Document:

Exhibit
10.11

 

OFFICE LEASE

 

 

BETWEEN

 

 

METROPOLITAN LIFE INSURANCE
COMPANY (LANDLORD)

 

 

AND

 

 

SOUTH BAY BANK (TENANT)

 

 

 

 

SOUTH COAST CORPORATE CENTER

 

Costa Mesa, California

 

 

TABLE OF CONTENTS

 

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE ONE - BASIC LEASE PROVISIONS

  	
   

  	
   

  
	
  1.01

  	
   

  	
  BASIC LEASE PROVISIONS

  	
   

  	
   

  
	
  1.02

  	
   

  	
  ENUMERATION OF EXHIBITS

  	
   

  	
   

  
	
  1.03

  	
   

  	
  DEFINITIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE TWO - PREMISES, TERM, FAILURE TO GIVE
  POSSESSION 6

  	
   

  	
   

  
	
  2.01

  	
   

  	
  LEASE OF PREMISES

  	
   

  	
   

  
	
  2.02

  	
   

  	
  TERM

  	
   

  	
   

  
	
  2.03

  	
   

  	
  FAILURE TO GIVE POSSESSION

  	
   

  	
   

  
	
  2.04

  	
   

  	
  AREA OF PREMISES

  	
   

  	
   

  
	
  2.05

  	
   

  	
  CONDITION OF PREMISES

  	
   

  	
   

  
	
  2.06

  	
   

  	
  TEMPORARY SPACE

  	
   

  	
   

  
	
  2.07

  	
   

  	
  ATM LICENSE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  THREE - RENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE FOUR - RENT ADJUSTMENTS AND PAYMENTS

  	
   

  	
   

  
	
  4.01

  	
   

  	
  RENT ADJUSTMENTS

  	
   

  	
   

  
	
  4.02

  	
   

  	
  STATEMENT OF LANDLORD

  	
   

  	
   

  
	
  4.03

  	
   

  	
  BOOKS AND RECORDS

  	
   

  	
   

  
	
  4.04

  	
   

  	
  PARTIAL OCCUPANCY

  	
   

  	
   

  
	
  4.05

  	
   

  	
  TENANT OR LEASE SPECIFIC TAXES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE FIVE - SECURITY DEPOSIT

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  SIX - SERVICES

  	
   

  	
   

  
	
  6.01

  	
   

  	
  LANDLORD’S GENERAL SERVICES

  	
   

  	
   

  
	
  6.02

  	
   

  	
  TELEPHONE SERVICES

  	
   

  	
   

  
	
  6.03

  	
   

  	
  DELAYS IN FURNISHING SERVICES

  	
   

  	
   

  
	
  6.04

  	
   

  	
  CHOICE OF SERVICE PROVIDER

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE SEVEN - POSSESSION, USE AND CONDITION OF
  PREMISES

  	
   

  	
   

  
	
  7.01

  	
   

  	
  POSSESSION AND USE OF PREMISES

  	
   

  	
   

  
	
  7.02

  	
   

  	
  LANDLORD ACCESS TO PREMISES; APPROVALS

  	
   

  	
   

  
	
  7.03

  	
   

  	
  QUIET ENJOYMENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE EIGHT - MAINTENANCE

  	
   

  	
   

  
	
  8.01

  	
   

  	
  LANDLORD’S MAINTENANCE

  	
   

  	
   

  
	
  8.02

  	
   

  	
  TENANT MAINTENANCE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE NINE - ALTERATIONS AND IMPROVEMENTS

  	
   

  	
   

  
	
  9.01

  	
   

  	
  TENANT ALTERATIONS

  	
   

  	
   

  
	
  9.02

  	
   

  	
  LIENS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE TEN - ASSIGNMENT AND SUBLETTING

  	
   

  	
   

  
	
  10.01

  	
   

  	
  ASSIGNMENT AND SUBLETTING

  	
   

  	
   

  
	
  10.02

  	
   

  	
  RECAPTURE

  	
   

  	
   

  
	
  10.03

  	
   

  	
  EXCESS RENT

  	
   

  	
   

  
	
  10.04

  	
   

  	
  TENANT LIABILITY

  	
   

  	
   

  
	
  10.05

  	
   

  	
  ASSUMPTION AND ATTORNMENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE ELEVEN - DEFAULT AND REMEDIES

  	
   

  	
   

  
	
  11.01

  	
   

  	
  EVENTS OF DEFAULT

  	
   

  	
   

  
	
  11.02

  	
   

  	
  LANDLORD’S REMEDIES

  	
   

  	
   

  
	
  11.03

  	
   

  	
  ATTORNEY’S FEES

  	
   

  	
   

  
	
  11.04

  	
   

  	
  BANKRUPTCY

  	
   

  	
   

  
	
  11.05

  	
   

  	
  LANDLORD’S DEFAULT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE TWELVE - SURRENDER OF PREMISES

  	
   

  	
   

  
	
  12.01

  	
   

  	
  IN GENERAL

  	
   

  	
   

  
	
  12.02

  	
   

  	
  LANDLORD’S RIGHTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE THIRTEEN - HOLDING OVER

  	
   

  	
   

  

 

	
  ARTICLE FOURTEEN - DAMAGE BY FIRE OR OTHER CASUALTY

  	
   

  	
   

  
	
  14.01

  	
   

  	
  SUBSTANTIAL UNTENANTABILITY

  	
   

  	
   

  
	
  14.02

  	
   

  	
  INSUBSTANTIAL UNTENANTABILITY

  	
   

  	
   

  
	
  14.03

  	
   

  	
  RENT ABATEMENT

  	
   

  	
   

  
	
  14.04

  	
   

  	
  WAIVER OF STATUTORY REMEDIES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE FIFTEEN - EMINENT DOMAIN

  	
   

  	
   

  
	
  15.01

  	
   

  	
  TAKING OF WHOLE OR SUBSTANTIAL PART

  	
   

  	
   

  
	
  15.02

  	
   

  	
  TAKING OF PART

  	
   

  	
   

  
	
  15.03

  	
   

  	
  COMPENSATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE SIXTEEN - INSURANCE

  	
   

  	
   

  
	
  16.01

  	
   

  	
  TENANT’S INSURANCE

  	
   

  	
   

  
	
  16.02

  	
   

  	
  FORM OF POLICIES

  	
   

  	
   

  
	
  16.03

  	
   

  	
  LANDLORD’S INSURANCE

  	
   

  	
   

  
	
  16.04

  	
   

  	
  WAIVER OF SUBROGATION

  	
   

  	
   

  
	
  16.05

  	
   

  	
  NOTICE OF CASUALTY

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE SEVENTEEN - WAIVER OF CLAIMS AND INDEMNITY

  	
   

  	
   

  
	
  17.01

  	
   

  	
  WAIVER OF CLAIMS

  	
   

  	
   

  
	
  17.02

  	
   

  	
  INDEMNITY BY TENANT

  	
   

  	
   

  
	
  17.03

  	
   

  	
  WAIVER OF CONSEQUENTIAL DAMAGES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE EIGHTEEN - RULES AND REGULATIONS

  	
   

  	
   

  
	
  18.01

  	
   

  	
  RULES

  	
   

  	
   

  
	
  18.02

  	
   

  	
  ENFORCEMENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE NINETEEN - LANDLORD’S RESERVED RIGHTS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE TWENTY - ESTOPPEL CERTIFICATE

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  20.01

  	
   

  	
  IN GENERAL

  	
   

  	
   

  
	
  20.02

  	
   

  	
  ENFORCEMENT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  TWENTY-ONE - INTENTIONALLY OMITTED

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE TWENTY-TWO
  - REAL ESTATE BROKERS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  TWENTY-THREE - MORTGAGEE PROTECTION

  	
   

  	
   

  
	
  23.01

  	
   

  	
  SUBORDINATION
  AND ATTORNMENT

  	
   

  	
   

  
	
  23.02

  	
   

  	
  MORTGAGEE
  PROTECTION

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE TWENTY-FOUR -
  NOTICES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE TWENTY-FIVE -
  PARKING

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE TWENTY-SIX -
  MISCELLANEOUS

  	
   

  	
   

  
	
  26.01

  	
   

  	
  LATE CHARGES

  	
   

  	
   

  
	
  26.02

  	
   

  	
  NO JURY TRIAL; VENUE; JURISDICTION

  	
   

  	
   

  
	
  26.03

  	
   

  	
  INTENTIONALLY OMITTED

  	
   

  	
   

  
	
  26.04

  	
   

  	
  OPTION

  	
   

  	
   

  
	
  26.05

  	
   

  	
  TENANT AUTHORITY

  	
   

  	
   

  
	
  26.06

  	
   

  	
  ENTIRE AGREEMENT

  	
   

  	
   

  
	
  26.07

  	
   

  	
  MODIFICATION OF LEASE FOR BENEFIT OF MORTGAGEE

  	
   

  	
   

  
	
  26.08

  	
   

  	
  EXCULPATION

  	
   

  	
   

  
	
  26.09

  	
   

  	
  ACCORD AND SATISFACTION

  	
   

  	
   

  
	
  26.10

  	
   

  	
  LANDLORD’S OBLIGATIONS ON SALE OF BUILDING

  	
   

  	
   

  
	
  26.11

  	
   

  	
  BINDING EFFECT

  	
   

  	
   

  
	
  26.12

  	
   

  	
  CAPTIONS

  	
   

  	
   

  
	
  26.13

  	
   

  	
  TIME; APPLICABLE LAW

  	
   

  	
   

  
	
  26.14

  	
   

  	
  ABANDONMENT

  	
   

  	
   

  
	
  26.15

  	
   

  	
  LANDLORD’S RIGHT TO PERFORM TENANT’S DUTIES

  	
   

  	
   

  
	
  26.16

  	
   

  	
  SECURITY SYSTEM

  	
   

  	
   

  
	
  26.17

  	
   

  	
  NO LIGHT, AIR OR VIEW EASEMENTS

  	
   

  	
   

  
	
  26.18

  	
   

  	
  RECORDATION

  	
   

  	
   

  
	
  26.19

  	
   

  	
  OPTION TO EXTEND

  	
   

  	
   

  
	
  26.20

  	
   

  	
  SIGNAGE

  	
   

  	
   

  
	
  26.21

  	
   

  	
  SURVIVAL

  	
   

  	
   

  

 

 

OFFICE
LEASE

 

ARTICLE ONE

BASIC LEASE PROVISIONS

 

1.01                   BASIC LEASE PROVISIONS - In the event of any conflict between these Basic
Lease Provisions and any other Lease provision, such other Lease provision
shall control.

 

	
  (1)

  	
   

  	
  BUILDING AND ADDRESS:

  
	
   

  	
   

  	
  3070 Bristol Street

  
	
   

  	
   

  	
  Costa Mesa, California 92626

  
	
   

  	
   

  	
   

  
	
  (2)

  	
   

  	
  LANDLORD AND ADDRESS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Metropolitan Life Insurance Company,

  
	
   

  	
   

  	
  a New York corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notices to Landlord shall be addressed:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Metropolitan Life Insurance Company

  
	
   

  	
   

  	
   

  	
   

  	
  c/o South Coast Corporate Center Property Manager

  
	
   

  	
   

  	
   

  	
   

  	
  3070 Bristol Street, Suite 440

  
	
   

  	
   

  	
   

  	
   

  	
  Costa Mesa, CA 92626

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  with copies to the following:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Metropolitan Life Insurance Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  333 South Hope Street, Suite 2950

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Los Angeles, CA 90071

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Attention: Equity Investments Management

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Metropolitan Life Insurance Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  400 South El Camino Real, 8th Floor

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  San Mateo, CA 94402

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Attention: Associate General Counsel

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (3)

  	
   

  	
  TENANT AND CURRENT ADDRESS:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
   

  	
  Name:   South Bay Bank

  
	
   

  	
   

  	
  (b)

  	
   

  	
  a National Association

  
	
   

  	
   

  	
  (c)

  	
   

  	
  Federal Tax Identification Number: 

  
	
   

  	
   

  	
   

  	
   

  	
  Tenant shall promptly notify Landlord of any change in the
  foregoing items.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notices to Tenant shall be addressed:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (4)

  	
   

  	
  DATE OF LEASE: as of September 19, 2003

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (5)

  	
   

  	
  LEASE TERM: sixty-three (63) months

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (6)

  	
   

  	
  PROJECTED COMMENCEMENT DATE: December 1, 2003

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (7)

  	
   

  	
  PROJECTED EXPIRATION DATE: February 28, 2009

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (8)

  	
   

  	
  MONTHLY BASE RENT:

  
									

 

	
   

  	
  Months

  	
   

  	
  Monthly

  	
   

  	
  Monthly
  Rate/SF of Rentable Area

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  01 to 03

  	
   

  	
   

  	
  -0-

  	
   

  	
   

  	
  -0-*

  	
   

  	
   

  	
   

  
	
   

  	
  04 to 15

  	
   

  	
  $

  	
   

  	
  2,876.75

  	
   

  	
  $

  	
   

  	
  1.85

  	
   

  	
   

  	
   

  
	
   

  	
  16 to 27

  	
   

  	
  $

  	
   

  	
  2,954.50

  	
   

  	
  $

  	
   

  	
  1.90

  	
   

  	
   

  	
   

  
	
   

  	
  28 to 39

  	
   

  	
  $

  	
   

  	
  3,032.25

  	
   

  	
  $

  	
   

  	
  1.95

  	
   

  	
   

  	
   

  
	
   

  	
  40 to 51

  	
   

  	
  $

  	
   

  	
  3,110.00

  	
   

  	
  $

  	
   

  	
  2.00

  	
   

  	
   

  	
   

  
	
   

  	
  52 to 63

  	
   

  	
  $

  	
   

  	
  3,187.75

  	
   

  	
  $

  	
   

  	
  2.05

  	
   

  	
   

  	
   

  

 

	
  (9)

  	
   

  	
  BASE
  BUILDING OPERATING EXPENSES:  The amount
  of Building Operating Expenses for the 2004 calendar year.

  
	
   

  	
   

  	
   

  
	
  (10)

  	
   

  	
  RENTABLE
  AREA OF THE BUILDING:  123,420 square
  feet

  
	
   

  	
   

  	
   

  
	
  (11)

  	
   

  	
  RENTABLE
  AREA OF THE PREMISES:  1,555 square
  feet

  
	
   

  	
   

  	
   

  
	
  (12)

  	
   

  	
  RENTABLE
  AREA OF THE PROJECT:   362,139 square
  feet

  
	
   

  	
   

  	
   

  
	
  (13)

  	
   

  	
  USABLE
  AREA OF THE PREMISES:    1,378 square
  feet

  
	
   

  	
   

  	
   

  
	
  (14)

  	
   

  	
  SECURITY
  DEPOSIT:  three thousand one hundred
  eighty-seven and 75/100 dollars ($3,187.75)

  
	
   

  	
   

  	
   

  
	
  (15)

  	
   

  	
  SUITE
  NUMBER OF PREMISES:  160 

  
	
   

  	
   

  	
   

  
	
  (16)

  	
   

  	
  TENANT’S
  SHARE:  1.2599%

  
	
   

  	
   

  	
   

  
	
  (17)

  	
   

  	
  BUILDING
  SHARE:  34.0%

  
	
   

  	
   

  	
   

  
	
  (18)

  	
   

  	
  TENANT’S
  USE OF PREMISES:  General office use.

  
	
   

  	
   

  	
   

  
	
  (19)

  	
   

  	
  PARKING
  SPACES:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Starting on the Commencement Date and continuing
  during the Term, Tenant shall have the use of parking stalls of the number
  and type described below, for which the monthly charge shall be the
  prevailing rates as described in Article 25, which as of the date of this
  Lease are agreed to be the amounts set forth below, and it is understood and
  agreed such rates are subject to increase from time to time as provided in
  Article 25.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6   unassigned single vehicle stalls (parking
  a total of  6 vehicles), initially at
  $30.00/stall/month for months 1-36, $40.00/stall/month for months 37-60

  0   assigned tandem stalls (parking a total
  of  0 vehicles), initially at
  $65.00/stall/month for months 1-36, $75.00/stall/month for months 37-60

  
	
   

  	
   

  	
   

  
	
  (20)

  	
   

  	
  BROKERS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Landlord’s
  Broker:     Cushman & Wakefield

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Tenant’s
  Broker:     Voit Commercial Brokerage

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
					

 

1.02     ENUMERATION
OF EXHIBITS

 

The Exhibits and Rider(s) set forth below and attached
to this Lease are incorporated in this Lease by this reference:

 

EXHIBIT A  Plan of Premises

EXHIBIT B  Workletter Agreement

EXHIBIT C  Current Janitorial Specifications

EXHIBIT D  Rules and Regulations

EXHIBIT E  Project

EXHIBIT F  Current Parking Rules

EXHIBIT G  Rentable Area & Usable Area

 

RIDER 1     Commencement Date Agreement

 

 

1.03     DEFINITIONS

For purposes hereof, the following terms shall have
the following meanings:

 

ADJUSTMENT YEAR: 
The applicable calendar year or any portion thereof after the year
specified in the definition of Base Building Operating Expenses for which a
Rent Adjustment computation is being made.

 

AFFILIATE:  Any
Person (as defined below) which is currently owned or controlled by, owns or
controls, or is under common ownership or control with Tenant.  For purposes of this definition, the word “control,”
as used above means, with respect to a Person that is a corporation, the right
to exercise, directly or indirectly, more than fifty percent (50%) of the
voting rights attributable to the shares of the controlled corporation and,
with respect to a Person that is not a corporation, the possession, directly or
indirectly, of the power at all times to direct or cause the direction of the management
and policies of the controlled Person. 
The word Person means an individual, partnership, trust, corporation,
firm or other entity.

 

2

 

BASE BUILDING OPERATING EXPENSES:  The amount of Building Operating Expenses
specified in Section 1.01(9).

 

BUILDING:  The
office building located at the address specified in Section 1.01(1).

BUILDING OPERATING EXPENSES:  Building Operating Expenses means all
Operating Expenses directly and separately identifiable to the Building and the
Building’s Share of Project Operating Expenses.

 

BUILDING SHARE: 
The percentage specified in Section 1.01(17), which represents the ratio
of the Rentable Area of the Building to the Rentable Area of the Project.

 

COMMENCEMENT DATE: 
The date specified in Section 1.01(6) as the Projected Commencement
Date, unless changed by operation of Article Two.

 

COMMON AREAS: 
All areas of the Project made available by Landlord from time to time
for the general common use or benefit of the tenants of the Building or
Project, and their employees and invitees, or the public, as such areas
currently exist and as they may be changed from time to time.

 

DECORATION: 
Tenant Alterations which do not require a building permit and which do
not involve any of the structural elements of the Building, or any of the
Building’s systems, including its electrical, mechanical, plumbing, security,
heating, ventilating, air-conditioning, communication, and fire and life safety
systems.

 

DEFAULT RATE: 
The lesser of fifteen percent (15%) or the maximum rate permitted by
Law.

 

ELECTRICITY USE EXPENSES: 
The separate category of Operating Expenses defined in the definition of
Operating Expenses below in this Section 1.03.

 

ENVIRONMENTAL LAWS: 
All Laws governing the use, storage, disposal or generation of any
Hazardous Material, including the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, and the Resource
Conservation and Recovery Act of 1976, as amended.

 

EXPIRATION DATE: 
The date specified in Section 1.01(7) unless changed by operation of
Article Two.

 

FORCE MAJEURE: 
Any accident, casualty, act of God, war or civil commotion, strike or
labor troubles, or any cause whatsoever beyond the reasonable control of
Landlord, including water shortages, energy shortages or governmental
preemption in connection with an act of God, a national emergency, or by reason
of Law, or by reason of the conditions of supply and demand which have been or
are affected by act of God, war or other emergency.

 

GENERAL EXPENSES:  The
separate category of Operating Expenses defined in the definition of Operating
Expenses below in this Section 1.03.

 

HAZARDOUS MATERIAL: 
Such substances, material and wastes which are or become regulated under
any Environmental Law; or which are classified as hazardous or toxic under any
Environmental Law; and explosives and firearms, radioactive material, asbestos,
and polychlorinated biphenyls.

 

INDEMNITEES: 
Collectively, Landlord, any Mortgagee or ground lessor of the Property,
the property manager and the leasing manager for the Property and their
respective directors, officers, agents and employees.

 

LAND:  The
parcel(s) of real estate on which the Building and Project are located.

 

LANDLORD WORK: 
The construction or installation of improvements to the Premises, to be
furnished by Landlord, specifically described in the Workletter or other
Exhibits attached hereto.

 

LAWS OR LAW: 
All laws, ordinances, rules, regulations, other requirements, orders,
rulings or decisions adopted or made by any governmental body, agency,
department or judicial authority having jurisdiction over the Property, the
Premises or Tenant’s activities at the Premises and any covenants, conditions
or restrictions of record which affect the Property.

 

LEASE:  This
instrument and all exhibits and riders attached hereto, as may be amended from
time to time.

 

LEASE YEAR:  The
twelve month period beginning on the first day of the first month following the
Commencement Date (unless the Commencement Date is the first day of a calendar
month in which case beginning on the Commencement Date), and each subsequent
twelve month, or shorter, period until the Expiration Date.

 

MONTHLY BASE RENT: 
The monthly rent specified in Section 1.01(8), subject to the
provisions of Section 2.04.

 

3

MORTGAGEE:  Any
holder of a mortgage, deed of trust or other security instrument encumbering
the Property.

 

NATIONAL HOLIDAYS: 
New Year’s Day, President’s Day, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day and other holidays recognized by the
Landlord and the janitorial and other unions servicing the Building in
accordance with their contracts.

 

OPERATING EXPENSES: 
All Taxes, costs, expenses and disbursements of every kind and nature
which Landlord shall pay or become obligated to pay in connection with the
ownership, management, operation, maintenance, replacement and repair of the
Property (including the amortized portion of any capital expenditure or improvement,
together with interest thereon, and the cost of changing utility service
providers). Operating Expenses shall not include, (i) costs of alterations of
the premises of tenants of the Project, (ii) costs of capital improvements to
the Project (except for amortized portion of capital improvements installed for
the purpose of reducing or controlling Operating Expenses or complying with
applicable Laws enacted after the Commencement Date), (iii) depreciation
charges, (iv) interest and principal payments on loans (except for loans for
capital expenditures or improvements which Landlord is allowed to include in
Operating Expenses as provided above), (v) ground rental payments, (vi) real
estate brokerage and leasing commissions, (vii) advertising and marketing
expenses, (viii) costs of Landlord reimbursed by insurance proceeds, (ix)
expenses incurred in negotiating leases of other tenants in the Project or
enforcing lease obligations of other tenants in the Project and (x) Landlord’s
or Landlord’s property manager’s corporate general overhead or corporate
general administrative expenses.  If any
Operating Expense, though paid in one year, relates to more than one calendar
year, at the option of Landlord such expense may be proportionately allocated
among such related calendar years. Operating Expenses shall for all purposes be
calculated and payable in two separate categories as follows:  (a) charges for electricity consumption (“Electricity
Use Expenses”) and all other Operating Expenses (“General Expenses”); (b) all
references to Operating Expenses (including, for example, Building Operating
Expenses, Project Operating Expenses, Base Building Operating Expenses and
Tenant’s Share of Building Operating Expenses) shall mean Electricity Use
Expenses and General Expenses as separate categories, and an increase in one
such category shall not be offset by a decrease in another category; and (c) no
expense shall be double counted.

 

PREMISES:  The
space located in the Building at the Suite Number listed in Section 1.01(15)
and depicted on Exhibit A attached hereto.

 

PROJECT:  The
Project consists of (a) three buildings (including the Building) whose present
street addresses are 3070, 3080 and 3090 Bristol Street, Costa Mesa,
California; (b) associated parking facilities, landscaping and other
improvements; (c) the Land on which the foregoing are located and any
associated interests in real property; and (d) the personal property, fixtures,
machinery, equipment, systems and apparatus located in or used in conjunction
with any of the foregoing.  A diagram of
certain elements of the Project is set forth on Exhibit E hereto.

 

PROJECT OPERATING EXPENSES:  Project Operating Expenses means all
Operating Expenses except those directly and separately identifiable to the
Building or to other Project office buildings.

 

PROPERTY:  The
Project and all elements thereof.

 

REAL PROPERTY: 
The Property excluding any personal property.

 

RENT: 
Collectively, Monthly Base Rent, Rent Adjustments and Rent Adjustment
Deposits, and all other charges, payments, late fees or other amounts required
to be paid by Tenant under this Lease.

 

RENT ADJUSTMENT: 
Any amounts owed by Tenant for payment of Building Operating
Expenses.  The Rent Adjustments shall be
determined and paid as provided in Article Four.

 

RENT ADJUSTMENT DEPOSIT:  An amount equal to Landlord’s estimate of the
Rent Adjustment attributable to each month of the applicable Adjustment
Year.  On or before the beginning of each
Adjustment Year or with Landlord’s Statement (defined in Article Four),
Landlord may estimate and notify Tenant in writing of its estimate of the
excess, if any, of Building Operating Expenses over Base Building Operating
Expenses.  Prior to the first
determination by Landlord of the amount of Base Building Operating Expenses,
Landlord may estimate that amount in the foregoing calculation.  The last estimate by Landlord shall remain in
effect as the applicable Rent Adjustment Deposit unless and until Landlord
notifies Tenant in writing of a change.

 

RENTABLE AREA OF THE BUILDING:  The amount of square footage set forth in
Section 1.01(10), which represents the sum of the rentable area of all space
intended for occupancy in the Building. 
Such square footage has been determined by Landlord in accordance with
the provisions of Exhibit G hereto and is subject to the provisions
of Section 2.04.

 

RENTABLE AREA OF THE PREMISES:  The amount of square footage set forth in
Section 1.01(11), subject to the provisions of Section 2.04.

 

4

RENTABLE AREA OF THE PROJECT:  The amount of square footage set forth in
Section 1.01(12), which represents the sum of the rentable area of all space
intended for occupancy in the Project. 
Such square footage has been determined by Landlord in accordance with
the provisions of Exhibit G hereto and is subject to the provisions
of Section 2.04.

 

SECURITY DEPOSIT: 
The funds specified in Section 1.01(14), if any, deposited by
Tenant with Landlord as security for Tenant’s performance of its obligations under
this Lease.

 

STANDARD OPERATING HOURS:  Monday through Friday from 8 A.M. to
6 P.M. and on Saturdays from 8 A.M. to 1 P.M., excluding
National Holidays.

 

SUBSTANTIALLY COMPLETE:  The completion of the Landlord Work or Tenant
Work, as the case may be, except for minor insubstantial details of
construction, decoration or mechanical adjustments which remain to be done.

 

TAXES:  All
federal, state and local governmental taxes, assessments and charges  of every kind or nature, whether general,
special, ordinary or extraordinary, which Landlord shall pay or become
obligated to pay because of or in connection with the ownership, leasing,
management, control or operation of the Property or any of its components
(including any personal property used in connection therewith), which may also
include any rental or similar taxes levied in lieu of or in addition to general
real and/or personal property taxes.  For
purposes hereof, Taxes for any year shall be Taxes which are assessed for any
period of such year, whether or not such Taxes are billed and payable in a
subsequent calendar year.  There shall be
included in Taxes for any year the amount of all fees, costs and expenses
(including reasonable attorneys’ fees) paid by Landlord during such year in
seeking or obtaining any refund or reduction of Taxes.  Taxes for any year shall be reduced by the
net amount of any tax refund received by Landlord attributable to such
year.  If a special assessment payable in
installments is levied against any part of the Property, Taxes for any year
shall include only the installment of such assessment and any interest payable
or paid during such year.  Taxes shall
not include any federal or state inheritance, general income, gift or estate
taxes, except that if a change occurs in the method of taxation resulting in
whole or in part in the substitution of any such taxes, or any other
assessment, for any Taxes as above defined, such substituted taxes or
assessments shall be included in the Taxes.

 

TENANT ADDITIONS: 
Collectively, Landlord Work, Tenant Work and Tenant Alterations.

 

TENANT ALTERATIONS: 
Any alterations, improvements, additions, installations or construction
in or to the Premises or any Real Property systems serving the Premises
(excluding Landlord Work or Tenant Work); and any supplementary air-conditioning
systems installed by Landlord or by Tenant at Landlord’s request pursuant to
Section 6.01(b).

 

TENANT DELAY: 
Any event or occurrence which delays the Substantial Completion of the
Landlord Work which is caused by or is described as follows:

 

                                                (i)  special work, changes,
alterations or additions requested or made by Tenant in the design or finish in
any part of the Premises after approval of the plans and specifications (as
described in the Workletter);

 

                                                (ii)  Tenant’s delay in submitting
plans, supplying information, approving plans, specifications or estimates,
giving authorizations or otherwise;

 

                                                (iii)  failure to approve and pay
for such Tenant Work as Landlord undertakes to complete at Tenant’s expense;

 

                                                (iv)  the performance or completion
by Tenant or any person engaged by Tenant of any work in or about the Premises;
or

 

                                                (v)  failure to perform or comply
with any obligation or condition binding upon Tenant pursuant to the
Workletter, including the failure to approve and pay for such Landlord Work or
other items if and to the extent the Workletter provides they are to be
approved or paid by Tenant.

 

TENANT WORK: 
All work installed or furnished to the Premises by Tenant pursuant to
the Workletter.

 

TENANT’S SHARE: 
The percentage specified in Section 1.01(16) which represents the
ratio of the Rentable Area of the Premises to the Rentable Area of the
Building, subject to the provisions of Section 2.04.

 

USABLE AREA OF THE PREMISES:  The amount of square footage set forth in
Section 1.01(13), subject to the provisions of Section 2.04.

 

TERM:  The term
of this Lease commencing on the Commencement Date and expiring on the
Expiration Date.

 

5

TERMINATION DATE: 
The Expiration Date or such earlier date as this Lease terminates or
Tenant’s right to possession of the Premises terminates.

 

WORKLETTER:  The
Agreement regarding the manner of completion of Landlord Work and Tenant Work
set forth on Exhibit B attached hereto.

 

ARTICLE TWO

PREMISES, TERM, FAILURE TO GIVE POSSESSION

 

2.01                           LEASE OF
PREMISES

 

Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord the Premises for the Term and upon the terms, covenants
and conditions provided in this Lease. 
In the event Landlord delivers possession of the Premises to Tenant
prior to the Commencement Date, Tenant shall be subject to all of the terms,
covenants and conditions of this Lease (except with respect to the payment of
Rent) as of the date of such possession.

 

2.02                           TERM

 

                (a)           The Commencement Date shall be the
date determined as follows:

 

                                                                (1)           If the Landlord Work is Substantially
Complete on or before the Projected Commencement Date then on the date which is
the earlier to occur of

 

                                                                                (i)  the Projected Commencement Date, or

 

                                                                                (ii)  the date Tenant first occupies all or part of
the Premises for the conduct of business; or

 

                                                                (2)           If the Landlord Work is not
Substantially Complete by the Projected Commencement Date, then on the date on
which the Landlord Work is Substantially Complete.

 

                (b)           Within thirty (30) days following the
occurrence of the Commencement Date, Landlord and Tenant shall enter into an
agreement (which is attached hereto as Rider 1) confirming the
Commencement Date and the Expiration Date. 
If Tenant fails to enter into such agreement, then the Commencement Date
and the Expiration Date shall be the dates designated by Landlord in such
agreement.

 

2.03                           FAILURE TO
GIVE POSSESSION

 

If the Landlord shall be unable to give possession of
the Premises on the Projected Commencement Date by reason of the following: (i)
the Building has not been sufficiently completed to make the Premises ready for
occupancy, (ii) the Landlord Work is not Substantially Complete, (iii) the
holding over or retention of possession of any tenant, tenants or occupants, or
(iv) for any other reason, then Landlord shall not be subject to any liability
for the failure to give possession on said date.  Under such circumstances the Rent reserved and
covenanted to be paid herein shall not commence until the Premises are made
available to Tenant by Landlord, and no such failure to give possession on the
Projected Commencement Date shall affect the validity of this Lease or the
obligations of the Tenant hereunder.  At
the option of Landlord to be exercised within thirty (30) days of the delayed
delivery of possession to Tenant, the Lease shall be amended so that the Term
shall be extended by the period of time possession is delayed.  The said Premises shall be deemed to be ready
for Tenant’s occupancy and Substantially Complete in the event Landlord’s Work
is Substantially Complete in fact, or if the delay in the availability of the
Premises for occupancy shall be due to any Tenant Delay and/or default on the
part of Tenant and/or its subtenant or subtenants.  In the event of any dispute as to whether the
Landlord Work is Substantially Complete, the decision of Landlord’s architect
shall be final and binding on the parties.

 

2.04                           AREA OF
PREMISES

 

Landlord and Tenant agree that for all purposes of
this Lease the Rentable Area of the Premises, the Usable Area of the Premises,
the Rentable Area of the Building and the Rentable Area of the Project as set
forth in Article One are controlling, and are not subject to revision after the
date of this Lease except as otherwise provided herein.  In the event that the demising walls of the
Premises are to be built or modified after the date of execution of the Lease
(either upon Tenant’s initial occupancy or any subsequent change in the
Premises pursuant to other provisions of this Lease), then when such demising
walls are substantially complete, Landlord shall have the right to verify or
correct such square footage and accordingly adjust other amounts hereunder
based upon such square footage in accordance with the provisions of Exhibit G
hereto.

 

6

2.05                           CONDITION
OF PREMISES

 

Tenant shall notify Landlord in writing within thirty
(30) days after the later of Substantial Completion of the Landlord Work or
when Tenant takes possession of the Premises of any defects in the Premises or
in the materials or workmanship furnished by Landlord in completing the
Landlord Work.  Except for defects stated
in such notice, Tenant shall be conclusively deemed to have accepted the
Premises “AS IS” in the condition existing on the date Tenant first takes
possession, and to have waived all claims relating to the condition of the
Premises.  Landlord shall proceed
diligently to correct the defects stated in such notice unless Landlord
disputes the existence of any such defects. 
In the event of any dispute as to the existence of any such defects, the
decision of Landlord’s architect shall be final and binding on the
parties.  No agreement of Landlord to
alter, remodel, decorate, clean or improve the Premises or the Real Property
and no representation regarding the condition of the Premises or the Real
Property has been made by or on behalf of Landlord to Tenant, except as may be
specifically stated in this Lease or in the Workletter.

 

2.06                           TEMPORARY
SPACE

 

                a.             Notwithstanding anything to the
contrary contained in this Lease and as an accommodation to Tenant, pending
completion of the Landlord Work in the Premises, Landlord shall provide Tenant
with certain temporary space known as Suite 660 (the “Temporary Space”).  However, Landlord hereby reserves the right
to substitute temporary comparable space in the Project during the term of the
temporary use.

 

                b.             Within thirty (30) days after
execution of this Lease, Tenant shall be entitled to possession upon mutual
execution and delivery of this Lease. 
Tenant shall occupy and use the Temporary Space only for the uses
specified in Section 1.01(18) to conduct Tenant’s business. Tenant shall
surrender possession of the Temporary Space no later than three (3) days after
the Commencement Date of this Lease, unless possession is terminated earlier as
provided for herein. Upon any termination or expiration of this Lease, Tenant
shall remove all its personal property from the Temporary Space and shall
return to Landlord all keys to the Temporary Space and shall vacate and
surrender the Temporary Space in broom clean condition, reasonable wear and
tear excepted.

 

                c.             Tenant understands, acknowledges
and agrees that the Temporary Space shall be delivered “AS IS” with no
obligation of Landlord to do any work therein or supply any materials in
connection therewith.

 

                d.             Upon occupancy of the Temporary
Space, Tenant shall be obligated to pay to Landlord Rent in the amount of One
Thousand and No/100 Dollars ($1,000.00) per month in connection with the
Temporary Space, plus the parking charges set forth in this Lease, which
payments shall be prorated for any partial months.

 

e.             Tenant
shall maintain at its expense, in an amount equal to full replacement cost, fire
and extended coverage insurance on all of its personal property, including
removable trade fixtures, located in the Temporary Space.  In addition, Tenant shall maintain a policy
of comprehensive general liability insurance with respect to Tenant’s activities
in the Temporary Space, which shall provide minimum protection of not less than
One Million and No/100 dollars ($1,000,000.00) combined single limit coverage
of bodily injury, property damage, or combination thereof.  Tenant shall provide Landlord with current
certificates of insurance evidencing Tenant’s compliance with this requirement.

 

2.07                           ATM LICENSE

 

Landlord shall grant a
license to Tenant, without charge, to establish and install one (1) automatic
teller machine and night depository (collectively, the “ATM”) as set forth in Exhibit
H attached hereto and made a part hereof which ATM will dispense cash and
perform such other transactions as are permitted by applicable law.  Tenant shall be solely responsible for all
service, repairs and maintenance to the ATM and all costs associated therewith
and agrees to manage, operate and maintain the ATM.

 

ARTICLE
THREE

RENT

 

Tenant agrees to pay to Landlord at the first office
specified in Section 1.01(2), or to such other persons, or at such other
places designated by Landlord, without any prior demand therefor in immediately
available funds and without any deduction or offset whatsoever, Rent, including
Monthly Base Rent and Rent Adjustments in accordance with Article Four, during
the Term. Monthly Base Rent shall be paid monthly in advance on the first day
of each month of the Term, except that the first installment of Monthly Base
Rent shall be paid by Tenant to Landlord concurrently with the execution of
this Lease.  Monthly Base Rent shall be
prorated for partial months within the Term. 
Unpaid Rent shall bear interest at the Default Rate from the date due
until paid.  Tenant’s covenant to pay
Rent shall be independent of every other covenant in this Lease.

 

 

7

ARTICLE FOUR

RENT ADJUSTMENTS AND PAYMENTS

 

4.01                           RENT
ADJUSTMENTS

 

Tenant shall pay to Landlord Rent Adjustments with
respect to each Adjustment Year as follows:

 

                                                (i)            The Rent Adjustment
Deposit representing Tenant’s Share of Building Operating Expenses for the
applicable Adjustment Year in excess of Base Building Operating Expenses,
monthly during the Term with the payment of Monthly Base Rent; and

 

                                                (ii)           Any Rent Adjustments
due in excess of the Rent Adjustment Deposits in accordance with Section 4.02.  Rent Adjustments due from Tenant to Landlord
for any Adjustment Year shall be Tenant’s Share of Building Operating Expenses
for such year in excess of Base Building Operating Expenses.

 

4.02                           STATEMENT
OF LANDLORD

 

Within one hundred and twenty (120) days after the
expiration of the year specified in the definition of Base Building Operating
Expenses and each Adjustment Year thereafter, Landlord will furnish Tenant a
statement (“Landlord’s Statement”) showing the following:

 

                                                (i)  Base Building Operating
Expenses and thereafter Building Operating Expenses for the last Adjustment
Year;

 

                                                (ii)  The amount of Rent Adjustments
due Landlord for the last Adjustment Year, less credit for Rent Adjustment
Deposits paid, if any; and

 

                                                (iii)  Any change in the Rent
Adjustment Deposit due monthly in the current Adjustment Year, including the
amount or revised amount due for months preceding any such change pursuant to
Landlord’s Statement.

 

Tenant shall pay to Landlord within thirty (30) days
after receipt of such statement any amounts for Rent Adjustments then due in
accordance with Landlord’s Statement. 
Any amounts due from Landlord to Tenant pursuant to this Section shall
be credited to the Rent Adjustment Deposit next coming due, or refunded to
Tenant if the Term has already expired provided Tenant is not in default
hereunder.  No interest or penalties
shall accrue on any amounts which Landlord is obligated to credit or refund to
Tenant by reason of this Section 4.02. 
Landlord’s failure to deliver Landlord’s Statement or to compute the
amount of the Rent Adjustments shall not constitute a waiver by Landlord of its
right to deliver such items nor constitute a waiver or release of Tenant’s
obligations to pay such amounts.  The
Rent Adjustment Deposit shall be credited against Rent Adjustments due for the
applicable Adjustment Year.  During the
last complete calendar year or during any partial calendar year in which the
Lease terminates, Landlord may include in the Rent Adjustment Deposit its
estimate of Rent Adjustments which may not be finally determined until after
the termination of this Lease.  Tenant’s
obligation to pay Rent Adjustments survives the expiration or termination of
the Lease.  Notwithstanding the
foregoing, in no event shall the sum of Monthly Base Rent and the Rent
Adjustments be less than the Monthly Base Rent payable.

 

4.03                           BOOKS AND
RECORDS

 

Landlord shall maintain books and records showing
Building Operating Expenses in accordance with sound accounting and management
practices, consistently applied.  The
Tenant or its representative (which representative shall be a certified public
accountant licensed to do business in the state in which the Property is
located and whose primary business is certified public accounting) shall have
the right, for a period of thirty (30) days following the date upon which
Landlord’s Statement is delivered to Tenant, to examine the Landlord’s books
and records with respect to the items in the foregoing statement of Building
Operating Expenses during normal business hours, upon written notice, delivered
at least three (3) business days in advance. If Tenant does not object in
writing to Landlord’s Statement within sixty (60) days of Tenant’s receipt
thereof, specifying the nature of the item in dispute and the reasons therefor,
then Landlord’s Statement shall be considered final and accepted by
Tenant.  Any amount due to the Landlord
as shown on Landlord’s Statement, whether or not disputed by Tenant as provided
herein shall be paid by Tenant when due as provided above, without prejudice to
any such written exception.

 

4.04         PARTIAL OCCUPANCY

 

For purposes of determining Rent Adjustments, if the
Building is not fully occupied during all or a portion of any year during the
Term, Landlord shall make appropriate adjustments to the Operating Expenses for
such year employing sound accounting and management principles consistently
applied, to determine the amount of Operating Expenses that would have been
paid or incurred by Landlord had the Building been 95% occupied, and the amount
so determined shall be deemed to have been the amount includable in Operating
Expenses for such year.  In the event
that the Real Property is not fully assessed for all or a portion of any year
during the Term, then Taxes shall be adjusted to an amount which would have
been payable in such year if the Real Property had been fully assessed.  In the event any other tenant in the 

 

8

Building provides itself with a service of a type
which Landlord would supply under the Lease without an additional or separate
charge to Tenant, then Operating Expenses shall be deemed to include the cost
Landlord would have incurred had Landlord provided such service to such other
tenant.

 

4.05         TENANT OR LEASE SPECIFIC TAXES

 

In addition to Monthly Base Rent, Rent Adjustments,
Rent Adjustment Deposits and other charges to be paid by Tenant, Tenant shall
pay to Landlord, upon demand, any and all taxes payable by Landlord (other than
federal or state inheritance, general income, gift or estate taxes) whether or
not now customary or within the contemplation of the parties hereto:  (a) upon, allocable to, or measured by the
Rent payable hereunder, including any gross receipts tax or excise tax levied
by any governmental or taxing body with respect to the receipt of such rent; or
(b) upon or with respect to the possession, leasing, operation, management,
maintenance, alteration, repair, use or occupancy by Tenant of the Premises or
any portion thereof; or (c) upon the measured value of Tenant’s personal
property located in the Premises or in any storeroom or any other place in the
Premises or the Property, or the areas used in connection with the operation of
the Property, it being the intention of Landlord and Tenant that, to the extent
possible, such personal property taxes shall be billed to and paid directly by
Tenant; or (d) resulting from Landlord Work, Tenant Work or Tenant Alterations
to the Premises, whether title thereto is in Landlord or Tenant; or (e) upon
this transaction.  Taxes paid by Tenant
pursuant to this Section 4.05 shall not be included in any computation of
Taxes payable as part of Building Operating Expenses pursuant to Sections 4.01
and 4.02.

 

ARTICLE
FIVE

SECURITY DEPOSIT

 

Tenant concurrently with the execution of this Lease
shall pay to Landlord in immediately available funds the Security Deposit.  The Security Deposit may be applied by
Landlord to cure, in whole or part, any default of Tenant under this Lease, and
upon notice by Landlord of such application, Tenant shall replenish the
Security Deposit in full by paying to Landlord within ten (10) days of demand
the amount so applied.  Landlord’s
application of the Security Deposit shall not constitute a waiver of Tenant’s
default to the extent that the Security Deposit does not fully compensate
Landlord for all losses, damages, costs and expenses incurred by Landlord in
connection with such default and shall not prejudice any other rights or
remedies available to Landlord under this Lease or by Law.  Landlord shall not pay any interest on the
Security Deposit.  Landlord shall not be
required to keep the Security Deposit separate from its general accounts.  The Security Deposit shall not be deemed an
advance payment of Rent, nor a measure of damages for any default by Tenant
under this Lease, nor shall it be a bar or defense of any action which Landlord
may at any time commence against Tenant. 
In the absence of evidence satisfactory to Landlord of an assignment of
the right to receive the Security Deposit or the remaining balance thereof,
Landlord may return the Security Deposit to the original Tenant, regardless of
one or more assignments of this Lease. 
Upon the transfer of Landlord’s interest under this Lease, Landlord’s
obligation to Tenant with respect to the Security Deposit shall terminate upon
transfer to the transferee of the Security Deposit, or any balance
thereof.  If Tenant shall fully and
faithfully comply with all the terms, provisions, covenants, and conditions of
this Lease, the Security Deposit, or any balance thereof, shall be returned to
Tenant within thirty (30) days after Landlord recovers possession of the
Premises or such longer time as may be permissible under Law.  Tenant hereby waives any and all rights of
Tenant under the provisions of Section 1950.7 of the California Civil Code or
other Law regarding security deposits.

 

ARTICLE SIX

SERVICES

 

6.01                           LANDLORD’S
GENERAL SERVICES

 

                (a)           So long as the Lease is in full force
and effect, Landlord shall furnish or cause to be furnished to the Premises the
utilities and services described below, subject to the conditions and in
accordance with the standards set forth below:

 

                                                                (1)           Landlord shall provide automatic
elevator facilities 24 hours per day, seven (7) days per week.

 

                                                                (2)           Landlord shall ventilate the Premises
during Standard Operating Hours and shall furnish heat or air conditioning when
in the judgment of Landlord it is required for the comfortable occupancy of the
Premises during Standard Operating Hours, subject to any requirements or standards
relating to, among other things, energy conservation, imposed or established by
governmental agencies.  Upon request,
Landlord shall make available at Tenant’s expense heat or air conditioning for
use at all other times, provided that such request is made at least one hour
before the end of the Standard Operating Hours preceding such service and
provided further that the minimum use of such additional heat or air
conditioning and the cost thereof shall be 
determined by Landlord and confirmed in writing to Tenant as the same
may change from time to time.

 

                                                                (3)           Landlord shall furnish electric
current to the Premises at all times. 
Tenant’s use of electric current shall at no time exceed the capacity of
the feeders to the Building or the risers or wiring installation therein.  Tenant shall not install or use or permit the
installation or use of any 

 

9

computer or electronic data processing equipment in
the Premises other than personal computers without the prior written consent of
Landlord.

 

                                                                (4)           Landlord shall furnish water for
drinking, cleaning and lavatory purposes only in the Common Areas of the
Building.

 

                                                                (5)           Provided that the Premises are used
exclusively as offices and are kept reasonably in order by Tenant, Landlord
shall provide janitorial services to the Premises as specified on Exhibit C
hereto, if any, as that Exhibit shall be modified by Landlord from time to time
in its reasonable discretion; however, in no event materially less than such services
then being provided in comparable office buildings in the Costa Mesa
market.  If the Premises are not used
exclusively as offices (provided Section 1.01(18) permits such use),
Tenant or persons approved by Landlord shall keep the Premises clean and in
order to the satisfaction of Landlord, but at Tenant’s sole expense. No persons
other than Tenant and those persons approved by Landlord shall be permitted to
enter the Premises for the purpose of keeping the Premises clean and in
order.  Tenant shall pay to Landlord the
cost of removal of any of Tenant’s refuse and rubbish, to the extent that such
refuse and rubbish removed by Landlord exceeds the refuse and rubbish usually
attendant upon the use of premises as offices.

 

                                                                (6)           Landlord shall replace, as necessary,
the light bulbs in the Building standard lighting fixtures installed by
Landlord.  Tenant shall replace, as
necessary, all bulbs and fluorescent tubes in non-Building standard lighting
fixtures, if any, installed in the Premises. 
If Tenant shall fail to make any such replacement within five (5) days
after written notice from Landlord, Landlord may make such replacement and
charge the cost of labor and materials involved therein to Tenant, as
additional rent.

 

                (b)           In addition to any after-hours use of
the Building’s heating, ventilation or air conditioning systems under Section
6.01(a)(2) above, Landlord may impose a reasonable charge upon Tenant for all
utilities and services used by Tenant or at the Premises which involves
(1) any substantial recurrent use of the Premises at any time other than
Standard Operating Hours, (2) any use beyond that which Landlord is
required to furnish under Section 6.01(a) above, (3) any special cooling
or ventilating needs created in certain areas of the Premises by special
telephone equipment, computers or other similar equipment or uses by Tenant, or
(4) any use of electrical service in the Premises (including, without
limitation, all lighting) in excess of seven (7) watts per square foot of
Usable Area of the Premises per hour during Standard Operating Hours.  At any time and from time to time during the
term of this Lease, Landlord may in its sole discretion install meters or other
similar devices in the Premises or the Building for the purpose of measuring
the electricity or other utilities supplied to the Premises.  If such meter or other device shows at any
time that utilities have been supplied to the Premises for which Landlord may
impose a charge as provided in this Section 6.01(b), then the cost of such meter
or similar device and the cost of installation thereof shall be borne by Tenant
and Tenant shall reimburse Landlord for such costs within ten (10) days of
receipt of Landlord’s invoice thereof.

 

                (c)           Tenant agrees to cooperate fully with
Landlord and to abide by all regulations and requirements which Landlord may
prescribe for the use of the above-described utilities and services to be
provided by Landlord.  Any failure to pay
any excess costs as described above shall constitute a breach of the obligation
to pay Rent under this Lease and shall entitle Landlord to the rights granted
herein, at law or in equity as a result of such a breach.

 

                (d)           Notwithstanding anything to the
contrary above, Landlord reserves the right from time to time to make reasonable
modifications to the above standards for utilities and services.

 

6.02         TELEPHONE SERVICES

 

All telegraph, telephone, and communication
connections which Tenant may desire shall be subject to Landlord’s prior
written approval, in Landlord’s sole discretion, and the location of all wires
and the work in connection therewith shall be performed by contractors approved
by Landlord and shall be subject to the direction of Landlord, except that such
approval is not required as to Tenant’s telephone equipment (including cabling)
within the Premises and from the Premises in a route designated by Landlord to
any telephone cabinet or panel provided (as existing or as installed as part of
Landlord’s Work, if any) on Tenant’s floor for Tenant’s connection to the
telephone cable serving the Building, so long as Tenant’s equipment does not
require connections different than or additional to those to the telephone
cabinet or panel provided.  Except to the
extent of such cabling within the Premises or from the Premises to such
telephone cabinet or panel, Landlord reserves the right to designate and
control the entity or entities providing telephone or other communication cable
installation, removal, repair and maintenance in the Building and to restrict
and control access to telephone cabinets or panels.  In the event Landlord designates a particular
vendor or vendors to provide such cable installation, removal, repair and
maintenance for the Building, Tenant agrees to abide by and participate in such
program.  Tenant shall be responsible for
and shall pay all costs incurred in connection with the installation of
telephone cables and communication wiring in the Premises, including any
hook-up, access and maintenance fees related to the installation of such wires
and cables in the Premises and the commencement of service therein, and the
maintenance thereafter of such wire and cables; and there shall be included in
Operating Expenses for the Building all installation, removal, hook-up or
maintenance costs incurred by Landlord in connection 

 

10

with telephone cables and communication wiring serving
the Building which are not allocable to any individual users of such service
but are allocable to the Building generally. 
If Tenant fails to maintain all telephone cables and communication
wiring in the Premises and such failure affects or interferes with the
operation or maintenance of any other telephone cables or communication wiring
serving the Building, Landlord or any vendor hired by Landlord may enter into
and upon the Premises forthwith and perform such repairs, restorations or
alterations as Landlord deems necessary in order to eliminate any such
interference (and Landlord may recover from Tenant all of Landlord’s costs in
connection therewith).  No later than the
Termination Date, Tenant agrees to remove all telephone cables and
communication wiring installed by Tenant for and during Tenant’s occupancy,
which Landlord shall request Tenant to remove. 
Tenant agrees that neither Landlord nor any of its agents or employees
shall be liable to Tenant, or any of Tenant’s employees, agents, customers or
invitees or anyone claiming through, by or under Tenant, for any damages,
injuries, losses, expenses, claims or causes of action because of any
interruption, diminution, delay or discontinuance at any time for any reason in
the furnishing of any telephone or other communication service to the Premises
and the Building.

 

6.03                           DELAYS IN
FURNISHING SERVICES

 

In the event of any failure to furnish or delay in furnishing
the services, including any utilities, to be supplied by Landlord, Landlord
shall use good faith efforts to have service promptly resumed.  Where the cause of any such failure, stoppage
or interruption of such utilities or services is within the system or control
of a utility company or public or quasi-public entity outside Landlord’s
control, notification to such utility or entity of such failure, stoppage or
interruption and request to remedy the same shall constitute “good faith
efforts” by Landlord to have service promptly resumed.  Should any equipment or machinery furnished
by Landlord break down or for any cause cease to function properly, Landlord
shall use reasonable diligence to repair same promptly, but Tenant shall have
no claim for abatement of Rent or damages on account of any interruption of
service occasioned thereby or resulting therefrom.  Tenant agrees that Landlord shall not be in
breach of this Lease nor be liable to Tenant for damages or otherwise, for any
failure to furnish, or a delay in furnishing, or a change in the quantity or
character of any service when such failure, delay or change is occasioned, in
whole or in part, by repairs, improvements or mechanical breakdowns by the act
or default of Tenant or other parties or by an event of Force Majeure.  No such failure, delay or change shall be
deemed to be an eviction or disturbance of Tenant’s use and possession of the
Premises, or relieve Tenant from paying Rent or from performing any other
obligations of Tenant under this Lease, without any deduction or offset.  Failure to any extent to make available, or
any slowdown, stoppage, or interruption of, the specified utility services
resulting from any cause, including changes in service provider or Landlord’s compliance
with any voluntary or similar governmental or business guidelines now or
hereafter published or any requirements now or hereafter established by any
governmental agency, board, or bureau having jurisdiction over the operation of
the Property, shall not render Landlord liable in any respect for damages to
either persons, property, or business, nor be construed as an eviction of
Tenant or work an abatement of Rent, nor relieve Tenant of Tenant’s obligations
for fulfillment of any covenant or agreement hereof.

 

6.04             CHOICE OF SERVICE PROVIDER

 

Tenant acknowledges that Landlord may, at Landlord’s sole
option, to the extent permitted by applicable law, elect to change, from time
to time, the company or companies which provide services (including electrical
service, gas service, water, telephone and technical services) to the Building,
the Premises and/or its occupants. 
Notwithstanding anything to the contrary set forth in this Lease, Tenant
acknowledges that Landlord has not and does not make any representations or
warranties concerning the identity or identities of the company or companies
which provide services to the Building and the Premises or its occupants and
Tenant acknowledges that the choice of service providers and matters concerning
the engagement and termination thereof shall be solely that of Landlord. The
foregoing provision is not intended to modify, amend, change or otherwise
derogate any provision of this Lease concerning the nature or type of service
to be provided or any specific information concerning the amount thereof to be
provided. Tenant agrees to cooperate with Landlord and each of its service
providers in connection with any change in service or provider.

 

ARTICLE SEVEN

POSSESSION, USE AND CONDITION OF PREMISES

 

7.01                           POSSESSION AND
USE OF PREMISES

 

                (a)           Tenant shall be entitled to
possession of the Premises when the Landlord Work is Substantially
Complete.  Tenant shall occupy and use
the Premises only for the uses specified in Section 1.01(18) to conduct
Tenant’s business.  Tenant shall not
occupy or use the Premises (or permit the use or occupancy of the Premises) for
any purpose or in any manner which: (1) is unlawful or in violation of any
Law or Environmental Law; (2) may be dangerous to persons or property or
which may increase the cost of, or invalidate, any policy of insurance carried
on the Building or covering its operations; (3) is contrary to or
prohibited by the terms and conditions of this Lease or the rules and
regulations of the Building set forth in Article Eighteen; or (4) would tend to
create or continue a nuisance.

 

                (b)           Tenant shall comply with all
Environmental Laws pertaining to Tenant’s occupancy and use of the Premises and
concerning the proper storage, handling and disposal of any Hazardous Material 

 

11

introduced to the Premises, the Building or the
Property by Tenant or other occupants of the Premises, or their employees,
servants, agents, contractors, customers or invitees. Landlord shall comply
with all Environmental Laws applicable to the Property other than those to be
complied with by Tenant pursuant to the preceding sentence.  Tenant shall not generate, store, handle or
dispose of any Hazardous Material in, on, or about the Property without the
prior written consent of Landlord, which may be withheld in Landlord’s sole
discretion, except that such consent shall not be required to the extent of
Hazardous Material packaged and contained in office products for consumer use
in general business offices in quantities for ordinary day-to-day use provided
such use does not give rise to, or pose a risk of, exposure to or release of
Hazardous Material.  In the event that
Tenant is notified of any investigation or violation of any Environmental Law
arising from Tenant’s activities at the Premises, Tenant shall immediately
deliver to Landlord a copy of such notice. 
In such event or in the event Landlord reasonably believes that a
violation of Environmental Law exists, Landlord may conduct such tests and
studies relating to compliance by Tenant with Environmental Laws or the alleged
presence of Hazardous Material upon the Premises as Landlord deems desirable,
all of which shall be completed at Tenant’s expense.  Landlord’s inspection and testing rights are
for Landlord’s own protection only, and Landlord has not, and shall not be
deemed to have assumed any responsibility to Tenant or any other party for
compliance with Environmental Laws, as a result of the exercise, or
non-exercise of such rights.  Tenant
hereby indemnifies, and agrees to defend, protect and hold harmless, the
Indemnitees from any and all loss, claim, demand, action, expense, liability
and cost (including attorneys’ fees and expenses) arising out of or in any way
related to the presence of any Hazardous Material introduced to the Premises or
the Property during the Lease Term by Tenant or other occupants of the
Premises, or their employees, servants, agents, contractors, customers or
invitees.  In case of any action or
proceeding brought against the Indemnitees by reason of any such claim, upon
notice from Landlord, Tenant covenants to defend such action or proceeding by
counsel chosen by Landlord, in Landlord’s sole discretion.  Landlord reserves the right to settle,
compromise or dispose of any and all actions, claims and demands related to the
foregoing indemnity.  If any Hazardous
Material is released, discharged or disposed of on or about the Property and
such release, discharge or disposal is not caused by Tenant or other occupants
of the Premises, or their employees, servants, agents, contractors customers or
invitees, such release, discharge or disposal shall be deemed casualty damage
under Article Fourteen to the extent that the Premises are affected thereby; in
such case, Landlord and Tenant shall have the obligations and rights respecting
such casualty damage provided under such Article.

 

                (c)           Landlord
and Tenant acknowledge that the Americans With Disabilities Act of 1990 (42
U.S.C. §12101 et seq.) and regulations and guidelines promulgated thereunder,
as all of the same may be amended and supplemented from time to time
(collectively referred to herein as the “ADA”) establish requirements for
business operations, accessibility and barrier removal, and that such
requirements may or may not apply to the Premises, the Building and the Project
depending on, among other things: (1) whether Tenant’s business is deemed a “public
accommodation” or “commercial facility”, (2) whether such requirements are “readily
achievable”, and (3) whether a given alteration affects a “primary function
area” or triggers “path of travel” requirements.  The parties hereby agree that: (a) Landlord
shall be responsible for ADA Title III compliance in the Common Areas, except
as provided below, (b) Tenant shall be responsible for ADA Title III compliance
in the Premises, including any leasehold improvements or other work to be
performed in the Premises under or in connection with this Lease, (c) Landlord
may perform, or require that Tenant perform, and Tenant shall be responsible
for the cost of, ADA Title III “path of travel” requirements triggered by
Tenant Alterations in the Premises, and (d) Landlord may perform, or require
Tenant to perform, and Tenant shall be responsible for the cost of, ADA Title
III compliance in the Common Areas necessitated by the Building being deemed to
be a “public accommodation” instead of a “commercial facility” as a result of
Tenant’s use of the Premises.  Tenant
shall be solely responsible for requirements under Title I of the ADA relating
to Tenant’s employees.  Notwithstanding anything to the contrary in this
Section 7.01(c), if Tenant is required to pay for the cost of ADA Title III
compliance in the Common Areas as a result of the Building being deemed to be a
“public accommodation” as a result of Tenant’s use of the Premises, and the
cost of such compliance is in excess of $75,000 , then Tenant shall have the
option of terminating this Lease in lieu of paying for such compliance
costs.  If Tenant elects to terminate the
Lease, Tenant shall pay to Landlord, as a termination fee, the aggregate sum of
(i) the unamortized cost of tenant improvements paid for by Landlord, (ii) the
unamortized cost of brokers fees paid for by Landlord, and (iii) two month’s
then escalated rent.

 

                (d)           Landlord and Tenant agree to
cooperate and use commercially reasonable efforts to participate in traffic
management programs generally applicable to businesses located in or about the
Costa Mesa, California area and Tenant shall encourage and support van and car
pooling by, and staggered and flexible working hours for, its office workers
and service employees to the extent reasonably permitted by the requirements of
Tenant’s business.  Neither this Section
or any other provision of this Lease is intended to or shall create any rights
or benefits in any other person, firm, company, governmental entity or the
public.

 

                (e)           Tenant agrees to cooperate with
Landlord and to comply with any and all guidelines or controls concerning
energy management imposed upon Landlord by federal or state governmental
organizations or by any energy conservation association to which Landlord is a
party or which is applicable to the Building.

 

12

7.02                           LANDLORD
ACCESS TO PREMISES; APPROVALS

 

                (a)           Tenant shall permit Landlord to
erect, use and maintain pipes, ducts, wiring and conduits in and through the
Premises, so long as Tenant’s use, layout or design of the Premises is not
materially affected or altered.  Landlord
or Landlord’s agents shall have the right to enter upon the Premises in the
event of an emergency, or to inspect the Premises, to perform janitorial and
other services, to conduct safety and other testing in the Premises and to make
such repairs, alterations, improvements or additions to the Premises or the
Building or other parts of the Property as Landlord may deem necessary or
desirable (including all alterations, improvements and additions in connection
with a change in service provider or providers).  Janitorial and cleaning services shall be
performed after normal business hours. 
Any entry or work by Landlord may be during normal business hours and
Landlord may use reasonable efforts to ensure that any entry or work shall not
materially interfere with Tenant’s occupancy of the Premises.

 

                (b)           If Tenant shall not be personally
present to permit an entry into the Premises when for any reason an entry
therein shall be necessary or permissible, Landlord (or Landlord’s agents),
after attempting to notify Tenant (unless Landlord believes an emergency
situation exists), may enter the Premises without rendering Landlord or its
agents liable therefor, and without relieving Tenant of any obligations under
this Lease.

 

                (c)           Landlord may enter the Premises for
the purpose of conducting such inspections, tests and studies as Landlord may
deem desirable or necessary to confirm Tenant’s compliance with all Laws and
Environmental Laws or for other purposes necessary in Landlord’s reasonable
judgment to ensure the sound condition of the Property and the systems serving
the Property.  Landlord’s rights under
this Section 7.02(c) are for Landlord’s own protection only, and Landlord has
not, and shall not be deemed to have assumed, any responsibility to Tenant or
any other party, as a result of the exercise or non-exercise of such rights,
for compliance with Laws or Environmental Laws or for the accuracy or
sufficiency of any item or the quality or suitability of any item for its
intended use.

                (d)           Landlord may do any of the foregoing,
or undertake any of the inspection or work described in the preceding
paragraphs without such action constituting an actual or constructive eviction
of Tenant, in whole or in part, or giving rise to an abatement of Rent by
reason of loss or interruption of business of the Tenant, or otherwise.

 

                (e)           The review, approval or consent of
Landlord with respect to any item required or permitted under this Lease is for
Landlord’s own protection only, and Landlord has not, and shall not be deemed
to have assumed, any responsibility to Tenant or any other party, as a result
of the exercise or non-exercise of such rights, for compliance with Laws or
Environmental Laws or for the accuracy or sufficiency of any item or the
quality or suitability of any item for its intended use.

 

7.03         QUIET ENJOYMENT

 

Landlord covenants, in lieu of any implied covenant of
quiet possession or quiet enjoyment, that so long as Tenant is in compliance
with the covenants and conditions set forth in this Lease, Tenant shall have
the right to quiet enjoyment of the Premises without hindrance or interference
from Landlord or those claiming through Landlord, and subject to the covenants
and conditions set forth in the Lease and to the rights of any Mortgagee or
ground lessor.

 

ARTICLE
EIGHT

MAINTENANCE

 

8.01                           LANDLORD’S
MAINTENANCE

 

Subject to the provisions of Article Fourteen,
Landlord shall maintain and make necessary repairs to the foundations, roofs,
exterior walls, and the structural elements of the Building, the electrical,
plumbing, heating, ventilating, air-conditioning, mechanical,
communication, security and the fire and life safety systems of the Building
and those corridors, washrooms and lobbies in the Common Areas of the Building,
except that:  (a) Landlord shall not
be responsible for the maintenance or repair of any floor or wall coverings in
the Premises or any of such systems which are located within the Premises and
are supplemental or special to the Building’s standard systems; and
(b) the cost of performing any of said maintenance or repairs whether to the
Premises or to the Building caused by the negligence of Tenant, its employees,
agents, servants, licensees, subtenants, contractors or invitees, shall be paid
by Tenant, subject to the waivers set forth in Section 16.04.  Landlord shall not be liable to Tenant for
any expense, injury, loss or damage resulting from work done in or upon, or in
connection with the use of any adjacent or nearby building, land, street or
alley.

 

8.02                           TENANT
MAINTENANCE

 

Subject to the provisions of Article Fourteen,
Tenant, at its expense, shall keep and maintain the Premises and all Tenant
Additions in good order, condition and repair and in accordance with all Laws
and Environmental Laws.  Tenant shall not
permit waste and shall promptly and adequately repair all damages to the
Premises and replace or repair all damaged or broken glass in the interior of
the Premises, fixtures or appurtenances. 
Any repairs or maintenance shall be completed with materials of similar
quality to the 

 

13

original materials, all such work to be completed
under the supervision of Landlord.  Any
such repairs or maintenance shall be performed only by contractors or mechanics
approved by Landlord, which approval shall not be unreasonably withheld, and whose
work will not cause or threaten to cause disharmony or interference with
Landlord or other tenants in the Building and their respective agents and
contractors performing work in or about the Building.  If Tenant fails to perform any of its
obligations set forth in this Section 8.02, Landlord may, in its sole
discretion and upon 24 hours prior notice to Tenant (except without notice in
the case of emergencies), perform the same, and Tenant shall pay to Landlord
any costs or expenses incurred by Landlord upon demand.

 

ARTICLE NINE

ALTERATIONS AND IMPROVEMENTS

 

9.01                           TENANT
ALTERATIONS

 

                (a)           The following provisions shall apply
to the completion of any Tenant Alterations:

 

(1)                                  Tenant shall not, except as provided herein, without the prior written
consent of Landlord, which consent shall not be unreasonably withheld, make or
cause to be made any Tenant Alterations in or to the Premises or any Property
systems serving the Premises.  Prior to
making any Tenant Alterations, Tenant shall give Landlord ten (10) days prior
written notice (or such earlier notice as would be necessary pursuant to
applicable Law) to permit Landlord sufficient time to post appropriate notices
of non-responsibility. Subject to all other requirements of this Article Nine,
Tenant may undertake Decoration work without Landlord’s prior written
consent.  Tenant shall furnish Landlord
with the names and addresses of all contractors and subcontractors and copies
of all contracts.  All Tenant Alterations
shall be completed at such time and in such manner as Landlord may from time to
time designate, and only by contractors or mechanics approved by Landlord,
which approval shall not be unreasonably withheld, provided, however, that
Landlord may, in its sole discretion, specify the engineers and contractors to
perform all work relating to the Building’s systems (including the mechanical,
heating, plumbing, security, ventilating, air-conditioning, electrical,
communication and the fire and life safety systems in the Building).  The contractors, mechanics and engineers who
may be used are further limited to those whose work will not cause or threaten
to cause disharmony or interference with Landlord or other tenants in the
Building and their respective agents and contractors performing work in or about
the Building.  Landlord may further
condition its consent upon Tenant furnishing to Landlord and Landlord approving
prior to the commencement of any work or delivery of materials to the Premises
related to the Tenant Alterations such of the following as specified by
Landlord:  architectural plans and
specifications, opinions from Landlord’s engineers stating that the Tenant
Alterations will not in any way adversely affect the Building’s systems,
necessary permits and licenses, certificates of insurance, and such other
documents in such form reasonably requested by Landlord.  Landlord may, in the exercise of reasonable
judgment, request that Tenant provide Landlord with appropriate evidence of
Tenant’s ability to complete and pay for the completion of the Tenant
Alterations such as a performance bond or letter of credit.  Upon completion of the Tenant Alterations,
Tenant shall deliver to Landlord an as-built mylar and digitized (if available)
set of plans and specifications for the Tenant Alterations.

 

(2)                                  Tenant shall pay the cost of all Tenant Alterations and the cost of
decorating the Premises and any work to the Property occasioned thereby.  In connection with completion of any Tenant
Alterations, Tenant shall pay Landlord a construction fee at Landlord’s then
standard rate.  Upon completion of Tenant
Alterations, Tenant shall furnish Landlord with contractors’ affidavits and
full and final waivers of lien and receipted bills covering all labor and
materials expended and used in connection therewith and such other
documentation reasonably requested by Landlord or Mortgagee.

 

(3)                                  Tenant agrees to complete all Tenant Alterations (i) in accordance
with all Laws, Environmental Laws, all requirements of applicable insurance
companies and in accordance with Landlord’s standard construction rules and
regulations, and (ii) in a good and workmanlike manner with the use of
good grades of materials.  Tenant shall
notify Landlord immediately if Tenant receives any notice of violation of any
Law in connection with completion of any Tenant Alterations and shall
immediately take such steps as are necessary to remedy such violation.  In no event shall such supervision or right
to supervise by Landlord nor shall any approvals given by Landlord under this
Lease constitute any warranty by Landlord to Tenant of the adequacy of the
design, workmanship or quality of such work or materials for Tenant’s intended
use or of compliance with the requirements of Section 9.01(a)(3)(i) and (ii)
above or impose any liability upon Landlord in connection with the performance
of such work.

 

                (b)           Except for personal property and
trade fixtures, all Tenant Additions whether installed by Landlord or Tenant,
shall without compensation or credit to Tenant, become part of the Premises and
the property of Landlord at the time of their installation and shall remain in
the Premises, unless pursuant to Article Twelve, Tenant may remove them or
is required to remove them at Landlord’s request.

 

14

9.02                           LIENS

 

Tenant shall not permit any lien or claim for lien of
any mechanic, laborer or supplier or any other lien to be filed against the
Building, the Land, the Premises, or any other part of the Property arising out
of work performed, or alleged to have been performed by, or at the direction
of, or on behalf of Tenant.  If any such
lien or claim for lien is filed, Tenant shall within ten (10) days of receiving
notice of such lien or claim (a) have such lien or claim for lien released
of record or (b) deliver to Landlord  a bond in form, content,
amount, and issued by surety, satisfactory to Landlord, indemnifying,
protecting, defending and holding harmless the Indemnitees against all costs
and liabilities resulting from such lien or claim for lien and the
foreclosure or attempted foreclosure thereof. 
If Tenant fails to take any of the above actions, Landlord, in addition
to its rights and remedies under Article Eleven, without investigating the
validity of such lien or claim for lien, may pay or discharge the same and
Tenant shall, as payment of additional Rent hereunder, reimburse Landlord upon
demand for the amount so paid by Landlord, including Landlord’s expenses and
attorneys’ fees.

 

ARTICLE TEN

ASSIGNMENT AND SUBLETTING

 

10.01       ASSIGNMENT AND SUBLETTING

 

                (a)           Without the prior written consent of
Landlord, which may be withheld in Landlord’s sole discretion, Tenant may not
sublease, assign, mortgage, pledge, hypothecate or otherwise transfer or permit
the transfer of this Lease or the encumbering of Tenant’s interest therein in
whole or in part, by operation of Law or otherwise or permit the use or
occupancy of the Premises, or any part thereof, by anyone other than Tenant,
provided, however, if Landlord chooses not to recapture the space proposed to
be subleased or assigned as provided in Section 10.02, Landlord shall not
unreasonably withhold its consent to a subletting or assignment under this
Section 10.01. Tenant agrees that the provisions governing sublease and
assignment set forth in this Article Ten shall be deemed to be reasonable.  If Tenant desires to enter into any sublease
of the Premises or assignment of this Lease, Tenant shall deliver written
notice thereof to Landlord (“Tenant’s Notice”), together with the identity of
the proposed subtenant or assignee and the proposed principal terms thereof and
financial and other information sufficient for Landlord to make an informed
judgment with respect to such proposed subtenant or assignee at least thirty
(30) days prior to the commencement date of the term of the proposed sublease
or assignment.  If Tenant proposes to
sublease less than all of the Rentable Area of the Premises, the space proposed
to be sublet and the space retained by Tenant must each be a marketable unit as
reasonably determined by Landlord and otherwise in compliance with all
Laws.  Landlord shall notify Tenant in
writing of its approval or disapproval of the proposed sublease or assignment
or its decision to exercise its rights under Section 10.02 within fifteen (15)
days after receipt of Tenant’s Notice (and all required information).  In no event may Tenant sublease any portion
of the Premises or assign the Lease to any other tenant of the Building.  Tenant shall submit for Landlord’s approval
(which approval shall not be unreasonably withheld) any advertising which
Tenant or its agents intend to use with respect to the space proposed to be
sublet.

 

                (b)           With respect to Landlord’s consent to
an assignment or sublease, Landlord may take into consideration any factors
which Landlord may deem relevant, and the reasons for which Landlord’s denial
shall be deemed to be reasonable shall include, without limitation, the
following:

 

                                                (i)            the business
reputation or creditworthiness of any proposed subtenant or assignee is not
acceptable to Landlord; or

 

                                                (ii)           in Landlord’s
reasonable judgment the proposed assignee or subtenant would diminish the value
or reputation of the Building or Landlord; or

 

                                                (iii)          any proposed assignee’s
or subtenant’s use of the Premises would violate Section 7.01 of the Lease or
would violate the provisions of any other leases of tenants in the Project;

 

                                                (iv)          the proposed assignee
or subtenant is either a governmental agency, a school or similar operation, or
a medical related practice; or

 

                                                (v)           the proposed subtenant
or assignee is a bona fide prospective tenant of Landlord in the Project as
demonstrated by a written proposal dated within ninety (90) days prior to the
date of Tenant’s request; or

 

                                                (vi)          the proposed subtenant
or assignee would materially increase the estimated pedestrian and vehicular
traffic to and from the Premises and the Building.

 

In no event shall Landlord be obligated to consider a
consent to any proposed assignment of the Lease which would assign less than
the entire Premises.  In the event
Landlord wrongfully withholds its consent to any proposed sublease of the
Premises or assignment of the Lease, Tenant’s sole and exclusive remedy
therefor shall be to seek specific performance of Landlord’s obligations to
consent to such sublease or assignment.

 

15

                (c)           Any sublease or assignment shall be
expressly subject to the terms and conditions of this Lease.  Any subtenant or assignee shall execute such
documents as Landlord may reasonably require to evidence such subtenant or
assignee’s assumption of the obligations and liabilities of Tenant under this
Lease.  Tenant shall deliver to Landlord
a copy of all agreements executed by Tenant and the proposed subtenant and
assignee with respect to the Premises. 
Landlord’s approval of a sublease, assignment, hypothecation, transfer
or third party use or occupancy shall not constitute a waiver of Tenant’s
obligation to obtain Landlord’s consent to further assignments or subleases,
hypothecations, transfers or third party use or occupancy.

 

                (d)           For
purposes of this Article Ten, an assignment shall be considered to include
a change in the majority ownership or control of Tenant unless Tenant is a
corporation whose stock is traded publicly.

 

                Notwithstanding the foregoing, any sublease of the
Premises or assignment of this Lease to (i) a parent or affiliate of Tenant,
(ii) an entity resulting from the merger or consolidation of Tenant with a
third party, or (iii) an entity purchasing all or substantially all of the
assets of Tenant, shall not require the consent of Landlord, provided that the
entity to whom the Premises are subleased or the Lease is assigned delivers to
Landlord a written assumption of all duties, obligations of Tenant under this
Lease.

 

                (e)           Notwithstanding anything to the
contrary contained in this Article Ten and provided there is no uncured default
under this Lease, Tenant shall have the right, without the prior written
consent of Landlord, to assign this Lease to an Affiliate or to sublease the
Premises or any part thereof to an Affiliate, but (i) no later than fifteen
(15) days prior to the effective date of the assignment or sublease, the
assignee shall execute documents satisfactory to Landlord to evidence such
assignee’s assumption of the obligations and liabilities of Tenant under this
Lease, unless Landlord modifies or waives such requirement in the case of any
assignment which occurs by operation of law (and without a written assignment)
as a consequence of merger, consolidation or non-bankruptcy reorganization, and
the subtenant shall execute documents satisfactory to Landlord to evidence that
the sublease is subject to the terms and conditions of this Lease and that the
subtenant shall perform and be bound by all the terms and conditions of this
Lease (except payment of Monthly Base Rent and Rent Adjustments hereunder and
other obligations which the sublease expressly provides are to be performed by
Tenant as the sublessor) to the extent applicable to the space and period
covered by the sublease; (ii) within ten (10) days after the effective date of
such assignment or sublease, give notice to Landlord which notice shall include
the full name and address of the assignee or subtenant, and a copy of all
agreements executed between Tenant and the assignee or subtenant with respect
to the Premises or part thereof, as may be the case; and (iii) within fifteen
(15) days after Landlord’s written request, provide such reasonable documents
or information which Landlord reasonably requests for the purpose of substantiating
whether or not the assignment or sublease is to an Affiliate.

 

10.02       RECAPTURE

 

Except as provided in Section 10.01(e) Landlord shall
have the option to exclude from the Premises covered by this Lease (“recapture”),
the space proposed to be sublet or subject to the assignment, effective as of
the proposed commencement date of such sublease or assignment.  If Landlord elects to recapture, Tenant shall
surrender possession of the space proposed to be subleased or subject to the
assignment to Landlord on the effective date of recapture of such space from
the Premises, such date being the Termination Date for such space.  Effective as of the date of recapture of any
portion of the Premises pursuant to this section, the Monthly Base Rent,
Rentable Area of the Premises and Tenant’s Share shall be adjusted accordingly.

 

10.03       EXCESS RENT

 

Tenant shall pay Landlord on the first day of each
month during the term of the sublease or assignment, fifty percent (50%) of the
amount by which the sum of all rent and other consideration (direct or
indirect) due from the subtenant or assignee for such month exceeds: (i) that
portion of the Monthly Base Rent and Rent Adjustments due under this Lease for
said month which is allocable to the space sublet or assigned; and (ii) the
following costs and expenses for the subletting or assignment of such space:
(1) brokerage commissions and attorneys’ fees and expenses; (2) the actual
costs paid in making any improvements or substitutions in the Premises required
by any sublease or assignment; and (3) “free rent” periods, costs of any
inducements or concessions given to subtenant or assignee, moving costs, and
other amounts in respect of such subtenant’s or assignee’s other leases or
occupancy arrangements.  All such costs
and expenses shall be amortized over the term of the sublease or assignment
pursuant to sound accounting principles.

 

10.04       TENANT LIABILITY

 

In the event of any sublease or assignment, whether or
not with Landlord’s consent, Tenant shall not be released or discharged from
any liability, whether past, present or future, under this Lease, including any
liability arising from the exercise of any renewal or expansion option, to the
extent such exercise is expressly permitted by Landlord.  Tenant’s liability shall remain primary, and
in the event of default by any subtenant, assignee or successor of Tenant in
performance or observance of any of the covenants or conditions of this Lease,
Landlord may proceed directly against Tenant without the necessity of
exhausting 

 

16

remedies against said subtenant, assignee or
successor.  After any assignment,
Landlord may consent to subsequent assignments or subletting of this Lease, or
amendments or modifications of this Lease with assignees of Tenant, without
notifying Tenant, or any successor of Tenant, and without obtaining its or
their consent thereto, and such action shall not relieve Tenant or any
successor of Tenant of liability under this Lease.  If Landlord grants consent to such sublease
or assignment, Tenant shall pay all reasonable attorneys’ fees and expenses
incurred by Landlord with respect to such assignment or sublease.  In addition, if Tenant has any options to
extend the term of this Lease or to add other space to the Premises, such
options shall not be available to any subtenant or assignee, directly or
indirectly without Landlord’s express written consent, which may be withheld in
Landlord’s sole discretion.

 

10.05       ASSUMPTION AND ATTORNMENT

 

If Tenant shall assign this Lease as permitted herein,
the assignee shall expressly assume all of the obligations of Tenant hereunder
in a written instrument satisfactory to Landlord and furnished to Landlord not
later than fifteen (15) days prior to the effective date of the assignment.  If Tenant shall sublease the Premises as
permitted herein, Tenant shall, at Landlord’s option, within fifteen (15) days
following any request by Landlord, obtain and furnish to Landlord the written
agreement of such subtenant to the effect that the subtenant will attorn to
Landlord and will pay all subrent directly to Landlord.

 

ARTICLE ELEVEN

DEFAULT AND REMEDIES

 

11.01                     EVENTS OF
DEFAULT

 

The occurrence or existence of any one or more of the
following shall constitute a “Default” by Tenant under this Lease:

 

                                                                (i)            Tenant fails to pay any installment
or other payment of Rent including Rent Adjustment Deposits or Rent Adjustments
within three (3) days after the date when due;

 

                                                                (ii)           Tenant fails to observe or perform
any of the other covenants, conditions or provisions of this Lease or the
Workletter and fails to cure such default within thirty (30) days after
written notice thereof to Tenant, unless the default involves a hazardous
condition, which shall be cured forthwith or unless the failure to perform is a
Default for which this Lease specifies there is no cure or grace period;

 

                                                                (iii)          the interest of Tenant in this Lease is
levied upon under execution or other legal process;

 

                                                                (iv)          a petition is filed by or against
Tenant to declare Tenant bankrupt or seeking a plan of reorganization or
arrangement under any Chapter of the Bankruptcy Act, or any amendment,
replacement or substitution therefor, or to delay payment of, reduce or modify
Tenant’s debts, which in the case of an involuntary action is not discharged
within thirty (30) days;

 

                                                                (v)           Tenant is declared insolvent by Law
or any assignment of Tenant’s property is made for the benefit of creditors;

 

                                                                (vi)          a receiver is appointed for Tenant or
Tenant’s property, which appointment is not discharged within thirty (30) days;

 

                                                                (vii)         any action taken by or against Tenant
to reorganize or modify Tenant’s capital structure in a materially adverse way
which in the case of an involuntary action is not discharged within thirty (30)
days;

 

                                                                (viii)        upon the dissolution of Tenant;

 

                                                                (ix)           upon the third occurrence within any
Lease Year that Tenant fails to pay Rent when due or has breached a particular
covenant of this Lease (whether or not such failure or breach is thereafter
cured within any stated cure or grace period or statutory period);

 

                                                                (x)            any vacation or abandonment of the
Premises by Tenant;

 

                                                                (xi)           any warranty, representation or
statement made or furnished by Tenant to Landlord at any time in connection
with this Lease or any other agreement to which Tenant and Landlord are parties
is determined to have been false or misleading in any material respect when
made or furnished; or

 

                                                                (xii)          Tenant makes any sublease, assignment,
mortgage, pledge, hypothecation or other transfer, or permit any transfer of
this Lease or encumbering of Tenant’s interest, or permit the use or occupancy
of the Premises or any part thereof in violation of Article Ten.

 

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11.02                     LANDLORD’S
REMEDIES

 

                (a)           A Default shall constitute a breach
of the Lease for which Landlord shall have the rights and remedies set forth in
this Section 11.02 and all other rights and remedies set forth in this Lease or
now or hereafter allowed by Law, whether legal or equitable, and all rights and
remedies of Landlord shall be cumulative and none shall exclude any other right
or remedy.

 

                (b)           With respect to a Default, at any
time Landlord may terminate Tenant’s right to possession by written notice to
Tenant stating such election.  Any
written notice required pursuant to Section 11.01 shall constitute notice of
unlawful detainer pursuant to California Code of Civil Procedure Section 1161
if, at Landlord’s sole discretion, it states Landlord’s election that Tenant’s
right to possession is terminated after expiration of any period required by
Law or any longer period required by Section 11.01.  Upon the expiration of the period stated in
Landlord’s written notice of termination (and unless such notice provides an
option to cure within such period and Tenant cures the Default within such
period), Tenant’s right to possession shall terminate and this Lease shall
terminate, and Tenant shall remain liable as hereinafter provided.  Upon such termination in writing of Tenant’s
right to possession, Landlord shall have the right, subject to applicable Law,
to re-enter the Premises and dispossess Tenant and the legal representatives of
Tenant and all other occupants of the Premises by unlawful detainer or other
summary proceedings, or otherwise as permitted by Law, regain possession of the
Premises and remove their property (including their trade fixtures, personal
property and those Tenant Additions which Tenant is required or permitted to
remove under Article Twelve), but Landlord shall not be obligated to effect
such removal, and such property may, at Landlord’s option, be stored elsewhere,
sold or otherwise dealt with as permitted by Law, at the risk of, expense of
and for the account of Tenant, and the proceeds of any sale shall be applied
pursuant to Law.  Landlord shall in no
event be responsible for the value, preservation or safekeeping of any such
property.  Tenant hereby waives all
claims for damages that may be caused by Landlord’s removing or storing Tenant’s
personal property pursuant to this Section or Section 12.01, and Tenant hereby
indemnifies, and agrees to defend, protect and hold harmless, the Indemnitees
from any and all loss, claims, demands, actions, expenses, liability and cost
(including attorneys’ fees and expenses) arising out of or in any way related
to such removal or storage.  Upon such
written termination of Tenant’s right to possession and this Lease, Landlord
shall have the right to recover damages for Tenant’s Default as provided herein
or by Law, including the following damages provided by California Civil Code
Section 1951.2:

 

                                                                (1) the worth at the
time of award of the unpaid Rent which had been earned at the time of
termination;

 

                                                                (2) the worth at the
time of award of the amount by which the unpaid Rent which would have been earned
after termination until the time of award exceeds the amount of such Rent loss
that Tenant proves could reasonably have been avoided;

 

                                                                (3) the worth at the
time of award of the amount by which the unpaid Rent for the balance of the
term of this Lease after the time of award exceeds the amount of such Rent loss
that Tenant proves could be reasonably avoided; and

 

                                                                (4) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant’s failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom.  The word “rent” as used in this Section 11.02
shall have the same meaning as the defined term Rent in this Lease.  The “worth at the time of award” of the
amount referred to in clauses (1) and (2) above is computed by allowing
interest at the Default Rate.  The worth
at the time of award of the amount referred to in clause (3) above is computed
by discounting such amount at the discount rate of the Federal Reserve Bank of
San Francisco at the time of award plus one percent (1%).  For the purpose of determining unpaid Rent
under clause (3) above, the monthly Rent reserved in this Lease shall be deemed
to be the sum of the Monthly Base Rent, monthly storage space rent (if any),
and the amounts last payable by Tenant as Rent Adjustments for the calendar
year in which Landlord terminated this Lease as provided hereinabove.

 

                (c)           Even if Tenant is in Default and/or
has abandoned the Premises, this Lease shall continue in effect for so long as
Landlord does not terminate Tenant’s right to possession by written notice as
provided in Section 11.02(b) above, and Landlord may enforce all its rights and
remedies under this Lease, including the right to recover Rent as it becomes
due under this Lease.  In such event,
Landlord shall have all of the rights and remedies of a landlord under
California Civil Code Section 1951.4 (lessor may continue Lease in effect after
Tenant’s Default and abandonment and recover Rent as it becomes due, if Tenant
has the right to sublet or assign, subject only to reasonable limitations), or
any successor statute.  During such time
as Tenant is in Default, if Landlord has not terminated this Lease by written
notice and if Tenant requests Landlord’s consent to an assignment of this Lease
or a sublease of the Premises, subject to Landlord’s option to recapture
pursuant to Section 10.02, Landlord shall not unreasonably withhold its consent
to such assignment or sublease.  Tenant
acknowledges and agrees that the provisions of Article Ten shall be deemed to
constitute reasonable limitations of Tenant’s right to assign or sublet.  Tenant acknowledges and agrees that in the
absence of written notice pursuant to Section 11.02(b) above terminating Tenant’s
right to possession, no other act of Landlord shall constitute a termination of
Tenant’s right to possession or an acceptance of Tenant’s surrender of the
Premises,

 

18

including acts of maintenance or preservation or
efforts to relet the Premises or the appointment of a receiver upon initiative
of Landlord to protect Landlord’s interest under this Lease or the withholding
of consent to a subletting or assignment, or terminating a subletting or
assignment, if in accordance with other provisions of this Lease.

 

                (d)           In the event that Landlord seeks an
injunction with respect to a breach or threatened breach by Tenant of any of
the covenants, conditions or provisions of this Lease, Tenant agrees to pay the
premium for any bond required in connection with such injunction.

 

                (e)           Tenant hereby waives any and all
rights to relief from forfeiture, redemption or reinstatement granted by Law
(including California Civil Code of Procedure Sections 1174 and 1179) in the event
of Tenant being evicted or dispossessed for any cause or in the event of
Landlord obtaining possession of the Premises by reason of Tenant’s Default or
otherwise.

 

                (f)            When this Lease requires giving or
service of a notice, that notice shall replace rather than supplement any
equivalent or similar statutory notice, including any equivalent or similar
notices required by California Code of Civil Procedure Section 1161 or any
similar or successor statute.  When a statute
requires service of a notice in a particular manner, service of that notice (or
a similar notice required by this Lease) in the manner required by Article
Twenty-four shall replace and satisfy the statutory service—of—notice
procedures, including those required by Code of Civil Procedure section 1162 or
any similar or successor statute.

 

                (g)           The voluntary or other surrender or
termination of this Lease, or a mutual termination or cancellation thereof,
shall not work a merger and shall terminate all or any existing assignments,
subleases, subtenancies or occupancies permitted by Tenant, except if and as
otherwise specified in writing by Landlord.

 

                (h)           No delay or omission in the exercise
of any right or remedy of Landlord upon any default by Tenant, and no exercise
by Landlord of its rights pursuant to Section 26.15 to perform any duty which
Tenant fails timely to perform, shall impair any right or remedy or be
construed as a waiver.  No provision of
this Lease shall be deemed waived by Landlord unless such waiver is in a
writing signed by Landlord.  The waiver
by Landlord of any breach of any provision of this Lease shall not be deemed a
waiver of any subsequent breach of the same or any other provision of this
Lease.

 

11.03                     ATTORNEY’S
FEES

 

In the event any party brings any suit or other proceeding
with respect to the subject matter or enforcement of this Lease, the prevailing
party (as determined by the court, agency or other authority before which such
suit or proceeding is commenced) shall, in addition to such other relief as may
be awarded, be entitled to recover attorneys’ fees, expenses and costs of
investigation as actually incurred, including court costs, expert witness fees,
costs and expenses of investigation, and all attorneys’ fees, costs and
expenses in any such suit or proceeding (including in any action or
participation in or in connection with any case or proceeding under the
Bankruptcy Code, 11 United States Code Sections 101 et seq., or any
successor statutes, in establishing or enforcing the right to indemnification,
in appellate proceedings, or in connection with the enforcement or collection
of any judgment obtained in any such suit or proceeding).

 

11.04       BANKRUPTCY

 

The following provisions shall apply in the event of
the bankruptcy or insolvency of Tenant:

 

                (a)           In connection with any proceeding
under Chapter 7 of the Bankruptcy Code where the trustee of Tenant elects
to assume this Lease for the purposes of assigning it, such election or
assignment, may only be made upon compliance with the provisions of (b) and (c)
below, which conditions Landlord and Tenant acknowledge to be commercially
reasonable.  In the event the trustee
elects to reject this Lease then Landlord shall immediately be entitled to
possession of the Premises without further obligation to Tenant or the trustee.

 

                (b)           Any election to assume this Lease
under Chapter 11 or 13 of the Bankruptcy Code by Tenant as debtor-in-possession
or by Tenant’s trustee (the “Electing Party”) must provide for:

 

                                                The Electing Party to cure or provide to Landlord adequate assurance that
it will cure all monetary defaults under this Lease within fifteen (15) days
from the date of assumption and it will cure all nonmonetary defaults under
this Lease within thirty (30) days from the date of assumption.  Landlord and Tenant acknowledge such
condition to be commercially reasonable.

 

                (c)           If the Electing Party has assumed
this Lease or elects to assign Tenant’s interest under this Lease to any other
person, such interest may be assigned only if the intended assignee has
provided adequate assurance of future performance (as herein defined), of all
of the obligations imposed on Tenant under this Lease.

 

19

                                                For the purposes hereof, “adequate assurance of future performance” means
that Landlord has ascertained that each of the following conditions has been
satisfied:

 

                                                                (i)  The assignee has submitted a current
financial statement, certified by its chief financial officer, which shows a
net worth and working capital in amounts sufficient to assure the future
performance by the assignee of Tenant’s obligations under this Lease; and

 

                                                                (ii)  Landlord has obtained consents or waivers
from any third parties which may be required under a lease, mortgage, financing
arrangement, or other agreement by which Landlord is bound, to enable Landlord
to permit such assignment.

 

                (d)           Landlord’s acceptance of Rent or any
other payment from any trustee, receiver, assignee, person, or other entity
will not be deemed to have waived, or waive, the requirement of Landlord’s
consent, Landlord’s right to terminate this Lease for any transfer of Tenant’s
interest under this Lease without such consent, or Landlord’s claim for any
amount of Rent due from Tenant.

 

11.05           LANDLORD’S DEFAULT

 

Landlord shall be in default hereunder in the event Landlord
has not begun and pursued with reasonable diligence the cure of any failure of
Landlord to meet its obligations hereunder within thirty (30) days after the
receipt by Landlord of written notice from Tenant of the alleged failure to
perform. In no event shall Tenant have the right to terminate or rescind this
Lease as a result of Landlord’s default as to any covenant or agreement
contained in this Lease. Tenant hereby waives such remedies of termination and
rescission and hereby agrees that Tenant’s remedies for default hereunder and
for breach of any promise or inducement shall be limited to a suit for damages
and/or injunction. In addition, Tenant hereby covenants that, prior to the
exercise of any such remedies, it will give the Mortgagee notice and a
reasonable time to cure any default by Landlord.

ARTICLE TWELVE

SURRENDER OF PREMISES

 

12.01       IN GENERAL

 

Upon the Termination Date, Tenant shall surrender and
vacate the Premises immediately and deliver possession thereof to Landlord in a
clean, good and tenantable condition, ordinary wear and tear, and damage caused
by Landlord excepted.  Tenant shall
deliver to Landlord all keys to the Premises. 
Tenant shall remove from the Premises all movable personal property of
Tenant and Tenant’s trade fixtures, including, subject to Section 6.02, cabling
for any of the foregoing.  Tenant shall
be entitled to remove such Tenant Additions which at the time of their
installation Landlord and Tenant agreed may be removed by Tenant.  Tenant shall also remove such other Tenant
Additions as required by Landlord, including any Tenant Additions containing
Hazardous Material.  Tenant immediately
shall repair all damage resulting from removal of any of Tenant’s property,
furnishings or Tenant Additions, shall close all floor, ceiling and roof
openings and shall restore the Premises to a tenantable condition as reasonably
determined by Landlord.  If any of the
Tenant Additions which were installed by Tenant involved the lowering of
ceilings, raising of floors or the installation of specialized wall or floor
coverings or lights, then Tenant shall also be obligated to return such
surfaces to their condition prior to the commencement of this Lease.   Tenant shall also be required to close any
staircases or other openings between floors. In the event possession of the
Premises is not delivered to Landlord when required hereunder, or if Tenant
shall fail to remove those items described above, Landlord may (but shall not
be obligated to), at Tenant’s expense, remove any of such property and store,
sell or otherwise deal with such property as provided in Section 11.02(b),
including the waiver and indemnity obligations provided in that Section, and
undertake, at Tenant’s expense, such restoration work as Landlord deems
necessary or advisable.

 

12.02       LANDLORD’S RIGHTS

 

All property which may be removed from the Premises by
Landlord shall be conclusively presumed to have been abandoned by Tenant and
Landlord may deal with such property as provided in Section 11.02(b), including
the waiver and indemnity obligations provided in that Section.  Tenant shall also reimburse Landlord for all
costs and expenses incurred by Landlord in removing any of Tenant Additions and
in restoring the Premises to the condition required by this Lease at the
Termination Date.

 

ARTICLE
THIRTEEN

HOLDING OVER

 

Tenant shall pay Landlord one hundred and fifty
percent (150%) of the fair market rental value of the Premises as reasonably
determined by Landlord for each month or portion thereof that Tenant retains
possession of the Premises, or any portion thereof, after the Termination Date
(without reduction for any partial month that Tenant retains possession).  Tenant shall also pay all damages sustained
by Landlord by reason of such retention of possession.  The provisions of this Article shall not
constitute a waiver by Landlord of any re-entry rights of Landlord and
Tenant’s continued occupancy of the Premises shall be as a tenancy in
sufferance.

 

20

ARTICLE FOURTEEN

DAMAGE BY FIRE OR OTHER CASUALTY

 

14.01                     SUBSTANTIAL
UNTENANTABILITY

 

                (a)           If any fire or other casualty
(whether insured or uninsured) renders all or a substantial portion of the
Premises or the Building untenantable, Landlord shall, with reasonable
promptness after the occurrence of such damage, estimate the length of time
that will be required to substantially complete the repair and restoration and
shall by notice advise Tenant of such estimate (“Landlord’s Notice”).  If Landlord estimates that the amount of time
required to substantially complete such repair and restoration will exceed one
year from the date such damage occurred, then Landlord, or Tenant if all or a
substantial portion of the Premises is rendered untenantable, shall have the
right to terminate this Lease as of the date of such damage upon giving written
notice to the other at any time within twenty (20) days after delivery of
Landlord’s Notice, provided that if Landlord so chooses, Landlord’s Notice may
also constitute such notice of termination. 
Further, in the event that the Building is damaged or destroyed to the
extent of more than twenty-five percent (25%) of its replacement cost or to any
extent if no insurance proceeds or insufficient insurance proceeds are receivable
by Landlord, Landlord may elect by written notice to Tenant given within thirty
(30) days after the occurrence of the casualty to terminate this Lease in lieu
of so restoring the Premises and Building, in which event this Lease shall
terminate as of the date of such damage.

 

                (b)           Unless this Lease is terminated as
provided in the preceding subparagraph, Landlord shall proceed with reasonable
promptness to repair and restore the Premises to its condition as existed prior
to such casualty, subject to reasonable delays for insurance adjustments and
Force Majeure delays, and also subject to zoning Laws and building codes then
in effect.  Landlord shall have no
liability to Tenant, and Tenant shall not be entitled to terminate this Lease
if such repairs and restoration are not in fact completed within the time
period estimated by Landlord so long as Landlord shall proceed with reasonable
diligence to complete such repairs and restoration.

 

                (c)           Tenant acknowledges that Landlord
shall be entitled to the full proceeds of any insurance coverage, whether
carried by Landlord or Tenant, for damages to the Premises, except for those
proceeds of Tenant’s insurance of its own personal property and equipment which
would be removable by Tenant at the Termination Date.  All such insurance proceeds shall be payable
to Landlord whether or not the Premises are to be repaired and restored,
provided, however, if this Lease is not terminated and the parties proceed to
repair and restore Tenant Additions at Tenant’s cost, to the extent Landlord
received proceeds of Tenant’s insurance covering Tenant Additions, such
proceeds shall be applied to reimburse Tenant for its cost of repairing and
restoring Tenant Additions.

 

                (d)           Notwithstanding anything to the
contrary herein set forth: 
(i) Landlord shall have no duty pursuant to this Section to repair
or restore any portion of any Tenant Additions or to expend for any repair or
restoration of the Premises or Building amounts in excess of insurance proceeds
paid to Landlord and available for repair or restoration; and (ii) Tenant
shall not have the right to terminate this Lease pursuant to this Section if
any damage or destruction was caused by the act or neglect of Tenant, its agent
or employees.  Whether or not the Lease
is terminated pursuant to this Article Fourteen, in no event shall Tenant be
entitled to any compensation or damages for loss of the use of the whole or any
part of the Premises or for any inconvenience or annoyance occasioned by any
such damage, destruction, rebuilding or restoration of the Premises or the
Building or access thereto.

 

                (e)           Any repair or restoration of the
Premises performed by Tenant shall be in accordance with the provisions of
Article Nine hereof.

 

14.02       INSUBSTANTIAL UNTENANTABILITY

 

If the Premises or the Building is damaged by a
casualty but neither is rendered substantially untenantable and Landlord
estimates that the time to substantially complete the repair or restoration
will not exceed one hundred eighty (180) days from the date such damage occurred,
then Landlord shall proceed to repair and restore the Building or the Premises
other than Tenant Additions, with reasonable promptness, unless such damage is
to the Premises and occurs during the last six (6) months of the Term, in which
event either Tenant or Landlord shall have the right to terminate this Lease as
of the date of such casualty by giving written notice thereof to the other
within twenty (20) days after the date of such casualty.  Notwithstanding the foregoing, Landlord’s
obligation to repair shall be limited in accordance with the provisions of
Section 14.01 above.

 

14.03                     RENT
ABATEMENT

 

Except for the negligence or willful act of Tenant or
its agents, employees, contractors or invitees, if all or any part of the
Premises are rendered untenantable by fire or other casualty and this Lease is
not terminated, Monthly Base Rent and Rent Adjustments shall abate for that
part of the Premises which is untenantable on a per diem basis from
the date of the casualty until Landlord has Substantially Completed the
repair and restoration work in the Premises which it is required to perform,
provided, that as a result of such casualty, Tenant does not occupy the portion
of the Premises which is untenantable during such period.

 

21

14.04       WAIVER OF STATUTORY REMEDIES

 

The provisions of this Lease, including this
Article Fourteen, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, the Premises
or the Property or any part of either, and any Law, including
Sections 1932(2), 1933(4), 1941 and 1942 of the California Civil Code,
with respect to any rights or obligations concerning damage or destruction
shall have no application to this Lease or to any damage to or destruction of
all or any part of the Premises or the Property or any part of either, and are
hereby waived.

 

ARTICLE
FIFTEEN

EMINENT DOMAIN

 

15.01                     TAKING OF
WHOLE OR SUBSTANTIAL PART

 

In the event the whole or any substantial part of the
Building or of the Premises is taken or condemned by any competent authority
for any public use or purpose (including a deed given in lieu of condemnation)
and is thereby rendered untenantable, this Lease shall terminate as of the date
title vests in such authority, and Monthly Base Rent and Rent Adjustments shall
be apportioned as of the Termination Date. 
Notwithstanding anything to the contrary herein set forth, in the event
the taking is temporary (for less than the remaining term of the Lease), Landlord
may elect either (i) to terminate this Lease or (ii) permit Tenant to receive
the entire award attributable to the Premises in which case Tenant shall
continue to pay Rent and this Lease shall not terminate.

 

15.02                     TAKING OF
PART

 

In the event a part of the Building or the Premises is
taken or condemned by any competent authority (or a deed is delivered in lieu
of condemnation) and this Lease is not terminated, the Lease shall be amended
to reduce or increase, as the case may be, the Monthly Base Rent and Tenant’s
Share to reflect the Rentable Area of the Premises or Building, as the case may
be, remaining after any such taking or condemnation.  Landlord, upon receipt and to the extent of
the award in condemnation (or proceeds of sale) shall make necessary repairs
and restorations to the Premises (exclusive of Tenant Additions) and to the
Building to the extent necessary to constitute the portion of the Building not
so taken or condemned as a complete architectural and economically efficient
unit.  Notwithstanding the foregoing, if
as a result of any taking, or a governmental order that the grade of any street
or alley adjacent to the Building is to be changed and such taking or change of
grade makes it necessary or desirable to substantially remodel or restore the
Building or prevents the economical operation of the Building, Landlord shall
have the right to terminate this Lease upon ninety (90) days prior written
notice to Tenant.

 

15.03       COMPENSATION

 

Landlord shall be entitled to receive the entire award
(or sale proceeds) from any such taking, condemnation or sale without any
payment to Tenant, and Tenant hereby assigns to Landlord Tenant’s interest, if
any, in such award; provided, however, Tenant shall have the right separately
to pursue against the condemning authority a separate award in respect of the
loss, if any, to Tenant Additions paid for by Tenant without any credit or
allowance from Landlord so long as there is no diminution of Landlord’s award
as a result.

 

ARTICLE
SIXTEEN

INSURANCE

 

16.01       TENANT’S INSURANCE

 

Tenant, at Tenant’s expense, agrees to maintain in
force, with a company or companies acceptable to Landlord, during the Term:
(a) Commercial General Liability Insurance on a primary basis and without
any right of contribution from any insurance carried by Landlord covering the
Premises on an occurrence basis against all claims for personal injury, bodily
injury, death and property damage, including contractual liability covering the
indemnification provisions in this Lease. 
Such insurance shall be for such limits that are reasonably required by
Landlord from time to time but not less than a combined single limit of Two
Million Dollars ($2,000,000.00); (b) Workers’ Compensation and Employers’
Liability Insurance to the extent required by and in accordance with the Laws
of the State of California; (c) “All Risks” property insurance in an amount
adequate to cover the full replacement cost of all Tenant Additions, equipment,
installations, fixtures and contents of the Premises in the event of loss; and
(d) business interruption or loss of income insurance in an amount equal to the
Monthly Base Rent for a period of at least one year commencing with the date of
loss (and the proceeds of such insurance shall be paid to Landlord to the
extent of any abatement of Rent under the Lease).

 

16.02       FORM OF POLICIES

 

Each policy referred to in 16.01 shall satisfy the
following requirements.  Each policy
shall (i) name Landlord and the Indemnitees as additional insureds (except
Workers’ Compensation and Employers’ Liability Insurance), (ii) be issued by
one or more responsible insurance companies licensed to do 

 

22

business in the State of California reasonably
satisfactory to Landlord, (iii) where applicable, provide for deductible
amounts satisfactory to Landlord and not permit co-insurance, (iv) shall
provide that such insurance may not be canceled or amended without thirty (30)
days’ prior written notice to the Landlord, and (v) each policy of “All-Risks”
property insurance shall provide that the policy shall not be invalidated
should the insured waive in writing prior to a loss, any or all rights of
recovery against any other party for losses covered by such policies.  Tenant shall deliver to Landlord, certificates
of insurance and at Landlord’s request, copies of all policies and renewals
thereof to be maintained by Tenant hereunder, not less than ten (10) days prior
to the Commencement Date and not less than ten (10) days prior to the
expiration date of each policy.

 

16.03       LANDLORD’S INSURANCE

 

Landlord agrees to purchase and keep in full force and
effect during the Term hereof, including any extensions or renewals thereof,
insurance under policies issued by insurers of recognized responsibility,
qualified to do business in the State of California on the Building in amounts
not less than the greater of eighty (80%) percent of the then full replacement
cost (without depreciation) of the Building (above foundations and excluding
Tenant Additions) or an amount sufficient to prevent Landlord from becoming a
co-insurer under the terms of the applicable policies, against fire and such
other risks as may be included in standard forms of all risk coverage insurance
reasonably available from time to time. 
Landlord agrees to maintain in force during the Term, Commercial General
Liability Insurance covering the Building on an occurrence basis against all
claims for personal injury, bodily injury, death and property damage.  Such insurance shall be for a combined single
limit of Five Million Dollars ($5,000,000.00). 
Neither Landlord’s obligation to carry such insurance nor the carrying
of such insurance shall be deemed to be an indemnity by Landlord with respect
to any claim, liability, loss, cost or expense due, in whole or in part, to
Tenant’s negligent acts or omissions or willful misconduct.  Without obligation to do so, Landlord may, in
its sole discretion from time to time, carry insurance in amounts greater
and/or for coverage additional to the coverage and amounts set forth above.

 

16.04       WAIVER OF SUBROGATION

 

                (a)           Landlord agrees that, if obtainable
at no, or minimal, additional cost, and so long as the same is permitted under
the laws of the State of California, it will include in its “All Risks”
policies appropriate clauses pursuant to which the insurance companies (i)
waive all right of subrogation against Tenant with respect to losses payable
under such policies and/or (ii) agree that such policies shall not be
invalidated should the insured waive in writing prior to a loss any or all
right of recovery against any party for losses covered by such policies.

 

                (b)           Tenant agrees to include, if
obtainable at no, or minimal, additional cost, and so long as the same is
permitted under the laws of the State of California, in its “All Risks”
insurance policy or policies on Tenant Additions, whether or not removable, and
on Tenant’s furniture, furnishings, fixtures and other property removable by
Tenant under the provisions of this Lease appropriate clauses pursuant to which
the insurance company or companies (i) waive the right of subrogation against
Landlord and/or any tenant of space in the Building with respect to losses
payable under such policy or policies and/or (ii) agree that such policy or
policies shall not be invalidated should the insured waive in writing prior to
a loss any or all right of recovery against any party for losses covered by
such policy or policies.  If Tenant is
unable to obtain in such policy or policies either of the clauses described in
the preceding sentence, Tenant shall, if legally possible and without
necessitating a change in insurance carriers, have Landlord named in such
policy or policies as an additional insured. 
If Landlord shall be named as an additional insured in accordance with
the foregoing, Landlord agrees to endorse promptly to the order of Tenant,
without recourse, any check, draft, or order for the payment of money
representing the proceeds of any such policy or representing any other payment
growing out of or connected with said policies, and Landlord does hereby
irrevocably waive any and all rights in and to such proceeds and payments.

 

                (c)           Provided that Landlord’s right of
full recovery under its policy or policies aforesaid is not adversely affected
or prejudiced thereby, Landlord hereby waives any and all right of recovery
which it might otherwise have against Tenant, its servants, agents and
employees, for loss or damage occurring to the Real Property and the fixtures,
appurtenances and equipment therein, except Tenant Additions, to the extent the
same is covered by Landlord’s insurance, notwithstanding that such loss or
damage may result from the negligence or fault of Tenant, its servants, agents
or employees.  Provided that Tenant’s
right of full recovery under its aforesaid policy or policies is not adversely
affected or prejudiced thereby, Tenant hereby waives any and all right of
recovery which it might otherwise have against Landlord, its servants, and
employees and against every other tenant of the Real Property who shall have
executed a similar waiver as set forth in this Section 16.04(c) for loss or
damage to Tenant Additions, whether or not removable, and to Tenant’s
furniture, furnishings, fixtures and other property removable by Tenant under
the provisions hereof to the extent the same is coverable by Tenant’s insurance
required under this Lease, notwithstanding that such loss or damage may result
from the negligence or fault of Landlord, its servants, agents or employees, or
such other tenant and the servants, agents or employees thereof.

 

                (d)           Landlord and Tenant hereby agree to
advise the other promptly if the clauses to be included in their respective
insurance policies pursuant to Sections (a) and (b) above cannot be obtained on
the terms hereinbefore provided and thereafter to furnish the other with a
certificate of insurance or copy of such policies showing the naming of the
other as an additional insured, as aforesaid. 
Landlord 

 

23

and Tenant hereby also agree to notify the other
promptly of any cancellation or change of the terms of any such policy which
would affect such clauses or naming.  All
such policies which name both Landlord and Tenant as additional insureds shall,
to the extent obtainable, contain agreements by the insurers to the effect that
no act or omission of any additional insured will invalidate the policy as to
the other additional insureds.

 

16.05       NOTICE OF CASUALTY

 

Tenant shall give Landlord notice in case of a fire or
accident in the Premises promptly after Tenant is aware of such event.

 

ARTICLE SEVENTEEN

WAIVER OF CLAIMS AND INDEMNITY

 

17.01                     WAIVER OF
CLAIMS

 

To the extent permitted by Law, Tenant releases the
Indemnitees from, and waives all claims for, damage to person or property sustained
by the Tenant or any occupant of the Premises or the Property resulting
directly or indirectly from any existing or future condition, defect, matter or
thing in and about the Premises or the Property, or any part of either, or any
equipment or appurtenance therein, or resulting from any accident in or about
the Premises or the Property, or resulting directly or indirectly from any act
or neglect of any tenant or occupant of the Property or of any other person,
including Landlord’s agents and servants, except to the extent caused by the
gross negligence or willful misconduct of any of the Indemnitees. If any such
damage, whether to the Premises or the Property or any part of either, or
whether to Landlord or to other tenants in the Property, results from any act
or neglect of Tenant, its employees, servants, agents, contractors, invitees or
customers, Tenant shall be liable therefor and Landlord may, at Landlord’s
option, repair such damage and Tenant shall, upon demand by Landlord, as
payment of additional Rent hereunder, reimburse Landlord within ten (10) days
of demand for the total cost of such repairs, in excess of amounts, if any,
paid to Landlord under insurance covering such damages.  Tenant shall not be liable for any such
damage caused by its acts or neglect if Landlord or a tenant has recovered the
full amount of the damage from proceeds of insurance policies and the insurance
company has waived its right of subrogation against Tenant.

 

17.02                     INDEMNITY
BY TENANT

 

To the extent permitted by Law, Tenant hereby
indemnifies, and agrees to protect, defend and hold the Indemnitees harmless,
against any and all actions, claims, demands, liability, costs and expenses,
including attorneys’ fees and expenses for the defense thereof, arising from
Tenant’s occupancy of the Premises, from the undertaking of any Tenant
Additions or repairs to the Premises, from the conduct of Tenant’s business on
the Premises, or from any breach or default on the part of Tenant in the
performance of any covenant or agreement on the part of Tenant to be performed
pursuant to the terms of this Lease, or from any willful act or negligence of
Tenant, its agents, contractors, servants, employees, customers or invitees, in
or about the Premises or the Property or any part of either.  In case of any action or proceeding brought
against the Indemnitees by reason of any such claim, upon notice from Landlord,
Tenant covenants to defend such action or proceeding by counsel chosen by
Landlord, in Landlord’s sole discretion. 
Landlord reserves the right to settle, compromise or dispose of any and
all actions, claims and demands related to the foregoing indemnity.  The foregoing indemnity shall not operate to
relieve Indemnitees of liability to the extent such liability is caused by the
willful and wrongful act of Indemnitees. 
Further, the foregoing indemnity is subject to and shall not diminish
any waivers in effect in accordance with Section 16.04 by Landlord or its
insurers to the extent of amounts, if any, paid to Landlord under its “All-Risks”
property insurance.

 

17.03                     WAIVER OF
CONSEQUENTIAL DAMAGES 

 

To the extent permitted by law, Tenant hereby waives and
releases the Indemnitees from any consequential damages, compensation or claims
for inconvenience or loss of business, rents or profits as a result of any
injury or damage, whether or not caused by the willful and wrongful act of any
of the Indemnitees.

 

 

ARTICLE EIGHTEEN

RULES AND REGULATIONS

 

18.01       RULES

 

Tenant agrees for itself and for its subtenants,
employees, agents, and invitees to comply with the rules and regulations listed
on Exhibit D attached hereto and with all reasonable modifications
and additions thereto which Landlord may make from time to time.

 

24

18.02       ENFORCEMENT

 

Nothing in this Lease shall be construed to impose
upon the Landlord any duty or obligation to enforce the rules and regulations
as set forth on Exhibit D or as hereafter adopted, or the terms,
covenants or conditions of any other lease as against any other tenant, and the
Landlord shall not be liable to the Tenant for violation of the same by any
other tenant, its servants, employees, agents, visitors or licensees.

 

ARTICLE NINETEEN

LANDLORD’S RESERVED RIGHTS

 

Landlord shall have the following rights exercisable
without notice to Tenant and without liability to Tenant for damage or injury
to persons, property or business and without being deemed an eviction or
disturbance of Tenant’s use or possession of the Premises or giving rise to any
claim for offset or abatement of Rent: 
(1) to change the Building’s name or street address upon thirty
(30) days’ prior written notice to Tenant; (2) to install, affix and
maintain all signs on the exterior and/or interior of the Building; (3) to
designate and/or approve prior to installation, all types of signs, window
shades, blinds, drapes, awnings or other similar items, and all internal
lighting that may be visible from the exterior of the Premises; (4) upon
reasonable notice to Tenant, to display the Premises to prospective purchasers
at reasonable hours at any time during the Term and to prospective tenants at
reasonable hours during the last twelve (12) months of the Term; (5) to
grant to any party the exclusive right to conduct any business or render any
service in or to the Building, provided such exclusive right shall not operate
to prohibit Tenant from using the Premises for the purpose permitted hereunder;
(6) to change the arrangement and/or location of entrances or passageways,
doors and doorways, corridors, elevators, stairs, washrooms or public portions
of the Building, and to close entrances, doors, corridors, elevators or other
facilities, provided that such action shall not materially and adversely
interfere with Tenant’s access to the Premises or the Building; (7) to
have access for Landlord and other tenants of the Building to any mail chutes
and boxes located in or on the Premises as required by any applicable rules of
the United States Post Office; and (8) to close the Building after
Standard Operating Hours, except that Tenant and its employees and invitees
shall be entitled to admission at all times, under such regulations as Landlord
prescribes for security purposes.

 

ARTICLE TWENTY

ESTOPPEL CERTIFICATE

 

20.01                     IN GENERAL

 

Within fifteen (15) days after request therefor by
Landlord, Mortgagee or any prospective mortgagee or owner, Tenant agrees as
directed in such request to execute an Estoppel Certificate in recordable form,
binding upon Tenant, certifying (i) that this Lease is unmodified and in
full force and effect (or if there have been modifications, a description of
such modifications and that this Lease as modified is in full force and
effect); (ii) the dates to which Rent has been paid; (iii) that Tenant is
in the possession of the Premises if that is the case; (iv) that Landlord is
not in default under this Lease, or, if Tenant believes Landlord is in default,
the nature thereof in detail; (v) that Tenant has no offsets or defenses
to the performance of its obligations under this Lease (or if Tenant believes
there are any offsets or defenses, a full and complete explanation thereof);
(vi) that the Premises have been completed in accordance with the terms and
provisions hereof, that Tenant has accepted the Premises and the condition
thereof and of all improvements thereto and has no claims against Landlord or
any other party with respect thereto; (vii) that if an assignment of rents
or leases has been served upon the Tenant by a Mortgagee, Tenant will
acknowledge receipt thereof and agree to be bound by the provisions thereof;
(viii) that Tenant will give to the Mortgagee copies of all notices
required or permitted to be given by Tenant to Landlord; and (ix) to any
other information reasonably requested.

 

20.02                     ENFORCEMENT

 

In the event that Tenant fails to deliver an Estoppel
Certificate, then such failure shall be a Default for which there shall be no
cure or grace period. In addition to any other remedy available to Landlord,
Landlord may impose a charge equal to Five Hundred Dollars ($500.00) for each
day that Tenant fails to deliver an Estoppel Certificate and Tenant shall be
deemed to have irrevocably appointed Landlord as Tenant’s attorney-in-fact to
execute and deliver such Estoppel Certificate.

 

ARTICLE TWENTY-ONE

INTENTIONALLY OMITTED

 

ARTICLE TWENTY-TWO

REAL ESTATE BROKERS

 

Tenant represents that, except for the broker(s)
listed in Section 1.01(20) Tenant has not dealt with any real estate broker,
sales person, or finder in connection with this Lease, and no such person
initiated or participated in the negotiation of this Lease, or showed the
Premises to Tenant.  Tenant hereby agrees
to indemnify, protect, defend and hold Landlord and the Indemnitees, harmless
from and against any and all liabilities and claims for commissions and fees
arising out of a breach of the foregoing representation.  Landlord agrees to pay any commission to
which Landlord’s Broker listed in Section 1.01(20) is entitled in 

 

25

connection with this Lease pursuant to Landlord’s
written agreement with such broker. 
Landlord and Tenant agree that any commission payable to Tenant’s Broker
shall be paid by Tenant except to the extent that Tenant’s Broker and Landlord’s
Broker have entered into a separate agreement between themselves to share the
commission paid to Landlord’s Broker by Landlord.

 

ARTICLE TWENTY-THREE

MORTGAGEE PROTECTION

 

23.01       SUBORDINATION AND ATTORNMENT

 

This Lease is and shall be expressly subject and
subordinate at all times to (i) any ground or underlying lease of the Real
Property, now or hereafter existing, and all amendments, extensions, renewals
and modifications to any such lease, and (ii) the lien of any mortgage or trust
deed now or hereafter encumbering fee title to the Real Property and/or the
leasehold estate under any such lease, and all amendments, extensions,
renewals, replacements and modifications of such mortgage or trust deed and/or
the obligation secured thereby, unless such ground lease or ground lessor, or
mortgage, trust deed or Mortgagee, expressly provides or elects that the Lease
shall be superior to such lease or mortgage or trust deed.  If any such mortgage or trust deed is
foreclosed (including any sale of the Real Property pursuant to a power of sale),
or if any such lease is terminated, upon request of the Mortgagee or ground
lessor, as the case may be, Tenant shall attorn to the purchaser at the
foreclosure sale or to the ground lessor under such lease, as the case may be,
provided, however, that such purchaser or ground lessor shall not be
(i) bound by any payment of Rent for more than one month in advance except
payments in the nature of security for the performance by Tenant of its
obligations under this Lease; (ii) subject to any offset, defense or
damages arising out of a default of any obligations of any preceding Landlord;
or (iii) bound by any amendment or modification of this Lease made without
the written consent of the Mortgagee or ground lessor; or (iv) liable for any
security deposits not actually received in cash by such purchaser or ground
lessor.  This subordination shall be self-operative
and no further certificate or instrument of subordination need be required by
any such Mortgagee or ground lessor.  In
confirmation of such subordination, however, Tenant shall execute promptly any
reasonable certificate or instrument that Landlord, Mortgagee or ground lessor
may request.  Tenant hereby constitutes
Landlord as Tenant’s attorney-in-fact to execute such certificate
or instrument for and on behalf of Tenant upon Tenant’s failure to do so within
fifteen (15) days of a request to do so. 
Upon request by such successor in interest, Tenant shall execute and
deliver reasonable instruments confirming the attornment provided for herein.

 

23.02       MORTGAGEE PROTECTION

 

Tenant agrees to give any Mortgagee or ground lessor,
by registered or certified mail, a copy of any notice of default served upon
the Landlord by Tenant, provided that prior to such notice Tenant has received
notice (by way of service on Tenant of a copy of an assignment of rents and
leases, or otherwise) of the address of such Mortgagee or ground lessor.  Tenant further agrees that if Landlord shall
have failed to cure such default within the time provided for in this Lease,
then the Mortgagee or ground lessor shall have an additional thirty (30) days
after receipt of notice thereof within which to cure such default or if such
default cannot be cured within that time, then such additional notice time as
may be necessary, if, within such thirty (30) days, any Mortgagee or ground
lessor has commenced and is diligently pursuing the remedies necessary to cure
such default (including commencement of foreclosure proceedings or other
proceedings to acquire possession of the Real Property, if necessary to effect
such cure).  Such period of time shall be
extended by any period within which such Mortgagee or ground lessor is
prevented from commencing or pursuing such foreclosure proceedings or other
proceedings to acquire possession of the Real Property by reason of Landlord’s
bankruptcy.  Until the time allowed as
aforesaid for Mortgagee or ground lessor to cure such defaults has expired
without cure, Tenant shall have no right to, and shall not, terminate this
Lease on account of default.  This Lease
may not be modified or amended so as to reduce the Rent or shorten the Term, or
so as to adversely affect in any other respect to any material extent the
rights of the Landlord, nor shall this Lease be canceled or surrendered,
without the prior written consent, in each instance, of the ground lessor or
the Mortgagee.

 

ARTICLE
TWENTY-FOUR

NOTICES

 

                (a)           All notices, demands or requests
provided for or permitted to be given pursuant to this Lease must be in writing
and shall be personally delivered, sent by Federal Express or other reputable overnight
courier service, or mailed by first class, registered or certified United
States mail, return receipt requested, postage prepaid.

 

                (b)           All notices, demands or requests to
be sent pursuant to this Lease shall be deemed to have been properly given or
served by delivering or sending the same in accordance with this Section,
addressed to the parties hereto at their respective addresses listed in
Sections 1.01(2) and (3).

 

                (c)           Notices, demands or requests sent by
mail or overnight courier service as described above shall be effective upon
deposit in the mail or with such courier service.  However, the time period in which a response
to any such notice, demand or request must be given shall commence to run from
(i) in the case of delivery by mail, the date of receipt on the return receipt
of the notice, demand or request by the addressee thereof, or (ii) in the case
of delivery by Federal Express or other overnight courier service, 

 

26

the date of acceptance of delivery by an employee,
officer, director or partner of Landlord or Tenant.  Rejection or other refusal to accept or the
inability to deliver because of changed address of which no notice was given,
as indicated by advice from Federal Express or other overnight courier service
or by mail return receipt, shall be deemed to be receipt of notice, demand or
request sent.  Notices may also be served
by personal service upon any officer, director or partner of Landlord or
Tenant, and shall be effective upon such service.

 

                (d)           By giving to the other party at least
thirty (30) days written notice thereof, either party shall have the right from
time to time during the term of this Lease to change their respective addresses
for notices, statements, demands and requests, provided such new address shall
be within the United States of America.

 

ARTICLE
TWENTY-FIVE

PARKING

 

                (a)           Tenant shall be entitled to use up to
the total number of parking spaces specified in Section 1.01(19), including
unreserved as well as any reserved spaces, at Landlord’s then current rates, in
parking facilities of the Project, subject to the terms, covenants and
conditions set forth below.  Landlord’s
current monthly parking charges at the Project are Thirty Dollars ($30.00)
per automobile for unreserved parking and are Sixty-Five Dollars ($65.00)
per automobile for reserved parking.  All
of the payments and charges provided in this Article shall be collectable as
additional Rent under the Lease. 
Notwithstanding any provision of the foregoing to the contrary, upon
written request by Tenant to Landlord, Tenant may convert one (1) unreserved
parking space to one (1) reserved parking space and pay the then-current rate
therefore and Landlord shall designate as reserved for Tenant said space.

 

                (b)           Tenant and its employees and business
invitees shall not park any vehicle in any stall designated for the exclusive
use of any other person and Tenant further agrees to employ reasonable measures
to assure that its employees do not park in any such stall.  Tenant shall furnish Landlord with a list of
its and its employees’ vehicle license numbers within fifteen (15) days after
the Commencement Date and thereafter notify Landlord of any change in such list
within fifteen (15) days after such change occurs.  Tenant agrees to assume responsibility for
compliance by its employees with all Parking Rules and for all losses
(including the loss of parking entrance key-cards, if any) and other damages
caused by Tenant or Tenant’s agents, servants, employees, contractors, visitors
or licensees occurring during or relating to any use of the Building’s parking
facilities.  In addition to all other
remedies available to Landlord under the Lease, at law or in equity, in the
event any of Tenant’s employees park in violation of the Parking Rules,
Landlord may charge Tenant a “violation fee” therefor set by Landlord from time
to time.  Landlord’s current violation
fee is Fifteen Dollars ($15.00) per automobile for each day or partial day each
such vehicle is so parked in violation of the Parking Rules.  Tenant hereby authorizes Landlord to tow away
from the Project or attach violation stickers, devices or notices to any
vehicle belonging to Tenant or its employees which Landlord in good faith
determines is parked in violation of the Parking Rules.  All costs of any such towing or violation
device and all applicable violation fees shall be payable by Tenant immediately
upon demand by Landlord and, at Landlord’s option, such payment may be required
prior to the release of the towed vehicle to its owner.

 

                (c)           A condition of any parking shall be
compliance by the vehicle operator with all Parking Rules, including, without
limitation, displaying any sticker or complying with any other identification
system from time to time established by Landlord.  The current Parking Rules are set forth on Exhibit F
hereto, and the Parking Rules are subject to change by Landlord from time to
time.  Landlord expressly reserves the
right to refuse to permit any person or vehicle in violation of the Parking
Rules to enter or remain in the parking areas of the Project and to demand
return therefrom of all parking stickers or other identification supplied by
Landlord and Tenant hereby agrees to assist Landlord in enforcing all Parking
Rules.

 

                (d)           In the event any surcharge,
regulatory fee or parking tax is at any time imposed by any governmental
authority, Tenant shall pay all such amounts applicable to Tenant’s parking
privileges hereunder to Landlord either in advance on the first day of each
calendar month concurrently with its installments of Monthly Base Rent or as
otherwise billed from time to time by Landlord.

 

                (e)           All parking privileges hereunder are
personal to Tenant and, accordingly, in the event Tenant assigns or sublets all
or any portion of the Premises, all of the same shall be reduced
proportionately based on the Usable Area so assigned or sublet and any assignee
or subtenant of Tenant shall receive only then prevailing parking privileges at
the full then prevailing rates therefor.

 

                (f)            Landlord shall not be responsible
for enforcing Tenant’s exclusive right to use any of its reserved parking
stalls under the Lease nor shall Tenant have any right to impound, tow or
impose any penalty on vehicles occupying such spaces.

 

                (g)           Landlord makes available a number of
parking spaces for visitors to the Project at Landlord’s then current rates,
and Tenant’s shall have the non-exclusive right, in common with others, to the
use of such spaces by its visitors, to the extent such spaces are available on
a first-come, first-served basis subject to payment at Landlord’s then current
rates for such use.  Tenant may purchase
validation coupons, stamps or tickets in the manner made available by Landlord
for Tenant to give its visitors to present at the time payment of parking
charges is due to defray such charges. 
Any visitor not presenting 

 

27

the appropriate validation shall pay the then current
rate for parking.  Notwithstanding the
foregoing, Landlord shall provide Tenant, at no charge to Tenant, with fifty
(50) hours of parking validation per month on a non-cumulative basis for Tenant’s
visitor parking use

.

ARTICLE
TWENTY-SIX

MISCELLANEOUS

 

26.01                     LATE
CHARGES

 

                (a)           The Monthly Base Rent, Rent Adjustments,
Rent Adjustment Deposits and Parking charges shall be due when specifically
provided above.  Except for such payments
and late charges described below, which late charge shall be due when provided
below (without notice or demand), all other payments required hereunder to
Landlord shall be paid within ten (10) days after Landlord’s demand
therefor.  All Rent and charges, except
late charges, not paid when due shall bear interest from the date due until the
date paid at the Default Rate in effect on the date such payment was due.

 

                (b)           In the event Tenant is more than five
(5) days late in paying any installment of Rent due under this Lease, Tenant
shall pay Landlord a late charge equal to five percent (5%) of the delinquent
installment of Rent.  The parties agree
that (i) such delinquency will cause Landlord to incur costs and expenses not
contemplated herein, the exact amount of which will be difficult to calculate,
including the cost and expense that will be incurred by Landlord in processing
each delinquent payment of rent by Tenant, (ii) the amount of such late charge
represents a reasonable estimate of such costs and expenses and (iii) that such
late charge shall be paid to Landlord for each delinquent payment in addition
to all Rent otherwise due hereunder.  The
parties further agree that the payment of late charges and the payment of
interest provided for in subparagraph (a) above are distinct and separate
from one another in that the payment of interest is to compensate Landlord for
its inability to use the money improperly withheld by Tenant, while the payment
of late charges is to compensate Landlord for its additional administrative
expenses in handling and processing delinquent payments.

 

                (c)           Payment of interest at the Default
Rate and/or of late charges shall not excuse or cure any default by Tenant
under this Lease, nor shall the foregoing provisions of this Article or any
such payments prevent Landlord from exercising any right or remedy available to
Landlord upon Tenant’s failure to pay Rent when due, including the right to
terminate this Lease.

 

26.02       NO JURY TRIAL; VENUE; JURISDICTION

 

Each party hereto (which includes any assignee,
successor, heir or personal representative of a party) shall not seek a jury
trial, hereby waives trial by jury, and hereby further waives any objection to
venue in the County in which the Project is located, and agrees and consents to
personal jurisdiction of the courts of the State of California, in any action
or proceeding or counterclaim brought by any party hereto against the other on
any matter whatsoever arising out of or in any way connected with this Lease,
the relationship of Landlord and Tenant, Tenant’s use or occupancy of the
Premises, or any claim of injury or damage, or the enforcement of any remedy under
any statute, emergency or otherwise, whether any of the foregoing is based on
this Lease or on tort law.  No party will
seek to consolidate any such action in which a jury has been waived with any
other action in which a jury trial cannot or has not been waived.  It is the intention of the parties that these
provisions shall be subject to no exceptions. 
By execution of this Lease the parties agree that this provision may be
filed by any party hereto with the clerk or judge before whom any action is instituted,
which filing shall constitute the written consent to a waiver of jury trial
pursuant to and in accordance with Section 631 of the California Code of Civil
Procedure.  No party has in any way
agreed with or represented to any other party that the provisions of this
Section will not be fully enforced in all instances.  The provisions of this Section shall survive
the expiration or earlier termination of this Lease.

 

26.03       INTENTIONALLY OMITTED

 

26.04       OPTION

 

This Lease shall not become effective as a lease or
otherwise until executed and delivered by both Landlord and Tenant. The
submission of the Lease to Tenant does not constitute a reservation of or
option for the Premises, but when executed by Tenant and delivered to Landlord,
the Lease shall constitute an irrevocable offer by Tenant in effect for fifteen
(15) days to lease the Premises on the terms and conditions herein contained.

 

26.05       TENANT AUTHORITY

 

Tenant represents and warrants to Landlord that it has
full authority and power to enter into and perform its obligations under this
Lease, that the person executing this Lease is fully empowered to do so, and
that no consent or authorization is necessary from any third party.  Landlord may request that Tenant provide
Landlord evidence of Tenant’s authority.

 

28

26.06                     ENTIRE
AGREEMENT

 

This Lease, the Exhibits and Rider(s) attached hereto
contain the entire agreement between Landlord and Tenant concerning the
Premises and there are no other agreements, either oral or written, and no
other representations or statements, either oral or written, on which Tenant
has relied.  This Lease shall not be
modified except by a writing executed by Landlord and Tenant.

 

26.07       MODIFICATION OF LEASE FOR BENEFIT OF MORTGAGEE

 

If any Mortgagee requires a modification of this Lease
which shall not result in any increased cost or expense to Tenant or in any
other substantial and adverse change in the rights and obligations of Tenant
hereunder, then Tenant agrees that the Lease may be so modified.

 

26.08       EXCULPATION

 

Tenant agrees, on its behalf and on behalf of its
successors and assigns, that any liability or obligation of Landlord in
connection with this Lease shall only be enforced against Landlord’s equity
interest in the Building up to a maximum of Three Million Dollars
($3,000,000.00) and in no event against any other assets of the Landlord, or
Landlord’s officers or directors, partners or members, and that any liability
of Landlord with respect to this Lease shall be so limited and Tenant shall not
be entitled to any judgment in excess of such amount.

 

26.09                     ACCORD AND
SATISFACTION

 

No payment by Tenant or receipt by Landlord of a
lesser amount than any installment or payment of Rent due shall be deemed to be
other than on account of the amount due, and no endorsement or statement on any
check or any letter accompanying any check or payment of Rent shall be deemed
an accord and satisfaction, and Landlord may accept such check or payment
without prejudice to Landlord’s right to recover the balance of such
installment or payment of Rent or pursue any other remedies available to
Landlord.  No receipt of money by
Landlord from Tenant after the termination of this Lease or Tenant’s right of
possession of the Premises shall reinstate, continue or extend the Term.  Receipt or acceptance of payment from anyone
other than Tenant, including an assignee of Tenant, is not a waiver of any
breach of Article Ten, and Landlord may accept such payment on account of the
amount due without prejudice to Landlord’s right to pursue any remedies
available to Landlord.

 

26.10                     LANDLORD’S
OBLIGATIONS ON SALE OF BUILDING

 

In the event of any sale or other transfer of the
Building, Landlord shall be entirely freed and relieved of all agreements and
obligations of Landlord hereunder accruing or to be performed after the date of
such sale or transfer; provided that all of Landlord’s obligations hereunder
are specifically assumed by the buyer or transferee; and further provided that
any remaining liability of Landlord with respect to this Lease shall be limited
to Three Million Dollars ($3,000,000.00) and Tenant shall not be entitled to
any judgment in excess of such amount.

 

26.11                     BINDING
EFFECT

 

Subject to the provisions of Article Ten, this Lease
shall be binding upon and inure to the benefit of Landlord and Tenant and their
respective heirs, legal representatives, successors and permitted assigns.

 

26.12                     CAPTIONS

 

The Article and Section captions in this Lease are
inserted only as a matter of convenience and in no way define, limit, construe,
or describe the scope or intent of such Articles and Sections.

 

26.13                     TIME;
APPLICABLE LAW; CONSTRUCTION

 

Time is of the essence of this Lease and each and all
of its provisions.  This Lease shall be
construed in accordance with the Laws of the State of California.  If more than one person signs this Lease as
Tenant, the obligations hereunder imposed shall be joint and several.  If any term, covenant or condition of this
Lease or the application thereof to any person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Lease, or the
application of such term, covenant or condition to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each item, covenant or condition of this Lease shall be
valid and be enforced to the fullest extent permitted by Law.  Wherever the term “including” or “includes”
is used in this Lease, it shall have the same meaning as if followed by the
phrase “but not limited to”.  The
language in all parts of this Lease shall be construed according to its normal
and usual meaning and not strictly for or against either Landlord or Tenant.

 

26.14                     ABANDONMENT

 

In the event Tenant vacates or abandons the Premises
but is otherwise in compliance with all the terms, covenants and conditions of
this Lease, Landlord shall have the right to enter into the Premises in order
to 

 

29

show the space to prospective tenants.  Tenant expressly acknowledges that in the
absence of written notice pursuant to Section 11.02(b) or pursuant to
California Civil Code Section 1951.3 terminating Tenant’s right to possession,
none of the foregoing acts of Landlord or any other act of Landlord shall
constitute a termination of Tenant’s right to possession or an acceptance of
Tenant’s surrender of the Premises, and the Lease shall continue in effect.

 

26.15                     LANDLORD’S
RIGHT TO PERFORM TENANT’S DUTIES

 

If Tenant fails timely to perform any of its duties
under this Lease, Landlord shall have the right (but not the obligation), to
perform such duty on behalf and at the expense of Tenant without prior notice
to Tenant, and all sums expended or expenses incurred by Landlord in performing
such duty shall be deemed to be additional Rent under this Lease and shall be
due and payable upon demand by Landlord.

 

26.16       SECURITY SYSTEM

 

Landlord shall not be obligated to provide or maintain
any security patrol or security system. 
Landlord shall not be responsible for the quality of any such patrol or
system which may be provided hereunder or for damage or injury to Tenant, its
employees, invitees or others due to the failure, action or inaction of such
patrol or system.

 

26.17       NO LIGHT, AIR OR VIEW EASEMENTS

 

Any diminution or shutting off of light, air or view
by any structure which may be erected on lands of or adjacent to the Project
shall in no way affect this Lease or impose any liability on Landlord.

 

26.18       RECORDATION

 

Neither this Lease, nor any notice nor memorandum
regarding the terms hereof, shall be recorded by Tenant.  Any such unauthorized recording shall be a
Default for which there shall be no cure or grace period. Tenant agrees to
execute and acknowledge, at the request of Landlord, a memorandum of this
Lease, in recordable form.

 

26.19       OPTION TO EXTEND

 

                (a)           Landlord
hereby grants Tenant a single option to extend the initial Term of the Lease
for an additional period of five (5) years (such period may be referred to as
the “Option Term”), as to the entire Premises as it may then exist, upon and
subject to the terms and conditions of this Section (the “Option To Extend”),
and provided that at the time of exercise of such right:  (i) Tenant must be in occupancy of the entire
Premises; and (ii) there has been no material adverse change in Tenant’s
financial position from such position as of the date of execution of the Lease,
as certified by Tenant’s independent certified public accountants, and as
supported by Tenant’s certified financial statements, copies of which shall be
delivered to Landlord with Tenant’s written notice exercising its right
hereunder.

 

                (b)           Tenant’s
election (the “Election Notice”) to exercise the Option To Extend must be given
to Landlord in writing no later than the date which is nine (9) months before
the Expiration Date.  If Tenant either
fails or elects not to exercise its Option to Extend by not timely giving its
Election Notice, then the Option to Extend shall be null and void.

 

                (c)           The
Option Term shall commence immediately after the expiration of the initial Term
of the Lease.  Tenant’s leasing of the
Premises during the Option Term shall be upon and subject to the same terms and
conditions contained in the Lease except that: 
(i) the Monthly Base Rent shall be amended to an amount to equal the “Option
Term Rent”, defined and determined in the manner set forth in the immediately
following Subsection (and otherwise, Tenant shall continue to pay Rent
Adjustments, all other Rent and all other charges pursuant to the Lease); (ii)
the Security Deposit, if any, shall be increased within fifteen (15) days after
the Prevailing Market Rent has been determined to equal one hundred percent
(100%) of the highest monthly installment of Monthly Base Rent thereunder, but
in no event shall the Security Deposit be decreased; (iii) Tenant shall accept
the Premises in its “AS-IS” condition without any obligation of Landlord to
repaint, remodel, repair, improve or alter the Premises or to provide Tenant
any allowance therefor; and (iv) there shall be no further option or right to
extend the term of the Lease.  If Tenant
timely and properly exercises the Option To Extend, references in the Lease to
the Term shall be deemed to mean the initial Term as extended by the Option
Term unless the context clearly requires otherwise.

 

                (d)           The
Option Term Rent shall mean the “Prevailing Market Rent” (defined below). As
used herein, “Prevailing Market Rent” shall mean the base rent and all other
monetary payments and escalations, including consumer price increases, payable
by a tenant that Landlord could obtain from a third party desiring to lease the
Premises for a term equal to the Option Term and commencing when the Option
Term is to commence under market leasing conditions, and taking into account
the following:  the size, location and
floor levels of the Premises; the type and quality of tenant improvements; age
and location of the Project; quality of construction of the Project; services
to be provided by Landlord or by tenant; the rent, all other monetary payments
and escalations obtainable for new leases of space comparable to the Premises
in the Project and in comparable buildings in the surrounding geographic 

 

30

submarkets, and other factors
that would be relevant to such a third party in determining what such party
would be willing to pay therefor.  The
determination of Prevailing Market Rent based upon the foregoing criteria shall
be made by Landlord, in the good faith exercise of Landlord’s business
judgment.  Within thirty (30) days after
Tenant’s exercise of the Option To Extend, Landlord shall notify Tenant of
Landlord’s determination of Option Term Rent for the Premises.  If Tenant, in Tenant’s sole discretion,
disagrees with the amount of Prevailing Market Rent determined by Landlord,
Tenant may elect to revoke and rescind the exercise of the option by giving
written notice thereof to Landlord within thirty (30) days after notice of
Landlord’s determination of Prevailing Market Rent.

 

                (e)           This
Option to Extend is personal to South Bay Bank and may not be used by, and
shall not be transferable or assignable (voluntarily or involuntarily) to any
person or entity.

 

                (f)            Upon
the occurrence of any of the following events, Landlord shall have the option,
exercisable at any time prior to commencement of the Option Term, to terminate
all of the provisions of this Section with respect to the Option to Extend,
with the effect of canceling and voiding any prior or subsequent exercise so
this Option to Extend is of no force or effect:

 

                                                                (i)   Tenant’s
failure to timely exercise the Option to Extend in accordance with the
provisions of this Section.

 

                                                                (ii)  The
existence at the time Tenant exercises the Option to Extend or at the
commencement of the Option Term of any default on the part of Tenant under the
Lease or of any state of facts which with the passage of time or the giving of
notice, or both, would constitute such a default.

 

                                                                (iii) Tenant’s
third monetary default under the Lease prior to the commencement of the Option
Term, notwithstanding that all such defaults may subsequently be cured.

 

(g)           Without limiting the generality of
any provision of the Lease, time shall be of the essence with respect to all of
the provisions of this Section.

 

26.20       SIGNAGE

 

Tenant shall have the right to
Building standard directory listing and suite signage at Tenant’s cost. Except
as hereinprovided, Tenant shall not display, maintain or affix on any place on
or about the Building any sign, notice, legend or advertisement.

 

26.21       SURVIVAL

 

The waivers of the right of
jury trial, the other waivers of claims or rights, the releases and the
obligations of Tenant under this Lease to indemnify, protect, defend and hold
harmless Landlord and/or Indemnitees shall survive the expiration or
termination of this Lease, and so shall all other obligations or agreements
which by their terms survive expiration or termination of the Lease.

 

IN WITNESS WHEREOF, this Lease
has been executed as of the date set forth in Section 1.01(4) hereof.

 

	
  TENANT:

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
  South Bay Bank,

  	
   

  	
  Metropolitan Life Insurance Company,

  
	
  a National Association

  	
   

  	
  a New York corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print Name)

  	
   

  	
   

  	
   

  	
  (Print Name)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its

  	
   

  	
   

  	
  Its

  	
   

  
	
  (Chairman of Board, President or Vice President)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print Name)

  	
   

  	
   

  
	
  Its

  	
   

  	
   

  	
   

  
	
  (Secretary, Assistant Secretary, CFO or Assistant
  Treasurer)

  
									

 

 

31

EXHIBIT A

PLAN OF
PREMISES

 

 

 

 

 

 

 

EXHIBIT B

WORKLETTER
AGREEMENT

(Allowance)

 

                This
Workletter Agreement (“Workletter”) is attached to and a part of a certain
Office Lease dated as of September 19, 2003 by and between Metropolitan Life
Insurance Company, a New York corporation, as Landlord, and South Bay Bank, a
National Association, as Tenant, for the Premises (the “Lease”).

 

                1.
            Defined Terms.  Capitalized terms used in this Workletter
shall have the same meanings set forth in the Lease except as otherwise
specified herein and except for terms capitalized in the ordinary course of punctuation.  For purposes of this Workletter the following
capitalized terms have the following meanings:

 

                1.1.          “Design Documents” means the layout
plans and specifications for the real property improvements to be constructed
by Landlord in the Premises which are the final product of the preliminary
space planning and which (i) include, among other things, all partitions,
doors, HVAC (heating, ventilating and air conditioning systems) distribution,
ceiling systems, light fixtures, plumbing installations, electrical
installations and outlets, telephone installations and outlets, any other
installations required by Tenant, fire and life-safety systems, wall finishes
and floor coverings, whether to be newly installed or requiring changes from
the as-is condition of the Premises as of the date of execution of the Lease,
all in sufficient detail for Landlord to commence preparation of the
Construction Drawings (as defined below); and (ii) comply with all Law as
applicable and as interpreted at the time of construction of the Tenant
Improvements (as defined below), including all building codes and the ADA (as
defined in the Lease);

 

                1.2           “Construction Drawings” means the
final architectural plans and specifications, and engineering plans and
specifications, for the real property improvements to be constructed by
Landlord in the Premises in sufficient detail to be submitted for governmental
approvals and building permits and to serve as the detailed construction
drawings and specifications for the contractor, and shall (i) include, among
other things, all partitions, doors, HVAC (heating, ventilating and air
conditioning systems) distribution, ceiling systems, light fixtures, plumbing
installations, electrical installations and outlets, telephone installations
and outlets, any other installations required by Tenant, fire and life-safety
systems, wall finishes and floor coverings, whether to be newly installed or
requiring changes from the as-is condition of the Premises as of the date of
execution of the Lease; and (ii) comply with all Law as applicable and as
interpreted at the time of construction of the Tenant Improvements, including
all building codes and the ADA;

 

                1.3           “Tenant Improvements” means all real
property improvements to be constructed by Landlord as shown on the
Construction Drawings, as they may be modified as provided herein; and

 

                1.4           “Landlord Work” means the
construction and installation of the Tenant Improvements.

 

                2.             Design Matters.

 

                2.1.          Landlord, through its architects
and/or space planners (“Landlord’s Architect”), shall prepare the Design
Documents and the Construction Drawings, as they may be modified as provided
herein, in accordance with the design specified by Tenant and reasonably
approved by Landlord.

 

                2.2.          Tenant shall be responsible for the
suitability for the Tenant’s needs and business of the design and function of
all Tenant Improvements.  Tenant, at its
own expense, shall devote such time and provide such instructions as may be
necessary to enable Landlord to complete the matters described below, and
Tenant shall approve such matters, within the times described below:

 

                                (a)  to provide no later than                 ,
2003, all information necessary or appropriate for Landlord’s Architect to
prepare the Design Documents;

 

                                (b)  to
provide Tenant’s written approval of the Design Documents within five (5) days
after receipt of the proposed Design Documents;

 

                                (c)  to
provide Tenant’s written approval of a nonbinding preliminary estimate (“Landlord’s
Preliminary Estimate”) provided by Landlord of the cost of the Tenant
Improvements shown on the Design Documents within three (3) days after receipt
of such estimate; and

 

                                (d)  to
provide Tenant’s written approval of the Construction Drawings within five (5)
days after receipt of the proposed Construction Drawings.

 

                3.             Construction; Landlord’s  Contribution; Tenant Improvement Costs.

 

                3.1.          Construction; Landlord’s
Contribution.  Landlord, through its
contractor, shall complete the construction of the Tenant Improvements in a
good and workmanlike manner, up to a maximum cost to Landlord of Thirty-Four
Thousand Four Hundred Fifty and No/100 Dollars ($34,450.00), which shall be
binding upon the parties unless and until Landlord measures the Premises
pursuant to Exhibit G of the Lease and such measurement shows the
Premises is larger or smaller than 1,378 square feet of Usable Area, in which
event Landlord shall recalculate such amount at the rate of Twenty-Five and
No/100 Dollars 

 

32

($25.00) per square foot of Usable Area of the
Premises (“Landlord’s Maximum Contribution”), and within ten days after
Landlord’s notice of such measurement (if any), recalculation (if any) and
amount owing (if any) from either party with respect to the Landlord’s Maximum
Contribution and the Tenant Improvement Costs (as defined below), the owing
party shall credit (if Landlord owes Tenant) or pay (if Tenant owes Landlord)
the other the amount due.

 

                3.2.          Tenant Improvement Costs.  The cost of the Tenant Improvements (“Tenant
Improvement Costs”) to be paid by Landlord from, but not in excess of, Landlord’s
Maximum Contribution shall include:

 

                                (a)  The
costs of Landlord’s Architect and any other consultants retained by Landlord in
connection with the preparation of Design Documents and Constructions Drawings,
and engineering costs associated with completion of the State of California
energy utilization calculations under Title 24 legislation;

 

                                (b)  All
costs of obtaining from the City of Costa Mesa and any other governmental
authority, approvals, building permits and occupancy permits, if any;

 

                                (c)  All
costs of interior design and finish schedule plans and specifications including
as-built drawings;

 

                                (d)  All
direct and indirect costs of procuring, installing and constructing the Tenant
Improvements, including:  (i) the
construction fee in the amount of three percent (3%) of the total construction
costs for overhead and profit and the cost of all on-site supervisory and administrative
staff, office, equipment and temporary services rendered or provided by
Landlord’s contractor in connection with construction of the Tenant
Improvements; (ii) the cost of any services or utilities made available by
Landlord; and (iii) a construction management fee payable to Landlord of no more than three percent (3%);

 

                                (e)  Without
limiting the generality of the foregoing, the Tenant Improvement Costs include
all costs of designing, procuring, constructing and installing Tenant
Improvements in compliance with Law as applicable and as interpreted at the
time of construction of the Tenant Improvements, including all building codes
and the ADA; and

 

                                (f)  All
fees payable to Landlord’s architectural and engineering firm if it is required
by Tenant to redesign any portion of the Tenant Improvements following Tenant’s
approval of the Construction Drawings, and all costs in connection with any
approved Change Order (as defined below) in accordance with the provisions of
this Workletter.

 

In no event shall the Tenant Improvement Costs include
(i) any costs of procuring or installing in the Premises any trade fixtures,
equipment, furniture, furnishings, telephone equipment, cabling for any of the
foregoing or other personal property (“Personal Property”) to be used in the
Premises by Tenant, and the cost of such Personal Property shall be paid by
Tenant, or (ii) any costs or expenses of any consultants retained by Tenant
with respect to design, procurement, installation or construction of
improvements or installations, whether real or personal property, for the
Premises.

 

                3.3.          Limitations of Landlord’s
Obligations.  Upon Substantial
Completion of the Tenant Improvements, Landlord shall have no further
obligation to construct improvements or construct modifications to or changes
in the Tenant Improvements, except to complete the punchlist of Landlord Work
remaining to be completed or correct any part thereof not in compliance with
the Construction Drawings and any approved modifications thereof, as provided
in the Lease.  If Landlord’s Maximum Contribution
exceeds the Tenant Improvement Costs, then Landlord shall retain such excess
and shall have no obligation or liability to Tenant with respect to such
excess.

 

                4.             Costs of Tenant Improvements in
Excess of Landlord’s  Maximum
Contribution.  As soon as reasonably
available after completion and approval by both parties of the Construction
Drawings, Landlord shall notify Tenant in writing of the costs, if any, of the
Tenant Improvements in excess of the Landlord’s Maximum Contribution (such
notification shall be referred to as “Landlord’s Cost Statement”).  Within five (5) business days after receipt
of Landlord’s Cost Statement, Tenant shall, in writing, give Landlord
authorization to complete the Tenant Improvements in accordance with the
Construction Drawings, and to the extent that there remain any costs of the
Tenant Improvements in excess of the Landlord’s Maximum Contribution, Tenant
shall accompany said authorization with a good check made payable to the order
of Landlord in the amount of the excess cost authorized by Tenant of the Tenant
Improvements over Landlord’s Maximum Contribution.  In such authorization, Tenant may, pursuant
to the provisions of this Workletter, request a Change Order to the approved
Construction Drawings to reduce or delete all or part of such excess costs, but
any delay in completion of the Premises resulting from such request for a
Change Order or from the changes so made or necessitated shall be chargeable as
Tenant Delay.  If such written
authorization and check (if applicable) are not received by Landlord, Landlord
shall not be obligated to commence work on the Premises and any resulting delay
in the completion of the Premises shall be chargeable against Tenant as Tenant
Delay as provided in Section 6 of this Workletter and in the Lease.

 

2

 

                5.             Changes. If Tenant shall
request any change, addition or alteration in the approved Construction
Drawings, any such request and Change Order pursuant thereto shall be subject to
Landlord’s approval, which shall not unreasonably be withheld, and subject to
such approval, Landlord shall promptly give Tenant a written estimate of (a)
the cost of engineering and design services and the construction contractor
services to prepare a change order (the “Change Order”) in accordance with such
request, (b) the cost of work to be performed pursuant to such Change Order,
and (c) the time delay expected because of such requested Change Order.  Within three (3) business days following
Tenant’s receipt of the foregoing written estimate, Tenant shall notify
Landlord in writing whether it approves such written estimate.  If Tenant approves such written estimate and
if such cost is in excess of Landlord’s Maximum Contribution, Tenant shall
accompany such approval with a good check made payable to the order of Landlord
in the amount of the estimated cost of preparing the Change Order and
performing the work thereto, and the foregoing shall constitute Landlord’s
authorization to proceed.  If such written
authorization, and check if required, are not received by Landlord within such
three (3) business day period, Landlord shall not be obligated to prepare the
Change Order or perform any work in connection therewith.  Upon completion of the work of the Change
Order and submission of the final cost thereof by Landlord to Tenant, Tenant
shall promptly pay to Landlord any such additional amounts in excess of
Landlord’s Maximum Contribution.

 

                6.             Tenant Delay.  If the Substantial Completion of the Tenant
Improvements in the Premises is delayed due to Tenant Delay, then Tenant shall
be responsible for all costs and any expenses occasioned by such delay,
including any costs and expenses attributable to increases in labor or
materials, and the provisions of Article Two of the Lease shall apply.

 

                7.             Entry by Tenant.  Tenant may, with Landlord’s consent, which
will not unreasonably be withheld, enter the Premises during construction and
prior to the Commencement Date for the Premises solely for the purpose of installing
Tenant’s Personal Property (defined in Section 3.2 above) as long as such entry
will not interfere with the timely and orderly construction and completion of
the Premises.  Tenant shall notify
Landlord of its desired time(s) of entry and shall submit for Landlord’s
approval the scope of the work to be performed and the name(s) of the
contractor(s) who will perform such work. 
Such work and such contractors shall be subject to Landlord’s approval
in the same manner as for work subject to Section 9.01(a) of the Lease.  Such entry shall be without payment of
Monthly Base Rent or Rent Adjustments, but such entry and all acts and
omissions in connection with it are subject to and governed by all other
provisions of the Lease, including Tenant’s indemnification obligations,
insurance obligations, obligations under Article Seven and the provisions of
Section 9.02.

 

                8.             Force and Effect.  The terms and conditions of this Workletter
supplement the Lease and shall be construed to be a part of the Lease and are incorporated
in the Lease.  Should any inconsistency
arise between this Workletter and the Lease as to the specific matters which
are the subject of this Workletter, the terms and conditions of this Workletter
shall control.

 

3

EXHIBIT C

CURRENT
JANITORIAL SPECIFICATIONS

 

                This
Exhibit is attached to and a part of a certain Office Lease dated as of
September 19, 2003 by and between Metropolitan Life Insurance Company, a New
York corporation, as Landlord, and South Bay Bank, a National Association, as
Tenant, for the Premises (the “Lease”).

 

I.  Five times per week, excluding National
Holidays:

 

                                                (1)                                  Sweep and damp mop all hard flooring and vacuum all carpeted areas.  Spot clean as necessary.

 

                                                (2)                                  Empty and clean all wastepaper containers, ash trays, receptacles, etc.,
and damp wipe as necessary.

 

                                                (3)                                  Remove wastepaper and waste materials to a designated area or areas.

 

                                                (4)                                  Dust and wipe clean all furniture, hand reached fixtures, baseboards, and
window sills.

 

                                                (5)                                  When applicable, clean restrooms and water fountains.

 

II.  One time per week (and as necessary):

 

                                                (1)                                  Remove all finger marks, smudges, and other marks from walls, doors,
windows and other surfaces.

 

III.  One time per month (and as necessary):

 

                                                (1)                                  Scrub and wax hard flooring.

 

                                                (2)                                  High dust.

 

IV.  Two times per year (and as necessary):

 

                                                (1)                                  Clean all windows inside, including sills and frames, and outside.

 

V.  One time per year (and as necessary):

 

                                                (1)                                  Wash, clean, and dust ceiling fixtures and light panels.

 

 

EXHIBIT D

RULES AND
REGULATIONS

 

                This
Exhibit is attached to and a part of a certain Office Lease dated as of
September 19, 2003 by and between Metropolitan Life Insurance Company, a New
York corporation, as Landlord, and South Bay Bank, a National Association, as
Tenant, for the Premises (the “Lease”).

 

                1.             No sidewalks, entrance, passages,
courts, elevators, vestibules, stairways, corridors or halls shall be
obstructed or encumbered by Tenant or used for any purpose other than ingress
and egress to and from the Premises or the Project.

 

                2.             No awning or other projection shall
be attached to the outside walls or windows of the Project without the prior
written consent of Landlord.  No
curtains, blinds, shades, drapes or screens shall be attached to or hung in, or
used in connection with any window or door of the Premises, without the prior
written consent of Landlord.  Such
awnings, projections, curtains, blinds, shades, drapes, screens and other fixtures
must be of a quality, type, design, color, material and general appearance
approved by Landlord, and shall be attached in the manner approved by
Landlord.  All electrical fixtures hung
in offices or spaces along the perimeter of the Premises must be fluorescent,
of a quality, type, design, bulb color, size and general appearance approved by
Landlord, which approval shall not be unreasonably withheld.

 

                3.             No sign, advertisement, notice or
other lettering shall be exhibited, inscribed, painted or affixed by Tenant on
any part of the outside or inside of the Premises or of the Project without the
prior written consent of Landlord.  In
the event of the violation of the foregoing by Tenant, Landlord may remove same
without liability, and may charge the expense incurred by such removal to Tenant.  Interior signs on doors and directly tablet
shall be inscribed, painted or affixed for Tenant by Landlord at the expense of
Tenant, and shall be of a quality, quantity, type, design, color, size style,
composition, material, location and general appearance acceptable to Landlord.

 

                4.             The sashes, sash doors, skylights,
windows, and doors that reflect or admit light or air into the halls
passageways or other public places in the Project shall not be covered or
obstructed by Tenant, nor shall any bottles, parcels, or other articles be
placed on the window sills, or in the public portions of the Project.

 

                5.             No show cases or other articles
shall be put in front of or affixed to any part of the exterior of the Project,
nor placed in public portions thereof without the prior written consent of
Landlord.

 

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

 

                7.             Tenant shall not paint, mark, drill
into or in any way deface any part of the Premises or the Project.  No boring or cutting shall be permitted,
except with the prior written consent of Landlord, and as Landlord may direct.

 

                8.             No animal or bird of any kind shall
be brought into or kept in or about the Premises or the Project.

 

                9.             Prior to leaving the Premises for
the day, Tenant shall reasonably draw or lower window coverings and extinguish
all lights.

 

                10.           Tenant shall not make, or permit to
be made, any unseemly or disturbing noises or interfere with occupants of the
Project or neighboring buildings or premises or those having business with
them.  Tenant shall not throw anything
out of the doors, windows or skylights or down the passageways.

 

                11.           Except as otherwise permitted under
Section 9 of the Lease, neither Tenant nor any of Tenant’s agents, servants,
employees, contractors, visitors or licensees shall at any time bring or keep
upon the Premises any flammable, combustible or explosive fluid, chemical or
substance.

 

                12.           No additional locks, bolts or mail
slots of any kind shall be placed upon any of the doors or windows by Tenant,
nor shall any change be made in existing locks or the mechanism thereof;
however, the foregoing shall not apply to any card key system which Tenant
installs in full compliance with all other provisions of the Lease at its sole
expense and with respect to which Landlord is provided with all access cards
necessary to fully exercise all of its entry rights under the Lease with
respect to the Premises.  Tenant must,
upon the termination of the tenancy, restore to Landlord all keys of stores,
offices and toilet rooms either furnished to or otherwise procured by Tenant
and, in the event of the loss of any keys so furnished, Tenant shall pay to Landlord
the cost thereof.

 

                13.           All removals, or the carrying in or
out of any safes, freight, furniture, fixtures, bulky matter or heavy equipment
of any description must take place during the hours which Landlord or its agent
may determine from time to time. 
Landlord reserves the right to prescribe the weight and position of all
safes, which must be placed upon two-inch thick plank strips to distribute the
weight.  The moving of safes, 

 

freight, furniture, fixtures, bulky matter or heavy
equipment of any kind must be made upon previous notice to the Superintendent
of the Building and in a manner and at the time prescribed by him, and the
persons employed by Tenant for such work are subject to Landlord’s prior
approval.  Landlord reserves the right to
inspect all safes, freight or other bulky articles to be brought into the
Project and to exclude from the Project all safes, freight or other bulky
articles which violate any of these Rules and Regulations or the lease of which
these Rules and Regulations are a part.

 

                14.           Tenant shall not occupy or permit any
portion of the Premises to be occupied as an office that is not generally
consistent with the character and nature of an ordinary desk-type office.  Nor shall Tenant permit any portion of the
Premises to be used (a) for an employment agency, a public stenographer or
typist, a labor union  office, a
physician’s or dentist’s office, a dance or music studio, a school, a beauty
salon or barber shop, the business of photographic or multilith or multigraph reproductions
or offset printing (not precluding using any part of the Premises for
photographic, multilith or multigraph reproductions solely in connection with
Tenant’s own business and/or activities), a restaurant or bar, an establishment
for the sale of confectionery or soda or beverages or sandwiches or ice cream
or baked goods, an establishment for the preparation or dispensing or
consumption of food or beverages (of any kind) in any manner whatsoever, or as
a news or cigar stand, or as a radio or television or recording studio, theater
or exhibition hall, for manufacturing, for the storage of merchandise or for
the sale of merchandise, goods or property of any kind at auction, or for
lodging, sleeping or for any immoral purpose, or for any business which would
tend to generate a large amount of foot traffic in or about the Project or any
of the areas used in connection with the operation thereof, including but not
limited to any use (i) as a government office or foreign embassy or consulate,
or (vi) as a tourist or travel bureau, or (b) a use which conflicts with any
so-called “exclusive” then in favor of, or is for any use the same as that
stated in any percentage lease to, another tenant of the Project, or (c) a
use which would be prohibited by any other portion of the Lease (including but
not limited to any Rules and Regulations then in effect) or in violation of
Law.  Tenant shall not engage or pay for
any employees on the Premises other than those working at the Premises, nor
shall Tenant advertise for laborers giving an address at the Premises.

 

                15.           Tenant shall not purchase spring
water, towels, janitorial or maintenance or other like service from any company
or persons not reasonably approved by Landlord. 
Landlord shall approve a sufficient number of sources of such service to
provide Tenant with a reasonable selection, but only in such instances and to
such extent as Landlord in its judgment shall consider consistent with security
and proper operation of the Project.

 

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

 

                17.           Landlord reserves the right to
exclude from the Project between the hours of 6:00 P.M. and 8:00 A.M. on all
days, and at all hours on Saturdays, Sundays and National Holidays, all persons
who do not present a pass to the Project issued by Landlord.  Landlord may furnish passes to Tenant so that
Tenant may validate and issue same. 
Tenant shall safeguard said passes and shall be responsible for all acts
of persons in or about the Project who possess a pass issued to Tenant.

 

                18.           Tenant’s contractors shall, while in
the Project, be subject to and under the control and direction of the
Superintendent of the Building (but not as agent or servant of said
Superintendent or of Landlord) except for supervision of work.

 

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

 

                20.           The requirements of Tenant will be
attended to only upon application at or call to the office of the Project.  Project personnel shall not perform any work
or do anything outside of their regular duties, unless under special
instructions from the office of the Landlord.

 

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

 

                22.           No water cooler, air conditioning
unit or system or other apparatus shall be installed or used by Tenant without
the written consent of Landlord.

 

                23.           There shall not be used in any Common
Areas, public halls, plaza areas, lobbies or other space in the Project, either
by Tenant or by jobbers or others, in the delivery or receipt of merchandise,
any hand trucks or dollies, except those equipped with rubber tires and side guards.

 

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

 

2

                25.           Tenant shall install and maintain, at
Tenant’s sole cost and expense, an adequate visibly marked (at all times
property operational) fire extinguisher next to any duplicating or photocopying
machine or similar heat producing equipment, which may or may not contain
combustible material, in the Premises.

 

                26.           Tenant shall reasonably keep its
window coverings closed during any period of the day when the sun is shining
directly on the windows of the Premises.

 

                27.           Tenant shall not use the name of the
Project for any purpose other than as the address of the business to be
conducted by Tenant in the Premises, nor shall Tenant use any picture of the
Project in its advertising, stationary or in any other manner without the prior
written permission of Landlord.  Landlord
expressly reserves the right at any time to change said name without in any
manner being liable to Tenant therefor.

 

3

EXHIBIT E

PROJECT

 

 

 

 

 

 

 

EXHIBIT F

CURRENT
PARKING RULES

 

                This
Exhibit is attached to and a part of a certain Office Lease dated as of
September 19, 2003 by and between Metropolitan Life Insurance Company, a New
York corporation, as Landlord, and South Bay Bank, a National Association, as
Tenant, for the Premises (the “Lease”).

 

                1.  Cars
must be parked entirely within painted stall lines.

 

                2.  All
directional signs and arrows must be observed.

 

                3.  All
posted speed limits for the parking areas shall be observed.  If no speed limit is posted for an area, the
speed limit shall be five (5) miles per hour.

 

                4.
 Parking is prohibited:

 

                                (a)  in
areas not striped for parking;

                                (b)  in
aisles;

                                (c)  where
“no parking” signs are posted;

                                (d)  on
ramps;

                                (e)  in
cross-hatched areas; and

                                (f)  in
such other areas as may be designated by Landlord.

 

                5.  Handicap
and visitor stalls shall be used only by handicapped persons or visitors, as
applicable.

 

                6.  Parking
stickers or any other device or form of identification supplied by Landlord
from time to time (if any) shall remain the property of Landlord.  Such parking identification device must be
displayed as requested and may not be mutilated in any manner.  The serial number of the parking
identification device may not be obliterated. 
Devices are not transferable and any device may not be obliterated.  Devices are not transferable and any device
in the possession of an unauthorized holder will be void.  There will be a replacement charge payable by
the parker and such parker’s appropriate tenant equal to the amount posted from
time to time by Landlord for loss of any magnetic parking card or any parking
sticker.

 

                7.  Every
parker is required to park and lock his or her own car.  All responsibility for damage to cars or
persons is assumed by the parker.

 

                8.  Loss
or theft of parking identification devices must be reported to Landlord, and a
report of such loss or theft must be filed by the parker at that time.  Any parking identification devices reported
lost or stolen found on any unauthorized car will be confiscated and the
illegal holder will be subject to prosecution. 
Lost or stolen devices found by the parker must be reported to Landlord
immediately to avoid confusion.

 

                9.  Parking
spaces are for the express purpose of parking one automobile per space.  Washing, waxing, cleaning or servicing of any
vehicle by the parker and/or such person’s agents is prohibited.  The parking areas shall not be used for
overnight or other storage for vehicles of any type.

 

                10. Landlord
reserves the right to refuse the issuance of parking identification or access
devices to any tenant and/or such tenant’s agents or representatives who
willfully refuse to comply with the Parking Rules and/or all applicable
governmental ordinances, laws or agreements.

 

                11. Tenant
shall acquaint its employees and visitors with the Parking Rules, as they may
be in effect from time to time.

 

                12. Any
monthly rate for rental of a parking space shall be paid one month in advance
prior to the first day of such month. 
Failure to do so will automatically cancel parking privileges, and a
charge of the prevailing daily rate will be due.  No deductions or allowances from the monthly
rate will be made for days a parker does not use the parking facilities.

 

                13. Each
parker shall pay a reasonable deposit for any parking card issued to such
person.  Such deposit shall be paid at
the time the parking card is issued and shall be forfeited if the parking card
is lost.  Such deposit shall be returned
without interest, at the time such person ceases to utilize the parking
facilities, upon surrender of the parking card. 
A reasonable replacement charge shall be paid to replace a lost card and
an amount in excess of the initial deposit may be charged as the replacement
fee.

 

EXHIBIT G

RENTABLE
AREA & USABLE AREA

 

                This
Exhibit is attached to and a part of a certain Office Lease dated as of
September 19, 2003 by and between Metropolitan Life Insurance Company, a New
York corporation, as Landlord, and South Bay Bank, a National Association, as
Tenant, for the Premises (the “Lease”).

 

                “Rentable
Area” and “Usable Area” under the Lease shall be determined by Landlord in any
reasonable fashion consistently applied throughout the Project which
substantially conforms with BOMA standards, modified as follows:

 

                (a)           As to each floor of the Building on
which the entire space rentable to tenants is or will be leased to one tenant,
the Rentable Area attributable to such tenant shall be the total of
(i) the entire area bounded by the interior surface of the exterior walls
of the Building on such floor, including all areas used for elevator lobbies,
corridors, special stairways and elevators, restrooms, mechanical rooms,
electrical rooms and telephone closets; however, excluding the area contained
within the Building stairs, fire towers, vertical ducts, elevator shafts,
flues, vents, stacks and pipe shafts, but without deduction for columns or
other structural portions of the Building or any other vertical penetrations;
and (ii) that portion of the covered or enclosed Common Areas which
constitute a part of the Building and which are maintained by Landlord for the
common benefit of all tenants of the Building which bears the same proportion
to the total area of such Common Areas as the Rentable Area of such tenant
under (i) above bears to the Rentable Area of the Building (excluding such
common facilities).

 

                (b)           As to each floor of the Building on
which space is or will be leased to more than one tenant, the Rentable Area
attributable to each such tenant shall be the total of (i) the entire area
included within such tenant’s premises, as bounded by the interior surface of
any exterior walls of the Building bounding such premises, the exterior surface
of all walls separating such premises from any public corridors or other public
areas on such floor, and the centerline of all walls separating such premises
from other areas leased or to be leased to other tenants on such floor;
however, excluding the area contained within the Building stairs, fire towers,
vertical ducts, elevator shafts, flues, vents, stacks and pipe shafts, but without
deduction for columns or other structural portions of the Building or any other
vertical penetrations; (ii) that portion of the area used for elevator
lobbies, corridors, restrooms, mechanical rooms, electrical rooms and telephone
closets situated on such floor which bears the same proportion to the total
area of such facilities as the Rentable Area of such tenant under (i)
above bears to the Rentable Area of such floor (excluding such facilities); and
(iii) that portion of the covered or enclosed Common Areas which
constitute a part of the Building and which are maintained by Landlord for the
common benefit of all tenants of the Building which bears the same proportion
to the total area of such Common Areas as the Rentable Area of such tenant
under (i) and (ii) above bears to the Rentable Area of the Building
(excluding such common facilities).

 

                (c)           For purposes of establishing the
Monthly Base Rent, Tenant’s Share, Building Share and Landlord’s Maximum
Contribution, if any, pursuant to the Workletter as of the date of the Lease,
the Rentable Area of the Premises is deemed to be as set forth in Section
1.01(11), the Usable Area of the Premises is deemed to be as set forth in
Section 1.01(13), the Rentable Area of the Building is deemed to be as set
forth in Section 1.01(10), and the Rentable Area of the Project is deemed to be
as set forth in Section 1.01(12), which on a per building basis is deemed to be
123,420 square feet for Building A, 3070 Bristol Street, and 123,420 square
feet for Building B, 3090 Bristol, and 115,299 square feet for Building C, 3080
Bristol.  In the event that the demising
walls of the Premises are to be built or modified after the date of execution
of the Lease (either upon Tenant’s initial occupancy or any subsequent change
in the Premises pursuant to other provisions of this Lease), then when such
demising walls are substantially complete, Landlord shall have the right to
verify or correct the square footage of the Rentable Area of the Premises and
the Usable Area of the Premises and accordingly adjust other amounts under the
Lease based upon such square footage.  At
such time(s) at Landlord’s option, Landlord’s architect shall determine and
certify in writing to Tenant and Landlord the actual Rentable Area of the
Premises and Usable Area of the Premises, which such determinations and
certifications shall be conclusive, and thereupon Landlord shall accordingly
adjust other amounts under the Lease based upon such square footage, including
the Monthly Base Rent,  Tenant’s Share
and Landlord’s Maximum Contribution, if any, pursuant to the Workletter.

 

                (d)           The term “Usable Area” shall mean
only that portion of the Rentable Area determined under subsection (a)(i) or
(b)(i) above, as the case may be, subject to the provisions of subsection (c)
above.

 

EXHIBIT H

ATM LICENSE

 

                This
Exhibit is attached to and a part of a certain Office Lease dated as of
September 19, 2003 by and between Metropolitan Life Insurance Company, a New
York corporation, as Landlord, and South Bay Bank, a National Association, as
Tenant, for the Premises (the “Lease”).

 

LICENSE
AGREEMENT

FOR

AUTOMATED TELLER MACHINE

 

 

                This agreement (the “Agreement”) dated                  ,
2003, is made by and between METROPOLITAN
LIFE INSURANCE COMPANY, a New York corporation (“Licensor”), and SOUTH BAY BANK, a                                   
(“Licensee”).

 

1.             Premises.  Licensor hereby grants a license to Licensee
to establish and install one (1) automatic teller machine and night depository
(collectively, the “ATM”) on the exterior wall or window adjacent to the front
door of the building commonly known as South Coast Corporate Center (the “Building”),
located at 3070 Bristol Street, Costa Mesa, California as shown on Exhibit A
attached hereto and made a part hereof (the “Premises”) which ATM will dispense
cash and perform such other transactions as are permitted by applicable
law.  Licensee is solely responsible for
all service, repairs and maintenance to the ATM and all costs associated therewith
and agrees to manage, operate and maintain the ATM.  Without limiting the foregoing, Licensee
shall:

 

(a)                                  Handle mechanical malfunctions in a timely manner;

 

(b)                                 Deal
directly with ATM service providers such as ATM repair persons (Licensor shall
not be required to handle these relationships except as incidental to its
ownership or control of the Building); and

 

(c)                                  Shall have
the right to install such additional, ancillary improvements that may be
required by Law or as deemed necessary by Tenant such as security cameras and
lights.

 

2.             Term.  The term of this Agreement shall commence on                       ,
2003 and shall be coterminous with that certain lease between Licensor and
Licensee dated                    ,
2003 (the “Lease”) including any extension of the term of the Lease.

 

3.             Installation and
Maintenance.  Installation
and maintenance of the ATM shall be at Licensee’s sole cost  The selection of contractors chosen by
Licensee to install the ATM must be approved by Licensor prior to installation
of the ATM.  Licensee shall submit its
plans (including plans for the proposed design and location of signs on the
ATM) for installation which shall also include the estimated weight of the ATM
to be installed to Licensor prior to the commencement of the installation
thereof for Licensor’s review and approval. 
Licensee shall not make any alterations, additions or improvements to
the Premises without the prior written consent of Licensor.  Installation process, installation location
and maintenance shall be coordinated with Licensor and subject to supervision
by Licensor or its building staff, without charge.  Contractors must abide by the building rules
and regulations, provide adequate insurance and evidence of such insurance upon
request of Licensor and hold harmless Licensor, except for Licensor’s gross
negligence or willful misconduct. Licensee shall avoid and minimize any
disturbance to the operation of the Building and to the tenants of the Building
during installation, alteration or maintenance of the ATM.

 

4.             Licensee Covenants.  Licensee shall at all times observe the
following rules and regulations with respect to the Premises: (a) Licensee
shall maintain the ATM in a clean, sanitary, attractive and safe condition and
in good repair; (b) Licensee shall not perform any act or carry on any practice
which may injure the Premises or any portion of the Building or any person at
the Building, or which may void any of Licensor’s insurance on the Building or
increase the premium rate therefor; (c) Licensee shall not keep or display any
merchandise in the floor area adjacent to the Premises or otherwise obstruct
said area; (d) Licensee shall not overload the floor of the Premises; (e)
Licensee shall at all times comply with all laws pertaining to the Premises or
the conduct of Licensee’s business thereat; and (f) Licensee shall perform all
loading and unloading of goods only at such times and in such places as is
designated by Licensor for such purpose. 
Licensee shall comply with such other reasonable rules and regulations
as Licensor may from time to time adopt with respect to the Building.

 

5.             Liens.  Licensee shall promptly pay for any work done
or material furnished by or on behalf of Licensee in or about the Premises or
Building and shall not permit or suffer any lien to attach to the Premises or
all or any part of the Building and Licensee shall have no authority or power,
express or implied, to create or cause any lien, charge or encumbrance of any
kind against the Premises or all or any part of the Building.  If any lien shall at any time be filed
against the Premises or against any part of the Building by reason of work,
labor, services or materials alleged to have been performed or furnished by,
for or to Licensee or to anyone holding the Premises through or under Licensee,
Licensee shall forthwith cause the same to be discharged of record or bonded to
the satisfaction of Licensor.  If
Licensee shall fail to cause such lien forthwith to be so discharged or bonded
after being notified of the filing thereof, then, in 

 

addition to any other right
or remedy of Licensor, Licensor may discharge the same by paying the amount
claimed to be due, and the amount so paid by Licensor and all costs and
expenses, including reasonable attorneys’ fees incurred by Licensor, in
procuring the discharge of such lien, shall be due and payable by Licensee to
Licensor as an additional amount on the first day of the next following
month.  Licensor shall take all
reasonable steps necessary to maintain the ATM free from any mortgage, security
agreement, lien or encumbrance, except liens arising by operation of law for
taxes not yet due and payable.

 

6.             Governmental
Regulation.  Licensee has
the sole obligation to secure, and shall secure without expense to Licensor,
any building permits, changes in zoning variances and approvals which are or
may be required for the ATM from local, state and any governmental agency which
regulates such systems.  Licensor’s
approval of the design or installation of the ATM does not constitute agreement
that any of the requisite governmental permits or approvals have been issued or
granted.  Licensee shall comply with any
and all laws, ordinances and/or regulations applicable to the ownership,
deployment, operation or maintenance of the ATM, including without limitation
Federal Regulation E and any such laws, ordinances and/or regulations which are
applicable to financial settlement of ATM transactions, electronic transfers of
funds or the operation of so-called “electronic branches” or ATMs generally.

 

7.             Financial
Settlement.  Licensee
shall be solely responsible for all financial settlements of, and any and all
obligations or liabilities arising from or with respect to, all ATM
transactions.  Without limiting the
generality of the foregoing, Licensee shall be responsible for daily financial
settlement with electronic funds transfer (EFT) networks and any other relevant
third party payers, obligors or their respective agents, and Licensee shall
bear sole responsibility with respect to any shortages of cash or other ATM
inventory in connection with any such financial settlements.

 

8.             Interference.  Licensee must modify or remove the ATM and
Licensor may terminate this Agreement if the ATM, in Licensor’s sole judgment,
causes any interference or disturbs the operation of any other equipment of
Licensor or any tenants of the Building or creates or maintains any noise, odor
or nuisance tending to disturb any occupant of the Building or areas adjacent
thereto.  Licensee must immediately shut
the ATM off upon notification of interference and may be allowed to restart a
modified ATM to test for interference only with Licensor’s permission.

 

9.             Interruption.  Licensor may from time to time and on
reasonable advance notice to Licensee (except in the event of an emergency),
require temporary interruption of service for repairs, maintenance,
modification of the Premises or Building, including, but not limited to,
roofing, structural, electrical or mechanical repairs.

 

10.           Damage.  Licensee is solely responsible for damage to
the Premises, Building, equipment, property, or bodily personal injury related
to or caused by the ATM, except for damage due to the negligent or intentional
acts of Licensor, its agents, employees or contractors.  Licensee agrees that Licensor shall not be
liable, responsible or accountable for any loss, injury, death or damage to
persons or property which at any time may be suffered or sustained by Licensee
or by any person occurring in, on or about the Premises or as a consequence,
direct or indirect, of the existence, installation, repairs to, maintenance or
removal of the ATM, and Licensee agrees to protect, defend, indemnify and save
Licensor harmless from any and all claims, liabilities, losses, damages, costs,
attorneys’ fees and expenses arising out of any such loss, injury, death or
damage, except where such claims, liabilities, losses, damages, costs,
attorneys’ fees and expenses are due to the negligent or intentional acts of
Licensor, its agents, employees or contractors. 
Licensee agrees to pay for all damage done to the Premises or Building
by Licensee, or any person or persons brought onto the Premises or into the
Building by Licensee in connection with the ATM.

 

11.           License.

 

(a)                                  Licensee, Repair people, etc.  Licensor hereby grants Licensee and Licensee’s
agents, officers and employees a non-exclusive right to enter upon the Premises
during normal business hours with prior notice to Licensor and approval by
Licensor of the date and time of entry in each instance (which approval will
not be unreasonably withheld) for the purpose of performing Licensee’s duties
under this Agreement, including, without limitation, the installation,
management and maintenance of the ATM and any cameras or other security
equipment.

 

(b)                                 Regulators. 
Licensor shall also permit any and all regulators, examiners and
auditors of Licensee or any automatic teller machine network, as well as
officers, employees and agents of any such automatic teller machine network
itself, to have access to the ATM during normal business hours, upon presentation
of proper identification.

 

12.                                 Covenants of Licensor.  Provided Licensee complies with all of the
terms, covenants and conditions of this Agreement, Licensor shall:

 

(a)                                  Site Maintenance.  Maintain the Premises in a clean condition
and in good repair.

 

(b)                                 Utilities. 
Pay all electrical bills associated with the installation, maintenance
and operation of the ATM and any related security cameras.

 

2

 

 

13.           Restoration.  Upon termination of this Agreement, Licensee,
at Licensee’s expense, must remove the ATM and promptly restore the Premises to
the condition as existed on the date of installation of the ATM.  Licensee shall also promptly repair any
damage to the Premises or any other areas caused by removal of the ATM.  Any part of the ATM which Licensee fails to
remove from the Premises at the expiration of the term of this Agreement shall
be deemed abandoned by Licensee and shall become the property of Licensor.

 

14.           Cost Recovery.  If Licensee does not comply with the terms
hereof, Licensor may elect to hire its own contractor to remedy any condition
after ten (10) days written notice to Licensee and may charge related costs to
Licensee which shall be payable by Licensee to Licensor within thirty (30) days
after Licensor renders a statement to Licensee therefor.

 

15.           Insurance.  Licensee shall carry insurance during the
entire term of this agreement insuring Licensee and Licensor as their interest
may appear with terms, coverages and limits and with companies satisfactory to
Licensor.  Licensee shall maintain the
following coverages in the following amounts:

 

(a)                                  In case of
personal injury to or death of any person or persons, not less than One Million
Dollars ($1,000,000.00) for each injury to or death of a person and Three
Million Dollars ($3,000,000.00) for each occurrence; and in case of property
damage, not less than One Million Dollars ($1,000,000.00) for any one (1)
occurrence; and

 

(b)                                 In case of
fire, sprinkler leakage, malicious mischief, vandalism and other extended
coverage perils, for the full replacement value of all additions, improvements
and alterations to the Premises.

 

                Licensee  shall, prior to the commencement of this
agreement and thereafter during the term of this agreement, upon request by
Licensor, furnish to Licensor certificates evidencing such coverage, which
certificates shall state that such insurance coverage may not be changes or
canceled without at least thirty (30) days prior written notice to Licensor and
Licensee.

 

                Licensor and Licensee each hereby waive any and every
claim for recovery from the other for any and all loss or damage to the
Premises or the contents thereof, which loss or damage is covered by valid and
collectable fire and extended coverage insurance policies to the extent that
such loss or damage is recoverable under said insurance policies.  Inasmuch as this mutual waiver will preclude
the assignment of any such claim by subrogation (or otherwise) to an insurance
company (or any other person), Licensor and Licensee each agree to give to each
insurance company which has issued, or in the future may issue, its policies of
fire and extended coverage insurance, written notice of the terms of this
mutual waiver and to have said insurance policies properly endorse, if
necessary, to prevent the invalidation of said insurance coverage by reason of
said waiver.

 

16.           Signs.  Except as maybe approved by Licensor pursuant
to Paragraph 4, Licensee shall not inscribe, paint or affix any sign,
advertisement, display or notice on any part of the Premises, ATM or the
Building without obtaining Licensor’s prior written consent in each instance.

 

17.           Representations.  Licensee represents as follows:  Any servicing other than routine
replenishment of currency in the ATM will be coordinated with Licensor; the ATM
is UL approved; the ATM will not emit radiation; and the ATM will not interfere
with other existing building equipment.

 

18.           Termination.  Either party shall have the right to
terminate this agreement at any time for cause on not less than thirty (30)
days written notice to the other party, it being understood that “cause” shall be limited to
a default under this agreement past any applicable cure period.

 

19.           Assignment.  Licensee shall not assign this Agreement or
otherwise transfer all or a portion of its rights hereunder without the prior
written consent of Licensor which may be granted or denied in Licensor’s sole
and absolute discretion, it being understood that Licensee may, in connection
with a similar assignment of the Lease, assign this Agreement to (i) a parent
or affiliate of Licensee, (ii) an entity resulting from the merger or
consolidation of Licensee with a third party, or (iii) an entity purchasing all
or substantially all of the assets of Licensee. 
Licensor shall have the right to assign this Agreement to any party who
becomes an owner of the Building or otherwise obtains an interest in the
Building, and upon such assignment, the assignee shall be deemed to have fully
assumed all liabilities and obligations of Licensor hereunder, and the original
Licensor shall be free from all liabilities and obligations accruing after the
date of said assignment.  Licensor shall
also have the right to collaterally assign this Agreement to any lender or for
other security purposes.

 

20.           Exculpation.  Licensee agrees, on its behalf and on behalf
of its successors and any permitted assigns, that any liability of Licensor
with respect to this Agreement shall never exceed the amount of Five Million
and No/100 Dollars ($5,000,000) and Licensee shall not be entitled to any
judgment in excess of such amount.

 

3

21.           Notices.

 

(a)                                  All notices, demands or requests provided for or permitted to be given
pursuant to this Agreement must be in writing and shall be personally
delivered, sent by Federal Express or other overnight courier service, or
mailed by first class, registered or certified mail, return receipt requested,
postage prepaid.

 

(b)                                 All notices, demands or requests to be sent pursuant to this Agreement
shall be deemed to have been properly given or served by delivering or sending
the same in accordance with this Section, addressed to the parties hereto at
their respective addresses listed in the Lease.

 

(c)                                  If notices, demands or requests are sent by registered or certified mail,
said notices, demands or requests shall be effective upon being deposited in
the United States mail.  However, the
time period in which a response to any such notice, demand or request must be
given shall commence to run from the date of receipt on the return receipt of
the notice, demand or request by the addressee thereof.  Rejection or other refusal to accept or the
inability to deliver because of changed address of which no notice was given
shall be deemed to be receipt of notice, demand or request sent.

 

Notices may
also be served by personal service upon any officer, director or partner of
Licensor or Licensee or in the case of delivery by Federal Express or other
overnight courier service, notices shall be effective upon acceptance of
delivery by an employee, officer, director or partner of Licensor or Licensee.

 

(d)                                 By giving to the other party at least thirty (30) days written notice
thereof, either party shall have the right from time to time during the term of
this Agreement to change their respective addresses for notices, statements,
demands and requests, provided such new address shall be within the United
States of America.

 

22.                                 Miscellaneous.

 

(a)                                  Independent Contractors.  The parties hereto agree that they are
independent contractors and that neither party is an agent of the other.

 

(b)                                 Successors. 
This Agreement shall bind and inure to the benefit of the parties and
their respective successors and permitted assigns.

 

(c)                                  Captions. 
Captions in this Agreement are for convenience of reference only and
shall not define or limit any of the terms or provisions hereof.  References herein to Sections or provisions
without reference to the document in which they are contained are references to
this Agreement.

 

(d)                                 Singular and Plural.  Unless the context requires otherwise,
wherever used herein the singular shall include the plural and vice versa, and
the use of one gender shall also denote the other.

 

(e)                                  Construction. 
This Agreement and any document or instrument executed in connection
herewith shall be governed by, and construed and interpreted in accordance
with, the laws of the State of California and any applicable federal law, and
shall be deemed to have been executed in the State of California.  If any term, covenant or condition of this
Agreement or the application thereof to any person or circumstance shall, to
any extent, be invalid or unenforceable, the remainder of this Agreement, or
the application of such term, covenant or condition to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby and each item, covenant or condition of this Agreement shall
be valid and be enforced to the fullest extent permitted by law.

 

(f)                                    Authorization. 
Each party represents and warrants to the other that the execution,
delivery and performance of this Agreement and its obligations hereunder have
been duly authorized and are within such party’s rights and powers.

 

(g)                                 Submission
to Jurisdiction; Venue.  The parties irrevocably agree that all suits,
actions or other proceedings (including without limitation ancillary
proceedings) in any way, manner or respect arising out of or from or related to
this Agreement or any document or instrument executed in connection herewith
shall be subject to litigation in courts having situs within                        ,
California.  The parties hereby consent
and submit to the jurisdiction of any local, state or federal court located
within said city and state.  IN CONNECTION WITH ANY SUIT, ACTION OR OTHER
PROCEEDING BROUGHT IN ACCORDANCE WITH THIS SECTION THE PARTIES HEREBY WAIVE ANY
RIGHT TO (i) REQUEST OR DEMAND TRIAL BY JURY, (ii) TRANSFER OR CHANGE VENUE, OR
(iii) CLAIM THAT SUCH PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

4

(h)                                 Access. 
The general public shall have access to the ATM during Standard
Operating Hours.

 

5

(i)                                     Entire Agreement.  This Agreement and the Lease contain the
entire agreement between Licensor and Licensee concerning the Premises and
there are no other agreements, either oral or written between Licensor and
Licensee concerning the Premises.  This Agreement
shall not be modified except by a writing executed by Licensor and Licensee.

 

                IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed as of the day and year first above
written.

 

	
  LICENSOR:

  	
   

  	
  LICENSEE:

  
	
   

  	
   

  	
   

  
	
  South Bay Bank,

  	
   

  	
  Metropolitan Life Insurance Company,

  
	
  a National Association

  	
   

  	
  a New York corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print Name)

  	
   

  	
   

  	
   

  	
  (Print Name)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its

  	
   

  	
   

  	
  Its

  	
   

  
	
  (Chairman of Board, President or Vice President)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print Name)

  	
   

  	
   

  
	
  Its

  	
   

  	
   

  	
   

  
	
  (Secretary, Assistant Secretary, CFO or Assistant
  Treasurer)

  
									

 

 

6

RIDER 1

COMMENCEMENT
DATE AGREEMENT

 

Metropolitan Life Insurance Company, a New York
corporation (“Landlord”), and South Bay Bank, a National Association (“Tenant”),
have entered into a certain Office Lease dated as of September 19, 2003 (the “Lease”).

 

                WHEREAS,
Landlord and Tenant wish to confirm and memorialize the Commencement Date and
Expiration Date of the Lease as provided for in Section 2.02(b) of the Lease;

 

                NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants contained
herein and contained in the Lease, Landlord and Tenant agree as follows:

 

                1.             Unless otherwise defined herein,
all capitalized terms shall have the same meaning ascribed to them in the
Lease.

 

                2.             The Commencement Date (as defined
in the Lease) of the Lease is                         .

 

                3.             The Expiration Date (as defined in
the Lease) of the Lease is                           .

 

                4.             Tenant hereby confirms the
following:

 

                                                                (a)           That it has accepted possession of
the Premises pursuant to the terms of the Lease;

 

                                                                (b)           That the Landlord Work is
Substantially Complete;

 

                                                                (c)           That the Rentable Area of the
Premises is        ; and

 

                                                                (d)           That the Lease is in full force and
effect.

 

                5.             Except as expressly modified
hereby, all terms and provisions of the Lease are hereby ratified and confirmed
and shall remain in full force and effect and binding on the parties hereto.

 

                6.             The Lease and this Commencement
Date Agreement contain all of the terms, covenants, conditions and agreements
between the Landlord and the Tenant relating to the subject matter herein.  No prior other agreements or understandings
pertaining to such matters are valid or of any force and effect.

 

	
  TENANT:

  	
   

  	
  LANDLORD:

  
	
   

  	
   

  	
   

  
	
  South Bay Bank,

  	
   

  	
  Metropolitan Life Insurance Company,

  
	
  a National Association

  	
   

  	
  a New York corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print Name)

  	
   

  	
   

  	
   

  	
  (Print Name)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its

  	
   

  	
   

  	
  Its

  	
   

  
	
  (Chairman of Board, President or Vice President)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print Name)

  	
   

  	
   

  
	
  Its

  	
   

  	
   

  	
   

  
	
  (Secretary, Assistant Secretary, CFO or Assistant
  Treasurer)Exhibit
10.12

LEASE

 

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

 

	
  1.

  	
   

  	
  Premises and Basic Lease
  Information

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.

  	
   

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

  	 

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

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.1

  	
   

  	
  Premises:

  	
   

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

  	 

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

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.2

  	
   

  	
  Lease Term:

  	
   

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

  	 

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

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.3

  	
   

  	
  Holding Over.

  	
   

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

  	 

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

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.4

  	
   

  	
  Base Rent:

  	
   

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

  	 

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

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.5

  	
   

  	
  Additional Rent:

  	
   

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

  	 

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

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.6

  	
   

  	
  Base Year:

  	
   

  	
  2004 is the Base Year.

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.7

  	
   

  	
  Tenant’s Percentage Share:

  	
   

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

  	 

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

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.8

  	
   

  	
  Security Deposit:

  	
   

  	
  None

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.9

  	
   

  	
  Permitted Use:

  	
   

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

  	 

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

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
  1.1.10

  	
   

  	
  Address For Notices:

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	 

	 
	
  Tenant (prior to Commencement Date)

  	
  Tenant (after Commencement Date)

  
	 
	
  Mercantile National Bank

  1840 Century Park East

  Los Angeles, CA 
  90067

    

  	
  Mercantile National
  Bank

  1880 Century Park East,
  Suite 800

  Los Angeles, CA 90067

  
	 
	
  Contact: Mr.
  Scott A. Montgomery

  Phone:  310/282-6778

  	
  Contact: Mr.
  Scott A. Montgomery

  Phone: 310/
  282-6778

  
	 
	
   

  	
  With a Copy to:

  
	 
	
   

  	
  Ted Simpson

  
	 
	
   

  	
  Cushman &
  Wakefield

  
	 
	
   

  	
  601 Figueroa
  Street, Suite 4700

  
	 
	
   

  	
  Los Angeles, CA
  90017

  
	 
	
   

  	
  Telephone:  213/955-5100

  
																				

1

 

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

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

1.1.12      Guarantor(s):                        N/A

1.1.13      Broker:                                 Cushman
& Wakefield of California, Inc.

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

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

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

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

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

2.             Commencement Date; Early Entry

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

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

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

 

3.             Base Rent; Adjustments;
General Rent Provisions.

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

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

 

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

 

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

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

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

 

2

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

 

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

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

 

4.             Additional Rent.

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

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

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

3

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

4.4           Operating Costs.

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

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

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

5.             Security Deposit. [Intentionally
Deleted]

 

6.             Restrictions on Use;
Compliance with Laws.

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

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

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

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

4

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

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

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

 

7.             Improvements and
Alterations.

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

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

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

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

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

5

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

 

8.             Repairs and Maintenance.

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

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

 

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

 

10.           Assignment and Subletting.

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

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

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

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

6

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

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

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

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

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

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

 

7

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

 

11.           Waiver; Indemnity.

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

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

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

 

12.           Insurance.

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

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

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

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

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

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

8

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

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

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

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

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

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

 

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

 

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

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

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

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

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

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

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

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

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

9

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

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

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

 

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

 

15.           Subordination;
Requirements of Lenders.

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

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

 

16.           Access by Landlord.

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

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

 

10

17.           Default by Tenant.

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

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

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

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

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

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

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

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

 

18.           Remedies of Landlord.

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

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

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

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

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

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

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

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

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

11

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

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

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

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

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

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

18.9         [Intentionally
Deleted]

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

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

19.           Default by Landlord;
Limitation of Liability.

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

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

20.           Damage and Destruction.

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

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

 

12

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

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

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

 

21.           Eminent Domain.

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

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

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

 

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

 

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

 

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

 

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

 

13

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

 

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

 

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

 

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

 

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

 

30.           Signs and Directory.

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

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

 

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

 

14

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

 

33.           Relocation Right.                [Intentionally Deleted] 

 

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

 

35.           Miscellaneous.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

15

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

 

16

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

 

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

 

17

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

 

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

	
  LANDLORD

  	
   

  	
  TENANT

  
	
   

  	
   

  	
   

  
	
  Century Park, 

  	
   

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

  
	
  a California limited partnership

  	
   

  	
   

  
	
  By: 

  	
  Held Properties, Inc.

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Director of Leasing

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Joel R. Delman 

  	
   

  	
   

  	
  Scott A. Montgomery

  
	
  Its:

  	
  Management Company

  	
   

  	
  Its:

  	
  President and Chief Executive Officer

  

 

18

LEASE ADDENDUM

 

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

 

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

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

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

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

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

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

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

 

41.           First
Class Financial Institute Use Provisions.

 

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

 

19

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

 

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

 

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

 

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

 

42.           Option to Terminate.

 

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

 

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

 

43.           Signage.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

45.           Proposition
13.  [See Article 48.1]

 

20

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                49.5         Depreciation
and amortization except as provided above.

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

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

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

 

21

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

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

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

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

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

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

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

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

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

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

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

                                49.20       Costs
of Landlord’s charitable or political contributions.

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

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

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

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

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

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

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

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

 

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

 

22

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

 

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

 

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

 

 

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

 

	
  LANDLORD

  	
   

  	
  TENANT

  
	
   

  	
   

  	
   

  
	
  Century Park, 

  	
   

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

  
	
  a California limited partnership

  	
   

  	
   

  
	
  By: 

  	
  Held Properties, Inc.

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Management Company

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Joel R. Delman 

  	
   

  	
   

  	
  Scott A. Montgomery

  
	
  Its:

  	
  Director of Leasing

  	
   

  	
  Its:

  	
  President and Chief Executive Officer

  

 

23

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