for
with Landlord has been directly reimbursed by another tenant or occupant of the
Building, or for which any tenant directly contracts with the local public
service company;

                        xiv)          Tax penalties and interest incurred as a
result of Landlord’s negligent or willful failure to make payments and/or to
file any income tax or informational return(s) when due, unless such
non-payment is due to Tenant’s nonpayment of rent;

                        xv)           Costs incurred by Landlord to comply with notices of violation of the
Americans With Disabilities Act, as amended, when such notices are for
conditions existing prior to the Commencement Date;

                        xvi)          Any charitable or political
contributions;

                        xvii)        The
purchase or rental price of any sculpture, paintings or other object of art,
whether or not installed in, on or upon the Building;

                        xviii)       Any
compensation paid or expenses reimbursed to clerks, attendants or other persons
working in any commercial concession(s) operated by Landlord, and any services
provided, taxes attributable to and costs incurred in connection with the
operation of any retail or restaurant operations in the Building;

                        xix)         Any accelerated payment(s) made at
Landlord’s election on obligations, including, without limitation, taxes and
assessments, undertaken by of which would not otherwise become due, to the
extent that such accelerated payment(s) exceed the amount otherwise payable had
Landlord not elected to accelerate payment thereof.  Notwithstanding such exclusion, the balance
of such accelerated payment shall be included by Landlord in operating expense
calculations for succeeding years, as if the payment had been made when
originally due prior to such acceleration.

                        xx)           Costs, including attorneys’ fees and
settlement judgments and/or payments in lieu thereof, arising from actual or
potential claims, disputes, litigation or arbitration pertaining to Landlord
and/or the Building;

                        xxi)         Insurance deductibles in excess of
reasonable and customary deductible amounts, and/or whether or not reasonable
and/or customary, in excess of $250,000 in any calendar year;

 

7

	
  xxii)

  	
   

  	
  Costs of repairs which would have been covered by casualty insurance
  but for Landlord’s failure to maintain casualty insurance to cover the
  replacement value of the Building as required by this Lease;

  
	
  xxiii)

  	
   

  	
  Capital
  expenditures not otherwise permitted hereunder;

  
	
  xxiv)

  	
   

  	
  The assessment or billing of operating expenses that results in
  Landlord being reimbursed more than one hundred percent (100%) of the total
  expenses for the calendar year in question;

  
	
  xxv)

  	
   

  	
  Costs to remove or abate or remediate hazardous materials or comply
  with laws regulating hazardous materials;

  
	
  xxvi)

  	
   

  	
  Any bad debt loss, rent loss or reserves for bad debts or rent loss;
  and

  
	
  xxvii)

  	
   

  	
  Costs incurred by Landlord to comply with applicable Codes (as such
  term is defined in Section 10.1 of this Lease), when compliance is in
  connection with conditions existing prior to the Commencement Date.

  
	
   

  	
   

  	
   

  

d) “Tenant’s Share” means .79%, which is derived by
dividing the usable square footage of the Premises (2,084) by the usable square
footage of the Building (265,105).

Section 4.2. 
Calculation of Tenant’s Share of Increases in Operating Expenses.  If, commencing with the calendar year 2005, the
Operating Expenses for any calendar year during the Term, or portion thereof,
(including the last calendar year of the Term), have increased over the
Operating Expenses for the calendar year 2004 (the “Base Year”), then within
thirty (30) days after Tenant’s receipt of Landlord’s computation of such
increase (an “Escalation Statement”), Tenant shall pay to Landlord, as
Additional Rent, an amount equal to the product obtained by multiplying such
increase by Tenant’s Share.

        Landlord
may, at or after the start of any calendar year subsequent to the Base Year,
notify Tenant of the amount which Landlord estimates will be Tenant’s monthly
share of any such increase in Operating Expenses for such calendar year over
the Base Year and the amount thereof shall be added to the Fixed Monthly Rent
payments required to be made by Tenant in such year.  If Tenant’s Share of any such increase in
rent payable hereunder as shown on the Escalation Statement is greater or less
than the total amounts actually billed to and paid by Tenant during the year
covered by such statement, then within thirty (30) days thereafter, Tenant
shall pay in cash any sums owed Landlord or, if applicable, Tenant shall either
receive a credit against any Fixed Monthly Rent and/or Additional Rent next
accruing for any sum owed Tenant, or if Landlord’s Escalation Statement is
rendered after the expiration or earlier termination of this Lease and
indicates that Tenant’s estimated payments have exceeded the total amount to
which Tenant was obligated, then provided that Landlord is not owed any other
sum by Tenant, Landlord shall issue a cash refund to Tenant within thirty (30)
days after Landlord’s completion of such Escalation Statement.

        Within
one hundred fifty (150) days after receipt of a statement by Tenant, if Tenant
disputes the amount of Additional Rent set forth in the statement, Tenant may
review Landlord’s records with respect to such statement at Landlord’s
offices.  Tenant may, after such review,
but within one hundred fifty (150) days after receipt of a statement, retain an
independent certified public accountant (“Tenant’s Accountant”) to, after
reasonable notice to Landlord and at reasonable times, inspect Landlord’s
records with respect to such statement at Landlord’s offices, provided that
Tenant is not then in default under this Lease beyond any applicable notice
and/or cure period and Tenant has paid all amounts required to be paid under
the applicable statement.  In connection
with such inspection, Tenant and Tenant’s agents must agree in advance to
follow Landlord’s reasonable rules and procedures regarding inspections of
Landlord’s records, and shall execute a commercially reasonable confidentiality
agreement regarding such inspection. 
Tenant’s failure to dispute the amount of Additional Rent set forth in
any Statement within one hundred fifty (150) days of Tenant’s receipt of such
statement shall be deemed to be Tenant’s approval of such statement and Tenant,
thereafter, waives the right or ability to dispute the amounts set forth in
such statement.  If after such
inspection, Tenant still disputes such Additional Rent, a determination as to
the proper amount shall be made, at Tenant’s expense, by an independent
certified public accountant (“Landlord’s Accountant”) selected by Landlord and
subject to Tenant’s reasonable approval; provided that if such determination by
Landlord’s Accountant proves that Operating Expenses were overstated by more
than five percent (5%), then the cost of 
Landlord’s Accountant and Tenant’s Accountant and the costs of such
determination shall be paid for by Landlord. 
Tenant hereby acknowledges that Tenant’s sole right to inspect Landlord’s
books and records and to contest the amount of Operating Expenses payable by
Tenant shall be as set forth in this Section 4.2 and Tenant hereby waives any
and all other rights pursuant to applicable law to inspect such books and
records and/or to contest the amount of Operating Expenses payable by Tenant.

Section
4.3.  Tenant’s Payment of Direct Charges
as Additional Rent.  Tenant shall promptly and duly pay all
costs and expenses incurred for or in connection with any Tenant Change or
Tenant Service, and discharge any mechanic’s or other lien created against the
Premises, Building or the Real Property arising as a result of or in connection
with any Tenant Change or Tenant Service as Additional Rent by paying the same,
bonding or manner otherwise provided by law.

        Any other cost, expense, charge, amount
or sum (other than Fixed Monthly Rent) payable by Tenant as provided in this
Lease shall also be considered Additional Rent.

 

8

 

        Certain individual items of cost or
expense may, in the reasonable determination of Landlord, be separately charged
and billed to Tenant by Landlord, either alone or in conjunction with another
party or parties, if they are deemed in good faith by Landlord to apply solely
to Tenant and/or such other party or parties and are not otherwise normally
recaptured by Landlord as part of normal operating expenses.  Landlord shall give Tenant prior notice and
the opportunity to cure any circumstance that would give rise to such separate
and direct billing.

        Said separate billing shall be paid as
Additional Rent, regardless of Tenant’s Share. 
Such allocations by Landlord shall be binding on Tenant unless patently
unreasonable, and shall be payable within thirty (30) days after receipt of
Landlord’s billing therefor.

ARTICLE 5

ETHICS

INTENTIONALLY DELETED

ARTICLE 6

USE OF PREMISES

Section 6.1.  Use.  The Premises shall only be for general
office use consistent with the operation of a first-class office building in
the Beverly Hills area (the “Specified Use”) and for no other purposes, without
Landlord’s prior written consent, which consent shall be in Landlord’s sole
discretion.  Any proposed revision of the
Specified Use by Tenant shall be for a use consistent with those customarily
found in first-class office buildings. 
Reasonable grounds for Landlord withholding its consent shall include,
but not be limited to:

a)              the proposed use will place a
disproportionate burden on the Building systems;

b)              the proposed use is for governmental or
medical purposes or for a company whose primary business is that of conducting
boiler-room type transactions or sales;

c)              the proposed use would generate excessive
foot traffic to the Premises and/or Building.

        So long
as Tenant is in control of the Premises, Tenant covenants and agrees that it
shall not use, suffer or permit any person(s) to use all or any portion of the
Premises for any purpose in violation of the laws of the United States of
America, the State of California, or the ordinances, regulations or
requirements of the City or County of Los Angeles, or other lawful authorities
having jurisdiction over the Building.

        Tenant
shall not do or permit anything to be done in or about the Premises which will
in any way obstruct or unreasonably interfere with the rights of other tenants
or occupants of the Building, or injure or annoy them.  Tenant shall not use or allow the Premises to
be used for any pornographic or violent purposes, nor shall Tenant cause,
commit, maintain or permit the continuance of any nuisance or waste in, on or
about the Premises.  Tenant shall not use
the Premises in any manner that in Landlord’s reasonable judgment would
adversely affect or interfere with any services Landlord is required to furnish
to Tenant or to any other tenant or occupant of the Building, or that would
interfere with or obstruct the proper and economical rendition of any such service.

Section 6.2. 
Exclusive Use.  Landlord represents that Tenant’s
Specified Use of the Premises and its usage for private banking and investment
banking and related activities (“Particular Usage”) does not conflict with
exclusive use provisions granted by Landlord in other leases for the
Building.  Landlord further agrees that
it shall, in the future, not grant an exclusive use privilege to any other
tenant in the Building that will prevent Tenant from continuing to use the
Premises for its Specified Use or the Particular Usage.

        Tenant
acknowledges and agrees that it shall not engage in any of the uses specified
hereinbelow, for which Landlord has already granted exclusive rights:

a)     Gymnasium
or private fitness training; and

b)    Designer
shoes

        Provided
that Tenant has received written notice of the same from Landlord, and further
provided that Landlord does not grant a future exclusive use right that
prohibits Tenant from engaging in the Specified Use or the Particular Usage,
then Tenant agrees that it shall not violate any exclusive use provision(s)
granted by Landlord to other tenants in the Building.

Section 6.3.  Rules and Regulations.  Tenant shall observe and comply with the rules and
regulations set forth in Exhibit C, and such other and further reasonable and
non-discriminatory rules and regulations as Landlord may make or adopt and
communicate to Tenant in writing at any time or from time to time, when said
rules, in the reasonable judgment of Landlord, may be necessary or desirable to
ensure the first-class operation, maintenance, reputation or appearance of the
Building. However, if any conflict arises between the provisions of this Lease
and any such rule or regulation, the provisions of this Lease shall control.

        Provided Landlord makes commercially reasonable efforts to
seek compliance by all occupants of the Building with the rules and regulations
adopted by Landlord, Landlord shall not be responsible to Tenant for the
failure of any other tenants or occupants of the Building to comply with said
rules and regulations.

 

9

 

ARTICLE 7

CONDITION UPON VACATING & REMOVAL OF PROPERTY

Section 7.1.  Condition upon Vacating.  At the expiration or earlier termination of this
Lease, Tenant shall:

a)              terminate its occupancy of, quit and
surrender to Landlord, all or such portion of the Premises upon which this
Lease has so terminated, broom-clean and in the same condition as received
except for:

i)                ordinary wear and tear, or

ii)            loss or damage by fire or other casualty; and

b)              surrender the Premises free of any and
all debris and trash and any of Tenant’s personal property, furniture, fixtures
and equipment that do not otherwise become a part of the Real Property,
pursuant to the provisions contained in Section 7.2 hereinbelow; and

c)              at Tenant’s sole expense, forthwith and
with all due diligence remove any Tenant Change made by Tenant and restore the
Premises to their original condition, reasonable wear and tear excepted.  However, Tenant shall only be obligated to
remove said Tenant Change if it was made without Landlord’s approval and/or if
Landlord notified Tenant of its obligation to do so at the time Landlord
approved Tenant’s request for a Tenant Change. 
If Tenant fails to complete such removal and/or to repair any damage
caused by the removal of any Tenant Change, Landlord may do so and may charge
the cost thereof to Tenant.  For purposes
of this Section 7.1, a Tenant Change shall not include any of the Tenant
Improvements to be made in accordance with Exhibit B of this Lease or any
wiring or cabling.

Section 7.2.  Tenant’s Property. 
All fixtures, equipment, improvements and installations attached or
built into the Premises at any time during the Term shall, at the expiration or
earlier termination of this Lease, be deemed the property of Landlord; become a
permanent part of the Premises and remain therein.  However, if said equipment, improvements
and/or installations can be removed without causing any structural damage to
the Premises, then, provided after such removal Tenant restores the Premises to
the condition existing prior to installation of Tenant’s trade fixtures or
equipment, Tenant shall be permitted, at Tenant’s sole expense, to remove said
trade fixtures and equipment.

ARTICLE 8

UTILITIES AND SERVICES

Section 8.1. 
Normal Building Hours / Holidays. 
The “Normal
Business Hours” of the Building, during which Landlord shall furnish the
services specified in this Article 8 are defined as 6:00 A.M. to 7:00
P.M., Monday through Friday, and 7:00 A.M. to 2:00 P.M. on Saturday, any one or
more Holiday(s) excepted.

        The “Holidays”
which shall be observed by Landlord in the Building are defined as any
federally-recognized holiday and any other holiday specified herein, which are:
New Years Day, Presidents’ Day, Memorial Day, the 4th of July, Labor Day,
Thanksgiving Day, the day after Thanksgiving, and Christmas Day (each
individually a “Holiday”).  Tenant
acknowledges that the Building shall be closed on each and every such Holiday,
and Tenant shall not be guaranteed access to Landlord or Landlord’s managing
agent(s) on each such Holiday.

Section 8.2.  Access to the Building and General Services.        Subject to Force
Majeure and any power outage(s) which may occur in the Building when the same
are out of Landlord’s reasonable control, Landlord shall furnish the following
services to the Premises twenty-four (24) hours per day, seven days per week:

a)              during Normal Business Hours, bulb
replacement for building standard lights;

b)              access to and use of the parking facilities
for persons holding valid parking permits or customers or guests of Tenant;

c)              access to and use of the elevators and
the Premises, it being expressly understood and agreed that there shall be no
charge for use of the freight elevators;

d)              use of electrical lighting on an
as-needed basis within the Premises; and

e)              use of a reasonable level of water for
kitchen and toilet facilities in the Premises and common area bathrooms.

Section 8.3.  Janitorial Services.  Landlord shall furnish the Premises with a level of
janitorial services consistent with the level of janitorial services provided
by landlords of comparable first-class office buildings in the Beverly Hills
area (“Comparable Buildings”) five (5) business days per week, except when the
Building is closed on any Holiday. 
Landlord shall retain the sole discretion to choose and/or revise the
janitorial company providing said services to the Premises and/or Building,
subject to Landlord’s compliance with the first sentence of this Section 8.3,
and maintaining the Building in a first-class manner.

Section 8.4.  Security Services.  Tenant acknowledges that Landlord currently provides
uniformed guard service to the Building twenty-four (24) hours per day, seven
(7) days per week, solely for the purposes of providing surveillance of,
information and directional assistance to persons entering the Building.

 

10

 

        Tenant acknowledges that such guard service shall not provide
any measure of security or safety to the Building or the Premises, and that
Tenant shall take such actions as it may deem necessary and reasonable to
ensure the safety and security of Tenant’s property or person or the property
or persons of Tenant’s agents, clients, contractors, directors, employees,
invitees, licensees, officers, partners or shareholders.  Tenant agrees and acknowledges that, except
in the case of the gross negligence or willful misconduct of Landlord or its
directors, employees, officers, partners or shareholders, Landlord shall not be
liable to Tenant in any manner whatsoever arising out of the failure of
Landlord’s guard service to secure  any
person or property from harm.

        Tenant agrees and acknowledges that Landlord, in Landlord’s
sole discretion, shall have the option, but not the obligation to add,
decrease, revise the hours of and/or change the level of services being
provided by any guard company serving the Building, so long as the level of
security services provided to the Building remains consistent with the level of
security services provided by landlords of Comparable Buildings.  Tenant further agrees that Tenant shall not
engage or hire any outside guard or security company without Landlord’s prior
written consent, which shall be in Landlord’s sole discretion.

Section 8.5.  Utilities. 
During
Normal Business Hours Landlord shall furnish a reasonable and comfortable level
of water, heat, ventilation and air conditioning (“HVAC”), and a sufficient
amount of electric current to provide customary business lighting and to
operate ordinary office business machines, such as a single personal computer
and ancillary printer per one hundred and twenty (120) Rentable square feet
contained in the Premises, facsimile machines, small copiers customarily used
for general office purposes, and such other equipment and office machines as do
not result in above-standard use of the existing electrical system.  So long as the same remain reasonably cost
competitive and are of first-class quality, Landlord shall retain the sole
discretion to choose the utility vendor(s) to supply such services to the
Premises and the Building.

        Except with the prior written consent of Landlord, which
shall not be unreasonably withheld, conditioned and/or delayed, Tenant shall
not install or use any equipment, apparatus or device in the Premises that
requires the installation of a 220 voltage circuit; consumes more than five (5)
kilowatts per hour per item; or the aggregate use of which will in any way
increase the connected load to more than 5 Watts per square foot, or cause the
amount of electricity to be furnished or supplied for use in the Premises to
more than 1.2 kWh per usable square foot, per month.

        Except with the prior written consent of Landlord, Tenant
shall not connect any electrical equipment to the electrical system of the
Building, except through electrical outlets already existing in the Premises,
nor shall Tenant pierce, revise, delete or add to the electrical, plumbing,
mechanical or HVAC systems in the Premises.

Section 8.6.  After Hours HVAC and/or Excess Utility
Usage.  If Tenant requires HVAC service during other than
Normal Business Hours (“Excess HVAC”), Tenant shall use reasonable efforts to
make its request at least six (6) hours before the close of the normal business
day. If less notice is given, Landlord shall use reasonable efforts to provide
Excess HVAC.  Tenant’s request shall be
deemed conclusive evidence of its willingness to pay the costs specified
herein.  The current cost of Excess HVAC
is $100.00 per hour, which shall increase only to the extent that Landlord’s
actual, out-of-pocket costs of providing Excess HVAC increase.

        If Tenant requires electric current in
excess of the amounts specified hereinabove, 
water or gas in excess of that customarily furnished to the Premises as
office space (“Excess Utility Use”), Tenant shall first procure Landlord’s
prior written consent to such Excess Utility Use, which Landlord may reasonably
refuse.

        In lieu of Landlord’s refusal, Landlord may cause a meter or
sub-meter to be installed to measure the amount of water, gas and/or electric
current consumed by Tenant in the Premises. 
The cost of any such meter(s), and the installation, maintenance, and
repair thereof, shall be paid by Tenant as Additional Rent.

        After completing installation of said meter(s), and/or if
Tenant requests Excess HVAC, then Tenant shall pay, as Additional Rent, within
thirty (30) calendar days after Tenant’s receipt of Landlord’s billing, for the
actual amounts of all water, steam, compressed air, electric current and/or
Excess HVAC consumed beyond the normal levels Landlord is required herein to
provide.  Said billing shall be
calculated on the usage indicated by such meter(s), sub-meter(s), or Tenant’s
written request therefor, and shall be issued by Landlord at the rates charged
for such services by the local public utility furnishing the same, plus any
additional expense reasonably incurred by Landlord in providing said Excess
Utility Use and/or in keeping account of the water, steam, compressed air and
electric current so consumed, plus an administrative and billing fee equal to
ten percent (10%) of the costs so billed.

Section
8.7.  Changes affecting HVAC.  Tenant shall also pay as Additional Rent for any
additional costs Landlord incurs to repair any failure of the HVAC equipment
and systems to perform their function when said failure arises out of or in
connection with any change in, or alterations to, the arrangement of
partitioning in the Premises after the Commencement Date, or from occupancy by,
on average, more than one person for every one hundred and twenty-five (125)
usable square feet of the Premises, or from Tenant’s failure to keep all HVAC
vents within the Premises free of obstruction.

Section
8.8.  Damaged or Defective Systems.  Tenant shall give prompt notice to Landlord after
Tenant acquires actual knowledge of any alleged damage to, or defective
condition in any part or appurtenance of the Building’s sanitary, electrical,
HVAC or other systems serving, located in, or passing through, the Premises.  Provided that the repair or remedy of said
damage or defective condition is within the reasonable control of Landlord, it
shall be remedied by Landlord with reasonable diligence.  Otherwise, Landlord shall make such
commercially reasonable efforts as may be available to Landlord to effect such

 

11

 

remedy or repair,
but except in the case of Landlord’s gross negligence and/or willful misconduct
or the gross negligence and/or willful misconduct of Landlord’s agents,
contractors, directors, employees, officers, partners, and/or shareholders,
Landlord shall not be liable to Tenant for any failure thereof.

        Tenant shall not be entitled to claim any damages arising
from any such damage or defective condition nor shall Tenant be entitled to
claim any eviction by reason of any such damage or defective condition unless:

a)              the same was caused by Landlord’s gross
negligence or willful misconduct while operating or maintaining the Premises or
the Building;

b)              the damage or defective condition has
substantially prevented Tenant from conducting its normal business operations
or obtaining access to at least seventy-five percent (75%) of the Premises; and

c)              Landlord shall have failed to commence
the remedy thereof and proceeded with reasonable diligence to complete the same
after Landlord’s receipt of notice thereof from Tenant.

        Furthermore, if such damage or defective
condition was caused by, or is attributed to, a Tenant Change or the
unreasonable or improper use of such system(s) by Tenant or its employees,
licensees or invitees:

d)              the cost of the remedy thereof shall be
paid by Tenant as Additional Rent pursuant to the provisions of Section 4.3;

e)              in no event shall Tenant be entitled to
any abatement of rent as specified above; and

f)                Tenant shall be estopped from making any
claim for damages arising out of Landlord’s repair thereof.

Section 8.9.  Limitation on Landlord’s Liability for
Failure to Provide Utilities and/or Services.  Except in the
case of Landlord’s gross negligence or willful misconduct or the gross
negligence or willful misconduct of Landlord’s agents, contractors, directors,
employees, licensees, officers, partners or shareholders, Tenant hereby
releases Landlord from any liability for damages, by abatement of rent or
otherwise, for any failure or delay in furnishing any of the services or
utilities specified in this Article 8 (including, but not limited to
telephone and telecommunication services), or for any diminution in the quality
or quantity thereof.

        Tenant’s release of Landlord’s liability
shall be applicable when such failure, delay or diminution is occasioned, in
whole or in part, by repairs, replacements, or improvements, by any strike,
lockout or other labor trouble, by Landlord’s inability to secure electricity,
gas, water or other fuel at the Building after Landlord’s reasonable effort to
do so, by accident or casualty whatsoever, by act or default of Tenant or
parties other than Landlord, or by any other cause beyond Landlord’s reasonable
control.  Such failures, delays or
diminution shall never be deemed to constitute a constructive eviction or
disturbance of Tenant’s use and possession of the Premises, or serve to relieve
Tenant from paying Rent or performing any of its obligations under the Lease.

        Furthermore,
Landlord shall not be liable under any circumstances for a loss of, injury to,
or interference with, Tenant’s business, including, without limitation, any
loss of profits occurring or arising through or in connection with or incidental
to Landlord’s failure to furnish any of the services or utilities required by
this Article 8.

        Notwithstanding the above, Landlord
shall use commercially reasonable efforts to remedy any delay, defect or
insufficiency in providing the services and or utilities required hereunder.

        Notwithstanding the foregoing, if Tenant
is prevented from using and does not use, the Premises or any portion thereof,
as a result of (i) Landlord’s failure to provide services or utilities as
required by this Lease, or (ii) Landlord’s exercise of its rights under Section
12.11 below (an “Abatement Event”), then Tenant shall give Landlord Notice of
such Abatement Event and if such Abatement Event continues for five (5)
consecutive business days after Landlord’s receipt of any such Notice (the “Eligibility
Period”), and such failure is in no way attributable to, or caused by, the acts
of Tenant,  then the Fixed Monthly Rent
shall be abated or reduced, as the case may be, after expiration of the
Eligibility Period for such time that Tenant continues to be so prevented from
using, and does not use, the Premises, or a portion thereof, in the proportion
that the rentable area of the portion of the Premises that Tenant is prevented
from using, and does not use (“Unusable Area”), bears to the total rentable
area of the Premises; provided, however, in the event that Tenant is prevented
from using, and does not use, the Unusable Area for a period of time in excess
of the Eligibility Period and the remaining portion of the Premises is not
sufficient to allow Tenant to effectively conduct its business therein and if
Tenant does not conduct its business from such remaining portion, then for such
time after expiration of the Eligibility Period during which Tenant is so
prevented from effectively conducting its business therein, the Fixed Monthly
Rent and Additional Rent for the entire Premises shall be abated for such time
as Tenant continues to be so prevented from using, and does not use, the
Premises.  If, however, Tenant reoccupies
any portion of the Premises during such period, the Rent allocable to such
reoccupied portion, based on the proportion that the rentable area of such
reoccupied portion of the Premises bears to the total rentable area of the
Premises, shall be payable by Tenant from the date Tenant reoccupies such
portion of the Premises.  Such right to
abate Fixed Monthly Rent and Additional Rent shall be Tenant’s sole and
exclusive remedy at law or in equity for an Abatement Event.

Section
8.10.  Tenant Provided Services.  Tenant shall make no contract or employ any labor in
connection with the maintenance, cleaning or other servicing of the physical
structures of the Premises or for installation of any computer, telephone or
other cabling, equipment or materials provided in or to the Premises
(collectively and individually a “Tenant Service”) without the prior consent of
Landlord, which consent shall not be unreasonably withheld.  Tenant shall not permit the use of any labor,
material

 

12

 

or equipment in
the performance of any Tenant Service if the use thereof, in Landlord’s
reasonable judgment, would violate the provisions of any agreement between
Landlord and any union providing work, labor or services in or about the
Premises, Building and/or create labor disharmony in the Building.

ARTICLE 9           

TENANT’S INDEMNIFICATION AND LIMITATION ON LANDLORD’S LIABILITY

Section
9.1.  Tenant’s Indemnification and Hold
Harmless.  For the purposes of this
Section 9.1, “Indemnitee(s)” shall jointly and severally refer to Landlord
and Landlord’s agents, clients, contractors, directors, employees, officers,
partners, and/or shareholders.

        Tenant
shall indemnify and hold Indemnitees harmless from and against all claims,
suits, demands, damages, judgments, costs, interest and expenses (including
attorneys fees and costs incurred in the defense thereof) to which any
Indemnitee may be subject or suffer to the extent the same arise out of the
negligence or willful misconduct of Tenant or the negligence or willful
misconduct of Tenant’s agents, contractors, directors, employees, licensees,
officers, partners or shareholders in connection with the use of, work in,
construction to, or actions in, on, upon or about the Premises, including any
actions relating to the installation, placement, removal or financing of any
Tenant Change, improvements, fixtures and/or equipment in, on, upon or about
the Premises.

        Tenant’s indemnification (if required
pursuant to the above paragraph) shall extend to any and all claims and
occurrences, whether for injury to or death of any person or persons, or for
damage to property (including any loss of use thereof), or otherwise, occurring
during the Term or prior to the Commencement Date (if Tenant has been given
early access to the Premises for whatever purpose), and to all claims arising
from any condition of the Premises due to or resulting from any default by
Tenant in the keeping, observance or performance of any covenant or provision
of this Lease, or from the negligence or willful misconduct of Tenant or the
negligence or willful misconduct of Tenant’s agents, contractors, directors,
employees, licensees, officers, partners or shareholders.

Section 9.2.  Nullity of Tenant’s Indemnification in Event
of Negligence.  Notwithstanding anything to the contrary
contained in this Lease, Tenant’s indemnification shall not extend to the
negligence or willful misconduct of Landlord or the negligence or willful
misconduct of Landlord’s agents, contractors, directors, employees, officers,
partners or shareholders, nor to such events and occurrences for which Landlord
otherwise carries insurance coverage.

Section
9.3.  Tenant’s Waiver of Liability.  Provided and to the extent that any injury or damage
suffered by Tenant or Tenant’s agents, clients, contractors, directors,
employees, invitees, officers, partners, and/or shareholders did not arise out
of the  negligence or willful misconduct
of Landlord or the negligence or willful misconduct of Landlord’s agents,
contractors, employees, officers, partners or shareholders, Tenant shall make
no claim against Landlord and Landlord shall not be liable or responsible in
any way for, and Tenant hereby waives all claims against Landlord with respect
to or arising out of injury or damage to any person or property in or about the
Premises by or from any cause whatsoever under the reasonable control or
management of Tenant.

Section
9.4.  Limitation of Landlord’s
Liability.  Tenant expressly agrees that,
notwithstanding anything in this Lease and/or any applicable law to the
contrary, the liability of Landlord and Landlord’s agents, contractors,
directors, employees, licensees, officers, partners or shareholders, including
any successor in interest thereto (collectively and individually the “Landlord
Parties”), and any recourse by Tenant against Landlord or the Landlord Parties
shall be limited solely and exclusively to an amount which is equal to the
interest of Landlord in the Building, including rental income and proceeds from
insurance.

        Tenant specifically agrees that neither Landlord nor any of
the Landlord Parties shall have any personal liability therefor.  Further, Tenant hereby expressly waives and
releases such personal liability on behalf of itself and all persons claiming
by, through or under Tenant.

Section 9.5.  Transfer of Landlord’s Liability.  Tenant expressly agrees that, to the extent that any
transferee assumes the obligations of Landlord hereunder in writing, and
provided Landlord has either transferred the complete Security Deposit held
pursuant to this Lease or refunded the same to Tenant as of the date of such
transfer, then the covenants and agreements on the part of Landlord to be
performed under this Lease which arise and/or accrue after the date of such
transfer shall not be binding upon Landlord herein named from and after the
date of transfer of its interest in the Building.

Section
9.6.  Landlord’s Indemnification. 
Notwithstanding any contrary provision of this Lease, Landlord shall
indemnify, and hold Tenant and Tenant’s agents, clients, directors, officers,
partners, employees, shareholders and contractors harmless from and against,
any and all claims, causes of action, liabilities, losses, reasonable costs and
expenses, including reasonable attorney’s fees and court costs, arising from or
in connection with:

a)              any activity occurring, or condition existing, at or
in the Building and/or the Real Property (other than in the Premises) when such
activity or condition is under the reasonable control of Landlord, except and
to the extent the same is caused by the negligence or willful misconduct of
Tenant or Tenant’s employees, agents, licensee, invitees, or contractors, or by
Tenant’s breach or default in the performance of any obligation under this
Lease;

b)              any activity occurring, or condition existing in the
Premises when and to the extent caused by the negligence or willful misconduct
of Landlord or Landlord’s employees, agents or contractors; or

c)     any breach by Landlord of any of Landlord’s
obligations under this Lease.

 

13

 

ARTICLE 10

COMPLIANCE WITH LAWS

Section 10.1.  Tenant’s Compliance with Laws.  Tenant shall not use, permit to be used, or permit
anything to be done in or about all or any portion of the Premises which will
in any way violate any laws, statutes, ordinances, rules, orders or regulations
duly issued by any governmental authority having jurisdiction over the
Premises, or by the Board of Fire Underwriters (or any successor thereto)
(collectively “Codes”).

Section 10.2.  Tenant to Comply at Sole Expense.  Tenant shall, at its sole expense, promptly remedy any
violation of such Codes relating to the condition of the Premises, provided,
however, that nothing contained in this Section 10.2 shall require Tenant
to make any structural changes, or other alterations, additions or improvements
of a capital nature to the Premises, unless such changes are required due to
either Tenant or Tenant’s agents, clients, contractors, directors, employees,
invitees, licensees, officers, partners or shareholders use of the Premises for
purposes other than general office purposes consistent with a Class A office
building.

Section 10.3.  Conclusive Evidence of Violation.  The judgment of any court of competent jurisdiction;
Tenant’s admission; or the admission of any one or more of Tenant’s agents,
contractors, directors, employees, officers, partners or shareholders in any
action against Tenant, whether or not Landlord is a party thereto, that Tenant
has so violated any one or more Codes shall be conclusive evidence of such
violation as between Landlord and Tenant.

Section
10.  Landlord’s Compliance with Law. 
Landlord represents that to the best of Landlord’s knowledge, and except
as expressly provided in this Lease (including any of the exhibits attached
hereto) Landlord has not received any notice of any non-compliance with any
law, regulation or code affecting the Premises or the Building from any
applicable governmental authority having jurisdiction.  If Landlord is cited for any such non-compliance,
and:

a)     Landlord chooses to not dispute such citation (or Landlord
disputes such citation and is unsuccessful); and

b)    The existence of such condition materially affects Tenant’s
reasonable occupancy and beneficial use of the Premises, then Landlord shall
commence to cure said non-compliance at Landlord’s expense if such
non-compliance is due to a condition that existed prior to the Commencement
Date, and as part of Operating Expenses of the Building if such non-compliance
is due to a condition that arises after the Commencement Date.

ARTICLE 11

ASSIGNMENT AND SUBLETTING

Section 11.1.  Permission Required for Assignment or
Sublet.  Unless Landlord’s prior written consent has been
given, which consent shall not be unreasonably withheld, conditioned and/or
delayed (subject to the express provisions of this Article 11), this Lease
shall not, nor shall any interest herein, be assignable as to the interest of
Tenant by operation of law; nor shall Tenant:

a)              assign Tenant’s interest in this Lease; or

b)              sublet the Premises or any part thereof or permit the
Premises or any part thereof to be utilized by anyone other than Tenant,
whether as by a concessionaire, franchisee, licensee, permittee or otherwise
(collectively, a “sublease”)

        In addition, except for Transfers under
clauses (a) or (b), Tenant shall not mortgage, pledge, encumber or otherwise
transfer this Lease, the Term and/or estate hereby granted or any interest
herein without Landlord’s prior written consent, which consent may be granted
or withheld in Landlord’s sole and absolute discretion.

        Any assignment, mortgage, pledge,
encumbrance, transfer or sublease (collectively, any “Transfer”) without
Landlord’s prior written consent shall be voidable, and, in Landlord’s sole
election, shall constitute a material default under this Lease.

Section 11.2.  Voluntary Assignment due to Changes in
Structure of Tenant.  A change of stock ownership or control of
Tenant shall not require the consent of Landlord; provided, however, that
Tenant shall give Landlord not less than ten (10) days’ prior notice of any
such transfer of ownership or control.

        Any withdrawal or change (whether voluntary, involuntary, or
by operation of law) in the partnership by one or more partners who own, in the
aggregate fifty percent (50%) or more of the partnership, or the dissolution of
the partnership, shall be deemed a voluntary assignment.

        If Tenant is comprised of more than one individual, a
purported assignment (whether voluntary, involuntary, or by operation of law),
by any one of the persons executing this Lease shall be deemed a voluntary
assignment.

Section 11.2.1.  Affiliated Companies/Restructuring of
Business Organization.  Any contrary provision of this
Article 11 notwithstanding, the assignment or subletting by Tenant of all or
any portion of this Lease or the Premises to (i) a parent or subsidiary of
Tenant, or (ii) any person or entity which controls, is controlled by or under
common control with Tenant, or (iii) any entity which purchases all or
substantially all of the stock or assets of Tenant, or (iv) any entity into
which Tenant is merged or consolidated (all such persons or entities described
in (i), (ii), (iii) and (iv) being sometimes hereinafter referred to as “Affiliates”)
shall not be deemed a Transfer under this Article 11 and thus shall not be
subject  to Landlord’s prior consent, and
Landlord shall not be entitled to any Net Rental Profit resulting therefrom,
provided that:

 

14

 

a) 
Any such Affiliate was not formed as a subterfuge to avoid the
obligations of this Article 11;

b) 
Tenant gives Landlord at least ten (10) days’ prior notice of any such
assignment or sublease to an Affiliate;

c) 
The successor of Tenant and Tenant have as of the effective date of any
such assignment or sublease a tangible net worth, in the aggregate, computed in
accordance with generally accepted accounting principles (but excluding good
will as an asset), which is sufficient to meet the then-remaining obligations
of Tenant under this Lease;

d) 
Any such assignment or sublease shall be subject and subordinate to all
of the terms and provisions of this Lease, and such assignee or sublessee shall
assume, in a written document reasonably satisfactory to Landlord and delivered
to Landlord upon or prior to the effective date of such assignment or sublease,
all the obligations of Tenant under this Lease with respect to that portion of
the Premises which is the subject of such Transfer (other than the amount of
Fixed Monthly Rent payable by Tenant with respect to a sublease); and

e) 
Tenant and any guarantor shall remain fully liable for all obligations
to be performed by Tenant under this Lease.

Section
11.3.  Request to Assign or
Sublease.  If at any time during the Term, Tenant
wishes to assign this Lease or any interest therein, or to sublet all or any
portion of the Premises, then at least twenty (20) days prior to the date when
Tenant desires the assignment or sublease to be effective, Tenant shall give
written notice to Landlord setting forth the name, address, and business of the
proposed assignee or sublessee, business and personal credit applications
completed on Landlord’s standard application forms, and information (including
references and such financial documentation as Landlord shall reasonably
prescribe) concerning the character and financial condition of the proposed
assignee or sublessee, the effective date of the assignment or sublease, and
all the material terms and conditions of the proposed assignment, and with
reference solely to a sublease: a detailed description of the space proposed to
be sublet, together with any rights of the proposed sublessee to use Tenant’s
improvements and/or ancillary services with the Premises.  Tenant expressly acknowledges and agrees that
if Tenant proposes to assign this Lease or sublet all of the Premises to an
entity other than an Affiliate (as such term is defined in Section 11.2.1 of
this Lease), and the financial status and creditworthiness of the entity is
such that Landlord would ordinarily require the payment of a security deposit,
Tenant shall provide Landlord with a security deposit equal to the Fixed
Monthly Rent payable by Tenant under this Lease as of the effective date of the
proposed Transfer.

Section
11.4.  Landlord’s Consent.  Landlord shall have twenty (20) days after Tenant’s
notice of assignment and/or sublease is received with the financial information
reasonably requested by Landlord to advise Tenant of Landlord’s (i) consent to
such proposed assignment or sublease, (ii) withholding of consent to such
proposed assignment or sublease, or (iii) election to terminate this Lease,
such termination to be effective as of the date of the commencement of the
proposed assignment or subletting.  If
Landlord shall exercise its termination right hereunder, Landlord shall have
the right to enter into a lease or other occupancy agreement directly with the
proposed assignee or subtenant, and Tenant shall have no right to any of the
rents or other consideration payable by such proposed assignee or subtenant
under such other lease or occupancy agreement, even if such rents and other
consideration exceed the rent payable under this Lease by Tenant.  Landlord shall have the right to lease the
Premises to any other tenant, or not lease the Premises, in its sole and
absolute discretion.  Landlord and Tenant
specifically agree that Landlord’s right to terminate this Lease under clause
(iii) above is a material consideration for Landlord’s agreement to enter into
this Lease and such right may be exercised in Landlord’s sole and absolute
discretion and no test of reasonableness shall be applicable thereto; provided,
however, that Landlord may exercise the termination right described in said
clause (iii) only if Tenant proposes to assign this Lease or sublet the entire
Premises.

        Tenant acknowledges that Landlord’s consent shall be based
upon the criteria listed in Sections 11.4 (a) through (e) below, and
subject to Landlord’s right to unilaterally disapprove of any proposed
assignment and/or sublease, based on the existence of any condition contained
within Section 11.5 hereinbelow.  If
Landlord either provides its consent or fails to respond within the time period
specified, Tenant shall be free to complete the assignment and/or sublet such
space to the party contained in Tenant’s notice, subject to the following
conditions:

a)              The assignment and/or sublease shall be
on the same terms as were set forth in the notice given to Landlord;

b)              The assignment and/or sublease shall be
documented in a written format that is reasonably acceptable to Landlord, which
form shall specifically include the assignee’s and/or sublessee’s
acknowledgement and acceptance of the obligation contained in this Lease, in so
far as applicable;

c)              The assignment and/or sublease shall not
be valid, nor shall the assignee or sublessee take possession of the Premises,
or subleased portion thereof, until an executed duplicate original of such
sublease and/or assignment has been delivered to Landlord;

 

15

 

d)              In the event of any Transfer, Landlord
shall receive as Additional Rent hereunder (and without affecting or reducing
any other obligation of Tenant under this Lease) fifty percent (50%) of Tenant’s
“Net Rental Profit” derived from such Transfer. 
If Tenant shall elect to Transfer, Tenant shall use reasonable and good
faith efforts to secure consideration from any such Transferee which would be
generally equivalent to then-current market rent for a sublease of the square
footage and for the term then being offered by Tenant, but in no event shall
Tenant’s monetary obligations to Landlord, as set forth in this Lease, be
reduced.   Net Rental Profit shall mean
all rent, additional rent or other consideration payable (in lieu of or in
addition to rent) by such Transferee in connection with the Transfer in
excess of the Rent and Additional Rent payable by Tenant under this Lease
during the term of the Transfer on a per rentable square foot basis if less
than all of the Premises is transferred, after deducting the reasonable
expenses incurred by Tenant in connection with such Transfer for (i) any
improvement allowance or other economic concessions (space planning allowance,
moving expenses, etc.) paid by Tenant or Transferee in connection with such
Transfer, (ii) any brokerage commissions incurred by Tenant in connection with
the Transfer, and (iii) reasonable attorneys’ fees incurred by Tenant in
connection with the Transfer.

                                Tenant shall deliver to Landlord a
statement within thirty (30) days after the end of each calendar year and/or
within thirty (30) days after the expiration or earlier termination of the Term
of this Lease in which any Transfer has occurred, specifying for each such
Transfer:

i)                the date of its execution and delivery, the number of
square feet of the Rentable Area demised thereby, and the Term thereof, and

ii)            a computation in reasonable detail showing the amounts
(if any) paid and payable by Tenant to Landlord pursuant to this Section 11.4
with respect to such Transfer for the period covered by such statement, and the
amounts (if any) paid and payable by Tenant to Landlord pursuant to this
Section 11.4 with respect to any payments received from a Transferee during
such period but which relate to an earlier period.

Section 11.5.  Reasonable Grounds for Denial of Assignment
and/or Sublease.  Landlord and Tenant agree that, in
addition to such other reasonable grounds as Landlord may assert for
withholding its consent, it shall be reasonable under this Lease and any
applicable law for Landlord to withhold its consent to any proposed Transfer,
where any one or more of the following conditions exists:

a)              The proposed sublessee or assignee (a “Transferee”)
is, in Landlord’s reasonable judgment, of a character or reputation which is not
consistent with those businesses customarily found in a Class A office
building;

b)              The Transferee is engaged in a business or intends to
use all or any portion of the Premises for purposes which are not consistent
with those generally found in the Building or other Class A office buildings in
the vicinity of the Building, provided, however, that in no event shall
Landlord be permitted to decline Tenant’s request for a Transfer solely on the
basis of said Transferee’s intent to change the Specified Use from that of
Tenant, unless such proposed change shall violate any Exclusive Use provision
already granted by Landlord;

c)              The Transferee is either a governmental agency or
instrumentality thereof;

d)              The Transfer will result in more than a reasonable and
safe number of occupants within the Premises;

e)              The Transferee is not a party of reasonable financial
worth and/or financial stability in light of the responsibilities involved
under the sublease, if a sublessee, or the Lease, if an assignee, on the date consent
is requested, or has demonstrated a prior history of credit instability or
unworthiness;

f)                The Transfer will cause Landlord to be in violation of
another lease or agreement to which Landlord is a party, or would give another
occupant of the Building a right to cancel its lease;

g)             The Transferee will retain any right originally
granted to Tenant to exercise a right of renewal, right of expansion, right of
first offer or other similar right held by Tenant;

h)             Either the proposed Transferee, or any person or
entity which directly or indirectly, controls, is controlled by, or is under
common control with, the proposed Transferee is a tenant in the Building at the
time Tenant requests approval of the proposed Transfer, or is engaged in
on-going negotiations with Landlord to lease space in the Building at the time
Tenant requests approval of the proposed Transfer, and Landlord can make space
available in the Building comparable to the space that is the subject of the
proposed Transfer; or

i)                The Transferee intends to use all or a portion of the
Premises for medical procedures or for a primary business which is as a
boiler-room type sales or marketing organization.

Section
11.6.  Tenant’s Continued
Obligation.  Any consent by Landlord to an assignment
of this Lease and/or sublease of the Premises shall not release Tenant from any
of Tenant’s obligations hereunder or be deemed to be a consent by Landlord to
any subsequent hypothecation, assignment, subletting, occupation or use by
another person, and Tenant shall remain liable to pay the Rent and/or perform
all other obligations to be performed by Tenant hereunder.  Landlord’s acceptance of Rent or Additional
Rent from any other person shall not be deemed to be a waiver by Landlord of
any provision of this Lease.  Landlord’s
consent to one assignment or subletting shall not be deemed consent to any
subsequent assignment or subletting.

        If any assignee or sublessee of Tenant
or any successor of Tenant defaults in the performance of any of the provisions
of this Lease, whether or not Landlord has collected Rent directly from said
assignee or

 

16

 

sublessee,
Landlord may proceed directly against Tenant without the necessity of
exhausting remedies against such assignee, sublessee or other
successor-in-interest.

        Provided that in no event shall any further assignment,
sublease, amendment or modification to this Lease serve to either increase
Tenant’s liability or expand Tenant’s duties or obligations hereunder, or
relieve Tenant of its liability under this Lease, then Landlord may consent to
subsequent assignments or subletting of this Lease or amendments or
modifications to this Lease with any assignee, without notifying Tenant or any
successor of Tenant, and without obtaining their consent thereto.

Section 11.7.  Tenant To Pay Landlord’s Costs.  If Tenant assigns or sublets the Premises or requests
the consent of Landlord to any assignment, subletting or other modification of
this Lease, or if Tenant requests the consent of Landlord for any act that
Tenant proposes to do, whether or not Landlord shall grant consent thereto,
then Tenant shall, concurrent with Tenant’s submission of any written request
therefor, pay to Landlord the non-refundable sum of $1,000 as reasonable
consideration for Landlord’s considering and processing the applicable request.

Section 11.8.  Successors and Assigns. 
Subject to the provisions contained herein, the covenants and agreements
contained in this Lease shall bind and inure to the benefit of Landlord and
Tenant, their respective successors and assigns and all persons claiming by,
through or under them.

ARTICLE 12

MAINTENANCE, REPAIRS, DAMAGE, DESTRUCTION, RENOVATION AND/OR ALTERATION

Section
12.1.  Tenant’s Obligation to
Maintain.  Tenant shall, at Tenant’s sole expense,
maintain the non-structural portions of the Premises in good order and repair,
and shall also keep clean any portion of the Premises which Landlord is not
obligated to clean.  Such obligation
shall include the clean-out; repair and/or replacement of Tenant’s garbage
disposal(s), Instant-Heat or other hot water producing equipment, if any, and
the cleaning and removal of any dishes and/or food prior to the same becoming
unsanitary.  If Tenant becomes obligated
to repair anything within the Premises and desires that Landlord make the
repair, Tenant shall advise Landlord’s managing agent of such need, which
request shall be presumed conclusive evidence of Tenant’s obligation and
willingness to reimburse Landlord a fair and reasonable charge for such
repair(s), unless such repair is Landlord’s obligation as described in this
Section 12.1 or in the event of a casualty.

        Further, Tenant shall pay the cost of
any injury, damage or breakage in, upon or to the Premises created by Tenant’s
gross negligence or willful misconduct or the gross negligence or willful
misconduct of Tenant’s agents, clients, contractors, directors, employees,
invitees, licensees, officers, partners or shareholders.

        Subject to Tenant’s obligation for
reimbursement to Landlord, if applicable, as specified herein, Landlord shall
make all repairs to the Premises. Landlord shall maintain in first-class
operating condition and repair, the Common Areas, the exterior walls,
foundation and roof of the Building, the structural portions of the floors of
the Building, structural elements of the Premises, all of the systems and
equipment of the Building and the Tenant Improvements installed in the
Premises.  The allocation of the foregoing
costs of such maintenance and repair shall be governed by Article 4.  However, if such repairs, maintenance or
cleaning are required due to Tenant’s gross negligence or willful misconduct or
the gross negligence or willful misconduct of Tenant’s agents, clients,
contractors, directors, employees, invitees, licensees, officers, partners or
shareholders, then, Tenant shall, within thirty (30) days after receipt of
Landlord’s billing therefor, reimburse Landlord, as Additional Rent, for any
expense of such repairs, cleaning and/or maintenance in excess of any insurance
proceeds available for reimbursement thereof, including for any deductible
anticipated in connection therewith.

        Tenant hereby waives all right to make
repairs at Landlord’s expense under the provisions of Section 1932(1),
1941 and 1942 of the Civil Code of California.

Section 12.2.  Repair Period Notice.  Tenant shall give prompt notice to Landlord of Tenant’s
actual knowledge of any damage or destruction to all or any part of the
Premises or Building resulting from or arising out of any fire, earthquake, or
other identifiable event of a sudden, unexpected or unusual nature
(individually or collectively a “Casualty”).  The time periods specified in this
Section 12.2. shall commence on the earlier of the date of Landlord’s actual
knowledge of the Casualty or after Landlord receives said written notice from
Tenant of the occurrence of a Casualty. 
After the earlier of Landlord ‘s actual knowledge or receipt of Tenant’s
written notice that a Casualty has occurred, Landlord shall, within the later
of:

a)              sixty (60) days after the date on which
Landlord determines the full extent of the damage caused by the Casualty; or

b)              thirty (30) days after Landlord has
determined the extent of the insurance proceeds available to effectuate
repairs, but

c)              in no event more than ninety (90) days
after the Casualty,

        provide written notice to Tenant indicating the anticipated
time period for repairing the Casualty (the ”Repair Period Notice”).  The Repair Period Notice shall also state, if
applicable, Landlord’s election either to repair the Premises, or to terminate
this Lease, pursuant to the provisions of Section 12.3, and if Landlord elects
to terminate this Lease, Landlord shall use commercially reasonable efforts to
provide Tenant with a minimum period of ninety (90) days within which to fully
vacate the Premises.

 

17

 

Section 12.3.  Landlord’s Option to Terminate or
Repair.  Notwithstanding anything to the contrary contained
herein, Landlord shall have the option, but not the obligation to elect not to
rebuild or restore the Premises and/or the Building if one or more of the
following conditions is present:

a)              repairs to the Premises cannot reasonably
be completed within one hundred and eighty (180) days after the date of the
Casualty (when such repairs are made without the payment of overtime or other
premiums);

b)              repairs required cannot be made pursuant
to the then-existing laws or regulations affecting the Premises or Building, or
the Building cannot be restored except in a substantially different structural
or architectural form than existed before the Casualty;

c)              the holder of any mortgage on the
Building or ground or underlying lessor with respect to the Real Property
and/or the Building shall require that all or such large a portion of the
insurance proceeds be used to retire the mortgage debt, so that the balance of
insurance proceeds remaining available to Landlord for completion of repairs
shall be insufficient to repair said damage or destruction;

d)              the holder of any mortgage on the
Building or ground or underlying lessor with respect to the Real Property
and/or the Building shall terminate the mortgage, ground or underlying lease,
as the case may be;

e)              provided Landlord has carried the coverage
Landlord is required to obtain under Section 19.1 of this Lease, the
damage is not fully covered, except for deductible amounts, by Landlord’s
insurance policies;

f)                more than thirty-three and one-third
percent (33 1/3%) of the Building is damaged or destroyed, whether or not the
Premises is affected, provided that Landlord elects to terminate all other
leases for offices of a similar size in the Building.

        If Landlord elects not to complete
repairs to the Building or Premises, pursuant to this Section 12.3,
Landlord’s election to terminate this Lease shall be stated in the Repair
Period Notice, in which event this Lease shall cease and terminate as of the
date contained in Landlord’s Repair Period Notice.

        If one hundred percent of the Building
is damaged or destroyed, as certified by an independent building inspector,
this Lease shall automatically terminate after Tenant’s receipt of written
notice of such termination from Landlord, and without action beyond the giving
of such notice being required by either Landlord or Tenant.

        Upon any termination of this Lease
pursuant to this Section 12.3, Tenant shall pay its prorata share of Fixed
Monthly Rent and Additional Rent, properly apportioned up to the date of such
termination, reduced by any abatement of Rent to which Tenant is entitled under
Section 12.5; after which both Landlord and Tenant shall thereafter be
freed and discharged of all further obligations under the Lease, except for
those obligations which by their provisions specifically survive the expiration
or earlier termination of the Term.

Section
12.4.  Tenant’s Option to Terminate.  If

a)              the Repair Period Notice provided by Landlord
indicates that the anticipated period for repairing the Casualty (the “Repair
Period”) exceeds one hundred and eighty (180) days after the Casualty, or

b)              the Casualty to the Premises occurs
during the last twelve (12) months of the Term;

then Tenant shall have
the option, but not the obligation, to terminate this Lease by providing
written notice (“Tenant’s Termination Notice”) to Landlord within thirty (30)
days after receiving the Repair Period Notice in the case of 12.4 (a); or
within thirty (30) days after the Casualty, in the case of
Section 12.4 (b).  Furthermore,
if

Landlord has not completed the repairs thereafter on or before thirty
(30) days after the expiration of the Repair Period,

then Tenant shall
also have the option, but not the obligation, to terminate this Lease by giving
Landlord written notice of its intention to so terminate, which notice shall be
given not more than forty-five (45) days after expiration of the Repair Period.

        Tenant’s failure to provide Landlord with Tenant’s
Termination Notice within the time periods specified hereinabove shall be
deemed conclusive evidence that Tenant has waived its option to terminate this
Lease.

Section 12.5.  Temporary Space and/or Rent Abatement During
Repairs or Renovation.  During the Repair Period or during any
such period that Landlord completes Work (as defined hereinbelow) or
Renovations (as defined in Section 12.11 hereinbelow), if available, and if
requested by Tenant, Landlord shall make available to Tenant other space in the
Building which, in Tenant’s reasonable opinion, is suitable for the temporary
conduct of Tenant’s business.  However,
if such temporary space is smaller than the Premises, Tenant shall pay Fixed
Monthly Rent and Additional Rent for the temporary space based upon the
calculated rate per Rentable square foot payable hereunder for the Premises,
times the number of Rentable square feet available for Tenant’s use in the
temporary space.  If such temporary space
is larger than the Premises, Tenant shall pay Fixed Monthly Rent and Additional
Rent for the temporary space based upon the square footage of the Premises
initially leased to Tenant, and Landlord shall pay the costs of the move in to
the temporary space and the move back to the Premises initially leased to
Tenant, including the cost of the relocation of all telephone and computer
cabling.

        If no temporary space is available that
is reasonably satisfactory to Tenant, and any part of the Premises is rendered
untenantable by reason of such Casualty, Work or Renovation, then to the extent
that all or said portion of the usable area of the Premises is so rendered
untenantable by reason of such Casualty, Work or Renovation, Tenant shall be
provided with a proportionate abatement of Fixed

 

18

 

Monthly Rent and
Additional Rent.  Said proportional
abatement shall be based on the Usable Square Footage of the Premises that
cannot and is not actually used by Tenant, divided by the total Usable square
feet contained in the Premises; provided, however, if the remaining portion of
the Premises is not usable for Tenant’s business purposes, then Tenant shall be
entitled to a full abatement of Fixed Monthly Rent and Additional Rent.  That proportional abatement (or full
abatement, as the case may be), if any, shall be provided during the period
beginning on the later of:

a)              the date of the Casualty; or

b)              the actual date on which Tenant ceases to
conduct Tenant’s normal business operations in all or any portion of the
Premises,

and shall end on the date
Landlord achieves substantial completion of restoration of the Premises.  Tenant’s acceptance of said abatement of Rent
shall be deemed conclusive evidence of Tenant’s waiver of any further claim or
right of future claim for any loss or damage asserted by Tenant arising out of
the Casualty Repair, Work or Renovation, as the case may be.

Section 12.6. 
Tenant’s Waiver of Consequential Damages.  Subject to Section 12.4, the provisions contained
in Section 12.5 are Tenant’s sole remedy arising out of any Casualty.  Landlord shall not be liable to Tenant or any
other person or entity for any direct, indirect, or consequential damage
(including but not limited to lost profits of Tenant or loss of or interference
with Tenant’s business), unless caused by the gross negligence or willful
misconduct of Landlord or the gross negligence or willful misconduct of
Landlord’s agents, contractors, directors, employees, licensees, officers,
partners or shareholders, due to, arising out of, or as a result of the
Casualty (including but not limited to the termination of the Lease in
connection with the Casualty).

Section 12.7. Restoration of the
Premises.  If the cost of repair of any Casualty is
covered under one or more of the insurance policies Landlord is required herein
to provide, then Landlord shall restore the base core and shell of the Premises
to its condition prior to the Casualty and repair and/or replace the
Improvements previously installed in the Premises.

        If Landlord has elected to complete repairs to the Premises,
and has not elected to terminate this Lease, as specified in Section 12.3, then
Landlord shall complete such repairs within the Repair Period, in a manner, and
at times, which do not unreasonably interfere with Tenant’s use of that portion
of the Premises remaining unaffected by the Casualty.  Provided Landlord has elected to make the
repairs required hereunder, this Lease shall not be void or voidable during the
Repair Period, nor shall Landlord be deemed to have constructively evicted
Tenant thereby.

Section 12.8.  Waiver. 
Tenant
hereby waives the provisions of California Civil Code Sections 1932(2) and
1933(4) and the provisions of any successor or other law of like import.

Section 12.9.  Repair of the Building.  Except as specified hereinabove, unless Landlord
terminates this Lease as permitted hereinabove, Landlord shall repair the
Building, parking structure or other supporting structures and facilities
within two hundred ten (210) days after Landlord becomes aware of such damage
and/or destruction.

Section 12.10.  Government-Required Repairs.  If, during the Term, additional inspections other than
those standard annual or biannual inspections to which the Building may
generally be subject; testing, repairs and/or reconstruction (collectively the “Work”)
are required by any governmental authority, or if, upon the recommendation of
its engineers, Landlord independently elects to undertake all or any portion of
the Work prior to being required to do so by such governmental authority,
Landlord shall give notice thereof to Tenant and shall use its best efforts not
to unreasonably interfere with Tenant’s use of the Premises while completing
the Work.  Tenant shall cooperate fully
with Landlord in connection with the Work and, upon the prior written request
of Landlord, shall make the Premises available for completion of the Work.  Tenant agrees that Landlord shall allocate
all costs associated with completion of the Work to the Building’s Operating
Expenses, when permitted to under the provisions of Section 4.1 of this
Lease.

        If Landlord elects to undertake the Work
during the Term, then Tenant shall be entitled to an abatement of rent,
pursuant to the provisions of Section 12.5 hereinabove, and Landlord shall be
completely responsible for repair of any damage to the Premises and all costs
associated with the removal, moving and/or storage of Tenant’s furniture,
artwork, office equipment and files.  If
Tenant is moved to alternate space, then Landlord shall pay the costs of the
move in to the alternate space and the move back to the Premises, including the
cost of the relocation of all telephone and computer cabling.  Landlord will restore any and all areas
damaged by completion of the Work to their previous quality and pay all
clean-up costs.  Landlord further agrees
that it shall use commercially reasonable efforts to see that all construction,
such as coring or power nailing that could be disruptive to Tenant’s normal
business operations shall, in so far as is reasonably possible, be performed
between the hours of 7:00 p.m. to 7:00 a.m. Monday through Friday; after 1:00
p.m. on Saturdays and/or at any time on Sundays.

        Except in
the case of Landlord’s gross negligence and/or willful misconduct or the gross
negligence and/or willful misconduct of Landlord’s agents, contractors,
directors, employees, officers, partners, and/or shareholders, Tenant shall not
have the right to terminate this Lease as a result of Landlord undertaking the
Work, nor shall Tenant or any third party claiming under Tenant be entitled to
make any claim against Landlord for any interruption, interference or
disruption of Tenant’s business or loss of profits therefrom as a result of the
Work, and Tenant hereby releases Landlord from any claim which Tenant may have
against Landlord arising from or relating to, directly or indirectly, the
performance of the Work by Landlord.

 

19

 

Section 12.11.  Optional Landlord Renovation.  It is specifically understood and agreed that Landlord
has no obligation and has made no promises to alter, remodel, improve, renovate
or decorate the Premises, Building, or any part thereof and that, except as set
forth herein, no representations respecting the condition of the Premises or
the Building have been made by Landlord to Tenant.

        However, at any time and from time to time during the Term,
Landlord may elect, in Landlord’s sole discretion, to otherwise renovate,
improve, alter or modify elements of the Real Property, the Building and/or the
Premises (collectively, “Renovations”) including without limitation, the
parking facilities, common areas, systems, equipment, roof, and structural
portions of the same, which Renovations may include, without limitation:

a)              modifying the common areas and tenant
spaces to comply with applicable laws and regulations, including regulations
relating to the physically disabled, seismic conditions and building safety and
security, and

b)              installing new carpeting, lighting and
wall covering in the Building common areas.

        In
connection with such Renovations, Landlord may, among other things, erect
scaffolding or other necessary structures in or about the Building, limit or
eliminate access to portions of the Building, common areas or parking
facilities serving the Building, or perform other work in or about the
Building, which work may create noise, dust or debris that remains in the
Building.

        Landlord
shall have the right to access through the Premises as well as the right to
take into and upon and through all or any part of the Premises, or any other
part of the Building, all materials that may reasonably be required to make
such repairs, alterations, decorating, additions or improvements pursuant to
the provisions of this Section 12.11. 
So long as Tenant shall maintain reasonable access to the Premises, the
Building and the parking facilities, Landlord shall also have the right, in the
course of the Renovations, to close entrances, doors, corridors, elevators, or
other building facilities, or temporarily to abate the operation of such
facilities.

        So long as Tenant is not required to
vacate the Premises for any reason arising out of the Renovations, and
maintains reasonable access to the Premises and the parking facilities, Tenant
shall permit all of the Renovations to be done, and except in the case of
Landlord’s gross negligence or willful misconduct or the gross negligence or
willful misconduct of Landlord’s contractors, directors, employees, officers,
partners or shareholders, without claiming Landlord is guilty of the
constructive eviction or disturbance of Tenant’s use and possession.

        Landlord shall not be liable to Tenant
in any manner (except as expressly provided otherwise in this Lease), whether
for abatement of any Rent or other charge, reimbursement of any expense,
injury, loss or damage to Tenant’s property, business, or any person claiming
by or under Tenant, by reason of interference with the business of Tenant or
inconvenience or annoyance to Tenant or the customers of Tenant resulting from
any Renovations done in or about the Premises or the Building or to any
adjacent or nearby building, land, street or alley.  However, Landlord agrees that the Renovations
shall be scheduled insofar as is commercially reasonable to permit Tenant to
continue its normal business operations, with advance notice thereof, and in
such commercially reasonable manner so as to minimize Tenant’s inconvenience.

Section 12.12.  Optional Tenant Changes During the Term.  After completion of the initial Improvements
contemplated hereunder, if any, Tenant shall make no alteration, change,
addition, removal, demolition, improvement, repair or replacement in, on, upon,
to or about the Premises, or at any time to any portion of the Building
(collectively or individually a “Tenant Change”), without the prior written
consent of Landlord, which consent shall be in Landlord’s reasonable
discretion.  Notwithstanding the
foregoing, Tenant shall have the right, without Landlord’s consent but upon ten
(10) days prior notice to Landlord, to make non-structural additions and
alterations (“Cosmetic Alterations”) to the Premises that do not (i) involve
the expenditure of more than $50,000.00 in the aggregate in any twelve (12)
month period during the Term, (ii) affect the exterior appearance of the
Building, or (iii) affect the Building systems or the Building structure.  Except as otherwise specified in Article 7,
any Tenant Change shall, at the termination of this Lease, become a part of the
Building and belong to Landlord, pursuant to the provisions of Article 7.  Any application for Landlord’s consent to a
Tenant Change, and the completion thereof, shall be in conformance with the
provisions of Exhibit B-1, attached hereto and made a part hereof by reference.

        Tenant
shall not knowingly permit Tenant’s agents, clients, contractors, directors,
employees, invitees, licensees, officers, partners or shareholders to deface
the walls, floors and/or ceilings of the Premises, nor mark, drive nails,
screws or drill holes into, paint, or in any way mar any surface in the
Building.  Notwithstanding the above,
Tenant is hereby permitted to install such pictures, certificates, licenses,
artwork, bulletin boards and similar items as are normally used in Tenant’s
business, so long as such installation is carefully attached to the walls by
Tenant in a manner reasonably prescribed by Landlord.

        If Tenant desires, as a part of any Tenant Change, to make
any revisions whatsoever to the electrical, HVAC, mechanical, plumbing, or
structural systems of the Building or Premises, such revisions must be
completed by subcontractors specified by Landlord and in the manner and
location(s) reasonably prescribed by Landlord. 
If Tenant desires to install any telephone outlets, the same shall be
installed in the manner and location(s) reasonably prescribed by Landlord.

 

20

 

        If Landlord consents to any requested Tenant Change, Tenant
shall give Landlord a minimum of fifteen (15) days written notice prior to
commencement thereof.  Landlord reserves
the option, but not the obligation, to enter upon the Premises for the purpose of
posting and maintaining such notices on the Premises as may be reasonably
necessary to protect Landlord against mechanic’s liens, material man’s liens or
other liens, and/or for posting any other notices that may be proper and
necessary in connection with Tenant’s completion of the Tenant Change.

        If any alterations, additions or
improvements made by Tenant result in Landlord being required to make any
alterations to other portions of the Building in order to comply with any
applicable statutes, ordinances or regulations (e.g., “handicap ordinances”)
then Tenant shall reimburse Landlord upon demand for all costs and expenses
incurred by Landlord in making such alterations.

Section 12.13.  Express Agreement.  The provisions of this Lease, including those
contained in this Article 12, constitute an express agreement between
Landlord and Tenant that applies in the event of any Casualty to the Premises,
Building or Real Property.  Tenant,
therefore, fully waives the provisions of any statute or regulations, including
California Civil Code Sections 1932(2) and 1933(4), and any other law or
statute which purports to govern the rights or obligations of Landlord and
Tenant concerning a Casualty in the absence of express agreement.  Tenant and Landlord expressly agree and
accept that any successor or other law of like import shall have no application
hereunder.

ARTICLE 13

CONDEMNATION

Section 13.1.  Condemnation of the Premises.  If more than twenty five percent (25%) of the Premises
is lawfully condemned or taken in any manner for any public or quasi-public
use, or if any portion of the Building is condemned or taken in such a manner
that Tenant is reasonably prevented from obtaining access to the Building or
the Premises, this Lease may, within ten (10) business days of such taking, be
terminated at the option of either Landlord or Tenant by one party giving the
other thirty (30) days written notice of its intent to do so.  If either Landlord or Tenant provide the
other party written notice of termination, the Term and estate hereby granted
shall forthwith cease and terminate as of the earlier of the date of vesting of
title in such condemnation or taking or the date of taking of possession by the
condemning authority.

        If less than twenty-five percent (25%) of the Premises is so
condemned or taken, then the term and estate hereby granted with respect to
such part shall forthwith cease and terminate as of the earlier of the date of
vesting of title in such condemnation or taking or the date of taking of
possession by the condemning authority, and the Fixed Monthly Rent payable
hereunder (and Additional Rent payable pursuant to
Articles 3 or 4) shall be abated on a prorated basis, by
dividing the total number of Usable square feet so taken by the total number of
Usable square feet contained in the Premises, then multiplying said percentage
on a monthly basis, continuing from the date of such vesting of title to the
date specified in this Lease for the expiration of the Term hereof.

Section
13.2.  Condemnation of the Building.  If less than twenty-five percent (25%) of the Building
is so condemned or taken, then Landlord shall, to the extent of the proceeds of
the condemnation payable to Landlord and with reasonable diligence, restore the
remaining portion of the Building as nearly as practicable to its condition
prior to such condemnation or taking; except that, if such proceeds constitute
less than ninety percent (90%) of Landlord’s estimate of the cost of rebuilding
or restoration, then Landlord may terminate this Lease on thirty (30) days
prior written notice to Tenant.

        If more
than twenty-five percent (25%) of the Building is so condemned or taken, but
the Premises are unaffected thereby, then Landlord shall have the option but
not the obligation, which election shall be in Landlord’s sole discretion, to
terminate this Lease, effective the earlier of the date of vesting of title in
such condemnation or the date Landlord delivers actual possession of the
Building and Premises to the condemning authority, which election by Landlord
shall be provided to Tenant in writing.

Section 13.3.  Award. 
If any
condemnation or taking of all or a part of the Building takes place, Tenant
shall be entitled to join in any action claiming compensation therefore, and
Landlord shall be entitled to receive that portion of the award made for the
value of the Building, Premises, leasehold improvements made or reimbursed by
Landlord, or bonus value of the Lease, and Tenant shall only be entitled to
receive any award made for the value of the estate vested by this Lease in
Tenant, including Tenant’s proximate damages to Tenant’s business and
reasonable relocation expenses.  Nothing
shall preclude Tenant from intervening in any such condemnation proceeding to
claim or receive from the condemning authority any compensation to which Tenant
may otherwise lawfully be entitled in such case in respect of Tenant’s property
or for moving to a new location.

Section 13.4.  Condemnation for a Limited Period.  Notwithstanding the provisions of Section 13.1,
13.2 or 13.3, except during the final twelve (12) months of the Term, if all or
any portion of the Premises are condemned or taken for governmental occupancy
for a limited period (i.e. -  anticipated
to be no longer than sixty (60) days), then this Lease shall not terminate;
there shall be no abatement of Fixed Monthly Rent or Additional Rent payable
hereunder; and Tenant shall be entitled to receive the entire award therefor
(whether paid as damages, rent or otherwise).

        If, during the final twelve (12) months of the Term, all or
any portion of the Premises are condemned or taken for governmental occupancy
for a limited period anticipated to be in excess of sixty (60) days, or for a
period extended after the expiration of the initial Term, Tenant shall have the
option, but not the obligation, to terminate this Lease, in which case,
Landlord shall be entitled to such part of such award as shall be properly
allocable to the cost of restoration of the Premises, and the balance of such
award shall be apportioned between Landlord and Tenant as of the date of such
termination.

 

21

 

        If the termination of such governmental occupancy is prior to
expiration of this Lease, and Tenant has not elected to terminate this Lease,
Tenant shall, upon receipt thereof and to the extent an award has been made,
restore the Premises as nearly as possible to the condition in which they were
prior to the condemnation or taking.

ARTICLE 14

MORTGAGE SUBORDINATION; ATTORNMENT AND MODIFICATION OF LEASE

Section 14.1.  Subordination.  This Lease, the Term and estate hereby granted, are
and shall be subject and subordinate to the lien of each mortgage which may now
or at any time hereafter affect Landlord’s interest in the real property,
Building, parking facilities, common areas or portions thereof and/or the land
thereunder (an “underlying mortgage”), regardless of the interest rate, the
terms of repayment, the use of the proceeds or any other provision of any such
mortgage.  Tenant shall from time to time
execute and deliver such instruments as Landlord or the holder of any such
mortgage may reasonably request to confirm the subordination provided in this
Section 14.1.  Tenant shall execute
and deliver to Landlord three (3) copies of the Subordination, Non-Disturbance
and Attornment Agreement attached as Exhibit H hereto and made a part hereof
(the “SNDA”) concurrently with Tenant’s execution and delivery of this
Lease.  Within thirty (30) days following
the full execution of this Lease, Landlord shall deliver to Tenant a copy of
the SNDA executed by Landlord and Landlord’s lender.

Section
14.2.  Attornment.  Tenant confirms that if by reason of a default under
an underlying mortgage the interest of Landlord in the Premises is terminated,
provided Tenant is granted in writing continued quiet enjoyment of the Premises
pursuant to the terms and provisions of this Lease, Tenant shall attorn to the
holder of the reversionary interest in the Premises and shall recognize such
holder as Tenant’s landlord under this Lease, but in no event shall such holder
be bound by any payment of Rent paid more than one month in advance of the date
due under this Lease.  Tenant shall,
within fifteen (15) calendar days after request therefor, execute and deliver,
at any time and from time to time, upon the request of Landlord or of the
holder of an underlying mortgage any instrument which may be necessary or
appropriate to evidence such attornment.

Section
14.3.  Modification of Lease; Notice of
Default.  If any current or prospective mortgagee or ground
lessor for the Building requires a modification or modifications of this Lease,
which modification or modifications will not cause an increased cost or expense
to Tenant or in any other way changes the rights and obligations of Tenant or
the obligations of Landlord hereunder, then in such event, Tenant agrees that
this Lease may be so modified.  Tenant
agrees to execute and deliver to Landlord within fifteen (15) calendar days
following the request therefor whatever documents are required to effectuate
said modification.  Should Landlord or
any such current or prospective mortgagee or ground lessor require execution of
a short form of Lease for recording, containing, among other customary
provisions, the names of the parties, a description of the Premises and the
Term, Tenant agrees to execute and deliver to Landlord such short form of Lease
within fifteen (15) calendar days following the request therefor.  Further, Tenant shall give written notice of
any default by Landlord under this Lease to any mortgagee and ground lessor of
the Building and shall afford such mortgagee and ground lessor a reasonable
opportunity to cure such default prior to exercising any remedy under this
Lease.

ARTICLE 15

ESTOPPEL CERTIFICATES

Section 15.1.  Estoppel Certificates.  Tenant shall, within fifteen (15) business days after
receipt of Landlord’s written request therefor, execute, acknowledge and
deliver to Landlord an Estoppel Certificate, which may be conclusively relied
upon by any prospective purchaser, mortgagee or beneficiary under any deed of
trust covering the Building or any part thereof.  Said Estoppel Certificate shall certify the
following:

a)              that this Lease is unmodified and in full
force and effect (or, if there have been modifications, that this Lease is in
full force and effect, as modified, and stating the date and nature of each
modification);

b)              the date, if any, to which rental and
other sums payable hereunder have been paid;

c)              that no notice has been received by
Tenant of any default which has not been cured, except as to defaults specified
in the certificate;

d)              that, to Tenant’s actual knowledge,
Landlord is not in default under this Lease or, if so, specifying such default;
and

e)              such other factual matters as may be
reasonably requested by Landlord.

        Tenant’s failure to deliver the Estoppel Certificate within
five (5) days following Tenant’s receipt of Landlord’s second (2nd)
written request therefor shall constitute a material default under the Lease,
and Landlord shall have the option, but not the obligation, to enforce the
remedies contained in Article 18.

ARTICLE 16

NOTICES

Section 16.1.  Notices. 
Any
notice, consent, approval, agreement, certification, request, bill, demand,
statement, acceptance or other communication hereunder (a “notice”) shall be in
writing and shall be considered duly given or furnished when:

a)              delivered personally or by messenger or
overnight delivery service, with signature evidencing such delivery;

 

22

 

b)              upon the date of delivery, after being
mailed in a postpaid envelope, sent certified mail, return receipt requested,
when addressed to Landlord as set forth in the Basic Lease Information and to
Tenant at the Premises and any other address for Tenant specified in the Basic
Lease Information; or to such other address or addressee as either party may
designate by a written notice given pursuant hereto; or

c)              upon confirmation of good transmission if
sent via facsimile machine to such phone number as shall have been provided in
writing by Landlord or Tenant, one to the other.

        If Tenant
fails to provide another valid address, other than the Premises, upon which
service to Tenant can be perfected, then Tenant hereby appoints as its agent to
receive the service of all dispossessory or distraint proceedings and notices
thereunder the person in charge of or occupying the Premises at the time, and
if no person shall be in charge of or occupy the same, then such service may be
made by attaching the same to the main entrance of the Premises.

ARTICLE 17

DEFAULT AND LANDLORD’S OPTION TO CURE

Section
17.1.  Tenant’s Default.  For the purposes of this Section 17.1, if the term “Tenant”,
as used in this Lease, refers to more than one person, then, such term shall be
deemed to include all of such persons or any one of them; if any of the
obligations of Tenant under this Lease are guaranteed, the term “Tenant,” as
used in Section 17.1(e) and Section 17.1(f), shall be deemed to also
include the guarantor or, if there is more than one guarantor, all or any one of
them; and if this Lease has been assigned, the term “Tenant,” as used in
Sections 17.1 (a) through (h), inclusive, shall be deemed to include the
assignee and assignor, jointly and severally, unless Landlord shall have, in
connection with such assignment, previously released the assignor from any
further liability under this Lease, in which event the term “Tenant,” as used
in said subparagraphs, shall not include the assignor that was previously
released.

        Tenant’s continued occupancy and quiet
enjoyment of the Premises and this Lease and the covenants and estate hereby
granted are subject to the limitation that:

a)              if Tenant fails to make any payment of
Fixed Monthly Rent or Additional Rent within five (5) business days following
Tenant’s receipt of written notice from Landlord that any such amount is due
and unpaid, or

b)              if Tenant abandons or vacates the
Premises and concurrently discontinues the payment of Rent, or

c)              if Tenant defaults in the keeping,
observance or performance of any covenant or agreement set forth in
Sections 6.1, 6.2 or 19.3, and if such default continues
and is not cured by Tenant before the expiration of Landlord’s written 3-Day
Notice to Cure or Quit; or

d)              if Tenant defaults in the keeping,
observance or performance of any covenant or agreement including any provisions
of the rules and regulations established by Landlord (other than a default of
the character referred to in Sections
17.1 (a), (b) or (c)), and if such default continues and is
not cured by Tenant within thirty (30) days after Landlord has given to Tenant
a notice specifying the same, or, in the case of such a default which for
causes beyond Tenant’s reasonable control (including occupancy of a sublessee)
cannot with due diligence be cured within such period of thirty (30) days, if
Tenant:

i)                does not, promptly upon Tenant’s receipt of such
notice, advise Landlord of Tenant’s intention duly to institute all steps
necessary to cure such default or

ii)            does not duly institute and thereafter diligently
prosecute to completion all steps (including, if appropriate, legal proceedings
against a defaulting sublessee) necessary to cure the same, or

e)              if Tenant fails to deliver the Estoppel
Certificate required under Article 15 hereof within the time period
specified, or

f)                if Tenant:

i)                applies for or consents to the appointment of, or the
taking of possession by a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property;

ii)            admits in writing its inability, or is generally
unable, to pay its debts as such debts become due;

iii)        makes a general assignment for the benefit of its
creditors;

iv)           commences a voluntary case under federal bankruptcy
laws (as now or hereafter in effect);

v)               files a petition seeking to take advantage of any other
law relating to bankruptcy, insolvency, reorganization, winding up, or
composition or adjustment of debts;

vi)           fails to controvert in a timely or appropriate manner,
or acquiesces in writing to, any petition filed against it in an involuntary
case under such bankruptcy laws;

vii)       take any action for the purpose of effecting any of
the foregoing, or

g)             if a proceeding or case is commenced,
without the application or consent of Tenant, in any court of competent
jurisdiction, seeking:

i)                the liquidation, reorganization, dissolution, winding
up, or composition or readjustment of debts, of Tenant; or

ii)            the appointment of a trustee, receiver, custodian,
liquidator or the like of Tenant or of all or a substantial part of its assets;
or

 

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iii)        similar relief with respect of Tenant under any law
relating to bankruptcy, insolvency, reorganization, winding up, or composition
or adjustment of debts, and such proceeding or case shall continue undismissed,
or an order, judgment or decree approving or ordering any of the foregoing
shall be entered and continue unstayed and in effect, for a period of sixty
(60) days, or an order for relief against Tenant shall be entered in an
involuntary case under such bankruptcy laws, or

h)             if Tenant fails to take possession of and
move into the Premises within fifteen (15) calendar days after Landlord tenders
the same in writing to Tenant, unless Tenant acknowledges and accepts the
Commencement Date as occurring within such fifteen-day time period, and pays
Rent thereon from such Commencement Date;

then, in any or each such
event, Tenant shall be deemed to have committed a material default under this
Lease.

Section 17.2.  Landlord’s Option to Cure Tenant’s
Default.  If Tenant enters into a default under this Lease, in
lieu of Landlord’s issuance of a written notice, as specified hereinbelow,
Landlord may cure the same at the sole expense of Tenant:

a)              immediately and without notice in the
case of emergency; if said default is specified in Sections
17.1 (a), (b) or (c), or if such default unreasonably interferes
with the use by any other tenant of the Building; with the efficient operation
of the Building; or will result in a violation of law or in a cancellation of
any insurance policy maintained by Landlord, and

b)              after the expiration of Landlord’s 3-Day
Notice of Intent to Cure, in the case of any default other than those specified
in Section 17.2 (a) hereinabove.

Section 17.3.  Landlord’s Option to Terminate this
Lease.  In addition to any other remedies Landlord may have at
law or in equity, Landlord shall be entitled to give to Tenant a written notice
of intention to terminate this Lease at the expiration of three (3) days from
the date of the giving of such notice (which notice shall be in addition to the
notices described in Section 17.1, and shall not be given unless and until the
cure period described in Section 17.1 has expired and the default has not been
cured, except that this notice shall constitute the notice described in Section
17.1 (a)), and if such notice is given by Landlord, and Tenant fails to cure
the defaults specified therein, then this Lease and the Term and estate hereby
granted (whether or not the Commencement Date has already occurred) shall
terminate upon the expiration of such three (3) day period (a “Default
Termination”), with the same effect as if the last of such three (3) days were
the Termination Date, except that Tenant shall remain liable for damages as
provided hereinbelow or pursuant to law.

Section 17.4.  Certain Payments.  Bills for all reasonable costs and expenses incurred
by Landlord in connection with any performance by it under Section 17.2
shall be payable, as Additional Rent, pursuant to the provisions of Section
4.3.

Section 17.5.  Certain Waivers.  Unless Tenant has submitted documentation that it
validly disputes Landlord’s billing for Fixed Monthly Rent hereunder, or is
completing an audit of Landlord’s Operating Expense Statement, if Tenant is in
default in payment of Fixed Monthly Rent or Additional Rent hereunder, Tenant
waives the right to designate the items against which any payments made by
Tenant are to be credited.  In lieu
thereof, Landlord may apply any payments received from Tenant to the then-oldest
billing remaining unpaid on Tenant’s rental account or to any other payment due
from Tenant, as Landlord sees fit.

Section 17.6.  Landlord Default.  Notwithstanding anything to the contrary set forth in
this Lease, Landlord shall not be in default in the performance of any
obligation required to be performed by Landlord pursuant to this Lease unless:

a)              in the event such default is with respect
to the payment of money, Landlord fails to pay such unpaid amounts within five
(5) business days of written notice from Tenant that the same was not paid when
due, or

b)              in the event such default is other than
the obligation to pay money, Landlord fails to perform such obligation within
thirty (30) days after the receipt of notice from Tenant specifying in detail
Landlord’s failure to perform; provided, however, if the nature of Landlord’s
obligation is such that more than thirty (30) days are required for its
performance, then Landlord shall not be in default under this Lease if it shall
commence such performance within such thirty (30) days period and thereafter
diligently pursue the same to completion within a reasonable time period.

        Upon any such default by Landlord under
this Lease, Tenant may, except as otherwise specifically provided in this Lease
to the contrary, exercise any of its rights provided at law or in equity.

ARTICLE 18

DAMAGES; REMEDIES; RE-ENTRY BY LANDLORD; ETC.

Section
18.1.  Damages.  If Landlord terminates this Lease, pursuant to the
provisions of Section 17.3 (a “Default Termination”), then Landlord may recover
from Tenant the total of:

a)              the worth at the time of award of the
unpaid Fixed Monthly Rent and Additional Rent earned to the date of such
Default Termination; and

b)              the worth at the time of award of the
amount by which the unpaid Fixed Monthly Rent and Additional Rent which would
have been earned after the date of such Default Termination until the time of
award exceeds the amount of such rental loss that Tenant proves could have been
reasonably avoided; and

 

24

 

c)              the worth at the time of award of the
amount by which the unpaid Fixed Monthly Rent and Additional Rent which would
have been earned for the balance of the Term after the time of award exceeds
the amount of such rental loss that Tenant proves could have been reasonably
avoided; and

d)              any other amount reasonably necessary to
compensate Landlord for all of the detriment proximately caused by Tenant’s
failure to observe or perform any of its covenants and agreements under this
Lease or which in the ordinary course of events would be likely to result
therefrom, including, without limitation, the payment of the reasonable
expenses incurred or paid by Landlord in re-entering and securing possession of
the Premises and in the reletting thereof (including, without limitation,
altering and preparing the Premises for new tenants and brokers’ commission);
and

e)              at Landlord’s sole election, such other
amounts in addition to or in lieu of the foregoing as may be permitted from
time to time under applicable California laws.

Section
18.2.  Computations:  The “worth at the time of award” is computed:

a)              in paragraphs (a) and (b) above, by
allowing interest at the rate of ten percent (10%) per annum (but in no event
in excess of the maximum rate permitted by law); and

b)              in paragraph (c) above, by discounting
such amount at the discount rate of the Federal Reserve Bank of San Francisco
at the time of award plus one percent (1%).

c)              For purposes of computing unpaid rental
which would have accrued and become payable under this Lease, unpaid rental
shall consist of the sum of:

i)                the total Fixed Monthly Rent for the balance of the
Term, plus

ii)            a computation of Tenant’s Share of Additional Rent due
under the Lease including, without limitation, Tenant’s Proportionate Share of
any increase in Operating Expenses (including real estate taxes) for the
balance of the Term.  For purposes of
computing any increases due Landlord hereunder, Additional Rent for the
calendar year of the default and for each future calendar year in the Term shall
be assumed to be equal to the Additional Rent for the calendar year prior to
the year in which default occurs, compounded at a rate equal to the mean
average rate of inflation for the preceding five calendar years as determined
by the United States Department of Labor, Bureau of Labor Statistics Consumer
Price Index (All Urban Consumers, all items, 1982-84 equals 100) for the
metropolitan area or region of which Los Angeles, California is a part.  If such index is discontinued or revised, the
average rate of inflation shall be determined by reference to the index
designated as the successor or substitute index by the government of the United
States.

Section
18.3.  Re-Entry by Landlord.

a)              If a Default Termination occurs or any
default specified in Sections 17.1 (a) through (g) occurs and
continues beyond the period of grace (if any) therefor, Landlord or Landlord’s
authorized representatives may re-enter the Premises and remove all persons and
all property therefrom, either by summary dispossession proceedings or by any
suitable action or proceeding at law, without being liable to indictment,
prosecution or damages therefor, and may repossess and enjoy the Premises.  No re-entry or repossession of the Premises
by Landlord or its representatives under this Section 18.3 shall be
construed as an election to terminate this Lease unless a notice of such
election is given to Tenant or unless the termination thereof is decreed by a
court of competent jurisdiction.  The words
“re-enter”, “re-entry” and “re-entering” as used herein are not restricted to
their technical legal meanings.

b)              If any default specified in Sections
17.1 (a) through (g) occurs and continues beyond the period of
grace (if any) therefor, then if Landlord does not elect to terminate this
Lease Landlord may, from time to time and without terminating this Lease,
enforce all its rights and remedies under this Lease, including the right to
recover the Fixed Monthly Rent and Additional Rent as the same becomes payable
by Tenant hereunder.

i)                If Landlord consents thereto, Tenant may sublet the
Premises or any part thereof (which consent Landlord agrees will not be
unreasonably withheld), subject to Tenant’s compliance with the requirements of
Article 11 of this Lease.  So long
as Landlord is exercising this remedy it will not terminate Tenant’s right to
possession of the Premises, but it may engage in the acts permitted by
Section 1951.4(c) of the California Civil Code.

c)              If Tenant abandons the Premises in breach
of this Lease, Landlord shall have the right to relet the Premises or any part
thereof on such terms and conditions and at such rentals as Landlord in its
sole discretion may deem advisable, with the right to make alterations and
repairs in and to the Premises necessary to reletting.  If Landlord so elects to relet, then gross
rentals received by Landlord from the reletting shall be applied:

i)                first, to the payment of the reasonable
expenses incurred or paid by Landlord in re-entering and securing possession of
the Premises and in the reletting thereof (including, without limitation,
altering and preparing the Premises for new tenants and brokers’ commissions);

ii)            second, to the payment of the Fixed Monthly Rent
and Additional Rent payable by Tenant hereunder; and

iii)        third,
the remainder, if any, to be retained by Landlord and applied to the payment of
future Fixed Monthly Rent and Additional Rent as the same become due.

        Should the gross rentals received by
Landlord from the reletting be insufficient to pay in full the sums stated in
Section 18.3 (a) and (b) hereinabove, Tenant shall, upon demand, pay
the deficiency to Landlord.

 

25

 

Section
18.4.  Certain Waivers.  After Landlord has actually obtained possession of the
Premises pursuant to any lawful order of possession granted in a valid court of
law, Tenant thereafter waives and surrenders for Tenant, and for all claiming
under Tenant, all rights and privileges now or hereafter existing to redeem the
Premises (whether by order or judgment of any court or by any legal process or
writ); to assert Tenant’s continued right to occupancy of the Premises; or to
have a continuance of this Lease for the Term hereof.  Tenant also waives the provisions of any law
relating to notice and/or delay in levy of execution in case of an eviction or
dispossession for nonpayment of rent, and of any successor or other law of like
import.

Section 18.5.  Cumulative Remedies.  The remedies of Landlord provided for in this Lease
are cumulative and are not intended to be exclusive of any other remedies to
which Landlord may be lawfully entitled. 
The exercise by Landlord of any remedy to which it is entitled shall not
preclude or hinder the exercise of any other such remedy.

ARTICLE 19

INSURANCE

Section 19.1.  Landlord Obligations:

a)              Landlord shall secure and maintain during
the Term of this Lease the following insurance:

i)                Commercial General Liability and Umbrella Liability
insurance relating to Landlord’s operation of the Building, for personal and
bodily injury and death, and damage to other’s property.

ii)            All risk of standard fire insurance and extended
coverage including vandalism and malicious mischief and sprinkler leakage
endorsements relating to the Building, the parking facilities, the common area
improvements and any and all improvements installed in, on or upon the Premises
and affixed thereto (but excluding Tenant’s fixtures, furnishings, equipment,
personal property or other elements of Tenant’s Property), and provided that
the premium cost for coverage of the Improvements to the Premises in excess of
a total value equal to Thirty-Five Dollars ($35.00) per square foot of Usable
Area in the Premises shall be directly reimbursed from Tenant to Landlord,
pursuant to the provisions of Section 4.3 of this Lease;

iii)        Such other insurance (including, without limitation,
boiler and machinery, rental loss, earthquake and/or flood insurance) as
Landlord reasonably elects to obtain or any Lender requires.

b)              Insurance effected by Landlord under this
Section 19.1 will be:

i)                In amounts which Landlord from time to time determines
sufficient or which any Lender requires; and

ii)            Subject to such deductibles and exclusions as Landlord
deems appropriate.

c)              Notwithstanding
any contribution by Tenant to the cost of insurance premiums as provided
herein, Tenant acknowledges that Tenant has no right to receive any proceeds
from any insurance policies carried by Landlord.

Section 19.2.  Tenant Obligations.

a)              At least ten (10) days prior to the earlier of the
Commencement Date or Tenant’s anticipated early possession date of the Premises
and thereafter during the Term of this Lease, Tenant shall secure and maintain,
at its own expense throughout the Term of this Lease the following minimum
types and amounts of insurance, in form and in companies acceptable to
Landlord, insuring Tenant, its employees, agents and designees:

i)                Workers’ Compensation Insurance, the amount and scope
of which shall be the greater of (1) the insurance currently maintained by
Tenant, or (2) the amount and scope required by statute or other governing law.

ii)            Employer’s Liability Insurance in amounts equal to the
greater of (1) the insurance currently maintained by Tenant, or (2) the
following:  Bodily Injury by accident -
$1,000,000 each accident; Bodily Injury by disease - $1,000,000 policy limit;
and Bodily Injury by disease - $1,000,000 each employee.

iii)        Commercial General Liability and Umbrella Liability
Insurance on an occurrence basis, without claims-made features, with bodily
injury and property damage coverage in an amount equal to the greater of (1)
the insurance currently maintained by Tenant or (2) a combined single limit of
$1,000,000; and such insurance shall include the following coverages:  (A) Premises and Operations coverage with X,
C, and U exclusions for explosion, collapse, and underground property damage
deleted under both premises/operations and contractual liability coverage
parts, if applicable; (B) Owner and Contractor Protective coverage; (C)
Products and Completed Operations coverage; (D) Blanket Contractual coverage,
including both oral and written contracts; (E) Personal Injury coverage; (F)
Broad Form Comprehensive General Liability coverage (or its equivalent); and
(G) Broad Form Property Damage coverage, including completed operations.

iv)           All risk of standard fire insurance and extended
coverage with vandalism and malicious mischief and sprinkler leakage
endorsements, insuring fixtures, glass, equipment, merchandise, inventory and
other elements of Tenant’s Property in and all other contents of the
Premises.  Such insurance shall be in an
amount equal to 100% of the replacement value thereof (and Tenant shall
re-determine the same as frequently as necessary in order to comply herewith).  The proceeds of such insurance, so long as
this Lease remains in effect, shall be used to repair and/or replace the items
so insured.

 

26

 

v)               A commercially reasonable and customary policy of
business interruption insurance with respect to the operation of Tenant’s
business.

vi)           Any other forms of insurance Landlord’s lender may
require from time to time, in form and amounts and for insurance risks against
which a prudent tenant of comparable size in a comparable business would
protect itself, and as requested by other landlords of similar buildings in the
Beverly Hills area for similarly sized premises and uses.

b)              All insurance policies maintained to
provide the coverages required herein shall:

i)                Be issued by insurance companies authorized to do
business in the state in which the leased premises are located, and with
companies rated, at a minimum “A- VII” by A.M. Best, so long as such rating is
available on a commercially reasonable basis;

ii)            Be subject to the prior approval of Landlord (which
approval shall not be unreasonably withheld) as to form, substance and insurer;

iii)        Provide for a deductible only so long as Tenant shall
remain liable for payment of any such deductible in the event of any loss;

iv)           Contain appropriate cross-liability endorsements
denying Tenant’s insurers the right of subrogation against Landlord as to risks
covered by such insurance, without prejudice to any waiver of indemnity
provisions applicable to Tenant and any limitation of liability provisions
applicable to Landlord hereunder, of which provisions Tenant shall notify all
insurance carriers;

v)               Contain provisions for at least ten (10) days advance
written notice to Landlord of cancellation due to non-payment and of material
modification resulting in a violation of the requirements of this Section 19.2
or cancellation for any reason other than non-payment; and

vi)           Stipulate that coverages afforded under such policies
are primary insurance as respects Landlord and that any other insurance
maintained by Landlord are excess and non-contributing with the insurance
required hereunder.

c)              No endorsement limiting or excluding a
required coverage is permitted.

d)              Tenant shall deliver to Landlord upon
execution of this Lease, written evidence of insurance coverages required
herein.  Tenant shall deliver to Landlord
no less than fifteen (15) days prior to the expiration of any required
coverage, written evidence of the renewal or replacement of such coverage.  Landlord’s failure at any time to object to
Tenant’s failure to provide the specified insurance or written evidence thereof
(either as to the type or amount of such insurance) shall not be deemed as a
waiver of Tenant’s obligations under this Section.

e)              Landlord shall be named as an additional
insured on the Tenant’s policies of General Liability and Umbrella Liability
insurance and as a loss payee on the Tenant’s policies of All Risk insurance as
their interest may appear.  Tenant shall
deliver to Landlord the appropriate endorsements evidencing additional insured
and loss payee status.  Any claim for
loss under said insurance policies shall be payable notwithstanding any act,
omission, negligence, representation, misrepresentation or other conduct or
misconduct of Tenant which might otherwise cause cancellation, forfeiture or
reduction of such insurance.

f)                The insurance requirements in this
Section shall not in any way limit, in either scope or amount, the indemnity
obligations separately owed by Tenant to Landlord under the Lease.

g)             Nothing
herein shall in any manner limit the liability of Tenant for non-performance of
its obligations or for loss or damage for which Tenant is responsible.  The aforementioned minimum limits of policies
shall in no event limit the liability of Tenant hereunder.

h)             Tenant may, at its option, satisfy its
insurance obligations hereunder by policies of so-called blanket insurance
carried by Tenant provided that the same shall, in all respects, comply with
the provisions hereof.  In such event,
Tenant shall not be deemed to have complied with its obligations hereunder
until Tenant shall have obtained and delivered to Landlord a copy of each such
policy together with an appropriate endorsement or certificate applicable to
and evidencing full compliance with the specific requirements of the Lease
(irrespective of any claim which may be made with respect to any other property
or liability covered under such policy), and until the same shall have been
approved by Landlord in writing.

Section 19.3.  Compliance with Building Insurance
Requirements.  After Tenant takes occupancy of the
Premises, Tenant shall not violate or permit in, on or upon the Premises the
violation of any condition imposed by such standard fire insurance policies as
are normally issued for office buildings in the City or County in which the Building
is located.  Tenant shall not do, suffer
or permit anything to be done, or keep, suffer or permit anything to be kept,
in the Premises which would increase the risk ratings or premium calculation
factors on the Building or property therein (collectively an “Increased Risk”),
or which would result in insurance companies of good standing refusing to
insure the Building or any property appurtenant thereto in such amounts and
against such risks as Landlord may reasonably determine from time to time are appropriate.

        Notwithstanding the above, if additional insurance is
available to cover such Increased Risk, Tenant shall not be in default
hereunder if:

a)              Tenant authorizes Landlord in writing to
obtain such additional insurance; and

b)              prepays the annual cost thereof to
Landlord for such additional coverage, as well as the additional costs, if any,
of any increase in Landlord’s other insurance premiums resulting from the
existence or continuance of such Increased Risk.

 

27

 

Section 19.4.  Mutual Waiver of Subrogation.   Tenant and
Landlord agree that if a loss occurs due to any of the perils for which they
are required hereunder to provide insurance, each party shall look solely to
the insurance policies covering such loss or risk for recovery and each party
waives all claims of recovery against the other for damage or loss to its
property due to hazards covered by the insurance maintained by that party or
which would have been covered by the policies of insurance which should have
been obtained pursuant to this Lease or which should have been covered
thereby.  Landlord and Tenant hereby
grant to each other, on behalf of any insurer providing insurance to either of
them with respect to the demised premises, a waiver of any right of subrogation
that any such insurer of one party may acquire against the other by virtue of
payment of any loss under such insurance.

Section 19.5.  Failure to Secure.  If at any time during the Term, and after expiration
of ten (10) business days prior written demand therefore from Landlord, Tenant
fails to:

a)              provide Landlord with access to a
registered insurance broker of record that can verify Tenant’s compliance
with  the requirement contained in this
Article 19; or

b)              provide documentation reasonably
acceptable to Landlord that Tenant has secured and maintained the insurance
coverage required hereunder,

then such failure shall
be considered a material default under the Lease, and Landlord shall have the
option, but not the obligation, without further notice or demand to obtain such
insurance on behalf of or as the agent of Tenant and in Tenant’s name.

        Tenant shall pay Landlord’s billing for the premiums
associated with such insurance policy or policies within fifteen (15) days
after receipt of Landlord’s billing, as well as such other reasonable costs and
fees arising out of such default, together with interest on the entire amount
so advanced by Landlord, at the rate of ten percent (10%) per annum, computed
from the date of such advance.  Such
advances, if made by Landlord, shall be construed as and considered Additional
Rent under this Lease.

ARTICLE 20

MISCELLANEOUS

Section 20.1.  Entire Agreement.  This Lease, including the exhibits and guaranty of
lease, if any, annexed hereto, contains all of the agreements and
understandings relating to the leasing of the Premises and the obligations of
Landlord and Tenant in connection therewith and neither party and no agent or
representative thereof has made or is making, and neither party in executing
and delivering this Lease is relying upon, any warranties or representations,
except to the extent set forth in this Lease. 
All understandings and agreements heretofore had between Landlord and
Tenant relating to the leasing of the Premises are merged in this Lease, which
alone fully and completely expresses their agreement.  The Riders (if any) and Exhibits annexed to
this Lease and the Construction Agreement are hereby incorporated herein and
made a part hereof.   This Lease
includes, and incorporates herein, Exhibits A , B, C, D, F and H.

Section 20.2.  No Waiver or Modification.  The failure of Landlord or Tenant to insist in any
instance upon the strict keeping, observance or performance of any covenant or
agreement contained in this Lease or to exercise any election herein contained
shall not be construed as a waiver or relinquishment for the future of such
covenant or agreement, but the same shall continue and remain in full force and
effect.  No waiver or modification by
either Landlord or Tenant of any covenant or agreement contained in this Lease
shall be deemed to have been made unless the same is in writing executed by the
party whose rights are being waived or modified.  No surrender of possession of any part of the
Premises shall release Tenant from any of its obligations hereunder unless
accepted in writing by Landlord.  The
receipt and retention by Landlord, and the payment by Tenant, of Fixed Monthly
Rent or Additional Rent with knowledge of the breach of any covenant or
agreement contained in this Lease shall not be deemed a waiver of such breach
by either Landlord or Tenant.

Section 20.3.  Time of the Essence.  Time is of the essence of this Lease and of all
provisions hereof, except in respect to the delivery of possession of the Premises
at the Commencement Date.  Nothing set
forth herein negates any notice and cure periods set forth in this Lease.

Section 20.4.  Force Majeure.  For the purposes of this Lease, “Force Majeure” shall
be defined as any or all prevention, delays or stoppages and/or the inability
to obtain services, labor, materials or reasonable substitutes therefor, when
such prevention, delay, stoppage or failure is due to strikes, lockouts, labor
disputes, acts of God, governmental actions, civil commotion, fire or other
casualty, and/or other causes beyond the reasonable control of the party
obligated to perform, except that Force Majeure may not be raised as a defense
for Tenant’s non-performance of any obligations imposed by the Lease with
regard to the payment of Fixed Monthly Rent and/or Additional Rent.

        Notwithstanding anything to the contrary contained in this
Lease, Force Majeure shall excuse the performance of such party for a period
equal to any such prevention, delay, stoppage or inability.  Therefore, if this Lease specifies a time
period for performance of an obligation by either party, that time period shall
be extended by the period of any delay in such party’s performance caused by a
Force Majeure.

Section 20.5.  Broker. 
Landlord
and Tenant represent to one another that each has dealt with no broker in
connection with this Lease other than Douglas, Emmett and
Company and First Property Realty Corporation.  Landlord and Tenant shall hold one another
harmless from and against any and all liability, loss, damage, expense, claim,
action, demand, suit or obligation arising out of or relating to a breach by
the indemnifying party of such representation. 
Landlord agrees to pay all commissions due to the brokers listed above
created by Tenant’s execution of this Lease.

 

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Section 20.6.  Governing Law.  This Lease shall be governed by and construed in
accordance with the laws of the State of California.

Section 20.7.  Submission of Lease.  Whether or not rental deposits have been received by
Landlord from Tenant, and whether or not Landlord has delivered to Tenant an
unexecuted draft version of this Lease for Tenant’s review and/or signature, no
contractual or other rights shall exist between Landlord and Tenant with
respect to the Premises, nor shall this Lease be valid and/or in effect until
this Lease has been fully executed and a duplicate original of said
fully-executed Lease has been delivered to both Landlord and Tenant.

        The submission of this Lease to Tenant
shall be for examination purposes only, and does not and shall not constitute a
reservation of or an option for Tenant to lease, or otherwise create any
interest by Tenant in the Premises or any other offices or space situated in
the Building.  Execution of this Lease by
Tenant and its return to Landlord shall not be binding upon Landlord,
notwithstanding any time interval, until Landlord has in fact executed and
delivered a fully-executed duplicate original of this Lease to Tenant.  Landlord and Tenant agree hereby to authorize
transmission of all or portions of documents, including signature lines
thereon, by facsimile machines, and further authorize the other party to rely
conclusively upon such facsimile transmissions as if the original had been received.

Sections
20.8.  Captions.  The captions in this Lease are for convenience only
and shall not in any way limit or be deemed to construe or interpret the terms
and provisions hereof.

Section 20.9.  Singular and Plural, Etc.  The words “Landlord” and “Tenant”, as used herein,
shall include the plural as well as the singular.  Words used in the masculine gender include
the feminine and neuter.  If there be
more than one Landlord or Tenant the obligations hereunder imposed upon
Landlord and Tenant shall be joint and several.

Section 20.10.  Independent Covenants.  Except where the covenants contained in one Article of
this Lease are clearly affected by or contingent upon fulfillment by either
party of another Article or paragraph of this Lease, this Lease shall be
construed as though the covenants herein between Landlord and Tenant are
independent and not dependent and Tenant hereby expressly waives the benefit of
any statute to the contrary and agrees that if Landlord fails to perform its
obligations set forth herein, Tenant shall not be entitled to make any repairs
or perform any actions hereunder at Landlord’s expense or to any set-off of the
Rent or other amounts owing hereunder against Landlord; provided, however, that
the foregoing shall in no way impair the right of Tenant to commence a separate
action against Landlord for the violation by Landlord of the provisions hereof
so long as notice is first given to Landlord and any holder of a mortgage or
deed of trust covering the Building, Real Property or any portion thereof, of
whose address Tenant has theretofore been notified, and an opportunity is
granted to Landlord and such holder to correct such violations as provided
above.

Section 20.11.  Severability. 
If any
covenant or agreement of this Lease or the application thereof to any person or
circumstance shall be held to be invalid or unenforceable, then and in each
such event the remainder of this Lease or the application of such covenant or
agreement to any other person or any other circumstance shall not be thereby
affected, and each covenant and agreement hereof shall remain valid and
enforceable to the fullest extent permitted by law.

Section 20.12.  Warranty of Authority.  If Landlord or Tenant signs as a corporation, limited
liability company or a partnership, each of the persons executing this Lease on
behalf of Landlord or Tenant hereby covenant and warrant that each is a duly
authorized and existing entity, that each has and is qualified to do business
in California, that the persons signing on behalf of Landlord or Tenant have
full right and authority to enter into this Lease, and that each and every
person signing on behalf of either Landlord or Tenant are authorized to do so.

Section 20.13.  No Representations or Warranties. 
Neither Landlord nor Landlord’s agents or attorneys have made any
representations or warranties with respect to the Premises, the Building or
this Lease, except as expressly set forth herein, and no rights, easements or
licenses are or shall be acquired by Tenant by implication or otherwise.

Section 20.14.  No Joint Venture or Partnership.  This Lease shall not be deemed or construed to create
or establish any relationship of partnership or joint venture or similar
relationship or arrangement between Landlord and Tenant hereunder.

Section
20.15.  Tenant’s Obligations At Its Sole
Expense.  Notwithstanding the fact that certain references in
this Lease to acts required to be performed by Tenant hereunder, or to breaches
or defaults of this Lease by Tenant, omit to state that such acts shall be
performed at Tenant’s sole expense, or omit to state that such breaches or
defaults by Tenant are material, unless the context clearly implies to the
contrary each and every act to be performed or obligation to be fulfilled by
Tenant pursuant to this Lease shall be performed or fulfilled at Tenant’s sole
expense, and all breaches or defaults by Tenant hereunder shall be deemed
material if not cured with any applicable notice and/or cure period.

Section 20.16.  Attorneys’ Fees.  If litigation is instituted between Landlord and
Tenant, the cause for which arises out of or in relation to this Lease, the
prevailing party in such litigation shall be entitled to receive its costs (not
limited to court costs), expenses and reasonable attorneys’ fees from the
non-prevailing party as the same may be awarded by the court.

Section 20.17.  Waiver of Trial by Jury.  In the interest of saving time and expense,
Landlord and Tenant hereby consent to trial without a jury in any action,
proceeding or counterclaim brought by either of the parties hereto against the
other or their successor-in-interest in respect to any matters arising out of
or relating to this Lease.

 

29

 

Section 20.18.  No Merger. 
The
voluntary or other surrender of this Lease by Tenant, or a mutual cancellation
thereof, shall not work a merger, and shall, at the option of Landlord
terminate all or any existing subleases or subtenancies, or may, at the option
of Landlord, operate as an assignment to it of any or all such subleases or
subtenancies.

Section 20.19.  Prohibition Against Recording.  Except as provided in Section 14.3 of this Lease,
neither this Lease, nor any memorandum, affidavit or other writing with respect
thereto, shall be recorded by Tenant or by anyone acting through, under or on
behalf of Tenant, and the recording thereof in violation of this provision
shall make this Lease null and void at Landlord’s election.

Section 20.20.  Hazardous Waste.  Tenant specifically agrees that, except for such
limited quantities of office materials and supplies as are customarily used in
Tenant’s normal business operations, Tenant shall not engage or permit at any
time, any operations or activities upon, or any use or occupancy of the
Premises, or any portion thereof, for the purpose of or in any way involving
the handling, manufacturing, treatment, storage, use, transportation, spillage,
leakage, dumping, discharge or disposal (whether legal or illegal, accidental
or intentional) of any hazardous substances, materials or wastes, or any wastes
regulated under any local, state or federal law.

        Tenant shall, during the Term, remain in
full compliance with all applicable laws governing the handling, manufacturing,
treatment, storage, disposal, discharge, use, and transportation of hazardous
substances, materials or wastes, and any wastes regulated under any local,
state or federal law.  Tenant will remain
in full compliance with the terms and conditions of all permits and licenses
issued to it by any governmental authority on account of any or all of its
activities on the Premises.

        Landlord shall not cause or permit any
hazardous material to be brought, kept, or used in or about the Real Property
in violation of any Code, and shall indemnify, defend, and hold Tenant harmless
from and against any and all claims, demands, obligations, penalties, fines,
liabilities, losses and expenses (including, without limitation, reasonable
attorneys’ fees and costs) arising out of or resulting from the presence of any
hazardous material in, on or under the Building, except to the extent arising
from any hazardous material introduced into the Building by Tenant or Tenant’s
agents, employees, representatives or contractors.

Section 20.21.  Transportation Management.  Tenant shall, at Tenant’s sole expense, fully comply
with all present or future programs intended to manage parking, transportation
or traffic in and around the Building, when the same have been mandated by an
outside governmental authority having jurisdiction therefor and not when
required for the convenience of Landlord.

        In connection therewith, Tenant shall be responsible for the
transportation planning and management for all of Tenant’s employees while
located at the Premises, by working directly with Landlord, any governmental
transportation management organization or any other transportation-related
committees or entities reasonably designated by Landlord.  Such programs may include, without
limitation:

a)              restrictions on the number of peak-hour
vehicle trips generated by Tenant;

b)              requirements for increased vehicle
occupancy;

c)              implementing an in-house ride-sharing
program and/or appointing an employee transportation coordinator;

d)              working with employees of any Building
(or area-wide) ridesharing program manager;

e)              instituting employer-sponsored incentives
(financial or in-kind) to encourage employees to ridesharing; and

f)                utilizing flexible work shifts for
employees.

Section
20.22.  Signage.  Tenant may not install, inscribe, paint or affix any
awning, shade, sign, advertisement or notice on or to any part of the outside
or inside of the Building, or in any portion of the Premises visible to the
outside of the Building or common areas without Landlord’s prior written
consent, which shall not be unreasonably withheld, conditioned or delayed.

        All signage and/or directory listings
installed on behalf of Tenant, whether installed in, on or upon the public
corridors, doorways, Building directory and/or parking directory (if any), or
in any other location whatsoever visible outside of the Premises, shall be
installed by Landlord, at Tenant’s sole expense.

        Tenant’s identification on or in any
common area of the Building shall be limited to Tenant’s name and suite
designation, and in no event shall Tenant be entitled to the installation of
Tenant’s logo in any portion of the Building or common areas.  Furthermore, the size, style, and placement
of letters to be used in any of Tenant’s signage shall be determined by
Landlord, in Landlord’s sole discretion, in full conformance with
previously-established signage program for the Building.

        Except as specified hereinbelow, Tenant
shall only be entitled to one (1) listing on the Building directory, or any
parking directory ancillary thereto, which shall only show Tenant’s business
name and suite designation.  Tenant shall
also be entitled to a maximum of two (2) additional listings on said Building
and/or parking directory, which listings shall be limited solely to Tenant’s
officers, employees, subsidiaries, affiliates and/or sublessees, if
any.Landlord shall permit Tenant to designate the names connected with Tenant
on the directory board in the lobby of the Building.  Tenant may elect to have its names grouped in
one location on the directory board in any area designated by Landlord in
addition to having such names listed alphabetically, one (1) line per 1,000
rentable square feet lease, not to exceed 20 lines, subject to
availability.  Tenant shall also be
entitled to building standard suite identity signage at the entrance of the
Premises.

 

30

 

Section 20.23.  Disclosure. 
Landlord
and Tenant acknowledge that principals of Landlord have a financial interest in
Douglas Emmett Realty Advisors and P.L.E. Builders.

Section
20.24.  Confidentiality.  Landlord and Tenant agree that the covenants and
provisions of this Lease shall not be divulged to anyone not directly involved
in the management, administration, ownership, lending against, or subleasing of
the Premises, which permitted disclosure shall include, but not be limited to,
the board members, legal counsel and/or accountants of either Landlord or
Tenant.

Section
20.25.  Guaranty.  INTENTIONALLY DELETED

Section 20.26.  Asbestos Notification.  Tenant acknowledges that it
has received and reviewed Exhibit F attached hereto and incorporated herein.

ARTICLE 21

PARKING

Section 21.1.  Parking. 
Throughout
the Term, Tenant shall have the right, but not the obligation, to purchase and
assign to its employees up to the number of parking permits set forth in
Section 21.1 of the Basic Lease Information (“BLI”).  Notwithstanding the foregoing, Tenant shall
be obligated, during each month of the Term, to purchase no fewer than 1.5
parking permits per each 1,000 usable square feet then leased by Tenant under
this Lease.  In addition, if, during any calendar month of the Term, Tenant
elects to purchase less than the total number of parking permits to which
Tenant is entitled hereunder, Tenant shall thereafter lose the right to
purchase the number of parking permits which Tenant so elected not to
purchase.  Except as otherwise permitted
by Landlord’s management agent in its reasonable discretion, and based on the
availability thereof, in no event shall Tenant be entitled to purchase more than
the number of parking permits listed in the BLI.  If additional parking permits are available
on a month-to-month basis, which determination shall be in the sole discretion
of Landlord’s parking agent, Tenant shall be permitted to purchase one or more of
said permits on a first-come, first-served basis.

        The current rates for such permits are:  $165.00 per single unreserved permit; $220.00
per single reserved permit; $175.00 per single VIP permit, for Level P-1;
$140.00 per single unreserved permit for Level P-2; and $120.00 per single
unreserved permit in Levels 3 and 4, per month.

        Said parking permits shall allow Tenant
to park in the Building parking facility at the prevailing monthly parking rate
then in effect, which rate may be thereafter changed from time to time, in
Landlord’s sole discretion. 
Notwithstanding the foregoing, the rate payable by Tenant for each such
category of parking shall not increase by more than six percent (6%) per annum,
on a cumulative basis. Landlord shall retain sole discretion to designate the
location of each parking space, and whether it shall be assigned, or
unassigned, unless specifically agreed to otherwise in writing between Landlord
and Tenant.

        Guests and invitees of Tenant shall have
the right to use, in common with guests and invitees of other tenants of the
Building, the transient parking facilities of the Building at the then-posted
parking rates and charges, or at such other rate or rates and charges as may be
agreed upon from time to time between Landlord and Tenant in writing.  Such rate(s) or charges may be changed by
Landlord from time to time in Landlord’s sole discretion, and shall include,
without limitation, any and all fees or taxes relating to parking assessed to
Landlord for such parking facilities. 
Landlord shall make parking validations available to Tenant upon Tenant’s
payment of then-prevailing rate therefor.

        Tenant or Tenant’s agents, clients, contractors, directors,
employees, invitees, licensees, officers, partners or shareholders continued use
of said transient, as well as monthly parking, shall be contingent upon Tenant
and Tenant’s agents, clients, contractors, directors, employees, invitees,
licensees, officers, partners or shareholders continued compliance with the
reasonable and non-discriminatory rules and regulations adopted by Landlord,
which rules and regulations may change at any time or from time to time during
the Term hereof in Landlord’s sole discretion.

 

ARTICLE 22

CONCIERGE SERVICES

Section
22.1.  Provision of Services.  Landlord and Tenant acknowledge and understand that
Landlord may, from time to time, make it possible for Tenant to use or purchase
a variety of personal services which may include, but not be limited to,
personal shopping, assistance with choosing or obtaining travel reservations,
accommodations and/or tickets; tickets to performances, recommendations to
eating establishments; and the like (collectively “Concierge Services”).

        Tenant acknowledges that said Concierge
Services are provided by Landlord solely as an accommodation to and for the
convenience of Tenant and Tenant’s agents, contractors, directors, employees,
licensees, officers, partners or shareholders, and Landlord does not make any
representation, warranty or guarantee, express or implied, as to the quality,
value, accuracy, or completeness of said Concierge Services, or whether or not
Tenant shall be satisfied with the services and/or goods so provided and/or
recommended. Landlord hereby disclaims any control over the variety or
sufficiency of such services to be provided.

        Tenant acknowledges that Tenant is not
required to use such Concierge Services as a condition precedent to compliance
with the Lease; that Tenant’s use of such Concierge Services is strictly
voluntary, and at the sole discretion and control of Tenant.  Tenant shall independently make such
financial arrangements for payment of the services provided as Tenant deems
reasonable and of value.

Section 22.2. 
Indemnification and Release by Tenant. 
Notwithstanding
anything to the contrary contained in the Lease, any city, county, state or
federal ordinance, statute, regulation or law, Tenant’s

 

31

 

signature hereon indicates Tenant’s agreement that
solely as it relates to the purchase or use of Concierge Services by Tenant or
the agents, contractors, employees, officers, partners, and/or shareholders of
Tenant, Tenant, on behalf of itself and its agents, contractors, directors,
employees, licensees, officers, partners or shareholders, does and shall hereby
forever hold Landlord and Landlord’s affiliates, agents, assigns, contractors,
directors, employees, officers, parent organization, partners, representatives,
shareholders, and subsidiaries (collectively the “Indemnitees”) harmless from
and forever release, remise, discharge, acquit and relieve the Indemnitees from
and against any and all claims, demands, causes of action, obligations,
liabilities, agreements, damages, cost (including, without limitation,
reasonable attorneys’ fees), loss, or liability of any kind or nature, whether
asserted, known or unknown, suspected or unsuspected, in any way connected
with, which any one or more of the Indemnitees may sustain or incur by reason
of, related to, associated with, or arising out of the provision, use or the
rendering of any such Concierge Services or the delivery of such Concierge
Services to Tenant or Tenant’s agents, clients, contractors, directors,
employees, invitees, licensees, officers, partners or shareholders.

        Solely as it relates to the purchase or
use of Concierge Services by Tenant or the agents, contractors, employees,
officers, partners, and/or shareholders of Tenant, Tenant hereby expressly
waives all rights and benefits conferred by the provisions of Section 1542
of the Civil Code of the State of California, which reads as follows:

                        “A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the release
and which, if known by him, must have materially affected his settlement with
the debtor.”

In so doing, Tenant acknowledges that it will be unable to make any
claim against Landlord or any other Indemnitees for damages that may exist as
of the date or after the date of this release, but which Tenant does not know
to exist, and which, if known, would materially have affected Tenant’s decision
to execute this document, regardless of whether Tenant’s lack of knowledge, if
any, is the result of ignorance, oversight, error, negligence or other cause.

ARTICLE 23

OPTION TO EXTEND TERM

Section
23.1.  Option to Extend Term.  Provided Tenant is not in material default after the
expiration of notice and the opportunity to cure on the date Tenant gives
notice to Landlord of Tenant’s intent to exercise its rights pursuant to this
Article 23, Tenant is given the option to extend the term for an additional
five (5) year period (the “Extended Term”), commencing the next calendar day
after the expiration of the Term (the “Option”).  The Option shall apply only to the entirety
of the Premises, and Tenant shall have no right to exercise the Option as to
only a portion of the Premises.

        Tenant’s exercise of this Option is contingent upon Tenant
giving written notice to Landlord (the “Option Notice”) of Tenant’s election to
exercise its rights pursuant to this Option by Certified Mail, Return Receipt
Requested, or by reputable overnight courier, or by personal delivery, with
signed receipt, no more than twelve (12) and no less than eight (8) months
prior to the Termination Date.

Section
23.2.  Fixed Monthly Rent Payable.  The Rent payable by Tenant
during the Extended Term (“Option Rent”) shall be equal to the Fair Market
Value of the Premises as of the commencement date of the Extended Term. 
The term “Fair Market Value” shall be defined as the annual rent per
rentable square foot that Landlord has accepted in other current similar
transactions in the Building, or if there are not a sufficient number of
comparable current similar transactions in the Building, then what a willing,
comparable new, non-equity tenant would pay, and what a willing comparable
landlord in the Beverly Hills area would accept at arms length, in either case
giving appropriate consideration to brokerage commissions, if any, which would
be payable by Landlord in similar transactions, all economic benefits
achievable by Landlord, such as Fixed Monthly Rent (including periodic
adjustments), Additional Rent in the form of Operating Expense reimbursements,
and any and all  monetary or non-monetary
concessions (including [x] a then-current base year or expense stop number, as
the case may be, [y] any tenant improvement allowance, and [z] any rent
abatement, if any) that may be given in the market place to a comparable new
tenant, as is chargeable for a similar use of comparable space for a comparable
term in a Comparable Building.

        .

        Landlord and Tenant shall have thirty (30) days (the “Negotiation
Period”) after Landlord receives the Option Notice in which to agree on the
Fair Market Value.  If Landlord and
Tenant agree on the Fair Market Value during the Negotiation Period, they shall
immediately execute an amendment to the Lease extending the Term and stating
the Fair Market Value.

Section
23.3.  Appraisers to Set Fixed Rent.  If Landlord and Tenant are unable to agree on the Fair
Market Value during the Negotiation Period, then:

a)            Landlord
and Tenant, each at its own cost, shall select an independent real estate
appraiser with at least ten (10) years full-time commercial appraisal
experience in the area in which the Premises are located, and shall provide
written notice to the other party of the identity and address of the appraiser
so appointed.  Landlord and Tenant shall
make such selection within ten (10) days after the expiration of the
Negotiation Period.

b)              Within thirty (30) days of having been appointed to do
so (the “Appraisal Period”), the two (2) appraisers so appointed shall meet and
set the Fair Market Value for the Extended Term.  In setting the Fair Market Value, the
appraisers shall solely consider the use of the Premises for general office
purposes.

 

32

 

Section
23.4.  Failure by Appraisers to Set Fair
Market Value.  If the two (2) appointed appraisers are
unable to agree on the Fair Market Value within ten (10) days after expiration
of the Appraisal Period, they shall elect a third appraiser of like or better
qualifications, and who has not previously acted in any capacity for either
Landlord or Tenant.  Landlord and Tenant
shall each bear one half of the costs of the third appraiser’s fee.

        Within thirty (30) days after the selection of the third
appraiser (the “Second Appraisal Period”) the Fair Market Value for the
Extended Term shall be set by a majority of the appraisers now appointed.

        If a majority of the appraisers are unable to set the Fair
Market Value within the Second Appraisal Period, the three (3) appraisers shall
individually render separate appraisals of the Fair Market Value, and their
three (3) appraisals shall be added together, then divided by three (3);
resulting in an average of the appraisals, which shall be the Fair Market Value
during the Extended Term.

        However, if the low appraisal or high appraisal varies by
more than ten percent (10%) from the middle appraisal, then one (1) or both
shall be disregarded.  If only one (1)
appraisal is disregarded, the remaining two (2) appraisals shall be added
together and their total divided by two (2), and the resulting average shall be
the Fair Market Value.  If both the low
and high appraisal are disregarded, the middle appraisal shall be the Fair
Market Value for the Premises during the Extended Term.  The appraisers shall immediately notify
Landlord and Tenant of the Fair Market Value so established, and Landlord and
Tenant shall immediately execute an amendment to the Lease, extending the Term
and revising the Fixed Rent payable pursuant to the Fair Market Value so
established.

        Landlord and Tenant shall execute such amendment establishing
the Fair Market Value within thirty (30) days following the determination of
the Fair Market Value and if Tenant is the party failing to so execute, this
Option shall become null and void and of no further force or effect.

Section 23.5. 
No Right of Reinstatement or Further Extension.  Once Tenant has either failed to exercise its rights
to extend the term pursuant to this Article 23 or failed to execute the
amendment called for hereunder, it shall have no right of reinstatement of its
Option to Extend the Term, nor shall Tenant have any right to a further or second
extension of the Term beyond the period stated in Section 23.1
hereinabove.

Section
23.6.  No Assignment of Option.  This Option may be exercised only by the original
Tenant signing this Lease or an Affiliate (as such term is defined in Section
11.2.1 above), and shall be null, void and of no further force or effect as of
the date that Tenant assigns this Lease to an unaffiliated entity and/or
subleases more than forty-nine percent (49%) of the total Rentable Area of the
Premises.

ARTICLE 24

RIGHT OF FIRST OFFER

Section
24.1.  Right of First Offer. 
Landlord hereby grants to the originally named Tenant herein (and any
Affiliate, as such term is defined in Section 11.2.1 above) a one-time right of
first offer with respect to the first tenant space contiguous to the Premises
becoming available on the second (2nd) floor of the Building (the “First
Offer Space”).  Notwithstanding the
foregoing, such first offer right of Tenant shall commence only following the
expiration or earlier termination of the existing lease (including renewals) of
the First Offer Space and only after the First Offer Space is actually vacated
and becomes available for lease, and such right of first offer shall be
subordinate to the holders of all existing rights of expansion, rights of first
refusal or rights of first offer (collectively, the “Superior Right Holders”)
with respect to the First Offer Space. 
Tenant’s right of first offer shall be on the terms and conditions set
forth in this Article 24.

Section
24.2.  Procedure for Offer. 
So long as Tenant theretofore notified Landlord in writing that Tenant
desires to lease the First Offer Space, Landlord shall notify Tenant (the “First
Offer Notice”) when the First Offer Space becomes available for lease to third
parties, provided that no Superior Right Holder wishes to lease the First Offer
Space.  The First Offer Notice shall
specify the terms and conditions upon which Landlord is willing to lease the
First Offer Space to Tenant.

Section
24.3.  Procedure for Acceptance. 
If Tenant wishes to exercise Tenant’s right of first offer with respect
to the First Offer Space, then within ten (10) business days of delivery of the
First Offer Notice to Tenant, Tenant shall deliver notice to Landlord of Tenant’s
intention to exercise its right of first offer with respect to the First Offer
Space.  If Tenant does not so notify
Landlord within such ten (10) business day period, then Landlord shall be free
to lease the First Offer Space to anyone to whom Landlord desires on terms not
materially different than the terms contained in the Offer Notice.  Notwithstanding anything to the contrary
contained herein, Tenant must elect to exercise its right of first offer, if at
all, with respect to all of the First Offer Space, and Tenant may not elect to
lease only a portion thereof.

Section 24.4.  Amendment to Lease. 
If Tenant timely exercises Tenant’s right to lease the First Offer Space
as set forth herein, Landlord and Tenant shall within fifteen (15) days
thereafter execute an amendment to this Lease for such First Offer Space upon
the terms and conditions as set forth in the First Offer Notice and this
Article 24.

 

[INTENTIONALLY LEFT BLANK]

 

33

 

Section 24.5.  Termination of Right of First Offer. 
The rights contained in this Article 24 may only be exercised by Tenant
or an Affiliate and only if Tenant or an Affiliate occupies the entire
Premises.  The right of first offer
granted herein shall terminate as to the First Offer Space upon the failure by
Tenant to exercise its right of first offer with respect to the First Offer
Space.  Tenant shall not have the right
to lease the First Offer Space, as provided in this Article 24, if, as of the
date of the attempted exercise of any right of first offer by Tenant, or as of
the scheduled date of delivery of the First Offer Space to Tenant, Tenant is in
material default under this Lease beyond any applicable notice and/or cure
period.

IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease,
effective the day and year first above written.

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  BRIGHTON ENTERPRISES, LLC,

  a California limited liability company

  	
   

  	
  MERCANTILE NATIONAL BANK, N.A.,

  a California “C” corporation_________

  
	
   

  	
   

  	
   

  
	
  By:

  	
  DOUGLAS, EMMETT
  AND COMPANY,

  	
   

  	
   

  	
   

  
	
   

  	
  a California corporation,

  	
   

  	
   

  	
   

  
	
   

  	
  its agent

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Michael J.
  Means, Vice President

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dated:

  	
   

  
						

 

34

 

EXHIBIT A — PREMISES PLAN

 

Suite 250
at 9601 Wilshire Boulevard, Beverly Hills, California  90210

Rentable
Area:  approximately 2,559 square feet

Usable
Area:  approximately 2,084 square feet

(Measured
pursuant to the provisions of Section 1.4 of the Lease)

 

 

 

 

 

EXHIBIT
B

TENANT WORK LETTER

 

This
Tenant Work Letter shall set forth the terms and conditions relating to the
construction of the tenant improvements in the Premises.  This Tenant Work Letter is essentially
organized chronologically and addresses the issues of the construction of the
Premises, in sequence, as such issues will arise during the actual construction
of the Premises.  All references in this
Tenant Work Letter to Articles or Sections of “this Lease” shall mean the
relevant portion of Articles 1 through 24 of the Office Lease to
which this Tenant Work Letter is attached as Exhibit B and of which this
Tenant Work Letter forms a part, and all references in this Tenant Work Letter
to Sections of “this Tenant Work Letter” shall mean the relevant portion of Sections
1 through 6 of this Tenant Work Letter.

SECTION 1

CONSTRUCTION
DRAWINGS FOR THE PREMISES

Landlord
shall cause the improvements in the Premises (the “Improvements”) to be
constructed by PLE Builders, Inc. (“PLE”) pursuant to those certain drawings
T-1, A-1, A-2, D-1, each dated December 30, 2003, and that certain Bulletin #1,
dated February 17, 2004, prepared by WWCOT (collectively, the “Approved Working
Drawings”) in strict compliance with the Approved Working Drawings, all Codes,
and with first-class workmanship and the materials described in the Approved
Working Drawings.  Tenant shall make no
changes or modifications to the Approved Working Drawings without the prior
written consent of Landlord, which consent may be withheld in Landlord’s sole
discretion if such change or modification would directly or indirectly delay
the substantial completion of, or increase the cost of designing or
constructing, the Improvements.

SECTION 2

 TENANT’S CONTRIBUTION; CHANGE ORDERS

Concurrently
with Tenant’s execution and delivery of this Lease, Tenant shall pay to Landlord
the sum of $2,865.00 as Tenant’s contribution toward the cost of the
Improvements (“Tenant’s Contribution”). 
In the event that after Tenant’s execution of this Lease, any revisions,
changes, or substitutions shall be made to the Approved Working Drawings or the
Improvements, any additional costs which arise in connection with such
revisions, changes or substitutions shall be paid by Tenant to Landlord
immediately upon Landlord’s request.

SECTION 3

CONTRACTOR’S WARRANTIES AND GUARANTIES

Landlord
hereby assigns to Tenant all warranties and guaranties by the contractor who
constructs the Tenant Improvements (the “Contractor”) relating to the
Improvements, and Tenant hereby waives all claims against Landlord relating to,
or arising out of the construction of, the Improvements; provided, however,
that Landlord shall assist Tenant in the enforcement of all warranties and
guaranties, based upon Landlord’s relationship with the Contractor.

SECTION 4

TENANT’S COVENANTS

INTENTIONALLY OMITTED.

SECTION
5

COMPLETION OF THE
IMPROVEMENTS;

COMMENCEMENT DATE

Except
as provided in this Section 5, the Commencement Date shall occur as set
forth in Section 2.1 of the Lease.  If
there shall be a delay or there are delays in the substantial completion of the
Improvements or in the occurrence of any of the other conditions precedent to
the Commencement Date, as set forth in of the Lease, then, to the extent the
delay is the result of:

5.2.1  Tenant’s failure to timely approve any matter
requiring Tenant’s approval;

5.2.2  A breach by Tenant of the terms of this
Tenant Work Letter or the Lease;

5.2.3  Tenant’s request for changes in the Approved
Working Drawings;

 

5.2.4  Tenant’s requirement for materials,
components, finishes or improvements which are not available in a commercially
reasonable time given the anticipated date of substantial completion of the
Improvements, as set forth in the Lease, or which are different from, or not
included in, Landlord’s standard improvement package items for the Building;

5.2.5  Changes to the base, shell and core work of
the Building required by the Approved Working Drawings; or

5.2.6  Any other acts or omissions of Tenant, or its
agents, or employees;

then,
notwithstanding anything to the contrary set forth in the Lease or this Tenant
Work Letter and regardless of the actual date of the substantial completion of
the Improvements, the date of substantial completion of the Improvements shall
be deemed to be the date the substantial completion of the Improvements would
have occurred if the act or omission of Tenant causing the delay or delays, as
set forth above, had not occurred.

 

 

SECTION 6

MISCELLANEOUS

6.1           Tenant’s
Entry Into the Premises Prior to Substantial Completion.  Provided that Tenant and its agents do not
interfere with Contractor’s work in the Building and the Premises, Contractor
shall allow Tenant access to the Premises prior to the substantial completion
of the Improvements for the purpose of Tenant installing furniture, equipment
or fixtures (including Tenant’s data and telephone equipment) in the
Premises.  Tenant shall hold Landlord
harmless from and indemnify, protect and defend Landlord against any loss or
damage to the Building or Premises and against injury to any persons caused by Tenant’s
actions pursuant to this Section 6.1, except and to the extent caused by the
negligence or willful misconduct of Landlord, its agents, employees or
contractors (including Contractor).

6.2           Freight Elevators.  Landlord shall, consistent with its
obligations to other tenants of the Building, make the freight elevator
reasonably available to Tenant in connection with initial decorating,
furnishing and moving into the Premises.

6.3           Tenant’s Representative.  Tenant has designated _Chuck Avis as its sole representative with respect to
the matters set forth in this Tenant Work Letter, who, until further notice to
Landlord, shall have full authority and responsibility to act on behalf of the
Tenant as required in this Tenant Work Letter.

6.4           Landlord’s Representative.  Landlord has designated Mary Lowe as its sole representative with
respect to the matters set forth in this Tenant Work Letter, who, until further
notice to Tenant, shall have full authority and responsibility to act on behalf
of the Landlord as required in this Tenant Work Letter.

6.5           Tenant’s Agents.  All subcontractors, laborers, materialmen,
and suppliers retained directly by Tenant shall all be union labor in
compliance with the then existing master labor agreements.

6.6           Time of the Essence in This Tenant
Work Letter.  Unless otherwise
indicated, all references herein to a “number of days” shall mean and refer to
calendar days.  In all instances where
Tenant is required to approve or deliver an item, if no written notice of
approval is given or the item is not delivered within the stated time period,
at Landlord’s sole option, at the end of such period the item shall
automatically be deemed approved or delivered by Tenant and the next succeeding
time period shall commence.

6.7           Tenant’s Lease
Default.  Notwithstanding any
provision to the contrary contained in this Lease, if an event of default that
is not cured within the applicable notice and/or cure period as described in
the Lease, or a default by Tenant under this Tenant Work Letter that is not
cured with the applicable notice and/or cure period (and a default under this
Tenant Work Letter shall be entitled to the notice and cure period described in
Section 17.1 (d) of the Lease), has occurred at any time on or before the
substantial completion of the Improvements, then (i) in addition to all
other rights and remedies granted to Landlord pursuant to the Lease, Landlord
shall have the right to cause Contractor to cease the construction of the
Premises (in which case, Tenant shall be responsible for any delay in the
substantial completion of the Improvements caused by such work stoppage as set
forth in Section 5 of this Tenant Work Letter), and (ii) all other
obligations of Landlord under the terms of this Tenant Work Letter shall be
forgiven until such time as such default is cured pursuant to the terms of the
Lease.

6.8           Move-In.  Landlord shall thoroughly clean the Premises
prior to and subsequent to Tenant’s move-in to the Premises.

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  BRIGHTON ENTERPRISES, LLC,

  a California limited liability company

  	
   

  	
  MERCANTILE NATIONAL BANK, N.A.,

  a California “C” corporation_________

  
	
   

  	
   

  	
   

  
	
  By:

  	
  DOUGLAS, EMMETT
  AND COMPANY,

  	
   

  	
   

  	
   

  
	
   

  	
  a California
  corporation,

  	
   

  	
   

  	
   

  
	
   

  	
  its agent

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Michael J.
  Means, Vice President

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dated:

  	
   

  
						

 

B-2

 

EXHIBIT B-1

CONSTRUCTION BY TENANT DURING TERM

1.              If
Tenant wishes to make a Tenant Change, as specified in Section 12.12 of
the Lease (other than a Cosmetic Alteration, as defined in Section 12.12 of the
Lease), such Tenant Change shall be completed pursuant to the provisions of
Section 12.12. of the Lease and this Exhibit B-1.  Tenant shall bear all costs of said Tenant
Change, which shall be paid directly to Tenant’s general contractor (“Contractor”).

2.     Contractor shall complete construction to
the Premises pursuant to the final Plans and Specifications approved in writing
by Landlord and Tenant (the “Tenant Change”), in compliance with all applicable
codes and regulations. Tenant’s selections of finishes and materials shall be
indicated on the Plans and Specifications, and shall be equal to or better than
the minimum Building standards and specifications.  All work not shown on the final Plans and
Specifications, but which is to be included in the Tenant Change, including but
not limited to, telephone service installation, furnishings or cabinetry, shall
be installed pursuant to Landlord’s reasonable directives.

3.     Prior to commencing any work:

a)              Tenant’s proposed Contractor and the Contractor’s proposed
subcontractors and suppliers shall be approved in writing by Landlord, which
approval shall not be unreasonably withheld, conditioned or delayed.   As a condition of such approval, so long as
the same are reasonably cost competitive, then Contractor shall use Landlord’s
Heating, Venting, and Air-conditioning, plumbing, and electrical subcontractors
for such work.

b)              During completion of any Tenant Change, neither Tenant
or Contractor shall permit any sub-contractors, workmen, laborers, material or
equipment to come into or upon the Building if the use thereof, in Landlord’s
reasonable judgment, would violate Landlord’s agreement with any union
providing work, labor or services in or about the Building.

c)              Contractor shall submit to Landlord and Tenant a
written bid for completion of the Tenant Change.  Said bid shall include Contractor’s overhead,
profit, and fees, and, if the proposed Tenant Change is for cosmetic work in
excess of $50,000 in aggregate value per occurrence or for structural work of
any kind, Contractor shall:

i                    pre-pay to Landlord’s managing agent
$250.00 as partial payment of said managing agent’s construction administration
fee, as specified hereinbelow, and

ii                upon completion of said Tenant Change, pay an
administration fee for supervision of said Tenant Change equal to fifty dollars
($50.00) per hour, to a maximum of three percent (3%) of the total cost of the
Tenant Change, to defray said agent’s costs for supervision of the
construction;

4.     Tenant or Contractor shall submit all
Plans and Specifications to Landlord, and no work on the Premises shall be
commenced before Tenant has received Landlord’s final written approval thereof,
which shall not be unreasonably withheld, delayed or conditioned;

5.     Contractor shall complete all architectural
and planning review and obtain all permits, including signage, required by the
city, state or county in which the Premises are located; and

6.     Contractor shall submit to Landlord
verification of public liability and worker’s compensation insurance adequate
to fully protect Landlord and Tenant from and against any and all liability for
death or injury to persons or damage to property caused in or about or by
reason of the construction of any work done by Contractor or Contractor’s
subcontractors or suppliers.

7.     INTENTIONALLY DELETED

8.     Contractor and Contractor’s subcontractors and
suppliers shall be subject to Landlord’s reasonable administrative control and
supervision.  Landlord shall provide
Contractor and Contractor’s subcontractors and suppliers with reasonable access
to the Premises.

9.     During construction of the Tenant Change, Contractor
shall adhere to the procedures contained hereinbelow, which represent Landlord’s
minimum requirements for completion of the Tenant Change.

10.  Upon completion of the Tenant Change, Tenant shall
provide Landlord with such evidence as Landlord may reasonably request that the
Contractor has been paid in full, and Contractor shall provide Landlord with
lien releases as requested by Landlord, confirmation that no liens have been
filed against the Premises or the Building. 
If any liens arise against the Premises or the Building as a result of
the Tenant Change, Tenant shall immediately, at Tenant’s sole expense, remove
such liens and provide Landlord evidence that the title to the Building and
Premises have been cleared of such liens.

11.  Whether or not Tenant or Contractor timely complete
the Tenant Change, unless the Lease is otherwise terminated pursuant to the
provisions contained therein, Tenant acknowledges and agrees that Tenant’s
obligations under the Lease to pay Fixed Monthly Rent and/or Additional Rent
shall continue unabated.

CONSTRUCTION POLICY

        The following policies outlined are the
construction procedures for the Building. 
As a material consideration to Landlord for granting Landlord’s
permission to Tenant to complete the construction contemplated hereunder,
Tenant agrees to be bound by and follow the provisions contained hereinbelow:

1.     Administration

a)              Contractors to notify the management office for the
Building prior to starting any work.  All
jobs must be scheduled by the general contractor or sub-contractor when no
general contractor is being used.

 

 

b)              The general contractor is to provide the Building
Manager with a copy of the projected work schedule for the suite, prior to the
start of construction.

c)              Contractor will make sure that at least one set of
drawings will have the Building Manager’s initials approving the plans and a
copy delivered to the Building Office.

d)              As-built construction, including mechanical drawings
and air balancing reports will be submitted at the end of each project.

e)              The HVAC contractor is to provide the following items
to the Building Manager upon being awarded the contract from the general
contractor:

i)                A plan showing the new ducting layout,
all supply and return air grille locations and all thermostat locations.  The plan sheet should also include the
location of any fire dampers.

ii)            An Air Balance Report reflecting the
supply air capacity throughout the suite, which is to be given to the Chief
Building Engineer at the finish of the HVAC installation.

f)                All paint bids should reflect a one-time touch-up
paint on all suites.  This is to be
completed approximately five (5) days after move-in date.

g)             The general contractor must provide for the removal of
all trash and debris arising during the course of construction.  At no time are the building’s trash
compactors and/or dumpsters to be used by the general contractor’s clean-up
crews for the disposal of any trash or debris accumulated during
construction.  The Building Office
assumes no responsibility for bins. 
Contractor is to monitor and resolve any problems with bin usage without
involving the Building Office.  Bins are
to be emptied on a regular basis and never allowed to overflow.  Trash is to be placed in the bin.

 

h)             Any problems with construction per the plan, will be
brought to the attention of and documented to the Building Manager.  Any changes that need additional work not
described in the bid will be approved in writing by the Building Manager.  All contractors doing work on this project
should first verify the scope of work (as stated on the plans) before
submitting bids; not after the job has started.

2.              Building Facilities Coordination

a)              All deliveries of material will be made through the
parking lot entrance.

b)              Construction materials and equipment will not be
stored in any area without prior approval of the Building Manager.

c)              Only the freight elevator is to be used by
construction personnel and equipment. 
Under no circumstances are construction personnel with materials and/or
tools to use the “passenger” elevators.

3.              Housekeeping

a)              Suite entrance doors are to remain closed at all
times, except when hauling or delivering construction materials.

b)              All construction done on the property that requires
the use of lobbies or common area corridors will have carpet or other floor
protection.  The following are the only
prescribed methods allowed:

i)                Mylar:  Extra
heavy-duty to be taped from the freight elevator to the suite under
construction.

ii)            Masonite:  1/4
inch Panel, Taped to floor and adjoining areas. 
All corners, edges and joints to have adequate anchoring to provide safe
and “trip-free” transitions.  Materials
to be extra heavy-duty and installed from freight elevator to the suite under
construction.

c)              Restroom wash basins will not be used to fill buckets,
make pastes, wash brushes, etc.  If
facilities are required, arrangements for utility closets will be made with the
Building Office.

d)              Food and related lunch debris are not to be left in
the suite under construction.

e)              All areas the general contractor or their
sub-contractors work in must be kept clean. 
All suites the general contractor works in will have construction debris
removed prior to completion inspection. 
This includes dusting of all window sills, light diffusers, cleaning of
cabinets and sinks.  All common areas are
to be kept clean of building materials at all times so as to allow tenants
access to their suites or the building.

4.              Construction Requirements

a)              All Life and Safety and applicable Building Codes will
be strictly enforced (i.e. tempered glass, fire dampers, exit signs, smoke
detectors, alarms, etc.).  Prior
coordination with the Building Manager is required.

b)              Electric panel schedules must be brought up to date
identifying all new circuits added.

c)              All electrical outlets and lighting circuits are to be
properly identified.  Outlets will be
labeled on back side of each cover plate.

d)              All electrical and phone closets being used must have
panels replaced and doors shut at the end of each day’s work.  Any electrical closet that is opened with the
panel exposed must have a work person present.

 

B1-2

 

e)              All electricians, telephone personnel, etc. will, upon
completion of their respective projects, pick up and discard their trash
leaving the telephone and electrical rooms clean.  If this is not complied with, a clean-up will
be conducted by the building janitors and the general contractor will be
back-charged for this service.

f)                Welding or burning with an open flame will not be done
without prior approval of the Building Manager. 
Fire extinguishers must be on hand at all times.

g)             All “anchoring” of walls or supports to the concrete
are not to be done during normal working hours (7:30 AM - 6:00 PM, Monday
through Friday).  This work must be
scheduled before or after these hours during the week or on the weekend.

h)             All core drilling is not to be done during normal
working hours (7:30 AM - 6:00 PM, Monday through Friday).  This work must be scheduled before or after
these hours during the week or on the weekend.

i)                All HVAC work must be inspected by the Building
Engineer.  The following procedures will
be followed by the general contractor:

i)                A preliminary inspection of the HVAC work in progress
will be scheduled through the Building Office prior to the reinstallation of
the ceiling grid.

ii)            A second inspection of the HVAC operation will also be
scheduled through the Building Office and will take place with the attendance
of the HVAC contractor’s Air Balance Engineer. 
This inspection will take place when the suite in question is ready to
be air-balanced.

iii)        The Building Engineer will inspect the construction on
a periodic basis as well.

j)                All existing thermostats, ceiling tiles, lighting
fixtures and air conditioning grilles shall be saved and turned over to the
Building Engineer.

        Good
housekeeping rules and regulations will be strictly enforced.  The building office and engineering
department will do everything possible to make your job easier.  However, contractors who do not observe the
construction policy will not be allowed to perform within this building.  The cost of repairing any damages that are
caused by Tenant or Tenant’s contractor during the course of construction shall
be deducted from Tenant’s Allowance or Tenant’s Security Deposit, as
appropriate.

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  BRIGHTON ENTERPRISES, LLC,

  a California limited liability company

  	
   

  	
  MERCANTILE NATIONAL BANK, N.A.,

  a California “C” corporation_________

  
	
   

  	
   

  	
   

  
	
  By:

  	
  DOUGLAS, EMMETT
  AND COMPANY,

  	
   

  	
   

  	
   

  
	
   

  	
  a California
  corporation,

  	
   

  	
   

  	
   

  
	
   

  	
  its agent

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Michael J.
  Means, Vice President

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dated:

  	
   

  
						

 

B1-3

 

EXHIBIT C

RULES AND REGULATIONS

BUILDING RULES AND
REGULATIONS

1.     Access.  Tenant and/or Tenant’s agents, clients, contractors,
directors, employees, invitees, licensees, officers, partners or shareholders
shall only use the sidewalks, entrances, lobby(ies), garage(s), elevators,
stairways, and public corridors as a means of ingress and egress, and shall
take such actions as may reasonably be necessary to ensure that the same remain
unobstructed at all times.

        The entrance
and exit doors to the Premises are to be kept closed at all times except as
required for orderly passage to and from the Premises.  Except on balconies available for the joint
or exclusive use of Tenant as otherwise specified hereinabove, Tenant shall not
permit its agents, clients, contractors, directors, employees, invitees,
licensees, officers, partners or shareholders to loiter in any part of the
Building or obstruct any means of ingress or egress.  Tenant shall not cover any doors, and shall
not cover any window, other than with vertical or mini-blinds pre-approved in
writing by Landlord.  Landlord
specifically disapproves the installation of any film or foil covering
whatsoever on the windows of the Premises.

        Neither Tenant, nor its agents, clients,
contractors, directors, employees, invitees, licensees, officers, partners or
shareholders shall go up on the roof or onto any balcony serving the Building,
except upon such roof, portion thereof, or balcony as may be contiguous to the
Premises and is designated in writing by Landlord as a roof-deck, roof-garden
area, or exclusive use balcony area.

2.     Restroom Facilities.  The toilet rooms, toilets, urinals, wash bowls and
other apparatus (the “Restroom Facilities”), whether contained in the common
areas of the Building and/or the interior of the Premises, shall not be used
for any purpose other than that for which they were designed.  Tenant shall not permit its agents, clients,
contractors, directors, employees, invitees, licensees, officers, partners or
shareholders to throw foreign substances of any kind whatsoever or papers not
specifically designated for use in the Restroom facilities down any toilet, or
to dispose of the same in any way not in keeping with the instructions provided
to Tenant by the management of the Building regarding same, and Tenant hereby
specifically agrees to reimburse Landlord directly for the expense of any
breakage, stoppage or damage resulting from Tenant’s violation of this rule.

3.     Heavy Equipment.  Landlord reserves the right, in Landlord’s sole
discretion, to decline, limit or designate the location for installation of any
safes, other unusually heavy, or unusually large objects to be used or brought
into the Premises the Building.  In each
case where Tenant requests installation of one or more such unusually heavy
item(s), which request shall be conclusively evidenced by Tenant’s effort to
bring such item(s) into the Building or Premises, Tenant shall reimburse
Landlord for the costs of any engineering or structural analysis required by
Landlord in connection therewith.  In all
cases, each such heavy object shall be placed on a metal stand or metal plates
or such other mounting detail of such size as shall be prescribed by Landlord.

        Tenant
hereby indemnifies Landlord against any damage or injury done to persons,
places, things or the Building or its common areas when such damage or injury
primarily arises out of Tenant’s installation or use of one or more unusually
heavy objects.  Tenant further agrees to
reimburse Landlord for the costs of repair of any damage done to the Building
or property therein by putting in, taking out, or maintaining such safes or
other unusually heavy objects.

INTENTIONALLY DELETED

4.     Flammable Materials.  Except for such limited quantities of office materials
and supplies as are customarily utilized in Tenant’s normal business
operations, Tenant shall not use or keep in the Premises or the Building any
kerosene, gasoline, flammable or combustible fluid or material, other than
those limited quantities of normal business operating materials as may
reasonably be necessary for the operation or maintenance of office
equipment.  Nor shall Tenant keep or
bring into the Premises or the Building any other toxic or hazardous material
specifically disallowed pursuant to California state law.

5.     Cooking / Odors / Nuisances.  Tenant shall not permit its agents, clients,
contractors, directors, employees, invitees, licensees, officers, partners or
shareholders to engage in the preparation and/or serving of foods unless the
Premises includes a self-contained kitchen area.  Notwithstanding the foregoing, Tenant may use
a coffeemaker, toaster oven, microwave oven and refrigerator in the Premises,
regardless of whether or not the Premises contain a self-contained kitchen.  Tenant shall not permit the odors arising
from such cooking, or any other improper noises, vibrations, or odors to
emanate from the Premises.  Tenant shall
not obtain for use in the Premises, ice, drinking water, food, beverage, towel
or other similar services except at such reasonable hours and under such
reasonable regulations as may be specified by Landlord.

        Tenant
hereby agrees to instruct all persons entering the Premises to comply with the
requirements of the Building, by advising all persons entering the Premises
that smoking of any tobacco or other substance is prohibited at all times,
except in such common areas located outside the Building as may be designated
by the Building management.

        Tenant
shall not permit Tenant’s agents, clients, contractors, directors, employees,
invitees, licensees, officers, partners or shareholders to interfere in any way
with other tenants of the Building or with those having business with them.

 

 

        Tenant
shall not permit its agents, clients, contractors, directors, employees,
invitees, licensees, officers, partners or shareholders to bring or keep within
the Building any animal, bird or bicycle, except such seeing-eye dog or other
disability assistance type animal as may comply with the requirements of any handicapped
ordinances having jurisdiction therefor.

        Tenant
shall store its trash and garbage within the Premises.  No material shall be placed in the trash
boxes or receptacles if such material is a hazardous waste or toxic substance
or is of such a nature that its disposal in Landlord’s ordinary and customary
manner of removing and disposing of trash and garbage would be a violation of
any law, ordinance or company regulation governing such disposal.  All garbage and refuse disposal shall be made
only through entry ways and elevators provided for such purposes and at such
times as Landlord shall designate.  As
and when directed by Landlord and/or if required by any governmental agency
having jurisdiction therefor, Tenant shall comply with all directives for recycling
and separation of trash.

        Tenant
shall not employ any person to do janitorial work in any part of the Premises
without the prior written consent of Landlord, which consent may be withheld in
Landlord’s sole discretion.

        Landlord
reserves the right to exclude or expel from the Building any person who in
Landlord’s sole discretion is intoxicated or under the influence of liquor or
drugs or who, in any manner, engages in any act in violation of the Rules and
Regulations of the Building.

        Tenant
shall not conduct any public or private auction, fire sale or other sale of
Tenant’s personal property, furniture, fixtures or equipment or any other
property located in or upon the Premises, without Landlord’s prior written
consent, which consent shall be in Landlord’s sole discretion.

6.     Storage. 
Tenant may
only store goods, wares, or merchandise on or in the Premises in areas
specifically designated by Landlord for such storage.

7.     Directives to Management.  Tenant’s requirements, other than those Landlord specifically
agrees to perform elsewhere in this Lease, shall only be attended to upon the
Building management’s receipt of Tenant’s written request therefor.  Landlord’s employees shall not perform any
work or do anything outside of their regular duties unless under special
instruction from the Building management. 
No security guard, janitor or engineer or other employee of the Building
management shall admit any person (Tenant or otherwise) to the Premises without
specific instructions from the Office of the Building and written authorization
for such admittance from Tenant.

8.     Keys and Locks.  Landlord shall furnish Tenant with two keys to each
door lock existing in the Premises. 
Tenant shall reimburse Landlord a reasonable charge for these and any
additional keys. Tenant shall not be permitted to have keys made, nor shall
Tenant alter any lock or install a new or additional lock or bolts on any door
of the Premises without Landlord’s prior written consent.  Tenant shall, in each case, furnish Landlord
with a key for any additional lock installed or changed by Tenant or Tenant’s
agent(s).  Tenant, upon the expiration or
earlier termination of this Lease, shall deliver to Landlord all keys in the
possession of Tenant or Tenant’s agents, clients, contractors, directors,
employees, invitees, licensees, officers, partners or shareholders for doors in
the Building, whether or not furnished to Tenant by Landlord.  If Tenant, or Tenant’s agents, clients,
contractors, directors, employees, invitees, licensees, officers, partners or
shareholders, lose or misplace any key(s) to the Building, Landlord shall, in
Landlord’s sole discretion, either replace said key(s) or re-key such locks as
may be affected thereby, and Tenant shall reimburse Landlord for all such costs
of such re-keying and/or replacement.

9.     Solicitation.  Tenant and/or its agents, clients, contractors,
directors, employees, invitees, licensees, officers, partners or shareholders
shall not permit any canvassing, peddling, soliciting and/or distribution of
handbills or any other written materials to occur in the Premises and/or the
Building, nor shall Tenant or Tenant’s agents, clients, contractors, directors,
employees, invitees, licensees, officers, partners or shareholders engage in
such solicitation or distribution activities.

10.  Retail Sales, Services and Manufacturing
Prohibited.  Except with the prior written consent of
Landlord, Tenant shall not sell, or permit the retail sale of, newspapers,
magazines, periodicals, theater tickets or any other goods or merchandise to
the general public in or on the Premises, nor shall Tenant carry on or permit
or allow any employee or other person to carry on the independent business of
stenography, typewriting or any similar business in or from the Premises for the
service or accommodation of other occupants of any other portion of the
Building.  Tenant shall not permit the
Premises to be used for manufacturing or for any illegal activity of any kind,
or for any business or activity other than for Tenant’s specific use.

11.  Change in Name or Address.  Landlord shall have the right, exercisable without
notice and without liability to Tenant, to change the name and street address
of the Building.

12.  Projections from Premises.  Tenant shall not install any radio or television
antenna, loudspeaker or other device on the roof or the exterior walls of the
Building or in any area projecting outside the interior walls of the
Premises.  Tenant shall not install or
permit to be installed any awnings, air conditioning units or other
projections, without the prior written consent of Landlord.

13.  Superiority of Lease.  These Rules and Regulations are in addition to, and
shall not be construed to in any way modify or amend, in whole or in part, the
covenants, agreements or provisions of this Lease.  If a conflict or disagreement between the
Lease and these Rules becomes apparent, this Lease shall prevail.

 

C-2

 

14.  Changes
to Rules and Regulations.  Provided such changes do not harm Tenant’s
ability to conduct its normal business operations, Landlord shall retain the
right to change, add or rescind any rule or regulation contained herein, or to
make such other and further reasonable and non-discriminatory Rules and
Regulations as in Landlord’s sole judgment may, from time to time, become
necessary for the management, safety, care and cleanliness of the Premises, the
Building or the Parking Facilities, or for the preservation of good order
therein, or for the convenience of other occupants and tenants therein, so long
as such recision, addition, deletion or change is thereafter reasonably applied
to all occupants of the Building affected thereby.

PARKING RULES AND
REGULATIONS

A.            Tenant shall strictly comply with all posted speed
limits, directional signs, yield signs, stops signs and all other signs within
or about the parking facilities.

B.            Tenant shall register all vehicle license plate
numbers with the Building management.

C.            Tenant shall be responsible for the cost of repairing
any damage to the parking facilities or cleaning any debris created or left by
Tenant, including, without limitation, oil leakage from motor vehicles parked
in the parking facilities under its auspices.

D.            Landlord, in addition to reserving the right to designate
one or more areas solely for visitor parking, which areas may be changed by
Landlord from time to time with or without prior notice to Tenant, reserves the
right to allocate additional visitor spaces on any floor of the parking
facilities.  Tenant shall not park any
vehicles in any spaces designated as visitor only spaces or customer spaces
within the parking facilities.

E.              Tenant shall strictly comply with all rules,
regulations, ordinances, speed limits, and statutes affecting handicapped
parking and/or access, and shall not park any vehicles within the fire lanes,
along parking curbs or in striped areas.

F.              Tenant shall only use the number of parking permits
allocated to it and shall not permit more than one of its employees to utilize
the same parking permit.  Landlord
reserves the right to assign or re-assign parking spaces within the Parking
facilities to Tenant from time to time, and provided Landlord is required to do
so by reason of any action arising out of a governmental mandate imposed on
Landlord, Landlord further reserves the right at any time to substitute an
equivalent number of parking spaces in a parking facilities or subterranean or
surface parking facility within a reasonable distance of the Premises.

G.            Except with Landlord’s managing agent(s)’ prior
written consent, Tenant shall not leave vehicles in the parking facilities
overnight, nor park any vehicles in the parking facilities other than
automobiles, motorcycles, motor-driven or non-motor-driven bicycles or
four-wheeled trucks or vans.  Landlord
may, in its sole discretion, designate separate areas for bicycles and
motorcycles.  Tenant shall ensure that
vehicles parking in the parking facilities by using the parking permits
assigned to Tenant shall be parked entirely within the striped lines
designating a single space and are not so situated or of such a width or length
as to impede access to or egress from vehicles parked in adjacent areas or
doors or loading docks.  Further, all
vehicles utilizing Tenant’s parking permits shall not be higher than any height
limitation that may be posted, or of such a size, weight or dimension so that
entry of such vehicle into the parking facilities would cause any damage or
injury thereto.

H.            Tenant shall not allow any of the vehicles parked
using Tenant’s permits, or the vehicles of any of Tenant’s suppliers, shippers,
customers or invitees to be loaded or unloaded in any area other than those
specifically designated by Landlord for loading.

I.                 Tenant shall not use or occupy the parking facilities in
any manner which will unreasonably interfere with the use of the parking
facilities by other tenants or occupants of the Building.  Without limitation, Tenant agrees to promptly
turn off any vehicle alarm system activated and sounding an alarm in the parking
facilities.  In the event said alarm
system fails to turn off and no longer sound an intruder alert fifteen (15)
minutes after commencing such an alarm, Landlord shall reserve the right to
remove the vehicle from the parking facilities at Tenant’s sole expense.

J.              Tenant acknowledges that the Rules and Regulations as
posted herein shall be in effect twenty-four hours per day, seven days per
week, without exception.

 

[INTENTIONALLY
LEFT BLANK]

 

C-3

 

K.            Tenant acknowledges that the uniformed guard officers
and parking attendants serving the parking facilities are authorized to issue
verbal and written warnings of Tenant’s violations of any of the rules and
regulations contained herein.  Except in
the case of a car alarm continuing to sound in excess of a maximum of fifteen
minutes, in which case no further notice by Landlord shall be required.  If Tenant or Tenant’s agents, contractors,
directors, employees, officers, partners or shareholders continue to materially
breach these rules and regulations after expiration of written notice and the
opportunity to cure has been given to Tenant, then in addition to such other
remedies and request for injunctive relief it may have, Landlord shall have the
right, without additional notice, to remove or tow away the vehicle involved
and store the same, all costs of which shall be borne exclusively by Tenant.

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  BRIGHTON ENTERPRISES, LLC,

  a California limited liability company

  	
   

  	
  MERCANTILE NATIONAL BANK, N.A.,

  a California “C” corporation_________

  
	
   

  	
   

  	
   

  
	
  By:

  	
  DOUGLAS, EMMETT
  AND COMPANY,

  	
   

  	
   

  	
   

  
	
   

  	
  a California
  corporation,

  	
   

  	
   

  	
   

  
	
   

  	
  its agent

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Michael J.
  Means, Vice President

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dated:

  	
   

  
						

 

C-4

 

EXHIBIT D

FIRST AMENDMENT - COMMENCEMENT DATE AND TERM

 

        This First Amendment, dated March
30, 2005, is by and between BRIGHTON ENTERPRISES, LLC, a California
limited liability company (“Landlord”), with an office at 808 Wilshire
Boulevard, Suite 200, Santa Monica, California 
90401, and MERCANTILE NATIONAL BANK, N.A., a California “C” corporation
(“Tenant”), with an office at 1880 Century Park East, Suite 1200, Los Angeles,
California 90067.

WHEREAS,

A.    Landlord,
pursuant to the provisions of that certain written, dated March 30, 2005 (the “Lease”), leased to Tenant
and Tenant leased from Landlord space in the property located at 9601 Wilshire
Boulevard, Beverly Hills, California 
90210 (the “Building”), commonly known as Suite 250 (the “Premises”);

B.    The
provisions of said Lease specify that the Commencement Date shall be the date
that is five (5) days following the date Landlord substantially completes the
Improvements for which Landlord is obligated under the Lease;

C.    Tenant
took possession of the Premises for the purpose of conducting its business on ;

NOW,
THEREFORE, in consideration of the covenants and provisions contained herein, and
other good and valuable consideration, the sufficiency of which Landlord and Tenant
hereby acknowledge, Landlord and Tenant agree:

1.              Confirmation of Defined
Terms.  Unless modified herein, all terms previously defined
and capitalized in the Lease shall hold the same meaning for the purposes of
this  Amendment.

2.              Confirmation of Commencement Date
and Term.  The Commencement Date is hereby confirmed
to be           , and the
Term is hereby confirmed from and including           
to and including                              .

3.              Revision in Fixed Monthly
Rent.  Tenant acknowledges and agrees commencing                    ,
and continuing through                    ,
Tenant shall pay the initial Fixed Monthly Rent of $                    
per month.  Furthermore, as of the
Commencement Date, the provisions of Section 3.3 are hereby deleted in their
entirety, and replaced in lieu thereof, with the following:

                        “      Commencing
on the date that is ninety (90) days following the Commencement Date, and
continuing through the last calendar day of the twelfth (12th)
calendar month of the Term, the Fixed Monthly Rent payable by Tenant shall
increase from $         per month to $         
per month.

        Commencing the first
calendar day of the thirteenth (13th) calendar month of the Term,
and continuing through the last calendar day of the twenty-fourth (24th)
calendar month of the Term, the Fixed Monthly Rent payable by Tenant shall
increase from $         per month to $          
per month.

        Commencing the first
calendar day of the twenty-fifth (25th) calendar month of the Term,
and continuing through the last calendar day of the thirty-sixth (36th)
calendar month of the Term, the Fixed Monthly Rent payable by Tenant shall
increase from $           per
month to $           per
month.

        Commencing the first
calendar day of the thirty-seventh (37th) calendar month of the
Term, and continuing the last calendar day of the forty-eighth (48th)
calendar month of the Term, the Fixed Monthly Rent payable by Tenant shall
increase from $           per
month to $           per
month.

        Commencing the first
calendar day of the forty-ninth (49th) calendar month of the Term,
and continuing the last calendar day of the sixtieth (60th) calendar
month of the Term, the Fixed Monthly Rent payable by Tenant shall increase from
$           per month to $          
per month.

                                Commencing
the first calendar day of the sixty-first (61st) calendar month of
the Term, and continuing throughout the remainder of the initial Term, the
Fixed Monthly Rent payable by Tenant shall increase from $          
per month to $           per
month.

        Notwithstanding the foregoing, Tenant
shall be permitted to defer one hundred percent of the Fixed Monthly Rent due
for the second (2nd), third (3rd), thirteenth (13th),
twenty-fifth (25th) and thirty-seventh (37th) months of
the Term (collectively, the “Rent Deferral Amount”).  So long as Tenant does not commit a material,
uncured default during the Term that has resulted in Landlord filing an
unlawful detainer action against Tenant, the entire Rent Deferral Amount shall
be abated and forgiven as of the Termination Date.

4.              Acceptance of Premises.  Tenant acknowledges and agrees that Landlord has
completed the Improvements for which Landlord was obligated under the Lease.

5.              Warranty of Authority. If Landlord or Tenant signs as a
corporation, or a limited liability company, or a partnership, each of the
persons executing this  Amendment on
behalf of Landlord or Tenant hereby covenants and warrants that the applicable
entity is a duly authorized and existing entity that is qualified to do
business in California; that the person(s) signing on behalf of either Landlord
or Tenant have full right and authority to enter into this  Amendment; and that each and every person
signing on behalf of either Landlord or Tenant are authorized in writing to do
so.

 

 

6.              Broker Representation.  Landlord and Tenant represent to one another that it
has dealt with no broker in connection with this  Amendment other than Douglas,
Emmett and Company and First Property Realty Corporation.  Landlord and Tenant shall hold one another
harmless from and against any and all liability, loss, damage, expense, claim,
action, demand, suit or obligation arising out of or relating to a breach by
the indemnifying party of such representation. 
Landlord agrees to pay all commissions due to the brokers listed above
created by Tenant’s execution of this 
Amendment.

7.              Successors and Heirs.  The provisions of this 
Amendment shall inure to the benefit of Landlord’s and Tenant’s
respective successors, assigns, heirs and all persons claiming by, through or
under them.

8.              Confidentiality.  Landlord and Tenant agree that the covenants and
provisions of this  Amendment shall not
be divulged to anyone not directly involved in the management, administration,
ownership, lending against, or subleasing of the Premises, other than Tenant’s
or Landlord’s counsel-of-record or leasing or sub-leasing broker of record.

9.              Disclosure. 
Landlord and Tenant acknowledge that principals of Landlord have a
financial interest in Douglas Emmett Realty Advisors, Douglas Emmett and
Company, and P.L.E. Builders.

10.       Governing Law.  The provisions of this Amendment shall be governed by
the laws of the State of California.

11.       Reaffirmation.  Landlord and Tenant acknowledge and agree that the
Lease, as amended herein, constitutes the entire agreement by and between
Landlord and Tenant, and supersedes any and all other agreements written or
oral between the parties hereto. 
Furthermore, except as modified herein, all other covenants and provisions
of the Lease shall remain unmodified and in full force and effect.

IN
WITNESS WHEREOF,
Landlord and Tenant have duly executed this document as of the day and year
written below.

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  BRIGHTON ENTERPRISES, LLC,

  a California limited liability company

  	
   

  	
  MERCANTILE NATIONAL BANK, N.A.,

  a California “C” corporation_________

  
	
   

  	
   

  	
   

  
	
  By:

  	
  DOUGLAS, EMMETT
  AND COMPANY,

  	
   

  	
   

  	
   

  
	
   

  	
  a California
  corporation,

  	
   

  	
   

  	
   

  
	
   

  	
  its agent

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Michael J.
  Means, Vice President

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dated:

  	
   

  
						

 

D-2

 

EXHIBIT F

ASBESTOS RIDER

        As you
are probably aware, many buildings constructed during the 20th Century through
the mid to late 1970s, such as this property, utilized some degree of asbestos
in the construction process; such practice was formerly a standard in the
building trade. Asbestos is the commercial name for a naturally-occurring
family of fibrous minerals which was used in building materials mainly as a
fireproofing, reinforcing and insulating agent, and is typically encountered in
wrapped heating system insulation, structural fire-proofing, acoustical
ceilings, vinyl flooring and roofing felts. Asbestos was regularly used in many
other building and non-building products as well. In fact, asbestos fibers are
generally present in urban air and water.

        Extensive
governmental regulation of asbestos now exists, and proposals have been made
for additional regulations. No federal laws, regulations or standards, however,
require wholesale removal of asbestos from an occupied building. Indeed, the
EPA has concluded that “The presence of asbestos in a building does not mean
that the health of building occupants is endangered. If asbestos-containing
material remains in good condition and is unlikely to be disturbed, exposure
will be negligible.” Guidance for Controlling
Asbestos-Containing Materials in Buildings (EPA 560/5-85-024 June
1985), page 1-1. According to the experts, the health risks associated with
asbestos arise only when and if fibers become airborne and are inhaled, for
example, as a result of maintenance or repairs conducted without proper
controls. When inhaled, asbestos fibers can cause certain diseases, including
asbestosis, mesothelioma and lung cancer (and risks for smokers are
dramatically compounded). The thrust of both current EPA and OSHA requirements
and non-binding guidance is to identify the materials that are releasing or
could release asbestos fibers into the air, implement proper response actions
when such materials are located, maintain asbestos in good condition, and
follow appropriate work practices when disturbance of asbestos is unavoidable.

        It is the
policy of the property owner to provide a healthy environment by repairing,
removing or otherwise abating any damaged asbestos materials that pose a health
risk, and by complying with all regulations concerning asbestos at the property
and following procedures that will minimize or avoid disturbance of
asbestos-containing materials (ACM). We have engaged a qualified asbestos
consultant to survey the property for asbestos and assist in implementing an
asbestos management plan which includes, among other things, periodic
reinspection and surveillance, air monitoring, information and training
programs for building engineering and maintenance staff, cleaning procedures,
emergency fiber release and training programs for building engineering and
maintenance staff, cleaning procedures, emergency fiber release procedures,
work procedures and other measures to minimize potential fiber releases, as well
as recordkeeping requirements.

        Because
any tenant alterations or other work at the property could disturb ACM and
possibly release asbestos fibers into the air, we must require the property
manager’s written approval prior to beginning such projects. This includes
major alterations, but might also include such activities as drilling or boring
holes, installing electrical, telecommunications or computer lines, sanding
floors, removing ceiling tiles, or other work which might disturb ACM. In many
cases, such activities will not affect ACM, but you must check with the
property manager in advance, just in case, and the property manager may make
available such instructions as may be required. Any such work should not be
attempted by an individual or contractor who is not qualified to handle ACM.

        In
connection with the foregoing, we are adopting the following new rules under
tenant leases: (1) the owner, and representatives of the owner, including,
without limitation, the owner’s ACM consultant, are entitled to enter into the
premises of any tenant to inspect for ACM, perform air tests and abatement
which may be legally required or prudent, and otherwise to comply with legal
requirements or recommended practices relating to ACM; (2) any tenant,
contractor, or other party must obtain the property manager’s prior written
approval before performing any alterations on any tenant space, or performing
any other work at the property that might disturb ACM or involve exposure to
asbestos fibers as described above.

 

[INTENTIONALLY
LEFT BLANK]

 

 

        We trust
that the implementation of the aforesaid requirements will not unduly
inconvenience you. If you have any questions or concerns about asbestos, please
contact the property manager. Thank you for your cooperation in this mutual
endeavor.

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  BRIGHTON ENTERPRISES, LLC,

  a California limited liability company

  	
   

  	
  MERCANTILE NATIONAL BANK, N.A.,

  a California “C” corporation_________

  
	
   

  	
   

  	
   

  
	
  By:

  	
  DOUGLAS, EMMETT
  AND COMPANY,

  	
   

  	
   

  	
   

  
	
   

  	
  a California
  corporation,

  	
   

  	
   

  	
   

  
	
   

  	
  its agent

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Michael J.
  Means, Vice President

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dated:

  	
   

  
						

 

 

D-2

 

EXHIBIT H

SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

(Lease)

THIS AGREEMENT made as of
March 30, 2005 between TRIANGLE LENDERS,
LLC, a California limited liability company, having an address at 808 Wilshire
Boulevard, Suite 200, Santa Monica, California 90401 (the “Leasehold Mortgagee”),
BRIGHTON ENTERPRISES, LLC, a California limited liability company, having an
address at 808 Wilshire Boulevard, Suite 200, Santa Monica, California 90401
(the “Ground Lessor”), and MERCANTILE NATIONAL BANK, a California “C”
corporation, having an office at 1880 Century Park East, Suite 1200, Los
Angeles, California 90067 (the “Tenant”);

W I T N E S S E T H:

WHEREAS the Ground Lessor
and Brighton Enterprises, LLC, a California limited liability company,
successor-in-interest to Wilshire-Camden Associates, a California limited
partnership (the “Ground Lessee”), are the current parties to that certain
Amended and Restated Ground Lease (the “Ground Lease”), pursuant to which the
Ground Lessee is leasing certain land located in the County of Los Angeles,
City of Beverly Hills and State of California, known as 9601 Wilshire
Boulevard, as more particularly described in Exhibit “A” attached hereto and
incorporated herein by this reference (the “Land”) from the Ground Lessor;

WHEREAS the Leasehold
Mortgagee is the present owner and holder of a certain deed of trust or deeds
of trust (the “Leasehold Deed of Trust”) encumbering the Ground Lessee’s
interest in the Ground Lease, as well as that certain office building together
with the four-level subterranean parking garage located on the Land (the “Improvements”);

WHEREAS the Tenant is the
holder of a leasehold estate in a portion of the Improvements under and
pursuant to the provisions of a certain lease dated September     ,
2002 with Ground Lessee, as landlord (the “Lease”); and

WHEREAS the Tenant has
agreed to subordinate the Lease to the Leasehold Deed of Trust and the Ground
Lease, and to the lien of each of the same, and the Leasehold Mortgagee and the
Ground Lessor have each agreed to grant non-disturbance to the Tenant under the
Lease on the terms and conditions hereinafter set forth.

NOW THEREFORE, in
consideration of Ten Dollars ($10) and other good and valuable consideration,
the receipt of which is hereby acknowledged, the Leasehold Mortgagee, the
Ground Lessor and the Tenant hereby covenant and agree as follows:

1.             The Tenant agrees that the Lease and all of the terms,
covenants and provisions thereof and all rights, remedies and options of the
Tenant thereunder are and shall at all times continue to be subject and
subordinate in all respects to (i) the Leasehold Deed of Trust and all of the
terms, covenants and provisions thereof and to the lien thereof and to any and
all increases, renewals, modifications, spreaders, consolidations, replacements
and extensions thereof, and to any and all sums secured thereby, with the same
force and effect as if the Leasehold Deed of Trust had been executed, delivered
and recorded prior to the execution and delivery of the Lease, and (ii) the
Ground Lease and all of the terms, covenants and provisions thereof and to any
and all amendments, modifications, replacements and extensions thereof, and to
any and all amounts required to be paid thereunder, with the same force and
effect as if the Ground Lease had been executed, delivered and recorded prior
to the execution and delivery of the Lease.

2.             The Leasehold Mortgagee and the Ground Lessor,
respectively, agree that provided  (i)
the Lease shall be in full force and effect, and (ii) the Tenant shall not be
in default under any of the terms, covenants or conditions of the Lease or of
this Agreement on the part of the Tenant to be observed or performed thereunder
or hereunder, the right of possession of Tenant to the leased premises shall
not be affected or disturbed by (a) the Leasehold Mortgagee in the exercise of
any of its rights under the Leasehold Deed of Trust and any sale of the
Improvements pursuant to the exercise of any rights and remedies under the
Leasehold Deed of Trust or otherwise shall be made subject to Tenant’s right of
possession under the Lease, and (b) the Ground Lessor in the exercise of any of
its rights under the Ground Lease and any termination of the Ground Lease
pursuant to the exercise of any rights and remedies under the Ground Lease or
otherwise shall be made subject to Tenant’s right of possession under the
Lease.

3.             The Tenant agrees that (i) if the Leasehold Mortgagee or
any successors in interest to the Leasehold Mortgagee shall become the owner of
the Improvements and the leasehold interest in the Ground Lease by reason of
the foreclosure of the Leasehold Deed of Trust or the acceptance of a deed or
assignment in lieu of foreclosure or otherwise, or (ii) if the Ground Lease is
terminated and Ground Lessor or any successors in interest to the Ground Lessor
shall become the owner of the Improvements, the Lease shall not be terminated
or affected thereby but shall continue in full force and effect as a direct
lease between the Leasehold Mortgagee and the Ground Lessor, as applicable, and
the Tenant upon all of the terms, covenants and conditions set forth in the
Lease and in that

 

 

event the Tenant
agrees to attorn to the Leasehold Mortgagee and the Ground Lessor, as
applicable, and the Leasehold Mortgagee and the Ground Lessor, as applicable,
agrees to accept such attornment, provided, however, that the provisions of the
Leasehold Deed of Trust shall govern with respect to the disposition of any
casualty insurance proceeds or condemnation awards and neither the Leasehold
Mortgagee or the Ground Lessor, as applicable, shall be (i) obligated to complete
any construction work required to be done by the Landlord (as hereinafter
defined) pursuant to the provisions of the Lease or to reimburse the Tenant for
any construction work done by the Tenant, (ii) liable for any accrued
obligation of the Landlord, or for any act or omission of the Landlord, whether
prior to or after such foreclosure, sale or termination, as applicable, (iii)
liable under any indemnity provision of whatever nature contained in the Lease,
including, but not limited to, any environmental indemnification, (iv) required
to make any repairs to the Premises (as hereinafter defined) and/or to the
premises demised under the Lease as a result of fire or other casualty or by
reason of condemnation, (v) required to make any capital improvements to the
Premises and/or to the premises demised under the Lease which the Landlord may
have agreed to make, but had not completed, or to perform or provide any
services not related to possession or quiet enjoyment of the premises demised
under the Lease, (vi) subject to any offsets, claims or counterclaims which
shall have accrued to the Tenant against the Landlord prior to the date on
which the Leasehold Mortgagee or the Ground Lessor, as applicable, or its
respective successor in interest shall become the owner of the Premises, (vii)
liable for any security deposit or other monies not actually received by the
Leasehold Mortgagee or the Ground Lessor, as applicable.

4.             The Tenant shall not, without the prior written consent
of the Leasehold Mortgagee and the Ground Lessor (which consent shall not be
unreasonably withheld) (i) enter into any agreement decreasing the amount of
rent payable under the Lease, (ii) prepay any of the rents, additional rents or
other sums due under the Lease for more than one (1) month in advance of the
due date thereof, (iii) voluntarily surrender the premises demised under the
Lease or terminate the Lease without cause or shorten the term thereof, or (iv)
assign the Lease or sublet the premises demised under the Lease or any part
thereof except as expressly permitted by the terms of the Lease; and any such
amendment, modification, termination, prepayment, voluntary surrender,
assignment or subletting, without the prior written consent of the Leasehold
Mortgagee and the Ground Lessor shall not be binding on the Leasehold Mortgagee
or the Ground Lessor, respectively.

5.             The Tenant hereby represents and warrants to the
Leasehold Mortgagee and the Ground Lessor that as of the date hereof (i) the
Tenant is the owner and holder of the tenant’s interest under the Lease, (ii)
the Lease has not been modified or amended, (iii) the Lease is in full force
and effect and the term thereof will commence as provided in accordance with the provisions thereof , (iv) neither the
Tenant nor the Landlord is in default under any of the terms, covenants or
provisions of the Lease and the Tenant to the best of its knowledge knows of no
event which but for the passage of time or the giving of notice or both would
constitute an event of default by the Tenant or the Landlord under the Lease,
(v) neither the Tenant nor the Landlord has commenced any action or given or
received any notice for the purpose of terminating the Lease, (vi) all rents,
additional rents and other sums due and payable under the Lease have been paid
in full and no rents, additional rents or other sums payable under the Lease
have been paid for more than one (1) month in advance of the due dates thereof,
and (vii) there are no offsets or defenses to the payment of the rents,
additional rents, or other sums payable under the Lease.

6.             The Tenant shall notify the Leasehold Mortgagee and the
Ground Lessor of any default by the Landlord under the Lease or any other
circumstance which would entitle the Tenant to cancel or terminate the Lease or
abate the rents, additional rents or other sums payable thereunder, and agrees
that, notwithstanding any provisions of the Lease to the contrary, no notice of
cancellation, termination or abatement thereof shall be effective unless the
Leasehold Mortgagee and the Ground Lessor shall have received notice of the
default or other circumstance giving rise to such cancellation, termination or
abatement and shall have failed within sixty (60) days after receipt of such
notice to cure such default or remedy such circumstance, or if such default
cannot be cured within sixty (60) days, shall have failed within sixty (60)
days after receipt of such notice to commence and to thereafter diligently
pursue any action necessary to cure such default or remedy such circumstance,
as the case may be.

7.             Anything herein or in the Lease to
the contrary notwithstanding, in the event that the Leasehold Mortgagee or the
Ground Lessor shall acquire title to the Premises, or shall otherwise become
liable for any obligations of the Landlord under the Lease, neither the
Leasehold Mortgagee nor the Ground Lessor, as applicable, shall have any
obligation, nor incur any liability, beyond the then interest, if any, of the
Leasehold Mortgagee or the Ground Lessor, as applicable, in the Premises and
the Tenant shall look exclusively to such interest of the Leasehold Mortgagee
or the Ground Lessor, as applicable, if any, in the Premises for the payment
and discharge of any obligations imposed upon the Leasehold Mortgagee or the
Ground Lessor, as applicable, hereunder or under the Lease and the Leasehold
Mortgagee and the Ground Lessor, as applicable, are hereby released or relieved
of any other liability hereunder and under the Lease.  The Tenant agrees that with respect to any
money judgment which may be obtained or secured by the Tenant against the
Leasehold Mortgagee or the Ground Lessor, as applicable, the Tenant shall look
solely to the estate or interest

 

 

owned by the Leasehold Mortgagee or the Ground Lessor, as applicable,
in the Premises and the Tenant will not collect or attempt to collect any such
judgment out of any other assets of the Leasehold Mortgagee or the Ground
Lessor, as applicable.

8.             Any notice, request, demand, statement, authorization,
approval or consent made hereunder shall be in writing and shall be sent by
Federal Express, or other reputable courier service, or by postage pre-paid
registered or certified mail, return receipt requested, and shall be deemed
given when received or refused (as indicated on the receipt) and addressed as
follows:

	
  If to the Leasehold Mortgagee:

  
	
   

  
	
  Triangle
  Lenders, LLC

  
	
  c/o
  Douglas Emmett Realty Advisors

  
	
  808
  Wilshire Boulevard, Suite 200

  
	
  Santa
  Monica, California 90401

  
	
  Attention:
  Mr. Jordan Kaplan and Mr. William Kamer

  
	
   

  
	
  If to the Ground Lessor:

  
	
   

  
	
  Douglas
  Emmett Realty Fund 2000

  
	
  c/o
  Douglas Emmett Realty Advisors

  
	
  808
  Wilshire Boulevard, Suite 200

  
	
  Santa
  Monica, California 90401

  
	
  Attention:
  Mr. Jordan Kaplan and Mr. William Kamer

  
	
   

  
	
  If to the Tenant:

  
	
   

  
	
  Mr. David Brown

  
	
  Chief Financial Officer

  
	
  Mercantile National
  Bank, N.A.

  
	
  1880 Century Park East,
  Suite 1200

  
	
  Los Angeles, California 90067

  

 

it being understood and agreed that each party will use reasonable
efforts to send copies of any notices to the addresses marked “With a copy to”
hereinabove set forth; provided, however, that failure to deliver such copy or
copies shall have no consequence whatsoever to the effectiveness of any notice
made to the Tenant, the Leasehold Mortgagee and/or the Ground Lessor.  Each party may designate a change of address
by notice given, as hereinabove provided, to the other party, at least fifteen
(15) days prior to the date such change of address is to become effective.

9.             This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.

10.           The term “Leasehold Mortgagee” as
used herein shall include the successors and assigns of the Leasehold Mortgagee
and any person, party or entity which shall become the owner of the Premises by
reason of a foreclosure of the Leasehold Deed of Trust or the acceptance of a
deed or assignment in lieu of foreclosure or otherwise.  The term “Ground Lessor” as used herein shall
include the successors and assigns of the Ground Lessor and any person, party
or entity which shall become the owner of the Improvements by reason of a
termination of the Ground Lease.  The
term “Landlord” as used herein shall mean and include the present landlord
under the Lease and such landlord’s predecessors and successors in interest
under the Lease.  The term “Premises” as
used herein shall mean the Land, the Improvements, any other improvements now
or hereafter located on the Land and/or the estates therein encumbered by the
Leasehold Deed of Trust and/or the Ground Lease.

11.           This Agreement may not be modified in
any manner or terminated except by an instrument in writing executed by the
parties hereto.

 

[INTENTIONALLY
OMITTED]

 

12.           This Agreement shall be governed by
and construed under the laws of the State in which the Premises are located.

IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the date first above written.

 

	
  TRIANGLE LENDERS, LLC,

  
	
  a California limited liability company

  
	
   

  
	
  By:

  	
  Douglas Emmett Realty Advisors,

  
	
   

  	
  a California corporation,

  
	
   

  	
  Manager

  
	
   

  
	
  By:

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
  Dated:

  	
   

  
			

 

	
  BRIGHTON ENTERPRISES, LLC,

  
	
  a California limited liability company

  
	
   

  
	
  By:

  	
  Douglas, Emmett and Company,

  
	
   

  	
  a California corporation,

  
	
   

  	
  Its agent

  
	
   

  
	
  By:

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
  Dated:

  	
   

  
			

 

	
  MERCANTILE NATIONAL BANK, N.A.,

  
	
  a California “C”________

  
	
   

  
	
  By:

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
  Dated:

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
	
  Dated:

  	
   

  
			

 

 

 

	
  STATE OF

  	
   

  	
      )

  
	
   

  	
   

  	
      )
  ss:

  
	
  COUNTY OF

  	
   

  	
      )

  
					

 

On                              ,
before me,                              ,
a Notary Public, personally appeared                              ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

WITNESS my hand and
official seal.

 

	
   

  
	
  Notary Public

  

 

	
  STATE OF

  	
   

  	
      )

  
	
   

  	
   

  	
      )
  ss:

  
	
  COUNTY OF

  	
   

  	
      )

  
					

On                               ,
before me,                              ,
a Notary Public, personally appeared                              ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

WITNESS my hand and
official seal.

 

	
   

  
	
  Notary Public

  

 

	
  STATE OF

  	
   

  	
      )

  
	
   

  	
   

  	
      )
  ss:

  
	
  COUNTY OF

  	
   

  	
      )

  
					

On                              ,
before me,                              ,
a Notary Public, personally appeared                              ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.

WITNESS my hand and
official seal.

 

	
   

  
	
  Notary Public

  

 

 

EXHIBIT “A”

LEGAL DESCRIPTION

 

Lots 8, 9, 10, 11,
12, 13 and 14, in Block 18, of Beverly, in the City of Beverly Hills, County of
Los Angeles, State of California, as per map recorded in Book 11, Pages 94 and
95 of Maps, in the Office of the County Recorder of said County.

 

 

FIRST AMENDMENT TO OFFICE
LEASE

                This First
Amendment to Office Lease (the “First Amendment”), dated March 30, 2005, is made by and between BRIGHTON
ENTERPRISES, LLC, a California limited liability company (“Landlord”), with an
office at 808 Wilshire Boulevard, Suite 200, Santa Monica, California 90401,
and MERCANTILE NATIONAL BANK, N.A., a California “C” corporation (“Tenant”),
with offices at 9601 Wilshire Boulevard, Suite 250, Beverly Hills, California
90210.

WHEREAS,

                A.    Landlord,
pursuant to the provisions of that certain written Office Lease, dated  March 11, 2004 (the “Lease”) leased to Tenant
and Tenant leased from Landlord space in the property located at 9601 Wilshire
Boulevard, Beverly Hills, California 90210 (the “Building”), commonly known as Suite
250 (the “Premises”);

                B.    The provisions of the Lease specify that the Commencement Date
shall commence five (5) business days following the date Landlord substantially
completes the Improvements for which Landlord is obligated under the Lease;

                C.    The Improvements were
completed on May 25, 2004;

                D.    The provisions of the Lease further specify that the Rentable
Area and all other economic provisions of the Lease shall be appropriately
adjusted based upon the final certification of the Usable Area;

                E.     Certification of the Usable Area has now been received.

NOW,
THEREFORE, in consideration of the covenants and provisions contained herein, and
other good and valuable consideration, the sufficiency of which Landlord and
Tenant hereby acknowledge, Landlord and Tenant agree:

1.              Confirmation of Defined
Terms.  Unless modified herein, all terms previously defined
and capitalized in the Lease shall hold the same meaning for the purposes of
this First Amendment.

2.              Confirmation of Commencement Date
and Term.  The Commencement Date is hereby confirmed
to be June 1, 2004 and the Term is hereby confirmed from and including June 1,
2004 to and including August 31, 2009.

3.              Confirmation of Usable and
Rentable Area.  The Usable Area of the Premises is hereby
confirmed to be 2,084 square feet and the Rentable Area of the Premises is
hereby confirmed to be 2,559 square feet.

                                Landlord
and Tenant agree that even if the Rentable or Usable Area of the Premises
and/or the total Building Area are later determined to be more or less than the
figures stated herein, for all purposes of the Lease, the figures stated herein
shall be conclusively deemed to be the actual Rentable or Usable Area of the
Premises, as the case may be.

4.              Revision in Fixed Monthly
Rent.  Tenant acknowledges and
agrees commencing
June 1, 2004 and continuing through
August 31, 2004, the initial Fixed Monthly Rent payable by Tenant shall be
$7,369.92 per month.  Furthermore, as of
the Commencement Date, the provisions of Section 3.3 are hereby deleted in
their entirety, and replaced in lieu thereof, with the following:

                                “Commencing
September 1, 2004 and continuing through May 31, 2005, the Fixed Monthly Rent
payable by Tenant shall increase from $7,369.92 per month to $7,753.77 per
month;

                                Commencing
June 1, 2005 and continuing through May 31, 2006 the Fixed Monthly Rent payable
by Tenant shall increase from $7,753.77 per month to $7,986.38 per month;

                                Commencing
June 1, 2006 and continuing through May 31, 2007, the Fixed Monthly Rent
payable by Tenant shall increase from $7,986.38 per month to $8,225.97 per
month; and

                                Commencing
June 1, 2007 and continuing through May 31, 2008 the Fixed Monthly Rent payable
by Tenant shall increase from $8,225.97 per month to $8,472.75 per month;

                                Commencing
June 1, 2008 and continuing through May 31, 2009, the Fixed Monthly Rent
payable by Tenant shall increase from $8,472.75 per month to $8,726.94 per
month; and

                                Commencing
June 1, 2009 and continuing throughout the remainder of the initial Term, the
Fixed Monthly Rent payable by Tenant shall increase from $8,726.94 per month to
$8,988.74 per month.”

                                Notwithstanding
the foregoing, Tenant shall be permitted to defer one hundred percent (100%) of
the Fixed Monthly Rent due for the months of July 2004, August 2004, June 2005,
June 2006, and June 2007 (collectively, the “Rent Deferral Amount”).  So long as Tenant does not commit a material,
uncured default during the Term that has resulted in Landlord filing an
unlawful detainer action against Tenant, the entire Rent Deferral Amount shall
be abated and forgiven as of the Termination Date.

5.              Acceptance of Premises.   Tenant acknowledges and agrees that Landlord
has completed the Improvements for which Landlord was obligated under the
Lease.

6.              Warranty of Authority. If Landlord or Tenant signs as a
corporation or a partnership, each of the persons executing this First
Amendment on behalf of Landlord or Tenant hereby covenants and warrants that
the corporation executing hereinbelow is a duly authorized and existing entity
that is qualified to do business in California; that the person(s) signing on
behalf of either Landlord or Tenant have full right and authority to enter into
this First Amendment; and that each and every person signing on behalf of
either Landlord or Tenant are authorized in writing to do so.

 

 

7.              Broker Representation.  Landlord and Tenant represent to one another that it
has dealt with no broker in connection with this First Amendment other than Douglas, Emmett and Company and First Property Realty Corporation.  Landlord and Tenant shall hold one another
harmless from and against any and all liability, loss, damage, expense, claim,
action, demand, suit or obligation arising out of or relating to a breach by
the indemnifying party of such representation. 
Landlord agrees to pay all commissions due to the brokers listed above
created by Tenant’s execution of this First Amendment.

8.              Successors and Heirs.  The provisions of this First Amendment shall inure to
the benefit of Landlord’s and Tenant’s respective successors, assigns, heirs
and all persons claiming by, through or under them.

9.              Confidentiality.  Landlord and Tenant agree that the covenants and
provisions of this First Amendment shall not be divulged to anyone not directly
involved in the management, administration, ownership, lending against, or
subleasing of the Premises, other than Tenant’s or Landlord’s counsel-of-record
or leasing or sub-leasing broker of record.

10.       Disclosure. 
Landlord and Tenant acknowledge that principals of Landlord have a
financial interest in Douglas Emmett Realty Advisors, Douglas Emmett and
Company, and P.L.E. Builders.

11.       Governing Law.  The provisions of this First Amendment
shall be governed by the laws of the State of California.

12.       Reaffirmation.  Landlord and Tenant acknowledge and agree
that the Lease, as amended herein, constitutes the entire agreement by and
between Landlord and Tenant relating to the Premises, and supersedes any and
all other agreements written or oral between the parties hereto.  Furthermore, except as modified herein, all
other covenants and provisions of the Lease shall remain unmodified and in full
force and effect.

IN
WITNESS WHEREOF,
Landlord and Tenant have duly executed this document as of the day and year
written below.

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  BRIGHTON ENTERPRISES, LLC,

  a California limited
  liability company

  	
   

  	
  MERCANTILE NATIONAL BANK, N.A.,

  a California “C” corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  DOUGLAS, EMMETT
  AND COMPANY,

  	
   

  	
   

  	
   

  
	
   

  	
  a California
  corporation,

  	
   

  	
   

  	
   

  
	
   

  	
  its agent

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Michael J. Means,
  Vice President

  	
   

  	
   

     Signer's
  Name

  	
   

  
	
   

  	
   

  	
   

  o President o Vice President or o Chief Executive Officer

  (Check
  Title Above)

  
	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

     Signer's
  Name

  	
   

  
	
   

  	
   

  	
   

  o President o Vice President or o Chief Executive Officer

  (Check
  Title Above)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dated:Exhibit 10.14

OFFICE BUILDING LEASE

 

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

WITNESSETH:

 

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

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

 

b.                       
LANDLORD’s Representative: (The authorized
representative of LANDLORD for all rental payments and all notices as provided
herein)     Milbank Real Estate Services, Inc. 

727 West 7th Street, Suite 800, Los Angeles, California
90017

 

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

 

d.              TENANT’s
Address:

                   16661 Ventura Boulevard, Suite 110, Encino,
California  91436                                                       

 

e.              Building’s Name and Address:  Encino Corporate Plaza,    16661 Ventura Blvd., Encino, California
91436     

 

f.               Suite
Number: 110, consisting of approximately1650 rentable square feet   

 

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

 

h.              Premises: Those certain Premises
described in Paragraph 2.

 

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

 

j.               Commencement
Date:    June 1, 2004                               

 

k.             Expiration
Date:        May 31, 2009                                  

 

l.               Monthly
Basic Rent:    Four
Thousand Five Hundred and No/100 Dollars ($4,500.00)                               

 

m.             TENANT’s
Percentage Share:          1.01%                             

 

n.              Security
Deposit:   Four
Thousand Five Hundred and No/100 Dollars ($4,500.00)                                   

 

o.              Permitted Use:     Commercial Bank Branch, including ATM
and Night Depository    

 

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

 

q.          Brokers:   Milbank Real Estate
Services, Inc., for the Landlord, and Cushman Wakefield for the Tenant

 

r.              Initial Payment Upon Execution of Lease:

	
   

  	
  i.

  	
   

  	
  1st Month Basic Rent:

  	
   

  	
  $

  	
  4,500.00

  	
   

  
	
   

  	
  ii.

  	
   

  	
  Last Month Basic Rent:

  	
   

  	
  $

  	
  0.00

  	
   

  
	
   

  	
  iii.

  	
   

  	
  Security Deposit:

  	
   

  	
  $

  	
  4,500.00

  	
   

  
	
   

  	
  iv.

  	
   

  	
  1st Month Parking:

  	
   

  	
  $

  	
  0.00

  	
   

  
	
   

  	
  v.

  	
   

  	
  Miscellaneous:

  	
   

  	
  $

  	
  0.00

  	
   

  
	
   

  	
   

  	
   

  	
  Total:

  	
   

  	
  $

  	
  9,000.00

  	
   

  

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

 

	
   

  	
   

  	
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  TENANT’s Initials: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

1

 

2.    PREMISES LEASED.  For and in consideration of the covenants
hereinafter mentioned, LANDLORD leases to TENANT and TENANT hereby leases from
LANDLORD the Premises contained within suite designated in Paragraph 1.f.  The rent hereunder is a negotiated sum determined
by a number of factors including but not limited to:  (i) the location of the Premises within in
the Building, (ii) the extent of the improvements in the Premises,(iii) the
length of the Lease term, (iv) the intended use of the Premises, (v) the credit
worthiness of the TENANT, (vi) LANDLORD’s prior business dealings with the
TENANT,  and (vii) the approximate
rentable square footage of the Premises. The term “approximate rentable square
footage” contained in this Lease, includes a portion of all common areas in the
Building and areas dedicated to the service of the Building which essentially
comprises the whole floor upon which the premises are located, without
deduction for columns and projections necessary to the Buildings structure,
plus the ground floor common areas located within the Building.  The rentable square footage of the Premises
and the Building are determined by LANDLORD’s architect, which such
determination shall be conclusive and binding upon the parties herein.

 

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

 

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

 

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

 

5.  LATE CHARGES.  TENANT hereby acknowledges that late payment
by TENANT to LANDLORD of rent and other sums due hereunder will cause LANDLORD
to incur costs not contemplated by this Lease, the exact amount of which will
be impractical or extremely difficult to ascertain.  Such costs include, but are not limited to,
processing and accounting charges and late charges which may be imposed on
LANDLORD by the terms of the trust deed encumbering the Premises.  Accordingly, if any installment of rent or
any other sum due from TENANT shall not be received by LANDLORD within five (5)
days after such amount shall be due, TENANT shall pay to LANDLORD a late charge
equal to 10% of such overdue amount.  The
parties hereby agree that such late charge represents a fair and reasonable
estimate of the costs LANDLORD will incur by reason of late payment. TENANT
acknowledges that the aforesaid amount of 10% is not a penalty, but is an
amount that is acknowledged by the parties as the amount representing the
liquidated damages that LANDLORD will suffer as a result of the late payment,
taking into consideration all facts and circumstances known to the parties at
this time and represents a fair and reasonable estimate of the costs the
LANDLORD will incur by reason of the late payment. The parties further agree
that proof of actual damage would be costly or inconvenient.  The late charge shall be considered
Additional Rent as defined in Paragraph 4 of this Lease, and shall be in
addition to all of LANDLORD’s other rights and remedies hereunder or at law. In
addition to the late charge described herein, any Monthly Basic Rent, or other
amounts owed by TENANT to LANDLORD which are not paid on or before the date
they are due, shall thereafter bear interest until paid in full at a rate equal
to twelve percent (12%) per annum, provided that in no event shall such rate
exceed the highest rate permitted by applicable law.  The Late Charge and interest payable
hereunder shall be considered Rent.  If
TENANT’s check is returned by the bank, in addition to the late charge of 10%
as specified above, TENANT shall also pay to LANDLORD the charge made by the
bank for the returned check and LANDLORD’s return check charge of $15.00 per
check returned.  Notwithstanding
anything to the contrary in this Paragraph 5, LANDLORD shall not impose
interest or late charges unless 3 days’ prior written notice has been given to
TENANT of late rent; provided further, that such notice shall only be required
once in every 12 month period.

 

 

	
   

  	
   

  	
  LANDLORD’s Initials: 

  	
   

  	
   

  	
  TENANT’s Initials: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  TENANT’s Initials: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

6.  C.P.I.
ADJUSTMENTS.  LANDLORD
shall have the additional right to increase each year the monthly basic rent as
specified in Paragraph 1.l on the first day of the month following the
anniversary date of the commencement of the term and in accordance with the
following formula:

 

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

 

 

	
   

  	
   

  	
  LANDLORD’s Initials: 

  	
   

  	
   

  	
  TENANT’s Initials: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  TENANT’s Initials: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

2

           If the Extension Index
has increased over the Beginning Index, the monthly rent payable during the
next year shall be set by multiplying the monthly basic rent for the Beginning
Month by a fraction, the numerator of which is the Extension Index and
denominator of which is the Beginning Index. As soon as the monthly basic rent
is set, LANDLORD shall notify TENANT of the amount of the increase of the
rental, if any, for the next year of the term. The failure of LANDLORD to notify
TENANT of an increase shall not preclude LANDLORD from enforcing its rights
hereunder for such year or any subsequent year.

 

           If the Index is changed
so that the base year differs from that used in the Beginning Month, the Index
shall be converted in accordance with the conversion factor published by the
U.S. Department of Labor, Bureau of Labor Statistics.  If the index is discontinued or revised
during the Term, such other government index, as selected by LANDLORD in its
reasonable discretion,  or computation
with which it is replaced shall be used in order to obtain substantially the
same result as would be obtained if the Index had not been discontinued or
revised.

 

7.  OPERATING
EXPENSES AND REAL PROPERTY TAX ADJUSTMENTS.  TENANT shall pay to LANDLORD upon receipt of
a statement therefor, as additional rent, such proportion of the following
items as the rentable square footage rented by TENANT bears to the total
rentable square footage of the Building as set forth in Paragraph 1.m of this
Lease:

 

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

ii.  Any increase in the city, county, special
district and state “real estate taxes” in excess of the real estate taxes
levied against the land and Building (including parking structure ancillary
thereto) of which the Premises are a part, for the base year (hereinafter
defined).

 

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

 

                     i.
 Expenses:
Expenses shall consist of all direct costs of operation and maintenance of the
Building, including parking structure ancillary thereto and the common areas as
determined by standard accounting practices, including the following costs by
way of illustration, but not limitation: water and sewer charges; the net cost
and expense of insurance for which LANDLORD is responsible hereunder or which
LANDLORD or any mortgagee with a lien affecting the Premises reasonably deems
necessary in connection with the operation of the Building; utilities;
janitorial services; security; labor, parking expenses; utilities surcharges;
or any other costs levied, assessed or imposed by, or at the direction of, or
resulting from statutes or regulation or interpretations thereof, promulgated
by any federal, state, regional, municipal or local government authority in
connection with the use or occupancy of the Building or the Premises or the
parking facilities serving the Building or the Premises; the cost (amortized
over such reasonable period as LANDLORD shall determine together with interest
at the maximum rate allowed by law on the unamortized balance) of (A) any
capital improvements made to the Building by the LANDLORD after the first year
of the term of the Lease that reduce other Expenses, or made to the Building by
LANDLORD after the date of the Lease that are required under any governmental
law or regulation that was not applicable to the Building as of the
Commencement Date of this Lease, or (B) replacement of any Building equipment
needed to operate the Building at the same quality levels as prior to the
replacement; costs incurred in the management of the Building, if any (including
supplies, wages and salaries of employees used in the management, operation and
maintenance of the Building, payroll taxes and similar governmental charges
with respect thereto, Building management office rental if said office is
located in the Building, and a management fee); air-conditioning; waste
disposal; heating; ventilating; elevator maintenance; supplies; materials;
equipment; tools; repair and maintenance of the structural portions of the
Building, plumbing, heating, ventilating, air-conditioning and electrical
systems installed or furnished by LANDLORD; maintenance costs and upkeep of all
parking and commons areas, including rental of personal property used in such
maintenance and upkeep; costs and expenses of gardening and landscaping; maintenance
of signs (other than TENANT’s signs); personal property taxes levied on or
attributable to personal property used in connection with the entire Building,
including the Common Areas and ancillary parking structure; reasonable audit or
verification fees; and costs and expenses of repairs, resurfacing, repairing,
maintenance, painting, lighting, cleaning, refuse removal, security and similar
items, including appropriate reserves. 
Expenses shall not include depreciation on the Building or equipment
therein; LANDLORD’s executive salaries; the commission of real estate brokers
or leasing agents, and other costs related to leasing the Building, including marketing expenses and tenant
improvements; interest expense on Building financing; amortization of the cost
of Leasehold Improvements in the Building; ground rent; income and franchise
taxes; dividends; and attorney’s fees and expenses which are not related to the
operation of the Building; amounts paid to LANDLORD or subsidiaries or
affiliates of LANDLORD for goods or services provided for the Building to the
extent that such costs exceed competitive costs of such goods or services
provided by unaffiliated third parties; costs paid or reimbursed by insurance
or other tenants.

 

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

(1)  Any tax on
LANDLORD’s “right” to rent or “right” to other income from the Premises or as
against LANDLORD’s business of leasing the Premises;

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

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

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

 

 

	
   

  	
   

  	
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3

 

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

(6) Reasonable legal and other
professional fees, costs and disbursements incurred in connection with
proceedings to contest, determine or reduce real property taxes.

 

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

 

iii.  Base Year
for Expenses.  The base year
for the determination of any increase in expenses incurred by LANDLORD in the
operation or maintenance of the Building, is the calendar year commencing
January 1, and ending December 31 in which the term of this Lease commenced.

 

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

           With respect to any
portion of a Lease year which does not conform to a fiscal tax year (a tax year
ends June 30th), the additional payments provided under this Paragraph 7 shall
be prorated accordingly.

 

                     b.  Estimate Statement and
Actual Statement. At the time of making and entering into of this
Lease and by the first day of March of each calendar year during the term of
this Lease, LANDLORD shall endeavor to deliver to TENANT a statement (“Estimate
Statement”) wherein LANDLORD shall estimate the Expenses and Real Estate Taxes
for the current calendar year; provided, however, that if LANDLORD determines
that TENANT’s Percentage Share of the Expenses for such current calendar year
is greater than that set forth in the Estimate Statement, then LANDLORD may
deliver on the first day of June, September, or December, as appropriate, a
revised Estimate Statement and TENANT shall pay to LANDLORD, within ten (10)
days of the delivery of such revised Estimate Statement, the difference between
such revised Estimate Statement and the original Estimate Statement for the
portion of the current calendar year which has then expired, and TENANT shall
pay during the balance of such current calendar year through February of the
succeeding calendar year a fraction of the balance of such difference as would
fully amortize such excess over the remaining months of the then current
calendar year through and including February of the succeeding calendar
year.  Subsequent installments shall be paid
concurrently with the regular monthly rent payments for the balance of the
calendar year and shall continue until the next calendar year’s Estimate
Statement is rendered.  By the first day
of March of each succeeding calendar year during the term of this Lease,
LANDLORD shall endeavor to deliver to TENANT a statement (“Actual Statement”)
wherein LANDLORD shall state the actual Expenses for the preceding calendar
year.  If the Actual Statement reveals a
greater increase in TENANT’s Percentage Share of Expenses than was estimated by
LANDLORD in the Estimated Statement delivered as provided herein, then upon
receipt of the Actual Statement from LANDLORD, TENANT shall pay a lump sum
equal to said total increase over the Expenses and Real Estate Taxes, less the
total of the monthly installments of increases set forth on the Estimate
Statement which were paid in the previous calendar year. If, in any calendar
year, TENANT’s Percentage Share of Expenses is less than the preceding calendar
year, then upon receipt of LANDLORD’s Actual Statement, any overpayment made by
TENANT on the monthly installment basis provided above shall be credited toward
the next monthly rent falling due and the monthly installment of TENANT’s
Percentage Share of Expenses to be paid pursuant to the then current Estimate
Statement shall be adjusted to reflect such lower expenses for the most recent
calendar year, or if this Lease has been terminated, such excess shall be
credited against any amount which TENANT owes LANDLORD pursuant to this Lease
and, to the extent all amounts which TENANT owes LANDLORD pursuant to this
Lease have been paid, LANDLORD shall promptly pay such excess to TENANT.  Any delay or failure by LANDLORD in
delivering any Estimate or Actual Statement pursuant to this Paragraph 7 shall
not constitute a waiver of its right to require an increase in rent nor shall
it relieve TENANT of its obligations pursuant to this Paragraph 7, except that
TENANT shall not be obligated to make any payments based on such Estimate or
Actual Statement until ten (10) days after receipt of such Estimate or Actual
statement.

           Even though the term has
expired and TENANT has vacated the Premises, when the final determination is
made of TENANT’s Percentage Share of Expenses for the year in which this Lease
terminates, TENANT shall immediately pay any increase due over the estimated
expenses paid and conversely any overpayment made in the event said expenses
decrease shall be immediately rebated by LANDLORD to TENANT.

           Notwithstanding anything
contained in this Paragraph 7, the rental payable by TENANT shall in no event
be less than the rent specified in Paragraph 1.l  hereof.

 

   c.  Disputes Regarding Actual Statement.  In the event TENANT disputes any and all
amounts set forth in the Actual Statement, TENANT shall provide LANDLORD with
written notice of same within sixty (60) days of receipt of the Actual
Statement. As a condition precedent to contesting the amount set forth in the
Actual Statement shall be the payment by TENANT in a timely manner of the
amount claimed due and owing by LANDLORD. 
Failure to provide such notice in said timely fashion and pay in the
full the amounts claimed due and owing by LANDLORD will constitute a waiver by
TENANT of the right to dispute the validity of the Actual Statement amounts so
set forth. After TENANT has timely given the written notice and paid the amount
claimed by LANDLORD in full, TENANT shall have the right no later than sixty
(60) days after such notice and payment, to cause LANDLORD’s books and records with
respect to the preceding calendar year to be audited by a certified public
accountant mutually acceptable to LANDLORD and TENANT. The amounts payable
under this Paragraph 7 by LANDLORD to TENANT or by TENANT to LANDLORD, as the
case may be, shall be appropriately adjusted on the basis of such audit. If
such audit discloses a liability for further refund by LANDLORD to TENANT in
excess of fifteen
(15%) of the payments previously made by TENANT for
such calendar year, the cost of such audit shall be borne by LANDLORD;
otherwise, the cost of such audit shall be borne by TENANT.

 

8.  DELAY IN OCCUPANCY.  TENANT agrees that in the event of the
inability of LANDLORD to deliver to TENANT possession of the Premises at the
commencement of said term, LANDLORD shall not be liable for any damage caused
thereby, nor shall this Lease be void or voidable if possession is given to
TENANT within 180 days after the date set for commencement of this Lease, but
in no event shall TENANT be liable for rent until such time as LANDLORD offers
to deliver possession of the Premises to TENANT.  However, the term hereof shall not be
extended by such delay.

 

 

	
   

  	
   

  	
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4

  9. TERMINATION. Except if terminated
as otherwise provided in this Lease, this Lease shall terminate on the
Expiration date set forth in Paragraph 1.k without the necessity of notice from
either party to the other party.

 

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

 

11.  TAXES ON
TENANT’s PROPERTY.

 

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

 

b.     Taxation of Leasehold
Improvements. If the Leasehold Improvements in the Premises, whether
installed and/or paid for by LANDLORD or TENANT and whether or not affixed to
the real property so as to become a part thereof, are assessed for real
property tax purposes at a valuation higher than the valuation at which
Leasehold Improvements conforming to LANDLORD’s “Building Standard” in other  space in the Building are assessed, then the
real property taxes and assessment levied against LANDLORD or the property by
reason of such excess assessed valuation shall be deemed to be taxes levied
against personal property of TENANT and shall be governed by the provisions of
Paragraph 11.a above.  If the records of
the County Assessor are available and sufficiently detailed as same as a basis
for determining whether said Leasehold Improvements are assessed at a higher
valuation than LANDLORD’s “Building Standard” such records shall be binding
on  both LANDLORD and TENANT.  If the records of the County Assessors are
not available or sufficiently detailed to serve as a basis for making said
determination, the actual cost of construction shall be used.

 

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

 

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

 

           If TENANT is not
in default of the terms of this Lease beyond
any applicable notice and cure period as  of the
last day of the Term (as it may be
extended), the security deposit or any balance thereof shall be
returned to TENANT (or, at LANDLORD’s option, to the last assignee of TENANT’s
interest hereunder) within ninety days from expiration of the Lease term,
provided that the LANDLORD may retain the security deposit for a
period not to exceed the longer of six months or  until
such time as any amount due from TENANT in accordance with different provisions
of this Lease has been determined and paid in full. TENANT shall not apply the
security deposit to the last month’s rent. TENANT
expressly agrees that if it should attempt to apply the security deposit to the
last month’s rent, then the last month’s rent shall be increased to 150% of the
amount otherwise scheduled as the last month’s rent. LANDLORD and TENANT hereby
agree that the increase of rent set forth above will be considered as
liquidated damages for the failure to pay the last month’s rent and not a
penalty. At the time of the making and entering into of this Lease, LANDLORD
and TENANT agree that it would be difficult, costly, and inconvenient to
determine the amount of damages that LANDLORD would sustain as a result of the
failure of TENANT to pay the last month’s rent. 
Therefore, LANDLORD and TENANT hereby agree that the increase in rent as
set forth in this Paragraph 12 is a fair and reasonable estimation of the
damages that LANDLORD would suffer. In the event of bankruptcy or other
debtor-creditor proceedings against TENANT, TENANT’s security deposit shall be
deemed to be applied first to the payment of rent, and other sums due LANDLORD
for all periods prior to filing of such proceedings.

 

	
   

  	
   

  	
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5

13.  USE OF
PREMISES.  In addition to the use
provided for in Paragraph 1.o, TENANT shall use the Premises for general office
purposes and shall not use or permit the Premises to be used for any other
purposes without consent of LANDLORD., which consent shall not be unreasonably withheld,
conditioned, or delayed  Notwithstanding
anything to the contrary in this Lease,  
During the term of this Lease and any extensions thereof, LANDLORD
hereby grants to TENANT the right to maintain the existing night depository
window into the Premises, and further to install and maintain an automated
teller machine (“ATM”) including installation of any required lighting.  The location for installation of the ATM
shall be as set forth in attached Exhibit “A”.

 

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

 

           TENANT
shall not do or permit anything to be done in or about the Premises which will
in any way obstruct or interfere with the rights of other TENANTS or occupants
of the Building or injure or annoy them or use or allow the Premises to be used
for any improper, immoral, unlawful or objectionable purpose nor shall TENANT
cause, maintain or permit any nuisance in, on or about the Premises.

 

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

 

           TENANT
warrants that it is not a political organization, and agrees that the Premises
shall not be used for political offices or political meetings.  TENANT shall at its sole cost and expense
promptly comply with all laws, statutes, ordinances and governmental
regulations or requirements now in force or which may hereafter be in force
relating to or affecting TENANT’s specific and unique use of the
Premises or the Building.  Nothing
contained herein shall require TENANT to make any structural changes, capital
improvements, or other alterations, additions or improvements to the Premises,
unless such changes are required due to either TENANT or TENANT’s agents,
clients, contractors, directors, employees, invitees, licensees, officers,
partners or shareholders use of the Premises for purposes other than general
office purposes.

 

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

 

14. CONDITION OF THE PREMISES. TENANT hereby
accepts the Premises “AS IS”, with all faults, and without any representation
or warranties by LANDLORD. TENANT acknowledges that LANDLORD has not promised
to make any changes or improvements to the Premises, except for those
improvements described in writing and signed by LANDLORD.

 

           The
entry of the TENANT into the possession of the Premises shall be a conclusive
acknowledgment on TENANT’s part that the Premises are in good and tenantable condition
as far as visual inspection discloses. 
At the expiration, or sooner termination of this lease, TENANT shall
deliver the Premises to LANDLORD in a state of repair in which the Premises
existed at the commencement of the term hereof, reasonable wear and tear
excepted.

 

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

 

15.  ALTERATIONS AND REPAIRS DURING OCCUPANCY.  The Premises shall not be altered,
repaired, or changed without the written consent of the LANDLORD first had and
obtained, which consent shall not be unreasonably withheld or delayed, and all
such alterations, improvements or changes shall be at the sole cost of the
TENANT. Notwithstanding the foregoing, TENANT shall have the right, without
LANDLORD’s consent but upon ten (10) days prior notice to LANDLORD, to make
non-structural additions and alterations (“Cosmetic Alterations”) to the
Premises that do not (i) involve the expenditure of more than $25,000.00 in the
aggregate in any twelve (12) month period during the Term, (ii) affect the
exterior appearance of the Building, or (iii) affect the Building systems
(electrical, plumbing or mechanical) or the Building structure.  After LANDLORD’s written consent has been
obtained by the TENANT (except for Cosmetic Alterations), TENANT shall enter
into an agreement for the performance of the work to be done pursuant to this
Paragraph 15 with LANDLORD’s contractor or a contractor selected by TENANT and
approved by LANDLORD, in LANDLORD’s reasonable judgment.  In any event, TENANT agrees to pay to
LANDLORD, as additional rent, the cost of such construction, within 30 days
following receipt from LANDLORD of invoice from time to time during the course
of such construction.  All costs and
expenses incurred in changes shall be paid by TENANT within thirty (30) days
after each billing by LANDLORD or any such contractor(s).  If LANDLORD approves the construction of the
specific interior improvements in the Premises by other contractors chosen by
TENANT from a list prepared by LANDLORD at TENANT’s request, then TENANT’s
contractors shall obtain on behalf of TENANT and at TENANT’s sole cost and
expense all necessary governmental permits and certificates for the
commencement and prosecution of TENANT’s 

 

 

	
   

  	
   

  	
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6

changes and for final approval thereof upon
completion and a completion and lien indemnity bond, or other surety,
satisfactory to LANDLORD, for the changes.; provided that the completion and
lien bond shall only be required if the proposed improvements exceed
$25,000.  In the event TENANT shall request any changes in the work to be
performed after the submission of plans referred to in this Paragraph 15 such
additional changes shall be subject to the same approvals and notices as the
changes initially submitted by the TENANT. 
TENANT shall pay to LANDLORD for LANDLORD’s services in the event LANDLORD
performs as a general contractor in connection with the work performed pursuant
to this Paragraph 15, a fee equal to fifteen percent (15%)
of the total cost the changes and LANDLORD’s reasonable overhead related
thereto.  Such fee shall be five percent
(5%)
in order to cover LANDLORD’s reasonable overhead if LANDLORD or its agent does
not perform as such general contractor. 
All such alterations, repairs, additions or improvements, except trade
fixtures, counters, appliances, shelving, bookcases and other personal
property that is attached to the walls for seismic safety purposes only,
and movable partitions placed therein by the LANDLORD for the requirement of
TENANT’s business, shall, unless otherwise provided by written agreement,
become the property of the LANDLORD and shall remain upon and be surrendered
with the Premises upon the expiration of this lease or any sooner termination
thereof.

 

16. DUTY
OF TENANT WITH REGARD TO PREMISES. TENANT shall take good care
of the Premises and fixtures therein and shall make, as and when needed, as a
result of misuse or neglect by TENANT, all repairs in and about the Premises
necessary to preserve them in good order and condition, which repairs shall be
in quality and class equal to the original work.  However, LANDLORD may repair, at the expense
of TENANT, after
notice to TENANT, if TENANT fails to make the repairs, all
damage or injury to the Premises, or to the Building or to its fixtures,
appurtenances or equipment, done by TENANT or by TENANT’s agents, servants,
employees, contractors, visitors or licensees or caused by moving property of
TENANT in or out of the Building, or by installation or removal of furniture or
other property, or resulting from fire, heating, ventilating or air
conditioning unit or system, short circuits, overflow or leakage of water,
steam, gas, sewer gas, sewage or odors, or by frost or by bursting or leaking
pipes or plumbing works or gas, or from any other cause, if
due to the carelessness, negligence or improper
conduct of TENANT, or TENANT’s agents, servants, employees, contractors,
visitors or licensees.  LANDLORD shall
have the right to replace, at the expense of TENANT, any and all plate and
other glass damages or broken from any cause whatsoever in or about the
Premises unless caused by or due to the negligence of LANDLORD, LANDLORD’s
agents, servants or employees.  Except as
otherwise specifically provided in Paragraph 26.c hereof, there shall be no
allowance to TENANT for diminution of rental value, and no liability of the part
of LANDLORD by reason of inconvenience, annoyance, or injury to TENANT’s
business arising from the making of any repairs, alterations, decorations,
additions or improvements in or to any portion of the Building or Premises  (so long as there is no material
interference with TENANT’s and TENANT’s customers, employees, and visitors,
access to and use of the Premises and the parking facility, or in or to
fixtures, appurtenances or equipment, and no liability upon LANDLORD (except in
the event of Landlord’s gross negligence or willful misconduct) for failure to
make any repairs, alterations, decorations, additions or improvements in or to any portion of the Building or
Premises, or in or to the fixtures, appurtenances or equipment or by reason of
the act or neglect of TENANT or any other TENANT or occupant of the Building.

 

17. WAIVER OF RIGHT TO MAKE REPAIRS AT EXPENSE OF
LANDLORD.  TENANT hereby
waives all rights under the provisions of Sections 1932, 1933, 1941, and 1942
of the Civil Code of the State of California, and all rights under any law in
existence during the term of this Lease authorizing a TENANT to make repairs at
the expense of a LANDLORD or to terminate a Lease upon the complete or partial
destruction of the leased Premises.

 

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

 

19.             AUTOMOBILE PARKING.  LANDLORD hereby grants to the TENANT, in
common with other TENANTS in said Building, of which the Premises are a part
thereof, the right to use during normal business hours, certain designated
space for automobile parking purposes. 
The designated space for automobile parking purposes to be selected at
the discretion of the LANDLORD. TENANT and its designated employees will be
limited to the number of cars designated in Paragraph 1.p at the prevailing
rates in the Building, payable in advance on the 1st of each month, said rates
being subject to change by LANDLORD applicable to all TENANTS during the term
upon thirty (30) days written notice. LANDLORD’s right to change said rates
being limited to once in any one calendar year, except that LANDLORD shall have
the right to change said rates at any time to include in said rates the payment
of any and all amounts levied, assessed, imposed or required to be paid by any
governmental authority upon the parking of motor vehicles, including without
limiting the generality of the foregoing, all sums required to be paid pursuant
to transportation controls imposed by the Environmental Protection Agency under
the Clean Air Act of 1970, or otherwise required to be paid pursuant to any
other law, ordinance, rule or regulation imposed by the State of California or
any City, County or any authority thereof, or by any authority of the United
States of America with respect to the parking, use, or transportation of motor
vehicles, or the reduction or control of motor vehicle traffic, and/or motor
vehicle pollution.  TENANT shall not use
more parking spaces than said number. In the event LANDLORD has not assigned
specific parking spaces to TENANT, TENANT shall not use any spaces which have
been so specifically assigned by LANDLORD to other TENANTS or for such other
uses as visitor parking or which have been designated by governmental entities
with competent jurisdiction as being restricted to certain uses.

 

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

 

           If
TENANT permits or allows any of the prohibited activities described in this
Paragraph 19, then LANDLORD shall have the right without notice, in addition to
such other rights and remedies that it may have, to remove or tow away the
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7

 

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

 

           TENANT
shall submit a written notice in a form reasonably specified by LANDLORD,
containing the names, home and office addresses and telephone numbers of those
persons who are authorized by TENANT to use the parking spaces on a monthly
basis (the “Authorized Users”) and shall use its best efforts to identify each
automobile by make, model and license number. 
Such notice shall be served upon LANDLORD prior to the beginning of the
term of this Lease.  Such notice, as
amended from time to time, is hereafter referred to as the “Parking
Notice.”  No person whose name and
address is not contained in the Parking Notice shall have any right to park an
automobile in the area of the Building parking facilities designated for
monthly parking and no person whether or not his name is included in the
Parking Notice shall have any right to park an automobile not identified in the
Parking Notice without (in either case) paying the parking charge then
applicable for daily parking in the Building parking facilities and parking in
the area designated for daily parking.

 

           The
automobiles entitled to such parking shall be designated to LANDLORD by TENANT
and shall be identified by LANDLORD’s automobile window stickers and only such
designated cars will be permitted the use of such automobile parking
space.  Additional automobile parking
space, subject to availability, shall be extended to TENANT’s invitees at
reasonable parking rates to be established by LANDLORD.  LANDLORD reserves the sole right and option
as to whether or not an attendant will be furnished for such automobile parking
area or areas.  If no attendant is
furnished, LANDLORD will provide suitable designation of the parking space
granted to TENANT.

 

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

 

20.  UTILITIES.

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

 

b.   TENANT
shall not permit the consumption at any one time in the Premises of more than 5 watts per net usable square foot in the Premises for all
purposes including lighting and power outlets. 
If such limits are exceeded, LANDLORD shall have the right to remove any
lighting fixture or any fluorescent tube or bulb therein as it deems necessary
and/or to charge TENANT for the cost of the additional electricity
consumed.  TENANT will not without
consent of LANDLORD use any apparatus or devise in the Premises, including
without limitation electronic data processing machines, punch card machines and
machines using current in excess of 110 volts, which will in any way increase
the amount of electricity or water usually furnished or supplied for use of the
Premises as general office space; nor connect any apparatus, machine or device
with water pipes or electric current (except through existing electrical
outlets in the Premises), for the purposes of using electric current or water.

 

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

 

 d.    If any lights, machines or equipment
(including but not limited to computers) are used by TENANT in the Premises
which materially affect the temperature otherwise maintained by the air
conditioning system, or generate substantially more heat in the Premises than
would be generated by the Building Standard lights and usual fractional
horsepower office equipment, LANDLORD shall have the right to install any
machinery and equipment which LANDLORD reasonably deems necessary to restore
temperature balance, including but not limited to modifications to the standard
air conditioning equipment, and cost thereof, including the cost of installation
and any additional cost of operation and maintenance occasioned thereby, shall
be paid by TENANT to LANDLORD upon demand by LANDLORD.  LANDLORD shall not be liable under any
circumstance for loss of or injury to property, however occurring, through or in
connection with or incidental to failure of any of the foregoing.

 

e.    If TENANT requires heating, ventilation
and/or air conditioning during times other than provided in Paragraph 20.a
above, TENANT shall give LANDLORD such advance notice as LANDLORD shall
reasonably require and shall pay for the use of such equipment, at reasonable
fee or charge as LANDLORD shall require.

 

	
   

  	
   

  	
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21.            ASSIGNMENT.

                                a. 
TENANT shall not, either voluntarily or by operation of law, sell,
hypothecate, assign, transfer, or otherwise encumber its interest in this Lease
or in the Premises, or sublease all or any part of the Premises, or allow any
other person or entity (except TENANT’s authorized representatives) to occupy
or use all or any part of the Premises, without first obtaining LANDLORD’s
written consent, which consent shall not be
unreasonably withheld or delayed.  If
LANDLORD does not respond to a written request for consent within 30 days after
LANDLORD’s receipt thereof, LANDLORD shall be deemed to have consented to the
proposed assignment or sublease.  Any
sale, assignment, mortgage, transfer or subletting of this Lease which is not in
compliance with the provisions of this Paragraph 21 shall be voidable and, at
LANDLORD’s election, shall constitute a default.  No consent to any assignment, encumbrance, or
sublease shall constitute a further waiver of the  provisions of this Paragraph 21.
Notwithstanding the consent of the LANDLORD to a subletting or assignment of
the Premises, in the event that the assignment or sublease by the TENANT should
be for a rental rate which is greater than that paid to the LANDLORD by TENANT,
such 50% of such excess shall be paid to the LANDLORD, after deduction for
TENANT’s costs of obtaining the assignment or sublease, including brokers’ fees
and attorneys’ fees.

 

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

 

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

 

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

 

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

                                                i.              A
conflict with other uses in the Building;

                                                ii.            Incompatibility
of the proposed use with others within the Building;

                                                iii.           Financial
inadequacy of the proposed sublessee or assignee;

                                                iv.            A
proposed use or user which would cause a diminution in the reputation of the
Building or the other businesses located therein;

                                                v.             A
proposed user whose impact on the common facilities or the other TENANTS in the
Building would be disadvantageous;

                                                vi.            A
proposed assignee or sublessee who is an existing tenant of LANDLORD in the
Building, or has negotiated with LANDLORD concerning the leasing of premises
from LANDLORD within the prior 120 days, and LANDLORD has available
space that meets the needs of the proposed assignee or sublessee.

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

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

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

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

                                          iv. 
Intentionally deleted.

                                          v. 
No subletting or assignment, even with the consent of LANDLORD, shall
relieve TENANT of its obligation to pay the rent and to perform all other
obligations to be performed by TENANT hereunder.  The acceptance of rent by LANDLORD from any
person shall not be deemed to be a waiver by LANDLORD of any provision of this
Lease or to be consent to any assignment or subletting;

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

                                                     a.  Except in the
case of an Affiliate (as defined in the First Amendment to this Lease), in the event that at any time or from time to time
during the term of this Lease, TENANT desires to assign or sublet all or part
of the Premises, TENANT shall notify LANDLORD in writing (hereinafter referred
to as “Transfer Notice”) of the terms of the proposed assignment or sublet and
shall give the LANDLORD the right to accept an assignment or to sublet from
TENANT such space (hereinafter referred to as “Transfer Space”) on the same
terms as those contained in this Lease, including the rent which TENANT is then
paying for such space.  Such option shall
be exercisable by LANDLORD in writing for a period of thirty (30) days after
receipt of the Transfer Notice.

 

	
   

  	
   

  	
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9

                                                     b. 
If LANDLORD fails to exercise such option, and TENANT fails to complete
negotiations for a valid and bona fide assignment to or sublease with a third
party within ninety (90) days
thereafter in accordance with the terms of the Transfer Notice, TENANT shall
again comply with all the conditions of this Paragraph 21, as if the notice and
option hereinabove referred to had not been given and received.

 

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

 

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

 

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

 

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

 

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

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

 

                                                     d. 
TENANT shall have the right without the consent of LANDLORD, but upon
prior written notice to LANDLORD, to assign this Lease to a company
incorporated or to be incorporated by TENANT provided that TENANT owns or
beneficially controls 50% or more of the issued and outstanding shares in the
capital stock of the corporation.  Such
assignment shall not, however, relieve TENANT from its obligations for the
payment of rent and for the full and faithful observance of the covenants,
terms and conditions contained herein.

 

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

 

23.            RIGHTS OF LANDLORD.  So long as the LANDLORD’s exercise
of these rights does not materially interfere with TENANT’s or TENANT’s
customers, employees, or visitors access to and use of the Premises and the
parking facility, the LANDLORD reserves the
following rights: (a) to change the name of the Building without notice or
liability to TENANT; (b) to designate all sources furnishing sign painting or
lettering, ice, bottled water and toilet supplies used on the Premises; (c)
constantly to have pass keys to the 
Premises; (d) to grant to anyone the exclusive right to conduct any
particular business or undertaking in the Building in which Premises are
situated; (e) to enter the Premises at any time for inspections, repairs,
alterations or additions to the Premises or the Building in which the Premises
are situated, to exhibit the Premises to others, to affix and display “For
Rent” signs, and for any purpose whatsoever related to the safety, protection,
preservation or improvement of the Premises, the said Building, or the
LANDLORD’s interest, without being deemed guilty of an eviction or disturbance
of TENANT’s use and possession, and without being liable in any manner to the
TENANT on account thereof; (f) at any time, and from time to time, whether at
the instance of LANDLORD or pursuant to government requirements, at LANDLORD’s
expense, to make repairs, alterations, additions, improvements or decorating,
whether structural or otherwise, in or to the Building or any part thereof,
including the Premises.  Without limiting
the generality of the foregoing rights LANDLORD shall specifically have the
right to remove, alter, improve or rebuild the lobby of the Building as the
same is presently or shall hereafter be constructed, or the light court of said
Building as the same is presently or shall hereafter be constituted, or any
part or parts thereof.  LANDLORD shall
not be liable to TENANT for any expense, injury, loss, or damage resulting from
any work so done in or about the Premises or the Building or any adjacent or
nearby the Building, land, street or alley. 
All claims against LANDLORD for any and all such liability being hereby
expressly released by TENANT.  In
connection with making repairs, alterations, decorating, additions or
improvements under the terms of this Paragraph 23, the LANDLORD shall have the
right to access through the Premises as well as the right to take into and upon
and through the Premises of any other part of the Building, all material that
may be required to make such repairs, alterations, decorating, additions or
improvements, as well as the right in the course of such work to close
entrances, doors, corridors, elevators, or other Building facilities, without
being deemed or held guilty of an eviction of TENANT and without liability for
damages to TENANT’s property, business or person and without liability to
TENANT by reason of interference with the business of TENANT or inconvenience
or annoyance to the TENANT or the customers of the TENANT.  The rent reserved herein shall in no ways
abate while said repairs, alterations, decorating, additions or improvements
are being made and TENANT shall not be entitled to maintain any set-off or
counter-claim for damages of any kind against LANDLORD by reason thereof, all
such claims being hereby expressly released by the TENANT. LANDLORD reserves
and shall have the right to enter upon the Premises for the purpose of posting
and maintaining such notices on the Premises as may be necessary to protect
LANDLORD against mechanic’s, material-men’s or other liens and any other
notices that may be proper and necessary.

 

	
   

  	
   

  	
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24.                                           INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY.

 

a.    TENANT shall indemnify, defend and hold
LANDLORD harmless from any activity, work or thing which may be permitted or
suffered by TENANT in or about the Premises and shall further indemnify, defend
and hold harmless from and against any and all claims arising from any breach
or default in the performance of any obligation on TENANT’s part to be
performed under this Lease or arising from any negligence of TENANT or any of
its agents, contractors, employees or invitees, patrons, customers or members
and from any and all costs, attorney’s fees, expenses and liabilities incurred
in the defense of any claim or any action or proceeding brought thereon,
including negotiations in connection therewith. 
TENANT hereby assumes all risk of damage to property or injury to
persons in or about the Premises from any cause, and TENANT hereby waives all
claims in respect thereof against LANDLORD, excepting where the damage is
caused solely by a willful or gross negligence of LANDLORD.

 

b.    LANDLORD shall not be liable for injury to
TENANT’s business, or loss of income therefrom, or for damage that may be
sustained by the person, or property of TENANT, its employees, invitees,
customers, agents, or contractors, or any other person in, on or about the
Premises directly or indirectly caused by or resulting from fire, steam,
electricity, gas, water, or rain which may leak or flow from or into any part
of the Premises, or from the breakage, leakage, obstruction or other defects of
the pipes, sprinklers, wires, appliances, plumbing, air conditioning, light
fixtures, or mechanical or electrical systems, or from any other cause
whatsoever, whether such damage or injury results from conditions arising upon
the Premises or upon other portions of the Building or from other sources or
places; and regardless of whether the cause of such damage or injury or the
means of repairing the same is inaccessible to TENANT, except in connection
with damage or injury resulting from the gross negligence or willful misconduct
of LANDLORD, or its authorized agents. 
LANDLORD shall not be liable to TENANT for any damages arising from any
act or neglect of any other TENANT of the Building.  LANDLORD shall not be liable for any damage
to property entrusted to employees of the Building.  LANDLORD shall not be liable for losses due
to theft, vandalism, or like causes.  TENANT shall defend, indemnify, and hold
LANDLORD harmless from any such claims made by any employee, licensee, invitee,
contractor, agent or person whose presence in, on or about the Premises or the
Building is attendant to the business of TENANT.

 

c.   TENANT acknowledges that LANDLORD’s election
to provide mechanical surveillance or to post security guards in the Building
is solely at LANDLORD’s discretion; 
LANDLORD shall have no liability in connection with the decision whether
or not to provide such services and TENANT hereby waives all claims based
thereon.

 

25.             INSURANCE.

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

b.    Form of
Policies.  The aforementioned
minimum limits of policies shall in no event limit the liability of TENANT
hereunder.  Such Insurance shall name
LANDLORD and such other persons or firms with insurable interests, as LANDLORD
specifies from time to time, as additional insured and shall be with companies
having a rating of not less than the A+ in Best’s Insurance Guide.  No such policy shall be cancelable or subject
to reduction of coverage or other modification or cancellation except after 30 days prior written notice to LANDLORD by the
insurer.  All such policies shall be
endorsed to agree that TENANT’s policy is primary and that any insurance
covered by LANDLORD is excess and not contributing with any insurance
requirement hereunder.  TENANT shall
furnish to LANDLORD, from the insurance companies, or cause the insurance
companies to furnish, certificates of coverage. 
TENANT shall, at least 20 days prior to the expiration of such policies
furnish LANDLORD with renewals or binders. 
TENANT agrees that if TENANT does not take out and maintain such
insurance or furnish LANDLORD with renewals or binders, LANDLORD may (but shall
not be required to) procure said insurance on TENANT’s behalf and charge TENANT
the cost thereof, which amount shall be payable by TENANT upon demand with
interest from the date such sums are extended. 
TENANT shall have the right to provide such insurance coverage, pursuant
to blanket policies obtained by TENANT, provided such blanket policies
expressly afford coverage to the Premises and to TENANT as required by this
Lease.

c.     LANDLORD’s
Insurance.  The cost of
Insurance carried by LANDLORD shall be included in Operating Costs.  TENANT understands that LANDLORD will not
carry insurance of any kind on TENANT’s furniture, furnishings, fixtures, or
equipment, and that LANDLORD shall not be obligated to repair any damage
thereto or replace the same.

d.     Waiver of
Subrogation.  The parties
release each other and their respective authorized representatives from any
claims for damage to any person or the Premises, and to the fixtures, personal
property, improvements, and alterations of either LANDLORD or TENANT, in or on
the Premises and the Building, to the extent that they are covered by any
insurance polices in force at the time of any such damage.  Each party shall cause each insurance policy
obtained by it to provide that the insurance company waives its rights of
subrogation.

 

26.            DAMAGE OR DESTRUCTION (PARTIAL OR TOTAL).

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

 

 

	
   

  	
   

  	
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cover the cost of such repairs, reconstruction, or
restoration, LANDLORD either  may elect
to so repair, reconstruct or restore the Building, the Premises and any insured
alterations and the Lease shall continue in full force and effect or  not to repair, reconstruct or restore the
Building, the Premises and any insured alterations and the Lease shall in such
event terminate.  Under any of the
conditions of this Paragraph 26.a, LANDLORD shall give written notice to TENANT
of its intention within thirty (30) days from the date of such event of damage
or destruction.  In the event LANDLORD
elects not to restore said Building and any insured alterations, this Lease
shall be deemed to have terminated as of the date of such partial destruction.

b.   Upon any termination of this Lease under any
of the provisions of this Paragraph, the parties shall be released thereby
without further obligation to the other from the date the possession of the
Premises is surrendered to LANDLORD except for items which have theretofore
accrued and are then unpaid.

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

d.    TENANT shall be released from any of its obligations
under this Lease except to the extent and upon the conditions expressly stated
in this Paragraph 26.  Notwithstanding
anything to the contrary contained in this Paragraph 26 should LANDLORD be
delayed or prevented from repairing or restoring the damaged Premises within
six (6) months after the occurrence of such damage or destruction, by reason of
acts of God, war, governmental restrictions, inability to procure the necessary
labor or materials, or other cause beyond the control of LANDLORD, LANDLORD
shall be relieved of its obligation to make such repairs or restoration and
TENANT shall be released from its obligations under this Lease as of the end of
said six (6) month period.

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

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

g.    Notwithstanding anything to the contrary
contained in this Paragraph 26, LANDLORD shall not have any obligation
whatsoever to repair, reconstruct or restore the Premises when the damage
resulting from any casualty covered under this Paragraph 26 occurs during the
last twelve (12) months of the term of this Lease or any extension hereof.

 

27.            DAMAGE TO TENANT’S PROPERTY.  Subject to the provisions of Paragraph 24,
LANDLORD or its agents shall not be liable for any damage to property entrusted
to employees of the Building, nor for loss of or damage to any property by
theft or otherwise, nor for any injury or damage to persons or property
resulting from fire, explosion, falling plaster, steam, gas, electricity, water
or rain which may leak from any part of the Building or from the pipes,
appliances or plumbing works therein or from the roof, street or sub-surface or
from any other place or resulting from dampness or any other patent or latent
cause whatsoever.  LANDLORD or its agents
shall not be liable for interference with the light or other incorporeal
hereditaments.  TENANT shall give prompt
notice to LANDLORD in case of fire or accidents in the Premises or in the
Building or of defects therein or in the fixtures or equipment located therein.

 

28.            EMINENT DOMAIN.

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

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

 

29.            RIGHT OF REPOSSESSION.  If, in compliance with any law or ordinance
now or hereafter enacted, or if required to comply with the directions or
requirements of any public officer, board or commission, it becomes necessary
for LANDLORD to acquire permanently all or any portion of the Premises,
LANDLORD or its assigns shall have the right to repossess the Premises, or any
portion thereof, at any time upon thirty days written notice to TENANT, and
when said space shall have been so permanently repossessed, the LANDLORD shall,
in lieu of any and all claims for damages, allow TENANT a credit on TENANT rent
in the proportion that space taken bears to the whole of the Premises;  provided, however, that if the space taken is
of such an amount or size as to make the remaining space undesirable to TENANT,
then the LANDLORD, upon thirty (30) days written notice from TENANT, will endeavor,
if available, to furnish TENANT with comparable space elsewhere in the Building (which must be on the ground
floor), and to place TENANT in such new space
and this Lease and each and all of the terms, covenants and conditions
therefore, shall thereupon remain in full force and effect and be deemed
applicable to such new space; provided, however, that if the LANDLORD shall be
unable to provide TENANT with such other space, then this Lease shall thereupon
cease and terminate.  No exercise by
LANDLORD of any right herein reserved shall entitle TENANT to damages for any
injury or inconvenience occasioned thereby, nor shall TENANT by reason thereof
be entitled to any abatement in rent (except as above set forth in case of
taking of space permanently).

 

 

	
   

  	
   

  	
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12

30.            DEFAULT- REMEDIES OF LANDLORD.  In the event of default at any time by TENANT
in the payment of the rent herein provided for, or any part thereof, or in the
performance of any other terms, covenants or conditions to be kept or performed
by TENANT, or if TENANT shall abandon or vacate the Premises (as defined
below) without the written consent of LANDLORD, then after three days’
written notice of any default in payment of rent and after fifteen days’
written notice of any default other than payment of rent (if such default is
not cured within such period; provided, however, that if the cure cannot
reasonably be accomplished within 15 days, TENANT shall not be in default so
long as TENANT has commenced the cure within the 15 day period and diligently
prosecutes it to completion), the LANDLORD, at
its option, shall have the right to deem this Lease to be in default and LANDLORD
shall have the right, at its option, to enter upon the Premises or any part
thereof, either with or without process of law, and to expel, remove or put out
TENANT or any other person or persons who may be thereon, together with all
personal property found therein; and in event of TENANT’s default, LANDLORD
shall have the following cumulative remedies:

 

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

b.     Upon
termination of such right to possession or upon abandonment of the property by
TENANT, the remedies prescribed by Civil Code Section 1951.2(a), Paragraphs
(1), (2), (3), and (4).  In connection
with such Paragraph (3), it is hereby provided that damages that LANDLORD may
recover include the worth at the time of award of the amount by which the
unpaid rent for the balance of the term after the time of award exceeds the
amount of rental loss for the same period that the TENANT proves could be
reasonably avoided;

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

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

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

(i)  TENANT ceased to regularly occupy the
property during business hours and gives written notice to LANDLORD of
abandonment; or

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

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

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

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

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

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

iv.     Assignment
of the Premises by TENANT, either voluntarily or by operation of law, whether
by judgment, execution, death or any other means, without the consent of
LANDLORD; or

v.   A filing by
TENANT or any other person of a voluntary or involuntary petition in bankruptcy
or

an arrangement by or against TENANT; the adjudication
of TENANT as a bankrupt or insolvent; the appointment of a receiver of the
business or of the assets of TENANT, except a receiver appointed at the
instance or request of LANDLORD; the general or any other assignment by TENANT
for the benefits of its creditors; or

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

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

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

 

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

 

 

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

 

 

	
   

  	
   

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

 

           Should
TENANT fail to deliver such statement within said ten (10) days, LANDLORD, at
its option, following: the termination of the
applicable notice and cure period (provided, however, that such cure period
shall not, in this case, be more than 10 days following notice of default)

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

 

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

 

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

 

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

 

34.           
PLANNING PROGRAM.  Intentionally Deleted.

 

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

 

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

 

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

 

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

 

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

 

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

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

 

 

	
   

  	
   

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

 

40.           
JOINT AND SEVERAL LIABILITY OF TENANT.
If more than one person executes this Lease as TENANT, (a) each of them is
jointly and severally liable for the keeping, observing and performing of all
of the terms, conditions, covenants, provisions, and agreements of this Lease
to be kept, observed and performed by TENANT, and (b) the term “TENANT” as used
in this Lease shall mean and include each of them jointly and severally and the
act of or notice from, or notice or refund to, or the signature of, any one or
more of them, with respect to the tenancy of this Lease, including, but not
limited to any renewal, extension, expiration, termination or modification of
this Lease shall be binding upon each and all of the persons executing this
Lease as TENANT with the same force and effect as if each and all of them had
so acted or so given or received such notice or refund or so signed.

 

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

 

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

 

43.            COVENANT BY TENANT.  TENANT covenants to hold LANDLORD
free and harmless from all loss, cost or damage (including reasonable attorney
fees and court costs) resulting from TENANT’s violation of any term or
provisions of this lease, the use, misuse or neglect of the Premises or
appurtenances and from all claims arising out of any alleged defective or
unsafe condition thereof.

 

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

 

44.           
COMPLIANCE.  Subject to the terms of
Paragraph 13 of this Lease, TENANT agrees to comply with all laws, ordinances and all regulations and
requirements of Municipal, State and Federal governments, boards, and
authorities relative to the TENANT’s occupancy of the Premises or to the
business to be conducted therein and will keep the said Premises in a clean and
orderly condition according to all laws and ordinances and the direction of all
public officers, and, as far as reasonably possible will keep all immoral and
disreputable persons out of the Premises to the end that the reputation of the
Premises and the said Building as a first class office building may be
preserved.

 

45.           
HAZARDOUS WASTE.

a.   Except for small quantities
of ordinary office supplies, which shall be used and disposed of in accordance
with law, TENANT shall not cause or permit any
Hazardous Material (as defined in Paragraph 45.c below) to be brought, kept or
used in or about the Building by TENANT, its agents, employees, contractors, or
invitees.  TENANT shall indemnify
LANDLORD from and against any  breach by TENANT
of the obligations stated in the preceding sentence, and agrees to defend and
hold LANDLORD harmless from and against any and all claims, judgments, damages,
penalties, fines, costs, liabilities, or losses, (including without limitation,
diminution in value of the Building, damages for the loss or restriction on use
of rentable or usable space or of any amenity of the Building, damages arising
from any adverse impact on marketing of space in the Building, and sums paid in
settlement of claims, attorney’s fees, consultant fees, and expert fees) which
arise during or after the term of this Lease as a result of such breach.  This indemnification of LANDLORD by TENANT
includes, without limitation, costs incurred in connection with any
investigation of site conditions of any cleanup, remedial removal, or
restoration work required by any federal, state, or local governmental agency
or political subdivision because of Hazardous Material present in the soil or
ground water on or under the Building. Without the limiting the foregoing, if
the presence of any Hazardous Material in the Building caused or permitted by
TENANT results in any contamination of the Building, TENANT shall promptly take
all actions, at its sole expense, as are necessary to return the Building to
the condition existing prior to the introduction of any such Hazardous Material.

 

b.    LANDLORD and TENANT acknowledge that
LANDLORD may become legally liable for the costs of complying with Laws (as
defined in Paragraph 45.d below) relating to Hazardous Material which are not
the responsibility of LANDLORD or the responsibility of TENANT, including the
following: (i) Hazardous Material present in the soil or ground water on the
Building of which LANDLORD has no knowledge as of the effective date of this
Lease; (ii) a change in Laws which relate to Hazardous Material which make that
Hazardous Material which is present on the Property as of the effective date of
this Lease, whether known or unknown to LANDLORD, a violation of such new
Laws:  (iii) Hazardous Material that
migrates, flows, percolates, diffuses, or in any way moves on, to, or under the
Building after the effective date of this Lease; or Hazardous Material present
on or under the Building as a result of any discharge, dumping or spilling
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the Building by other 
TENANTS of the Building or their agents, employees, contractors, or
invitees, or by others.  Accordingly,
LANDLORD and TENANT agree that the cost of complying with Laws relating to
Hazardous Material in or under the Building for which LANDLORD is legally
liable and which are paid or incurred by LANDLORD shall be an Operating Cost
(and TENANT shall pay TENANT’s Percentage Share thereof in accordance with
Paragraph 1.m); unless the cost of such compliance, as between LANDLORD and
TENANT, is made the responsibility of TENANT pursuant to Paragraphs 45.a
above.  To the extent any such Operating
Cost relating to Hazardous Material is subsequently recovered or reimbursed,
TENANT shall be entitled to a proportionate reimbursement to the extent it has
paid its share of such Operating Cost to which such recovery or reimbursement
relates.

c.    As used herein, the term “Hazardous
Material” means any hazardous or toxic substance, material, or waste which is
or becomes regulated by any local governmental authority, the State of
California or the United States Government. 
The term “Hazardous Material” includes, without limitation, any material
or substance which is (i) defined as “hazardous waste”, “extremely hazardous
waste”, or “restricted Hazardous Waste” 
under Section 25115, 25117, or 25122.7, or listed pursuant to Section
25140 of the California Health and Safety Code, Division 20, Chapter 6.5
(Hazardous Waste Control Law), (ii) defined as “hazardous substance” under
Section 25316 of the California Health and Safety Code, Division 20, Chapter
6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined
as a “hazardous material”, “hazardous substance”, or “hazardous waste” under
Section 25501 of the California Health and Safety Code, Division 20, Chapter
6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined
as a “hazardous substance” under Section 25281 of the California Health and
Safety Code, Division 20, chapter 6.7 (Underground Storage of Hazardous
Substances), (v) petroleum, (vi) asbestos, (vii) listed under Article 9 or
defined hazardous or extremely hazardous pursuant to Article 11 of Title 22 of
the California Administrative Code, Division 4, Chapter 20, (viii) designated
as a “hazardous substance” pursuant to section 311 of the Federal Water
Pollution control Act (33 U.S.C. & 1317), (ix) defined as a “hazardous
waste” pursuant to Section 1004 of the Federal Resource Conservation and
Recovery Act, 42 U.S.C. & 6901) et seq. (42 U.S.C. & 6903), or (x)
defined as a “hazardous substance” pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. & 6901 et
seq. (42 U.S.C. & 9601).

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

 

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

 

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

 

48.  BROKERS.  The parties recognize that the brokers who
negotiated this Lease are the brokers whose names are stated in Paragraph 1.q
and agree that LANDLORD shall be solely responsible for the payment of
brokerage commissions to said brokers, and that TENANT shall have no
responsibility therefor.  As part of the
consideration for the granting of this Lease, TENANT represents and warrants to
LANDLORD that to TENANT’s knowledge no other broker, agent or finder negotiated
or was instrumental in negotiating or consummating this Lease and that TENANT
knows of no other real estate broker, agent or finder who is, or might be
entitled to a commission or compensation in connection with this Lease. Any
broker, agent, or finder of TENANT whom TENANT has failed to disclose herein
shall be paid by TENANT.  TENANT shall
hold LANDLORD harmless from all loss, cost or damages (including reasonable
attorney fees and court costs) and indemnify LANDLORD for all loss, cost or
damages (including reasonable attorney’s fees and court costs) paid or incurred
by LANDLORD resulting from any claims that may be asserted against LANDLORD by
any broker, agent, or finder undisclosed by TENANT herein.

 

49.             TRANSFER OF LANDLORD’s INTEREST.  If LANDLORD transfers its interest in the
Premises or in the real property of which the Premises are a part, other than a
transfer for security purposes only, the transferor shall be automatically
relieved of any and all obligations and liabilities on the part of LANDLORD
from and after the date of such transfer. 
LANDLORD shall transfer
TENANT’s Security Deposit hereunder to the purchaser of the property.  Upon such transfer, LANDLORD shall be
relieved from any further liability with respect to said security deposit.  In the event of an assignment or sublease
consented to by LANDLORD, the assigning TENANT’s interest in the security
deposit shall be deemed transferred to such assignee or sublessee (to the pro
rata extent applicable).  Neither LANDLORD
or any successor in interest of LANDLORD shall be personally liable with
respect to any of the terms, covenants and conditions of this Lease, and TENANT
shall look solely to the equity of LANDLORD in the Building and the rent
payable by TENANT for the satisfaction of each and every remedy by TENANT, such
exculpation of liability to be absolute and without any exception whatsoever.

 

50.             EXAMINATION OF LEASE.  The submission of this Lease to TENANT for
examination by TENANT does not constitute an option or offer to lease the
Premises upon the terms and conditions contained herein or a reservation of the
Premises for TENANT.  This Lease shall
only become effective upon the execution hereof by LANDLORD.  The negotiation of checks tendered by TENANT
and delivery of a copy of this Lease signed by TENANT to LANDLORD, shall not
constitute an acceptance of TENANT’s offer to lease as contained herein until
such time as LANDLORD makes and executes this Lease and delivers a signed copy
thereof to TENANT.

 

51.             ETHICS. If the TENANT is a member
of any profession, he agrees to abide by the Code of Ethics of the Association
recognized as representing that particular profession in the County of Los
Angeles, State of California.

 

	
   

  	
   

  	
  LANDLORD’s Initials: 

  	
   

  	
   

  	
  TENANT’s Initials: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  TENANT’s Initials: 

  	
   

  

 

16

52.            GENERAL PROVISIONS.

 

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

 

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

 

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

 

d.     Cumulative
Remedies.  No remedy or
election hereunder shall be deemed exclusive but shall, whenever possible, be
cumulative with all other remedies at law or in equity.

 

e.    
Successors. 
The words “LANDLORD” and “TENANT” as used herein, shall include, apply
to, and bind and benefit the heirs, executors, administrators, assigns and
successors of the LANDLORD and TENANT, subject to the aforementioned
restrictions on assignment of this Lease on the part of the TENANT.

 

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

 

g.    Paragraph
Headings.  Paragraph headings
do not constitute part of the text of this lease, but are inserted in this
Lease for paragraph identification only.

 

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

 

Chief Financial Officer

Mercantile National Bank, N.A.

1880 Century Park East, Suite 800

Los Angeles, California 90067.

 

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

 

           Any
notices desired to be served on LANDLORD by TENANT must be sent by United
States registered mail to the LANDLORD at the address set forth in Paragraph
1.b, which may be changed from time to time upon giving of written notice to
TENANT.

 

     53.  SPECIAL
CONDITIONS.         Exhibit “A”
(Floor Plan) and Exhibit “B”
(First Amendment to Office Building Lease) are
attached hereto and incorporated herein by this reference.

 

	
  LANDLORD:

  	
   

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Encino Corporate Plaza, L.P.

  	
   

  	
   

  	
  Mercantile National Bank, N.A.,
  national bank

  
	
  By:

  	
   Milbank Real Estate
  Services, Inc.

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
   Authorized Agent

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By: 

  	
   

  
	
   

  	
  Solyman Yashouafar, COO

  	
   

  	
   

  	
   

  	
  Scott A. Montgomery

  
	
   

  	
   

  	
   

  	
   

  	
  For:

  	
  Mercantile
  National Bank

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
  President
  and CEO

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  David Brown

  
	
   

  	
   

  	
   

  	
   

  	
  For:

  	
  Mercantile National Bank

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
  Vice President and Chief
  Financial Officer

  

 

17

RULES AND REGULATIONS OF THE BUILDING
REFERRED TO HEREIN

WHICH CONSTITUTE A PART OF THIS LEASE

 

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

 

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

           2. 
The sash doors, sashes, windows, glass doors, lights and skylights that
reflect or admit light into the halls or other places of the Building, shall
not be covered or obstructed, nor shall any bottles, parcels, or other articles
be placed on the windowsills.

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

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

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

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

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

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

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

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

           11. 
All keys shall be obtained from LANDLORD and all keys shall be returned
to LANDLORD upon the termination of this lease. 
If the keys are not returned to LANDLORD immediately upon termination of
this lease, LANDLORD may replace all of the locks in the Premises with new
locks, all at TENANT’s sole expense.  No
additional locks or bolts of any kind shall be placed upon any of the doors by
TENANT, nor shall any changes be made in existing locks or the mechanisms
thereof unless LANDLORD is first notified thereof, gives written approval, and
the mechanism thereof is placed on LANDLORD’s Master Key.

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

           13.  TENANT shall comply with all safety, fire
protection and evacuation procedures and regulations instituted by LANDLORD or
any governmental agency.  TENANT shall
comply with all relevant non-smoking laws applicable to the Building.

           14. 
TENANT shall not obtain for use on the Premises cleaning, interior glass
polishing, rubbish removal, towel or other similar services, or accept
barbering or bootblacking, or coffee cart services, milk, soft drinks or other
like services on the Premises, except from persons authorized by LANDLORD and
at the hours and under regulations fixed by LANDLORD.  No vending machines or machines of any
description shall be installed, maintained or operated upon the Premises
without LANDLORD’s prior written consent.

           15. 
Toilet rooms, toilets, urinals, wash bowls and other apparatus shall not
be used for any purpose other than for which they were constructed and no
foreign substance of any kind whatsoever (ie. cigarette butts, sanitary
napkins, or paper), shall be thrown therein.

           16. 
Before TENANT or the last employee to leave the Premises, such
individual shall see that the doors of the Premises are closed and locked and
be sure that all water faucets, coffee pots, heat generating objects, lights
and appliances are turned off to prevent waste and damage.  TENANT shall avoid all situations which could
be fire hazards including placing trash near or on wires and the careless
disposal of cigarettes, or other pipes.

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

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

 

 

	
   

  	
   

  	
  LANDLORD’s Initials: 

  	
   

  	
   

  	
  TENANT’s Initials: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  TENANT’s Initials: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

18

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

           20. 
TENANT shall cooperate with LANDLORD in obtaining maximum effectiveness
of the cooling system by closing drapes or blinds when the sun’s rays fall
directly on windows of the Premises and by keeping the windows closed.  TENANT shall not obstruct, alter, or in any
way impair the efficient operation of LANDLORD’s heating, ventilating and air-conditioning
system.  TENANT shall not tamper with or
change the setting of any thermostats or control valves.  No heating or air conditioning unit or other
similar apparatus shall be installed or used by any TENANT without the prior
written consent of LANDLORD.

           21. 
TENANT shall not make, or permit to be made, any unseemly or disturbing
noises, or disturb or interfere with occupants of Building or neighboring
buildings or premises or those having business with it by the use of any  musical instrument, radio, photographs or
unusual noise, or in any other way. If TENANT does not eliminate objectionable
noise coming from the Premises after notice from LANDLORD, LANDLORD may, in its
sole discretion, cancel this Lease or enter the Premises and add such soundproofing
material and take such other steps as may be necessary to prevent such noise
from being heard outside the Premises. 
The cost of such soundproofing shall be paid by TENANT to LANDLORD upon
demand.

           22. 
No bicycles, vehicles or animals of any kind shall be brought into or
kept in or about the Premises, and no cooking shall be done or permitted by any
TENANT in the Premises, except that the preparation of coffee, tea, hot
chocolate and similar items for TENANT’s, their employees and visitors shall be
permitted.  No TENANT shall cause or
permit any unusual or objectionable odors to be produced in or permeate from or
throughout the Premises.

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

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

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

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

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

           28. 
TENANT shall not go on the roof of the Building nor shall TENANT install
any type of antenna on the roof or walls of the Building.  TENANT shall not operate any equipment in the
Premises which causes electromagnetic interference with the equipment of any
other person.

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

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

 

 

	
   

  	
   

  	
  LANDLORD’s Initials: 

  	
   

  	
   

  	
  TENANT’s Initials: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  TENANT’s Initials: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

19

Exhibit “A”

 

 

Floor Plan

 

 

 

 

 

 

 

 

 

 

 

	
   

  	
   

  	
  LANDLORD’s Initials: 

  	
   

  	
   

  	
  TENANT’s Initials: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  TENANT’s Initials: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

20

Exhibit “B”

 

First Amendment to Office Building Lease

                     

On this 30th day of August 2004, this
Exhibit “B” shall serve as the First Amendment (“1st Amendment”) to
that certain Office Building Lease, dated May 24, 2004 (“Lease”), by and
between ENCINO CORPORATE PLAZA, LP (“LANDLORD”) and MERCANTILE NATIONAL BANK,
N.A., a national bank (“TENANT”) for
the premises located at 16661 Ventura Boulevard, Suite 110, Encino, California
91436 (“Premises”).  In the event of a
conflict, the provisions of this 1st Amendment shall supersede the
provisions of the Lease.

 

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

 

2.                      HVAC.  Notwithstanding anything to the contrary in
the provisions of Paragraph 20 of the Lease, LANDLORD shall furnish to the
Premises heating, ventilating and air conditioning Monday through Friday, from
8:00 a.m. to 6:00 p.m, and Saturdays from 9:00 a.m. to 1:00 p.m. at no additional
charge.

 

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

 

4.                      Rent Credit.  Provided TENANT is not in default of any of the terms and
conditions of the Lease beyond any applicable notice and cure period,
at
the time
of the applicable rent credit,
then, TENANT
shall be entitled to the total of six (6) monthly credits, each credit shall be
equal to the then Monthly Basic Rent payable hereunder and shall be applied
during the months of August 2004, December 2004, July 2005, July 2006, July 2007 and July
2008.

 

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

 

6.                      Option
to Extend Term.

           i) TENANT and its
Affiliates (as defined in Paragraph 8 of this First Amendment,
but not any third party assignee
of TENANT)  is given the option to extend
the term of this Lease for a five (5) year period (“Extended Term”) following
expiration of the initial term by giving written notice of exercise of the
option (“Option Notice”) to LANDLORD at least nine (9) months but not more than
twelve (12) months prior to the expiration of the initial term.  Provided that, if the TENANT is in default beyond
any applicable notice and cure period  on the date of
giving the Option Notice or if the TENANT is in default beyond any applicable notice and cure period
on the date the Extended Term is commenced, the Option Notice shall be totally
ineffective, the Extended Term shall not commence and the Lease shall expire at
the end of the initial term. Similarly, in the event TENANT, during the initial
term, failed to cure a monetary default
within the applicable cure period as defined in the Lease, then the Option
Notice shall be totally ineffective, the Extended Term shall not commence and
the Lease shall expire at end of the initial term.

 

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

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

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

 

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

 

	
   

  	
   

  	
  LANDLORD’s Initials: 

  	
   

  	
   

  	
  TENANT’s Initials: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  TENANT’s Initials: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

21

7.       Right
of First Acceptance.

 

           i) At any time during the term of the
Lease, upon prior written notice to LANDLORD (“Expansion Notice”), TENANT shall
have the Right of First Acceptance to lease any contiguous space (“Additional
Premises”)  that is then available for
lease or becomes available for lease within two (2) months of the date of the Expansion Notice (the “Additional
Premises Period”).  
Within ten (10) business days from receipt of Expansion
Notice, or
within ten (10) business days after any Additional Premises becomes available
during Additional Premises Period, the  LANDLORD
shall provide TENANT with a letter  which
shall set forth the description of Additional Premises and LANDLORD’s proposed
material terms and conditions (“Economic Terms”) applicable to TENANT’s lease
of the Additional Premises (“First Acceptance Notice”).  Except for the Economic Terms and the number
of parking spaces, all of the terms for the lease of the Additional Premises
shall be the terms of this Lease, as amended by this First Amendment.

 

           ii) If TENANT wishes to exercise TENANT’s
Right of First Acceptance with respect to the Additional Premises, then within
ten (10) business
days after LANDLORD’s delivery
of the First Acceptance Notice to TENANT, TENANT shall deliver notice to
LANDLORD of TENANT’s unconditional and irrevocable exercise of its Right of
First Acceptance with respect to the entire Additional Premises and the
Economic Terms set forth in the First Acceptance Notice.  TENANT may not elect to lease only a portion
of the Additional Premises.  If TENANT
does not unconditionally and irrevocably exercise its Right of First Acceptance
within the ten (10) day period, or if TENANT exercises its Right of First
Acceptance but objects to LANDLORD’s proposed Economic Terms, then LANDLORD
shall be free to lease the Additional Premises, or any portion thereof, to
anyone to whom LANDLORD desires; provided, however, that if the
Economic Terms on which LANDLORD is willing to lease
the Additional Premises to a third party are more favorable than the
terms offered
to TENANT (as adjusted for the difference
in the term of the proposed lease). then LANDLORD
shall again
offer the Additional Premises to TENANT on such
terms. Unless otherwise expressly set forth to the
contrary in LANDLORD’s First Acceptance Notice, TENANT shall accept
the Additional Premises in its “AS-IS” condition.   Any space leased by TENANT under the
provisions of this Paragraph 7 shall be for a term that is co-terminous with
the term of the Lease, however, in no event less than 24 months.

 

          iii) The rights contained in this
Paragraph 7 shall be personal to TENANT or an Affiliate of TENANT (as
defined in Paragraph 8 below) and may only be
exercised by TENANT or an Affiliate of TENANT, and not any third party
assignee or subtenant.  TENANT shall not
have the right to lease the Additional Premises if as of the date of the Expansion Notice, or, at LANDLORD’s option, as of the
scheduled date of delivery of the Additional Premises to TENANT, TENANT is in
default of the Lease or has been previoiusly in default of the Lease
beyond any applicable notice and cure
period.

 

8.                    Assignment
and Sublease. Notwithstanding anything to the contrary
contained in Paragraph 21 of the Lease, LANDLORD’s prior consent to assignment
or sublease shall not be required for any transfer to TENANT’s affiliate
defined as (i) a corporation or entity into or with which all of TENANT is
merged or consolidated, or (ii) a corporation or entity which controls the
TENANT or is controlled by TENANT, or is
under common control with TENANT, or (iii) a corporation which acquires all of
the stock or assets of TENANT; provided however, that TENANT (a) notifies LANDLORD of any
such assignment or sublease at least 15 days prior to the effective date of
such assignment or sublease, (b) promptly supplies LANDLORD with any documents
or information requested by LANDLORD regarding such assignment or sublease, (c)
the proposed assignee assumes in writing for the express benefit of LANDLORD
all of the liabilities and obligations of TENANT under the Lease, in a form and
substance satisfactory to LANDLORD, and (d) such assignment or sublease is not
a subterfuge by TENANT to avoid its obligations under the Lease.  “Control” as used in this Paragraph 8 shall
mean the ownership, directly or indirectly, of at least fifty-one percent (51%)
of the voting securities of, or possession of the right to vote, in the
ordinary direction of its affairs, of at least fifty-one percent (51%) of the
voting interest in, any person or entity.

 

 

	
   

  	
   

  	
  LANDLORD’s Initials: 

  	
   

  	
   

  	
  TENANT’s Initials: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  TENANT’s Initials: 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

22

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