Document:

exv10w31

 

EXHIBIT 10.31

STANDARD MULTI-TENANT
OFFICE LEASE - GROSS

AIR COMMERCIAL REAL ESTATE ASSOCIATION

1. Basic Provisions (“Basic Provisions”).

     1.1 Parties: This Lease (“Lease”), dated for reference purposes only March 5,
2004, is made
by and between E Street LLC, a California limited liability company
(“Lessor”)
and SOUTHWEST COMMUNITY BANK
(collectively the “Parties”, or individually a “Party”).

     1.2(a)
Premises: That certain portion of the Project (as defined below), known as Suite Numbers(s) 100
floor(s), consisting of approximately 5,386 rentable square feet and approximately 4,552
useable square feet(“Premises”). The Premises are located at: 599 North E Street, in
the City of San Bernardino, County of San Bernardino, State of California, with zip code 92401. In addition to Lessee’s rights to use and occupy the Premises as hereinafter specified, Lessee shall have
non-exclusive rights to the Common Areas (as defined in Paragraph 2.7 below) as hereinafter
specified, but shall not have any rights to the roof, the exterior walls, the area above the
dropped ceilings, or the utility raceways of the building containing the Premises (“Building”) or
to any other buildings in the Project. The Premises, the Building, the Common Areas, the land upon
which they are located, along with all other buildings and improvements thereon, are herein
collectively referred to as the “Project.” The Project consists of approximately 18,275 rentable square feet. (See also Paragraph 2)

     1.2(b)
Parking : 22 unreserved and 5 reserved vehicle parking spaces at a monthly cost of $N/A
per unreserved space and $N/A per reserved space. (See Paragraph 2.6)

     1.3
Term: 10 years and N/A months (“Original Term”)
commencing July 15, 2004 (“Commencement Date”) and ending July 14, 2014
(“Expiration Date”). (See also Paragraph 3)

     1.4 Early Possession: (“Early Possession Date”).
(See also Paragraphs 3.2 and 3.3)

     1.5 Base Rent: $10,368.05 per month (“Base Rent)”, payable on the first day of each month
commencing upon occupancy. (See also Paragraph 4)
If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted.

     1.6 Lessee’s Share of Operating Expense Increase: 29.5 percent percent (29.5%) (“Lessee’s Share”).
Lessee’s Share has been calculated by dividing the approximate rentable square footage of the
Premises by the total approximate square footage of the rentable space contained in the Project and
shall not be subject to revision except in connection with an actual change in the size of the
Premises or change in the space available for lease in the Project.

     1.7 Base Rent and Other Monies Paid Upon Execution:

	 	(a)  	Base Rent: $10,368.05 for the period first month of occupancy of “Premises”
	 
	 	(b)  	Security Deposit: $10,368.05 (“Security Deposit”). (See also Paragraph 5)
	 
	 	(c)  	Parking: $N/A for the period N/A
	 
	 	(d)  	Other: $N/A for N/A
	 
	 	(e)  	Total Due Upon Execution of this Lease: $20,736.10

     1.8 Agreed Use: Bank branch and related activities. The leased Premises includes
non-exclusive use of the employee breakroom located on the ground floor of the Building
Project. Lessee’s prorata share of breakroom is 66% (349 rentable sq. ft. (See also Paragraph 6)

     1.9 Base Year; Insuring Party. The Base Year is 2005. Lessor is the “Insuring Party”. (See also Paragraphs 4.2 and 8)

     1.10 Real Estate Brokers: (See also Paragraph 15)

	  	(a) Representation: The following real estate brokers(the “Brokers”)and brokerage
relationships exist in this transaction (check applicable boxes):

o represents Lessor exclusively (“Lessor’s Broker”);

o represents Lessee exclusively (“Lessee’s Broker”); or

þ F.E. Schnetz Commercial Brokerage represents both Lessor and Lessee (“Dual Agency”).

     (b) Payment to Brokers: Upon execution and delivery of this Lease by both Parties, Lessor
shall pay to the Brokers the brokerage fee
agreed to in a separate written agreement (or if there is no such agreement, the sum of $ 50,933.05
or N/A % of the total Base
Rent for the brokerage services rendered by the Brokers).

     1.11 Guarantor. The
obligations of the Lessee under this Lease shall be guaranteed by NONE
(“Guarantor”). (See also Paragraph 37)

     1.12 Business Hours for the Building: 8:00 a.m. to 6:00 p.m., Mondays through Fridays (except Building Holidays)
and 9:00 a.m. to 3:00 p.m. on Saturdays (except Building Holidays). “Building Holidays” shall mean the dates of observation of New
Year’s Day, President’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas
Day, and
           
           

Notwithstanding the Business Hours for the Building, Lessee shall access to the Premises 24 hours
per day, 7 clays per week .

     1.13
Lessor Supplied Services. Notwithstanding the provisions of Paragraph 11.1, Lessor is NOT obligated to provide the following:

o Janitorial services

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o Electricity

o Other (specify):

     1.14 Attachments. Attached hereto are the following, all of which constitute a part of this Lease:

þ an Addendum consisting of Paragraphs 51 through 56

þ a plot plan depicting the Premises;

þ a current set of the Rules and Regulations;

o a Work Letter;

o a janitorial schedule;

þ other (specify):
Paragraph 57 “Rent Adjustments” and Paragraph 58
“Option To Extend Lease ”

2. Premises.

     2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the
Premises, for the term, at the rental, and upon all
of the terms, covenants and conditions set forth in this Lease. Unless otherwise provided herein,
any statement of size set forth in this Lease, or that may
have been used in calculating Rent, is an approximation which the Parties agree is reasonable and
any payments based thereon are not subject to revision whether or not the actual size is more or
less. Note: Lessee is advised to verify the actual size prior to executing this Lease.

     2.2 Condition. Lessor shall deliver the Premises to Lessee in a clean condition on the
Commencement Date or the Early Possession Date, whichever first occurs (“Start Date”), and warrants
that the existing electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air
conditioning systems (“HVAC”), and all other items which the Lessor is obligated to construct
pursuant to the Work Letter attached hereto, if any, other than those constructed by Lessee, shall
be in good operating condition on said date.

     2.3 Compliance. Lessor warrants that the improvements comprising the Premises and the Common
Areas comply with the building codes that were in effect at the time that each such improvement, or
portion thereof, was constructed, and also with all applicable laws, covenants or restrictions of
record, regulations, and ordinances (“Applicable Requirements”) in effect on the Start Date. Said
warranty does not apply to the use to which Lessee will put the Premises, modifications which may
be required by the Americans with Disabilities Act or any similar laws as a result of Lessee’s use
(see Paragraph 50), or to any Alterations or Utility Installations (as defined in Paragraph 7.3(a))
made or to be made by Lessee. NOTE: Lessee is responsible for determining whether or not the zoning
and other Applicable Requirements are appropriate for Lessee’s intended use, and acknowledges that
past uses of the Premises may no longer be allowed. If the Premises do not comply with said
warranty, Lessor shall, except as otherwise provided, promptly after receipt of written notice from
Lessee setting forth with specificity the nature and extent of such non-compliance, rectify the
same. If the Applicable Requirements are hereafter changed so as to require during the term of this
Lease the construction of an addition to or an alteration of the Premises, the remediation of any
Hazardous Substance, or the reinforcement or other physical modification of the Premises (“Capital
Expenditure”), Lessor and Lessee shall allocate the cost of such work as follows:

          (a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result
of the specific and unique use of the Premises by Lessee as compared with uses by tenants in
general, Lessee shall be fully responsible for the cost thereof, provided, however that if such
Capital Expenditure is required during the last 2 years of this Lease and the cost thereof exceeds
6 months’ Base Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in
writing, within 10 days after receipt of Lessee’s termination notice that Lessor has elected to pay
the difference between the actual cost thereof and the amount equal to 6 months’ Base Rent. If
Lessee elects termination, Lessee shall immediately cease the use of the Premises which requires
such Capital Expenditure and deliver to Lessor written notice specifying a termination date at
least 90 days thereafter. Such termination date shall, however, in no event be earlier than the
last day that Lessee could legally utilize the Premises without commencing such Capital
Expenditure.

          (b) If such Capital Expenditure is not the result of the specific and unique use of the
Premises by Lessee (such as, governmentally mandated seismic modifications), then Lessor and Lessee
shall allocate the cost of such Capital Expenditure as follows: Lessor shall advance the funds
necessary for such Capital Expenditure but Lessee shall be obligated to pay, each month during the
remainder of the term of this Lease, on the date on which Base Rent is due, an amount equal to the
product of multiplying Lessee’s share of the cost of such Capital Expenditure (the percentage
specified in Paragraph 1.6 by a fraction, the numerator of which is one, and the denominator of
which is 144 (ie. 1/144th of the cost per month). Lessee shall pay interest on the unamortized
balance of Lessee’s share at a rate that is commercially reasonable in the judgment of Lessor’s
accountants. Lessee may, however, prepay its obligation at any time. Provided, however, that if
such Capital Expenditure is required during the last 2 years of this Lease or if Lessor reasonably
determines that it is not economically feasible to pay its share thereof, Lessor shall have the
option to terminate this Lease upon 90 days prior written notice to Lessee unless Lessee notifies
Lessor, in writing, within 10 days after receipt of Lessor’s termination notice that Lessee will
pay for such Capital Expenditure. If Lessor does not elect to terminate, and fails to tender its
share of any such Capital Expenditure, Lessee may advance such funds and deduct same, with
Interest, from Rent until Lessor’s share of such costs have been fully paid. If Lessee is unable to
finance Lessor’s share, or if the balance of the Rent due and payable for the remainder of this
Lease is not sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the right
to terminate this Lease upon 30 days written notice to Lessor.

          (c) Notwithstanding the above, the provisions concerning Capital Expenditures are intended to
apply only to nonvoluntary, unexpected, and new Applicable Requirements. If the Capital
Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use,
change in intensity of use, or modification to the Premises then, and in that event, Lessee shall
be fully responsible for the cost thereof, and Lessee shall not have any right to terminate this
Lease.

     2.4 Acknowledgements. Lessee acknowledges that: (a) Lessee has been advised by Lessor and/or
Brokers to satisfy itself with respect to the condition of the Premises (including but not limited
to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance
with Applicable Requirements), and their suitability for Lessee’s intended use, (b) Lessee has made
such investigation as it deems necessary with reference to such matters and assumes all
responsibility therefor as the same relate to its occupancy of the Premises, and (c) neither
Lessor, Lessor’s agents, nor Brokers have made any oral or written representations or warranties
with respect to said matters other than as set forth in this Lease. In addition, Lessor
acknowledges that: (i) Brokers have made no representations, promises or warranties concerning
Lessee’s ability to honor the Lease or suitability to occupy the Premises, and (ii) it is Lessor’s
sole responsibility to investigate the financial capability and/or suitability of all proposed
tenants.

     2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in Paragraph 2 shall be of
no force or effect if immediately prior to the Start Date, Lessee was the owner or occupant of the
Premises. In such event, Lessee shall be responsible for any necessary corrective work.

     2.6 Vehicle Parking. So long as Lessee is not in default, and subject to the Rules and
Regulations attached hereto, and as established by Lessor from time to time, Lessee shall be
entitled to rent-and use the number of parking spaces specified in Paragraph 1.2(b)

          (a) If Lessee commits, permits or allows any of the prohibited activities described in the
Lease or the rules then in effect, then Lessor shall have the right, without notice, in addition to
such other rights and remedies that it may have, to remove or tow away the vehicle involved and
charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor.

          (b) The monthly rent per parking space specified in Paragraph 1.2(b) is subject to change upon
30 days prior written notice to Lessee. The rent for the parking is payable one month in advance
prior to the first day of each calendar month.

     2.7 Common Areas — Definition. The term “Common “Common Areas” is defined as all areas and
facilities outside the Premises and within the exterior boundary line of the Project and interior
utility raceways and installations within the Premises that are provided and designated by the
Lessor from time to time for the general nonexclusive use of Lessor, Lessee and other tenants of
the Project and their respective employees, suppliers, shippers, customers, contractors and
invitees, including, but not limited to, common entrances, lobbies, corridors, stairwells, public
restrooms, elevators, parking areas, loading and unloading areas, trash areas, roadways, walkways,
driveways and landscaped areas.

     2.8 Common Areas — Lessee’s Rights. Lessor grants to Lessee, for the benefit of Lessee and its
employees, suppliers, shippers, contractors, customers and invitees, during the term of this Lease,
the nonexclusive right to use, in common with others entitled to such use, the Common Areas as they
exist from time to time, subject to any rights, powers, and privileges reserved by Lessor under the
terms hereof or under the terms of any rules and regulations or restrictions governing the use of
the Project. Under no circumstances shall the right herein granted to use the Common Areas be
deemed to include the right to store any property, temporarily or permanently, in the Common Areas.
Any such storage shall be permitted only by the prior written consent of Lessor or Lessor’s
designated agent, which consent may be revoked at any time. In the event that any unauthorized
storage shall occur then Lessor shall have the right, without notice, in addition to such other
rights and remedies that it may have, to remove the property and charge the cost to Lessee, which
cost shall be immediately payable upon demand by Lessor.

     2.9 Common Areas — Rules and Regulations. Lessor or such other person(s) as Lessor may appoint
shall have the exclusive control and management of the Common Areas and shall have the right, from
time to time, to adopt, modify, amend and enforce reasonable rules and regulations (“Rules and
Regulations”) for the management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the convenience of other
occupants or tenants of the Building and the Project and their invitees. The Lessee agrees to abide
by and conform to all such Rules and Regulations, and to cause its employees, suppliers, shippers,
customers, contractors and invitees to so abide and conform. Lessor shall not be responsible to
Lessee for the noncompliance with said Rules and Regulations by other tenants of the Project.

     2.10 Common Areas — Changes. Lessor shall have the right, in Lessor’s sole discretion, from
time to time.

          (a) To make changes to the Common Areas, including, without limitation, changes in the
location, size, shape and number of the lobbies, windows, stairways, air shafts, elevators,
escalators, restrooms, driveways, entrances, parking spaces, parking areas, loading and unloading
areas,

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ingress, egress, direction of traffic, landscaped an walkways and utility raceways;

          (a) To close temporarily any of the Common Areas for maintenance purposes so long as
reasonable access to the Premises remains available;

          (b) To designate other land outside the boundaries of the Project to be a part of the Common Areas;

          (c) To add additional buildings and improvements to the Common Areas;

          (d) To use the Common Areas while engaged in making additional improvements, repairs or
alterations to the Project, or any portion thereof; and

          (e) To do and perform such other acts and make such other changes in, to or with respect to
the Common Areas and Project as Lessor may, in the exercise of sound business judgment, deem to be
appropriate.

3. Term.

     3.1 Term. The Commencement Date, Expiration Date and Original Term of this Lease are as
specified in Paragraph 1.3.

     3.2 Early Possession. If Lessee totally or partially occupies the Premises prior to the
Commencement Date, the obligation to pay Base Rent shall be abated for the period of such early
possession. All other terms of this Lease (including but not limited to the obligations to pay
Lessee’s Share of the Operating Expense Increase) shall, however, be in effect during such period.
Any such early possession shall not affect the Expiration Date.

     3.3 Delay In Possession. Lessor agrees to use its best commercially reasonable efforts to
deliver possession of the Premises to Lessee by the Commencement Date. If, despite said efforts,
Lessor is unable to deliver possession by such date, Lessor shall not be subject to any liability
therefor, nor shall such failure affect the validity of this Lease. Lessee shall not, however, be
obligated to pay Rent or perform its other obligations until Lessor delivers possession of the
Premises and any period of rent abatement that Lessee would otherwise have enjoyed shall run from
the date of delivery of possession and continue for a period equal to what Lessee would otherwise
have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of
Lessee. If possession is not delivered within 60 days after the Commencement Date, as the same may
be extended under the terms of any Work Letter executed by Parties, Lessee may, at its option, by
notice in writing within 10 days after the end of such 60 day period, cancel this Lease, in which
event the Parties shall be discharged from all obligations hereunder. If such written notice is not
received by Lessor within said 10 day period, Lessee’s right to cancel shall terminate. If
possession of the Premises is not delivered within 120 days after the Commencement Data, this Lease
shall terminate unless other agreements are reached between Lessor and Lessee, in writing.

     3.4 Lessee Compliance. Lessor shall not be required to deliver possession of the Premises to
Lessee until Lessee complies with its obligation to provide evidence of insurance (Paragraph 8.5).
Pending delivery of such evidence, Lessee shall be required to perform all of its obligations under
this Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessor’s
election to withhold possession pending receipt of such evidence of insurance. Further, if Lessee
is required to perform any other conditions prior to or concurrent with the Start Date, the Start
Date shall occur but Lessor may elect to withhold possession until such conditions are satisfied.

4. Rent.

     4.1. Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease
(except for the Security Deposit) are deemed to be rent (“Rent”).

     4.2 Operating Expense Increase. Lessee shall pay to Lessor during the term hereof, in addition
to the Base Rent, Lessee‘s Share of the amount by which all Operating Expenses for each
Comparison Year exceeds the amount of all Operating Expenses for the Base Year, such excess being
hereinafter referred to as the “Operating Expense Increase”, in accordance with the following
provisions:

          (a) “Base Year” is as specified in Paragraph 1.9.

          (b) “Comparison Year” is defined as each calendar year during the term of this Lease
subsequent to the Base Year; provided, however, Lessee shall have no obligation to pay a share of
the Operating Expense Increase applicable to the first 12 months of the Lease Term (other than such
as are mandated by a governmental authority, as to which government mandated expenses Lessee shall
pay Lessee’s Share, notwithstanding they occur during the first twelve (12) months). Lessee’s Share
of the Operating Expense Increase for the first and last Comparison Years of the Lease Term shall
be prorated according to that portion of such Comparison Year as to which Lessee is responsible for
a share of such increase.

          (c) “Operating Expenses” include all costs incurred by Lessor relating to the ownership and
operation of the Project, calculated as if the Project was at least 95% occupied, including, but
not limited to, the following:

               (i) The operation, repair, and maintenance in neat, clean, safe, good order and condition, but
not the replacement (see subparagraph (g)), of the following:

                    (aa) The Common Areas, including their surfaces, coverings, decorative items, carpets, drapes
and window coverings, and including parking areas, loading and unloading areas, trash areas,
roadways, sidewalks, walkways, stairways, parkways, driveways, landscaped areas, striping, bumpers,
irrigation systems, Common Area lighting facilities, building exteriors and roofs, fences and
gates;

                    (bb) All heating, air conditioning, plumbing, electrical systems, life safety equipment,
communication systems and other equipment used in common by, or for the benefit of, lessees or
occupants of the Project, including elevators and escalators, tenant directories, fire detection
systems including sprinkler system maintenance and repair.

               (ii) Trash disposal, janitorial and security services, pest control services, and the costs of
any environmental inspections;

               (iii) Any other service to be provided by Lessor that is elsewhere in this Lease stated to be
an “Operating Expense”;

               (iv) The cost of the premiums for the insurance policies maintained by Lessor pursuant to
paragraph 8 and any
deductible portion of an insured loss concerning the Building or the Common Areas;

               (v) The amount of the Real Property Taxes payable by Lessor pursuant to paragraph 10;

               (vi) The cost of water, sewer, gas, electricity, and other publicly mandated services not
separately metered;

               (vii) Labor, salaries, and applicable fringe benefits and costs, materials, supplies and
tools, used in maintaining and/or cleaning the Project and accounting and management fees
attributable to the operation of the Project. Accounting and management fees shall be reasonable
and not more than the industry standard for outside professional accounting and management fees for
buildings similar to the building Project;

               (viii) The cost of any Capital Expenditure to the Building or the Project not covered under
the provisions of Paragraph 2.3 provided; however, that Lessor shall allocate the cost of any such
Capital Expenditure over a 12 year period and Lessee shall not be required to pay more than
Lessee’s Share of 1/144th of the cost of such Capital Expenditure in any given month;

               (ix) Replacement of equipment or improvements that have a useful life for accounting purposes
of 5 years or less.

          (d) Any item of Operating Expense that is specifically attributable to the Premises, the
Building or to any other building in the Project or to the operation, repair and maintenance
thereof, shall be allocated entirely to such Premises, Building, or other building. However, any
such item that is not specifically attributable to the Building or to any other building or to the
operation, repair and maintenance thereof, shall be equitably allocated by Lessor to all buildings
in the Project.

          (e) The inclusion of the improvements, facilities and services set forth in Subparagraph
4.2(c) shall not be deemed to impose an obligation upon Lessor to either have said improvements or
facilities or to provide those services unless the Project already has the same, Lessor already
provides the services, or Lessor has agreed elsewhere in this Lease to provide the same or some of
them.

          (f) Lessee’s Share of Operating Expense Increase shall be payable by Lessee within 10 days
after a reasonably detailed statement of actual expenses is presented to Lessee by Lessor. At
Lessor’s option, however, an amount may be estimated by Lessor from time to time in advance of
Lessee’s Share of the Operating Expense Increase for any Comparison year, and the same shall be
payable monthly during each Comparison Year of the Lease term, on the same day as the Base Rent is
due hereunder. In the event that Lessee pays Lessor’s estimate of Lessee’s Share of Operating
Expense Increase as aforesaid, Lessor shall deliver to Lessee within 60 days after the expiration
of each Comparison Year a reasonably detailed statement showing Lessee’s Share of the actual
Operating Expense Increase incurred during such year. If Lessee’s payments under this paragraph (f)
during said Comparison Year exceed Lessee’s Share as indicated on said statement, Lessee shall be
entitled to credit the amount of such overpayment against Lessee’s Share of Operating Expense
Increase next failing due. If Lessee‘s payments under this paragraph during said
Comparison Year were less than Lessee’s Share as indicated on said statement, Lessee shall pay to
Lessor the amount of the deficiency within 10 days after delivery by Lessor to Lessee of said
statement. Lessor and Lessee shall forthwith adjust between them by cash payment any balance
determined to exist with respect to that portion of the last Comparison Year for which Lessee is
responsible as to Operating Expense Increases, notwithstanding that the Lease term may have
terminated before the end of such Comparison Year.

          (g) Operating Expenses shall not include the costs of replacement for equipment or capital
components such as the roof, foundations, exterior walls or a Common Area capital improvement, such
as the parking lot paving, elevators, fences that have a useful life for accounting purposes of 5
years or more unless it is of the type described in paragraph 4.2(c) (viii), in which case their
cost shall be included as above provided.

          (h) Operating Expenses shall not include any expenses paid by any tenant directly to third
parties, or as to which Lessor is
otherwise reimbursed by any third party, other tenant, or by insurance proceeds.

     4.3 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of
the United States on or before the day on which it is due, without offset or deduction (except as
specifically permitted in this Lease). Rent for any period during the term hereof which is for less
than one full calendar month shall be prorated based upon the actual number of days of said month.
Payment of Rent shall be made to Lessor at its address stated herein or to such other persons or
place as Lessor may from time to time designate in writing. Acceptance of a payment which is less
than the amount then due shall not be a waiver of Lessor’s rights to the balance of such Rent,
regardless of Lessor’s endorsement of any check so stating. In the event that any check, draft, or
other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees
to pay to Lessor the sum of $25 in addition to any Late Charge. Payments will be applied first to
accrued late charges and attorney’s fees, second to accrued interest then to Base Rent and

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Operating Expense Increase, and any remaining a it to any other outstanding charges or costs.

5. Security Deposit. Lessee shall deposit r Lessor upon execution hereof the Security Deposit
security for Lessee’s faithful performance of its obligations under this Lease. If Lessee fails to
pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or retain all or any
portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or
compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of the Security Deposit, Lessee shall
within 10 days after written request therefor, deposit monies with Lessor sufficient to restore
said Security Deposit to the full amount required by this Lease. If the Base Rent increases during
the term of this Lease, Lessee shall, upon written request from Lessor, deposit additional moneys
with Lessor so that the total amount of the Security Deposit shall at all times bear the same
proportion to the increased Base Rent as the initial Security Deposit bore to the initial Base
Rent. Should the Agreed Use be amended to accommodate a material change in the business of Lessee
or to accommodate a sublessee or assignee, Lessor shall have the right to increase the Security
Deposit to the extent necessary, in Lessor’s reasonable judgment, to account for any increased wear
and tear that the Premises may suffer as a result thereof. If a change in control of Lessee occurs
during this Lease and following such change the financial condition of Lessee is, in Lessor’s
reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with Lessor
as shall be sufficient to cause the Security Deposit to be at a commercially reasonable level based
on such change in financial condition. Lessor shall not be required to keep the Security Deposit
separate from its general accounts- Within 14 days after the expiration or termination of this
Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and otherwise within 30
days after the Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall return
that portion of the Security Deposit not used or applied by Lessor. No part of the Security Deposit
shall be considered to be held in trust, to bear interest or to be prepayment for any monies to be
paid by Lessee under this Lease.

6. Use.

     6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal
use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or
permit the use of the Premises in a manner that is unlawful, creates damage, waste or a nuisance,
or that disturbs occupants of or causes damage to neighboring premises or properties. Lessor shall
not unreasonably withhold or delay its consent to any written request for a modification of the
Agreed Use, so long as the same will not impair the structural integrity of the improvements of the
Building, will not adversely affect the mechanical, electrical, HVAC, and other systems of the
Building, and/or will not affect the exterior appearance of the Building. If Lessor elects to
withhold consent, Lessor shall within 7 days after such request give written notification of same,
which notice shall include an explanation of Lessor’s objections to the change in the Agreed Use.

     6.2 Hazardous Substances.

          (a) Reportable Uses Require Consent. The term “Hazardous Substance” as used in this Lease
shall mean any product, substance, or waste whose presence, use, manufacture, disposal,
transportation, or release, either by itself or in combination with other materials expected to be
on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a
basis for potential liability of Lessor to any governmental agency or third party under any
applicable statute or common law theory. Hazardous Substances shall include, but not be limited to,
hydrocarbons, petroleum, gasoline, and/or crude oil or any products, byproducts or fractions
thereof. Lessee shall not engage in any activity in or on the Premises which constitutes a
Reportable Use of Hazardous Substances without the express prior written consent of Lessor and
timely compliance (at Lessee’s expense) with all Applicable Requirements. "Reportable
Use” shall mean (i) the installation or use of any above or below ground storage tank, (ii) the
generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that
requires a permit from, or with respect to which a report, notice, registration or business plan is
required to be filed with, any governmental authority, and/or (iii) the presence at the Premises of
a Hazardous Substance with respect to which any Applicable Requirements requires that a notice be
given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the
foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in
the normal course of the Agreed Use such as ordinary office supplies (copier toner, liquid paper,
glue, etc.) and common household cleaning materials, so long as such use is in compliance with all
Applicable Requirements, is not a Reportable Use, and does not expose the Premises or neighboring
property to any meaningful risk of contamination or damage or expose Lessor to any liability
therefor. In addition, Lessor may condition its consent to any Reportable Use upon receiving such
additional assurances as Lessor reasonably deems necessary to protect itself, the public, the
Premises and/or the environment against damage, contamination, injury and/or liability, including,
but not limited to, the installation (and removal on or before Lease expiration or termination) of
protective modifications (such as concrete encasements) and/or increasing the Security Deposit.

          (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a
Hazardous Substance has come to be located in, on, under or about the Premises, other than as
previously consented to by Lessor, Lessee shall immediately give written notice of such fact to
Lessor, and provide Lessor with a copy of any report, notice, claim or other documentation which it
has concerning the presence of such Hazardous Substance.

          (c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be spilled
or released in, on, under, or about the Premises (including through the plumbing or sanitary sewer
system) and shall promptly, at Lessee’s expense, comply with all Applicable Requirements and take
all investigatory and/or remedial action reasonably recommended, whether or not formally ordered or
required, for the cleanup of any contamination of, and for the maintenance, security and/or
monitoring of the Premises or neighboring properties, that was caused or materially contributed to
by Lessee, or pertaining to or involving any Hazardous Substance brought onto the Premises during
the term of this Lease, by or for Lessee, or any third party.

          (d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its agents,
employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents
and/or damages, liabilities, judgments, claims, expenses, penalties, and attorneys‘ and
consultants’ fees arising out of or involving any Hazardous Substance brought onto the Premises by
or for Lessee, or any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance under the Premises from
areas outside of the Project not caused or contributed to by Lessee). Lessee’s obligations shall
include, but not be limited to, the effects of any contamination or injury to person, property or
the environment created or suffered by Lessee, and the cost of investigation, removal, remediation,
restoration and/or abatement, and shall survive the expiration or termination of this Lease. No
termination, cancellation or release agreement entered into by Lessor and Lessee shall release
Lessee from its obligations under this Lease with respect to Hazardous Substances, unless
specifically so agreed by Lessor in writing at the time of such agreement.

          (e) Lessor Indemnification. Lessor and its successors and assigns shall indemnify, defend,
reimburse and hold Lessee, its employees and lenders, harmless from and against any and all
environmental damages, including the cost of remediation, which result from Hazardous Substances
which existed on the Premises prior to Lessee’s occupancy or which are caused by the gross
negligence or willful misconduct of Lessor, its agents or employees. Lessor’s obligations, as and
when required by the Applicable Requirements, shall include, but not be limited to, the cost of
investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration
or termination of this Lease.

          (f0 Investigations and Remediations. Lessor shall retain the responsibility and pay for any
investigations or remediation measures required by governmental entities having jurisdiction with
respect to the existence of Hazardous Substances on the Premises prior to Lessee’s occupancy,
unless such remediation measure is required as a result of Lessee’s use (including “Alterations”,
as defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible
for such payment. Lessee shall cooperate fully in any such activities at the request of Lessor,
including allowing Lessor and Lessor‘s agents to have reasonable access to the Premises
at reasonable times in order to carry out Lessor’s investigative and remedial responsibilities.

          (g) Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e))
occurs during the term of this Lease, unless Lessee is legally responsible therefor (in which case
Lessee shall make the investigation and remediation thereof required by the Applicable Requirements
and this Lease shall continue in full force and effect, but subject to Lessor’s rights under
Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either (i) investigate and
remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at
Lessor’s expense, in which event this Lease shall continue in full force and effect, or (ii) if the
estimated cost to remediate such condition exceeds 12 times the then monthly Base Rent or $100.000,
whichever is greater, give written notice to Lessee, within 30 days after receipt by Lessor of
knowledge of the occurrence of such Hazardous Substance Condition, of Lessor’s desire to terminate
this Lease as of the date 60 days following the date of such notice. In the event Lessor elects to
give a termination notice, Lessee may, within 10 days thereafter, give written notice to Lessor of
Lessee’s commitment to pay the amount by which the cost of the remediation of such Hazardous
Substance Condition exceeds an amount equal to 12 times the then monthly Base Rent or $100,000,
whichever is greater. Lessee shall provide Lessor with said funds or satisfactory assurance thereof
within 30 days following such commitment. In such event, this Lease shall continue in full force
and effect, and Lessor shall proceed to make such remediation as soon as reasonably possible after
the required funds are available. If Lessee does not give such notice and provide the required
funds or assurance thereof within the time provided, this Lease shall terminate as of the date
specified in Lessor’s notice of termination.

     6.3 Lessee’s Compliance with Applicable Requirements. Except as otherwise provided in this
Lease, Lessee shall, at Lessee’s sole expense, fully, diligently and in a timely manner, materially
comply with all Applicable Requirements, the requirements of any applicable fire insurance
underwriter or rating bureau, and the recommendations of Lessor’s engineers and/or consultants
which relate in any manner to the Premises, without regard to whether said requirements are now in
effect or become effective after the Start Date. Lessee shall, within 10 days after receipt of
Lessor’s written request, provide Lessor with copies of all permits and other documents, and other
information evidencing Lessee’s compliance with any Applicable Requirements specified by Lessor,
and shall immediately upon receipt, notify Lessor in writing (with copies of any documents
involved) of any threatened or actual claim, notice, citation, warning, complaint or report
pertaining to or involving the failure of Lessee or the Premises to comply with any Applicable
Requirements.

     6.4 Inspection; Compliance. Lessor and Lessor’s “Lender” (as defined in Paragraph 30) and
consultants shall have the right to enter into Premises at any time, in the case of an emergency,
and otherwise at reasonable times, for the purpose of inspecting the condition of the Premises and
for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid
by Lessor, unless a violation of Applicable Requirements, or a Hazardous Substance Condition (see
paragraph 9.1e) is found to exist or be imminent, or the inspection is requested or ordered by a
governmental authority. In such case, Lessee shall upon request reimburse Lessor for the cost of
such inspection, so long as such inspection is reasonably related to the violation or
contamination.

7. Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.

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     7.1 Lessee’s Obligations. Notwithstanding Lessor’s obligation to keep the Premises in good
condition and repair, Lessee shall be responsible for payment of the cost thereof to Lessor as
additional rent for that portion of the cost of any maintenance and repair of the Premises, or any
equipment (wherever located) that serves only Lessee or the Premises. to the extent such cost is
attributable to causes beyond normal wear and tear. Lessee shall be responsible for the cost of
painting, repairing or replacing wall coverings, and to repair or replace any improvements with the
Premises. Lessor may, at its option, upon reasonable notice, elect to have Lessee perform any
particular such maintenance or repairs the cost of which is otherwise Lessee’s responsibility
hereunder.

     7.2
Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2 (Condition),
2.3 (Compliance), 4.2 (Operating Expenses), 6 (Use), 7.1 (Lessee’s Obligations), 9 (Damage or
Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2,
shall keep in good order, condition and repair the foundations, exterior walls, structural
condition of interior bearing walls, exterior roof, fire sprinkler system, fire alarm and/or smoke
detection systems, fire hydrants, and the Common Areas. Lessee expressly waives the benefit of any
statute now or hereafter in effect to the extent it is inconsistent with the terms of this Lease.

     7.3 Utility Installations; Trade Fixtures; Alterations.

          (a) Definitions. The term “Utility Installations” refers to all floor and window coverings,
air lines, vacuum lines, power panels, electrical distribution, security and fire protection
systems, communication cabling, lighting fixtures, HVAC equipment, and plumbing in or on the
Premises. The term “Trade Fixtures" shall mean Lessee‘s machinery and
equipment that can be removed without doing material damage to the Premises. The term “
Alterations” shall mean any modification of the improvements, other than Utility Installations or
Trade Fixtures, whether by addition or deletion. “Lessee Owned Alterations and/or Utility
Installations” are defined as Alterations and/or Utility Installations made by Lessee that are not
yet owned by Lessor pursuant to Paragraph 7.4(a).

          (b) Consent. Lessee shall not make any Alterations or Utility Installations to the Premises
without Lessor’s prior written consent. Lessee may, however, make non-structural Utility
Installations to the interior of the Premises (excluding the roof) without such consent but upon
notice to Lessor, as long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof, ceilings, floors or any existing walls, will not affect the
electrical, plumbing, HVAC, and/or life safety systems, and the cumulative cost thereof during this
lease as extended does not exceed $2000 .Notwithstanding the foregoing, Lessee shall not make or
permit any roof penetrations and/or install anything on the roof without the prior written approval
of Lessor. Lessor may, as a precondition to granting such approval, require Lessee to utilize a
contractor chosen and/or approved by Lessor. Any Alterations or Utility Installations that Lessee
shall desire to make and which require the consent of the Lessor shall be presented to Lessor in
written form with detailed plans. Consent shall be deemed conditioned upon Lessee’s: (i) acquiring
all applicable governmental permits, (ii) furnishing Lessor with copies of both the permits and the
plans and specifications prior to commencement of the work, and (iii) compliance with all
conditions of said permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations or Utility Installations shall be performed in a workmanlike manner with good and
sufficient materials. Lessee shall promptly upon completion furnish Lessor with asbuilt plans and
specifications. For work which costs an amount in excess of one month’s Base Rent, Lessor may
condition its consent upon Lessee providing a lien and completion bond in an amount equal to 150%
of the estimated cost of such Alteration or Utility Installation and/or upon Lessee‘s
posting an additional Security Deposit with Lessor.

          (c) Liens; Bonds. Lessee shall pay, when due, all claims for labor or materials furnished or
alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are or
may be secured by any mechanic’s or materialmen’s lien against the Premises or any interest
therein. Lessee shall give Lessor not less than 10 days notice prior to the commencement of any
work in, on or about the Premises, and Lessor shall have the right to post notices of
non-responsibility. If Lessee shall contest the validity of any such lien, claim or demand, then
Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises against the
same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the
enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond in an amount equal
to 150% of the amount of such contested lien, claim or demand, indemnifying Lessor against
liability for the same. If Lessor elects to participate in any such action, Lessee shall pay
Lessor’s attorneys’ fees and costs.

     7.4 Ownership; Removal; Surrender; and Restoration.

          (a) Ownership. Subject to Lessor’s right to require removal or elect ownership as hereinafter
provided, all Alterations and Utility Installations made by Lessee shall be the property of Lessee,
but considered a part of the Premises. Lessor may, at any time, elect in writing to be the owner of
all or any specified part of the Lessee Owned Alterations and Utility Installations. Unless
otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utility
Installations shall, at the expiration or termination of this Lease, become the property of Lessor
and be surrendered by Lessee with the Premises.

          (b) Removal. By delivery to Lessee of written notice from Lessor not earlier than 90 and not
later than 30 days prior to the end of the term of this Lease, Lessor may require that any or all
Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of
this Lease. Lessor may require the removal at any time of all or any part of any Lessee Owned
Alterations or Utility Installations made without the required consent.

          (c) Surrender; Restoration. Lessee shall surrender the Premises by the Expiration Date or any
earlier termination date, with all of the improvements, parts and surfaces thereof clean and free
of debris, and in good operating order, condition and state of repair, ordinary wear and tear
excepted. “Ordinary wear and tear” shall not include any damage or deterioration that would have
been prevented by good maintenance practice. Notwithstanding the foregoing, if this Lease is for 12
months or less, then Lessee shall surrender the Premises in the same condition as delivered to
Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shall repair any
damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee owned
Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any
storage tank installed by or for Lessee. Lessee shall also completely remove from the Premises any
and all Hazardous Substances brought onto the Premises by or for Lessee, or any third party (except
Hazardous Substances which were deposited via underground migration from areas outside of the
Project) even if such removal would require Lessee to perform or pay for work that exceeds
statutory requirements. Trade Fixtures shall remain the property of Lessee and shall be removed by
Lessee. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c)
without the express written consent of Lessor shall constitute a holdover under the provisions of
Paragraph 26 below.

8. Insurance; Indemnity.

     8.1 Insurance Premiums. The cost of the premiums for the insurance policies maintained by
Lessor pursuant to paragraph 8 are included as Operating Expenses (see paragraph 4.2 (c)(iv)). Said
costs shall include increases in the premiums resulting from additional coverage related to
requirements of the holder of a mortgage or deed of trust covering the Premises, Building and/or
Project, increased valuation of the Premises, Building and/or Project, and/or a general premium
rate increase. Said costs shall not, however, include any premium increases resulting from the
nature of the occupancy of any other tenant of the Building. If the Project was not insured for the
entirety of the Base Year, then the base premium shall be the lowest annual premium reasonably
obtainable for the required insurance as of the Start Date, assuming the most nominal use possible
of the Building and/or Project. In no event, however, shall Lessee be responsible for any portion
of the premium cost attributable to liability insurance coverage in excess of S2,000,000 procured
under Paragraph 8.2(b).

     8.2 Liability Insurance.

          (a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability
policy of insurance protecting Lessee and Lessor as an additional insured against claims for bodily
injury, personal injury and property damage based upon or arising out of the ownership, use,
occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be
on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per
occurrence with an annual aggregate of not less than $2,000,000, an “Additional Insured-Managers or
Lessors of Premises Endorsement” and contain the “Amendment of the Pollution Exclusion Endorsement”
for damage caused by heat, smoke or fumes from a hostile fire. The policy shall not contain any
intra-insured exclusions as between insured persons or organizations, but shall include coverage
for liability assumed under this Lease as an “insured contract” for the performance of Lessee’s
indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the
liability of Lessee nor relieve Lessee of any obligation hereunder. All insurance carried by Lessee
shall be primary to and not contributory with any similar insurance carried by Lessor, whose
insurance shall be considered excess insurance only. The liability insurance policy obtained by
Lessee may be a blanket policy which provides coverage for the Premises as well as other locations
maintained by Lessee.

          (b) Carried by Lessor. Lessor shall maintain liability insurance as described in Paragraph
8.2(a), in addition to, and not in lieu of, the insurance required to be maintained by Lessee.
Lessee shall not be named as an additional insured therein.

     8.3 Property Insurance — Building, Improvements and Rental Value.

          (a) Building and Improvements. Lessor shall obtain and keep in force a policy or policies of
insurance in the name of Lessor, with loss payable to Lessor, any ground-lessor, and to any Lender
insuring loss or damage to the Building and/or Project. The amount of such insurance shall be equal
to the full replacement cost of the Building and/or Project, as the same shall exist from time to
time, or the amount required by any Lender, but in no event more than the commercially reasonable
and available insurable value thereof. Lessee Owned Alterations and Utility Installations, Trade
Fixtures, and Lessee’s personal property shall be insured by Lessee under Paragraph 8.4. If the
coverage is available and commercially appropriate, such policy or policies shall insure against
all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless
required by a Lender), including coverage for debris removal and the enforcement of any Applicable
Requirements requiring the upgrading, demolition, reconstruction or replacement of any portion of
the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed
valuation provision in lieu of any coinsurance clause, waiver of subrogation, and inflation guard
protection causing an increase in the annual property insurance coverage amount by a factor of not
less than the adjusted U.S. Department of Labor Consumer Price Index for All Urban Consumers for
the city nearest to where the Premises are located. If such insurance coverage has a deductible
clause, the deductible amount shall not exceed $1,000 per occurrence.

          (b) Rental Value. Lessor shall also obtain and keep in force a policy or policies in the name
of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent for one
year with an extended period of indemnity for an additional 180 days (“Rental Value Insurance”).
Said

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insurance snail contain an agreed valuation provision in lieu of any coinsurance clause, and the
amount of coverage shall be adjusted annually to reflect the projected Rent otherwise payable by
Lessee, for the next 12 month period.

          (c) Adjacent Premises. Lessee shall pay for any increase in the premiums for the property
insurance of the Building and for the Common Areas or other buildings in the Project if said
increase is caused by Lessee’s acts, omissions, use or occupancy of the Premises.

          (d) Lessee’s Improvements. Since Lessor is the Insuring Party, Lessor shall not be required to
insure Lessee Owned Alterations and Utility Installations unless the item in question has become
the property of Lessor under the terms of this Lease.

     8.4 Lessee’s Property; Business Interruption Insurance.

          (a) Property Damage. Lessee shall obtain and maintain insurance coverage on all of lessee’s
personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such
insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000 per
occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of
personal property, Trade Fixtures and Lessee Owned Alterations and Utility Installations, Lessee
shall provide Lessor with written evidence that such insurance is in force.

          (b)-Business-Interruption: Lessee shall obtain and maintain loss of income and extra expense
insurance in amounts as will reimburse lessee for direct or indirect loss of earnings attributable
to all perils commonly insured against by prudent lessees in the business of Lessee or attributable
to prevention of access to the Premises as a result of such perils.

          (c) No Representation of Adequate Coverage. Lessor makes no representation that the limits or
forms of coverage of insurance specified herein are adequate to cover Lessee’s property, business
operations or obligations under this Lease.

     8.5 Insurance Policies. Insurance required herein shall be by companies duly licensed or
admitted to transact business in the state where the Premises are located, and maintaining during
the policy term a “General Policyholders Rating" of at least B+, V, as set
forth in the most current issue of "Best’s Insurance Guide”, or such other rating as may
be required by a Lender. Lessee shall not do or permit to be done anything which invalidates the
required insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor certified
copies of policies of such insurance or certificates evidencing the existence and amounts of the
required insurance, No such policy shall be cancelable or subject to modification except after 30
days prior written notice to Lessor. Lessee shall, at least 30 days prior to the expiration of such
policies, furnish Lessor with evidence of renewals or “insurance binders” evidencing renewal
thereof, or Lessor may order such insurance and charge the cost thereof to Lessee, which amount
shall be payable by Lessee to Lessor upon demand. Such policies shall be for a term of at least one
year, or the length of the remaining term of this Lease, whichever is less. If either Party shall
fail to procure and maintain the insurance required to be carried by it, the other Party may, but
shall not be required to, procure and maintain the same.

     8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor
each hereby release and relieve the other, and waive their entire right to recover damages against
the other, for loss of or damage to its property arising out of or incident to the perils required
to be insured against herein. The effect of such releases and waivers is not limited by the amount
of insurance carried or required, or by any deductibles applicable hereto, The Parties agree to
have their respective property damage insurance carriers waive any right to subrogation that such
companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not
invalidated thereby.

     8.7 Indemnity. Except for Lessor‘s gross negligence or willful misconduct, Lessee
shall indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor’s
master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents
and/or damages, liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or
liabilities arising out of, involving, or in connection with, the use and/or occupancy of the
Premises by Lessee. If any action or proceeding is brought against Lessor by reason of any of the
foregoing matters, Lessee shall upon notice defend the same at Lessee’s expense by counsel
reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor
need not have first paid any such claim in order to be defended or indemnified.

     8.8 Exemption of Lessor from Liability. Lessor shall not be liable for injury or damage to the
person or goods, wares, merchandise or other property of Lessee, Lessee‘s employees,
contractors, invitees, customers, or any other person in or about the Premises, whether such damage
or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the
breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances,
plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage
results from conditions arising upon the Premises or upon other portions of the Building, or from
other sources or places. Lessor shall not be liable for any damages arising from any act or neglect
of any other tenant of Lessor nor from the failure of Lessor to enforce the provisions of any other
lease in the Project. Notwithstanding Lessor’s negligence or breach of this Lease, Lessor shall
under no circumstances be liable for injury to Lessee’s business or for any loss of income or
profit therefrom.

9. Damage or Destruction,

     9.1 Definitions.

          (a) “Premises Partial Damage” shall mean damage or destruction to the improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations, which can reasonably be
repaired in 3 months or less from the date of the damage or destruction, and the cost thereof does
not exceed a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee in writing within 30 days
from the date of the damage or destruction as to whether or not the damage is Partial or Total.

          (b) “Premises Total Destruction” shall mean damage or destruction to the improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which
cannot reasonably be repaired in 3 months or less from the date of the damage or destruction and/or
the cost thereof exceeds a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee in writing
within 30 days from the date of the damage or destruction as to whether or not the damage is
Partial or Total.

          (c) “Insured Loss” shall mean damage or destruction to improvements on the Premises, other
than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an
event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any
deductible amounts or coverage limits involved.

          (d) “Replacement Cost” shall mean the cost to repair or rebuild the improvements owned by
Lessor at the time of the occurrence to their condition existing immediately prior thereto,
including demolition, debris removal and upgrading required by the operation of Applicable
Requirements, and without deduction for depreciation.

          (e) “Hazardous Substance Condition” shall mean the occurrence or discovery of a condition
involving the presence of, or a contamination by, a Hazardous Substance as defined in Paragraph
6.2(a), in, on, or under the Premises which requires repair, remediation, or restoration,

     9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an Insured Loss
occurs, then Lessor shall, at Lessor’s expense, repair such damage (but not Lessee’s Trade Fixtures
or Lessee Owned Alterations and Utility installations) as soon as reasonably possible and this
Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor’s
election, make the repair of any damage or destruction the total cost to repair of which is $5,000
or less, and, in such event, Lessor shall make any applicable insurance proceeds available to
Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required
insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the
Insuring Party shall promptly contribute the shortage in proceeds as and when required to complete
said repairs. In the event, however, such shortage was due to the fact that, by reason of the
unique nature of the improvements, full replacement cost insurance coverage was not commercially
reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance
proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within 10 days following receipt of written
notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance
thereof within said 10 day period, the party responsible for making the repairs shall complete them
as soon as reasonably possible and this Lease shall remain in full force and effect. If such funds
or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within 10
days thereafter to: (i) make such restoration and repair as is commercially reasonable with Lessor
paying any shortage in proceeds, in which case this Lease shall remain in full force and effect, or
(ii) have this Lease terminate 30 days thereafter. Lessee shall not be entitled to reimbursement of
any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage
due to flood or earthquake shall be subject to Paragraph 9.3. notwithstanding that there may be
some insurance coverage. but the net proceeds of any such insurance shall be
made available for the repairs if made by either Party.

     9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss
occurs, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the
repairs at Lessee’s expense), Lessor may either: (i) repair such damage as soon as reasonably
possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or
(ii) terminate this Lease by giving written notice to Lessee within 30 days after receipt by Lessor
of knowledge of the occurrence of such damage. Such termination shall be effective 60 days
following the date of such notice. to the event Lessor elects to terminate this Lease, Lessee shall
have the right within 10 days after receipt of the termination notice to give written notice to
Lessor of Lessee‘s commitment to pay for the repair of such damage without reimbursement
from Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within
30 days after making such commitment. In such event this Lease shall continue in full force and
effect, and Lessor shall proceed to make such repairs as soon as reasonably possible after the
required funds are available. If Lessee does not make the required commitment, this Lease shall
terminate as of the date specified in the termination notice.

     9.4 Total Destruction, Notwithstanding any other provision hereof, if a Premises Total
Destruction occurs, this Lease shall terminate 60 days following such Destruction. If the damage or
destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall have
the right to recover Lessor’s damages from Lessee, except as provided in Paragraph 8.6.

     9.5 Damage Near End of Term. If at any time during the last 6 months of this Lease there is
damage for which the cost to repair exceeds one month’s Base Rent, whether or not an Insured Loss,
Lessor may terminate this Lease effective 60 days following the date of occurrence of such damage
by giving a written termination notice to Lessee within 30 days after the date of occurrence of
such damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable option to
extend this Lease or to purchase the Premises, then Lessee may preserve this Lease by, (a)
exercising such option and (b) providing Lessor with any shortage in insurance proceeds (or
adequate assurance thereof) needed to make the repairs on or before the earlier of (i) the date
which is 10 days after Lessee’s receipt of Lessor’s written notice purporting to terminate this
Lease, or (ii) the day prior to the date upon which such option expires. If Lessee duly exercises
such option during such period and provides Lessor with funds (or adequate assurance thereof) to
cover any shortage in insurance-proceeds, Lessor shall, at Lessor’s commercially reasonable
expense, repair such damage as soon as reasonably possible and this Lease shall

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continue in full force and effect. If Lessee fails to exercise such option and provide such funds
or acceptance during such period, then this Lease shall terminate on the date specified in the
termination notice and Lessee’s option shall be extinguished.

     9.6 Abatement of Rent; Lessee’s Remedies.

          (a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a
Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent
payable by Lessee for the period required for the repair, remediation or restoration of such damage
shall be abated in proportion to the degree to which Lessee’s use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value insurance. All other obligations of
Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such
damage, destruction remediation, repair or restoration except as provided herein.

          (b) Remedies. If Lessor shall be obligated to repair or restore the Premises and does not
commence, in a substantial and meaningful way, such repair or restoration within 90 days after such
obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or
restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of
Lessee’s election to terminate this Lease on a date not less than 60 days following the giving of
such notice. If Lessee gives such notice and such repair or restoration is not commenced within 30
days thereafter, this Lease shall terminate as of the date specified in said notice. If the repair
or restoration is commenced within such 30 days, this Lease shall continue in full force and
effect. “Commence” shall mean either the unconditional authorization of the preparation of the
required plans, or the beginning of the actual work on the Premises, whichever first occurs.

     9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g)
or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any other
advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of
Lessee’s Security Deposit as has not been, or is not then required to be, used by Lessor.

     9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease shall govern the
effect of any damage to or destruction of the
Premises with respect to the termination of this Lease and hereby waive the provisions of any
present or future statute to the extent inconsistent herewith.

10. Real Property Taxes.

     10.1 Definitions. As used herein, the term “Real Property Taxes” shall include any form of
assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax (other
than inheritance, personal income or estate taxes); improvement bond; and/or license fee imposed
upon or levied against any legal or equitable interest of Lessor in the Project, Lessor’s right to
other income therefrom, and/or Lessor’s business of leasing, by any authority having the direct or
indirect power to tax and where the funds are generated with reference to the Project address and
where the proceeds so generated are to be applied by the city, county or other local taxing
authority of a jurisdiction within which the Project is located. “Real Property Taxes” shall also
include any tax, fee, levy, assessment or charge, or any increase therein, imposed by reason of
events occurring during the term of this Lease, including but not limited to, a change in the
ownership of the Project or any portion thereof or a change in the improvements thereon.

     10.2 Payment of Taxes. Except as otherwise provided in Paragraph 10.3, Lessor shall pay the
Real Property Taxes applicable to the Project,
and said payments shall be included in the calculation of Operating Expenses in accordance with the
provisions of Paragraph 4.2.

     10.3 Additional Improvements. Operating Expenses shall not include Real Property Taxes
specified in the tax assessor’s records and work sheets as being caused by additional improvements
placed upon the Project by other lessees or by Lessor for the exclusive enjoyment of such other
lessees. Notwithstanding Paragraph 10.2 hereof, Lessee shall, however, pay to Lessor at the time
Operating Expenses are payable under Paragraph 4.2, the entirety of any increase in Real Property
Taxes if assessed solely by reason of Alterations, Trade Fixtures or Utility Installations placed
upon the Premises by Lessee or at Lessee’s request.

     10.4 Joint Assessment. If the Building is not separately assessed, Real Property Taxes
allocated to the Building shall be an equitable proportion of the Real Property Taxes for all of
the land and improvements included within the tax parcel assessed, such proportion to be determined
by Lessor from the respective valuations assigned in the assessor‘s work sheets or such
other information as may be reasonably available. Lessor’s reasonable determination thereof, in
good faith, shall be conclusive.

     10.5 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against
and levied upon Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings,
equipment and all personal property of Lessee contained in the Premises. When possible, Lessee
shall cause its Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings,
equipment and all other personal property to be assessed and billed separately from the real
property of Lessor. If any of Lessee’s said property shall be assessed with Lessor’s real property,
Lessee shall pay Lessor the taxes attributable to Lessee‘s property within 10 days after
receipt of a written statement setting forth the taxes applicable to Lessee‘s property.

11. Utilities and Services,

     11.1 Services Provided by Lessor. Lessor shall provide heating, ventilation, air conditioning,
reasonable amounts of electricity for normal lighting and office machines, water for reasonable and
normal drinking and lavatory use in connection with an office, and replacement light bulbs and/or
fluorescent tubes and ballasts for standard overhead fixtures. Lessor shall also provide janitorial
services to the Premises and Common Areas 5 times per week, excluding Building Holidays, or
pursuant to the attached janitorial schedule, if any. Lessor shall not, however, be required to
provide janitorial services to kitchens or storage areas included within the Premises.

     11.2 Services Exclusive to Lessee. Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities and services specially or
exclusively supplied and/or metered exclusively to the Premises or to Lessee, together with any
taxes thereon. If a service is deleted by Paragraph-1.13 and such service is not separately metered
to the Premises, Lessee shall pay at Lessor’s option, either Lessee’s Share or a reasonable
proportion to be determined by Leesor of all charges for such jointly metered services

     11.3 Hours of Service. Said services and utilities shall be provided during times set forth in
Paragraph 1.12. Utilities and services required at other times shall be subject to advance request
and reimbursement by Lessee to Lessor of the cost thereof.

     11.4 Excess Usage by Lessee. Lessee shall not make connection to the utilities except by or
through existing outlets and shall not install or use machinery or equipment in or about the
Premises that uses excess water, lighting or power, or suffer or permit any act that causes extra
burden upon the utilities or services, including but not limited to security and trash services,
over standard office usage for the Project. Lessor shall require Lessee to reimburse Lessor for any
excess expenses or costs that may arise out of a breach of this subparagraph by Lessee. Lessor may,
in its sole discretion, install at Lessee’s expense supplemental equipment and/or separate metering
applicable to Lessee‘s excess usage or loading.

     11.5 Interruptions. There shall be no abatement of rent and Lessor shall not be liable in any
respect whatsoever for the inadequacy, stoppage, interruption or discontinuance of any utility or
service due to riot, strike, labor dispute, breakdown, accident, repair or other cause beyond
Lessor’s reasonable control or in cooperation with governmental request or directions.

12. Assignment and Subletting.

     12.1 Lessor‘s Consent Required.

          (a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber
(collectively, “assign or assignment”) or sublet all or any part of Lessee’s interest in this Lease
or in the Premises without Lessor’s prior written consent.

          (b) Unless Lessee is a corporation and its stock is publicly traded on a national stock
exchange, a change in the control of Lessee shall constitute an assignment requiring consent. The
transfer, on a cumulative basis, of 25% or more of the voting control of Lessee shall constitute a
change in control for this purpose.

          (c) The involvement of Lessee or its assets in any transaction, or series of transactions (by
way of merger, sale, acquisition, financing, transfer, leveraged buyout or otherwise), whether or
not a formal assignment or hypothecation of this Lease or Lessee‘s assets occurs, which
results or will
result in a reduction of the Net Worth of Lessee by an amount greater than 25% of such Net Worth as
it was represented at the time of the execution of this
Lease or at the time of the most recent assignment to which Lessor has consented, or as it exists
immediately prior to said transaction or transaction: constituting such reduction, whichever was or
is greater, shall be considered an assignment of this Lease to which Lessor may withhold its
consent. "Net Worth of Lessee" shall mean the net worth of Lessee (excluding
any guarantors) established under generally accepted accounting principles.

          (d) An assignment or subletting without consent shall, at Lessor’s option, be a Default
curable after notice per Paragraph 13.1(c), or a noncurable Breach without the necessity of any
notice and grace period. If Lessor elects to treat such unapproved assignment or subletting as a
noncurable Breach, Lessor may either: (i) terminate this Lease, or (ii) upon 30 days written
notice, increase the monthly Base Rent to 110% of the Base Rent then in
effect. Further, in the event of such Breach and rental adjustment, (i) the purchase price of any
option to purchase the Premises held by Lessee shall be subject to similar adjustment to 110% of
the price previously in effect, and (ii) all fixed and non-fixed rental adjustments scheduled
during the remainder of the Lease term shall be increased to 110% of the scheduled adjusted rent.

          (e) Lessee’s remedy for any breach of Paragraph

     12.1 by Lessor shall be limited to
compensatory damages and/or injunctive relief.

     12.2 Terms and Conditions Applicable to Assignment and Subletting.

          (a) Regardless of Lessor’s consent, no assignment or subletting shall: (i) be effective
without the express written assumption by such assignee or sublessee of the obligations of Lessee
under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the primary
liability of Lessee for the payment of Rent or for the performance of any other obligations to be
performed by Lessee.

          (b) Lessor may accept Rent or performance of Lessee’s obligations from any person other than
Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or
disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver
of estoppel of Lessor’s right to exercise its remedies for Lessee‘s Default or Breach.

          (c) Lessor’s consent to any assignment or subletting shall not constitute a consent to any
subsequent assignment or subletting.

          (d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against
Lessee, any Guarantors or anyone else responsible for the performance of Lessee’s obligations under
this Lease, including any assignee or sublessee, without first exhausting Lessor’s remedies against
any other person or entity responsible therefore to Lessor, or any security held by Lessor.

          (e) Each request for consent to an assignment or subletting shall be in writing, accompanied
by information relevant to Lessor’s determination as to the financial and operational
responsibility and appropriateness of the proposed assignee or sublessee, including but not limited
to the

Page 7 of 12

 

intended use and/or required modification of the premises, if any. Lessee agrees to provide Lessor
with such other or additional information and/or
documentation as may be reasonably requested. (See also Paragraph 36)

          (f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such
assignment or entering into such sublease, be deemed to have assumed and agreed to conform and
comply with each and every term, covenant, condition and obligation herein to be observed or
performed by Lessee during the term of said assignment or sublease, other than such obligations as
are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has
specifically consented to in writing.

          (g) Lessor’s consent to any assignment or subletting shall not transfer to the assignee or
sublessee any Option granted to the original Lessee by this Lease unless such transfer is
specifically consented to by Lessor in writing. (See Paragraph 39.2)

     12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and
conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be
deemed included in all subleases under this Lease whether or riot expressly incorporated therein:

          (a) Lessee
hereby assigns and transfers to Lessor all of Lessee’s interest in all
Rent payable on any sublease, and Lessor may collect such Rent and apply same toward Lessee’s
obligations under this Lease; provided, however, that until a Breach shall occur in the performance
of Lessee’s obligations, Lessee may collect said Rent. Lessor shall not, by reason of the foregoing
or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to
the sublessee for any failure of Lessee to perform and comply with any of Lessee’s obligations to
such sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee, upon receipt
of a written notice from Lessor stating that a Breach exists in the performance of Lessee’s
obligations under this Lease. to pay to Lessor all Rent due and to become due under the sublease.
Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any
obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from
Lessee to the contrary.

          (b) In the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attorn
to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such
sublease from the time of the exercise of said option to the expiration of such sublease; provided,
however, Lessor shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor.

          (c) Any matter requiring the consent of the sublessor under a sublease shall also require the
consent of Lessor.

          (d) No sublessee shall further assign or sublet all or any part of the Premises without
Lessor’s prior written consent.

          (e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee,
who shall have the right to cure the Default of Lessee within the grace period, if any, specified
in such notice. The sublessee shall have a right of reimbursement and offset from and against
Lessee for any such Defaults cured by the sublessee.

13. Default; Breach; Remedies.

     13.1 Default; Breach. A “Default” is defined as a failure by the Lessee to comply with or
perform any of the terms, covenants, conditions or Rules and Regulations under this Lease. A
“Breach” is defined as the occurrence of one or more of the following Defaults, and the failure of
Lessee to cure such Default within any applicable grace period:

          (a) The abandonment of the Premises; or the vacating of the Premises without providing a
commercially reasonable level of security, or where the coverage of the property insurance
described in Paragraph 8.3 is jeopardized as a result thereof, or without providing reasonable
assurances to minimize potential vandalism.

          (b) The failure of Lessee to make any payment of Rent or any Security Deposit required to be
made by Lessee hereunder, whether to Lessor or to a third party, when due, to provide reasonable
evidence of insurance or surety bond, or to fulfill any obligation under this Lease which endangers
or threatens life or property, where such failure continues for a period of 3 business days
following written notice to Lessee.

          (c) The failure by Lessee to provide (i) reasonable written evidence of compliance with
Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized
assignment or subletting, (iv) an Estoppel Certificate, (v) a requested subordination, (vi)
evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 41
(easements), or (viii) any other documentation or information which Lessor may reasonably require
of Lessee under the terms of this Lease, where any such failure continues for a period of 10 days
following written notice to Lessee.

          (d) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or
of the rules adopted under Paragraph 2.9 hereof, other than those described in subparagraphs
13.1(a), (b) or (c), above, where such Default continues for a period of 30 days after written
notice; provided, however, that if the nature of Lessee’s Default is such that more than 30 days
are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee
commences such cure within said 30 day period and thereafter diligently prosecutes such cure to
completion.

          (e) The occurrence of any of the following events: (i) the making of any general arrangement
or assignment for the benefit of creditors: (ii) becoming a
“debtor” as defined in 11
U.S.C. § 101 or any successor statute thereto (unless, in the case of a petition filed against
Lessee, the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to
take possession of substantially all of Lessee’s assets located at the Premises or of Lessee’s
interest in this Lease, where possession is not restored to Lessee within 30 days, or (iv) the
attachment, execution or other judicial seizure of substantially all of Lessee’s assets located at
the Premises or of Lessee’s interest in this Lease, where such seizure is not discharged within 30
days; provided, however, in the event that any provision of this subparagraph (e) is contrary to
any applicable law, such provision shall be of no force or effect, and not affect the validity of
the remaining provisions.

      
    (f) The discovery that any
financial statement of Lessee or of any Guarantor given to Lessor
was materially false.

          (g) If the performance of Lessee’s obligations under this Lease is guaranteed: (i) the death
of a Guarantor, (ii) the termination of a Guarantor’s liability with respect to this
Lease other than in accordance with the terms of such guaranty, (iii) a Guarantor’s becoming
insolvent or the subject of a bankruptcy filing, (iv) a Guarantor’s refusal to honor the guaranty,
or (v) a Guarantor’s breach of its guaranty obligation on an anticipatory basis, and
Lessee’s failure, within 60 days following written notice of any such event, to provide written
alternative assurance or security, which, when coupled with the then existing resources of Lessee,
equals or exceeds the combined financial resources of Lessee and the Guarantors that existed at the
time of execution of this Lease.

     13.2 Remedies. If Lessee fails to perform any of its affirmative duties or obligations, within
10 days after written notice (or in case of an emergency, without notice), Lessor may, at its
option, perform such duty or obligation on Lessee’s behalf, including but not limited to
the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits
or approvals. The costs and expenses of any such performance by Lessor shall be due and payable by
Lessee upon receipt of invoice therefor. If any check given to Lessor by Lessee shall not be
honored by the bank upon which it is drawn, Lessor, at its option, may require all future payments
to be made by Lessee to be by cashier’s check. In the event of a Breach, Lessor may, with or
without further notice or demand, and without limiting Lessor in the exercise of any right or
remedy which Lessor may have by reason of such Breach:

          (a) Terminate Lessee’s right to possession of the Premises by any lawful means, in which case
this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such
event Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent which had been earned at
the time of termination: (:i) 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 the Lessee proves could have been reasonably avoided; (iii) the worth at the time
of award of the amount by which the unpaid rent for the balance of the term after the time of award
exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv)
any other amount necessary to compensate Lessor for all the detriment proximately caused by the
Lessee’s failure to perform its obligations under this Lease or which in the ordinary course of
things would be likely to result therefrom, including but not limited to the cost of recovering
possession of the Premises, expenses of reletting, including necessary renovation and alteration of
the Premises, reasonable attorneys’ fees, and that portion of any leasing commission paid by Lessor
in connection with this Lease applicable to the unexpired term of this Lease. The worth at the time
of award of the amount referred to in provision (iii) of the immediately preceding sentence shall
be computed by discounting such amount at the discount rate of the Federal Reserve Bank of the
District within which the Premises are located at the time of award plus one percent. Efforts by
Lessor to mitigate damages caused by Lessee’s Breach of this Lease she!: not waive
Lessor’s right to recover damages under Paragraph 12. If termination of this Lease is
obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to
recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may
reserve the right to recover all or any part thereof in a separate suit. If a notice and grace
period required under Paragraph 13.1 was not previously given, a notice to pay rent or
quit, or to perform or quit given to Lessee under the unlawful detainer
statute shall o constitute the notice required by Paragraph 13.1. In such case, the
applicable grace period required by Paragraph 13.1 and the unlawful detainer statute shall run
concurrently, and the failure of Lessee to cure the Default within the greater of the two such
grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling
Lessor to the remedies provided for in this Lease and/or by said statute.

          (b) Continue the Lease and Lessee’s right to possession and recover the Rent as it becomes
due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of
maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessor’s
interests, shall not constitute a termination of the Lessee’s right to possession.

          (c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of
the state wherein the Premises are located. The expiration or termination of this Lease and/or the
termination of Lessee’s right to possession shall not relieve Lessee from liability under any
indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by
reason of Lessee’s occupancy of the Premises.

     13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, or for the
giving or paying by Lessor to or for Lessee of any cash or other bonus. inducement or consideration
for Lessee’s entering into this Lease, all of which concessions are hereinafter referred to as
“Inducement Provisions”, shall be deemed conditioned upon Lessee’s full and faithful performance of
all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any
such Inducement Provision shall automatically be deemed deleted from this Lease and of no further
force or effect, and any rent, other charge, bonus, inducement or consideration theretofore abated,
given or paid by Lessor under such an Inducement Provision shall be immediately due and payable by
Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not
be deemed a waiver by Lessor of the provisions this paragraph unless specifically so stated in
writing by Lessor at the time of such acceptance.

     13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will cause
Lessor to incur costs not contemplated by

Page 8 of 12

 

this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include,
but are not limited to, processing and accounting charges, and late charges which may be imposed
upon Lessor by any Lender. Accordingly, if any Rent shall not be received by Lessor within 5 days
after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall
pay to Lessor a one-time late charge equal to 10% of each such overdue amount or S100, whichever is
greater. The parties hereby agree that such late charge represents a fair and reasonable estimate
of the costs Lessor will incur by reason of such late payment. Acceptance of such late charge by
Lessor shall in no event constitute a waiver of Lessee’s Default or Breach with respect to such
overdue amount, nor prevent the exercise of any of the other rights and remedies granted hereunder.
In the event that a late charge is payable hereunder, whether or not collected. for 3 consecutive
installments of Base Rent, then notwithstanding any provision of this Lease to the contrary, Base
Rent shall, at Lessor’s option. become due and payable quarterly in advance.

     13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not
received by Lessor, when due as to scheduled payments (such as Base Rent) or within 30 days
following the date on which it was due for nonscheduled payment, shall bear interest from the date
when due, as to scheduled payments. or the 31st day after it was due as to nonscheduled payments.
The interest (“Interest”) charged shall be computed at the rate of 10% per annum but shall not
exceed the maximum rate allowed by law. Interest is payable in addition to the potential late
charge provided for in Paragraph 13.4.

     13.6 Breach by Lessor.

          (a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails
within a reasonable time to perform an obligation required to be performed by Lessor.
For purposes of this Paragraph, a reasonable time shall in no event be less than 30 days after
receipt by Lessor, and any Lender whose name and address shall have been furnished Lessee in
writing for such purpose, of written notice specifying wherein such obligation of Lessor has not
been performed; provided, however, that if the nature of Lessor’s obligation is such that more than
30 days are reasonably required for its performance, then Lessor shall not be in breach if
performance is commenced within such 30 day period and thereafter diligently pursued to completion.

          (b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender
cures said breach within 30 days after receipt of said notice, or if having commenced said cure
they do not diligently pursue it to completion, then Lessee may elect to cure said breach at
Lessee’s expense and offset from Rent the actual and reasonable cost to perform such cure, provided
however, that such offset shall not exceed an amount equal to the greater of one month’s Base Rent
or the Security Deposit, reserving Lessee’s right to seek reimbursement from Lessor.
Lessee shall document the cost of said cure and supply said documentation to Lessor.

14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent
domain or sold under the threat of the exercise of said power (collectively “Condemnation”), this
Lease shall terminate as to the part taken as of the date the condemning authority takes title or
possession, whichever first occurs. If more than 10% of the rentable floor area of the Premises, or
more than 25% of Lessee’s Reserved Parking Spaces. if any, are taken by Condemnation,
Lessee may, at Lessee’s option, to be exercised in writing within 10 days after Lessor shall have
given Lessee written notice of such taking (or in the absence of such notice, within 10 days after
the condemning authority shall have taken possession) terminate this Lease as of the date the
condemning authority takes such possession. If Lessee does not terminate this Lease in accordance
with the foregoing, this Lease shall remain in full force and effect as to the portion of the
Premises remaining, except that the Base Rent shall be reduced in proportion to the reduction in
utility of the Premises caused by such Condemnation. Condemnation awards and/or payments shall be
the property of Lessor, whether such award shall be made as compensation for diminution in value of
the leasehold, the value of the part taken, or for severance damages; provided, however, that
Lessee shall be entitled to any compensation for Lessee’s relocation expenses, loss of business
goodwill and/or Trade Fixtures, without regard to whether or not this Lease is terminated pursuant
to the provisions of this Paragraph. All Alterations and Utility Installations made to the Premises
by Lessee, for purposes of Condemnation only, shall be considered the property of the Lessee and
Lessee shall be entitled to any and all compensation which is payable therefor. In the event that
this Lease is not terminated by reason of the Condemnation, Lessor shall repair any damage to the
Premises caused by such Condemnation.

15. Brokerage Fees.

     15.1 Additional Commission. In addition to the payments owed pursuant to Paragraph 1.10 above,
and unless Lessor and the Brokers otherwise agree in writing. Lessor agrees that (a) if Lessee
exercises any Option, (b) if Lessee acquires from Lessor any rights to the Premises or other
premises owned by Lessor and located within the Project, (c) if Lessee remains in possession of the
Premises, with the consent of Lessor, after the expiration of this Lease, or (d) if Base Rent is
increased, whether by agreement or operation of an escalation clause herein, then, Lessor shall pay
Brokers a fee in accordance with the schedule of the Brokers in effect at the time of the execution
of this Lease.

     15.2 Assumption of Obligations. Any buyer or transferee of Lessor’s interest in this Lease
shall be deemed to have assumed Lessor’s obligation hereunder. Brokers shall be third
party beneficiaries of the provisions of Paragraphs 1.10, 15, 22 and 31. If Lessor fails to pay to
Brokers any amounts due as and for brokerage fees pertaining to this Lease when due, then such
amounts shall accrue Interest. In addition, if Lessor fails to pay any amounts to Lessee’s Broker
when due, Lessee’s Broker may send written notice to Lessor and Lessee of such failure and if
Lessor fails to pay such amounts within 10 days after said notice, Lessee shall pay said monies to
its Broker and offset such amounts against Rent. In addition, Lessee’s Broker shall be
deemed to be a third party beneficiary of any commission agreement entered into by and/or between
Lessor and Lessor’s Broker for the limited purpose of collecting any brokerage fee owed.

     15.3 Representations and Indemnities of Broker Relationships. Lessee and Lessor each represent
and warrant to the other that it has had no dealings with any person. firm, broker or finder (other
than the Brokers, if any) in connection with this Lease, and that no one other than said named
Brokers is entitled to any commission or finder’s fee in connection herewith. Lessee and Lessor do
each hereby agree to indemnify, protect, defend and hold the other harmless from and against
liability for compensation or charges which may be claimed by any such unnamed broker, finder or
other similar party by reason of any dealings or actions of the indemnifying Party, including any
costs, expenses, attorneys’ fees reasonably incurred with respect thereto.

16. Estoppel Certificates.

         
 (a) Each Party (as “Responding Party”) shall within 10 days after
written notice from the other Party (the “Requesting Party”) execute, acknowledge and deliver to
the Requesting Party a statement in writing in form similar to the then most current “Estoppel
Certificate” form published by the AIR Commercial Real Estate Association, plus such additional
information, confirmation and/or statements as may be reasonably requested by the Requesting Party.

          (b) If the Responding Party shall fail to execute or deliver the Estoppel Certificate within
such 10 day period, the Requesting Party may execute an Estoppel Certificate stating that: (i) the
Lease is in full force and effect without modification except as may be represented by the
Requesting Party, (ii) there are no uncured defaults in the Requesting Party’s performance, and
(iii) if Lessor is the Requesting Party, not more than one month’s rent has been paid in advance.
Prospective purchasers and encumbrancers may rely upon the Requesting Party’s Estoppel Certificate,
and the Responding Party shall be estopped from denying the truth of the facts contained in said
Certificate.

          (c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee
and all Guarantors shall deliver to any potential lender or purchaser designated by Lessor such
financial statements as may be reasonably required by such lender or purchaser, including but not
limited to Lessee’s financial statements for the past 3 years. All such financial
statements shall be received by Lessor and such lender or purchaser in confidence and shall be used
only for the purposes herein set forth.

17. Definition of Lessor. The term “Lessor” as used herein shall mean the owner or owners at the
time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee’s
interest in the prior lease. In the event of a transfer of Lessor’s title or interest in the
Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit)
any unused Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such
transferor assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be
relieved of all liability with respect to the obligations and/or covenants under this Lease
thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or
covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as
hereinabove defined.

18. Severability. The invalidity of any provision of this Lease, as determined by a court of
competent jurisdiction, shall in no way affect the validity of
any other provision hereof.

19. Days. Unless otherwise specifically indicated to the contrary, the word

“days” as used in this Lease shall mean and refer to calendar days.

20. Limitation on Liability. The obligations of Lessor under this Lease shall not constitute
personal obligations of Lessor or its partners, members, directors. officers or shareholders. and
Lessee shall look to the Project, and to no other assets of Lessor, for the satisfaction of any
liability of Lessor with respect to this Lease, and shall not seek recourse against Lessor’s
partners, members, directors, officers or shareholders, or any of their personal assets for such
satisfaction.

21. Time of Essence. Time is of the essence with respect to the performance of all obligations to
be performed or observed by the Parties under this Lease.

22 No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the
Parties with respect to any matter mentioned herein, and no other prior or contemporaneous
agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to
the Brokers that it has made, and is relying solely upon, its own investigation as to the nature,
quality, character and financial responsibility of the other Party to this Lease and as to the use.
nature, quality and character of the Premises. Brokers have no responsibility with respect thereto
or with respect to any default or breach hereof by either Party. The liability (including court
costs and attorneys’ fees) of any Broker with respect to negotiation, execution, delivery or
performance by either Lessor or Lessee under this Lease or any amendment or modification hereto
shall be limited to an amount up to the fee received by such Broker pursuant to this Lease;
provided, however, that the foregoing limitation on each Broker’s liability shall not be applicable
to any gross negligence or willful misconduct of such Broker.

23. Notices.

     23.1 Notice Requirements. All notices required or permitted by this Lease or applicable law
shall be in writing and may be delivered in person (by hand or by courier) or may be sent by
regular, certified or registered mail or U.S. Postal Service Express
Mail, with postage prepaid, or by facsimile transmission, and shall be deemed sufficiently given if served in a manner
specified in this Paragraph 23. The addresses noted adjacent to a Party’s

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signature on this Lease shall be that Party’s address for delivery or mailing of notices. Either
Party may by written notice to the other specify a different address for notice, except that upon
Lessee’s taking possession of the Premises, the Premises shall constitute Lessee’s
address for notice. A copy of all notices to Lessor shall be concurrently transmitted to such party
or parties at such addresses as Lessor may from time to time hereafter designate in writing.

     23.2 Date of Notice. Any notice sent by registered or certified mail, return receipt
requested, shall be deemed given on the date of delivery shown on the receipt card, or if no
delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed
given 48 hours after the same is addressed as required herein and mailed with postage prepaid.
Notices delivered by United States Express Mail or overnight courier that guarantee next day
delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or
courier. Notices transmitted by facsimile transmission or similar means shall be deemed delivered
upon telephone confirmation of receipt (confirmation report from fax machine is sufficient),
provided a copy is also delivered via delivery or mail. If notice is received on a Saturday, Sunday
or legal holiday, it shall be deemed received on the next business day.

24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof
by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any
subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition
hereof. Lessor’s consent to, or approval of, any act shall not be deemed to render unnecessary the
obtaining of Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or be
construed as the basis of an estoppel to enforce the provision or provisions of this Lease
requiring such consent. The acceptance of Rent by Lessor shall not be a waiver of any Default or
Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys or damages
due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection
therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless
specifically agreed to in writing by Lessor at or before the time of deposit of such payment.

25. Disclosures Regarding The Nature of a Real Estate Agency Relationship.

               (a) When entering into a discussion with a real estate agent regarding a real estate
transaction, a Lessor or Lessee should from the outset understand what type of agency relationship
or representation it has with the agent or agents in the transaction. Lessor and Lessee acknowledge
being advised by the Brokers in this transaction, as follows:

        
               (i) Lessor’s, Agent. A Lessor’s agent under a listing
agreement with the Lessor acts as the agent for the Lessor only. A Lessor’s agent or subagent has
the following affirmative obligations: To the Lessor: A fiduciary duty of utmost care,
integrity, honesty, and loyalty in dealings with the Lessor. To the Lessee and the Lessor:
a. Diligent exercise of reasonable skills and care in performance of the agent’s duties. b. A duty
of honest and fair dealing and good faith. c. A duty to disclose all facts known to the agent
materially affecting the value or desirability of the property that are not known to, or within the
diligent attention and observation of, the Parties. An agent is not obligated to reveal to either
Party any confidential information obtained from the other Party which does not involve the
affirmative duties set forth above.

        
               (ii) Lessee’s Agent. An agent can agree to act as agent for the Lessee only. In these
situations, the agent is not the Lessor’s agent, even if by agreement the agent may receive
compensation for services rendered, either in full or in part from the Lessor. An agent acting only
for a Lessee has the following affirmative obligations. To the Lessee: A fiduciary duty of
utmost care, integrity, honesty, and loyalty in dealings with the Lessee. To the Lessee and the
Lessor: a. Diligent exercise of reasonable skills and care in performance of the agent’s
duties. b. A duty of honest and fair dealing and good faith. c. A duty to disclose all facts known
to the agent materially affecting the value or desirability of the property that are not known to,
or within the diligent attention and observation of, the Parties. An agent is not obligated to
reveal to either Party any confidential information obtained from the other Party which does not
involve the affirmative duties set forth above.

               
        (iii) Agent Representing Both Lessor and Lessee. A real estate agent, either acting
directly or through one or more associate licenses, can legally be the agent of both the Lessor and
the Lessee in a transaction, but only with the knowledge and consent of both the Lessor and the
Lessee. In a dual agency situation, the agent has the following affirmative obligations to both the
Lessor and the Lessee: a. A fiduciary duty of utmost care, integrity, honesty and loyalty in the
dealings with either Lesser or the Lessee. b. Other duties to the Lessor and the Lessee as stated
above in subparagraphs (i) or (ii). In representing both Lessor and Lessee, the agent may not
without the express permission of the respective Party, disclose to the other Party that the Lessor
will accept rent in an amount less than that indicated in the listing or that the Lessee is willing
to pay a higher rent than that offered. The above duties of the agent in a real estate transaction
do not relieve a Lessor or Lessee from the responsibility to protect their own interests. Lessor
and Lessee should carefully read all agreements to assure that they adequately express their
understanding of the transaction. A real estate agent is a person qualified to advise about real
estate. If legal or tax advise is desired, consult a competent professional.

               (b) Brokers
have no responsibility with respect to any default or breach hereof by either
Party. The liability (including court costs and attorneys’ fees), of any Broker with respect to any
breach of duty, error or omission relating to this Lease shall not exceed the fee received by such
Broker pursuant to this Lease; provided, however, that the foregoing limitation on each Broker’s
liability shall not be applicable to any gross negligence or willful misconduct of such Broker.

               (c) Buyer and Seller agree to identify to Brokers as “Confidential” any communication or
information given Brokers that is considered by such Party to be confidential.

26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part
thereof beyond the expiration or termination of this Lease In the event that Lessee holds over,
then the Base Rent shall be increased to 150% of the Base Rent applicable immediately preceding the
expiration or termination. Nothing contained herein shall be construed as consent by Lessor to any
holding over by Lessee.

27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall,
wherever possible, be cumulative with all other
remedies at law or in equity.

28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be
observed or performed by Lessee are both covenants and conditions. In construing this Lease, all
headings and titles are for the convenience of the Parties only and shall not be considered a part
of this Lease. Whenever required by the context, the singular shall include the plural and vice
versa. This Lease shall not be construed as if prepared by one of the Parties, but rather according
to its fair meaning as a whole, as if both Parties had prepared it.

29. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties, their personal
representatives, successors and assigns and be governed by the laws of the State in which the
Premises are located. Any litigation between the Parties hereto concerning this Lease shall be
initiated in the county in which the Premises are located.

30. Subordination; Attornment; Non-Disturbance.

     30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate
to any ground lease, mortgage, deed of trust, or other hypothecation or security device
(collectively, “Security Device”, now or hereafter placed upon the Premises, to any and
all advances made on the security thereof, and to all renewals, modifications, and extensions
thereof. Lessee agrees that the holders of any such Security Devices (in this Lease together
referred to as “Lender”) shall have no liability or obligation to perform any of the obligations of
Lessor under this Lease. Any Lender may elect to have this Lease and/or any Option granted hereby
superior to the lien of its Security Device by giving written notice thereof to Lessee, whereupon
this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the
relative dates of the documentation or recordation thereof.

     30.2 Attornment. In the event that Lessor transfers title to the Premises, or the Premises are
acquired by another upon the foreclosure or termination of a Security Device to which this Lease is
subordinated (i) Lessee shall, subject to the nondisturbance provisions of Paragraph 30.3, attorn
to such new owner, and upon request, enter into a new lease, containing all of the terms and
provisions of this Lease, with such new owner for the remainder of the term hereof, or, at the
election of such new owner, this Lease shall automatically become a new Lease between Lessee and
such new owner, upon all of the terms and conditions hereof, for the remainder of the term hereof,
and (ii) Lessor shall thereafter be relieved of any further obligations hereunder and such new
owner shall assume all of Lessor’s obligations hereunder, except that such new owner shall not: (a)
be liable for any act or omission of any prior lessor or with respect to events occurring prior to
acquisition of ownership; (b) be subject to any offsets or defenses which Lessee might have against
any prior lessor, (c) be bound by prepayment of more than one month’s rent, or (d) be liable for
the return of any security deposit paid to any prior lessor.

     30.3 Non-Disturbance. With respect to Security Devices entered into by Lessor after the
execution of this Lease, Lessee’s subordination of this Lease shall be subject to receiving a
commercially reasonable non-disturbance agreement (a “Non-Disturbance Agreement”) from
the Lender which Non-Disturbance Agreement provides that Lessee’s possession of the Premises, and
this Lease, including any options to extend the term hereof, will not be disturbed so long as
Lessee is not in Breach hereof and attorns to the record owner of the Premises. Further, within 60
days after the execution of this Lease, Lessor shall use its commercially reasonable efforts to
obtain a Non-Disturbance Agreement from the holder of any pre-existing Security Device which is
secured by the Premises. In the event that Lessor is unable to provide the Non-Disturbance
Agreement within said 60 days, then Lessee may, at Lessee’s option, directly contact Lender and
attempt to negotiate for the execution and delivery of a Non-Disturbance Agreement.

     30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be effective without
the execution of any further documents; provided, however, that, upon written request from Lessor
or a Lender in connection with a sale, financing or refinancing of the Premises, Lessee and Lessor
shall execute such further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.

31. Attorneys’ Fees. If any Party or Broker brings an action or proceeding involving the Premises
whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party
(as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to
reasonable attorneys’ fees. Such fees may be awarded in the same suit or recovered in a separate
suit, whether or not such action or proceeding is pursued to decision or judgment. The term,
“Prevailing Party” shall include, without limitation, a Party or Broker who substantially obtains
or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or
the abandonment by the other Party or Broker of its claim or defense. The attorneys’ fees award
shall not be computed in accordance with any court fee schedule, but shall be such as to fully
reimburse all attorneys’ fees reasonably incurred. In addition, Lessor shall be entitled to
attorneys’ fees, costs and expenses incurred in the preparation and service of notices of Default
and consultations in connection therewith, whether or not a legal action is subsequently commenced
in connection with such Default or resulting Breach ($200 is a reasonable minimum per occurrence
for such services and consultation).

32. Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall have the right to
enter the Premises at any time, in the case of an emergency, and otherwise at reasonable times for
the purpose of showing the same to prospective purchasers, lenders, or tenants, and making such

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alterations, repairs, improvements or additions to the Premises as Lessor may deem necessary or
desirable and the erecting, using and maintaining of utilities, services, pipes and conduits
through the Premises and/or other premises as long as there is its material adverse effect to
Lessee’s use of the Premises. All such activities shall be without abatement of rent or liability
to Lessee. Lessor may at any time place on the Premises any ordinary For Sale” signs and Lessor may
during the last 6 months of the term hereof place on the Premises any ordinary “For Lease” signs.
In addition, Lessor shall have the right to retain keys to the Premises and to unlock all doors in
or upon the Premises other than to files, vaults and safes, and in the case of emergency to enter
the Premises by any reasonably appropriate means, and any such entry shall not be deemed a forcible
or unlawful entry or detainer of the Premises or an eviction. Lessee waives any charges for damages
or injuries or interference with Lessee’s property or business in connection therewith.

33. Auctions. Lessee shall not conduct, nor permit to be conducted. any auction upon the Premises
without Lessor’s prior written consent. Lessor shall not be obligated to exercise any
standard of reasonableness in determining whether to permit an auction.

34. Signs. Lessee shall not place any sign upon the Project without Lessor’s prior
written consent.

35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary
or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a
termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or
lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor’s failure within 10 days following any such event to elect
to the contrary by written notice to the holder of any such lesser interest, shall constitute
Lessor’s election to have such event constitute the termination of such interest.

36. Consents. Except as otherwise provided herein, wherever in this Lease the consent of a Party is
required to an act by or for the other Party, such consent shall not be unreasonably withheld or
delayed. Lessor’s actual reasonable costs and expenses (including but not limited to
architects’, attorneys’, engineers’ and other
consultants’ fees) incurred in the consideration of, or response to, a request by Lessee
for any Lessor consent, including but not limited to consents to an assignment, a subletting or the
presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and
supporting documentation therefor. Lessor’s consent to any act, assignment or subletting
shall not constitute an acknowledgment that no Default or Breach by Lessee of this Lease exists.
nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be
otherwise specifically stated in writing by Lessor at the time of such consent. The failure to
specify herein any particular condition to Lessor’s consent shall not preclude the imposition by
Lessor at the time of consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the event that either Party
disagrees with any determination made by the other hereunder and reasonably requests the reasons
for such determination, the determining party shall furnish its reasons in writing and in
reasonable detail within 10 business days following such request.

37. Guarantor.

     37.1 Execution. The Guarantors, if any, shall each execute a guaranty in the form most
recently published by the AIR Commercial Real
Estate Association.

     37.2 Default. It shall constitute a Default of the Lessee if any Guarantor fails or refuses,
upon request to provide: (a) evidence of the execution of the guaranty, including the authority of
the party signing on Guarantor’s behalf to obligate Guarantor, and in the case of a corporate
Guarantor, a certified copy of a resolution of its board of directors authorizing the making of
such guaranty, (b) current financial statements, (c) an Estoppel Certificate, or
 (d) written confirmation that the guaranty is still in effect.

38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the
covenants, conditions and provisions on Lessee’s part to be observed and performed under this
Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term
hereof.

39. Options. If Lessee is granted an Option, as defined below, then the following provisions shall
apply.

     39.1 Definition. “Option” shall mean: (a) the right to extend the term of or renew this Lease
or to extend or renew any lease that Lessee has on other property of Lessor; (b) the right of first
refusal or first offer to lease either the Premises or other property of Lessor; (c) the right to
purchase or the right of first refusal to purchase the Premises or other property of Lessor.

     39.2 Options Personal To Original Lessee. Any Option granted to Lessee in this Lease is
personal to the original Lessee, and cannot be assigned or exercised by anyone other than said
original Lessee and only while the original Lessee is in full possession of the Premises and, if
requested by Lessor, with Lessee certifying that Lessee has no intention of thereafter assigning or
subletting.

     39.3 Multiple Options. In the event that Lessee has any multiple Options to extend or renew
this Lease, a later Option cannot be exercised
unless the prior Options have been validly exercised.

     39.4 Effect of Default on Options.

          (a)Lessee shall have no right to exercise an Option: (i) during the period commencing with the
giving of any notice of Default and continuing until said Default is cured, (ii) during the period
of time any Rent is unpaid (without regard to whether notice thereof is given Lessee), (iii) during
the time Lessee is in Breach of this Lease, or (iv) in the event that Lessee has been given 3 or
more notices of separate Default, whether or not the Defaults are cured, during the 12 month period
immediately preceding the exercise of the Option.

          (b) The period of time within which an Option may be exercised shall not be extended or
enlarged by reason of Lessee’s inability to exercise an Option because of the provisions
of Paragraph 39.4(a).

          (c) An Option shall terminate and be of no further force or effect, notwithstanding Lessee’s
due and timely exercise of the Option, if, after such exercise and prior to the commencement of the
extended term or completion of the purchase, (i) Lessee fails to pay Rent for a period of 30 days
after such Rent becomes due (without any necessity of Lessor to give notice thereof), or (ii) if
Lessee commits a Breach of this Lease.

40. Security Measures. Lessee hereby acknowledges that the Rent payable to Lessor hereunder does
not include the cost of guard service or other security measures. and that Lessor shall have no
obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the
Premises, Lessee, its agents and invitees and their property from the acts of third parties. In the
event. however, that Lessor should elect to provide security services, then the cost thereof shall
be an Operating Expense.

41. Reservations.

          (a) Lessor reserves the right: (i) to grant, without the consent or joinder of Lessee, such
easements, rights and dedications that Lessor deems necessary, (u) to cause the recordation of
parcel maps and restrictions, (iii) to create and/or install new utility raceways, so long as such
easements, rights, dedications, maps, restrictions, and utility raceways do not unreasonably
interfere with the use of the Premises by Lessee. Lessor may also: change the name, address or
title of the Building or Project upon at least 90 days prior written notice, provide and install,
at Lessee’s expense, Building standard graphics on the door of the Premises and such portions of
the Common Areas as Lessor shall reasonably deem appropriate; grant to any lessee the exclusive
right to conduct any business as long as such exclusive right does not conflict with any rights
expressly given herein; and to place such signs, notices or displays as Lessor reasonably deems
necessary or advisable upon the roof, exterior of the Building or the Project or on pole signs in
the Common Areas. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate
such rights. The obstruction of Lessee’s view, air, or light by any structure erected in
the vicinity of the Building, whether by Lessor or third parties, shall in no way affect this Lease
or impose any liability upon Lessor.

          (b) Lessor also reserves the right to move Lessee to other space of comparable size in the
Building or Project. Lessor must provide at least 45 days prior written notice of such move, and
the new space must contain improvements of comparable quality to those contained within the
Premises. Lessor shall pay the reasonable out of pocket costs that Lessee incurs with regard to
such relocation, including the expenses of moving and necessary stationary revision costs. In no
event, however, shall Lessor be required to pay an amount in excess of two months Base Rent. Lessee
may not be relocated more than once during the term of this Lease.

          (c) Lessee shall not: (i) use a representation (photographic or otherwise) of the Building or
Project or their name(s) in connection with Lessee’s business; or (ii) suffer or permit anyone,
except in emergency, to go upon the roof of the Building.

42. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of
money to be paid by one Party to the other under the provisions hereof, the Party against whom the
obligation to pay the money is asserted shall have the right to make payment “under protest” and
such payment shall not be regarded as a voluntary payment and there shall survive the right on the
part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there
was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party
shall be entitled to recover such sum or so much thereof as it was not legally required to pay.

43. Authority.

          (a) If either Party hereto is a corporation, trust, limited liability company, partnership, or
similar entity, each individual executing this Lease on behalf of such entity represents and
warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. Each
party shall, within 30 days after request. deliver to the other party satisfactory evidence of such
authority.

          (b) If this Lease is executed by more than one person or entity as “Lessee”, each such person
or entity shall be jointly and severally liable hereunder. It is agreed that any one of the named
Lessees shall be empowered to execute any amendment to this Lease, or other document ancillary
thereto and bind all of the named Lessees, and Lessor may rely on the same as if all of the named
Lessees had executed such document.

44. Conflict. Any conflict between the printed provisions of this Lease and the typewritten or
handwritten provisions shall be controlled by the typewritten or handwritten provisions.

45. Offer. Preparation of this Lease by either party or their agent and submission of same to the
other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended to
be binding until executed and delivered by all Parties hereto.

46. Amendments. This Lease may be modified only in writing, signed by the Parties in interest at
the time of the modification. As long as they do not materially change Lessee’s obligations
hereunder, Lessee agrees to make such reasonable nonmonetary modifications to this Lease as may be
reasonably required by a Lender in connection with the obtaining of normal financing or refinancing
of the Premises.

47. Multiple Parties. If more than one person or entity is named herein as either Lessor or Lessee.
such multiple Parties shall have joint and several responsibility to comply with the terms of this
Lease.

48. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT.

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49. Mediation and Arbitration of Dispute An Addendum requiring the Mediation and/or the Arbitration
of all disputes between the Parties and/or Brokers arising out of this Lease o is o is
not attached to this Lease.

50. Americans with Disabilities Act. In the event that as a result of Lessee’s use, or
intended use, of the Premises the Americans with Disabilities Act or any similar law requires
modifications or the construction or installation of improvements in or to the Premises, Building,
Project and/or Common Areas, the Parties agree that such modifications, construction or
improvements shall be made at:
þ Lessor’s
expense o  Lessee’s
expense.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED
HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE
PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE
COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO
THE PREMISES.

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL REAL ESTATE
ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS
LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:

1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID
INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES,
THE ZONING AND SIZE OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND
OPERATING SYSTEMS, COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE
PREMISES FOR LESSEE’S INTENDED USE.

WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE
LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES ARE
LOCATED.

The parties hereto have executed this Lease at the place and on the dates specified above their
respective signatures

	 	 	 	 	 
	Executed at: Newport Beach, CA	 	 
	on: 3/31/04	 	 
	 
	 	 	 	 
	By LESSOR:	 	 
	E Street LLC, a California limited	 	 
	liability company, W.A. Litman Devco, Onc., member	 	 
	 
	 	 	 	 
	By:

	 	/s/ Wayne Litman	 	 
	

	 	

	 	 
	Name Printed: Wayne Litman	 	 
	Title: President	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	

	 	

	 	 
	Name Printed:
	 	 	 	 
	Title:

	 	

	 	 
	

	 	

	 	 
	Address: 3419 Via Lido, Suite 438	 	 
	Newport Beach, California 92663	 	 
	(949)683-6333/(949)723-7423	 	 
	Telephone / Facsimile	 	 
	Federal ID No. 82-0569677	 	 
	 
	 	 	 	 
	-

	 	 	 	 
	 
	 	 	 	 
	LESSOR’S	 	 
	BROKER:	 	 
	F.E. Schnetz Commercial Brokerage	 	 
	Attn: Frank E. Schnetz	 	 
	Address: 330 North D Street	 	 
	San Bernardino, California 92401	 	 
	(909)889-0754/(909)889-0625	 	 
	Telephone / Facsimile	 	 
	 
	 	 	 	 
	Executed at:
	 	 	 	 
	on:
	 	
	 	 
	

	 	

	 	 
	 
	 	 	 	 
	By LESSEE:	 	 
	SOUTHWESTCOMMUNITY BANK	 	 
	 
	 	 	 	 
	By: /s/ Frank J Mercardante	 	 
	Name Printed: Frank J Mercardante	 	 
	Title: CEO	 	 
	 
	 	 	 	 
	By:

	 	/s/ Paul M. Weil	 	 
	

	 	

	 	 
	Name Printed: Paul M. Weil	 	 
	Title: Corp. Secty	 	 
	Address: P.O. Box 131690	 	 
	Carlsbad, California 92013-1690	 	 
	(760) 918-2616/ (760) 431-2160	 	 
	Telephone / Facsimile	 	 
	Federal ID No.	 	 
	 
	 	 	 	 
	LESSEE’S	 	 
	BROKER:
	 	 	 	 
	

	 	

	 	 
	Attn:
	 	 	 	 
	

	 	

	 	 
	Address:
	 	 	 	 
	

	 	

	 	 
	

	 	

	 	 
	

	 	

	 	 
	

	 	

	 	 
	 	 	 	 	 
	Telephone / Facsimile	 	 

These forms are often modified to meet changing requirements of taw and needs of the industry.
Always write or call to make sure you are utilizing the most current form: AIR Commercial Real
Estate Association, 700 South Flower Street, Suite 600, Los Angeles, CA 90017. (213) 687-8777.

©Copyright 1999-By AIR Commercial Real Estate Association.

All rights reserved.

No part of these works may be reproduced in any form without permission in writing.

Page 12 of 12

 

ADDENDUM “A”

Addendum to that certain lease between E Street LLC, a California limited

liability company and Southwest Community Bank, dated March 5, 2004 for

the premises known as 599 North L Street, Suite 100, San Bernardino,

California

51. a. Tenant Improvements: Lessor shall construct a new demising wall on the ground
floor to separate the bank branch from the remainder of the ground
floor. The location of the new
demising wall will be as noted on the floor plan attached to the
lease. The finishes of the
demising wall and modifications to the ceiling where it is penetrated by the new demising wall,
will be like kind to the existing finishes of the premises. Lessor shall install new carpet in the
employee area behind the teller counter and clean all the existing
carpet that will remain. The
premises shall be delivered to Lessee broom clean, ready for
occupancy.

51. b. Lessor shall install a wall and door at the south building lobby to secure the bank branch
from the south lobby and elevator area. Lessor’s total contribution toward this wall and door at
the south building lobby shall not exceed $5,000. 00.

52.  Interim Occupancy: Lessee shall have the right to occupy Suite 205 on the second floor
of the building under an Interim Occupancy License for a period beginning upon the execution of
this lease until possession of the demised premises is delivered to
Lessee. Lessor shall be
reimbursed for the cost of utilities, janitorial service and damage, if any, caused by Lessee or
its invitees. Lessee shall name Lessor as an additional insured under its liability insurance.

53. Signage: Lessee shall be provided the top location and current size sign on each of the
existing sign pylons. Lessor shall have the right to provide up to two additional tenants signage
rights on the sign pylons. If any additional sign faces are to be installed on the sign pylons,
Lessor shall pay for any sign modifications so as Lessees sign remains at least the same and
largest sign face and top location on the sign pylons.

54.  Equipment: Lessee shall be provided use of the existing vault and vault door, and the
teller counter, (if the existing teller counter is left by Jackson Federal Bank), in the premises.
Lessee shall be responsible for any maintenance and/or lock work required for this equipment to
meet Lessee’s requirements for security.

55. Regulatory Approval: Lessee’s obligations to Lessor under the terms of this lease arc
subject to and contingent upon Lessee receiving governmental regulatory approval to operate a bank
branch within the demised premises, no later than March 15, 2004.

56. Reserved Parking: Lessee shall have the exclusive right to 5 reserved parking spaces
within the building on—site covered parking facility. Lessor shall not monitor the use covered
parking facility. Lessee shall have the right to monitor it’s reserved parking spaces within the
covered parking facility and tow vehicles, if necessary, in accordance with all local and state
laws applicable to private parking facilities. Lessee shall indemnify Lessor against any damages,
if any, due to Lessee having any vehicles towed from the reserved
parking spaces.

 

 

RENT ADJUSTMENT(S)

STANDARD LEASE ADDENDUM

Dated March 5, 2004

By and Between (Lessor) E Street LLC, a California limited

                                             liability
company

(Lessee) Southwest Community Bank

Address of Premises: 599 North E Street, Suite 100

                                     San Bernardino, California

Paragraph 57

A. RENT ADJUSTMENTS:

The monthly rent for each month of the adjustment period(s) specified below shall be increased
using the method(s) indicated below:

(Check Method(s) to be Used and Fill in Appropriately)

þ
I. Cost of Living Adjustment(s) (COLA)

     a.
On (Fill in COLA Dates ): Each anniversary

the Base Rent shall be adjusted by the change, if any, from the Base Month specified below, in
the Consumer Price Index of the Bureau of Labor Statistics of
the U.S. Department of Labor for (select one): o CPI W (Urban Wage Earners and
Clerical Workers) or þ CPI U (All Urban Consumers), for (Fill in Urban Area):
Los Angeles — Riverside — Orange Counties

All Items (1982-1984 = 100), herein referred to as “CPI”.

     b. The
monthly rent payable in accordance with paragraph A. l. a. of this Addendum shall be
calculated as follows: the Base Rent set forth in
paragraph 1.5 of the attached Lease, shall be multiplied by a fraction the numerator of which
shall be the CPI of the calendar month 2 months prior to the
month(s) specified in paragraph A. l. a. above during which the adjustment is to take effect, and the
denominator of which shall be the CPI of the calendar
month which is 2 months prior to (select one): þ.the first month of the term of this
Lease as set forth in paragraph 1.3 (“Base Month”) or o (Fill in Other
“Base Month”):                                                            
                    
                                        
                    . The sum so calculated shall constitute the new monthly rent
hereunder, but in no event, shall any such new monthly rent be less than the rent payable for the
month immediately preceding the rent adjustment.

     c.
In the event the compilation and/or publication of the CPI shall be transferred to any
other governmental department or bureau or agency or shall be discontinued, then the index most
nearly the same as the CPI shall be used to make such calculation. In the event that the Parties
cannot agree on such alternative index, then the matter shall be submitted for decision to the
American Arbitration Association in accordance with the then rules of said Association and the
decision of the arbitrators shall be binding upon the parties. The cost of said Arbitration shall
be paid equally by the Parties.

     d.
The monthly rent increase to be calculated in paragraphs A. l. b or
A. l. c of this Addendum
shall be not less than two and one half percent (2.5/’0) per annum nor more than six percent (6%)
per annum of the initial base rent as set forth in paragraph 1.5 of
the Lease.

o
II. Market Rental Value Adjustment(s) (MRV)

     a.
 On (Fill in MRV Adjustment Date(s):
                                                                                                                                            
                                                                                                                                                                                                                                                
the Base Rent shall be adjusted to the “Market Rental Value” of the property as follows:

          1) Four months prior to each Market Rental Value Adjustment Date described above, the Parties
shall attempt to agree upon what the new
MRV will be on the adjustment date. If agreement cannot be reached within thirty days, then:

               (a) Lessor and Lessee shall immediately appoint a mutually acceptable appraiser or broker to
establish the new MRV within the next 30 days. Any associated costs will be split equally between
the Parties, or

               (b) Both Lessor and Lessee shall each immediately make a reasonable determination of the MRV
and submit such determination, in writing, to arbitration in accordance with the following provisions:

               (i) Within 15 days thereafter, Lessor and Lessee shall each select an  ̈ appraiser or  ̈ broker
(“Consultant” — check one) of their choice to act as
an arbitrator. The two arbitrators so appointed shall immediately select a third
mutually acceptable Consultant to act as a third arbitrator.

               (ii) The 3 arbitrators shall within 30 days of the appointment of the third arbitrator reach a
decision as to what the actual MRV for the Premises is, and whether Lessor’s or Lessee’s submitted
MRV is the closest thereto.The decision of a majority of the arbitrators shall ~ding on the
Parties.The submitted MRV which is determined to be the closest to the actual MRV shall thereafter
be used by the Parties

Page 1 of 2

 

               (iii) If either of the Parties fails to appoint an arbitrator within the specified 15 days,
the arbitrator timely appointed by one of them shall reach a decision on his or her own, and said
decision shall be binding on the Parties.

               (iv) The entire cost of such arbitration shall be paid by the party whose submitted MRV is not
selected, ie the one that is NOT the closest to the actual MRV.

          2) Notwithstanding the foregoing, the new MRV shall not be less than the rent payable for the
month immediately preceding the rent adjustment.

     b.
Upon the establishment of each New Market Rental Value:

          1) the new MRV will become the new “Base Rent” for the purpose of calculating any further
Adjustments, and

          2) the first month of each Market Rental Value term shall become the new ‘Base Month’ for the
purpose of calculating any further Adjustments.

o
III. Fixed Rental Adjustment(s) (FRA)

The Base Rent shall be increased to the following amounts on the dates set forth below:

	 	 	 	 	 	 	 
	On (Fill in FRA Adjustment Date(s)):

	 	 	The New Base Rent shall be:
	

	 	 	$	 	 	 
	 	 	 	 	 
	

	 	 	$	 	 	 
	 	 	 	 	 
	

	 	 	$	 	 	 
	 	 	 	 	 
	

	 	 	$	 	 	 
	 	 	 	 	 

B. NOTICE:

     Unless specified otherwise herein, notice of any such adjustments, other than Fixed Rental
Adjustments, shall be made as specified in paragraph 23 of
the Lease.

c. BROKER’S FEE:

     The Brokers shall be paid a Brokerage Fee for each adjustment specified above in accordance
with paragraph 15 of the Lease.

Page 2 of 2

 

OPTION(S) TO EXTEND

STANDARD LEASE ADDENDUM

Dated
March 5, 2004

By and Between (Lessor) E Street LLC, a California
limited
        
         
                   
       liability company

(Lessee) Southwest Community Bank

Address
of Premises: 599 North E Street, Suite 100 San Bernardino, California

Paragraph 58

Paragraph 58

A. OPTION(S) TO EXTEND:

Lessor hereby grants to Lessee the option to extend the term of this
Lease for ONE
                                        
additional SIXTY
                     month period(s)
commencing when the prior term expires upon each and all of the following terms and conditions:

     (i) In order to exercise an option to extend, Lessee must give written notice of such election
to Lessor and Lessor must receive the same at least SIX but not more than NINE
months prior to the date that the option period would commence, time
being of the essence. If
proper notification of the exercise of an option is not given and/or received, such option shall
automatically expire. Options (if there are more than one) may only
be exercised consecutively.

     (ii) The provisions of paragraph 39, including those relating to Lessee’s Default set forth in
paragraph 39.4 of this Lease, are conditions of this Option.

     (iii) Except for the provisions of this Lease granting an option or options to extend the
term, all of the terms and conditions of this Lease except where specifically modified by this
option shall apply.

     (iv) This Option is personal to the original Lessee, and cannot be assigned or exercised by
anyone other than said original Lessee and only while the original Lessee is in full possession of
the Premises and without the intention of thereafter assigning or
subletting.

     (v) The monthly rent for each month of the option period shall be calculated as follows, using
the method(s) indicated below: (Check Method(s) to be Used and Fill
in Appropriately)

o
I. Cost of Living Adjustment(s) (COLA)

     a.
On (Fill in COLA
Dates): _______________________________________________________________________
___________________________________________________________________________________________________________________
the Base Rent shall be adjusted by the change, if any, from the Base Month specified below, in the
Consumer Price Index of the Bureau of Labor Statistics of
the U S. Department of Labor for (select
one): o CPI W  (Urban Wage Earners and Clerical
Workers) or o CPI U (All Urban Consumers), for (Fill in Urban Area):

__________________________________________________________________________________________________

All Items (1982-1984 = 100), herein referred to as “CPI”.

     b.
The monthly rent payable in accordance with paragraph A.l.a of this Addendum shall be
calculated as follows: the Base Rent set forth in paragraph 1.5 of the attached Lease, shall be
multiplied by a fraction the numerator of which shall be the CPI of the calendar month 2 months
prior to the month(s) specified in paragraph A.l.a above during which the adjustment is to take
effect, and the denominator of which shall be the CPI of the calendar month which is 2 months prior
to (select one): o the first month of the term of this Lease as set forth in paragraph 1 3
(“Base Month”) or o (Fill in Other “Base Month”) :                                                            
             
           
           
     :. The sum so calculated shall constitute
the new monthly rent hereunder, but in no event, shall any such new monthly rent be less than the
rent payable for the month immediately preceding the rent adjustment.

     c.
In the event the compilation and/or publication of the CPI shall be transferred to any
other governmental department or bureau or agency or shall be discontinued, then the index most
nearly the same as the CPI shall be used to make such calculation. In the event that the Parties
cannot agree on such alternative index, then the matter shall be submitted for decision to the
American Arbitration Association in accordance with the then rules of said Association and the
decision of the arbitrators shall be binding upon the parties. The cost of said Arbitration shall
be paid equally by the Parties.

þ
II. Market Rental Value Adjustment(s) (MRV)

a. On (Fill in MRV Adjustment Date(s)) the first day of the “EXTENDED LEASE TERM”
_______________________________________________________________________________________
______________________________________________________
the Base Rent shall be adjusted to the “Market Rental Value” of the property as follows:

     1) Four months prior to each Market Rental Value Adjustment Date described above, the
Parties shall attempt to agree upon what the new MRV

Page 1 of 2

 

will be on the adjustment date. If agreement cannot bee reached, within thirty days, then:

          (a) Lessor and Lessee shall immediately appoint a mutually acceptable appraiser or broker to
establish the new MRV within the next 30 days. Any associated costs will be split equally between
the Parties, or

          (b) Both Lessor and Lessee shall each immediately make a reasonable determination of the MRV
and submit such determination, in writing, to arbitration in accordance with the following
provisions:

               (i) Within 15 days thereafter, Lessor and Lessee shall each select an ___ appraiser or
broker (“Consultant” - check one) of their choice to act as an arbitrator. The two
arbitrators so appointed shall immediately select a third mutually acceptable Consultant to act as
a third arbitrator.

               (ii) The 3 arbitrators shall within 30 days of the appointment of the third arbitrator reach
a decision as to what the actual MRV for the Premises is, and whether Lessor’s or Lessee’s
submitted MRV is the closest thereto. The decision of a majority of the arbitrators shall be
binding on the Parties. The submitted MRV which is determined to be the closest to the actual MRV
shall thereafter be used by the Parties.

               (iii) If either of the Parties fails to appoint an arbitrator within the specified 15 days,
the arbitrator timely appointed by one of them shall reach a decision on his or her own, and said
decision shall be binding on the Parties.

               (iv) The entire cost of such arbitration shall be paid by the party whose submitted MRV is
not selected, ie the one that is NOT the closest to the actual MRV.

          2) Notwithstanding the foregoing, the new MRV shall not be less than the rent payable for
the month immediately preceding the rent adjustment.

     b. Upon the establishment of each New
Market Rental Value:

	 	1)  	the new MRV will become the new “Base Rent” for the purpose of calculating any further
Adjustments, and
	 
	 	   	5) each anniversary of the “EXTENDED LEASE TERM the monthly rent shall be increased in
accordance with Paragraph 57 “RENT ADJUSTMENTS”.

	 	 	 	 	 
	o III. Fixed Rental Adjustment(s) (FRA)

The Base Rent shall be increased to the following amounts on the dates set forth below:

	 	 	 	 	 	 	 
	On (Fill in FRA Adjustment Date(s)):

	 	 	The New Base Rent shall be:

	

	 	 	$ 	 	 	 
	 	 	 	 	 
	

	 	 	$ 	 	 	 
	 	 	 	 	 
	

	 	 	$ 	 	 	 
	 	 	 	 	 
	

	 	 	$ 	 	 	 
	 	 	 	 	 

B. NOTICE:

     Unless specified otherwise herein, notice of any such adjustments, other than Fixed Rental
Adjustments, shall be made as specified in paragraph 23 of
the Lease.

C. BROKER’S FEE:

     The Brokers shall be paid a Brokerage Fee for each adjustment specified above in accordance
with paragraph 15 of the Lease.

Page 2 of 2exv10w32

 

EXHIBIT 10.32

OFFICE BUILDING LEASE

Carlsbad Gateway Center

LANDLORD

SOUTHWEST COMMUNITY BANK, INC.

TENANT

JUNE, 2004

 

 

OFFICE BUILDING LEASE

Table of Contents

	 	 	 	 	 	 	 
	1

	 	PARTIES
	 	 	1	 
	2

	 	PREMISES
	 	 	1	 
	3

	 	TERM
	 	 	1	 
	4

	 	POSSESSION
	 	 	1	 
	5

	 	BASIC RENT
	 	 	2	 
	6

	 	SECURITY DEPOSIT
	 	 	2	 
	7

	 	OPERATING EXPENSE ADJUSTMENTS
	 	 	2	 
	8

	 	ELECTRICITY EXPENSES
	 	 	4	 
	9

	 	USE
	 	 	5	 
	10

	 	SIGNAGE
	 	 	5	 
	11

	 	COMPLIANCE WITH LAW
	 	 	5	 
	12

	 	ALTERATIONS AND ADDITIONS
	 	 	5	 
	13

	 	REPAIRS
	 	 	5	 
	14

	 	LIENS
	 	 	6	 
	15

	 	ASSIGNMENT AND SUBLETTING
	 	 	6	 
	16

	 	HOLD HARMLESS
	 	 	6	 
	17

	 	SUBROGATION
	 	 	6	 
	18

	 	LIABILITY INSURANCE
	 	 	7	 
	19

	 	SERVICES AND UTILITIES
	 	 	7	 
	20

	 	PROPERTY TAXES
	 	 	7	 
	21

	 	RULES AND REGULATIONS
	 	 	7	 
	22

	 	HOLDING OVER
	 	 	7	 
	23

	 	ENTRY BY LANDLORD
	 	 	7	 
	24

	 	RECONSTRUCTION
	 	 	8	 
	25

	 	DEFAULT
	 	 	8	 
	26

	 	REMEDIES IN DEFAULT
	 	 	8	 
	27

	 	EMINENT DOMAIN
	 	 	9	 
	28

	 	OFFSET STATEMENT
	 	 	9	 
	29

	 	PARKING
	 	 	9	 
	30

	 	AUTHORITY OF PARTIES
	 	 	9	 
	31

	 	GENERAL PROVISIONS
	 	 	10	 
	32

	 	BROKERS
	 	 	11	 
	33

	 	CONDITION OF PREMISES
	 	 	11	 
	34

	 	AFTER HOURS USE
	 	 	11	 
	35

	 	INCORPORATION OF EXHIBITS/ADDENDA
	 	 	12	 

EXHIBIT A: PREMISES FLOOR PLAN (not included)

EXHIBIT B: RULES AND REGULATIONS (not included)

EXHIBIT C: PARKING RULES AND REGULATIONS (non included)

EXHIBIT D: SIGN CRITERIA (not included)

 

 

OFFICE BUILDING LEASE

1. PARTIES. This Lease, dated for reference purposes only as of May 21, 2004, is made by
and between, Carlsbad Gateway Center, LLC, a California Limited Liability Company
(“Landlord”) and Southwest Community Bank, Inc , a California Banking Corporation
(“Tenant”).

2. PREMISES. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord that
certain office space known as 5650 El Camino Real, Suite 130 (the “Premises”) indicated
on Exhibit “A” attached hereto and made a part hereof, containing a rentable area
of approximately Three Thousand Two Hundred Sixty (3,260) rentable square feet. The
Premises shall include any furniture, fixtures and equipment which is presently located
within the Premises. The rentable area consists of the usable area (totaling 2,898 usable
square feet) of the Premises determined in accordance with “BOMA” standards, plus a pro
rata share of the common areas. The Premises constitutes Six point Fifty-One percent
(6 51%) of the Building (total building area is 50,071 rentable square feet) located at
5650 El Camino Real (the “Building”). The “Base Year” for purposes of Article 7
(OPERATING EXPENSE ADJUSTMENTS) shall be the calendar year 2005. This Lease is subject to
the terms, covenants and conditions herein set forth and Tenant covenants, as a material
part of the consideration for this Lease, to keep and perform each and all of said terms,
covenants and conditions by it to be kept and performed and that this Lease is made upon
the condition of said performance.

3. TERM. The Term of this Lease shall be for Sixty-two (62) months, commencing as of the
date when the Landlord has substantially completed improvements to the Premises, expected
to be August 1, 2004. Landlord shall notify Tenant of the date when the Premises is
available for move in, such notice shall constitute the date of lease commencement (the
“Commencement Date”). Tenant shall have access to the Premises
prior to delivery for the purpose of installing Tenant’s phone
and computer cabling.

     (a) Extension
Option. Provided that Tenant is not in default of any monetary or material
non-monetary provision of this Lease at the time of exercise of an option to extend provided herein
or at any time thereafter prior to the commencement of the applicable “Option Term” (as
hereinafter defined), Tenant shall have the option to extend the Term of this Lease for two (2)
additional terms of Sixty (60) months, such period being referred to herein as an “Option
Term”, only by giving Landlord written notice at least two hundred seventy (270) days before
the expiration of the then applicable Term. All of the terms, covenants, conditions, provisions and
agreements applicable to the initial Term shall be applicable to the Option Term, except that the
Basic Rent payable during the Option Term shall be equal to the fair market rental rate or rates
for comparable buildings (considering size, age, quality, utility, location, access, improvements
and amenities) located within the general geographic location of the Project, as reasonably
determined by Landlord. In determining the fair market rental rate, Landlord shall take into
account recent leases within the Building. Landlord shall, upon receipt of Tenant’s notice provided
for above and at least four (4) months prior to the expiration of the original Term, notify Tenant
in writing of its determination of the fair market rental rate or rates and the Basic Rent for the
Option Term. Within ten (10) days after such notice is given, Tenant may elect in written notice to
Landlord either to (i) accept such Basic Rent for the Option Term as determined by Landlord, or
(ii) terminate this Lease as of the expiration of the original Term, or (iii) provide Landlord with
Notice that it elects to appoint an independent licensed appraiser to conduct an independent
evaluation of the fair market rental rate for comparable offices. Tenant shall have thirty (30)
days to complete the appraisal. Tenant shall then Notify Landlord of its intent to accept
Landlord’s determination of fair market rent or object to the
Landlord’s determination thereof. If
the difference between the Landlord’s determination is less than 5%, then Landlord’s determination
of fair market rental rate shall be the rate used during the Option
Term. However, if the
difference between Landlord’s estimate of fair market rental rate and that made by the appraiser is
5% or greater, then Landlord may (i) accept the appraiser’s determination of fair market rent rate,
or (ii) appoint a second independent licensed appraiser to reconcile the two opinions of value,
which reconciliation shall be completed within Thirty (30) days, and the reconciled amount shall be
the fair market rental rate. Tenant’s failure to make a written elections strictly in accordance
with the preceding sentences shall be deemed to be an acceptance of
the Basic Rent as determined by Landlord. Time is of the essence with
respect to Tenant’s exercise of the option to
extend the Term of this Lease provided herein. The option to extend the Term pursuant hereto by the
Option Terms shall be personal to the original Tenant signatory to this Lease and shall not be
exercisable by or for the benefit of any assignee or subtenant of Tenant other than an assignee in
connection with a permitted assignment: pursuant to
Article 15 below. All references in
this Lease.

4. POSSESSION. If Landlord, for any reason whatsoever, cannot deliver possession of said
Premises to Tenant at the commencement of the term hereof, this Lease shall not be void
or voidable, nor shall Landlord be liable to Tenant for any loss or damage resulting
therefrom, nor shall the expiration date of the above term be in any way extended, but in
that event all rent shall be
abated during the period between the commencement of said term and the time when Landlord
delivers possession.

Page 1 of 12

 

 

5. BASIC RENT. Tenant shall pay to Landlord, without prior notice or demand, on or before the first
day of the month during the term, “Basic Rent” according to the following rent schedule:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Dollars Per	 
	 	 	Monthly	 	 	Annual	 	 	Rentable S.F.	 
	Period	 	Basic Rent	 	 	Basic Rent	 	 	Per Month	 
	Month 1
	 	$	5,053.00	 	 	 	—	 	 	$	1.55	 
	Months 2-3
	 	Free of Base Rent	 	 	 	 	 	 	 	 
	Months 4-12
	 	$	5,053.00	 	 	$	45,477.00	 	 	$	1.55	 
	Months 13-24
	 	$	5,248.60	 	 	$	62,983.20	 	 	$	1.61	 
	Months 25-36
	 	$	5,476.80	 	 	$	65,721.60	 	 	$	1.68	 
	Months 37-48
	 	$	5,672.40	 	 	$	68,068.80	 	 	$	1.74	 
	Months 49-62
	 	$	5,900.60	 	 	$	70,807.20	 	 	$	1.81	 

Basic Rent for any period during the term hereof which is for less than one (1) month shall be a
prorated portion of the monthly installment herein, based upon a thirty (30) day month Said basic
rent shall be paid to Landlord, without deduction or offset, in lawful money of the United States
of America, which shall be legal tender at the time of payment at the Office of the Building, or to
such other person or at such other place as Landlord may from time to time designate in writing.

6. Security Deposit Upon execution of this Lease, Tenant shall deposit with Landlord a Security
Deposit in the amount of zero dollars and 00/100 ($0.00). Landlord and Tenant agree that such
amount shall remain on deposit with Landlord. Said sum 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 term hereof. If Tenant defaults with respect to any
provision 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 this
security deposit for the payment of any rent or any other sum in default, or for the payment of any
amount which Landlord may spend or become obligated to spend by reason of Tenant’s default, or to
compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant’s
default. If any portion of said deposit is so used or applied, Tenant shall within five (5) days
after written demand therefore 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 material breach of
this Lease. Landlord shall not be required to keep this security deposit separate from its general
funds, and Tenant shall not be entitled to interest on such deposit. If Tenant 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) at the expiration of the Lease
term. In the event of termination of
Landlord’s interest in this Lease, Landlord shall transfer said deposit to Landlord’s successor in
interest.

7. OPERATING EXPENSE
ADJUSTMENTS — ADDITIONAL RENT. Tenant shall pay in addition to the Basic Rent
as Additional Rent its pro rata share (the same percentage as set forth in Article 2 hereinabove)
of any increase in real estate taxes and/or operating and maintenance expenses relating to the land
and Building in which the Premises constitute a part as follows:

	 	(a)  	The rent adjustment shall include the amount by which real estate axes are
increased for any tax year subsequent to the Base Year of the term; provided, however
if the increase is a result of a reappraisal occasioned by the initial completion of
construction of the Building and other improvements of which the Premises are a part,
such increase shall be added to the Base Year real estate taxes for comparison
purposes as set out in Article 7.d. hereinbelow.
	 
	 	(b)  	The rent adjustment shall include the amount by which direct and indirect
costs of operation and maintenance are increased for any fiscal year subsequent to the
Base Year of the term.
	 
	 	(c)  	The term “Common Area”, as used in this Lease, shall mean all areas within
the exterior boundaries of the Premises, including the parking areas now or later made
available for the general use of Landlord and other persons entitled to occupy the
Building.
	 
	 	   	The use and occupancy by Tenant of the Premises shall include the non-exclusive use of
the Common Area (except those portions of the Common Area on which have been
constructed or placed permanent or temporary kiosks, displays, carts and stands and
except areas used in the maintenance or operation of the Project) in common with
Landlord and the other tenants of the Building and their customers
and invitees.
	 
	 	   	Landlord shall have the sole and exclusive control of the Common Area, and the
right to make changes to the Common Area. Landlord’s rights shall include, but not be
limited to,

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	 	   	the right to (a) restrain the use of the Common Area by unauthorized persons; (b)
utilize from time to time any portion of the Common Area for promotional,
entertainment and related matters; (c) place permanent or temporary kiosks, displays,
carts and stands in the Common Area and to lease same to tenants; provided, however,
no such items will be placed in a manner which will materially interfere with
“Tenant’s ability to operate its business from the Premises, materially impair
ingress, egress or other access to or from the Premises, or materially impair the
visibility of the Premises; (d) temporarily close any portion of the Common Area for
repairs, improvements or Alterations, to discourage noncustomer use, to prevent
dedication or an easement by prescription or for any other reason deemed sufficient in
Landlord’s reasonable judgment; and (e) renovate, upgrade or change the shape and size
of the Common Area or add, eliminate or change the location of improvements to the
Common Area including, without limitation, buildings, parking areas, roadways and curb
cuts, and to construct buildings on the Common Area.
	 
	 	(c)  	“Operating Expenses" as used herein means all direct and indirect
costs of operating, maintaining, repairing and replacing of the Building and common
areas and shall include by way of illustration only: Taxes (whether assessed against
Landlord or assessed against Tenant and collected by Landlord, or both); water and sewer
charges; insurance premiums; utilities and janitorial service; labor; direct on-site
maintenance and operations labor; management fee and other management costs not to
exceed five percent (5%) of gross rental for all tenant suites; maintenance of air
conditioning and heating equipment for all tenant suites and all common areas;
maintenance of any elevators; supplies; materials: equipment; any maintenance costs
within any tenant’s premises not required to be maintained directly by the tenant; and
repair, replacement and upkeep of all parking, landscaping and common areas (all of the
foregoing collectively referred to herein as “Operating Expenses”). Operating Expenses
shall not include management related expenses such as office, bookkeeping and phone
expenses (as these expenses are included in the management fee), nor shall such expenses
include depreciation on the Building or equipment therein, loan payments, executive
salaries or real estate commissions, or capital expenditures (as defined by Generally
Accepted Accounting Principals).
	 
	 	(d)  	In determining the amount of Operating Expenses for any calendar year during the
Term, including the Base Operating Year, if less than ninety-five percent (95%) of the
rentable area of the Building shall have been occupied by tenant(s) at any time during
any such calendar year.Operating Expenses shall be determined for such calendar year to
be an amount equal to the expenses which would normally be expected to be incurred had
such occupancy been ninety-five percent (95%) throughout such
calendar year.
	 
	 	(e)  	An Operating Expense Adjustment shall be made by the Landlord as soon as possible
after the first day of January each year following the “Base Year” Landlord shall
endeavor to give Tenant on or before the first day of March of each year an estimate of
the Operating Expense Adjustment for the following fiscal year but failure by Landlord
to give such estimate by said date shall not constitute a waiver by Landlord of its
right to require the increase in rent caused by the Operating Expense Adjustment.Upon
receipt of the estimate, Tenant shall pay in full the total amount of increase due for
the prior year (less any estimated payments).In addition, for the then
current year, the estimated amount of any such increase for said current year
shall be divided into twelve (12) equal monthly installments and Tenant shall pay to
Landlord, concurrently with the regular monthly rent payment next due following the
receipt of such statement, an amount equal to one (1) monthly installment of such excess
expenses multiplied by the number of months from the commencement of the fiscal year in
which said statement is submitted to the month of such payment, both months inclusive
Subsequent installments shall be payable concurrently with regular monthly rent payments
for the balance of that fiscal year and shall continue until that fiscal year’s
statement is rendered.If in any fiscal year the Tenant’s share of Operating Expenses is
less than the preceding year then upon receipt of Landlord’s statement, any overpayment
made by Tenant on the monthly installment basis provided above shall be credited towards
the next month’s rent falling due. Even though the term has expired and Tenant has
vacated the Premises, when the final determination is made of Tenant’s share of
Operating Expenses for the year in which the Lease terminates, Tenant shall immediately
pay any increase due over the estimated costs paid and conversely any overpayment made
in the event said costs decrease shall be immediately rebated by
Landlord to Tenant.
	 
	 	(f)  	Landlord shall pay all janitorial and electrical charges subject to any attached
schedule and Building Rules and Regulations.
	 
	 	(g)  	For the purpose of this Lease, any charges for Operating Expense Adjustments
herein are collectively considered as “Additional Rent.”

Page 3 of 12

 

 

	 	(h)  	Notwithstanding anything contained in this Article, the rent payable by Tenant shall in no
event be less than the rent specified in Article 5.

8.    ELECTRICITY EXPENSES-ADDITIONAL RENT

(a) Landlord shall redistribute or make available within the Premises electrical energy to or
for the use of Tenant in the Premises for the operation of the lighting fixtures and the
electrical receptacles installed in the Premises and for the operation of any other electrical
equipment within the Premises approved by Landlord. Tenant shall pay Landlord as Additional
Rent, an “Electricity Payment” equal to Tenant’s Pro Rata Share of the cost of the electrical
energy consumed in the Office Building (the “Electricity Expense”), calculated at the then
applicable rate prescribed by the public utility company serving the Office Building, plus any
taxes or other charges in connection therewith.If any tax shall be imposed upon Landlord’s
receipts from the sale or resale of electrical energy to the tenants in the Office Building,
Tenant’s Pro Rata Share thereof shall be passed on to, included in the bill of, and paid by
Tenant if and to the extent permitted by law.If either the supply or character of electrical
service is changed by the public utility or other company supplying electrical service to the
Office Building for any reason whatsoever or is no longer suitable for Tenant’s requirements,
no such change or unsuitability shall constitute an actual or constructive eviction, in whole
or in part, or entitle Tenant to any abatement or diminution of Base Rent or Additional Rent,
or relieve Tenant from any of its obligations under this Lease, or impose any liability upon
Landlord, or its agents, by reason of inconvenience or annoyance to Tenant, or injury to or
interruption of Tenant’s business, or otherwise.

(b) Tenant agrees to pay monthly, as Additional Rent, one-twelfth (1/12) of Landlord’s estimate
of Tenant’s Electricity Payment for the then current calendar year.Landlord will give Tenant
written notice from time to time of such estimated amounts, and Tenant shall pay such amounts
monthly to Landlord in the same manner and at the same time as Base Rent.As soon as is
reasonably practicable following the end of the calendar year, Landlord will submit to Tenant a
statement showing in reasonable detail Electricity Expenses on a per rentable square foot basis
for the preceding calendar year along with a reconciliation of estimated payments made by
Tenant as compared to Tenant’s actual Electricity Payment for such calendar year (each, an
“Electricity Statement”).Within thirty (30) days after receipt of an Electricity Statement,
Tenant shall pay to Landlord any additional amounts owed to Landlord as shown on the
Electricity Statement.Any payments due under this Section shall be prorated for any partial
calendar year occurring during the Term.Tenant’s obligation to pay any amounts due under this
Section shall survive the Expiration Date or earlier termination of this Lease.Any over
payment made by Tenant on the monthly installment basis provided above shall be credited
towards the next month’s rent coming due.

     (c) Any additional feeders or risers which are required to supply any additional
electrical requirements which Tenant may have, and all other equipment proper and necessary in
connection with such feeders or risers, shall be installed by Landlord upon Tenant’s request,
at the sole cost and expense of Tenant, provided that, in Landlord’s reasonable judgment, such
additional feeders or risers are necessary and are permissible under applicable laws and
insurance regulations and the installation of such feeders or risers will not cause permanent
damage or injury to the Office Building or the Premises or cause or create a dangerous or
hazardous condition or entail excessive or unreasonable alterations or interfere with or
disturb other tenants or occupants of the Office Building .At no time shall the use of
electrical energy in the Premises exceed the capacity of the existing feeders or wiring
installations then serving the Premises.Tenant shall not make or perform, or permit the making
or performance of, any alterations to wiring installations or other electrical facilities in or
serving the Premises without the prior consent of Landlord in each instance.Any such
alterations, additions or consent by Landlord shall be subject to the provisions of this Lease
If Landlord shall grant its consent, all additional feeders, risers or other equipment required
therefor shall be installed by Landlord and the cost thereof shall be paid by Tenant, as
Additional Rent, within ten (10) days after the rendition of a
bill therefor.

     (d) Landlord reserves the right to discontinue furnishing electricity to Tenant in the
Premises on not less than sixty (60) days notice to Tenant.If Landlord exercises such right to
discontinue, or is compelled to discontinue furnishing electricity to Tenant, this Lease shall
continue in full force and effect and shall be unaffected thereby, except only that from and
after the effective date of such discontinuance, Landlord shall not be obligated to furnish
electricity to Tenant and Tenant shall not be obligated to pay Landlord as additional rent for
any such electricity.If Landlord so discontinues furnishing electricity to Tenant, Tenant
shall arrange to obtain electricity directly from the public utility or other company servicing
the Building.Such electricity may be furnished to Tenant by means of the then existing
electrical facilities serving the Premises to the extent that the same are available, suitable
and safe for such purposes.All meters and all additional panel boards, feeders, risers,
wiring, and other conductors and equipment which may be required to obtain electricity, of
substantially the same quantity, quality and character, shall be installed by Landlord at
Landlord’s sole cost and expense.Landlord shall not voluntarily discontinue furnishing
electricity to Tenant until Tenant is able to receive electricity directly from the public
utility or other company serving the Building.

(e) Landlord shall not be liable to Tenant in any way for any interruption, curtailment by
reason of

Page 4 of 12

 

 

any requirement, act or omission of Landlord or of any public utility or other company
servicing the Building with electricity or for any other reason except Landlord’s negligence
or willful misconduct.

	 	(f)  	Upon reasonable prior notice, during business hours, and not more than once every six (6)
months during the Term, Tenant shall have the right to audit Landlord’s electricity expenses.

	9.  	USE. Tenant shall use the Premises for a bank location and shall not use or permit the
Premises to be used for any other purpose without the prior written consent of Landlord
Tenant shall not do or permit anything to be done in or about the Premises nor bring or keep
anything therein which will in any way increase the existing rate of or affect any fire or
other insurance upon the Building or any of its contents, or cause cancellation of any
insurance policy covering said Building or any part thereof or any of its contents.Tenant
shall not do or permit anything to be done in or about the Premises which will in any way
obstruct or interfere with the rights of other tenants or occupants of the Building or injure
or annoy them or use or allow the Premises to be used for any improper immoral, unlawful or
objectionable purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or about
the Premises.Tenant shall not commit or suffer to be committed any waste in or upon the
Premises.
	 
	10.  	SIGNAGE. Landlord, at Landlord’s sole cost and expense, shall provide lobby directory signage
and suite entry signage.Tenant, at Tenant’s sole cost and expense shall have the right to
building top signage facing El Camino Real.All signage shall be subject to all restrictions
set forth by the City of Carlsbad sign ordinance, Landlord’s sign criteria, Exhibit “D”, and
Architectural review.
	 
	11.  	COMPLIANCE WITH LAW. Tenant shall not use the Premises or permit anything to be done in or
about the Premises which will in any way conflict with any law, statute, ordinance or
governmental rule or regulation now in force or which may hereafter be enacted or promulgated
Tenant shall, at its sole cost and expense, promptly comply with all laws, statutes,
ordinances and governmental rules, regulations or requirements now in force or which may
hereafter be in force, and with the requirements of any board of fire insurance underwriters
or other similar bodies now or hereafter constituted, relating to, or affecting the condition,
use or occupancy of the Premises, excluding structural changes not related to or affected by
Tenant’s improvements or acts.The judgment of any court of competent jurisdiction
or the admission of Tenant in any action against Tenant, whether Landlord be a party thereto
or not, that Tenant has violated any law, statute, ordinance or governmental rule, regulation
or requirements, shall be conclusive of that fact as between the Land lord and ‘Tenant.
	 
	12.  	ALTERATIONS AND ADDITIONS. Tenant shall not make or suffer to be made any alterations,
additions or improvements to or of the Premises or any part thereof without the written
consent of Landlord first had and obtained, which consent shall not be unreasonably withheld
or delayed, and any alterations, additions or improvements to or of said Premises, including,
but not limited to, wall covering, paneling and built-in cabinet work, but excepting movable
furniture and trade fixtures, shall on the expiration of the term become a part of the realty
and belong to Landlord and shall be surrendered with the Premises.In the event
Landlord consents to the making of any alterations, additions or improvements to
the Premises by Tenant, the same shall be made by Tenant at Tenant’s sole cost and expense,
and any contractor or person selected by Tenant to make the same must first be approved of in
writing by the Landlord, which consent shall not be unreasonably withheld.Upon the expiration
or sooner termination of the term hereof, Tenant shall, upon written demand by Landlord, given
at least thirty (30) days prior to the end of the term at Tenant’s sole cost and expense,
forthwith and with all due diligence remove any alterations, additions, or improvements made
by Tenant, designated by Landlord to be removed, and Tenant shall, forthwith and with all due
diligence at its sole cost and expense, repair any damage to the Premises caused by such
removal.
	 
	13.  	REPAIRS

	 	(a)  	By taking possession of the Premises, Tenant shall be deemed to have accepted the
Premises as being in good, sanitary order condition and repair.Tenant shall, at
Tenant’s sole cost and expense, keep the Premises and every part thereof in good
condition and repair damage thereto from causes beyond the reasonable control of Tenant
and ordinary wear and tear excepted.Tenant shall upon the expiration or sooner
termination of this Lease surrender the Premises to Landlord in good condition, ordinary
wear and tear and damage from causes beyond the reasonable control of Tenant excepted
Except as specifically provided in an addendum to this Lease, if any, Landlord shall
have no obligation whatsoever to alter, remodel, improve, repair, decorate or paint the
Premises or any part thereof and the parties hereto affirm that Landlord has made no
representations to Tenant respecting the condition of the Premises or the Building
except as specifically herein set forth.
	 
	 	(b)  	Notwithstanding the provisions of Article l2 a.herein above, Landlord shall repair
and maintain the structural portions of the Building, including the basic plumbing, air
conditioning, heating, and electrical systems, installed or furnished by Landlord,
unless such maintenance and repairs are

Page 5 of 12

 

 

	 	   	caused in part or in whole by the act, neglect, fault or omission of any duty by
Tenant, its agents, servants, employees or invitees, in which case Tenant shall pay to
Landlord the reasonable cost of such maintenance and repairs. Landlord shall not be
liable for any failure to make any such repairs or to perform any maintenance unless
such failure shall persist for an unreasonable time after written notice of the need
of such repairs or maintenance is given to Landlord by Tenant.Except as provided in
Article 23 hereof, 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 Building or
the Premises or in or to fixtures, appurtenances and equipment therein.Tenant waives
the right to make repairs at Landlord’s expense under any law, statute or ordinance
now or hereafter in effect.Landlord shall maintain the building in a manner which is
commensurate with other comparable buildings in the Carlsbad Palomar Airport Class “A”
office market.

	14.  	LIENS. Tenant shall keep the Premises and the property in which the Premises are situated
free from any liens arising out of any work performed, materials furnished or obligations
incurred by Tenant Landlord may require, at Landlord’s sole option, that Tenant shall
provide to Landlord, at Tenant’s sole cost and expense, a lien and completion bond in an
amount equal to one and one-half (1 1/2) times any and all estimated cost of any
improvements, additions, or alterations in the Premises, to insure Landlord against any
liability for mechanics’ and materialmens’ liens and to insure completion of the work.
	 
	15.  	ASSIGNMENT AND SUBLETTING. Tenant shall not either voluntarily or by operation of law,
assign, transfer, mortgage, pledge, hypothecate or encumber this Lease or any interest
herein and shall not sublet the Premises or any part thereof or any right or privilege
appurtenant thereto, or suffer any other person (the employees, agents or servants and
invitees of Tenant excepted) to occupy or use the said Premises, or any portion thereof,
without the written consent of Landlord first had and obtained, which consent shall not be
unreasonably withheld.A consent to one assignment, subletting, occupation or use by any
other person shall not be deemed to be a consent to any subsequent assignment, subletting,
occupation or use by another person.Any such assignment or subletting without such consent
shall be void, and shall, at the option of Landlord, constitute a default under this Lease
Written consent shall not be required where the assignment results from a sale or merger
between Tenant and a third party of all or substantially all of Tenant’s business, which
sale or merger is approved by a government regulatory agency, provided, however, that the
third party seeking to purchase or merge with the “Tenant shall have a net worth equal to or
greater than that of Tenant (the “Exempt ‘Transaction”).With respect to such Exempt
Transaction, Tenant shall notify Landlord in writing in advance of the closing of the
proposed sale or merger, and such notice shall include such financial statements reasonably
necessary for Landlord to ascertain the financial position of the parties.
	 
	16.  	HOLD HARMLESS. Tenant shall indemnify and hold harmless Landlord against and from any and
all claims arising from Tenant’s use of the Premises for the conduct of its business or from
any activity, work, or other thing done, permitted or suffered by Tenant in or about the
Building, and shall further indemnify and hold harmless Landlord against and from any and
all claims arising from any breach or default in the performance of any obligation on
Tenant’s part to be performed under the terms of this Lease, or arising from any act or
negligence of Tenant, or any officer, agent, employee, guest, or invitee of Tenant, and from
all and against all costs, attorneys’ fees, expenses and liabilities incurred in or about
any such claim or any action or proceeding brought thereon. If in any case, action or
proceeding shall be brought against Landlord by reason of any such claim, Tenant upon notice
from Landlord shall defend the same at Tenant’s expense by counsel reasonably satisfactory
to Landlord. Tenant as a material part of the consideration to Landlord hereby assumes all
risk of damage to property or injury to persons, in, upon or about the Premises, from any
cause other than Landlord’s negligence, and Tenant hereby waives all claims in respect
thereof against Landlord.
	 
	   	Landlord or its agents shall not he liable for any damage to property entrusted to employees
of the Building, nor for loss or damage to any property by theft or otherwise, nor for any
injury to or damage to persons or property resulting from fire, explosion, falling plaster
steam, gas, electricity, water or rain which may leak from any part of the Building or from
the pipes, appliances or plumbing works therein or from the roof, street or subsurface or
from any other place resulting from dampness or any other cause whatsoever unless caused by
or due to the negligence of Landlord, its agents, servants or employees. Landlord or its
agents shall not be liable for interference with the light or other incorporeal
hereditaments, loss of business by Tenant, nor shall Landlord be liable for any latent defect
in the Premises or in the Building.Tenant shall give prompt notice to Landlord in case of
fire or accidents in the Premises or in the Building or of defects therein or in the fixtures
or equipment.
	 
	17.  	SUBROGATION. Landlord and Tenant hereby mutually waive their respective rights of
recovery against each other for any loss insured by fire, extended coverage and other
property insurance policies existing for the benefit of the respective parties.Each party
shall obtain any special endorsements, if required by their insurer to evidence compliance
with the aforementioned waiver

Page 6 of 12

 

 

	18.  	LIABILITY INSURANCE. Tenant shall, at Tenant’s expense, obtain and keep in force during the term
of this Lease a policy of comprehensive public liability insurance insuring Landlord and
Tenant against any liability arising out of the ownership, use, occupancy or maintenance of
the Premises and all areas appurtenant thereto. The limit of said insurance shall not,
however limit the liability of the Tenant hereunder. Tenant may carry said insurance under a
blanket policy, providing, however, said insurance by Tenant shall have a Landlord’s
protective liability endorsement attached thereto. If Tenant shall fail to procure and
maintain said insurance, Landlord may, but shall not be required to, procure and maintain
same, but at the expense of Tenant. Insurance required hereunder shall be in companies
acceptable to Landlord Tenant shall deliver to Landlord prior to occupancy of the Premises
copies of policies of liability insurance required herein or certificates evidencing the
existence and amounts of such insurance with loss payable clauses satisfactory to Landlord
No policy shall be cancelable or subject to reduction of coverage except after thirty (30)
clays’ prior written notice to Landlord. The amount of liability insurance to be carried by
Tenant shall be no less than $1,000,000 00. Tenant shall have Landlord named as an
additional insured on the policy.
	 
	19.  	SERVICES AND UTILITIES. Landlord shall maintain and keep lighted the common stairs,
common entries, elevators (if any) and toilet rooms in the Building of which the Premises
are a part. Landlord shall not be liable for and Tenant shall not be entitled to, any
reduction of rent by reason of Landlord’s failure to furnish any of the foregoing when such
failure is caused by accident, breakage, repairs, strikes, lockouts or other labor
disturbances or labor disputes of any character or by any other cause, similar or dissimilar
beyond the reasonable control of Landlord. Landlord shall not be liable under any
circumstances for a loss of or injury to property however occurring through or in connection
with or incidental to failure to furnish any of the foregoing.
	 
	20.  	PROPERTY TAXES. Tenant shall pay, or cause to be paid, before delinquency, any and all
taxes levied or assessed and which become payable during the term hereof upon all Tenant’s
leasehold improvements, equipment, furniture, Fixtures and personal property located in the
Premises; except that which has been paid for by Landlord, and is the standard of the
Building. In the event any or all of the Tenant’s leasehold improvements, equipment,
furniture, fixtures and personal property shall be assessed and taxed with the Building,
Tenant shall pay to Landlord its share of such taxes within ten (10) days after delivery to
Tenant by Landlord of a statement in writing setting forth the amount of such taxes
applicable to Tenant’s property.
	 
	21.  	RULES AND REGULATIONS. Tenant shall faithfully observe and comply with the Rules and
Regulations (Exhibit “B”) that Landlord shall from time to time promulgate. Landlord
reserves the right from time to time to make all reasonable modifications to said rules
which shall be binding upon Tenant upon delivery of a copy of them to Tenant. Landlord shall
not be responsible to Tenant for the nonperformance of any of said rules by any other
tenants or occupants.
	 
	22.  	HOLDING OVER. If Tenant remains in possession of the Premises or any part thereof after
the expiration of the term hereof, with the express written consent of Landlord, such
occupancy shall be a tenancy from month-to-month. Any holding over by Tenant, with or
without the consent of Landlord, shall be at a rental comprised of one hundred fifty percent
(150%) of the amount of the last month’s basic rent together with all other charges payable
hereunder including but not limited to the Operating Expense Adjustment, and upon all the
terms hereof applicable to a month-to-month tenancy.
	 
	23.  	ENTRY BY LANDLORD. Landlord reserves and shall at any and all times have the right to
enter the Premises upon reasonable Notice taking into account the nature of Tenant’s banking
business (except in the case of an emergency), to inspect the same, to supply any service to
be provided by Landlord to Tenant hereunder, to submit said Premises to prospective
purchasers or Tenants, to post notices of nonresponsibility, and to alter, improve or repair
the Premises and any portion of the Building of which the Premises are a part that Landlord
may deem necessary or desirable, without abatement of rent and may for that purpose erect
scaffolding and other necessary structures where reasonably required by the character of the
work to be performed, always providing that the entrance to the Premises shall not be
blocked thereby, and further providing that the business of Tenant shall not be interfered
with unreasonably. Tenant hereby waives any claim for damages or for any injury or
inconvenience to or interference with Tenant’s business, any loss of occupancy or quiet
enjoyment of the Premises, and any other loss occasioned thereby. For each of the aforesaid
purposes, Landlord shall at all times have and retain a key with which to unlock all of the
doors, in, upon and about the Premises, excluding Tenant’s vaults, safes and files, and
Landlord shall have the right to use any and all means which Landlord may deem proper to
open said doors in an emergency, in order to obtain entry to the Premises without liability
to Tenant except for any failure to exercise due care for Tenant’s property. Any entry to
the Premises obtained by Landlord by any of said means, or otherwise shall not under any
circumstances be construed or deemed to be a forcible or unlawful entry into, or a detainer
of, the Premises, or an eviction of Tenant from the Premises or any portion thereof.

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	24.  	RECONSTRUCTION. If the Premises or the Building of which the Premises are a part are damaged by
fire or other perils covered by extended coverage insurance, Landlord agrees to forthwith
repair the same; and this Lease shall remain in full force and effect, except that Tenant
shall be entitled to a proportionate reduction of the rent while such repairs are being
made, such proportionate reduction to be based upon the extent to which the making of such
repairs shall materially interfere with the business carried on by the Tenant in the
Premises. If the damage is due to the fault or neglect of Tenant or its employees, there
shall be no abatement of rent. If the Premises or the Building of which the Premises are a
part are damaged as a result of any cause other than the perils covered by fire and extended
coverage insurance, then Landlord shall forthwith repair the same, provided the extent of
the destruction is less than ten percent (10%) of the then full replacement cost of the
Premises or the Building of which the Premises are a part. If the destruction of the
Premises or the Building is to an extent greater than ten percent (10%) of the full
replacement cost, then Landlord shall have the option; (a) to repair or restore such damage,
this Lease continuing in full force and effect, but the rent to be proportionately reduced
as hereinabove in this Article provided; or (b) give notice to Tenant at any time within
sixty (60) days after such damage terminating this Lease as of the date specified in such
notice, which date shall be no less than thirty (30) days and no more than sixty (60) days
after the giving of such notice. In the event of giving such notice, this Lease shall expire
and all interest of Tenant in the Premises shall terminate on the date so specified in such
notice and the rent, reduced by a proportionate amount, based upon the extent, in ally, to
which such damage materially interfered with the business carried on by the Tenant in the
Premises, shall be paid up to the date of such termination.
	 
	   	Notwithstanding anything to the contrary contained in this Article, Landlord shall not have
any obligation whatsoever to repair reconstruct or restore the Premises when the damage
resulting from any casualty covered under this Article occurs during the last twelve (12)
months of the term of this Lease or any extension thereof. Landlord shall not be required to
repair any injury or damage by fire or other cause, or to make any repairs or replacements of
any panels, decoration, office fixtures, railings, floor covering, partitions, or any other
property installed in the Premises by Tenant. Tenant shall not be entitled to any
compensation or damages from Landlord for loss of the use of the whole or any part of the
Premises, Tenant’s personal property or any inconvenience or annoyance occasioned by such
damage, repair reconstruction or restoration.
	 
	25.  	DEFAULT. The occurrence of any one or more of the following events shall constitute a default
and breach of this Lease by Tenant

	 	(a)  	The abandonment of the Premises by Tenant.
	 
	 	(b)  	the failure by Tenant to make any payment of rent or any other payment required
to be made by Tenant hereunder as and when due where such failure shall continue for a
period of three (3) days after written notice thereof by Landlord to Tenant.
	 
	 	(c)  	The failure by Tenant to observe or perform any of the covenants, conditions or
provisions of this Lease to be observed or performed by Tenant, other than described in
Article 24 b above, where such failure shall continue for a period of thirty (30) days
after written notice thereof by Landlord to Tenant; provided, however that if the nature
of Tenant’s default is such that more than thirty (30) days are reasonably required for
its cure, then Tenant shall not be deemed to be in default if Tenant commences such cure
within said thirty (30) day period and thereafter diligently prosecutes such cure to
completion.
	 
	 	(d)  	The making by Tenant of any general assignment or general arrangement for the
benefit of creditors; or the filing by or against Tenant of a petition to have Tenant
adjudged bankrupt, or a petition or reorganization or arrangement under any law relating
to bankruptcy (unless, in the case of a petition filed against Tenant, the same is
dismissed within sixty (60) days); or the appointment of a trustee or a receiver to take
possession of substantially all of Tenant’s assets located at the Premises or of
Tenant’s interest in this Lease, where possession is not restored to Tenant within
thirty (30) days; or the attachment, execution or other judicial seizure of
substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in
this Lease, where such seizure is not discharged in thirty
(30) days.

	26.  	REMEDIES IN DEFAULT. In the event of any such material default or breach by Tenant, Landlord
may at any time thereafter, with or without notice or demand and without limiting Landlord in
the exercise of a right or remedy which Landlord may have by reason of such default or breach:

	 	(a)  	Terminate Tenant’s right to possession of the Premises by any lawful means, in which case
this Lease shall terminate and Tenant shall immediately surrender possession of the Premises
to Landlord. In such event Landlord shall be entitled to recover from Tenant all damages
incurred by Landlord by reason of Tenant’s default including, (i) the worth at the time of the
award of all unpaid rent, including without limitation basic rent, and other charges including
Operating Expense Adjustments which have been earned at the time of the termination; (ii) the
worth at the

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	 	   	time of the award of the amount by which the unpaid basic rent and other charges which would
have been earned after termination until the time of the award exceeds the amount of such rental
loss that Tenant proves could have been reasonably avoided; (iii) the worth at the time of the
award of the amount by which the unpaid basic rent and other charges which would have been paid for
the balance of the term after the time of award exceeds the amount of such rental loss that Tenant
proves could have been reasonably avoided; and (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, including, but not limited to, any cost or expenses incurred by Landlord in maintaining
or preserving the Premises after such default, the cost of recovering possession of the Premises,
expenses of reletting, including necessary repair or restoration of the Premises, Landlord’s
reasonable attorneys’ fees incurred in connection therewith, and
any real estate commissions. As
used in subparts (i) and (ii) above, the “worth at the time of the award” is computed by allowing
interest on unpaid amounts at ten percent (10%) per annum. As used in subpart (iii) above, the
“worth at the time of the award” is computed by discounting such amount at the discount rate of the
Federal Reserve Bank of San Francisco at the time of the award plus
one percent (1%) per annum.

	 	(b)  	Maintain Tenant’s right to possession, in which case this Lease shall continue in effect
whether or not Tenant shall have abandoned the Premises. In such event Landlord shall be
entitled to enforce all of Landlord’s rights and remedies under this Lease, including the
right to recover the rent as it becomes due hereunder.
	 
	 	(c)  	 Pursue any other remedy now or hereafter available to Landlord under the laws or judicial
decision of the State in which the Premises are located.

	27.	EMINENT DOMAIN. If more than twenty-five (25%) percent of the Premises shall be taken or
appropriated by any public or quasi-public authority under the power of eminent domain,
either party hereto shall have the right, at Its option, to terminate this Lease, and
Landlord shall be entitled to any and all income, rent, award, or any interest therein
whatsoever which may be paid or made In connection with such public or quasi-public use or
purpose, and Tenant shall have no claim against Landlord for the value of any unexpired term
of this Lease. If either less than or more than twenty-five (25%) percent of the Premises is
taken, and neither party elects to terminate as herein provided, the rent thereafter to be
paid shall be equitably reduced. If any part of the Building other than the Premises may be
so taken or appropriated, Landlord shall have the right at its option to terminate this
Lease and shall be entitled to the entire award as above provided.
	 
	28.  	OFFSET STATEMENT. Tenant shall at any time and from time to time upon not less than ten
(10) days’ prior written notice from Landlord, on Landlord’s or lender’s form, execute,
acknowledge and deliver to Landlord a statement in writing. (a) certifying that this Lease is
unmodified and in full force and effect (or if modified, stating the nature of such
modification and certifying that this Lease as so modified, is in full force and effect), and
the date to which the rent and other charges and paid in advance, if any, and (b)
acknowledging that there are not, to Tenant’s knowledge, any uncured defaults on the part of
Landlord hereunder, or specifying such defaults if any are claimed. Any such statement may be
relied upon by any prospective purchaser or encumbrance of all or any portion of the real
property of which the Premises are a part.
	 
	29.  	PARKING. Tenant shall have the right to use in common with other tenants or occupants of
the Building the parking facilities of the Building, subject to the rules and regulations of
Landlord for such parking facilities as attached hereto as Exhibit “C” which may be altered
by Landlord at any time or from time to time during the term hereof. Landlord reserves the
right to designate certain spaces for the exclusive use of certain
tenants or entities.
	 
	30.  	AUTHORITY OF PARTIES

	 	(a)  	Corporate Authority. If Tenant is a corporation, each individual executing
this Lease on behalf of said corporation represents and warrants that he is duly
authorized to execute and deliver this Lease on behalf of said corporation, in
accordance with a duly adopted resolution of the board of directors of said
corporation or in accordance with the bylaws of said corporation, and that this Lease
is binding upon said corporation in accordance with its terms.
	 
	 	(b)  	Limitation On Liability. In consideration of the benefits accruing hereunder,
Tenant on behalf of itself and all successors and assigns of Tenant covenants and
agrees that, in the event of any actual or alleged failure, breach or default
hereunder by Landlord: (a) Tenant’s recourse against Landlord for monetary damages
will be limited to Landlord’s interest in the Building including, subject to the prior
rights of any mortgagee, Landlord’s interest in the rents of the Building and any
insurance proceeds payable to Landlord; (b) Except as may be necessary to secure
jurisdiction of the partnership, no partner of Landlord shall be sued or named as a
party in any suit or action and no

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	 	   	service of process shall be made against any partner of Landlord; (c) No partner
of Landlord shall be required to answer or otherwise plead to any service of process;
(d) No judgment will be taken against any partner of Landlord and any judgment taken
against any partner of Landlord may be vacated and set aside at any time after the
fact; (e) No writ of execution will be levied against the assets of any partner of
Landlord; (f) The obligations under this Lease do not constitute personal obligations
of the individual partners, directors, officers or shareholders of Landlord, and
Tenant shall not seek recourse against the individual partners, directors, officers or
shareholders of Landlord or ally of their personal assets for satisfaction of any
liability in respect to this Lease; and (g) These covenants and agreements are
enforceable both by Landlord and also by any partner of Landlord.

31. GENERAL PROVISIONS.

	 	(a)  	Addenda, Exhibits and Riders. All addenda, exhibits and riders, if any, signed by
Landlord and Tenant and endorsed on or affixed to this Lease are a
part hereof.
	 
	 	(b)  	Waiver. The waiver by Landlord of any term, covenant or condition herein
contained shall not be deemed to be a waiver of such term, covenant or condition on any
subsequent breach of the same or any other term, covenant or condition herein contained.
The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a
waiver of any preceding breach by Tenant of any term, covenant or condition of this
Lease, other than the failure of the Tenant to pay the particular rent so accepted,
regardless of Landlord’s knowledge of such preceding breach at the time of the
acceptance of such rent.
	 
	 	(c)  	Notices. All notices and demands which may or are to be required or permitted to
be given by either party to the other hereunder shall be in writing. All notices and
demands by Landlord to Tenant shall be sent by United States Mail, postage prepaid,
addressed to Tenant at the Premises, or to such other place as Tenant may from time to
time designate in a notice to Landlord. All notices and demands by Tenant to Landlord
shall be sent by United States Mail, postage prepaid, addressed to Landlord at the
Office of the Building, or to such other person or place as Landlord may from time to
time designate in a notice to Tenant.
	 
	 	(d)  	Joint Obligation. If more than one person executes this Lease on behalf of
Tenant, the obligations hereunder imposed upon Tenant shall be imposed jointly and
severally on such parties.
	 
	 	(e)  	Marginal Headings. The marginal headings and Article titles to the Articles of
this Lease are not a part of this Lease and shall have no effect upon the construction
or Interpretation of any part hereof.
	 
	 	(f)  	Time. Time is of the essence of this Lease and each and all of its provisions in
which performance is a factor.
	 
	 	(g)  	Recordation. Neither Landlord nor Tenant shall record this Lease or a short form
memorandum hereof without the prior written consent of the other
party.
	 
	 	(h)  	Quiet Possession. Upon Tenant paying the rent reserved hereunder and observing
and performing all of the covenants, conditions and provisions on Tenant’s part to be
observed and performed hereunder Tenant shall have quiet possession of the Premises for
the entire term hereof, subject to all the provisions of this Lease.
	 
	 	(i)  	Late Charges. Tenant hereby acknowledges that late payment by Tenant to Landlord
of rent or other sums due hereunder will cause Landlord to incur costs not contemplated
by this Lease, the exact amount of which will be extremely difficult to ascertain. Such
costs include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Landlord by terms of any mortgage or trust deed
covering the Premises. Accordingly, if any installment of rent or of a sum due from
Tenant shall not be received by Landlord or Landlord’s designee within five (5) days of
when due that said amount is past due, then Tenant shall pay to Landlord a late charge
equal to ten percent (10%) of such overdue amount The parties hereby agree that such
late charge represents a fair and reasonable estimate of the cost that Landlord will
incur by reason of the late payment by Tenant. Acceptance of any such late charge by the
Landlord shall in no event constitute a waiver of Tenant’s default with respect to such
overdue amount, nor prevent Landlord from exercising any of the other rights and
remedies granted hereunder.
	 
	 	(j)  	Prior Agreements. This Lease contains all of the agreements of the parties hereto
with respect to any matter covered or mentioned in this Lease, and no prior agreements
or understanding pertaining to any such matters shall be effective
for any purpose. No
provision of this Lease may be amended or added to except by an agreement In writing
signed by both parties hereto or their respective
successors-in-interest. This Lease
shall not be effective or binding on any party until fully executed by both parties
hereto.

Page 10 of 12

 

 

	 	(k)  	Inability to Perform. This Lease and the obligations of Tenant hereunder shall
not be affected or impaired because Landlord is unable to fulfill any of its obligations
hereunder or is delayed in doing so, if such inability or delay is caused by reason of
strike, labor troubles, acts of God, or any other cause beyond the reasonable control of
Landlord.
	 
	 	(l)  	Attorneys’ Fees. In the event of any action or proceeding brought by either party
against the other under this Lease the prevailing party shall be entitled to recover all
costs and expenses including the fees of its attorneys in such action or proceeding in
such amount as the court may adjudge reasonable as attorneys’ fees.
	 
	 	(m)  	Sale of Premises by Landlord. In the event of any sale of the Building, Landlord
shall be and is hereby entirely freed and relieved of all liability under any and all of
its covenants and obligations contained in or derived from this Lease arising out of any
act, occurrence or omission occurring after the consummation of such sale; and the
purchaser at such sale or any subsequent sale of the Premises shall be deemed, without
any further agreement between the parties or their successors-in-interest or between the
parties and any such purchaser, to have assumed and agreed to carry out any and all of
the covenants and obligations of Landlord under this Lease.
	 
	 	(n)  	Subordination, Adornment. Upon request of Landlord, Tenant will in writing, and
within ten (10) days of written notice, subordinate its rights hereunder to the lien of
any mortgage, deed of trust to any bank, insurance company or other lending institution,
now or hereafter in force against the land and Building of which the Premises are a
part, and upon any buildings hereafter placed upon the land of which the Premises are a
part, and to all advances made or hereafter to be made upon the security thereof. In the
event any proceedings are brought for foreclosure, or in the event of the exercise of
the power of sale under any mortgage or deed of trust made by the Landlord covering the
Premises, Tenant shall attorn to the purchaser upon any such foreclosure or sale and
recognize such purchaser as the Landlord under this Lease. The provisions of this
Article to the contrary notwithstanding, and so long as Tenant is not in default
hereunder this Lease shall remain in full force and effect for the full term hereof.
	 
	 	(o)  	Name. Tenant shall not use the name of the Building or of the development in
which the Building is situated for any purpose other than as an address of the business
to be conducted by the Tenant in the Premises.
	 
	 	(p)  	Severability. Any provision of this Lease which shall prove to be invalid, void
or illegal shall in no way affect, impair or invalidate any other provision hereof and
such other provision shall remain In full force and effect.
	 
	 	(q)  	Cumulative Remedies. No reined), or election hereunder shall be deemed exclusive
but shall, wherever possible, be cumulative with all other remedies at law or in equity.
	 
	 	(r)  	Choice of Law. This Lease shall be governed by the laws of the State of
California in which the Premises are located and any actions taken hereunder shall be
filed in the County of San Diego.
	 
	 	(s)  	Signs. Tenant shall not place any sign upon the Premises or Building or conduct
any auction thereon without Landlord’s prior written consent. Landlord, at Landlord’s
sole cost and expense, shall provide suite entry and directory signage.

	32.  	BROKERS. Tenant warrants that it has no dealings with any real estate broker or agents in
connection with the negotiation of this Lease excepting only Grubb & Ellis|BRE Commercial and
it knows of no other real estate broker or agent who is entitled to a commission in connection
with this Lease. Landlord shall be responsible for paying commissions to Grubb & Ellis/BRE.
	 
	33.  	CONDITION OF THE PREMISES. Landlord at Landlord’s sole cost and expense shall provide new
carpet and paint based upon a mutually agreed upon pattern and color from the Landlord’s
building standard materials. Otherwise, the Landlord shall have no obligation to repair or
improve the Premises.
	 
	34.  	AFTER HOURS USE. The Building shall be fully
operational from 7:00 a.m. to 6:00 p.m. Monday
through Friday and 8:00 a.m. to 12:00 noon on Saturday, excluding holidays. During hours other
than those set forth in the preceding sentence, the Building operating systems, i.e., HVAC and
lighting shall be activated by a card-key system provided by the Landlord. Tenant shall pay
the cost of such after hours use at utility rates charged by local public utilities plus any
additional expense incurred by Landlord In providing such after hours use and in keeping
account of the utilities so consumed. Following receipt of a statement from Landlord, Tenant shall pay to Landlord, concurrently with the regular monthly rent payment next due, the total
amount due for after hours use of Building operating systems.

Page 11 of 12

 

 

	35.      	INCORPORATION OF EXHIBITS/ADDENDA. The following Exhibits and/or Addenda are incorporated in this
Lease by the Parties as though fully set forth herein:

	 
	Exhibit A: Premises Floor Plan
	 
	Exhibit B: Rules and Regulations
	 
	Exhibit C: Parking Rules and Regulations
	 
	Exhibit D: Sign Criteria

IN WITNESS WHEREOF, the parties have caused this Lease to be duly executed by their duly authorized
representatives as of the date first written above.

	 	 	 
	LANDLORD:	 	TENANT:
	 	 	 
	Carlsbad Gateway Center, LLC

	 	Southwest Community Bank
	A California Limited Liability, Company

	 	A California Banking Corporation
	 
	By: Cornish Family Trust 11/14/89. member

	 	By: /s/ Frank J.
Mercardante

	By: /s/ Christine A. Cornish

	 	Print Name: Frank J. Mercardante

Its: CEO
	Print Name: Christine A. Cornish

	 	Date:6-8-04
	Its: Trustee

	 	
	Date: 6/9/04
	 	By: /s/ Paul M. Weil

	 
	 	Print Name: Paul M. Weil
	

	 	Its: Secretary
	

	 	Date: 6-8-04

Page 12 of 12

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