Document:

Exhibit 10.9

LEGACY
SABRE SPRINGS

OFFICE
LEASE

LEGACY SABRE SPRINGS, LLC,

a California limited liability company,

as Landlord,

and

1st PACIFIC BANK OF CALIFORNIA,

a California corporation,

as Tenant

 

TABLE OF
CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SUMMARY OF BASIC LEASE INFORMATION

  	
   

  	
  iv

  
	
   

  	
   

  	
   

  
	
  OFFICE LEASE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1

  	
   

  	
  REAL PROPERTY, BUILDING AND PREMISES

  	
   

  	
  1

  
	
  ARTICLE 2

  	
   

  	
  LEASE TERM

  	
   

  	
  2

  
	
  ARTICLE 3

  	
   

  	
  BASE RENT

  	
   

  	
  3

  
	
  ARTICLE 4

  	
   

  	
  ADDITIONAL RENT

  	
   

  	
  3

  
	
  ARTICLE 5

  	
   

  	
  USE OF PREMISES

  	
   

  	
  7

  
	
  ARTICLE 6

  	
   

  	
  SERVICES AND UTILITIES

  	
   

  	
  8

  
	
  ARTICLE 7

  	
   

  	
  REPAIRS

  	
   

  	
  10

  
	
  ARTICLE 8

  	
   

  	
  ADDITIONS AND ALTERATIONS

  	
   

  	
  10

  
	
  ARTICLE 9

  	
   

  	
  COVENANT AGAINST LIENS

  	
   

  	
  11

  
	
  ARTICLE 10

  	
   

  	
  INDEMNIFICATION AND INSURANCE

  	
   

  	
  11

  
	
  ARTICLE 11

  	
   

  	
  DAMAGE AND DESTRUCTION

  	
   

  	
  13

  
	
  ARTICLE 12

  	
   

  	
  CONDEMNATION

  	
   

  	
  13

  
	
  ARTICLE 13

  	
   

  	
  COVENANT OF QUIET ENJOYMENT

  	
   

  	
  14

  
	
  ARTICLE 14

  	
   

  	
  ASSIGNMENT AND SUBLETTING

  	
   

  	
  14

  
	
  ARTICLE 15

  	
   

  	
  SURRENDER; OWNERSHIP AND REMOVAL OF TRADE FIXTURES

  	
   

  	
  16

  
	
  ARTICLE 16

  	
   

  	
  HOLDING OVER

  	
   

  	
  16

  
	
  ARTICLE 17

  	
   

  	
  ESTOPPEL CERTIFICATES

  	
   

  	
  17

  
	
  ARTICLE 18

  	
   

  	
  SUBORDINATION

  	
   

  	
  17

  
	
  ARTICLE 19

  	
   

  	
  TENANT’S DEFAULTS; LANDLORD’S REMEDIES

  	
   

  	
  18

  
	
  ARTICLE 20

  	
   

  	
  SECURITY DEPOSIT

  	
   

  	
  19

  
	
  ARTICLE 21

  	
   

  	
  COMPLIANCE WITH LAW

  	
   

  	
  19

  
	
  ARTICLE 22

  	
   

  	
  ENTRY BY LANDLORD

  	
   

  	
  20

  
	
  ARTICLE 23

  	
   

  	
  TENANT PARKING

  	
   

  	
  20

  
	
  ARTICLE 24

  	
   

  	
  MISCELLANEOUS PROVISIONS

  	
   

  	
  21

  
							

EXHIBITS

	
  A

  	
   

  	
  OUTLINE OF PREMISES

  
	
  A-1

  	
   

  	
  CONCEPTUAL SITE PLAN OF REAL PROPERTY

  
	
  B

  	
   

  	
  TENANT WORK LETTER

  
	
  C

  	
   

  	
  AMENDMENT TO LEASE

  
	
  D

  	
   

  	
  RULES AND REGULATIONS

  
	
  E

  	
   

  	
  SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT
  AGREEMENT

  
	
  F

  	
   

  	
  PROJECT SIGN CRITERIA

  
	
  G

  	
   

  	
  VISITOR PARKING LOCATION

  

 

EXTENSION OPTION RIDER

 i

INDEX

	
  

  	
   

  	
  Pages

  
	
   

  	
   

  	
   

  
	
  Additional Rent

  	
   

  	
  3

  
	
  Adjacent Building

  	
   

  	
  1

  
	
  Affiliates

  	
   

  	
  16

  
	
  Alterations

  	
   

  	
  10

  
	
  Approved Working Drawings

  	
   

  	
  Exhibit
  B

  
	
  Architect

  	
   

  	
  Exhibit
  B. Exhibit B

  
	
  ATM

  	
   

  	
  8

  
	
  ATM Facility

  	
   

  	
  8

  
	
  Base Rent

  	
   

  	
  3

  
	
  Base, Shell and Core

  	
   

  	
  Exhibit
  B

  
	
  BOMA

  	
   

  	
  2

  
	
  Brokers

  	
   

  	
  23

  
	
  Building II

  	
   

  	
  1

  
	
  Buildings

  	
   

  	
  1

  
	
  Calendar Year

  	
   

  	
  3

  
	
  Claims

  	
   

  	
  11

  
	
  Construction

  	
   

  	
  24

  
	
  Construction Drawings

  	
   

  	
  Exhibit
  B. Exhibit B

  
	
  Contractor

  	
   

  	
  Exhibit
  B

  
	
  Cost Pools

  	
   

  	
  4

  
	
  Cost Proposal

  	
   

  	
  Exhibit
  B

  
	
  Current Lender

  	
   

  	
  17

  
	
  Effective Date

  	
   

  	
  2

  
	
  Eligibility Period

  	
   

  	
  9

  
	
  Engineers

  	
   

  	
  Exhibit
  B. Exhibit B

  
	
  Estimate

  	
   

  	
  6

  
	
  Estimate Statement

  	
   

  	
  6

  
	
  Estimated Excess

  	
   

  	
  6

  
	
  Excess

  	
   

  	
  6

  
	
  Excluded Claims

  	
   

  	
  11

  
	
  Expense Base Year

  	
   

  	
  3

  
	
  Expense Year

  	
   

  	
  4

  
	
  Extension Rider

  	
   

  	
  Rider

  
	
  Fair Market Rental Rate

  	
   

  	
  1

  
	
  Final Space Plan

  	
   

  	
  Exhibit
  B

  
	
  Final Working Drawings

  	
   

  	
  Exhibit
  B

  
	
  Force Majeure

  	
   

  	
  23

  
	
  Hazardous Material

  	
   

  	
  8

  
	
  Holidays

  	
   

  	
  8

  
	
  Interest Rate

  	
   

  	
  7

  
	
  Landlord

  	
   

  	
  1

  
	
  Landlord Parties

  	
   

  	
  11

  
	
  Landlord Supervision Fee

  	
   

  	
  Exhibit
  B

  
	
  Lease

  	
   

  	
  1

  
	
  Lease Commencement Date

  	
   

  	
  2

  
	
  Lease Expiration Date

  	
   

  	
  2

  
	
  Lease Term

  	
   

  	
  2

  
	
  Lease Year

  	
   

  	
  2

  
	
  Monument Sign

  	
   

  	
  22

  
	
  Notices

  	
   

  	
  23

  
	
  Operating Expenses

  	
   

  	
  4

  
	
  Option Rent

  	
   

  	
  1

  
	
  Option Term

  	
   

  	
  1

  
	
  Original Tenant

  	
   

  	
  17

  
	
  Other Buildings

  	
   

  	
  7

  
	
  Outside Date

  	
   

  	
  2

  
	
  Outside Date Termination Notice

  	
   

  	
  2

  
	
  Over-Allowance Amount

  	
   

  	
  Exhibit
  B

  
	
  Over-Allowance Cap

  	
   

  	
  Exhibit
  B

  
	
  Parking Facilities

  	
   

  	
  1

  
	
  Partial Cost Proposal

  	
   

  	
  Exhibit
  B

  
	
  Permits

  	
   

  	
  Exhibit
  B

  
	
  Premises

  	
   

  	
  1

  
	
  Project

  	
   

  	
  1

  
	
  Proposition 13

  	
   

  	
  5

  
	
  Real Property

  	
   

  	
  1

  
	
  Rent

  	
   

  	
  3

  
	
  rentable square feet

  	
   

  	
  2

  
	
  Security Deposit

  	
   

  	
  19

  
	
  Specifications

  	
   

  	
  Exhibit
  B

  
	
  Statement

  	
   

  	
  6

  
	
  Subject Space

  	
   

  	
  14

  
	
  Subleasing Costs

  	
   

  	
  15

  

 i
 

 

	
  

  	
   

  	
  Pages

  
	
   

  	
   

  	
   

  
	
  Summary

  	
   

  	
  iii

  
	
  Systems and Equipment

  	
   

  	
  5

  
	
  Tax Expense Base Year

  	
   

  	
  5

  
	
  Tax Expenses

  	
   

  	
  5

  
	
  Temporary Extension Term

  	
   

  	
  16

  
	
  Tenant

  	
   

  	
  1

  
	
  Tenant Delays

  	
   

  	
  Exhibit
  B

  
	
  Tenant Improvement Allowance

  	
   

  	
  Exhibit
  B

  
	
  Tenant Improvement Allowance Items

  	
   

  	
  Exhibit
  B

  
	
  Tenant Improvements

  	
   

  	
  Exhibit
  B

  
	
  Tenant Parties

  	
   

  	
  11

  
	
  Tenant Work Letter

  	
   

  	
  Exhibit
  B

  
	
  Tenant’s Name Sign

  	
   

  	
  22

  
	
  Tenant’s Share

  	
   

  	
  5

  
	
  Time Deadlines

  	
   

  	
  Exhibit
  B

  
	
  Transfer Notice

  	
   

  	
  14

  
	
  Transfer Premium

  	
   

  	
  15

  
	
  Transfers

  	
   

  	
  14

  
	
  usable square feet

  	
   

  	
  2

  
	
  Utilities Base Year

  	
   

  	
  6

  
	
  Utilities Costs

  	
   

  	
  6

  

 

 ii
 

SUMMARY
OF BASIC LEASE INFORMATION

This Summary of Basic
Lease Information (“Summary”) is
hereby incorporated into and made a part of the attached Office Lease. Each
reference in the Office Lease to any term of this Summary shall have the
meaning as set forth in this Summary for such term. In the event of a conflict
between the terms of this Summary and the Office Lease, the terms of the Office
Lease shall prevail. Any capitalized terms used herein and not otherwise
defined herein shall have the meaning as set forth in the Office Lease.

	
  TERMS OF LEASE

  (References are to the Office Lease)

  	
   

  	
  DESCRIPTION

  
	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Date:

  	
   

  	
  September 30, 2004

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Landlord:

  	
   

  	
  LEGACY SABRE SPRINGS, LLC,

  a California limited liability company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Address of Landlord (Section 24.19):

  	
   

  	
  Legacy Sabre Springs, LLC

  c/o Legacy Partners Commercial, Inc.

  30 Executive Park, Suite 100

  Irvine, California 92614

  Attention: Regional Vice President, Operations

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Tenant:

  	
   

  	
  1ST PACIFIC
  BANK OF CALIFORNIA,

  a California corporation

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Address of Tenant (Section 24.19):

  	
   

  	
  1ST Pacific
  Bank of California

  7728 Regents Road, Suite 503

  San Diego, California 92122

  Attention: A. Vincent Siciliano

  (Prior to Lease Commencement Date)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1ST Pacific
  Bank of California

  13500 Evening Creek Drive, Suite 100

  San Diego, California 92128

  Attention: A. Vincent Siciliano

  (After Lease Commencement Date)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Premises (Article 1):

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.1

  	
  Premises: 

  	
   

  	
  Approximately 5,316 rentable and 4,664 usable square
  feet of space located on the first (1st) floor of the Building (as
  defined below), as set forth in Exhibit
  A attached hereto.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.2

  	
  Building: 

  	
   

  	
  The Premises are located in “Building No. I”
  (sometimes referred to herein as the “Building”)
  whose address is 13500 Evening Creek Drive, San Diego, California

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Term (Article 2):

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.1

  	
  Lease Term:

  	
   

  	
  Eighty-four (84) months.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.2

  	
  Lease Commencement Date: 

  	
   

  	
  The earlier to occur of (i) the date Tenant
  commences business operations in the Premises, or (ii) the date the Premises
  are Ready for Occupancy (as defined in the Tenant Work Letter attached hereto
  as Exhibit B), which
  Lease Commencement Date is anticipated to be February 1, 2005.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  7.3

  	
  Lease Expiration Date: 

  	
   

  	
  The last day of the month in which the seventh (7th) anniversary of the Lease
  Commencement Date occurs.

  

 

 iii
 

 

	
  TERMS OF LEASE

  (References are to the Office Lease)

  	
   

  	
  DESCRIPTION

  
	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Base Rent (Article 3):

  	
   

  	
   

  
					

 

 

	
  Lease Year

  	
   

  	
  Annual

  Base Rent

  	
   

  	
  Monthly

  Installment

  of Base Rent

  	
   

  	
  Monthly Rental

  Rate per Rentable

  Square Foot

  	
   

  
	
  1

  	
   

  	
  $

  	
  178,617.60

  	
   

  	
  $

  	
  14,884.80

  	
   

  	
  $

  	
  2.80

  	
   

  
	
  2

  	
   

  	
  $

  	
  183,720.96

  	
   

  	
  $

  	
  15,310.08

  	
   

  	
  $

  	
  2.88

  	
   

  
	
  3

  	
   

  	
  $

  	
  189,462.24

  	
   

  	
  $

  	
  15,788.52

  	
   

  	
  $

  	
  2.97

  	
   

  
	
  4

  	
   

  	
  $

  	
  195,203.52

  	
   

  	
  $

  	
  16,266.96

  	
   

  	
  $

  	
  3.06

  	
   

  
	
  5

  	
   

  	
  $

  	
  200,944.80

  	
   

  	
  $

  	
  16,745.40

  	
   

  	
  $

  	
  3.15

  	
   

  
	
  6

  	
   

  	
  $

  	
  206,686.08

  	
   

  	
  $

  	
  17,223.84

  	
   

  	
  $

  	
  3.24

  	
   

  
	
  7

  	
   

  	
  $

  	
  213,065.28

  	
   

  	
  $

  	
  17,755.44

  	
   

  	
  $

  	
  3.34

  	
   

  

 

* Subject to abatement as provided in Article 3 of the
Office Lease.

	
  9.

  	
   

  	
  Additional Rent (Article 4):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.1

  	
  Expense Base
  Year:

  	
   

  	
  Calendar year 2005.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.2

  	
  Tax Expense Base
  Year:

  	
   

  	
  Calendar year 2005.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.3

  	
  Utilities Base
  Year:

  	
   

  	
  Calendar year 2005.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  9.4

  	
  Tenant’s Share
  of Operating Expenses, Tax Expenses and Utilities Costs:

  	
   

  	
  3.77% (5,316 rentable square feet within the
  Premises/140,915 rentable square feet within the Building).

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
   

  	
  Security Deposit
  (Article 20):

  	
   

  	
  $17,755.44.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
   

  	
  Parking (Article
  23):

  	
   

  	
  Four (4) parking passes for every 1,000 usable square
  feet of the Premises.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
   

  	
  Brokers (Section
  24.25):

  	
   

  	
  CB Richard Ellis represents Landlord and Irving
  Hughes represents Tenant.

  

 

 iv

OFFICE LEASE

This Office Lease, which
includes the preceding Summary and the exhibits attached hereto and
incorporated herein by this reference (the Office Lease, the Summary and the
exhibits to be known sometimes collectively hereafter as the “Lease”), dated as of the date set forth in
Section 1 of the Summary, is made by and between LEGACY SABRE SPRINGS, LLC, a
California limited liability company (“Landlord”),
and 1ST PACIFIC
BANK. OF CALIFORNIA, a California corporation (“Tenant”).

ARTICLE 1

REAL PROPERTY, BUILDING
AND PREMISES

1.1                                 Real
Property, Building and Premises.

1.1.1                        Premises.
Upon and subject to the terms, covenants and conditions hereinafter set forth
in this Lease, Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the premises set forth in Section 6.1 of the Summary (the “Premises”), which Premises are located in
the Building defined in Section 6.2 of the Summary to be constructed on the
Real Property. The outline of the floor plan of the Premises is set forth in Exhibit A attached hereto.

1.1.2                        Building
and Real Property/Project. The Building is part of a multi-office building
project (“Project”) constructed on
the Real Property (as defined below) known as “Legacy Sabre Springs” which also
includes an additional office building located adjacent to the Building at
13520 Evening Creek Drive, San Diego, California (“Building  I”).
Building I and Building II are sometimes collectively referred to herein as the
“Buildings.” The Project may
contain an additional office building that may be constructed on the Real
Property and located adjacent to the Buildings (“Adjacent Building”). The term “Real Property,” as used in this Lease, shall mean,
collectively, (i) the Buildings, (ii) the Adjacent Building (if and when
constructed), (iii) any outside plaza areas, walkways, driveways, courtyards,
public and private streets, transportation facilitation areas and other
improvements and facilities now or hereafter constructed surrounding and/or
servicing the Buildings and the Adjacent Building (if and when constructed),
including parking structures and surface parking facilities now or hereafter
servicing the Buildings, the Adjacent Building (if and when constructed) and
any other buildings which may be constructed within the Project (collectively,
the “Parking Facilities”), which
are designated from time to time by Landlord as common areas (or parking
facilities, as the case may be) appurtenant to or servicing the Buildings, the
Adjacent Building (if and when constructed) and any such other buildings; (iv)
any additional buildings, improvements, facilities, parking areas and
structures and common areas which Landlord (and/or any common area association
formed by Landlord or Landlord’s assignee for the Project) may add thereto from
time to time within or as part of the Project; provided, however, that no such
additions shall materially and adversely interfere with Tenant’s permitted use
of the Premises (as described in Article 5 below) or unreasonably interfere
with Tenant’s access to the Premises or the Building (including Tenant’s access
to the Parking Facilities); and (iv) the land upon which any of the foregoing
are situated. The site plan depicting the current configuration of the Real
Property and proposed Project is set forth in Exhibit A-l attached hereto. Notwithstanding the foregoing
or anything contained in this Lease to the contrary, (1) Landlord has no
obligation to expand or otherwise make any improvements within the Project,
including, without limitation, the Adjacent Building, or any of the outside
plaza areas, walkways, driveways, courtyards, public and private streets,
transportation facilitation areas and other improvements and facilities which
may be depicted on Exhibit A-l
attached hereto (as the same may be modified by Landlord from time to time
without notice to Tenant), other than Landlord’s obligations set forth in the
Tenant Work Letter to construct the Base, Shell and Core of the Building, and
the initial Tenant Improvements for the Premises pursuant to the provisions of
the Tenant Work Letter, and (2) Landlord shall have the right from time to time
to include or exclude any improvements or facilities within the Project, at
Landlord’s sole election, as more particularly set forth in Section 1.1.3
below.

1.1.3                        Tenant’s
and Landlord’s Rights. Tenant is hereby granted the right to the
nonexclusive use of the common corridors and hallways, stairwells, elevators,
restrooms and other public or common areas located within the Building, and the
non-exclusive use of the areas located on the Real Property designated by
Landlord from time to time as common areas for the Building; provided, however,
that (i) Tenant’s use thereof shall be subject to (A) the provisions of any
covenants, conditions and restrictions regarding the use thereof now or
hereafter recorded against the Real Property, and (B) such reasonable,
non-discriminatory rules, regulations and restrictions as Landlord may make
from time to time (which shall be provided in writing to Tenant), and (ii)
Tenant may not go on the roof of Building without Landlord’s prior consent
(which may be withheld in Landlord’s sole and absolute discretion) and without
otherwise being accompanied by a representative of Landlord. Landlord reserves
the right from time to time to use any of the common areas of the Real
Property, and the roof, risers and conduits of the Building for
telecommunications and/or any other purposes, and to do any of the following:
(1) make any changes, additions, improvements, repairs and/or replacements in
or to the Real Property or any portion or elements thereof, including, without
limitation, (x) changes in the location, size, shape and number of driveways,
entrances, loading and unloading areas, ingress, egress, direction of traffic,
landscaped areas, walkways, public and private streets, plazas, courtyards, transportation facilitation areas and common
areas, parking spaces, parking structures and parking areas, and (y)
expanding or decreasing the size of the Real Property and any common areas and
other elements thereof, including adding or deleting buildings thereon and therefrom;
(2) close temporarily any of the common areas while engaged in making repairs,
improvements or alterations to the Real Property; (3) form a common area
association or associations under covenants, conditions and restrictions to
own, manage, operate, maintain, repair and/or replace all or any portion of the
landscaping, driveways, walkways, parking areas, public and private streets,
plazas, courtyards, transportation facilitation areas and/or other common areas
located outside of the

Building and, subject to
Article 4 below, include the common area assessments, fees and taxes charged by
the association(s) and the cost of maintaining, managing, administering and
operating the association(s), in Direct Expenses; and (4) perform such other
acts and make such other changes with respect to the Real Property as Landlord
may, in the exercise of good faith business judgment, deem to be appropriate;
provided, however, that Landlord agrees to exercise its rights under this
Section 1.1.3 so as to minimize any material, adverse interference with Tenant’s
use of and access to the Premises (including Tenant’s parking rights
hereunder). Landlord, as part of Operating Expenses, agrees to maintain the
common areas-of the Real Property in a first-class manner consistent with other
first-class office buildings in the Central San Diego County area.

1.2                                 Condition
of Premises. Except as expressly set forth in this Lease and in the Tenant
Work Letter attached hereto as Exhibit B,
Landlord shall not be obligated to provide or pay for any improvement,
remodeling or refurbishment work or services related to the improvement,
remodeling or refurbishment of the Premises, and Tenant shall accept the
Premises in its “As Is” condition on the Lease Commencement Date; provided,
however, in the event that, as of the date of execution of this Lease, the
Base, Shell and Core of the Building (as defined in Section 1 of Exhibit B), in its condition existing
as of such date without regard to any of the Tenant Improvements, alterations
or other improvements to be constructed or installed by or on behalf of Tenant
in the Premises or Tenant’s use of the Premises, and based solely on an
unoccupied basis, (A) does not comply with applicable laws in effect as of the
date hereof, or (B) contains latent defects (not caused by Tenant’s acts or
omissions), then Landlord shall be responsible, at its sole cost and expense
which shall not be included in Operating Expenses (except as otherwise
permitted in Section 4.2 hereof), for correcting any such non-compliance to the
extent and as and when required by applicable laws, and/or correcting any such
latent defects as soon as reasonably possible after receiving notice thereof
from Tenant; provided, however, that if Tenant fails to give Landlord written
notice of any such latent defects described in clause (B) hereinabove within
two (2) months after the Lease Commencement Date, then the correction of any
such latent defects shall, subject to Landlord’s repair obligations in Section
7.2 hereof, be Tenant’s responsibility at Tenant’s sole cost and expense.

1.3                                 Rentable
and Usable Square Feet. The rentable and usable square feet for the
Premises are approximately as set forth in Section 6.1 of the Summary. For purposes
hereof, the “usable square feet”
of the Premises and the “rentable square feet”
of the Premises and the Buildings and the Adjacent Building in the Project
shall be calculated by Landlord pursuant to the Standard Method for Measuring
Floor Area in Office Buildings, ANSI Z65.1-1996 (“BOMA”), as modified for the Project pursuant to Landlord’s
standard rentable area measurements for the Project, to include, among other
calculations, a portion of the common areas and service areas of the Buildings
and the Adjacent Building in the Project. If the rentable and usable square
feet of the Premises and/or the rentable square feet of the Building pursuant
to the BOMA Standard, shall be different from the amounts thereof set forth in
this Lease, Landlord shall modify all amounts, percentages and figures
appearing or referred to in this Lease to conform to such corrected square
footage amounts therefor (including, without limitation, the amount of the Base
Rent, Tenant’s Share of Operating Expenses, Tax Expense and Utilities Costs and
the Tenant Improvement Allowance). Any such modifications shall be confirmed in
writing by Landlord to Tenant.

ARTICLE 2

LEASE TERM

2.1                                 Lease
Term. The terms and provisions of this Lease shall be effective as of the
date of this Lease except for the provisions of this Lease relating to the
payment of Rent. The term of this Lease (the “Lease
Term”) shall be as set forth in Section 7.1 of the Summary and shall
commence on the date (the “Lease Commencement
Date”) set forth in Section 7.2 of the Summary (subject, however, to
the terms of the Tenant Work Letter), and shall terminate on the date (the “Lease Expiration Date”) set forth in
Section 7.3 of the Summary, unless this Lease is sooner terminated as
hereinafter provided. For purposes of this Lease, the term “Lease Year” shall mean each consecutive
twelve (12) month period during the Lease Term, provided that the last Lease
Year shall end on the Lease Expiration Date. If Landlord does not deliver
possession of the Premises to Tenant on or before the anticipated Lease
Commencement Date (as set forth in Section 7.2(ii) of the Summary), Landlord
shall not be subject to any liability nor shall the validity of this Lease nor
the obligations of Tenant hereunder be affected. In the event that the Lease
Commencement Date is a date which is other than the anticipated Lease
Commencement Date set forth in Section 7.2(ii) of the Summary, within a
reasonable period of time after the date Tenant takes possession of the
Premises Landlord shall deliver to Tenant an amendment to lease in the form
attached hereto as Exhibit C,
attached hereto, setting forth, among other things, the Lease Commencement Date
and the Lease Expiration Date, and Tenant shall execute and return such
amendment to Landlord within five (5) days after Tenant’s receipt thereof. In
the event that Landlord does not deliver such amendment to Tenant, the Lease
Commencement Date shall be deemed to be the anticipated Lease Commencement Date
set forth in Section 7.2(ii) of the Summary.

2.2                                 Outside
Date; Termination. In the event that Substantial Completion of the Premises
has not occurred by the “Outside Date,”
which Outside Date shall be April 1, 2005, as such Outside Date may be extended
by the number of days of Tenant Delays (as defined in the Tenant Work Letter)
and by the number of days of “Force Majeure” delays (as defined in Section
24.17 hereof) then the sole remedy of Tenant shall be the right to deliver a
notice to Landlord (the “Outside Date
Termination Notice”) electing to terminate this Lease effective upon
receipt of the Outside Date Termination
Notice by Landlord (the “Effective Date”).
Except as provided hereinbelow, the Outside Date Termination Notice must
be delivered by Tenant to Landlord, if at all, not earlier than the Outside Date
and not later than ten (10) business days after the Outside Date. If Tenant
delivers the Outside Date Termination Notice to Landlord, then Landlord shall
have the right to suspend the Effective Date for a period ending thirty (30)
days after the original Effective Date. In order to suspend the Effective Date,
Landlord must deliver to Tenant, within five (5) business days after receipt of
the Outside Date Termination Notice, a certificate of the Contractor (as
defined in the Tenant Work Letter) certifying that it is such Contractor’s best
good faith judgment that Substantial

 2
 

Completion of the Premises will occur within thirty
(30) days after the original Effective Date. If Substantial Completion of the
Premises occurs within said thirty (30) day suspension period, then the Outside
Date Termination Notice shall be of no further force and effect; if, however,
Substantial Completion of the Premises does not occur within thirty (30) day
suspension period, then this Lease shall terminate as of the date of expiration
of such thirty (30) day period. If, prior to the Outside Date, Landlord
determines that Substantial Completion of the Premises will not occur by the
Outside Date, Landlord shall have the right to deliver a written notice to
Tenant stating Landlord’s opinion as to the date by which Substantial
Completion of the Premises shall occur and Tenant shall be required, within
five (5) business days after receipt of such notice, to either deliver the
Outside Date Termination Notice (which will mean that this Lease shall
thereupon terminate and shall be of no further force and effect) or agree to
extend the Outside Date to that date which is set by Landlord. Failure of
Tenant to so respond in writing within said five (5) business day period shall
be deemed to constitute Tenant’s agreement to extend the Outside Date to that
date which is set by Landlord. If the Outside Date is so extended, Landlord’s
right to request Tenant to elect to either terminate this Lease or further
extend the Outside Date shall remain and shall continue to remain, with each of
the notice periods and response periods set forth above, until the Substantial
Completion of the Premises or until this Lease is terminated. Upon termination
of this Lease pursuant to this Section 2.2, the parties shall be relieved of
all further obligations under this Lease except for those obligations under
this Lease which expressly survive the expiration or sooner termination of this
Lease.

ARTICLE 3

BASE RENT

Tenant shall pay, without
notice or demand, to Landlord or Landlord’s agent at the management office of
the Project, or at such other place as Landlord may from time to time designate
in writing, in currency or a check for currency which, at the time of payment,
is legal tender for private or public debts in the United States of America,
base rent (“Base Rent”) as set
forth in Section 8 of the Summary, payable in equal monthly installments as set
forth in Section 8 of the Summary in advance on or before the first day of each
and every month during the Lease Term, without any setoff or deduction
whatsoever. The Base Rent for the first full month of the Lease Term shall be
paid at the time of Tenant’s execution of this Lease. If any rental payment
date (including the Lease Commencement Date) falls on a day of the month other
than the first day of such month or if any rental payment is for a period which
is shorter than one month, then the rental for any such fractional month shall
be a proportionate amount of a full calendar month’s rental based on the
proportion that the number of days in such fractional month bears to the number
of days in the calendar month during which such fractional month occurs. All
other payments or adjustments required to be made under the terms of this Lease
that require proration on a time basis shall be prorated on the same basis.

Notwithstanding anything
to the contrary contained herein and provided that Tenant faithfully performs
all of the terms and conditions of this Lease, Landlord hereby agrees to abate
Tenant’s obligation to pay Tenant’s monthly Base Rent for the second (2nd) and third (3rd) full months of the initial Lease Term.
During such abatement period, Tenant shall still be responsible for the payment
of all of its other monetary obligations under this Lease. In the event of a
default by Tenant under the terms of this Lease that results in early
termination pursuant to the provisions of Article 19 of this Lease, then as a
part of the recovery set forth in Article 19 of this Lease, Landlord shall be
entitled to the recovery of the monthly Base Rent that was abated under the
provisions of this Article 3.

ARTICLE 4

ADDITIONAL RENT

4.1                                 Additional
Rent. In addition to paying the Base Rent specified in Article 3 of this
Lease, Tenant shall pay as additional rent the sum of the following: (i) Tenant’s
Share (as such term is defined below) of the annual Operating Expenses
allocated to the Building (pursuant to Section 4.3.4 below) which are in excess
of the amount of Operating Expenses allocated to the Building and applicable to
the Expense Base Year; plus (ii) Tenant’s Share of the annual Tax Expenses
allocated to the Building (pursuant to Section 4.3.4 below) which are in excess
of the amount of Tax Expenses allocated to the Building and applicable to the
Tax Expense Base Year; plus (iii) Tenant’s Share of the annual Utilities Costs
allocated to the Building (pursuant to Section 4.3.4 below) which are in excess
of the amount of Utilities Costs allocated to the Building and applicable to
the Utilities Base Year. Such additional rent, together with any and all other
amounts payable by Tenant to Landlord pursuant to the terms of this Lease
(including, without limitation, pursuant to Article 6), shall be hereinafter
collectively referred to as the “Additional
Rent.” The Base Rent and Additional Rent are herein collectively
referred to as the “Rent.” All
amounts due under this Article 4 as Additional Rent shall be payable for the
same periods and in the same manner, time and place as the Base Rent. Without
limitation on other obligations of Tenant which shall survive the expiration of
the Lease Term, the obligations of Tenant to pay the Additional Rent provided
for in this Article 4 shall survive the expiration of the Lease Term.

4.2                                 Definitions.
As used in this Article 4, the following terms shall have the meanings
hereinafter set forth:

4.2.1                        “Calendar Year” shall mean each calendar
year in which any portion of the Lease Term falls, through and including the
calendar year in which the Lease Term expires.

4.2.2                        “Expense Base Year” shall mean the year set
forth in Section 9.1 of the Summary.

 3
 

4.2.3                        “Expense Year” shall mean each Calendar
Year, provided that Landlord, upon notice to Tenant, may change the Expense
Year from time to time to any other twelve (12) consecutive-month period, and,
in the event of any such change, Tenant’s Share of Operating Expenses, Tax
Expenses and Utilities Costs shall be equitably adjusted for any Expense Year
involved in any such change.

4.2.4                        “Operating Expenses” shall mean all
expenses, costs and amounts of every kind and nature which Landlord shall pay
during any Expense Year because of or in connection with the ownership,
management, maintenance, repair, replacement, restoration or operation of the
Real Property, including, without limitation, any amounts paid for: (i) the
cost of operating, maintaining, repairing, renovating and managing the utility
systems, mechanical systems, sanitary and storm drainage systems, any elevator
systems and all other “Systems and Equipment” (as defined in Section 4.2.5 of
this Lease), and the cost of supplies and equipment and maintenance and service
contracts in connection therewith; (ii) the cost of licenses, certificates,
permits and inspections, and the cost of contesting the validity or
applicability of any governmental enactments which may affect Operating
Expenses, and the costs incurred in connection with implementation and
operation (by Landlord or any common area association(s) formed for the
Project) of any transportation system management program or similar program;
(iii) the cost of insurance carried by Landlord, in such amounts as Landlord
may reasonably determine or as may be required by any mortgagees or the lessor
of any underlying or ground lease affecting the Real Property; (iv) the cost of
landscaping, relamping, supplies, tools, equipment and materials, and all fees,
charges and other costs (including consulting fees, legal fees and accounting
fees) incurred in connection with the management, operation, repair and
maintenance of the Real Property; (v) the cost of parking area repair,
restoration, and maintenance; (vi) any equipment rental agreements or
management agreements (including the cost of any management fee (not to exceed
five percent (5%) of the gross receipts of the Real Property) and the fair
rental value of any office space provided thereunder); (vii) wages, salaries
and other compensation and benefits of all persons engaged in the operation,
management, maintenance or security of the Real Property, and employer’s Social
Security taxes, unemployment taxes or insurance, and any other taxes which may
be levied on such wages, salaries, compensation and benefits; (viii) payments
under any easement, license, operating agreement, declaration, restrictive
covenant, underlying or ground lease (excluding rent), or instrument pertaining
to the sharing of costs by the Real Property; (ix) the cost of janitorial
service, alarm and security service, if any, window cleaning, trash removal,
replacement of wall and floor coverings, ceiling tiles and fixtures in lobbies,
corridors, restrooms and other common or public areas or facilities,
maintenance and replacement of curbs and walkways, repair to roofs and re
roofing; (x) amortization (including interest on the unamortized cost) of the
cost of acquiring or the rental expense of personal property used in the
maintenance, operation and repair of the Real Property; and (xi) the cost of
any capital improvements or other costs (I) which are intended as a
labor-saving device or to effect other economies in the operation or maintenance
of the Real Property, (II) made to the Real Property or any portion thereof
after the Lease Commencement Date that are required under any governmental law
or regulation, or (III) which are reasonably determined by Landlord to be in
the best interests of the Real Property; provided, however, that if any such
cost described in (I), (II) or (III) above, is a capital expenditure, such cost
shall be amortized (including interest on the unamortized cost) over its useful
life as Landlord shall reasonably determine. If Landlord is not furnishing any
particular work or service (the cost of which, if performed by Landlord, would
be included in Operating Expenses) to a tenant who has undertaken to perform
such work or service in lieu of the performance thereof by Landlord, Operating
Expenses shall be deemed to be increased by an amount equal to the additional
Operating Expenses which would reasonably have been incurred during such period
by Landlord if it had at its own expense furnished such work or service to such
tenant. If the Buildings (and during the period of time when any other office
buildings are fully constructed and ready for occupancy and are included by
Landlord within the Project) are less than ninety-five percent (95%) occupied
during all or a portion of any Expense Year (including the Expense Base Year),
Landlord shall make an appropriate adjustment to the variable components of
Operating Expenses for such year or applicable portion thereof, employing sound
accounting and management principles, to determine the amount of Operating
Expenses that would have been paid had the Buildings (and during the period of
time when any other office buildings are fully constructed and ready for
occupancy and are included by Landlord within the Project) been ninety-five
percent (95%) occupied; and the amount so determined shall be deemed to have
been the amount of Operating Expenses for such year, or applicable portion
thereof.

Subject to the provisions of Section 4.3.4 below,
Landlord shall have the right, from time to time, to equitably allocate some or
all of the Operating Expenses (and/or Tax Expenses and Utilities Costs) between
the Building and/or among different tenants of the Project and/or different
buildings of the Real Property as and when such different buildings (including,
but not limited to, Building II and the Adjacent Building) are constructed and
added to (and/or excluded from) the Real Property or otherwise (the “Cost Pools”). Such Cost Pools may include,
without limitation, the office space tenants and retail space tenants of the
Real Property or of a building or buildings in the Real Property. Such Cost
Pools may also include an allocation of certain Operating Expenses (and/or Tax
Expenses and Utilities Costs) within or under covenants, conditions and
restrictions affecting the Real Property. In addition, Landlord shall have the
right from time to time, in its reasonable discretion, to include or exclude
existing or future buildings in the Project for purposes of determining
Operating Expenses, Tax Expenses and Utilities Costs and/or the provision of
various services and amenities thereto, including allocation of Operating
Expenses, Tax Expenses and Utilities Costs in any such Cost Pools.

Notwithstanding anything to the contrary set forth in
this Article 4, when calculating Operating Expenses for the Expense Base Year,
Operating Expenses shall exclude market-wide labor-rate increases due to
extraordinary circumstances, including, but not limited to, boycotts and
strikes, and costs relating to capital improvements or expenditures.

Notwithstanding the foregoing, Operating Expenses
shall not, however, include: (A) costs of leasing commissions, attorneys’ fees
and other costs and expenses incurred in connection with negotiations or
disputes with present or prospective tenants or other occupants of the Real
Property; (B) costs (including permit, license and inspection costs) incurred
in renovating or otherwise improving, decorating or redecorating rentable space
for other

 4
 

tenants or vacant rentable space; (C) costs incurred
due to the violation by Landlord of the terms and conditions of any lease of
space in the Real Property; (D) costs of overhead or profit increment paid to
Landlord or to subsidiaries or affiliates of Landlord for services in or in
connection with the Real Property to the extent the same exceeds the costs of
overhead and profit increment included in the costs of such services which
could be obtained from third parties on a competitive basis; (E) except as
otherwise specifically provided in this Section 4.2.4, costs of interest on
debt or amortization on any mortgages, and rent payable under any ground lease
of the Real Property; (F) Utilities Costs; and (G) Tax Expenses.

4.2.5                        “Systems and Equipment” shall mean any
plant, machinery, transformers, duct work, cable, wires, and other equipment,
facilities, and systems designed to supply heat, ventilation, air conditioning
and humidity or any other services or utilities, or comprising or serving as
any component or portion of the electrical, gas, steam, plumbing, sprinkler,
communications, alarm, security, or fire/life safety systems or equipment, or
any other mechanical, electrical, electronic, computer or other systems or
equipment which serve either or both of the Buildings and/or the Adjacent Building
and/or any other building in the Project in whole or in part.

4.2.6                        “Tax Expense Base Year” shall mean the year
set forth in Section 9.2 of the Summary.

4.2.7                        “Tax Expenses” shall mean all federal,
state, county, or local governmental or municipal taxes, fees, assessments,
charges or other impositions of every kind and nature, whether general,
special, ordinary or extraordinary, (including, without limitation, real estate
taxes, general and special assessments, transit assessments, fees and taxes, child
care subsidies, fees and/or assessments, job training subsidies, fees and/or
assessments, open space fees and/or assessments, housing subsidies and/or
housing fund fees or assessments, public art fees and/or assessments, leasehold
taxes or taxes based upon the receipt of rent, including gross receipts or
sales taxes applicable to the receipt of rent, personal property taxes imposed
upon the fixtures, machinery, equipment, apparatus, systems and equipment,
appurtenances, furniture and other personal property used in connection with
the Real Property), which Landlord shall pay during any Expense Year because of
or in connection with the ownership, leasing and operation of the Real Property
or Landlord’s interest therein. For purposes of this Lease, Tax Expenses shall
be calculated as if the tenant improvements in the Buildings (and, if and when
constructed, the Adjacent Building) were fully constructed and the Real
Property, the Buildings (and, if and when constructed, the Adjacent Building)
and all tenant improvements in the Buildings (and, if and when constructed, the
Adjacent Building) were fully assessed for real estate tax purposes.

4.2.7.1               Tax Expenses shall
include, without limitation:

(i)                                     Any
tax on Landlord’s rent, right to rent or other income from the Real Property or
as against Landlord’s business of leasing any of the Real Property;

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

(iii)                               Any
assessment, tax, fee, levy, or charge allocable to or measured by the area of
the Premises or the rent payable hereunder, including, without limitation, any
gross income tax upon or with respect to the possession, leasing, operating,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises, or any portion thereof;

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

(v)                                 Any
reasonable expenses incurred by Landlord in attempting to protest, reduce or
minimize Tax Expenses.

4.2.7.2               In no event shall
Tax Expenses for any Expense Year be less than the Tax Expenses for the Tax
Expense Base Year.

4.2.7.3               Notwithstanding
anything to the contrary contained in this Section 4.2.7, there shall be
excluded from Tax Expenses (i) all excess profits taxes, franchise taxes, gift
taxes, capital stock taxes, inheritance and succession taxes, estate taxes,
federal and state net income taxes, and other taxes to the extent applicable to
Landlord’s net income (as opposed to rents, receipts or income attributable to
operations at the Real Property), (ii) any items included as Operating
Expenses, and (iii) any items paid by Tenant under Section 4.4 of this Lease.

4.2.8                        “Tenant’s Share” shall mean the percentage
set forth in Section 9.4 of the Summary. Tenant’s Share was calculated by
dividing the number of rentable square feet of the Premises by the total
rentable square feet in the Building (as set forth in Section 9.4 of the
Summary), and stating such amount as a percentage. Landlord shall have the
right from time to time to redetermine the rentable square feet of the Premises
and/or Building, and Tenant’s Share shall be appropriately adjusted to reflect
any such redetermination. If Tenant’s Share is adjusted pursuant to the
foregoing, as to the Expense Year in which such adjustment occurs, Tenant’s
Share for such

 5
 

year shall be determined on the basis of the number of
days during such Expense Year that each such Tenant’s Share was in effect.

4.2.9                        “Utilities Base Year” shall mean the year
set forth in Section 9.3 of the Summary.

4.2.10                  “Utilities Costs” shall mean all actual
charges for utilities for the Building and the Project which Landlord shall pay
during any Expense Year, including, but not limited to, the costs of water,
sewer and electricity, and the costs of HVAC (including, unless paid by Tenant
pursuant to Section 6.1.2 below, the cost of electricity to operate the HVAC
air handlers) and other utilities (but excluding (i) the cost of electricity
consumed in the Premises and the premises of other tenants of the Building, the
Adjacent Building and any other buildings in the Project (since Tenant is
separately paying for the cost of electricity pursuant to Section 6.1.2 below)
and (ii) those charges for which tenants directly reimburse Landlord or
otherwise pay directly to the utility company) as well as related fees,
assessments and surcharges. Utilities Costs shall be calculated assuming the
Buildings (and during the period of time when any other office buildings are
fully constructed and ready for occupancy and are included by Landlord within
the Project), are at least ninety-five percent (95%) occupied. If, during all or
any part of any Expense Year, Landlord shall not provide any utilities other
than gas and electricity (the cost of which, if provided by Landlord, would be
included in Utilities Costs) to a tenant (including Tenant) who has undertaken
to provide the same instead of Landlord, Utilities Costs shall be deemed to be
increased by an amount equal to the additional Utilities Costs which would
reasonably have been incurred during such period by Landlord if Landlord had at
its own expense provided such utilities to such tenant. Utilities Costs shall
include any costs of utilities which are allocated to the Real Property under
any declaration, restrictive covenant, or other instrument pertaining to the
sharing of costs by the Real Property or any portion thereof, including any
covenants, conditions or restrictions now or hereafter recorded against or
affecting the Real Property. For purposes of determining Utilities Costs
incurred for the Utilities Base Year, Utilities Costs for the Utilities Base
Year shall not include any one time special charges, costs or fees or
extraordinary charges or costs incurred in the Utilities Base Year only,
including those attributable to boycotts, embargoes, strikes or other shortages
of services or fuel. In addition, if in any Expense Year subsequent to the
Utilities Base Year, the amount of Utilities Costs decreases due to a reduction
in the cost of providing utilities to the Real Property for any reason,
including without limitation, because of deregulation of the utility industry and/or
reduction in rates achieved in contracts with utilities providers, then for
purposes of the Expense Year in which such decrease in Utilities Costs occurred
and all subsequent Expense Years, the Utilities Costs for the Utilities Base
Year shall be decreased by an amount equal to such decrease.

4.3                                 Calculation
and Payment of Additional Rent.

4.3.1                        Calculation
of Excess. If for any Expense Year ending or commencing within the Lease
Term, (i) Tenant’s Share of Operating Expenses allocated to the Building pursuant
to Section 4.3.4 below for such Expense Year exceeds Tenant’s Share of
Operating Expenses allocated to the Building for the Expense Base Year and/or
(ii) Tenant’s Share of Tax Expenses allocated to the Building pursuant to
Section 4.3.4 below for such Expense Year exceeds Tenant’s Share of Tax
Expenses allocated to the Building for the Tax Expense Base Year, and/or (iii)
Tenant’s Share of Utilities Costs allocated to the Building pursuant to Section
4.3.4 below for such Expense Year exceeds Tenant’s Share of Utilities Costs
allocated to the Building for the Utilities Base Year, then Tenant shall pay to
Landlord, in the manner set forth in Section 4.3.2, below, and as Additional
Rent, an amount equal to such excess (the “Excess”).

4.3.2                        Statement
of Actual Operating Expenses. Tax Expenses and Utilities Costs and Payment by
Tenant. Landlord shall endeavor to give to Tenant on or before the first
day of May following the end of each Expense Year, a statement (the “Statement”) which shall state the Operating
Expenses, Tax Expenses and Utilities Costs incurred or accrued for such
preceding Expense Year, and which shall indicate the amount, if any, of any
Excess. Upon receipt of the Statement for each Expense Year ending during the
Lease Term, if an Excess is present, Tenant shall pay, with its next
installment of Base Rent due, the full amount of the Excess for such Expense
Year, less the amounts, if any, paid during such Expense Year as “Estimated
Excess,” as that term is defined in Section 4.3.3 of this Lease. The failure of
Landlord to timely furnish the Statement for any Expense Year shall not
prejudice Landlord from enforcing its rights under this Article 4. Even though
the Lease Term has expired and Tenant has vacated the Premises, when the final
determination is made of Tenant’s Share of the Operating Expenses, Tax Expenses
and Utilities Costs for the Expense Year in which this Lease terminates, if an
Excess is present, Tenant shall immediately pay to Landlord an amount as
calculated pursuant to the provisions of Section 4.3.1 of this Lease. The
provisions of this Section 4.3.2 shall survive the expiration or earlier
termination of the Lease Term.

4.3.3                        Statement
of Estimated Operating Expenses, Tax Expenses and Utilities Costs. In
addition, Landlord shall endeavor to give Tenant a yearly expense estimate
statement (the “Estimate Statement”)
which shall set forth Landlord’s reasonable estimate (the “Estimate”) of what the total amount of
Operating Expenses, Tax Expenses and Utilities Costs allocated to the Building
pursuant to Section 4.3.4 below for the then-current Expense Year shall be and
the estimated Excess (the “Estimated Excess”)
as calculated by comparing (i) Tenant’s Share of Operating Expenses allocated
to the Building, which shall be based upon the Estimate, to Tenant’s Share of
Operating Expenses allocated to the Building for the Expense Base Year, (ii)
Tenant’s Share of Tax Expenses allocated to the Building, which shall be based
upon the Estimate, to Tenant’s Share of Tax Expenses allocated to the Building
for the Tax Expense Base Year, and (iii) Tenant’s Share of Utilities Costs
allocated to the Building, which shall
be based upon the Estimate, to Tenant’s Share of Utilities Costs allocated to
the Building for the Utilities Base Year. The failure of Landlord to
timely furnish the Estimate Statement for any Expense Year shall not preclude
Landlord from enforcing its rights to collect any Estimated Excess under this
Article 4. If pursuant to the Estimate Statement an Estimated Excess is calculated
for the then-current Expense Year, Tenant shall pay, with its next installment
of Base Rent due, a fraction of the Estimated Excess for the then-current
Expense Year (reduced by any amounts paid pursuant to the last sentence of this
Section 4.3.3). Such fraction shall have as its numerator the number of months
which have elapsed in such current Expense Year to the month of such payment,
both months

 6
 

inclusive, and shall have twelve (12) as its
denominator. Until a new Estimate Statement is furnished, Tenant shall pay
monthly, with the monthly Base Rent installments, an amount equal to
one-twelfth (1/12) of the total Estimated Excess set forth in the previous
Estimate Statement delivered by Landlord to Tenant.

4.3.4                        Allocation
of Operating Expenses, Tax Expenses and Utilities Costs to Building. The
parties acknowledge that the Building is a part of a multi-office building
project consisting of the Buildings and the Adjacent Building (if and when
constructed) and such other buildings as Landlord may elect to construct and
include as part of the Real Property from time to time (collectively, the “Other Buildings”), and that certain of the
costs and expenses incurred in connection with the Real Property (i.e.
the Operating Expenses, Tax Expenses and Utilities Costs) shall be shared among
the Buildings and/or such Other Buildings, while certain other costs and
expenses which are solely attributable to the Building, Building II and such
Other Buildings, as applicable, shall be allocated directly to the Building, Building
II and the Other Buildings, respectively. Accordingly, as set forth in Sections
4.1 and 4.2 above, Operating Expenses, Tax Expenses and Utilities Costs are
determined annually for the Real Property as a whole, and a portion of the
Operating Expenses, Tax Expenses and Utilities Costs, which portion shall be
determined by Landlord on an equitable basis, shall be allocated to the
Building (as opposed to the tenants of Building II and the Other Buildings),
and such portion so allocated shall be the amount of Operating Expenses, Tax
Expenses and Utilities Costs payable with respect to the Building upon which
Tenant’s Share shall be calculated. Such portion of the Operating Expenses, Tax
Expenses and Utilities Costs allocated to the Building shall include all
Operating Expenses, Tax Expenses and Utilities Costs which are attributable
solely to the Building, and an equitable portion of the Operating Expenses, Tax
Expenses and Utilities Costs attributable to the Real Property as a whole. As
an example of such allocation with respect to Tax Expenses and Utilities Costs,
it is anticipated that Landlord may receive separate tax bills which separately
assess the improvements component of Tax Expenses for each building in the
Project and/or Landlord may receive separate utilities bills from the utilities
companies identifying the Utilities Costs for certain of the utilities costs
directly incurred by each such building (as measured by separate meters
installed for each such building), and such separately assessed Tax Expenses
and separately metered Utilities Costs shall be calculated for and allocated
separately to each such applicable building. In addition, in the event Landlord
elects, at its sole option, to subdivide certain common area portions of the
Real Property such as landscaping, public and private streets, driveways,
walkways, courtyards, plazas, transportation facilitation areas, accessways
and/or parking areas into a separate parcel or parcels of land (and/or
separately convey all or any of such parcels to a common area association to
own, operate and/or maintain same), the Operating Expenses, Tax Expenses and
Utilities Costs for such common area parcels of land may be aggregated and then
reasonably allocated by Landlord to the Building, Building II and such Other
Buildings on an equitable basis as Landlord (and/or any applicable covenants,
conditions and restrictions for any such common area association) shall provide
from time to time.

4.4                                 Taxes
and Other Charges for Which Tenant Is Directly Responsible. Tenant shall
reimburse Landlord upon demand for any and all taxes or assessments required to
be paid by Landlord (except to the extent included in Tax Expenses by
Landlord), excluding state, local and federal personal or corporate income
taxes measured by the net income of Landlord from all sources and estate and
inheritance taxes, whether or not now customary or within the contemplation of
the parties hereto, when:

4.4.1                        said taxes
are measured by or reasonably attributable to the cost or value of Tenant’s
equipment, furniture, fixtures and other personal property located in the
Premises, or by the cost or value of any leasehold improvements made in or to
the Premises by or for Tenant, to the extent the cost or value of such
leasehold improvements exceeds the cost or value of a building standard
build-out as determined by Landlord regardless of whether title to such
improvements shall be vested in Tenant or Landlord;

4.4.2                        said taxes
are assessed upon or with respect to the possession, leasing, operation, management,
maintenance, alteration, repair, use or occupancy by Tenant of the Premises or
any portion of the Real Property (including the Parking Facilities); or

4.4.3                        said taxes
are assessed upon this transaction or any document to which Tenant is a party creating
or transferring an interest or an estate in the Premises.

4.5                                 Late
Charges. If any installment of Rent or any other sum due from Tenant shall
not be received by Landlord or Landlord’s designee by the due date therefor,
then Tenant shall pay to Landlord a late charge equal to ten percent (10%) of
the amount due plus any attorneys’ fees incurred by Landlord by reason of
Tenant’s failure to pay Rent and/or other charges when due hereunder. The late
charge shall be deemed Additional Rent and the right to require it shall be in
addition to all of Landlord’s other rights and remedies hereunder, at law
and/or in equity and shall not be construed as liquidated damages or as
limiting Landlord’s remedies in any manner. In addition to the late charge
described above, any Rent or other amounts owing hereunder which are not paid
by the date that they are due shall thereafter bear interest until paid at a
rate (the “Interest Rate”) equal
to the lesser of (i) the “Prime Rate” or “Reference Rate” announced from time
to time by the Bank of America (or such reasonable comparable national banking
institution as selected by Landlord in the event Bank of America ceases to
exist or publish a Prime Rate or Reference Rate), plus four percent (4%), or
(ii) the highest rate permitted by applicable law.

ARTICLE 5

USE OF PREMISES

5.1                                 Permitted
Use. Tenant shall use the Premises solely for retail banking, related
financial services and general office purposes, all to the extent consistent
with the character of the Building as a first-class office building, and Tenant
shall not use or permit the Premises to be used for any other purpose or
purposes whatsoever.

 7
 

Tenant further covenants and agrees that it shall not
use, or suffer or permit any person or persons to use, the Premises or any part
thereof for any use or purpose contrary to the provisions of Exhibit D, attached hereto, or in
violation of the laws of the United States of America, the state in which the
Real Property is located, or the ordinances, regulations or requirements of the
local municipal or county governing body or other lawful authorities having
jurisdiction over the Real Property. Tenant shall comply with all recorded
covenants, conditions, and restrictions, and the provisions of all ground or
underlying leases, now or hereafter affecting the Real Property. Tenant shall
not use or allow another person or entity to use any part of the Premises for
the storage, use, treatment, manufacture or sale of “Hazardous Material,” as
that term is defined below. 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 Real
Property is located or the United States Government.

5.2                                 ATM
Facility. Subject to all applicable governmental approvals, during the
Lease Term, Tenant shall have the exclusive right to install and maintain one
(1) automated transaction machine (the “ATM”)
in an area on the exterior of the Building that shall be subject to Landlord’s
approval, in Landlord’s sole and absolute discretion (collectively, the “ATM Facility”). In addition, Landlord
agrees that Tenant, at Tenant’s sole cost and expense, shall be permitted to
maintain the name “1st Pacific Bank of California” on the ATM
Facility, in a location thereon to be agreed upon by the parties. In connection
with Tenant’s operation of the ATM Facility, Tenant shall, at its sole cost and
expense (i) obtain and maintain all necessary federal, state, and local
permits, licenses, and approvals; (ii) comply with all laws applicable to the
use and operation of the ATM Facility, including, without limitation any
provisions of the Americans with Disabilities Act; (iii) maintain the ATM
Facility, and the area in the vicinity thereof, in clean and working condition
and service the ATM Facility with cash and supplies (such services shall be
performed before or after the normal business hours of the Real Property,
except as deemed reasonably necessary by Tenant); (iv) provide all security measures
that are customary for similar facilities in comparable projects in the
vicinity of the Real Property including, without limitation, mirrors,
surveillance cameras, door locks, adequate lighting, card entry systems, and
warning signage, and Tenant shall review such security measures at least
annually and revise same to reflect then customary security measures; (v) pay
all real, personal property, or other taxes or fees assessed or imposed on the
ATM Facility; (vi) arrange with, and pay directly to, the applicable public or
private utilities, as the case may be, for furnishing, installing, and
maintaining of all telecommunications lines, services, and equipment as may be
required by Tenant for the operation of the ATM Facility and, in connection
therewith, Tenant shall not modify or disturb any telecommunications lines,
services and/or equipment in the Real Property without Landlord’s prior written
consent, which shall not be unreasonably withheld or delayed. Landlord may
require Tenant to temporarily discontinue services in connection with Landlord’s
maintenance and repair of the Real Property or any portion thereof, or if
necessary in Landlord’s reasonable judgment, for the security of the Real
Property or its occupants or contents, and any such action by Landlord shall
not be deemed a constructive eviction of Tenant or a disturbance of Tenant’s
use of the Premises or the Real Property and without Landlord incurring any
liability to Tenant whatsoever. Landlord shall have no responsibility
whatsoever for the ATM Facility and shall not be liable for any damage or
disruption to same however caused, including without limitation, due to a
disruption in electrical or telecommunication service. Landlord makes no
representations as to the suitability of the Real Property for an ATM, whether
or not an ATM may be operated in the Real Property under applicable zoning
ordinances or other laws, or as to the safety or security of the Real Property.
The ATM Facility and surrounding area shall be deemed to constitute a portion
of the Premises for purposes of Article 10 below. Tenant’s rights to the ATM
Facility are personal to Original Tenant (as defined in Article 16 below and
any assignee that is an Affiliate of Original Tenant’s entire interest in this
Lease pursuant to Section 14.7 below), and shall only be available to the
Original Tenant (or such Affiliate assignee, as the case may be) while the
Original Tenant (or such Affiliate assignee, as the case may be) is in physical
occupancy of the entire Premises. Upon the expiration or early termination of
this Lease or the termination of Tenant’s rights to the ATM Facility as
provided hereinabove, Tenant shall, at its sole cost and expense, remove the
ATM and return that portion of the ATM Facility to the original condition as
existed immediately prior to Tenant’s initial installation of such ATM, normal
wear and tear and damage by fire and casualty excepted. If Tenant fails to
remove such ATM and restore the ATM Facility as provided in this Section 5.2
within ten (10) days following the expiration or early termination of this
Lease, then Landlord may perform such work, and all costs and expenses incurred
by Landlord in so performing such work shall be reimbursed by Tenant to
Landlord within thirty (30) days after Tenant’s receipt of invoice therefor.

ARTICLE 6

SERVICES AND UTILITIES

6.1                                 Standard
Tenant Services. Landlord shall provide the following services on all days
during the Lease Term, unless otherwise stated below.

6.1.1                        Subject to
reasonable changes implemented by Landlord and to all governmental rules,
regulations and guidelines applicable thereto, Landlord shall provide heating
and air conditioning when necessary for normal comfort for normal office use in
the Premises, from Monday through Friday, during the period from 7:00 a.m. to
6:00 p.m., and on Saturday during the period from 9:00 a.m. to 1:00 p.m.,
except for the date of observation of New Year’s Day, Presidents’ Day, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day and other
locally or nationally recognized holidays as designated by Landlord
(collectively, the “Holidays’”).

6.1.2                        Landlord
shall provide adequate electrical wiring and facilities and power for normal
general office use as determined by Landlord. Tenant shall pay directly to the
utility company pursuant to the utility company’s separate meters (or to
Landlord in the event Landlord provides submeters instead of the utility
company’s meters), the cost of all electricity provided to and/or consumed in
the Premises (including normal and excess consumption and including the cost of
electricity to operate the HVAC air handlers if not charged to and paid by

 8
 

Tenant as part of Utilities Costs), which electricity
shall be separately metered (as described above or otherwise equitably allocated
and charged by Landlord to Tenant and other tenants of the Building). Tenant
shall pay such cost (including the cost of such meters or submeters) within ten
(10) days after demand and as additional rent under this Lease (and not as part
of the Operating Expenses or Utilities Costs). Landlord shall designate the
electricity utility provider from time to time.

6.1.3                        As part of
Operating Expenses or Utilities Costs (as determined by Landlord), Landlord
shall replace lamps, starters and ballasts for Building standard lighting
fixtures within the Premises. In addition, Tenant shall bear the cost of
replacement of lamps, starters and ballasts for non-Building standard lighting
fixtures within the Premises.

6.1.4                        Landlord
shall provide city water from the regular Building outlets for drinking,
lavatory and toilet purposes.

6.1.5                        Landlord
shall, in a manner consistent with the janitorial standards generally employed
by landlords of comparable first-class office buildings in the Central San
Diego County area, provide janitorial services five (5) days per week, except
the date of observation of the Holidays, in and about the Premises and window
washing services in a manner consistent with other comparable buildings in the
vicinity of the Project.

6.1.6                        Landlord shall
provide nonexclusive automatic passenger elevator service at all times.

6.1.7                        Landlord
shall provide nonexclusive freight elevator service subject to scheduling by
Landlord.

6.2                                 Overstandard
Tenant Use. Tenant shall not, without Landlord’s prior written consent, use
heat-generating machines, machines other than normal fractional horsepower
office machines, or equipment or lighting other than building standard lights
in the Premises, which may affect the temperature otherwise maintained by the
air conditioning system or increase the need for water normally furnished for
the Premises by Landlord pursuant to the terms of Section 6.1 of this Lease. If
Tenant uses water or heat or air conditioning in excess of that supplied by
Landlord pursuant to Section 6.1 of this Lease, Tenant shall pay to Landlord,
within ten (10) days after billing and as additional rent, the cost of such
excess consumption, the cost of the installation, operation, and maintenance of
equipment which is installed in order to supply such excess consumption, and
the cost of the increased wear and tear on existing equipment caused by such
excess consumption; and Landlord may install devices to separately meter any
increased use, and in such event Tenant shall pay, as additional rent, the increased
cost directly to Landlord, within ten (10) days after demand, including the
cost of such additional metering devices. If Tenant desires to use heat,
ventilation or air conditioning during hours other than those for which
Landlord is obligated to supply such utilities pursuant to the terms of Section
6.1 of this Lease, (i) Tenant shall give Landlord at least twenty-four (24)
hours prior written notice or such other notice as Landlord shall from time to
time establish as appropriate (which other notice is anticipated to be
accomplished through telephonic dial-up and/or access via computer codes), of
Tenant’s desired use, (ii) Landlord shall supply such HVAC to Tenant at such
hourly cost to Tenant as Landlord shall from time to time establish; such hourly
cost shall be equal to (A) the actual cost incurred by Landlord to supply such
after-hours HVAC on an hourly basis (but based on a two (2) hour minimum
provision of such after-hours HVAC), (B) increased wear and tear and
depreciation of equipment to provide such after-hours HVAC, and (C) maintenance
costs, and (iii) Tenant shall pay such cost within ten (10) days after billing,
as Additional Rent.

6.3                                 Interruption
of Use. Except as expressly provided herein, Tenant agrees that Landlord
shall not be liable for damages, by abatement of Rent or otherwise, for failure
to furnish or delay in furnishing any service (including telephone and
telecommunication services), or for any diminution in the quality or quantity
thereof, when such failure or delay or diminution is occasioned, in whole or in
part, by repairs, replacements, or improvements, by any strike, lockout or
other labor trouble, by inability to secure electricity, gas, water, or other
fuel at the Building or Real Property after reasonable effort to do so, by any
accident or casualty whatsoever, by act or default of Tenant or other parties,
or by any other cause beyond Landlord’s reasonable control; and such failures
or delays or diminution shall never be deemed to constitute an eviction or
disturbance of Tenant’s use and possession of the Premises or relieve Tenant
from paying Rent or performing any of its obligations under this Lease.
Furthermore, Landlord shall not be liable under any circumstances for a loss
of, or injury to, property or for injury to, or interference with, Tenant’s
business, including, without limitation, loss of profits, however occurring,
through or in connection with or incidental to a failure to furnish any of the
services or utilities as set forth in this Article 6.

6.4                                 Additional
Services. Landlord shall also have the exclusive right, but not the
obligation, to provide any additional services which may be required by Tenant,
including, without limitation, locksmithing, lamp replacement, additional
janitorial service, and additional repairs and maintenance, provided that
Tenant shall pay to Landlord upon billing, the sum of all costs to Landlord of
such additional services plus an administration fee. Charges for any utilities
or service for which Tenant is required to pay from time to time hereunder,
shall be deemed Additional Rent hereunder and shall be billed on a monthly
basis.

6.5                                 Abatement
of Rent When Tenant Is Prevented From Using Premises. In the event that
Tenant is prevented from using, and does not use, the Premises or any portion
thereof, for five (5) consecutive business days (the “Eligibility Period”) as a result of (i) any
repair, maintenance or alteration performed by Landlord after the Lease
Commencement Date and required to be performed by Landlord under this Lease or
permitted pursuant to Section 24.30 below, or (ii) any failure by Landlord to
provide to the Premises any of the essential utilities and services required to
be provided in Sections 6.1.1 or 6.1.2 above, or (iii) any failure by Landlord
to provide access to the Premises, then Tenant’s obligation to pay Base Rent
and Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs
shall be abated or reduced, as the case may be, from and after the first (1st)
day following the Eligibility Period and continuing until such time that Tenant
continues to be so prevented from using, and does not

 9
 

use, the Premises or a portion thereof, in the
proportion that the rentable square feet of the portion of the Premises that
Tenant is prevented from using, and does not use, bears to the total rentable
square feet of the Premises; provided, however, that Tenant shall only be
entitled to such abatement of rent if the matter described in clauses (i), (ii)
or (iii) of this sentence is not caused by Tenant’s gross negligence or willful
misconduct. To the extent Tenant shall be entitled to abatement of rent because
of a damage or destruction pursuant to Article 11 or a taking pursuant to
Article 12, then the Eligibility Period shall not be applicable.

ARTICLE 7

REPAIRS

7.1                                 Tenant’s
Repairs. Subject to Landlord’s repair obligations in Sections 7.2 and 11.1
below, Tenant shall, at Tenant’s own expense, keep the Premises, including all
improvements, fixtures and furnishings therein, in good order, repair and
condition at all times during the Lease Term, which repair obligations shall
include, without limitation, the obligation to promptly and adequately repair
all damage to the Premises and replace or repair all damaged or broken fixtures
and appurtenances; provided however, that, at Landlord’s option, or if Tenant
fails to make such repairs, Landlord may, but need not, make such repairs and
replacements, and Tenant shall pay Landlord the cost thereof, including a
percentage of the cost thereof not to exceed five percent (5%) (to be uniformly
established for the Building) sufficient to reimburse Landlord for all
overhead, general conditions, fees and other costs or expenses arising from
Landlord’s involvement with such repairs and replacements forthwith upon being
billed for same.

7.2                                 Landlord’s
Repairs. Anything contained in Section 7.1 above to the contrary
notwithstanding, and subject to Articles 11 and 12 of this Lease, Landlord
shall repair and maintain the structural portions of the Building, including
the basic plumbing, heating, ventilating, air conditioning and electrical
systems serving the Building and not located in the Premises; provided,
however, if such maintenance and repairs are caused in part or in whole by the
act, neglect, fault of or omission of any duty by Tenant, its agents, servants,
employees or invitees, Tenant shall pay to Landlord as additional rent, 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. There
shall be no abatement of rent and no liability of Landlord by reason of any
injury to or interference with Tenant’s business arising from the making of any
repairs, alterations or improvements in or to any portion of the Real Property,
Building or the Premises or in or to fixtures, appurtenances and equipment
therein. Tenant hereby waives and releases its right to make repairs at
Landlord’s expense under Sections 1941 and 1942 of the California Civil Code;
or under any similar law, statute, or ordinance now or hereafter in effect.

ARTICLE 8

ADDITIONS AND ALTERATIONS

8.1                                 Landlord’s
Consent to Alterations. Tenant may not make any improvements, alterations,
additions or changes to the Premises (collectively, the “Alterations”) without first procuring the prior
written consent of Landlord to such Alterations, which consent shall be
requested by Tenant not less than thirty (30) days prior to the commencement
thereof, and which consent shall not be unreasonably withheld by Landlord;
provided, however, Landlord may withhold its consent in its sole and absolute
discretion with respect to any Alterations which may affect the structural
components of the Building or the Systems and Equipment or which can be seen
from outside the Premises. Tenant shall pay for all overhead, general
conditions, fees and other costs and expenses of the Alterations, and shall pay
to Landlord a Landlord supervision fee often percent (10%) of the cost of the
Alterations. The construction of the initial improvements to the Premises shall
be governed by the terms of the Tenant Work Letter and not the terms of this
Article 8.

8.2                                 Manner
of Construction. Landlord may impose, as a condition of its consent to all
Alterations or repairs of the Premises or about the Premises, such requirements
as Landlord in its reasonable discretion may deem desirable, including, but not
limited to, the requirement that Tenant utilize for such purposes only
contractors, materials, mechanics and materialmen approved by Landlord;
provided, however, Landlord may impose such requirements as Landlord may
determine, in its sole and absolute discretion, with respect to any work
affecting the structural components of the Building or Systems and Equipment
(including designating specific contractors to perform such work). Tenant shall
construct such Alterations and perform such repairs in conformance with any and
all applicable rules and regulations of any federal, state, county or municipal
code or ordinance and pursuant to a valid building permit, issued by the city
in which the Real Property is located, and in conformance with Landlord’s
construction rules and regulations. Landlord’s approval of the plans,
specifications and working drawings for Tenant’s Alterations shall create no
responsibility or liability on the part of Landlord for their completeness,
design sufficiency, or compliance with all laws, rules and regulations of
governmental agencies or authorities. All work with respect to any Alterations
must be done in a good and workmanlike manner and diligently prosecuted to
completion to the end that the Premises shall at all times be a complete unit
except during the period of work. In performing the work of any such
Alterations, Tenant shall have the work performed in such manner as not to
obstruct access to the Building or Real Property or the common areas for any
other tenant of the Real Property, and as not to obstruct the business of
Landlord or other tenants of the Real Property, or interfere with the labor
force working at the Real Property. If Tenant makes any Alterations, Tenant
agrees to carry “Builder’s All Risk” insurance in an amount approved by
Landlord covering the construction of such Alterations, and such other
insurance as Landlord may require, it being understood and agreed that all of
such Alterations shall be insured by Tenant pursuant to Article 10 of this
Lease immediately upon completion thereof. In addition, Landlord may, in its
discretion, require Tenant to obtain a lien and completion bond or some
alternate form of security satisfactory to

 10
 

Landlord in an amount sufficient to ensure the
lien-free completion of such Alterations and naming Landlord as a co-obligee.
Upon completion of any Alterations, Tenant shall (i) cause a Notice of
Completion to be recorded in the office of the Recorder of the county in which
the Real Property is located in accordance with Section 3093 of the Civil Code
of the State of California or any successor statute, (ii) deliver to the
management office of the Real Property a reproducible copy of the “as built”
drawings of the Alterations, and (iii) deliver to Landlord evidence of payment,
contractors’ affidavits and full and final waivers of all liens for labor,
services or materials.

8.3                                 Landlord’s
Property. All Alterations, improvements, fixtures and/or equipment which may
be installed or placed in or about the Premises, and all signs installed in, on
or about the Premises, from time to time, shall be at the sole cost of Tenant
and shall be and become the property of Landlord. Furthermore, except for the
Tenant Improvements constructed by Landlord pursuant to the Tenant Work Letter,
Landlord may require that Tenant remove any improvement or Alteration upon the
expiration or early termination of the Lease Term, and repair any damage to the
Premises and Building caused by such removal. If Tenant fails to complete such
removal and/or to repair any damage caused by the removal of any Alterations,
Landlord may do so and may charge the cost thereof to Tenant.

ARTICLE 9

COVENANT AGAINST LIENS

Tenant has no authority
or power to cause or permit any lien or encumbrance of any kind whatsoever,
whether created by act of Tenant, operation of law or otherwise, to attach to
or be placed upon the Real Property, Building or Premises, and any and all
liens and encumbrances created by Tenant shall attach to Tenant’s interest
only. Landlord shall have the right at all times to post and keep posted on the
Premises any notice which it deems necessary for protection from such liens.
Tenant covenants and agrees not to suffer or permit any lien of mechanics or
materialmen or others to be placed against the Real Property, the Building or
the Premises with respect to work or services claimed to have been performed
for or materials claimed to have been furnished to Tenant or the Premises, and,
in case of any such lien attaching or notice of any lien, Tenant covenants and
agrees to cause it to be immediately released and removed of record.
Notwithstanding anything to the contrary set forth in this Lease, if any such
lien is not released and removed on or before the date notice of such lien is
delivered by Landlord to Tenant, Landlord, at its sole option, may immediately
take all action necessary to release and remove such lien, without any duty to
investigate the validity thereof, and all sums, costs and expenses, including
reasonable attorneys’ fees and costs, incurred by Landlord in connection with
such lien shall be deemed Additional Rent under this Lease and shall
immediately be due and payable by Tenant.

ARTICLE 10

INDEMNIFICATION AND
INSURANCE

10.1                           Indemnification
and Waiver. Tenant hereby assumes all risk of damage to property and injury
to persons, in, on, or about the Premises from any cause whatsoever and agrees
that Landlord, and its partners and subpartners, and their respective officers,
agents, property managers, servants, employees, and independent contractors
(collectively, “Landlord Parties”)
shall not be liable for, and are hereby released from any responsibility for,
any damage to property or injury to persons or resulting from the loss of use
thereof, which damage or injury is sustained by Tenant or by other persons
claiming through Tenant. Tenant shall indemnify, defend, protect, and hold
harmless the Landlord Parties from any and all loss, cost, damage, expense and
liability, including without limitation court costs and reasonable attorneys’
fees (collectively, “Claims”)
incurred in connection with or arising from any cause in, on or about the
Premises (including, without limitation, Tenant’s installation, placement and
removal of Alterations, improvements, fixtures and/or equipment in, on or about
the Premises), and any acts, omissions or negligence of Tenant or of any person
claiming by, through or under Tenant, or of the contractors, agents, servants,
employees, licensees or invitees of Tenant or any such person, in, on or about
the Premises, the Building and Real Property; provided, however, that Tenant’s
indemnity shall, in no event, extend to loss of profits, loss of business or
other consequential damages incurred by Landlord or any Landlord Parties.
Notwithstanding anything in this Section 10.1 to the contrary, the foregoing
assumption of risk, release and indemnity shall not apply to any Claims to the
extent resulting from the gross negligence or willful misconduct of Landlord or
the Landlord Parties, and not insured (or required to be insured) by Tenant
under this Lease (collectively, the “Excluded
Claims”), and Landlord shall indemnify, protect, defend and hold
harmless Tenant and Tenant’s officers, agents and employees (collectively, “Tenant Parties”) from and against any such
Excluded Claims, but only to the extent Landlord’s liability is not waived and
released by Tenant pursuant to the terms of Section 10.4 of this Lease
(provided, however, that Landlord’s indemnity shall, in no event, extend to
loss of profits, loss of business or other consequential damages incurred by
Tenant or any Tenant Parties). Each party’s agreement to indemnify the other
pursuant to this Section 10.1 is not intended and shall not relieve any
insurance carrier of its obligations under policies required to be carried by
the indemnifying party pursuant to the provisions of this Lease. The provisions
of this Section 10.1 shall survive the expiration or sooner termination of this
Lease.

10.2                           Tenant’s Compliance with Landlord’s Fire and
Casualty Insurance. Tenant
shall, at Tenant’s expense, comply as to the Premises with all insurance
company requirements pertaining to the use of the Premises. If Tenant’s conduct
or use of the Premises causes any increase in the premium for such insurance
policies, then Tenant shall reimburse Landlord for any such increase. Tenant,
at Tenant’s expense, shall comply with all rules, orders, regulations or
requirements of the American Insurance Association (formerly the National Board
of Fire Underwriters) and with any similar body.

 11
 

10.3                           Tenant’s
Insurance. Tenant shall maintain the following coverages in the following
amounts.

10.3.1                  Commercial
General Liability Insurance covering the insured against claims of bodily
injury, personal injury and property damage arising out of Tenant’s operations,
assumed liabilities or use of the Premises, including a Broad Form Commercial
General Liability endorsement covering the insuring provisions of this Lease
and the performance by Tenant of the indemnity agreements set forth in Section
10.1 of this Lease, (and with owned and non-owned automobile liability
coverage, and liquor liability coverage in the event alcoholic beverages are
served on the Premises) for limits of liability not less than:

	
  Bodily Injury and

  	
  $5,000,000 each occurrence

  
	
  Property Damage
  Liability

  	
  $5,000,000 annual aggregate

  
	
   

  	
   

  
	
  Personal Injury
  Liability

  	
  $5,000,000 each occurrence

  
	
   

  	
  $5,000,000 annual aggregate

  
	
   

  	
  0% Insured’s participation

  

 

10.3.2                  Physical Damage
Insurance covering (i) all office furniture, trade fixtures, office equipment,
merchandise and all other items of Tenant’s property on the Premises installed
by, for, or at the expense of Tenant, (ii) the Tenant Improvements, including
any Tenant Improvements which Landlord permits to be installed above the
ceiling of the Premises or below the floor of the Premises, and (iii) all other
improvements, alterations and additions to the Premises, including any
improvements, alterations or additions installed at Tenant’s request above the
ceiling of the Premises or below the floor of the Premises. Such insurance
shall be written on a “physical loss or damage” basis under a “special form”
policy, for the full replacement cost value new without deduction for
depreciation of the covered items and in amounts that meet any co-insurance
clauses of the policies of insurance and shall include a vandalism and
malicious mischief endorsement, sprinkler leakage coverage and earthquake
sprinkler leakage coverage.

10.3.3                  Workers’
compensation insurance as required by law.

10.3.4                  Loss-of-income,
business interruption and extra-expense insurance in such amounts as will
reimburse Tenant for direct and indirect loss of earnings attributable to all
perils commonly insured against by prudent tenants or attributable to
prevention of loss of access to the Premises or to the Building as a result of
such perils.

10.3.5                  Tenant shall
carry comprehensive automobile liability insurance having a combined single limit
of not less than Two Million Dollars ($2,000,000.00) per occurrence and
insuring Tenant against liability for claims arising out of ownership,
maintenance or use of any owned, hired or non-owned automobiles.

10.3.6                  The minimum
limits of policies of insurance required of Tenant under this Lease shall in no
event limit the liability of Tenant under this Lease. Such insurance shall: (i)
name Landlord, and any other party it so specifies, as an additional insured;
(ii) specifically cover the liability assumed by Tenant under this Lease,
including, but not limited to, Tenant’s obligations under Section 10.1 of this
Lease; (iii) be issued by an insurance company having a rating of not less than
AX in Best’s Insurance Guide or which is otherwise acceptable to Landlord and
licensed to do business in the state in which the Real Property is located;
(iv) be primary insurance as to all claims thereunder and provide that any
insurance carried by Landlord is excess and is non-contributing with any
insurance requirement of Tenant; (v) provide that said insurance shall not be
canceled or coverage changed unless thirty (30) days’ prior written notice
shall have been given to Landlord and any mortgagee or ground or underlying
lessor of Landlord; (vi) contain a cross-liability endorsement or severability
of interest clause reasonably acceptable to Landlord; and (vii) with respect to
the insurance required in Sections 10.3.1, 10.3.2, 10.3.4 and 10.3.5 above,
have deductible amounts not exceeding Ten Thousand Dollars ($10,000.00). Tenant
shall deliver said policy or policies or certificates thereof to Landlord on or
before the Lease Commencement Date and at least thirty (30) days before the
expiration dates thereof. If Tenant shall fail to procure such insurance, or to
deliver such policies or certificate, within such time periods, Landlord may,
at its option, in addition to all of its other rights and remedies under this
Lease, and without regard to any notice and cure periods set forth in Section
19.1, procure such policies for the account of Tenant, and the cost thereof
shall be paid to Landlord as Additional Rent within ten (10) days after
delivery of bills therefor.

10.4                           Subrogation.
Landlord and Tenant agree to have their respective insurance companies issuing
property damage insurance waive any rights of subrogation that such companies
may have against Landlord or Tenant, as the case may be, so long as the
insurance carried by Landlord and Tenant, respectively, is not invalidated
thereby. As long as such waivers of subrogation are contained in their
respective insurance policies, Landlord and Tenant hereby waive any right that
either may have against the other on account of any loss or damage to their
respective property to the extent such loss or damage is insurable under policies
of insurance for fire and all risk coverage, theft, public liability, or other
similar insurance.

10.5                           Additional
Insurance Obligations. Tenant shall carry and maintain during the entire
Lease Term, at Tenant’s sole cost and expense, increased amounts of the
insurance required to be carried by Tenant pursuant to this Article 10, and
such other reasonable types of insurance coverage and in such reasonable
amounts covering the Premises and Tenant’s operations therein, as may be
reasonably requested by Landlord.

 12
 

ARTICLE 11

DAMAGE AND DESTRUCTION

11.1                           Repair
of Damage to Premises by Landlord. Tenant shall promptly notify Landlord of
any damage to the Premises resulting from fire or any other casualty. If the
Premises or any common areas of the Building or Real Property serving or
providing access to the Premises shall be damaged by fire or other casualty,
Landlord shall promptly and diligently, subject to reasonable delays for
insurance adjustment or other matters beyond Landlord’s reasonable control, and
subject to all other terms of this Article 11, restore the base, shell, and
core of the Premises and such common areas. Such restoration shall be to
substantially the same condition of the base, shell, and core of the Premises
and common areas prior to the casualty, except for modifications required by
zoning and building codes and other laws or by the holder of a mortgage on the
Real Property, or the lessor of a ground or underlying lease with respect to
the Real Property and/or the Building, or any other modifications to the common
areas deemed desirable by Landlord, provided access to the Premises and any
common restrooms serving the Premises shall not be materially impaired.
Notwithstanding any other provision of this Lease, upon the occurrence of any damage
to the Premises, Tenant shall assign to Landlord (or to any party designated by
Landlord) all insurance proceeds payable to Tenant under Tenant’s insurance
required under Section 10.3 of this Lease, and Landlord shall repair any injury
or damage to the tenant improvements and alterations installed in the Premises
and shall return such tenant improvements and alterations to their original
condition; provided that if the cost of such repair by Landlord exceeds the
amount of insurance proceeds received by Landlord from Landlord’s and Tenant’s
insurance carrier, as assigned by Tenant, the cost of such repairs shall be
paid by Tenant to Landlord prior to Landlord’s repair of the damage. In
connection with such repairs and replacements, Tenant shall, prior to the
commencement of construction, submit to Landlord, for Landlord’s review and
approval, all plans, specifications and working drawings relating thereto, and
Landlord shall select the contractors to perform such improvement work.
Landlord shall not be liable for any inconvenience or annoyance to Tenant or
its visitors, or injury to Tenant’s business resulting in any way from such
damage or the repair thereof; provided however, that if such fire or other
casualty shall have damaged the Premises or common areas necessary to Tenant’s
occupancy, and if such damage is not the result of the negligence or willful
misconduct of Tenant or Tenant’s employees, contractors, licensees, or
invitees, Landlord shall allow Tenant a proportionate abatement of Base Rent
and Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs,
during the time and to the extent the Premises as a result thereof.

11.2                           Landlord’s
Option to Repair. Notwithstanding the terms of Section 11.1 of this Lease,
Landlord may elect not to rebuild and/or restore the Premises, the Building
and/or any other portion of the Real Property and instead terminate this Lease
by notifying Tenant in writing of such termination within sixty (60) days after
the date of damage, such notice to include a termination date giving Tenant
ninety (90) days to vacate the Premises, but Landlord may so elect only if the
Building shall be damaged by fire or other casualty or cause, whether or not
the Premises are affected, and one or more of the following conditions is
present: (i) repairs cannot reasonably be completed within one hundred twenty
(120) days of the date of damage (when such repairs are made without the
payment of overtime or other premiums); (ii) the holder of any mortgage on the
Real Property or ground or underlying lessor with respect to the Real Property
and/or the Building shall require that the insurance proceeds or any portion
thereof be used to retire the mortgage debt, or shall terminate the ground or
underlying lease, as the case may be; or (iii) the damage is not fully covered,
except for deductible amounts, by Landlord’s insurance policies unless Tenant
agrees in writing to pay the amount not covered and timely provides such funds
at the time Landlord requests the same from Tenant to cover such uninsured
costs. In addition, if the Premises or the Building is destroyed or damaged to
any substantial extent during the last twelve (12) months of the Lease Term,
then notwithstanding anything contained in this Article 11, Landlord shall have
the option to terminate this Lease by giving written notice to Tenant of the
exercise of such option within thirty (30) days after such damage or
destruction, in which event this Lease shall cease and terminate as of the date
of such notice. Upon any such termination of this Lease pursuant to this
Section 11.2, Tenant shall pay the Base Rent and Additional Rent, properly
apportioned up to such date of termination, and both parties hereto shall
thereafter be freed and discharged of all further obligations hereunder, except
as provided for in provisions of this Lease which by their terms survive the
expiration or earlier termination of the Lease Term.

11.3                           Waiver
of Statutory Provisions. The provisions of this Lease, including this
Article 11, constitute an express agreement between Landlord and Tenant with
respect to any and all damage to, or destruction of, all or any part of the
Premises, the Building or any other portion of the Real Property, and any
statute or regulation of the state in which the Real Property is located,
including, without limitation, Sections 1932(2) and 1933(4) of the California
Civil Code, with respect to any rights or obligations concerning damage or
destruction in the absence of an express agreement between the parties, and any
other statute or regulation, now or hereafter in effect, shall have no
application to this Lease or any damage or destruction to all or any part of
the Premises, the Building or any other portion of the Real Property.

ARTICLE 12

CONDEMNATION

12.1                           Permanent
Taking. If the whole or any part of the Premises, Building or Real Property
shall be taken by power of eminent domain or condemned by any competent
authority for any public or quasi-public use or purpose, or if any adjacent
property or street shall be so taken or condemned, or reconfigured or vacated
by such authority in such manner as to require the use, reconstruction or
remodeling of any part of the Premises, Building or Real Property, or if
Landlord shall grant a deed or other instrument in lieu of such taking by eminent
domain or condemnation, Landlord shall have the option to terminate this Lease
upon ninety (90) days’ notice, provided such

 13
 

notice is given no later than one hundred eighty (180)
days after the date of such taking, condemnation, reconfiguration, vacation,
deed or other instrument. If more than twenty-five percent (25%) of the
rentable square feet of the Premises is taken, or if access to the Premises is
substantially impaired, Tenant shall have the option to terminate this Lease
upon ninety (90) days’ notice, provided such notice is given no later than one
hundred eighty (180) days after the date of such taking. Landlord shall be
entitled to receive the entire award or payment in connection therewith, except
that Tenant shall have the right to file any separate claim available to Tenant
for any taking of Tenant’s personal property and fixtures belonging to Tenant
and removable by Tenant upon expiration of the Lease Term pursuant to the terms
of this Lease, and for moving expenses, so long as such claim does not diminish
the award available to Landlord, its ground lessor with respect to the Real
Property or its mortgagee, and such claim is payable separately to Tenant. All
Rent shall be apportioned as of the date of such termination, or the date of such
taking, whichever shall first occur. If any part of the Premises shall be
taken, and this Lease shall not be so terminated, the Base Rent and Tenant’s
Share of Operating Expenses, Tax Expenses and Utilities Costs shall be
proportionately abated. Tenant hereby waives any and all rights it might
otherwise have pursuant to Section 1265.130 of The California Code of Civil
Procedure.

12.2                           Temporary
Taking. Notwithstanding anything to the contrary contained in this Article
12, in the event of a temporary taking of all or any portion of the Premises
for a period of one hundred and eighty (180) days or less, then this Lease
shall not terminate but the Base Rent and Tenant’s Share of Operating Expenses,
Tax Expenses and Utilities Costs shall be abated for the period of such taking
in proportion to the ratio that the amount of rentable square feet of the
Premises taken bears to the total rentable square feet of the Premises.
Landlord shall be entitled to receive the entire award made in connection with
any such temporary taking.

ARTICLE 13

COVENANT OF QUIET
ENJOYMENT

Landlord covenants that
Tenant, on paying the Rent, charges for services and other payments herein
reserved and on keeping, observing and performing all the other terms,
covenants, conditions, provisions and agreements herein contained on the part
of Tenant to be kept, observed and performed, shall, during the Lease Term,
peaceably and quietly have, hold and enjoy the Premises subject to the terms,
covenants, conditions, provisions and agreements hereof without interference by
any persons lawfully claiming by or through Landlord. The foregoing covenant is
in lieu of any other covenant express or implied.

ARTICLE 14

ASSIGNMENT AND SUBLETTING

14.1                           Transfers.
Tenant shall not, without the prior written consent of Landlord, assign,
mortgage, pledge, hypothecate, encumber, or permit any lien to attach to, or
otherwise transfer, this Lease or any interest hereunder, permit any assignment
or other such foregoing transfer of this Lease or any interest hereunder by operation
of law, sublet the Premises or any part thereof, or permit the use of the
Premises by any persons other than Tenant and its employees (all of the
foregoing are hereinafter sometimes referred to collectively as “Transfers” and any person to whom any
Transfer is made or sought to be made is hereinafter sometimes referred to as a
“Transferee”). If Tenant shall
desire Landlord’s consent to any Transfer, Tenant shall notify Landlord in
writing, which notice (the “Transfer Notice”)
shall include (i) the proposed effective date of the Transfer, which shall not
be less than thirty (30) days nor more than one hundred eighty (180) days after
the date of delivery of the Transfer Notice, (ii) a description of the portion
of the Premises to be transferred (the “Subject
Space”), (iii) all of the terms of the proposed Transfer, the name
and address of the proposed Transferee, and a copy of all existing and/or
proposed documentation pertaining to the proposed Transfer, including all
existing operative documents to be executed to evidence such Transfer or the
agreements incidental or related to such Transfer, (iv) current financial
statements of the proposed Transferee certified by an officer, partner or owner
thereof, and (v) such other information as Landlord may reasonably require. Any
Transfer made without Landlord’s prior written consent shall, at Landlord’s
option, be null, void and of no effect, and shall, at Landlord’s option,
constitute a default by Tenant under this Lease. Whether or not Landlord shall
grant consent, within thirty (30) days after written request by Landlord,
Tenant shall pay to Landlord Two Thousand Five Hundred Dollars ($2,500.00) to
reimburse Landlord for its review and processing fees, and Tenant shall also
reimburse Landlord for any reasonable legal fees incurred by Landlord in
connection with Tenant’s proposed Transfer.

14.2                           Landlord’s
Consent. Landlord shall not unreasonably withhold its consent to any
proposed Transfer of the Subject Space to the Transferee on the terms specified
in the Transfer Notice. The parties hereby agree that it shall be reasonable
under this Lease and under any applicable law for Landlord to withhold consent
to any proposed Transfer where one or more of the following apply, without
limitation as to other reasonable grounds for withholding consent:

14.2.1                  The Transferee
is of a character or reputation or engaged in a business which is not
consistent with the quality of the Building or Real Property;

14.2.2                  The Transferee
intends to use the Subject Space for purposes which are not permitted under
this Lease;

14.2.3                  The Transferee
is either a governmental agency or instrumentality thereof;

 14
 

14.2.4                  The Transfer
will result in more than a reasonable and safe number of occupants per floor
within the Subject Space;

14.2.5                  The Transferee
is not a party of reasonable financial worth and/or financial stability in
light of the responsibilities involved under the Lease on the date consent is
requested;

14.2.6                  The proposed
Transfer would cause Landlord to be in violation of another lease or agreement
to which Landlord is a party, or would give an occupant of the Real Property a
right to cancel its lease; or

14.2.7                  Either the
proposed Transferee, or any person or entity which directly or indirectly,
controls, is controlled by, or is under common control with, the proposed
Transferee, (i) occupies space in the Project at the time of the request for
consent, (ii) is negotiating with Landlord to lease space in the Project at
such time, or (iii) has negotiated with Landlord during the twelve (12) month
period immediately preceding the Transfer Notice.

If Landlord consents to
any Transfer pursuant to the terms of this Section 14.2 (and does not exercise
any recapture rights Landlord may have under Section 14.4 of this Lease),
Tenant may within six (6) months after Landlord’s consent, but not later than
the expiration of said six-month period, enter into such Transfer of the
Premises or portion thereof, upon substantially the same terms and conditions
as are set forth in the Transfer Notice furnished by Tenant to Landlord
pursuant to Section 14.1 of this Lease, provided that if there are any changes
in the terms and conditions from those specified in the Transfer Notice (i)
such that Landlord would initially have been entitled to refuse its consent to
such Transfer under this Section 14.2, or (ii) which would cause the proposed
Transfer to be more favorable to the Transferee than the terms set forth in
Tenant’s original Transfer Notice, Tenant shall again submit the Transfer to
Landlord for its approval and other action under this Article 14 (including
Landlord’s right of recapture, if any, under Section 14.4 of this Lease).

14.3                           Transfer
Premium. If Landlord consents to a Transfer, as a condition thereto which
the parties hereby agree is reasonable, Tenant shall pay to Landlord fifty
percent (50%) of any “Transfer Premium,” as that term is defined in this
Section 14.3, received by Tenant from such Transferee. “Transfer Premium” shall mean all rent,
additional rent or other consideration payable by such Transferee in excess of
the Rent and Additional Rent payable by Tenant under this Lease on a per
rentable square foot basis if less than all of the Premises is transferred,
after deducting the reasonable expenses incurred by Tenant for (i) any reasonable
changes, alterations and improvements to the Premises in connection with the
Transfer (but only to the extent approved by Landlord), and (ii) any reasonable
brokerage commissions in connection with the Transfer (collectively, the “Subleasing Costs”). “Transfer Premium”
shall also include, but not be limited to, key money and bonus money paid by
Transferee to Tenant in connection with such Transfer, and any payment in
excess of fair market value for services rendered by Tenant to Transferee or
for assets, fixtures, inventory, equipment, or furniture transferred by Tenant
to Transferee in connection with such Transfer.

14.4                           Landlord’s
Option as to Subject Space. Notwithstanding anything to the contrary
contained in this Article 14, Landlord shall have the option, by giving written
notice to Tenant within thirty (30) days after receipt of any Transfer Notice,
to recapture the Subject Space; provided, however, in no event shall this
Section 14.4 apply to a transfer pursuant to Section 14.7 below. Such recapture
notice shall cancel and terminate this Lease with respect to the Subject Space
as of the date stated in the Transfer Notice as the effective date of the
proposed Transfer until the last day of the term of the Transfer as set forth
in the Transfer Notice. If this Lease shall be canceled with respect to less
than the entire Premises, the Rent reserved herein shall be prorated on the
basis of the number of rentable square feet retained by Tenant in proportion to
the number of rentable square feet contained in the Premises, and this Lease as
so amended shall continue thereafter in full force and effect, and upon request
of either party, the parties shall execute written confirmation of the same. If
Landlord declines, or fails to elect in a timely manner to recapture the
Subject Space under this Section 14.4, then, provided Landlord has consented to
the proposed Transfer, Tenant shall be entitled to proceed to transfer the
Subject Space to the proposed Transferee, subject to provisions of the last
paragraph of Section 14.2 of this Lease.

14.5                           Effect
of Transfer. If Landlord consents to a Transfer, (i) the terms and
conditions of this Lease shall in no way be deemed to have been waived or
modified, (ii) such consent shall not be deemed consent to any further Transfer
by either Tenant or a Transferee, (iii) Tenant shall deliver to Landlord,
promptly after execution, an original executed copy of all documentation
pertaining to the Transfer in form reasonably acceptable to Landlord, and (iv)
no Transfer relating to this Lease or agreement entered into with respect
thereto, whether with or without Landlord’s consent, shall relieve Tenant or
any guarantor of the Lease from liability under this Lease. Landlord or its
authorized representatives shall have the right at all reasonable times to
audit the books, records and papers of Tenant relating to any Transfer, and
shall have the right to make copies thereof. If the Transfer Premium respecting
any Transfer shall be found understated, Tenant shall, within thirty (30) days
after demand, pay the deficiency and Landlord’s costs of such audit.

14.6                           Additional
Transfers. Except as otherwise provided in Section 14.7 below, for purposes
of this Lease, the term “Transfer” shall also include (i) if Tenant is a
partnership, the withdrawal or change, voluntary, involuntary or by operation
of law, of fifty percent (50%) or more of the partners, or transfer of
twenty-five percent or more of
partnership interests, within a twelve (12)-month period, or the dissolution of
the partnership without immediate reconstitution thereof, and (ii) if
Tenant is a closely held corporation (i.e., whose stock is not publicly held
and not traded through an exchange or over the counter), (A) the dissolution,
merger, consolidation or other reorganization of Tenant, (B) the sale or other
transfer of more than an aggregate of fifty percent (50%) of the voting shares
of Tenant (other than to immediate family members by reason of gift or death),
within a twelve (12)-month period, or (C) the sale, mortgage, hypothecation or
pledge of more than an aggregate of fifty percent (50%) of the value of the
unencumbered assets of Tenant within a twelve (12) month period.

 15
 

14.7                           Affiliated
Companies/Restructuring of Business Organization. The assignment or
subletting by Tenant of all or any portion of this Lease or the Premises to (i)
a parent or subsidiary of Tenant, or (ii) any person or entity which controls,
is controlled by or under common control with Tenant, or (iii) any entity which
purchases all or substantially all of the assets of Tenant, or (iv) any entity
into which Tenant is merged or consolidated (all such persons or entities
described in (i), (ii), (iii) and (iv) being sometimes hereinafter referred to
as “Affiliates”) shall not be deemed a Transfer under this Article 14 (and
shall not entitle Landlord to exercise its recapture right pursuant to Section
14.4 above), provided that:

14.7.1                  Any such
Affiliate was not formed as a subterfuge to avoid the obligations of this
Article 14;

14.7.2                  Tenant gives
Landlord prior written notice of any such assignment or sublease to an
Affiliate;

14.7.3                  Any such
Affiliate has, as of the effective date of any such assignment or sublease, a
tangible net worth and net income, in the aggregate, computed in accordance
with generally accepted accounting principles (but excluding goodwill as an
asset), sufficient, in Landlord’s reasonable good faith opinion, to meet the
obligations imposed by the assignment or sublease;

14.7.4                  Any such
assignment or sublease shall be subject to all of the terms and provisions of
this Lease, and such assignee or sublessee shall assume, in a written document
reasonably satisfactory to Landlord and delivered to Landlord upon or prior to
the effective date of such assignment or sublease, all the obligations of
Tenant under this Lease; and

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

ARTICLE 15

SURRENDER; OWNERSHIP AND
REMOVAL OF TRADE FIXTURES

15.1                           Surrender
of Premises. No act or thing done by Landlord or any agent or employee of
Landlord during the Lease Term shall be deemed to constitute an acceptance by
Landlord of a surrender of the Premises unless such intent is specifically
acknowledged in a writing signed by Landlord. The delivery of keys to the
Premises to Landlord or any agent or employee of Landlord shall not constitute
a surrender of the Premises or effect a termination of this Lease, whether or
not the keys are thereafter retained by Landlord, and notwithstanding such delivery
Tenant shall be entitled to the return of such keys at any reasonable time upon
request until this Lease shall have been properly terminated. The voluntary or
other surrender of this Lease by Tenant, whether accepted by Landlord or not,
or a mutual termination hereof, shall not work a merger, and at the option of
Landlord shall operate as an assignment to Landlord of all subleases or
subtenancies affecting the Premises.

15.2                           Removal
of Tenant Property by Tenant. Upon the expiration of the Lease Term, or
upon any earlier termination of this Lease, Tenant shall, subject to the
provisions of this Article 15, quit and surrender possession of the Premises to
Landlord in as good order and condition as when Tenant took possession and as
thereafter improved by Landlord and/or Tenant, reasonable wear and tear and
repairs which are specifically made the responsibility of Landlord hereunder
excepted. Upon such expiration or termination, Tenant shall, without expense to
Landlord, remove or cause to be removed from the Premises all debris and
rubbish, and such items of furniture, equipment, free-standing cabinet work,
and other articles of personal property owned by Tenant or installed or placed
by Tenant at its expense in the Premises, and such similar articles of any
other persons claiming under Tenant, as Landlord may, in its sole discretion,
require to be removed, and Tenant shall repair at its own expense all damage to
the Premises and Building resulting from such removal.

ARTICLE 16

HOLDING OVER

If Tenant holds over
after the expiration of the Lease Term hereof, with or without the express or
implied consent of Landlord, such tenancy shall be from month-to-month only,
and shall not constitute a renewal hereof or an extension for any further term,
and in such case Base Rent shall be payable at a monthly rate equal to two
hundred percent (200%) of the Base Rent applicable during the last rental
period of the Lease Term under this Lease. Such month-to-month tenancy shall be
subject to every other term, covenant and agreement contained herein. Landlord
hereby expressly reserves the right to require Tenant to surrender possession
of the Premises to Landlord as provided in this Lease upon the expiration or
other termination of this Lease. The provisions of this Article 16 shall not be
deemed to limit or constitute a waiver of any other rights or remedies of
Landlord provided herein or at law. If Tenant fails to surrender the Premises
upon the termination or expiration of this Lease, in addition to any other
liabilities to Landlord accruing therefrom, Tenant shall protect, defend,
indemnify and hold Landlord harmless from all loss, costs (including reasonable
attorneys’ fees) and liability resulting from such failure, including, without
limiting the generality of the foregoing, any claims made by any succeeding
tenant founded upon such failure to surrender, and any lost profits to Landlord
resulting therefrom. Notwithstanding anything set forth in this Article 16 to
the contrary. Tenant shall have the one-time right to extend the initial Lease
Term for a period of up to three (3) months thereafter (“Temporary Extension Term”) by delivering
written notice of the exercise of such right at least three (3) months prior to
the expiration of the initial Lease Term, which notice shall specify the

 16
 

period of the Temporary Extension Term Tenant shall
select (which period shall be not less than one (1) month nor more than three
(3) months), and provided that all of the following conditions are satisfied:
(i) Tenant shall not have exercised its renewal right under the Extension
Option Rider; (ii) at Landlord’s option, in addition to all remedies available
to Landlord under this Lease, at law or in equity, Tenant is not in default
under this Lease (after expiration of any applicable notice and cure period) as
of the date Tenant delivers such notice to Landlord or the commencement of the
Temporary Extension Term; and (iii) such renewal right is personal to the
original Tenant executing this Lease (“Original
Tenant”) and any assignee that is an Affiliate of the Original
Tenant’s entire interest in this Lease pursuant to Section 14.7 of this Lease,
and may only be exercised by the Original Tenant or such Affiliate assignee, as
the case may be (and not by any other assignee, sublessee or other transferee
of Original Tenant’s interest in this Lease). If Tenant timely exercises such
renewal right, all of the terms and conditions of this Lease shall apply during
the Temporary Extension Term, provided, however, that (i) the monthly Base Rent
payable by Tenant during the Temporary Extension Term shall be equal to one
hundred fifty percent (150%) of monthly Base Rent applicable during the last
rental period of the Lease Term, and (ii) Tenant shall reimburse to Landlord
all actual, documented and reasonable legal fees and costs incurred in
connection with the documentation of such Temporary Extension Term

ARTICLE 17 

ESTOPPEL CERTIFICATES

Within ten (10) days
following a request in writing by Landlord, Tenant shall execute and deliver to
Landlord an estoppel certificate, which shall be substantially in the form of Exhibit E, attached hereto (or such
other form as may be required by any prospective mortgagee or purchaser of the
Project, or any portion thereof) indicating therein any exceptions thereto that
may exist at that time, and shall also contain any other information reasonably
requested by Landlord or Landlord’s mortgagee or prospective mortgagee or
purchasers Tenant shall execute and deliver whatever other instruments may be
reasonably required for such purposes. Failure of Tenant to execute and deliver
such estoppel certificate within such ten (10) day period shall constitute an
acknowledgment by Tenant that statements included in the estoppel certificate
delivered to Tenant by Landlord are true and correct, without exception. In
addition, at any time during the Lease Term, Landlord may require Tenant to
provide Landlord with a current financial statement and financial statements of
the two (2) years prior to the current financial statement year. Such
statements shall be prepared in accordance with generally accepted accounting
principles and, if such is the normal practice of Tenant, shall be audited by
an independent certified public accountant.

ARTICLE 18

SUBORDINATION

18.1                           Subordination.
This Lease is subject and subordinate to all present and future ground or
underlying leases of the Real Property and to the lien of any mortgages or
trust deeds, now or hereafter in force against the Real Property, if any, and
to all renewals, extensions, modifications, consolidations and replacements
thereof, and to all advances made or hereafter to be made upon the security of
such mortgages or mist deeds, unless the holders of such mortgages or trust
deeds, or the lessors under such ground lease or underlying leases, require in
writing that this Lease be superior thereto. Tenant covenants and agrees in the
event any proceedings are brought for the foreclosure of any such mortgage, or
if any ground or underlying lease is terminated, to attorn, without any deductions
or set-offs whatsoever, to the purchaser upon any such foreclosure sale, or to
the lessor of such ground or underlying lease, as the case may be, if so
requested to do so by such purchaser or lessor and/or if required to do so
pursuant to any SNDA executed by the Current Lender as defined in and pursuant
to Section 18.2 below, and to recognize such purchaser or lessor as the lessor
under this Lease. Tenant shall, within five (5) days of request by Landlord,
execute such further instruments or assurances as Landlord may reasonably deem
necessary to evidence or confirm the subordination or superiority of this Lease
to any such mortgages, trust deeds, ground leases or underlying leases. Tenant
hereby irrevocably authorizes Landlord to execute and deliver in the name of
Tenant any such instrument or instruments if Tenant fails to do so, provided
that such authorization shall in no way relieve Tenant from the obligation of
executing such instruments of subordination or superiority. Tenant waives the
provisions of any current or future statute, rule or law which may give or
purport to give Tenant any right or election to terminate or otherwise
adversely affect this Lease and the obligations of the Tenant hereunder in the
event of any foreclosure proceeding or sale.

18.2                           Existing
Agreement. Tenant hereby acknowledges that as of the date of execution of
this Lease, there is a deed of trust encumbering the Real Property in favor of
Corns Bank, N.A. (the “Current Lender”).
Concurrently with Tenant’s execution of this Lease, Tenant shall sign, notarize
and deliver to Landlord a subordination, non-disturbance and attornment
agreement substantially in the form of Exhibit
E attached hereto (the “SNDA”).
Landlord shall endeavor to cause the Current Lender to execute, notarize and
deliver to Tenant the SNDA, but Landlord shall not be in default under this
Lease and shall have no liability to Tenant whatsoever if Landlord is unable to
obtain and deliver to Tenant the SNDA executed by the Current Lender.

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ARTICLE 19

TENANT’S DEFAULTS;
LANDLORD’S REMEDIES

19.1                           Events
of Default by Tenant. All covenants and agreements to be kept or performed
by Tenant under this Lease shall be performed by Tenant at Tenant’s sole cost
and expense and without any reduction of Rent. The occurrence of any of the
following shall constitute a default of this Lease by Tenant:

19.1.1                  Any failure by
Tenant to pay any Rent or any other charge required to be paid under this
Lease, or any part thereof, when due, where such failure continues for four (4)
calendar days after written notice thereof by Landlord to Tenant; provided,
however, that any such notice shall be in lieu of, and not in addition to, any
notice required under California Code of Civil Procedure Section 1161 or any
similar or successor law; or

19.1.2                  Any failure by
Tenant to observe or perform any other provision, covenant or condition of this
Lease to be observed or performed by Tenant where such failure continues for
fifteen (15) days after written notice thereof from Landlord to Tenant; provided
however, that any such notice shall be in lieu of, and not in addition to, any
notice required under California Code of Civil Procedure Section 1161 or any
similar or successor law; and provided further that if the nature of such
default is such that the same cannot reasonably be cured within a fifteen
(15)-day period, Tenant shall not be deemed to be in default if it diligently
commences such cure within such period and thereafter diligently proceeds to
rectify and cure said default as soon as possible; or

19.1.3                  Abandonment or
vacation of the Premises by Tenant. Abandonment is herein defined to include,
but is not limited to, any absence by Tenant from the Premises for three (3)
business days or longer while in default of any provision of this Lease.

19.2                           Landlord’s
Remedies Upon Default. Upon the occurrence of any such default by Tenant,
Landlord shall have, in addition to any other remedies available to Landlord at
law or in equity, the option to pursue any one or more of the following
remedies, each and all of which shall be cumulative and nonexclusive, without
any notice or demand whatsoever.

19.2.1                  Terminate this
Lease, in which event Tenant shall immediately surrender the Premises to
Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any
other remedy which it may have for possession or arrearages in rent, enter upon
and take possession of the Premises and expel or remove Tenant and any other
person who may be occupying the Premises or any part thereof, without being
liable for prosecution or any claim or damages therefor; and Landlord may
recover from Tenant the following:

(i)                                     The
worth at the time of award of any unpaid rent which has been earned at the time
of such termination; plus

(ii)                                  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 rental loss that Tenant proves could have been reasonably avoided; plus

(iii)                               The
worth at the time of award of the amount by which the unpaid rent for the
balance of the Lease Term after the time of award exceeds the amount of such
rental loss that Tenant proves could have been reasonably avoided; plus

(iv)                              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,
specifically including but not limited to, brokerage commissions and
advertising expenses incurred, expenses of remodeling the Premises or any
portion thereof for a new tenant, whether for the same or a different use, and
any special concessions made to obtain a new tenant; and

(v)                                 At
Landlord’s election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable law.

The term “rent” as used in this Section 19.2 shall be
deemed to be and to mean all sums of every nature required to be paid by Tenant
pursuant to the terms of this Lease, whether to Landlord or to others. As used
in Sections 19.2.1(i) and (ii), above, the “worth at the time of award” shall
be computed by allowing interest at the Interest Rate set forth in Section 4.5
of this Lease. As used in Section 19.2.1(iii) above, the “worth at the time of
award” shall be 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%).

19.2.2                  Landlord shall
have the remedy described in California Civil Code Section 1951.4 (lessor may
continue lease in effect after lessee’s breach and abandonment and recover rent
as it becomes due, if lessee has the right to sublet or assign, subject only to
reasonable limitations). Accordingly, if Landlord does not elect to terminate
this Lease on account of any default by Tenant, Landlord may, from time to
time, without terminating this Lease, enforce all of its rights and remedies
under this Lease, including the right to recover all rent as it becomes due.

19.2.3                  Landlord may,
but shall not be obligated to, make any such payment or perform or otherwise
cure any such obligation, provision, covenant or condition on Tenant’s part to
be observed or performed (and may enter the Premises for such purposes). In the
event of Tenant’s failure to perform any of its obligations or

 18
 

covenants under this Lease, and such failure to
perform poses a material risk of injury or harm to persons or damage to or loss
of property, then Landlord shall have the right to cure or otherwise perform
such covenant or obligation at any time after such failure to perform by
Tenant, whether or not any such notice or cure period set forth in Section 19.1
above has expired. Any such actions undertaken by Landlord pursuant to the
foregoing provisions of this Section 19.2.3 shall not be deemed a waiver of
Landlord’s rights and remedies as a result of Tenant’s failure to perform and
shall not release Tenant from any of its obligations under this Lease.

19.3                           Payment
by Tenant. Tenant shall pay to Landlord, within fifteen (15) days after
delivery by Landlord to Tenant of statements therefor: (i) sums equal to
expenditures reasonably made and obligations incurred by Landlord in connection
with Landlord’s performance or cure of any of Tenant’s obligations pursuant to
the provisions of Section 19.2.3 above; and (ii) sums equal to all expenditures
made and obligations incurred by Landlord in collecting or attempting to
collect the Rent or in enforcing or attempting to enforce any rights of
Landlord under this Lease or pursuant to law, including, without limitation,
all legal fees and other amounts so expended. Tenant’s obligations under this
Section 19.3 shall survive the expiration or sooner termination of the Lease
Term.

19.4                           Sublessees
of Tenant. Whether or not Landlord elects to terminate this Lease on
account of any default by Tenant, as set forth in this Article 19, Landlord
shall have the right to terminate any and all subleases, licenses, concessions
or other consensual arrangements for possession entered into by Tenant and
affecting the Premises or may, in Landlord’s sole discretion, succeed to Tenant’s
interest in such subleases, licenses, concessions or arrangements. In the event
of Landlord’s election to succeed to Tenant’s interest in any such subleases,
licenses, concessions or arrangements, Tenant shall, as of the date of notice
by Landlord of such election, have no further right to or interest in the rent
or other consideration receivable thereunder.

19.5                           Waiver
of Default. No waiver by Landlord of any violation or breach by Tenant of
any of the terms, provisions and covenants herein contained shall be deemed or
construed to constitute a waiver of any other or later violation or breach by
Tenant of the same or any other of the terms, provisions, and covenants herein
contained. Forbearance by Landlord in enforcement of one or more of the
remedies herein provided upon a default by Tenant shall not be deemed or
construed to constitute a waiver of such default. The acceptance of any Rent
hereunder by Landlord following the occurrence of any default, whether or not
known to Landlord, shall not be deemed a waiver of any such default, except
only a default in the payment of the Rent so accepted.

19.6                           Efforts
to Relet. For the purposes of this Article 19, Tenant’s right to possession
shall not be deemed to have been terminated by efforts of Landlord to relet the
Premises, by its acts of maintenance or preservation with respect to the
Premises, or by appointment of a receiver to protect Landlord’s interests
hereunder. The foregoing enumeration is not exhaustive, but merely illustrative
of acts which may be performed by Landlord without terminating Tenant’s right
to possession.

ARTICLE 20

SECURITY DEPOSIT

Concurrent with Tenant’s
execution of this Lease, Tenant shall deposit with Landlord a security deposit
(the “Security Deposit”) in the
amount set forth in Section 10 of the Summary. The Security Deposit shall be
held by Landlord as security for the faithful performance by Tenant of all the
terms, covenants, and conditions of this Lease to be kept and performed by
Tenant during the Lease Term. If Tenant defaults with respect to any provisions
of this Lease, including, but not limited to, the provisions relating to the
payment of Rent, Landlord may, but shall not be required to, use, apply or
retain all or any part of the Security Deposit for the payment of any Rent or
any other sum in default, or for the payment of any amount that Landlord may
spend or become obligated to spend by reason of Tenant’s default, or to
compensate Landlord for any other loss or damage that Landlord may suffer by
reason of Tenant’s default. If any portion of the Security Deposit is so used
or applied, Tenant shall, within five (5) days after written demand therefor,
deposit cash with Landlord in an amount sufficient to restore the Security
Deposit to its original amount, and Tenant’s failure to do so shall be a
default under this Lease. If Tenant shall fully and faithfully perform every
provision of this Lease to be performed by it, the Security Deposit, or any
balance thereof, shall be returned to Tenant, or, at Landlord’s option, to the
last assignee of Tenant’s interest hereunder, within sixty (60) days following
the expiration of the Lease Term. Tenant shall not be entitled to any interest
on the Security Deposit. Tenant hereby waives the provisions of Section 1950.7
of the California Civil Code, and all other provisions of law, now or hereafter
in force, which provide that Landlord may claim from a security deposit only
those sums reasonably necessary to remedy defaults in the payment of rent, to
repair damage caused by Tenant or to clean the Premises, it being agreed that
Landlord may, in addition, claim those sums reasonably necessary to compensate
Landlord for any other loss or damage, foreseeable or unforeseeable, caused by
the act or omission of Tenant or any officer, employee, agent or invitee of
Tenant.

ARTICLE 21

COMPLIANCE WITH LAW

Tenant shall not do
anything or suffer anything to be done in or about the Premises which will in
any way conflict with any applicable laws now in force or which may hereafter
be enacted or promulgated. At its sole cost and expense, Tenant shall promptly
comply and promptly cause the Premises to comply with all such applicable laws,
including, without limitation, the making of any improvements and alterations
to the Premises (including those considered to be capital improvements) and
those laws pertaining to Hazardous Materials; provided, however, that

 19
 

the making of structural changes to the Building or
changes to the common areas of the Building or Real Property which are not
necessitated by any improvements and Alterations to the Premises installed by
or on behalf of Tenant, by any specific act or negligence of Tenant or Tenant’s
agents, employees, licensees or invitees, and/or by Tenant’s specific manner or
use of the Premises, shall be performed by Landlord and the cost thereof shall
be included in Operating Expenses except to the extent specifically excluded in
Section 4.2.4 of this Lease. In addition, Tenant shall fully comply with all
present or future programs intended to manage parking, transportation or
traffic in and around the Real Property, and in connection therewith, Tenant
shall take responsible action for the transportation planning and management of
all employees located at the Premises by working directly with Landlord, any
governmental transportation management organization or any other
transportation-related committees or entities. The judgment of any court of
competent jurisdiction or the admission of Tenant in any judicial action,
regardless of whether Landlord is a party thereto, that Tenant has violated any
of said governmental measures, shall be conclusive of that fact as between
Landlord and Tenant.

ARTICLE 22

ENTRY BY LANDLORD

Landlord reserves the right
at all reasonable times and upon reasonable notice to Tenant to enter the
Premises to: (i) inspect them; (ii) show the Premises to prospective
purchasers, mortgagees or tenants, or to the ground or underlying lessors;
(iii) to post notices of nonresponsibility; or (iv) alter, improve or repair
the Premises or the Building if necessary to comply with current building codes
or other applicable laws, or for structural alterations, repairs or
improvements to the Building, or as Landlord may otherwise reasonably desire or
deem necessary. Notwithstanding anything to the contrary contained in this
Article 22, Landlord may enter the Premises at any time, without notice to
Tenant, in emergency situations and/or to perform janitorial or other services
required of Landlord pursuant to this Lease. Subject to Section 6.4 above, any
such entries shall be without the abatement of Rent and shall include the right
to take such reasonable steps as required to accomplish the stated purposes;
provided, however, that Landlord agrees to use commercially reasonable efforts
to minimize any material, adverse interference with Tenant’s normal business
functions within the Premises during any such entry in the Premises. Tenant
hereby waives any claims for damages or for any injuries or inconvenience to or
interference with Tenant’s business, lost profits, any loss of occupancy or
quiet enjoyment of the Premises, and any other loss occasioned thereby. For
each of the above purposes, Landlord shall at all times have a key with which to
unlock all the doors in the Premises, excluding Tenant’s vaults, safes and
special security areas designated in advance by Tenant. In an emergency,
Landlord shall have the right to enter without notice and use any means that
Landlord may deem proper to open the doors in and to the Premises. Any entry
into the Premises in the manner hereinbefore described shall not be deemed to
be a forcible or unlawful entry into, or a detainer of, the Premises, or an
actual or constructive eviction of Tenant from any portion of the Premises.

ARTICLE 23

TENANT PARKING

Tenant shall rent
throughout the Lease Term the number of unreserved parking passes set forth in
Section 11 of the Summary, located in those portions of the Parking Facilities
as may be designated by Landlord from time to time. Tenant shall pay to
Landlord for the use of such parking passes, on a monthly basis, the prevailing
rate charged from time to time by Landlord or Landlord’s parking operator for
parking passes in the Parking Facilities where such parking passes are located.
Notwithstanding the foregoing to the contrary, Tenant shall not be required to
pay any parking charges for the use of Tenant’s unreserved, uncovered parking
passes during the initial Lease Term (but Tenant shall be liable for any tax or
other charges described below), but during the Option Term (if exercised
pursuant to the Extension Option Rider), Tenant shall pay to Landlord for the
use of such unreserved, uncovered parking passes, on a monthly basis, the
prevailing rate charged from time to time by Landlord or Landlord’s parking
operator for unreserved, uncovered parking passes in the Parking Facilities
where such unreserved, uncovered parking passes are located. Tenant’s continued
right to use the parking passes is conditioned upon Tenant abiding by all rules
and regulations which are prescribed from time to time for the orderly
operation and use of the Parking Facilities and upon Tenant’s cooperation in
seeing that Tenant’s employees and visitors also comply with such rules and
regulations. In addition, Landlord may assign any parking spaces and/or make
all or a portion of such spaces reserved or institute an attendant-assisted
tandem parking program and/or valet parking program if Landlord determines in
its sole discretion that such is necessary or desirable for orderly and
efficient parking. Landlord specifically reserves the right, from time to time,
to change the size, configuration, design, layout, location and all other
aspects of the Parking Facilities (including, but not limited to, the location
of Tenant’s parking passes), and Tenant acknowledges and agrees that Landlord,
from time to time, may, without incurring any liability to Tenant and without
any abatement of Rent under this Lease temporarily close-off or restrict access
to the Parking Facilities, or temporarily relocate Tenant’s parking spaces to
other parking structures and/or surface parking areas within a reasonable
distance from the Parking Facilities, for purposes of permitting or
facilitating any such construction, alteration or improvements or to
accommodate or facilitate renovation, alteration, construction or other
modification of other improvements or structures located on the Real Property.
Landlord may delegate its responsibilities hereunder to a parking operator in
which case such parking operator shall have all the rights of control
attributed hereby to Landlord. The parking rates charged by Landlord for Tenant’s
parking passes shall be exclusive of any parking tax or other charges imposed
by governmental authorities in connection with the use of such parking, which
taxes and/or charges shall be paid directly by Tenant or the parking users, or,
if directly imposed against Landlord, Tenant shall reimburse Landlord for all
such taxes and/or charges within ten (10) days after Tenant’s receipt of the
invoice from Landlord. The parking passes provided to Tenant pursuant to this
Article 23 are provided solely for use by Tenant’s own personnel and such
passes may not be transferred, assigned,

 20
 

subleased or otherwise alienated by Tenant without
Landlord’s prior approval. Landlord agrees to provide at least ten (10) visitor
parking spaces in the location depicted on Exhibit
G, which visitor parking spaces shall be provided on a
non-exclusive basis (vis-a-vis Tenant and the other tenants of the Project).

ARTICLE 24

MISCELLANEOUS PROVISIONS

24.1                           Terms;
Captions. The necessary grammatical changes required to make the provisions
hereof apply either to corporations or partnerships or individuals, men or
women, as the case may require, shall in all cases be assumed as though in each
case fully expressed. The captions of Articles and Sections are for convenience
only and shall not be deemed to limit, construe, affect or alter the meaning of
such Articles and Sections.

24.2                           Binding
Effect. Each of the provisions of this Lease shall extend to and shall, as
the case may require, bind or inure to the benefit not only of Landlord and of
Tenant, but also of their respective successors or assigns, provided this
clause shall not permit any assignment by Tenant contrary to the provisions of
Article 14 of this Lease.

24.3                           No
Waiver. No waiver of any provision of this Lease shall be implied by any
failure of a party to enforce any remedy on account of the violation of such
provision, even if such violation shall continue or be repeated subsequently,
any waiver by a party of any provision of this Lease may only be in writing,
and no express waiver shall affect any provision other than the one specified
in such waiver and that one only for the time and in the manner specifically
stated. No receipt of monies by Landlord from Tenant after the termination of
this Lease shall in any way alter the length of the Lease Term or of Tenant’s
right of possession hereunder or after the giving of any notice shall
reinstate, continue or extend the Lease Term or affect any notice given Tenant
prior to the receipt of such monies, it being agreed that after the service of
notice or the commencement of a suit or after final judgment for possession of
the Premises, Landlord may receive and collect any Rent due, and the payment of
said Rent shall not waive or affect said notice, suit or judgment.

24.4                           Modification
of Lease. Should any current or prospective mortgagee or ground lessor for
the Real Property require a modification or modifications of this Lease, which
modification or modifications will not cause an increased cost or expense to
Tenant or in any other way materially and adversely change the rights and
obligations of Tenant hereunder, then and in such event, Tenant agrees that
this Lease may be so modified and agrees to execute whatever documents are
required therefor and deliver the same to Landlord within ten (10) days
following the request therefor. Should Landlord or any such current or
prospective mortgagee or ground lessor require execution of a short form of
Lease for recording, containing, among other customary provisions, the names of
the parties, a description of the Premises and the Lease Term, Tenant agrees to
execute such short form of Lease and to deliver the same to Landlord within ten
(10) days following the request therefor.

24.5                           Transfer
of Landlord’s Interest. Tenant acknowledges that Landlord has the right to
transfer all or any portion of its interest in the Real Property, the Building
and/or in this Lease, and Tenant agrees that in the event of any such transfer,
Landlord shall automatically be released from all liability under this Lease
arising after the date of the Transfer and Tenant agrees to look solely to such
transferee for the performance of Landlord’s obligations hereunder after the
date of transfer. The liability of any transferee of Landlord shall be limited
to the interest of such transferee in the Real Property and such transferee
shall be without personal liability under this Lease, and Tenant hereby
expressly waives and releases such personal liability on behalf of itself and
all persons claiming by, through or under Tenant. Tenant further acknowledges
that Landlord may assign its interest in this Lease to a mortgage lender as
additional security and agrees that such an assignment shall not release
Landlord from its obligations hereunder and that Tenant shall continue to look
to Landlord for the performance of its obligations hereunder.

24.6                           Prohibition
Against Recording. Except as provided in Section 24.4 of this Lease,
neither this Lease, nor any memorandum, affidavit or other writing with respect
thereto, shall be recorded by Tenant or by anyone acting through, under or on
behalf of Tenant, and the recording thereof in violation of this provision
shall make this Lease null and void at Landlord’s election.

24.7                           Landlord’s
Title; Air Rights. Landlord’s title is and always shall be paramount to the
title of Tenant. Nothing herein contained shall empower Tenant to do any act
which can, shall or may encumber the title of Landlord. No rights to any view
or to light or air over any property, whether belonging to Landlord or any
other person, are granted to Tenant by this Lease.

24.8                           Tenant’s
Signs.

24.8.1                  Interior
Signs. Tenant shall be entitled, at Landlord’s initial cost and expense, to
(i) one (1) identification sign on or near the entry doors of the Premises, and
(ii) for multi-tenant floors, one (1) identification or directional sign, as
designated by Landlord, in the elevator lobby on the floor on which the
Premises are located; provided, however, that any Landlord approved changes to
such identification signage shall be at Tenant’s sole cost and expense. Such
signs shall be installed by a signage contractor designated by Landlord. The
location, quality, design, style, lighting and size of such signs shall be
consistent with the Landlord’s Building standard signage program and shall be
subject to Landlord’s prior written approval, in its reasonable discretion.
Upon the expiration or earlier termination of this Lease, Tenant shall be
responsible, at its sole cost and expense, for the removal of such signage and
the repair of all damage to the Building caused by such removal. Except for
such identification signs, Tenant may not install any signs on the exterior or
roof of the Building or the common areas of the Building or the Real Property.
Any signs, window coverings, or blinds (even if the same are located behind the

 21
 

Landlord approved window coverings for the Building),
or other items visible from the exterior of the Premises or Building are
subject to the prior approval of Landlord, in its sole and absolute discretion.

24.8.2                  Monument Sign.
Subject to the approval of all applicable governmental and quasi-governmental
entities, and subject to all applicable governmental and quasi-governmental
laws, rules, regulations and codes, Landlord hereby grants Tenant the
non-exclusive right to have one (1) identification sign (“Tenant’s Name Sign”) containing the name “1st Pacific Bank of California” on a position to
be determined by Landlord on the Building’s monument sign located adjacent to
Evening Creek Drive in front of the Project (the “Monument Sign”). The design, size, specifications, graphics,
materials, manner of affixing, colors and lighting (if applicable) of Tenant’s
Name Sign shall be (i) consistent with the project sign criteria attached
hereto as Exhibit F and
consistent with other signs to be placed on the Monument Sign and the quality
and appearance of the Real Property and (ii) subject to the approval of all
applicable governmental authorities, and Landlord’s reasonable approval.
Landlord shall install Tenant’s Name Sign at Tenant’s cost. In addition, Tenant
shall pay to Landlord, within thirty (30) days after demand, from time to time,
all other costs attributable to the fabrication, installation, insurance,
lighting (if applicable), maintenance and repair of Tenant’s Name Sign on the
Monument Sign. The signage right granted to Tenant under this Section 24.8.2 is
personal to the Original Tenant and any assignee that is an Affiliate of
Original Tenant’s entire interest in this Lease pursuant to Section 14.7 of
this Lease (but any name change Tenant’s Name Sign to reflect the name of such
Affiliate assignee shall be subject to Landlord’s approval, which shall not be
unreasonably withheld or delayed) and may not be exercised or used by or
assigned to any other person or entity. In addition, Original Tenant (or such
Affiliate assignee, as the case may be) shall no longer have any right to
Tenant’s Name Sign on the Monument Sign if at any time during the Lease Term
the Original Tenant (or such Affiliate assignee, as the case may be) does not
lease and occupy the entire Premises. Upon the expiration or sooner termination
of this Lease, or upon the earlier termination of Tenant’s signage right under
this Section 24.8.2, Landlord shall have the right to permanently remove Tenant’s
Name Sign from the Monument Sign and to repair all damage to the Monument Sign
resulting from such removal and restore the affected area to its original
condition existing prior to the installation of Tenant’s Name Sign, and Tenant
shall reimburse Landlord for the costs thereof.

24.9                           Relationship
of Parties. Nothing contained in this Lease shall be deemed or construed by
the parties hereto or by any third party to create the relationship of
principal and agent, partnership, joint venturer or any association between
Landlord and Tenant, it being expressly understood and agreed that neither the
method of computation of Rent nor any act of the parties hereto shall be deemed
to create any relationship between Landlord and Tenant other than the
relationship of landlord and tenant.

24.10                     Application
of Payments. Landlord shall have the right to apply payments received from
Tenant pursuant to this Lease, regardless of Tenant’s designation of such
payments, to satisfy any obligations of Tenant hereunder, in such order and
amounts as Landlord, in its sole discretion, may elect.

24.11                     Time of
Essence. Time is of the essence of this Lease and each of its provisions.

24.12                     Partial
Invalidity. If any term, provision or condition contained in this Lease
shall, to any extent, be invalid or unenforceable, the remainder of this Lease,
or the application of such term, provision or condition to persons or
circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.

24.13                     No
Warranty. In executing and delivering this Lease, Tenant has not relied on
any representation, including, but not limited to, any representation
whatsoever as to the amount of any item comprising Additional Rent or the
amount of the Additional Rent in the aggregate or that Landlord is furnishing
the same services to other tenants, at all, on the same level or on the same
basis, or any warranty or any statement of Landlord which is not set forth
herein or in one or more of the Exhibits attached hereto.

24.14                     Landlord
Exculpation. It is expressly understood and agreed that notwithstanding
anything in this Lease to the contrary, and notwithstanding any applicable law
to the contrary, the liability of Landlord and the Landlord Parties hereunder
(including any successor landlord) and any recourse by Tenant against Landlord
or the Landlord Parties shall be limited solely and exclusively to an amount
which is equal to the interest of Landlord in the Real Property, and neither Landlord,
nor any of the Landlord Parties shall have any personal liability therefor, and
Tenant hereby expressly waives and releases such personal liability on behalf
of itself and all persons claiming by, through or under Tenant.

24.15                     Entire
Agreement. It is understood and acknowledged that there are no oral
agreements between the parties hereto affecting this Lease and this Lease
supersedes and cancels any and all previous negotiations, arrangements,
brochures, agreements and understandings, if any, between the parties hereto or
displayed by Landlord to Tenant with respect to the subject matter thereof, and
none thereof shall be used to interpret or construe this Lease. This Lease and
any side letter or separate agreement executed by Landlord and Tenant in
connection with this Lease and dated of even date herewith contain all of the
terms, covenants, conditions, warranties and agreements of the parties relating
in any manner to the rental, use and occupancy of the Premises, shall be
considered to be the only agreement between the parties hereto and their
representatives and agents, and none of the terms, covenants, conditions or
provisions of this Lease can be modified, deleted or added to except in writing
signed by the parties hereto. All negotiations and oral agreements acceptable
to both parties have been merged into and are included herein. There are no
other representations or warranties between the parties, and all reliance with
respect to representations is based totally upon the representations and agreements
contained in this Lease.

24.16                     Right to
Lease. Landlord reserves the absolute right to effect such other tenancies
in the Buildings, Adjacent Building (if and when constructed) and/or in any
other building and/or any other portion of the

 22
 

Real Property as Landlord in the exercise of its sole
business judgment shall determine to best promote the interests of the Real
Property. Tenant does not rely on the fact, nor does Landlord represent, that
any specific tenant or type or number of tenants shall, during the Lease Term,
occupy any space in the Building or Real Property.

24.17                     Force
Majeure. Any prevention, delay or stoppage due to strikes, lockouts, labor
disputes, acts of God, inability to obtain services, labor, or materials or
reasonable substitutes therefor, governmental actions, civil commotions, fire
or other casualty, and other causes beyond the reasonable control of the party
obligated to perform, except with respect to the obligations imposed with
regard to Rent and other charges to be paid by Tenant pursuant to this Lease
and except with respect to Tenant’s obligations under the Tenant Work Letter
(collectively, the “Force Majeure”),
notwithstanding anything to the contrary contained in this Lease, shall excuse
the performance of such party for a period equal to any such prevention, delay
or stoppage and, therefore, if this Lease specifies a time period for
performance of an obligation of either party, that time period shall be
extended by the period of any delay in such party’s performance caused by a
Force Majeure.

24.18                     Waiver of
Redemption by Tenant. Tenant hereby waives for Tenant and for all those
claiming under Tenant all right now or hereafter existing to redeem by order or
judgment of any court or by any legal process or writ, Tenant’s right of
occupancy of the Premises after any termination of this Lease.

24.19                     Notices.
All notices, demands, statements or communications (collectively, “Notices”) given or required to be given by
either party to the other hereunder shall be in writing, shall be sent by
United States certified or registered mail, postage prepaid, return receipt
requested, or delivered personally (i) to Tenant at the appropriate address set
forth in Section 5 of the Summary, or to such other place as Tenant may from
time to time designate in a Notice to Landlord; or (ii) to Landlord at the
addresses set forth in Section 3 of the Summary, or to such other firm or to
such other place as Landlord may from time to time designate in a Notice to
Tenant. Any Notice will be deemed given on the date it is mailed as provided in
this Section 24.19 or upon the date personal delivery is made. If Tenant is
notified of the identity and address of Landlord’s mortgagee or ground or
underlying lessor, Tenant shall give to such mortgagee or ground or underlying
lessor written notice of any default by Landlord under the terms of this Lease
by registered or certified mail, and such mortgagee or ground or underlying
lessor shall be given a reasonable opportunity to cure such default prior to Tenant’s
exercising any remedy available to Tenant.

24.20                     Joint and
Several. If there is more than one Tenant, the obligations imposed upon
Tenant under this Lease shall be joint and several.

24.21                     Authority.
If Tenant is a corporation or partnership, each individual executing this Lease
on behalf of Tenant hereby represents and warrants that Tenant is a duly formed
and existing entity qualified to do business in the state in which the Real
Property is located and that Tenant has full right and authority to execute and
deliver this Lease and that each person signing on behalf of Tenant is
authorized to do so.

24.22                     Jury
Trial; Attorneys’ Fees. IF EITHER PARTY COMMENCES LITIGATION AGAINST THE
OTHER FOR THE SPECIFIC PERFORMANCE OF THIS LEASE, FOR DAMAGES FOR THE BREACH
HEREOF OR OTHERWISE FOR ENFORCEMENT OF ANY REMEDY HEREUNDER, THE PARTIES HERETO
AGREE TO AND HEREBY DO WAIVE ANY RIGHT TO A TRIAL BY JURY. In the event of any
such commencement of litigation, the prevailing party shall be entitled to
recover from the other party such costs and reasonable attorneys’ fees as may
have been incurred, including any and all costs incurred in enforcing,
perfecting and executing such judgment.

24.23                     Governing
Law. This Lease shall be construed and enforced in accordance with the laws
of the state in which the Real Property is located.

24.24                     Submission
of Lease. Submission of this instrument for examination or signature by
Tenant does not constitute a reservation of or an option for lease, and it is
not effective as a lease or otherwise until execution and delivery by both
Landlord and Tenant.

24.25                     Brokers.
Landlord and Tenant hereby warrant to each other that they have had no dealings
with any real estate broker or agent in connection with the negotiation of this
Lease, excepting only the real estate brokers or agents specified in Section 12
of the Summary (the “Brokers”),
and that they know of no other real estate broker or agent who is entitled to a
commission in connection with this Lease. Each party agrees to indemnify and defend
the other party against and hold the other party harmless from any and all
claims, demands, losses, liabilities, lawsuits, judgments, and costs and
expenses (including without limitation reasonable attorneys’ fees) with respect
to any leasing commission or equivalent compensation alleged to be owing on
account of the indemnifying party’s dealings with any real estate broker or
agent other than the Brokers.

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

24.27                     Building
Name and Signage. Landlord shall have the right at any time to change the
name(s) of the Buildings and Real Property and to install, affix and maintain
any and all signs on the exterior and on the interior

 23
 

of the Buildings and any portion of the Real Property
as Landlord may, in Landlord’s sole discretion, desire. Tenant shall not use
the names of the Buildings or Real Property or use pictures or illustrations of
the Buildings or Real Property in advertising or other publicity, without the
prior written consent of Landlord.

24.28                     Building
Directory. At Tenant’s cost, Landlord shall include Tenant’s name and
location in the Building on one (1) line on the Building directory.

24.29                     Confidentiality.
Tenant acknowledges that the content of this Lease and any related documents
are confidential information. Tenant shall keep such confidential information
strictly confidential and shall not disclose such confidential information to
any person or entity other than Tenant’s financial, legal, and space planning
consultants.

24.30                     Landlord’s
Construction. It is specifically understood and agreed that Landlord has no
obligation and has made no promises to alter, remodel, improve, renovate,
repair or decorate the Premises, Buildings, Real Property, or any part thereof
and that no representations or warranties respecting the condition of the
Premises, the Buildings or the Real Property have been made by Landlord to
Tenant, except as specifically set forth in this Lease. Tenant acknowledges
that prior to and during the Lease Term, Landlord (and/or any common area
association) will be completing construction and/or demolition work pertaining
to various portions of the Buildings, Premises, and/or Real Property, including
without limitation the Parking Facilities, landscaping and tenant improvements
for premises for other tenants and, at Landlord’s sole election, such other
buildings (including the Adjacent Building), parking facilities, improvements,
landscaping and other facilities within or as part of the Project as Landlord
(and/or such common area association) shall from time to time desire
(collectively, the “Construction”).
In connection with such Construction, Landlord may, among other things, erect
scaffolding or other necessary structures in the Building, limit or eliminate
access to portions of the Real Property, including portions of the common
areas, or perform work in the Building and/or Real Property, which work may
create noise, dust or leave debris in the Building and/or Real Property. Tenant
hereby agrees that such Construction and Landlord’s actions in connection with
such Construction shall in no way constitute a constructive eviction of Tenant
nor entitle Tenant to any abatement of Rent. Landlord shall have no
responsibility or for any reason be liable to Tenant for any direct or indirect
injury to or interference with Tenant’s business arising from such
Construction, nor shall Tenant be entitled to any compensation or damages from
Landlord for loss of the use of the whole or any part of the Premises or of
Tenant’s personal property or improvements resulting from such Construction or
Landlord’s actions in connection with such Construction, or for any
inconvenience or annoyance occasioned by such Construction or Landlord’s
actions in connection with such Construction.

IN WITNESS WHEREOF,
Landlord and Tenant have caused this Lease to be executed the day and date
first above written.

	
  

  	
  “Landlord”:

  	
   

  
	
   

  	
   

  
	
   

  	
  LEGACY SABRE SPRINGS, LLC, a California limited
  liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Legacy Partners 2343 L.P., a California limited
  partnership, its managing member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gary Rossi

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Gary Rossi

  
	
   

  	
   

  	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “Tenant”:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  1ST PACIFIC
  BANK OF CALIFORNIA,

  a California corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ A. Vincent Siciliano

  
	
   

  	
   

  	
  Name:

  	
  A. Vincent Siciliano

  
	
   

  	
   

  	
  Its:

  	
  CEO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
								

 

*** If Tenant is a CORPORATION, the authorized officers must sign on
behalf of the corporation and indicate the capacity in which they are signing.
The Lease must be executed by the president or vice president and the secretary
or assistant secretary, unless the bylaws or a resolution of the board of
directors shall otherwise provide, in which event, the bylaws or a certified
copy of the resolution, as the case may be, must be attached to this Lease.

 24

EXHIBIT A

OUTLINE OF FLOOR PLAN OF
PREMISES

 A-1

EXHIBIT A-1

CONCEPTUAL SITE PLAN OF
REAL PROPERTY

 A-1-1

EXHIBIT
B

TENANT
WORK LETTER

This Tenant Work
Letter (“Tenant Work Letter”) sets
forth the terms and conditions relating to the construction of improvements for
the Premises. All references in this Tenant Work Letter to the “Lease” shall mean the relevant portions of
the Lease to which this Tenant Work Letter is attached as Exhibit B.

SECTION
1

BASE,
SHELL AND CORE

Landlord has
previously constructed the base, shell and core (i) of the Premises and (ii) of
the floor(s) of the Building on which the Premises are located (collectively,
the “Base, Shell and Core”), and
Tenant shall accept the Base, Shell and Core in its current “As-Is” condition
existing as of the date of the Lease and the Lease Commencement Date. Except
for the Tenant Improvement Allowance set forth below, Landlord shall not be
obligated to make or pay for any alterations or improvements to the Premises,
the Building or the Real Property.

SECTION
2

TENANT
IMPROVEMENTS

2.1               Tenant
Improvement Allowance. Tenant shall be entitled to a one-time tenant
improvement allowance (the “Tenant
Improvement Allowance”) in the amount of up to, but not exceeding
Forty Dollars ($40.00) per usable square foot of the Premises (ie., up
to One Hundred Eighty-Six Thousand Five Hundred Sixty Dollars ($186,560.00),
based on 4,664 usable square feet in the Premises), for the costs relating to
the initial design and construction of Tenant’s improvements which are
permanently affixed to the Premises (the “Tenant
Improvements”). In no event shall Landlord be obligated to make
disbursements pursuant to this Tenant Work Letter in a total amount which
exceeds the Tenant Improvement Allowance. Tenant shall not be entitled to
receive any cash payment or credit against Rent or otherwise for any portion of
the Tenant Improvement Allowance which is not used to pay for the Tenant
Improvement Allowance Items (as such term is defined below).

2.2               Disbursement of
the Tenant Improvement Allowance. Except as otherwise set forth in this
Tenant Work Letter, the Tenant Improvement Allowance shall be disbursed by
Landlord (each of which disbursement shall be made pursuant to Landlord’s
standard disbursement process), only for the following items and costs
(collectively, the “Tenant Improvement
Allowance Items”):

2.2.1        payment of the fees of the
“Architect” and the “Engineers,” as those terms are defined in
Section 3.1 of this Tenant Work Letter (provided, however, that only an amount
not to exceed Three Dollars ($3.00) per usable square foot of the Premises
(i.e., up to Thirteen Thousand Nine Hundred Ninety-Two Dollars ($13,992.00)
based on 4,664 usable square feet of the Premises) may be deducted from the
Tenant Improvement Allowance to pay for such fees), and payment of the fees
incurred by, and the cost of documents and materials supplied by, Landlord and
Landlord’s consultants in connection with the preparation and review of the “Construction Drawings,” as that term is
defined in Section 3.1 of this Tenant Work Letter;

2.2.2        the payment of plan check,
permit and license fees relating to construction of the Tenant Improvements;

2.2.3        the cost of construction
of the Tenant Improvements, including, without limitation, contractors’ fees
and general conditions, testing and inspection costs, costs of utilities, trash
removal, parking and hoists, and the costs of after-hours freight elevator
usage;

2.2.4        the cost of any changes in
the Base, Shell and Core when such changes are required by the Construction
Drawings (including if such changes are due to the fact that such work is
prepared on an unoccupied basis), such cost to include all direct architectural
and/or engineering fees and expenses incurred in connection therewith;

2.2.5        the cost of any changes to
the Construction Drawings or Tenant Improvements required by applicable laws;

2.2.6        sales and use taxes and
Title 24 fees;

2.2.7        the “Landlord Supervision
Fee,” as that term is defined in Section 4.3.2 of this Tenant Work Letter; and

2.2.8        all other costs to be
expended by Landlord in connection with the construction of the Tenant
Improvements.

 B-1
 

2.3               Specifications
for Building Standard Components. Landlord has established specifications
(the “Specifications”) for the
Building standard components to be used in the construction of the Tenant
Improvements in the Premises, which Specifications have been received by
Tenant. Unless otherwise agreed to by Landlord, the Tenant Improvements shall
comply with the Specifications. Landlord may make changes to the Specifications
from time to time.

SECTION
3

CONSTRUCTION
DRAWINGS

3.1               Selection of
Architect/Construction Drawings. Tenant shall retain en studio Interior
Design as its architect/space planner (the “Architect”)
to prepare the Construction Drawings, which Architect is hereby approved by
Landlord. Tenant shall retain engineering consultants designated by Landlord
(the “Engineers”) to prepare all
plans and engineering working drawings relating to the structural, mechanical,
electrical, plumbing, HVAC, lifesafety, and sprinkler work in the Premises. The
plans and drawings to be prepared by Architect and the Engineers hereunder
shall be known collectively as the “Construction
Drawings.” All Construction Drawings shall comply with the drawing
format and specifications determined by Landlord, and shall be subject to
Landlord’s approval. Tenant and Architect shall verify, in the field, the
dimensions and conditions as shown on the relevant portions of the base
building plans, and Tenant and Architect shall be solely responsible for the
same, and Landlord shall have no responsibility in connection therewith.
Landlord’s review of the Construction Drawings as set forth in this Section 3,
shall be for its sole purpose and shall not imply Landlord’s review of the
same, or obligate Landlord to review the same, for quality, design, compliance
with applicable laws or other like matters. Accordingly, notwithstanding that
any Construction Drawings are reviewed by Landlord or its space planner,
architect, engineers and consultants, and notwithstanding any advice or
assistance which may be rendered to Tenant by Landlord or Landlord’s space
planner, architect, engineers, and consultants, Landlord shall have no
liability whatsoever in connection therewith and shall not be responsible for
any omissions or errors contained in the Construction Drawings.

3.2               Final Space Plan.
On or before the date set forth in Schedule 1, attached hereto, Tenant and
Architect shall prepare the final space plan for Tenant Improvements in the
Premises (the “Final Space Plan”),
which Final Space Plan shall include a layout and designation of all offices,
rooms and other partitioning, their intended use, and equipment to be contained
therein, and shall deliver the Final Space Plan to Landlord for Landlord’s
approval.

3.3               Final Working
Drawings. On or before the date set forth in Schedule 1, Tenant, Architect
and the Engineers shall complete the architectural and engineering drawings for
the Premises, and Architect shall compile a fully coordinated set of
architectural, structural, mechanical, electrical and plumbing working drawings
in a form which is complete to allow subcontractors to bid on the work and to
obtain all applicable permits (collectively, the “Final Working Drawings”), and shall submit the same to
Landlord for Landlord’s approval.

3.4               Approved Working
Drawings. On or before the date set forth therefor in Schedule 1, Tenant
shall submit the Final Working Drawings approved by Landlord (the “Approved Working Drawings”) to the
applicable local governmental agency for all applicable building permits
necessary to allow “Contractor,” as that term is defined in Section 4.1 of this
Tenant Work Letter, to commence and fully complete the construction of the
Tenant Improvements (collectively, the “Permits”),
and, in connection therewith, Tenant shall coordinate with Landlord in order to
allow Landlord, at Landlord’s option, to take part in all phases of the
permitting process, and shall supply Landlord, as soon as possible, with all
plan check numbers and dates of submittal. Notwithstanding the foregoing,
Tenant hereby agrees that neither Landlord nor Landlord’s consultants shall be
responsible for obtaining any building permit or certificate of occupancy for
the Premises and that the obtaining of the same shall be Tenant’s
responsibility; provided, however, that Landlord shall, in any event, cooperate
with Tenant in executing permit applications and performing other ministerial
acts reasonably necessary to enable Tenant to obtain any such permit or
certificate of occupancy. No changes, modifications or alterations in the
Approved Working Drawings may be made without the prior written consent of
Landlord, provided that Landlord may withhold its consent, in its sole
discretion, to any change in the Approved Working Drawings, if such change
would directly or indirectly delay the Substantial Completion of the Premises and/or
would result in an Over-Allowance Cap (as defined below).

3.5               Time Deadlines.
Tenant shall cooperate with Architect, the Engineer, and Landlord to complete
all phases of the Construction Drawings and the permitting process and to
receive the permits, and with Contractor, for approval of the “Cost Proposal,”
as that term is defined in Section 4.2, below, in accordance with the dates set
forth in Schedule 1. Tenant shall meet with Landlord on a weekly (or such other
basis as Landlord shall determine) to discuss Tenant’s progress in connection
with the same. Certain of applicable dates for approval of items, plans and
drawings as described in this Section 3, Section 4, below, and in this Tenant
Work Letter are set forth and further elaborated upon in Schedule 1 (the “Time Deadlines”), attached hereto. Tenant
agrees to comply with the Time Deadlines.

 B-2
 

SECTION
4

CONSTRUCTION
OF THE TENANT IMPROVEMENTS

4.1               Contractor.
A contractor, under the supervision of and selected by Landlord, shall
construct the Tenant Improvements (the “Contractor).”

4.2               Cost Proposal.
After the Approved Working Drawings are signed by Landlord and Tenant, Landlord
shall provide Tenant with a cost proposal in accordance with the Approved
Working Drawings, which cost proposal shall include, as nearly as possible, the
cost of all Tenant Improvement Allowance Items to be incurred by Tenant in
connection with the construction of the Tenant Improvements (the “Cost Proposal”). Notwithstanding the
foregoing, portions of the cost of the Tenant Improvements may be delivered to
Tenant as such portions of the Tenant Improvements are priced by Contractor (on
an individual item-by-item or trade-by-trade basis), even before the Approved
Working Drawings are completed (the “Partial
Cost Proposal”). Tenant shall approve and deliver the Cost Proposal
to Landlord within five (5) business days of the receipt of the same (or, as to
a Partial Cost Proposal, within two (2) business days of receipt of the same).
The date by which Tenant must approve and deliver the Cost Proposal, or the
last Partial Cost Proposal to Landlord, as the case may be, shall be known
hereafter as the “Cost Proposal Delivery
Date.” The total of all Partial Cost Proposals, if any, shall be
known as the Cost Proposal. Notwithstanding anything above to the contrary, if
upon Landlord’s delivery of any Partial or final Cost Proposal to Tenant, the
Over-Allowance Amount (as defined below) is determined to be greater than an
amount equal to twenty- five percent (25%) of the Tenant Improvement Allowance
(the “Over-Allowance Cap”), then
Landlord, in Landlord’s sole discretion, shall have the right to revise the
Approved Working Drawings and/or any other Construction Drawings (and resubmit
the same to Tenant for Tenant’s approval to be provided pursuant to the
approval procedures and standards set forth in Section 3.3 above) to reduce the
Over-Allowance Amount to an amount less than the Over-Allowance Cap and
Landlord may refuse to sign any construction contract until such revisions to
the Approved Working Drawings and/or any other Construction Drawings are
approved by Tenant.

4.3               Construction of
Tenant Improvements by Landlord’s Contractor under the Supervision of Landlord.

4.3.1        Over-Allowance Amount.
On the Cost Proposal Delivery Date, Tenant shall deliver to Landlord cash in an
amount (the “Over-Allowance Amount”) equal to
the difference between (i) the amount of the Cost Proposal and (ii) the amount
of the Tenant Improvement Allowance (less any portion thereof already disbursed
by Landlord, or in the process of being disbursed by Landlord, on or before the
Cost Proposal Delivery Date). The Over-Allowance Amount shall be disbursed by
Landlord prior to the disbursement of any then remaining portion of the Tenant
Improvement Allowance, and such disbursement shall be pursuant to the same
procedure as the Tenant Improvement Allowance. In the event that, after the
Cost Proposal Date, any revisions, changes, or substitutions shall be made to
the Construction Drawings or the Tenant Improvements, any additional costs
which arise in connection with such revisions, changes or substitutions shall
be added to the Cost Proposal and shall be paid by Tenant to Landlord
immediately upon Landlord’s request to the extent such additional costs
increase any existing Over-Allowance Amount or result in an Over-Allowance
Amount. Following completion of the Tenant Improvements, Landlord shall deliver
to Tenant a final cost statement which shall indicate the final costs of the
Tenant Improvement Allowance Items, and if such cost statement indicates that
Tenant has underpaid or overpaid the Over-Allowance Amount, then within ten
(10) business days after receipt of such statement, Tenant shall deliver to
Landlord the amount of such underpayment or Landlord shall return to Tenant the
amount of such overpayment, as the case may be.

4.3.2        Landlord Supervision.
After Landlord selects the Contractor, Landlord shall independently retain
Contractor to construct the Tenant Improvements in accordance with the Approved
Working Drawings and the Cost Proposal and Landlord shall supervise the
construction by Contractor, and Tenant shall pay a construction supervision and
management fee (the “Landlord Supervision Fee”)
to Landlord in an amount equal to the product of (i) four percent (4%) and (ii)
an amount equal to the Tenant Improvement Allowance plus the Over-Allowance
Amount (as such Over-Allowance Amount may increase pursuant to the terms of
this Tenant Work Letter).

4.3.3        Contractor’s Warranties
and Guarantees. Landlord hereby assigns to Tenant all warranties and
guarantees by Contractor relating to the Tenant Improvements, which assignment
shall be on a non-exclusive basis such that the warranties and guarantees may
be enforced by Landlord and/or Tenant, and Tenant hereby waives all claims against
Landlord relating to, or arising out of the construction of, the Tenant
Improvements.

4.3.4        Tenant’s Covenants.
Tenant hereby indemnifies Landlord for any loss, claims, damages or delays
arising from the actions of Architect and the Engineers on the Premises or in
the Building. Within ten (10) days after completion of construction of the
Tenant Improvements, Tenant shall cause Contractor and Architect to cause a
Notice of Completion to be recorded in the office of the Recorder of the County
in which the Building is located in accordance with Section 3093 of the Civil
Code of the State of California or any successor statute and furnish a copy
thereof to Landlord upon recordation, failing which, Landlord may itself
execute and file the same on behalf of Tenant as Tenant’s agent for such
purpose. In addition, Tenant, immediately after the Substantial Completion of
the Premises, shall have prepared and delivered to the Building management
office a copy of the “as built” plans and specifications (including all working
drawings) for the Tenant Improvements, together with a computer disk containing
the Approved Working Drawings in AutoCAD format.

 B-3
 

SECTION
5

SUBSTANTIAL
COMPLETION:

LEASE
COMMENCEMENT DATE

5.1               Substantial
Completion. For purposes of the Lease, including for purposes of
determining the Lease Commencement Date (as set forth in Section 7.2 of the
Summary), the Premises shall be “Ready for
Occupancy” upon Substantial Completion of the Premises. For purposes
of this Lease, “Substantial Completion”
of the Premises shall occur upon the completion of construction of the Tenant
Improvements in the Premises pursuant to the Approved Working Drawings, with
the exception of any punchlist items and any tenant fixtures, work-stations,
built-in furniture, or equipment to be installed by Tenant or under the
supervision of Contractor.

5.2               Tenant Delays.
If there shall be a delay or there are delays in the Substantial Completion of
the Premises (as a direct, indirect, partial, or total result of any of the
following (collectively, “Tenant Delays”):

5.2.1        Tenant’s failure to timely
approve any matter requiring Tenant’s approval, including a Partial Cost
Proposal or the Cost Proposal and/or Tenant’s failure to timely perform any
other obligation or act required of Tenant hereunder;

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

5.2.3        Tenant’s request for
changes in the Construction Drawings after disapproval of the same by Landlord
or because the same do not comply with applicable laws;

5.2.4        Tenant’s requirement for
materials, components, finishes or improvements which are not available in a
reasonable time (based upon the anticipated date of the Lease Commencement
Date) or which are different from, or not included in, the Specifications;

5.2.5        changes to the Base, Shell
and Core required by the Approved Working Drawings;

5.2.6        any changes in the
Construction Drawings and/or the Tenant Improvements required by (i) applicable
laws if such changes are directly attributable to Tenant’s use of the Premises
or Tenant’s specialized tenant improvement(s) (as determined by Landlord),
and/or (ii) Landlord pursuant to Section 4.2 above;

5.2.7        Tenant’s failure to comply
with the Time Deadlines; or

5.2.8        any other acts or
omissions of Tenant, or its agents, or employees;

then, notwithstanding
anything to the contrary set forth in the Lease and regardless of the actual
date of the Substantial Completion of the Premises, the Lease Commencement Date
(as set forth in Section 7.2 of the Summary) shall be deemed to be the date the
Lease Commencement Date would have occurred if no Tenant Delay or Delays, as
set forth above, had occurred.

SECTION
6

MISCELLANEOUS

6.1               Tenant’s Entry
Into the Premises Prior to Substantial Completion. Subject to the terms
hereof and provided that Tenant and its agents do not interfere with, or delay,
Contractor’s work in the Building and the Premises, at Landlord’s reasonable
discretion, Contractor shall allow Tenant access to the Premises prior to the
Substantial Completion of the Premises for the purpose of Tenant installing
overstandard equipment or fixtures (including Tenant’s data and telephone
equipment) in the Premises. Prior to Tenant’s entry into the Premises as
permitted by the terms of this Section 6.1, Tenant shall submit a schedule to
Landlord and Contractor, for their approval, which schedule shall detail the
timing and purpose of Tenant’s entry. In connection with any such entry, Tenant
acknowledges and agrees that Tenant’s employees, agents, contractors,
consultants, workmen, mechanics, suppliers and invitees shall fully cooperate,
work in harmony and not, in any manner, interfere with Landlord or Landlord’s
Contractor, agents or representatives in performing work in the Building and
the Premises, or interfere with the general operation of the Building and/or
the Real Property. If at any time any such person representing Tenant shall not
be cooperative or shall otherwise cause or threaten to cause any such
disharmony or interference, including, without limitation, labor disharmony,
and Tenant fails to immediately institute and maintain corrective actions as
directed by Landlord, then Landlord may revoke Tenant’s entry rights upon
twenty-four (24) hours’ prior written notice to Tenant. Tenant acknowledges and
agrees that any such entry into and occupancy of the Premises or any portion
thereof by Tenant or any person or entity working for or on behalf of Tenant
shall be deemed to be subject to all of the terms, covenants, conditions and
provisions of the Lease, excluding only the covenant to pay Rent (until the
occurrence of the Lease Commencement Date). Tenant further acknowledges and
agrees that Landlord shall not be liable for any injury, loss or damage which
may occur to any of Tenant’s work made in or about the Premises in connection
with such entry or to any property placed therein prior to the Lease
Commencement Date, the same being at Tenant’s sole risk and liability. Tenant
shall be liable to Landlord for any damage to any portion of the Premises,
including the Tenant Improvement work, caused by Tenant or any of Tenant’s
employees, agents, contractors, consultants, workmen, mechanics, suppliers and
invitees. In the event that the performance of Tenant’s work in connection with
such entry causes extra costs to be incurred by Landlord or

 B-4
 

requires the use
of any Building services, Tenant shall promptly reimburse Landlord for such
extra costs and/or shall pay Landlord for such Building services at Landlord’s
standard rates then in effect. In addition, Tenant shall hold Landlord harmless
from and indemnify, protect and defend Landlord against any loss or damage to
the Building or Premises and against injury to any persons caused by Tenant’s
actions pursuant to this Section 6.1.

6.2               Tenant’s
Representative. Tenant has designated Vincent Siciliano as its sole
representative with respect to the matters set forth in this Tenant Work
Letter, who shall have full authority and responsibility to act on behalf of
the Tenant as required in this Tenant Work Letter.

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

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

6.5               Tenant’s Lease
Default. Notwithstanding any provision to the contrary contained in the
Lease, if an event of default by Tenant as described in Section 19.1 of the
Lease or any default by Tenant under this Tenant Work Letter has occurred at
any time on or before the Substantial Completion of the Premises, then (i) in
addition to all other rights and remedies granted to Landlord pursuant to the
Lease, at law and/or in equity, Landlord shall have the right to withhold payment
of all or any portion of the Tenant Improvement Allowance and/or Landlord may
cause Contractor to cease the construction of the Premises (in which case,
Tenant shall be responsible for any delay in the Substantial Completion of the
Premises caused by such work stoppage as set forth in Section 5.2 of this
Tenant Work Letter), and (ii) all other obligations of Landlord under the terms
of this Tenant Work Letter shall be forgiven until such time as such default is
cured pursuant to the terms of the Lease (in which case, Tenant shall be
responsible for any delay in the Substantial Completion of the Premises caused
by such inaction by Landlord). In addition, if the Lease is terminated prior to
the Lease Commencement Date, for any reason due to a default by Tenant as
described in Section 19.1 of the Lease or under this Tenant Work Letter, in
addition to any other remedies available to Landlord under the Lease, at law
and/or in equity, Tenant shall pay to Landlord, as Additional Rent under the
Lease, within five (5) days of receipt of a statement therefor, any and all
costs incurred by Landlord (including any portion of the Tenant Improvement
Allowance disbursed by Landlord) and not reimbursed or otherwise paid by Tenant
through the date of such termination in connection with the Tenant Improvements
to the extent planned, installed and/or constructed as of such date of
termination, including, but not limited to, any costs related to the removal of
all or any portion of the Tenant Improvements and restoration costs related
thereto.

 B-5

SCHEDULE 1

TIME DEADLINES

	
  Dates

  	
   

  	
  Actions to be Performed

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  September 27, 2004.

  	
   

  	
  Landlord to provide CAD drawings to Tenant of the
  Premises.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  October 4, 2004.

  	
   

  	
  Final Space Plan to be completed by Tenant and
  delivered to Landlord.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  October 6, 2004.

  	
   

  	
  Landlord to provide Tenant with approval or
  disapproval of the Final Space Plan.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  October 20, 2004, subject, however, to delays to the
  extent Landlord requested changes to the Final Space Plan.

  	
   

  	
  Tenant to deliver Final Working Drawings to
  Landlord.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  October 25, 2004.

  	
   

  	
  Landlord to provide Tenant with approval or
  disapproval of the Final Working Drawings.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  October 27, 2004, subject, however, to delays to the
  extent Landlord requested changes to the Final Working Drawings.

  	
   

  	
  Tenant to submit Approved Working Drawings to the
  City of San Diego for all applicable building permits.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Five (5) business days after the receipt of the Cost
  Proposal by Tenant.

  	
   

  	
  Tenant to approve Cost Proposal and deliver Cost Proposal
  to Landlord.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Two (2) business days after the receipt of a Partial
  Cost Proposal by Tenant.

  	
   

  	
  Tenant to approve Partial Cost Proposal and deliver
  same to Landlord.

  

 

 S-1

EXHIBIT C

AMENDMENT TO LEASE

This AMENDMENT TO LEASE (“Amendment”) is made and entered into
effective as of                ,
20   , by and between LEGACY SABRE SPRINGS, LLC, a California
limited liability company (“Landlord”)
and           , a                          (“Tenant”).

R  E
C  I  T  A  L  S:

A.                Landlord and Tenant entered into
that certain Office Lease dated as of                          (the
“Lease”) pursuant to which
Landlord leased to Tenant and Tenant leased from Landlord certain “Premises”,
as described in the Lease, in that certain Building located at
         , San Diego, California.

B.                 Except as otherwise set forth herein, all
capitalized terms used in this Amendment shall have the same meaning as such
terms have in the Lease.

C.                 Landlord and Tenant desire to amend the Lease to
confirm the commencement and expiration dates of the term, as hereinafter
provided.

NOW, THEREFORE, in
consideration of the foregoing Recitals and the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

1.                 Confirmation of Dates. The parties hereby
confirm that the term of the Lease commenced as of                          (the
“Lease Commencement Date”) for a
term of sixty (60) months ending on                          (unless
sooner terminated or extended as provided in the Lease.

2.                 No
Further Modification. Except as set forth in this Amendment, all of the
terms and provisions of the Lease shall remain unmodified and in full force and
effect.

IN WITNESS WHEREOF, this
Amendment to Lease has been executed as of the day and year first above
written.

	
  

  	
   

  	
  “Landlord”:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LEGACY SABRE SPRINGS, LLC,

  
	
   

  	
   

  	
  a California limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Legacy Partners 2343 L.P., a California limited

  
	
   

  	
   

  	
   

  	
  partnership, its managing member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Tenant”:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  ,

  	
   

  
	
   

  	
   

  	
  a

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  
									

 

 C-1

EXHIBIT D

RULES AND REGULATIONS

Tenant shall faithfully
observe and comply with the following Rules and Regulations. Landlord shall not
be responsible to Tenant for the nonperformance of any of said Rules and
Regulations by or otherwise with respect to the acts or omissions of any other
tenants or occupants of the Building or Real Property.

1.                 Tenant shall not
alter any lock or install any new or additional locks or bolts on any doors or
windows of the Premises without obtaining Landlord’s prior written consent.
Tenant shall bear the cost of any lock changes or repairs required by Tenant.
Two keys will be furnished by Landlord for the Premises, and any additional
keys required by Tenant must be obtained from Landlord at a reasonable cost to
be established by Landlord.

2.                 All doors opening
to public corridors shall be kept closed at all times except for normal ingress
and egress to the Premises, unless electrical hold backs have been installed.

3.                 Landlord reserves
the right to close and keep locked all entrance and exit doors of the Building
during such hours as are customary for comparable buildings in the vicinity of
the Building. Tenant, its employees and agents must be sure that the doors to
the Building are securely closed and locked when leaving the Premises if it is
after the normal hours of business for the Building. Any tenant, its employees,
agents or any other persons entering or leaving the Building at any time when
it is so locked, or any time when it is considered to be after normal business hours
for the Building, may be required to sign the Building register when so doing.
After-hours access by Tenant’s authorized employees may be provided by card-key
access or other procedures adopted by Landlord from time to time; Tenant shall
pay for the costs of all access cards provided to Tenant’s employees and all
replacements thereof for lost, stolen or damaged cards. Access to the Building
and/or Real Property may be refused unless the person seeking access has proper
identification or has a previously arranged, pass for such access. Landlord and
its agents shall in no case be liable for damages for any error with regard to
the admission to or exclusion from the Building and/or Real Property of any
person. In case of invasion, mob, riot, public excitement, or other commotion,
Landlord reserves the right to prevent access to the Building and/or Real
Property during the continuance of same by any means it deems appropriate for
the safety and protection of life and property.

4.                 Landlord shall
have the right to prescribe the weight, size and position of all safes and
other heavy property brought into the Building. Safes and other heavy objects
shall, if considered necessary by Landlord, stand on supports of such thickness
as is necessary to properly distribute the weight. Landlord will not be
responsible for loss of or damage to any such safe or property in any case. All
damage done to any part of the Building, its contents, occupants or visitors by
moving or maintaining any such safe or other property shall be the sole
responsibility of Tenant and any expense of said damage or injury shall be
borne by Tenant.

5.                 No furniture,
freight, packages, supplies, equipment or merchandise will be brought into or
removed from the Building or carried up or down in the elevators, except upon
prior notice to Landlord, and in such manner, in such specific elevator, and
between such hours as shall be designated by Landlord. Tenant shall provide
Landlord with not less than 24 hours prior notice of the need to utilize an elevator
for any such purpose, so as to provide Landlord with a reasonable period to
schedule such use and to install such padding or take such other actions or
prescribe such procedures as are appropriate to protect against damage to the
elevators or other parts of the Building.

6.                 Landlord shall
have the right to control and operate the public portions of the Building and
Real Property, the public facilities, the heating and air conditioning, and any
other facilities furnished for the common use of tenants, in such manner as is
customary for comparable buildings in the vicinity of the Building.

7.                 The requirements
of Tenant will be attended to only upon application at the management office of
the Real Property or at such office location designated by Landlord. Employees
of Landlord shall not perform any work or do anything outside their regular
duties unless under special instructions from Landlord.

8.                 Tenant shall not
disturb, solicit, or canvass any occupant of the Building or Real Property and
shall cooperate with Landlord or Landlord’s agents to prevent same.

9.                 The toilet rooms,
urinals, wash bowls and other apparatus shall not be used for any purpose other
than that for which they were constructed, and no foreign substance of any kind
whatsoever shall be thrown therein. The expense of any breakage, stoppage or
damage resulting from the violation of this rule shall be borne by the tenant
who, or whose employees or agents, shall have caused it.

10.               Tenant shall not
overload the floor of the Premises. Tenant shall not mark, drive nails or
screws, or drill into the partitions, woodwork or plaster or in any way deface
the Premises or any part thereof without Landlord’s consent first had and
obtained; provided, however, Landlord’s prior consent shall not be required
with respect to Tenant’s placement of pictures and other normal office wall
hangings on the interior walls of the Premises (but at the end of the Term,
Tenant shall repair any holes and other damage to the Premises resulting
therefrom).

11.               Except for vending
machines intended for the sole use of Tenant’s employees and invitees, no vending machine or machines of any description
other than fractional horsepower office machines shall be installed, maintained
or operated upon the Premises without the written consent of Landlord.

 D-1
 

12.               Tenant shall not
use any method of heating or air conditioning other than that which may be
supplied by Landlord, without the prior written consent of Landlord.

13.               Tenant shall not
use or keep in or on the Premises, the Building or Real Property any kerosene,
gasoline or other inflammable or combustible fluid or material. Tenant shall
not use, keep or permit to be used or kept, any foul or noxious gas or
substance in or on the Premises, or permit or allow the Premises to be occupied
or used in a manner offensive or objectionable to Landlord or other occupants
of the Building or Real Property by reason of noise, odors, or vibrations, or
interfere in any way with other tenants or those having business therewith.

14.               Tenant shall not
bring into or keep within the Real Property, the Building or the Premises any
animals, birds, bicycles or other vehicles.

15.               No cooking shall be
done or permitted by Tenant on the Premises, nor shall the Premises be used for
the storage of merchandise, for lodging or for any improper, objectionable or
immoral purposes. Notwithstanding the foregoing, Underwriters’
laboratory-approved equipment and microwave ovens may be used in the Premises
for heating food and brewing coffee, tea, hot chocolate and similar beverages,
provided that such use is in accordance with all applicable federal, state and
city laws, codes, ordinances, rules and regulations, and does not cause odors
which are objectionable to Landlord and other tenants.

16.               Landlord will
approve where and how telephone and telegraph wires are to be introduced to the
Premises. No boring or cutting for wires shall be allowed without the consent
of Landlord. The location of telephone, call boxes and other office equipment
affixed to the Premises shall be subject to the approval of Landlord.

17.               Landlord reserves
the right to exclude or expel from the Building and/or Real Property any person
who, in the judgment of Landlord, is intoxicated or under the influence of
liquor or drugs, or who shall in any manner do any act in violation of any of
these Rules and Regulations.

18.               Tenant, its
employees and agents shall not loiter in the entrances or corridors, nor in any
way obstruct the sidewalks, lobby, halls, stairways or elevators, and shall use
the same only as a means of ingress and egress for the Premises.

19.               Tenant shall not
waste electricity, water or air conditioning and agrees to cooperate fully with
Landlord to ensure the most effective operation of the Building’s heating and
air conditioning system, and shall refrain from attempting to adjust any
controls.

20.               Tenant shall store
all its trash and garbage within the interior of the Premises. No material
shall be placed in the trash boxes or receptacles if such material is of such
nature that it may not be disposed of in the ordinary and customary manner of
removing and disposing of trash and garbage in the city in which the Real
Property is located without violation of any law or ordinance governing such
disposal. All trash, garbage and refuse disposal shall be made only through
entry-ways and elevators provided for such purposes at such times as Landlord
shall designate.

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

22.               Tenant shall assume
any and all responsibility for protecting the Premises from theft, robbery and
pilferage, which includes keeping doors locked and other means of entry to the
Premises closed, when the Premises are not occupied.

23.               No awnings or other
projection shall be attached to the outside walls of the Building without the
prior written consent of Landlord. No curtains, blinds, shades 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. The sashes, sash
doors, skylights, windows, and doors that reflect or admit light and air into
the halls, passageways or other public places in the Building shall not be
covered or obstructed by Tenant, nor shall any bottles, parcels or other
articles be placed on the windowsills. All electrical ceiling fixtures hung in
offices or spaces along the perimeter of the Building must be fluorescent
and/or of a quality, type, design and bulb color approved by Landlord.

24.               The washing and/or
detailing of or, the installation of windshields, radios, telephones in or
general work on, automobiles shall not be allowed on the Real Property.

25.               Food vendors shall
be allowed in the Building upon receipt of a written request from the Tenant.
The food vendor shall service only the tenants that have a written request on
file in the management office of the Real Property. Under no circumstance shall
the food vendor display their products in a public or common area including
corridors and elevator lobbies. Any failure to comply with this rule shall
result in immediate permanent withdrawal of the vendor from the Building.

26.               Tenant must comply
with requests by the Landlord concerning the informing of their employees of
items of importance to the Landlord.

27.               Tenant shall comply
with any non-smoking ordinance adopted by any applicable governmental
authority.

 D-2
 

28.               Landlord may waive
any one or more of these Rules and Regulations for the benefit of any
particular tenant or tenants, but no such waiver by Landlord shall be construed
as a waiver of such Rules and Regulations in favor of any other tenant or
tenants, nor prevent Landlord from thereafter enforcing any such Rules or
Regulations against any or all tenants of the Building and/or Real Property.
Landlord reserves the right at any time to change or rescind any one or more of
these Rules and Regulations, or to make such other and further reasonable Rules
and Regulations as in Landlord’s judgment may from time to time be necessary
for the management, safety, care and cleanliness of the Premises, Building and
Real Property, and for the preservation of good order therein, as well as for
the convenience of other occupants and tenants therein. Landlord shall not be
responsible to Tenant or to any other person for the nonobservance of the Rules
and Regulations by another tenant or other person. Tenant shall be deemed to
have read these Rules and Regulations and to have agreed to abide by them as a
condition of its occupancy of the Premises.

 D-3

EXHIBIT E

Prepared by and after Recording Return to:

James Dow

Corus Bank, N.A. 

3959 N. Lincoln Avenue

Chicago, Illinois 60613

SUBORDINATION,
NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

THIS SUBORDINATION,
NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this “Agreement”) made by and among
1ST PACIFIC BANK OF CALIFORNIA, a California corporation (“Tenant”), Corus
Bank, N.A. (“Lender”), and Legacy Sabre Springs, LLC, a California limited
liability company (“Landlord”).

RECITALS:

A.                By a certain
Office Lease dated as of           (the
“Lease”), Landlord, as lessor, demised and leased to Tenant, as lessee, certain
leased premises (the “Leased Premises”) which represents part of the
improvements located or to be located on the land legally described on Exhibit
A attached hereto and by this reference incorporated herein, upon the terms and
conditions and for the rental, as more fully set forth in the Lease.

B.                 Landlord, by its
Deed of Trust (the “Deed of Trust”) recorded in the Office of the Recorder of
Deeds of San Diego County, California, grants and conveys unto Lender, all of
its right, title and interest in and to the Leased Premises to secure the
payment of its promissory note in the aggregate maximum principal amount of
$41,330,000 payable to Lender, with principal and interest payable as therein
provided, and as provided under the terms of that certain Construction Loan
Agreement by and between Landlord and Lender (the “Loan Agreement”) dated as of
August    , 2001. All references in this Agreement to the
Deed of Trust, the Loan Agreement and each and every other agreement, document
and instrument shall mean the Deed of Trust, the Loan Agreement and each other
agreement, document and instrument and all modifications, amendments,
supplements, extensions, replacements or restatements thereof or thereto.

C.                 Lender, as a
condition to making and continuing to make advances on the loan has required
the execution of this Agreement.

NOW, THEREFORE, in
consideration of the mutual covenants and agreements herein contained and to
induce Lender to make said loan, the parties do hereby covenant and agree as
follows:

1.                  The Lease and
all right and title of Tenant thereunder are and shall be subject and
subordinate to the lien of the Deed of Trust and to all renewals,
modifications, consolidations, replacements, and extensions thereof, to the
full extent of the principal sum secured thereby, interest thereon, and all
other amounts and sums secured thereby, subject to the terms and conditions
stated herein. Tenant further waives all rights and claims to assert that the
Lease or any provision thereof is superior to the lien of or to any other
provision of the Deed of Trust or any renewal, increase, replacement,
consolidation, modification or extension thereof.

2.                  Notwithstanding
such subordination, Tenant agrees that any action by Lender to enforce the Deed
of Trust by reason of default thereunder will not terminate the Lease (unless
Lender elects to terminate the Lease in the event of a default by Tenant which
is not cured within any applicable cure period), invalidate or constitute a
breach of any of the terms thereof, nor give rise to any right of Tenant to
terminate the Lease, nor constitute a breach or invalidation of the Lease. If
the Deed of Trust shall be foreclosed, or a voluntary conveyance in lieu of
foreclosure shall be delivered, or a sale of the Leased Premises pursuant to
the rights granted to Lender in the Deed of Trust, Tenant does hereby attorn to
the successors and assigns of the Landlord (successors and assigns being herein
defined to include the Lender, Lender’s nominee, assignee and/or purchaser at
any sale of the Leased Premises) provided Tenant’s attornment shall be to such
successor landlord upon the same terms, covenants and conditions as provided in
the Lease and such successor landlord shall be deemed to have assumed all of
the obligations of Landlord to Tenant set forth in the Lease, except as
provided herein.

3.                  Tenant’s
attornment by these presents is effective and self-operative without the
execution of any other instruments on the part of the parties hereto.

4.                  If the Lender
(or any other party) shall acquire title to the Leased Premises or shall
succeed to Landlord’s interest in the Lease, whether through foreclosure of the
Deed of Trust, conveyance in lieu of foreclosure, or otherwise, Lender (or such
other party) shall (a) not disturb Tenant’s possession of the Leased Premises
and all right and title of Tenant under the Lease and all amendments or
modifications thereto approved in writing by Lender (the “Approved
Modifications”) shall continue in full force and effect in accordance with
their terms and Lender (or such other party) shall recognize the Lease and the
Approved Modifications provided Tenant is not in default in the payment of any
sums due from Tenant under the Lease or performance of any material obligation
of Tenant under the Lease (beyond any period expressly given Tenant to cure
such default); and (b) except as may be required or necessary under the terms
of any applicable law or statute, not name Tenant in any action for foreclosure
of the Deed of Trust. Lender (or such other party) shall thereupon, and without
the necessity of further attornment or other act or agreement, be substituted
as Tenant’s landlord under the Lease, and shall be entitled to the rights and
benefits

 E-1
 

and subject to the obligations thereof; provided that
neither Lender nor any other party (other than Landlord) shall be:

(a)            liable for any act or
omission of any prior landlord under the Lease (including the Landlord) or
damages (actual, punitive or consequential) arising therefrom; or

(b)           subject to any offsets
or defenses which Tenant might have against any prior landlord under the Lease
(including the Landlord); or

(c)            bound by any
amendments or modification of the Lease made without Lender’s written consent;
or

(d)           bound by or required to
credit Tenant with any prepayment of rent more than thirty (30) days in advance
or any deposit, rental security or any other sums deposited with any prior
landlord under the Lease (including the Landlord) unless said sum is actually
received by Lender; or

(e)            liable for the
completion of any construction of the Leased Premises or tenant improvements to
the Leased Premises commenced or agreed to by any prior landlord (including
Landlord); or

(f)            liable for the payment
of any damages, fees or penalties payable by any landlord (including Landlord)
to Tenant, including but not limited to fees or penalties, for failure to
deliver the Leased Premises in a timely fashion.

5.                 Tenant will
deliver to Lender a copy of any notice of default served upon Landlord by
Tenant.

6.                 Tenant
agrees that from and after the date hereof in the event of any default under
the Lease which would give Tenant the right, either immediately or after the
lapse of a period of time, to terminate the Lease, to claim a partial or total
eviction, or claim for abatement of rent, offset or other remedy,
notwithstanding any provision of the Lease to the contrary, Tenant will not
exercise any such right (a) until it has given written notice of such default
to Lender in accordance with both Sections 5 and 18 of this Agreement, and (b)
until and unless Lender fails to remedy such act or omission within thirty (30)
days after receipt of Tenant’s notice, or in the case of any other act or omission
which cannot reasonably be remedied within said thirty (30) day period, then
Lender shall have as long as reasonably necessary to remedy such act or
omission, provided that, (i) Lender commences such remedy and notifies Tenant
within said 30-day period of Lender’s desire to remedy, and (ii) Lender pursues
completion of such remedy with due diligence following such giving of notice
and following the time when Lender shall have become entitled under the Deed of
Trust to remedy the same. It is specifically agreed that Tenant shall not, as
to Lender, be entitled to require cure of any default which is personal to
Landlord, and therefore not susceptible of cure by Lender, or which is
specified in Section 4 of this Agreement, and that no such uncured default
shall entitle Tenant to exercise any rights under the Lease with respect to
Lender, including, without limitation any rights of set-off, off-set, rent
abatement or termination, but that the Lease shall remain in full force and
effect as between Lender and Tenant, except with respect to the provisions
which are personal as to Landlord.

7.                 Notwithstanding
anything to the contrary contained in the Lease, Landlord hereby irrevocably
directs Tenant to make all payments of rent to Landlord to an account at Corus
Bank, N.A., 3959 North Lincoln Avenue, Chicago, Illinois 60613, if designated
by Lender to Tenant by written notice to Tenant and Landlord.

8.                 Tenant covenants
and agrees as follows for the benefit and reliance of Lender:

(a)            That it will not,
without the express written consent of Lender: (i) cancel, terminate or
surrender the Lease, except as expressly provided therein, and then only after
Lender has failed to or unsuccessfully attempted to pursue its rights and
remedies as provided herein; (ii) alter, amend or modify any term of the Lease;
(iii) enter into any agreement with Landlord, its successors or assigns, which
grants any concession with respect to the Lease or which reduces the rent
called for thereunder; or (iv) consent to the release of any party having
liability under the Lease.

(b)           That- Tenant shall,
except to the extent prohibited by law or legal proceedings, make rental
payments under the Lease to Lender pursuant to and upon written demand by
Lender, if such demand states that a default has occurred under the Deed of
Trust, and Landlord agrees that any payments so made to Lender shall be deemed
to have been made in accordance with and in satisfaction of Tenant’s obligation
to pay rent under the Lease.

9.                 Landlord and
Tenant hereby jointly and severally, agree for the benefit and reliance of
Lender, as follows:

(a)            That neither this
Agreement, the Deed of Trust, nor anything to the contrary in the Lease, prior
to Lender’s acquisition of Landlord’s interest in and possession of the Leased
Premises, operate to give rise to or create any responsibility or liability for
the control, care, management or repair of the Leased Premises upon Lender, or
impose responsibility for the carrying out by Lender of any of the covenants,
terms and conditions of the Lease, nor shall said instruments operate to make
Lender responsible or liable for any waste committed on the Leased Premises by
any party whatsoever, or for dangerous or defective condition of the Leased
Premises, or for any negligence in the management, upkeep, repair or control of
said Leased Premises resulting in loss, injury or death to any lessee,
licensee, invitee, guest, employee, agent or stranger. Notwithstanding anything
to the contrary in the Lease, Lender, its successors and assigns or a purchaser
under the terms of the Deed of Trust, shall, subject to

 E-2
 

the terms of this Agreement, be responsible for
performance of only those covenants and obligations of the Lease accruing after
Lender’s acquisition of Lessor’s interest in and possession of the Leased
Premises. In no event shall Lender be personally liable as Landlord under the
Lease, either by virtue of any assignment of the Lease, the exercise of any
right thereunder or hereunder, the foreclosure of its lien on the Leased
Premises, the acquisition of the Leased Premises or the collection of any rent
under the Lease as owner or beneficiary under the Deed of Trust, and Tenant
shall look solely to the real estate that is the subject of the Lease and to no
other assets of Lender for satisfaction of any liability in respect of the
Lease; but Tenant shall have reserved to it all other remedies available to it
at law or in equity, against Landlord.

(b)           That in the event
Lender gains title to the Leased Premises and becomes substitute lessor, it is
agreed that Lender may assign its interest as substitute lessor without notice
to or the consent of Tenant or any other party hereto; provided that, no such
assignment shall be binding upon Tenant until written notice thereof is
delivered to Tenant.

10.               Nothing contained
in this Agreement shall in any way impair or affect the lien created by the
Deed of Trust or any modifications, amendments, extensions or renewals thereof.

11.               Tenant agrees that
this Agreement satisfies any condition or requirement in the Lease relating to
the granting of a non-disturbance agreement.

12.               Tenant covenants
and acknowledges that, as of the date hereof, it has no right or option of any
nature whatsoever, whether pursuant to the Lease or otherwise, to purchase the
Leased Premises or the real property described on Exhibit A hereto or any
portion thereof or any interest therein.

13.               The foregoing
provisions shall be self-operative. However, Tenant agrees to execute and
deliver to Lender, or any person to whom Tenant herein agrees to attorn, such
other instrument which is reasonably necessary to effectuate such provisions
provided such documents in no way diminish Tenant’s rights or increases Tenant’s
obligations hereunder or under the Lease.

14.               Tenant hereby
represents and warrants to Lender that it has not subordinated the Lease or any
of its rights under the Lease to any lien, mortgage, deed of trust or deed to
secure debt prior to the date hereof and that it will not subordinate the Lease
or the rights of the Lessee thereunder to any lien, mortgage, deed of trust or
deed to secure debt other than the Deed of Trust without the prior written
consent of Lender or until the lien of the Deed of Trust has been released by
Lender.

15.               This Agreement may
not be modified orally or in any other manner than by an agreement in writing
signed by the parties hereto, or their respective successors in interest. This
Agreement shall inure to the benefit of and be binding upon the parties hereto,
and their successors and assigns.

16.               This Agreement may
be signed in one or more counterparts, each of which shall be an original, but
all of which together shall constitute one agreement, binding on all of the
parties hereto notwithstanding that all of the parties hereto are not
signatories to the same counterpart. Each of the undersigned parties authorizes
the assembly of one or more original copies of this Agreement through the
combination of the several executed counterpart signature pages with one or
more bodies of this Agreement, including the Exhibits, if any, to this
Agreement. Each such compilation of this Agreement shall constitute one
original of this Agreement.

17.               Tenant agrees that
the Deed of Trust and the promissory note evidencing the indebtedness secured
thereby may be increased, replaced, renewed, extended and/or modified from time
to time by agreement between Landlord and Lender and Lender may exercise any
one or more of its rights under the Deed of Trust from time to time at Lender’s
discretion, all without notice to or consent of Tenant, and this Agreement
shall continue in full force and effect as to all such renewals, extensions
and/or modifications and all such exercise of rights.

18.               Any and all notices
given in connection with this Agreement shall be deemed adequately given only
if in writing and addressed to the party for whom such notices are intended at
the address set forth below. All notices shall be sent by personal delivery,
Federal Express or other overnight messenger service, first class registered or
certified mail, postage prepaid, return receipt requested or by other means at
least as fast and reliable as first class mail. A written notice shall be
deemed to have been given to the recipient party on the earlier of (a) the date
it shall be delivered to the address required by this Agreement; (b) the date
delivery shall have been refused at the address required by this Agreement; or
(c) with respect to notices sent by mail, the date as of which the postal
service shall have indicated such notice to be undeliverable at the address
required by this Agreement. Any and all notices referred to in this Agreement,
or which either party desires to give to the other, shall be addressed as
follows:

	
  If to Landlord:

  	
   

  	
  Legacy Sabre Springs, LLC

  
	
   

  	
   

  	
  4000 East Third Avenue

  
	
   

  	
   

  	
  Suite 600

  
	
   

  	
   

  	
  Foster City, California 94404-4810

  
	
   

  	
   

  	
  Attn: Paul Meyer

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Allen Matkins Leck Gamble & Mallory LLP

  
	
   

  	
   

  	
  515 South Figueroa Street, 7th Floor

  
	
   

  	
   

  	
  Los Angeles, California 90071

  
	
   

  	
   

  	
  Attn: Neil N. Gluck, Esq.

  

 

 E-3
 

 

	
  To Lender:

  	
   

  	
  Corus Bank, N.A.

  
	
   

  	
   

  	
  10 S. Riverside Plaza

  
	
   

  	
   

  	
  Chicago, Illinois 60606

  
	
   

  	
   

  	
  Attn: James J. Dow, Vice President

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Joel Solomon, Esq.

  
	
   

  	
   

  	
  General Counsel and Senior Vice-President

  
	
   

  	
   

  	
  Corus Bank, N.A.

  
	
   

  	
   

  	
  3959 N. Lincoln Avenue

  
	
   

  	
   

  	
  Chicago, Illinois 60613

  
	
   

  	
   

  	
   

  
	
  and

  	
   

  	
  Sachnoff & Weaver

  
	
   

  	
   

  	
  30 South Wacker Drive, 29h Floor

  
	
   

  	
   

  	
  Chicago, Illinois 60606

  
	
   

  	
   

  	
  Attn: Cynthia Jared, Esq.

  
	
   

  	
   

  	
   

  
	
  If to Tenant:

  	
   

  	
  1ST Pacific
  Bank of California

  
	
   

  	
   

  	
  13500 Evening Creek Drive, Suite 100

  
	
   

  	
   

  	
  San Diego, California 92128

  
	
   

  	
   

  	
  Attn: Vincent Siciliano

  

 

Any party hereto may, by notice given hereunder,
designate any further or different addresses to which subsequent notices,
certificates or other communications shall be sent.

The provisions of this Agreement shall bind, and inure
to the benefit of, the parties hereto and their respective heirs, successors
and assigns.

IN WITNESS WHEREOF, the parties hereto have set their
hands and seals on the date set forth below.

	
  

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1ST PACIFIC BANK OF
  CALIFORNIA,

  
	
   

  	
   

  	
  a California corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CORUS BANK, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  James J. Dow, Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LANDLORD:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LEGACY SABRE SPRINGS, LLC,

  	
   

  
	
   

  	
   

  	
  a California limited liability company

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Legacy Partners 2343 L.P., a California limited

  
	
   

  	
   

  	
   

  	
  partnership, its managing member

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
   

  
												

 

 E-4
 

EXHIBIT A

LEGAL DESCRIPTION

Lots 10, 11 and 12 of the map of Sabre Springs
Industrial Park, Unit Number 3, according to Map Number 11547, recorded in the
Office of the County Recorder of San Diego County on June 19, 1986, located in
the City of San Diego, County of San Diego, State of California

 E-5
 

 

	
  STATE OF ILLINOIS

  	
  )

  
	
   

  	
  ) ss:

  
	
  COUNTY OF COOK

  	
  )

  

 

I,                 ,
a Notary Public within and for said County, in the State aforesaid, duly
commissioned and acting, do hereby certify that on this     day
of              personally
appeared before me     , the                      President
of Corus Bank, N.A., to me personally well known and known to be the person who
signed the foregoing instrument, and who, being by me duly sworn, stated and
acknowledged that he is the                     President
of said Corus Bank, N.A., and that he signed and delivered the same in behalf
of Corus Bank, N.A., with authority, as his and its free and voluntary act and
deed for the uses and purposes therein mentioned and set forth.

WITNESS my hand and seal as such Notary Public the day
and year in this certificate above written.

	
  

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary Public

  
	
   

  	
   

  	
  My commission expires:

  

 

	
  STATE OF CALIFORNIA

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF

  	
  )

  

 

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

WITNESS my hand and official seal.

	
  

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary Public in and for said State

  

 

(SEAL)

 E-6
 

 

	
  STATE OF CALIFORNIA

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF

  	
  )

  

 

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

WITNESS my hand and official seal.

	
  

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary Public in and for said State

  

 

(SEAL)

	
  STATE OF CALIFORNIA

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF

  	
  )

  

 

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

WITNESS my hand and official seal.

	
  

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Notary Public in and for said State

  

 

(SEAL)

 E-7

EXHIBIT F

PROJECT SIGN CRITERIA

Legacy Sabre Springs

13500-13520 Evening Creek Drive North

San Diego, CA 92128

Tenant
Signage Criteria

INTENT: The intent of these criteria is to
establish standards for the design and fabrication of identification signage for
tenants of Legacy Sabre Springs. The requirements herein provide individual
expression for each tenant and an attractive, unified Business Center for all.

REQUIREMENTS: Tenant’s signature on a lease
agreement for space at Legacy Sabre Springs is evidence that the tenant
acknowledges and agrees to the following requirements:

1.        The
Landlord shall have the exclusive right to determine which Tenants may display
Sign Types A, B, C and D. See the attached Exhibits. All tenant signage shall
conform to these criteria, specifically and in detail.

2.        To
conform to these criteria, the Tenant shall engage a sign design &
fabrication company that is approved in writing by the Landlord.

3.        Signage
within Legacy Sabre Springs is to identify, not advertise. Product names may
not be displayed.

4.        Signs
shall be designed in a manner and with materials and colors that are compatible
with and complementary to the overall project and associated building
architecture. Tenants may adapt established typestyles, logos, images and
colors that are in use on similar buildings operated by the Tenant in
California, provided that said images are architecturally compatible and
approved by the Landlord.

5.        All
sign fabrication work shall be of excellent quality. All logo images and typestyles
shall be accurately reproduced. Lettering that approximates typestyles shall
not be acceptable. The Landlord reserves the right to reject any fabrication
work deemed to be below standard.

6.        Signs
shall be made of permanent rust-inhibiting materials that are appropriate and
complimentary to the associated building. Dissimilar metals shall be
mechanically separated to prevent electrolysis. Stainless steel fasteners shall
be used to secure dissimilar metals.

7.        Sizes
and quantities for signs shall be as outlined in the attached exhibits for each
sign type.

 F-1
 

8.        The
Tenant shall maintain all signs in like-new condition. The Landlord may, at
Tenant’s expense, replace, refurbish or remove any sign that has deteriorated.

9.        The
Tenant is responsible for all expenses related to their signs, including design
fees, cost of fabrication and installation, and cost of eventual sign removal,
including repair of any damage to the building.

APPROVALS:

The Tenant must provide sign design drawings for the Landlord’s review
and approval. The design drawings submitted to the Landlord will be drawn to
scale and will indicate copy sizes, colors and materials.

Drawings for approval should be submitted to:

Michael Nelson, Senior Property Manager

Legacy Partners Commercial, Inc.

13520 Evening Creek Dr. North, Suite 130

San Diego, CA 92128

Office: (858) 385-2600 

Fax: (858)385-2620

CONFORMANCE: At the Tenant’s expense, the Landlord
may replace, remove or correct any sign installed without written approval, or
any sign that does not conform with the design drawings as submitted.

SIGN ACCEPTABILITY: Only those sign types and sign
locations specifically described herein are acceptable. There will be no
exceptions without specific written approval by the Landlord. Temporary signs
will not be allowed.

APPROVED SIGN DESIGN AND FABRICATION COMPANY:

The company referenced below has been approved by the Landlord to
design, produce and install the signs specified herein for Legacy Sabre
Springs.

Clear Sign & Design, Inc.

170 Navajo Street · San Marcos, CA
92069

Phone: 760-736-8111 · Fax: 760-736-8121

Or other sign company approved by Landlord.

 F-2
 

 

 F-3
 

 

 F-4
 

 

 F-5
 

 

 F-6
 

 

 F-7
 

 

 F-8

EXHIBIT G

VISITOR
PARKING LOCATION

 G-1

RIDER

EXTENSION
OPTION RIDER

This
Extension Option Rider (“Extension Rider”)
is made and entered into by and between LEGACY SABRE SPRINGS, LLC, a California
limited liability company (“Landlord”),
and 1ST PACIFIC BANK OF CALIFORNIA, a California corporation (“Tenant”), and is dated as of the date of
the Office Lease (“Lease”) by and
between Landlord and Tenant to which this Extension Rider is attached. The
agreements set forth in this Extension Rider shall have the same force and
effect as if set forth in the Lease. To the extent the terms of this Extension
Rider are inconsistent with the terms of the Lease, the terms of this Extension
Rider shall control.

1. Option
Right. Landlord hereby grants Tenant two (2) options to extend the Lease
Term for a period of five (5) years each (each, an “Option Term”), which options shall be exercisable only by
written Exercise Notice (as defined below) delivered by Tenant to Landlord as
provided below. Upon the proper exercise of an option to extend, the Lease Term
shall be extended for the applicable Option Term. Notwithstanding the
foregoing, at Landlord’s option, in addition to any other remedies available to
Landlord under the Lease, at law and/or in equity, Tenant shall not have the
right to extend the Lease Term for the applicable Option Term if as of the date
of delivery of the Exercise Notice by Tenant, or as of the end of the Lease
Term (or prior Option Term, if applicable), Tenant is in default under the
Lease after expiration of any applicable notice and cure period. The rights
contained in this Extension Rider shall be personal to the Original Tenant and
any Affiliate of Original Tenant to which Original Tenant’s entire interest in
the Lease has been assigned pursuant to Section 14.7 of the Lease and may only
be exercised by the Original Tenant or such Affiliate assignee, as the case may
be (and not any other assignee, sublessee or other transferee of the Original
Tenant’s interest in the Lease) if the Original Tenant or such Affiliate
assignee, as the case may be, occupies the entire Premises as of the date of
the Exercise Notice.

2. Option
Rent. The annual Base Rent payable by Tenant during the applicable Option
Term (the “Option Rent”) shall be
equal to the “Fair Market Rental Rate” for the Premises. As used herein, the “Fair Market Rental Rate” for purposes of
determining the annual Base Rent for the Option Term shall mean the annual Base
Rent at which tenants, as of the commencement of the applicable Option Term,
will be leasing non-sublease space comparable in size, location and quality to
the Premises for a comparable term, which comparable space is located in the
Building, the Adjacent Building and in other comparable first class office
buildings in the Central San Diego County area, taking into consideration all
free rent and other out-of-pocket concessions generally being granted at such
time for such comparable space for the applicable Option Term (including,
without limitation, any tenant improvement allowance provided for such
comparable space, with the amount of such tenant improvement allowance to be
provided for the Premises during the applicable Option Term to be determined
after taking into account the age, quality and layout of the tenant
improvements in the Premises as of the commencement of the applicable Option
Term with consideration given to the fact that the improvements existing in the
Premises are specifically suitable to Tenant). All other terms and conditions
of the Lease shall apply throughout the applicable Option Term; however, Tenant
shall, in no event, have the option to extend the Lease Term beyond the last
Option Term described in Section 1 above.

3. Exercise
of Options. Each of the options contained in this Extension Rider shall be
exercised by Tenant, if at all, only in the following manner: (i) Tenant shall
deliver written notice (“Interest Notice”)
to Landlord not more than ten (10) months nor less than nine (9) months prior
to the expiration of the initial Lease Term (or first Option Term, as
applicable) stating that Tenant may be interested in exercising its option;
(ii) Landlord, after receipt of Tenant’s Interest Notice, shall deliver notice
(the “Option Rent Notice”) to
Tenant not less than seven (7) months prior to the expiration of the initial
Lease Term (or first Option Term, as applicable) setting forth the Option Rent;
and (iii) if Tenant wishes to exercise such option, Tenant shall, on or before
the date (the “Exercise Date”)
which is six (6) months prior to the expiration of the initial Lease Term (or
first Option Term, as applicable), exercise the option by delivering written
notice (“Exercise Notice”) thereof
to Landlord. Tenant’s failure to deliver the Interest Notice or Exercise Notice
on or before the applicable delivery dates therefor specified hereinabove shall
be deemed to constitute Tenant’s waiver of its extension right hereunder.
Tenant’s failure to timely and properly exercise the first extension option
shall render all subsequent extension options (if any) null and void and of no
further force or effect.

4. Determination
of Option Rent. Tenant shall have no right to object to the Option Rent
provided by Landlord, and if Tenant disagrees with Landlord’s determination of
the Option Rent but Landlord and Tenant are unable to resolve such disagreement
as to the Option Rent prior to the Exercise Date, then either (i) Tenant shall
accept Landlord’s determination of the Option Rent by exercising its option to
extend the Lease Term by delivering Tenant’s Exercise Notice to Landlord on or
before the Exercise Date, or (ii) Tenant shall be deemed to have relinquished
its option to extend the Lease Term, in which event Tenant’s option to extend
the Lease Term (and any subsequent right to extend the Lease Term) shall be
null and void as of the Exercise Date, and Landlord and Tenant shall have no
further liability to the other under this Extension Rider.

 1
 

 

	
  

  	
   

  	
  “Landlord”:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LEGACY SABRE SPRINGS, LLC, 

  
	
   

  	
   

  	
  a California limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Legacy Partners 2343 L.P., a California limited
  partnership, its managing member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Gary Rossi

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Gary Rossi

  
	
   

  	
   

  	
   

  	
  Its:

  	
   

  
							

 

	
  

  	
   

  	
  “Tenant”:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1ST PACIFIC BANK OF
  CALIFORNIA,

  
	
   

  	
   

  	
  a California corporation 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ A. Vincent Siciliano

  
	
   

  	
   

  	
   

  	
  Name:

  	
  A. Vincent Siciliano

  
	
   

  	
   

  	
   

  	
  Its:

  	
  CEO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
   

  
						

 

 2Exhibit 10.10

AMENDMENT NO 1 TO LEASE

THIS AMENDMENT
NO. 1 TO LEASE (“Amendment No. 1”) is dated as of January 27, 2005, by and between KILROY REALTY, L.P., a Delaware Limited
Partnership, KILROY REALTY CORPORATION, a
Maryland Corporation, General Partner (“Landlord”), and 1st PACIFIC BANK OF
CALIFORNIA, a California
Corporation (“Tenant”), with reference to the following facts and objectives:

R E C I T A L S:

A.                         Legacy Sabre Springs, LLC, predecessor-in-interest to Landlord, acting in
the capacity of and therein referred to as
Landlord, entered into a Lease dated September 30, 2004, with Tenant,
acting in the capacity of and therein referred to as Tenant (the “Lease”) for
Suite 100 (the “Premises”), containing
approximately 5,316 rentable square feet, located in a six-story building, the street
address of which is 13500 Evening Creek Drive North, San Diego, California
92128 (“Building”), containing approximately 140,915 rentable square feet. The
Building comprises a portion of the Kilroy Sabre Springs project (the “Project”),
which also contains a second six-story office building containing approximately
140,915, with a street address of 13520 Evening Creek Drive North, San Diego,
California, 92128. The Lease and this Amendment No. 1 are hereinafter collectively
referred to as the “Lease.”

B.                           Landlord and Tenant now wish to amend the Lease to
confirm the commencement and
expiration dates of the term, as hereinafter provided.

NOW, THEREFORE, in consideration of the foregoing Recitals and the mutual covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant agree as follows:

1.                               Confirmation
of Dates

The
parties hereby confirm that the Term of the Lease will commence February 7,
2005 (“Lease Commencement Date”) for a term
of approximately eighty-four (84) months, expiring on February 29, 2012
(unless sooner terminated or extended as provided in the Lease.)

2.                               Rent

Rent shall commence February 7, 2005, in the amount of $14,884.80
per month, subject to abatement
as provided in Article 3 of the Lease.

3.                               Tenant’s Share

Tenant’s Share of Operating Expenses, Tax Expenses and
Utilities Costs for the Premises is 3.77%, and Tenant’s Base Year for Operating
Expenses, Tax Expenses and Utilities is calendar year 2005. Tenant’s obligation to commence payment
of Tenant’s Share of Operating Expenses, Tax Expenses and Utilities Costs is
January 1, 2006.

4.                            Payments and Notices

4.1                          Landlord’s address for purposes of payments and
notices pursuant to Section 24.19
of the Lease is hereby confirmed to be as follows:

Kilroy
Realty, L.P.

12200 W. Olympic Blvd., Suite 200

Los Angeles, CA 90064

Attn: Legal Department

Tel No. (310) 481-8400

Fax No. (310) 481-6530

With a copy to:                               Kilroy Realty, L.P.

13500 Evening Creek Drive North, Suite 130

San Diego, CA 92128

Attn: Asset Management

Tel No. (858) 513-3998

Fax No. (858) 513-2588

4.2                       Any correctly addressed notice that is refused, unclaimed, or
undeliverable because of an act or omission
of the party to be notified shall be considered to effective as of the first

 1
 

date that the notice was refused, unclaimed, or
considered undeliverable by the postal authorities, messenger, or overnight delivery service.

5.                               Entire Agreement

This Amendment No. 1 embodies the entire understanding
between Landlord and Tenant with respect to its subject matter hereof and can be changed only by an
instrument in writing signed by Landlord and Tenant. In the event of conflict
between the terms of the Lease and the terms of this Amendment No. 1, the terms
of this Amendment No. 1 shall prevail.

6.                               Counterparts

This Amendment No. 1 may be executed in
counterparts, including facsimile counterparts, each of which shall be
deemed an original, but all of which, together, shall constitute one and the same Amendment No. 1.

7.                             Authority

Each individual executing this Amendment No. 1
represents mat he or she is duly authorized to execute and deliver this
Amendment No. 1 and that this Amendment No. 1 is binding upon each of the respective parties in accordance with its
terms.

8.                               Miscellaneous

Capitalized terms used herein that are defined in the
Lease, as amended, shall have the same meaning when used in this Amendment No. 1. Any Exhibits attached hereto
are by this reference incorporated herein. Landlord and Tenant each hereby
acknowledge mat to their best information and belief no default exists under
the provisions of the Lease. Except as herein and previously amended the Lease is hereby ratified, affirmed
and approved and shall continue to apply in full force and effect.

IN
WITNESS WHEREOF, the
parties hereto have executed this Amendment No. 1 as of the date first herein
above written.

	
  KILROY REALTY, L.P.,

  	
   

  	
  lst PACIFIC BANK OF CALIFORNIA,

  
	
  A Delaware
  Limited Partnership

  	
   

  	
  A California Corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  KILROY
  REALTY CORPORATION,

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  A Maryland
  Corporation

  	
   

  	
   

  
	
   

  	
  General Parmer

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  	
  “TENANT”

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “LANDLORD”

  	
   

  	
   

  
																			

 

 2

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