U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended March 31, 1996
Commission file number 2-76555
SDN BANCORP, INC.
(Exact name of small business issuer in its charter)
Delaware 95-3683748
(State or other jurisdiction of (I.R.S.
Employer or
incorporation or organization)
Identification No.)
135 Saxony Road, Encinitas, California 92024-0905
(Address of principal executive offices) (Zip Code)
(619) 436-6888
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15 (d) of the Exchange Act during the past
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No
[ ]
Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $.01 par value 4,287,872 shares
outstanding on April 10, 1996
<PAGE>
SDN BANCORP, INC.
U.S. SECURITIES AND EXCHANGE COMMISSION
FORM 10-QSB
INDEX
Page
Part I - Financial Information
Item 1. Financial Statements
Condensed Consolidated Statements of Condition -
3
March 31, 1996 and December 31, 1995
Condensed Consolidated Statements of Operations
5
For the three months ended March 31, 1996 and 1995
Condensed Consolidated Statements of Cash Flows -
6
For the three months ended March 31, 1996 and 1995
Notes to the Consolidated Financial Statements
7
Item 2. Management's Discussion and Analysis or Plan of
Operation 10
Part II - Other Information
Item 2. Changes in Securities
14
Item 4. Submission of Matters to a Vote of Security Holders
14
Item 6. Exhibits and Reports on Form 8-K
15
Part I - Financial Information
Item 1. Financial Statements
SDN BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Condition
March 31, 1996 and December 31, 1995
March 31,
December
31,
1996
1995
(Unaudited)
-----------------
- -----------------
Assets
Cash and due from banks $13,834,000 $
3,640,000
Federal funds sold 30,800,000
2,300,000
-----------------
- ----------------
Total cash and cash equivalents 44,634,000
5,940,000
Interest bearing deposits in other
financial institutions 1,890,000
989,000
Held-to-maturity investment
securities at amortized cost
approximate fair value
March 31, 1996 $5,863,000;
December 31, 1995 $7,057,000 5,858,000
7,009,000
Available-for-sale investment
securities 35,583,000 -
Loans 123,287,000
38,977,000
Less allowance for loan loss 2,398,000
639,000
- --------------------------------
Loans, net 120,889,000
38,338,000
Premises and equipment, net 1,790,000
597,000
Real estate acquired through
foreclosure, net 3,123,000
1,411,000
Goodwill 3,780,000 -
Accrued interest receivable
and other assets 5,248,000
1,621,000
- --------------------------------
Total assets $222,795,000
$55,905,000
==========
=========
See notes to consolidated financial statements.
SDN BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Condition (Continued)
March 31, 1996 and December 31, 1995
March 31,
December
31,
1996
1995
(Unaudited)
-----------------
- -----------------
Liabilities and Shareholders' Equity
Deposits:
Demand:
Non-interest bearing $57,236,000
$13,445,000
Interest bearing 20,839,000
10,582,000
Savings:
Regular 24,581,000
4,714,000
Money market 12,125,000
8,558,000
Time:
Under $100,000 80,583,000
11,580,000
$100,000 or more 8,106,000
2,552,000
-----------------
- ----------------
Total deposits 203,470,000
51,431,000
Accrued expenses and other
liabilities 1,829,000
396,000
Mandatory Convertible Debentures 537,000
537,000
- --------------------------------
Total liabilities 205,836,000
52,364,000
Shareholders' equity:
Common stock, $.01 par value,
12,000,000 shares authorized
4,287,872 issued and
outstanding at March 31, 1996 43,000
9,000
Additional paid-in capital 20,959,000
7,593,000
Accumulated deficit (4,043,000)
(4,061,000)
- --------------------------------
Total shareholders' equity 16,959,000
3,541,000
- --------------------------------
Total liabilities and
shareholders' equity $222,795,000
$55,905,000
==========
==========
See notes to consolidated financial statements.
SDN BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Three months ended March 31, 1996 and 1995
(Unaudited)
Three Months Ended March
31,
- -----------------------------------------
1996
1995
--------------
- --------------
Interest Income:
Interest and fees on loans $ 920,000
$1,070,000
Interest on Federal funds sold 49,000
28,000
Interest on deposits with
financial institutions 11,000
15,000
Interest on investment securities,
substantially all taxable 86,000
64,000
--------------
- --------------
Total interest income 1,066,000
1,177,000
Interest Expense:
Deposits 292,000
405,000
Other borrowed funds 15,000
53,000
--------------
- --------------
Total interest expense 307,000
458,000
--------------
- --------------
Net interest income 759,000
719,000
Provision for loan losses 35,000
60,000
--------------
- --------------
Net interest income after
provision for loan losses 724,000
659,000
Non-interest income 162,000
134,000
Non-interest expense 863,000
923,000
--------------
- --------------
Net income (loss) before taxes 23,000
(130,000)
Income tax (5,000) -
--------------
- --------------
Net income (loss) $18,000 $
(130,000)
========
========
Income (loss) per common and common
equivalent share $ 0.02 $
(2.42)
Average share and common stock
equivalent 895,467
53,728
See notes to consolidated financial statements.
SDN BANCORP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1996 and 1995
(Unaudited)
For three months
ended
March 31,
- -------------------------------------------
1996
1995
-----------------
- --------------
Operating Activities:
Net income (loss) $ 18,000 $
(130,000)
Adjustments to reconcile
net loss to net cash
used by operating
activities:
Provision for loan
losses and real
estate acquired
through foreclosure 35,000
60,000
Depreciation and
amortization 35,000
50,000
Increase in other assets (1,428,000)
(242,000)
Increase (decrease) in
other liabilities 4,000
(147,000)
-----------------
- --------------
Net cash used by
operating activities (1,336,000)
(409,000)
Investing Activities:
Decrease in interest bearing
deposits with other financial
institutions (304,000) -
Purchases of investment
securities (2,500,000)
(501,000)
Proceeds from sales and
maturities of investment
securities 3,657,000
606,000
Net decrease in loans 1,773,000
2,497,000
Purchases of premises and
equipment -
(1,000)
Proceeds from sale of real
estate acquired through
foreclosures -
213,000
Capital expenditures for other
real estate owned (154,000) -
Purchase of Liberty National
Bank, net of cash received 7,283,000 -
-----------------
- -----------------
Net cash provided
by investing
activities 9,755,000
2,814,000
Financing Activities:
Net increase in deposits 16,875,000
1,659,000
Issuance of common stock 13,400,000 -
- --------------------------------
Net cash provided
by financing
activities 30,275,000
1,659,000
- --------------------------------
Net Increase in cash and
cash equivalents 38,694,000
4,064,000
Cash and cash equivalents at
beginning of period 5,940,000
2,842,000
-----------------
- -------------
Cash and cash equivalents at
end of period $44,634,000
$6,906,000
==========
========
See notes to consolidated financial statements.
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Noncash transactions-
Other real estate sold
and financed by the bank -
$115,000
Notes to Consolidated Financial Statements
NOTE 1 - BASIS OF PRESENTATION
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that effect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported
amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates. The
accompanying financial information has been prepared in
accordance with the Securities and Exchange Commission rules and
regulations for quarterly reporting and therefore does not
necessarily include all information and footnote disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles. This information
should be read in conjunction with Bancorp's Annual Report on
Form 10-K for the year ended December 31, 1995.
NOTE 2 - EARNINGS PER SHARE
Earnings per share is computed by dividing net income by the
weighted average number of common shares outstanding during the
year and dilutive common stock equivalents by using the treasury
stock method. The weighted average number of common shares used
to compute earnings per share was 895,497 for the three months
ended March 31, 1996 and 53,728 for the three months ended March
31, 1995. All per share amounts for the three months ended March
31, 1995 have been restated to give effect to the one for
twenty-one
reverse stock split and the 26,864 common stock dividend
declared during September 1995.
The assumed conversion of the mandatory convertible
debentures ("Debentures") is anti-dilutive for the periods ending
March 31, 1996 and 1995. Therefore, primary income and loss per
share and income and loss per share assuming full dilution are
the same for both periods.
NOTE 3 - MERGER
On March 31, 1996, SDN Bancorp, Inc. ("Bancorp" or the
"registrant") completed its acquisition (the "Liberty
Acquisition") of Liberty National Bank ("Liberty") for
approximately $15.1 million in cash as contemplated by the
October 26, 1995 Agreement and Plan of Merger by and among the
registrant, Liberty, and Dartmouth Capital Group, L.P., a
Delaware limited partnership ("the Partnership") and the
registrant's controlling shareholder. Liberty is headquartered
in Huntington Beach, California and had total assets of
approximately $149 million prior to the Liberty Acquisition.
As of March 27, 1996, the Partnership invested approximately
$13.4 million in the registrant to fund the Liberty Acquisition.
In exchange for that investment, the registrant issued a total of
3,392,405 additional shares of Common Stock at a price per share
of $3.95, the registrant's book value per share as of December
31, 1995. At the Partnership's direction the registrant issued
1,764,000 of those shares of Common Stock, in the aggregate, to
certain limited partners of the Partnership (the "Direct
Holders") and the remaining 1,628,405 shares of Common Stock
directly to the Partnership. Giving effect to the issuance of
those shares to fund the Liberty Acquisition, the Partnership
owns 48.0% of the Common Stock and the Direct Holders own, in the
aggregate 50.75% of the Common Stock.
The acquisition was accounted for using the purchase method
of accounting in accordance with Accounting Principles Board
Opinion No. 16, "Business Combinations". Under this method of
accounting, the purchase price was allocated to the assets
acquired and deposits and liabilities assumed based on their fair
values as of the acquisition date. The consolidated financial
statements include the operations of Liberty from the date of
acquisition. Goodwill arising from the transaction totaled
approximately $3,780,000 and is being amortized over ten years on
a straight line basis.
The following table sets forth selected unaudited pro forma
combined financial information of Bancorp and Liberty for three
months ended March 31, 1996 and 1995. The pro forma operating
data reflects the effect of the acquisition of Liberty as if it
was consummated at the beginning of each period presented. The
pro forma results are not necessarily indicative of the results
that would have occurred had the acquisition been in effect for
the full years presented, nor are they necessarily indicative of
the results of future operations.
Pro Forma Combined
for
Three Months Ended
March
31,
- -----------------------------------------
1996
1995
(Unaudited)
(Unaudited)
---------------
- --------------
Interest Income $4,580,000
$4,158,000
Interest Expense 1,750,000
1,653,000
---------------
- --------------
Net interest income 2,830,000
2,505,000
Provision for loan losses 65,000
210,000
---------------
- --------------
Net interest income after
provision for loan losses 2,765,000
2,295,000
Non-interest income 282,000
714,000
Non-interest expense 2,664,000
3,122,000
---------------
- --------------
Net income before taxes 383,000
(113,000)
Income tax(benefit) 151,000
(4,000)
---------------
- --------------
Net income $ 232,000 $
(109,000)
=========
========
NOTE 4 - LONG LIVED ASSETS
In March 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standard (FAS) No. 121
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets
to Be Disposed Of", which Bancorp adopted as
required on January 1, 1996. Pursuant to this Statement,
companies are required to investigate potential impairments of
long-lived assets, certain identifiable intangibles, and
associated goodwill, on an exception basis, when there is
evidence that events or changes in circumstances have made
recovery of an asset's carrying value unlikely. An impairment
loss would be recognized when the sum of the expected future net
cash flows is less than the carrying amount of the asset. The
adoption of FAS 121 did not have a significant impact on
Bancorp's financial position or results of operations.
Item 2. Management's Discussion and Analysis or Plan of
Operations
This information should be read in conjunction with the
consolidated financial statements and the notes thereto included
in Item 1 of this Quarterly Report and the audited consolidated
financial statements and notes thereto and Management Discussion
and Analysis of Financial Condition and Results of Operations for
the year ended December 31, 1995 contained in Bancorp's 1995
Annual Report on Form 10-K.
Except for the historical information contained herein, the
following discussion contains forward looking statements that
involve risks and uncertainties. Bancorp's actual results could
differ materially from those discussed here. Factors that could
cause or contribute to such differences include, but are not
specifically limited to, changes in regulatory climate, shifts in
interest rate environment, change in economic conditions of
various markets Bancorp serves, as well as the other risks
detailed in this section, and in the sections entitled Results of
Operations and Liquidity and Capital Resources, and those
discussed in Bancorp's Form 10-K for the year ended December 31,
1995.
Summary
SDN Bancorp, Inc. ("Bancorp") owns 100% of San Dieguito
National Bank ("SDNB"). Additionally, as of March 31, 1996, the
registrant completed the Liberty Acquisition as described in the
footnotes to the consolidated financial statements. The
acquisition of Liberty was accounted for using the purchase
method of accounting for business combinations . Accordingly,
the following discussion relates primarily to the operating
results of SDNB and the financial condition of both Liberty and
SDNB (collectively the "Banks").
On April 23, 1996, Bancorp entered into an Agreement and
Plan of Reorganization with Commerce Security Bank ("Commerce")
that provides for Bancorp's acquisition of Commerce (the
"Commerce Acquisition") for a combination of cash and stock. The
Commerce Acquisition is subject to receipt of regulatory and
shareholder approvals and to the satisfaction of other customary
closing conditions. As of March 31, 1996, Commerce Security had
total assets of $213.1 million and total shareholders' equity of
$12.1 million. The Commerce Acquisition is expected to be
accounted for using the purchase method of accounting for
business combinations.
Financial Condition
Average earning assets of SDNB for the first three months of
1996 were approximately $48.6 million, a decrease of $4.1
million, or 7.7%, from the average for the comparable three-month
period in 1995. Total assets of SDNB at March 31, 1996 were
$72.5 million compared to total assets of $55.9 million at
December 31, 1995 and $59.1 million at March 31, 1995. The
increase in total assets since December 31, 1995 is attributed
primarily to a temporary increase in deposits due to the escrow
account established with approximately $14.5 million related to
the cash purchase of the shares of Liberty shareholders. Total
assets following the Liberty Acquisition at March 31, 1996 is
$222.8 million.
Average loans at SDNB for the first three months of 1996
were approximately $38.3 million, a decrease of $6.9 million, or
15.2%, from the average for the comparable three month period in
1995. Total loans of SDNB at March 31, 1996 were $37.2 million
compared to $39.0 million at December 31, 1994 and $43.7 million
at March 31, 1995. Total loans following the Liberty Acquisition
at March 31, 1996 were $123.3 million.
Average deposits at SDNB for the first three months of 1996
were approximately $51.4 million, a decrease of $5.9 million, or
10.2%, from the average for the comparable three month period in
1995. Total deposits increased to $68.3 million at March 31,
1996 compared to $51.4 million at December 31, 1995 and $57.5
million at March 31, 1995. The increase in total deposits since
December 31, 1995 is attributed primarily to a temporary increase
in deposits due to the escrow account established with
approximately $14.5 million related to the cash purchase of the
shares of Liberty shareholders. Total deposits after the Liberty
Acquisition at March 31, 1996 were $203.5 million.
Results of Operations
For the three months ended March 31, 1996, Bancorp had net
income of $18,000 compared to a net loss of $130,000 for the same
period in 1995. The improvement in 1996 earnings over the same
period in 1995 resulted from a combination of improved net
interest income of approximately $40,000, reduced loan loss
provision by $25,000, improved non-interest income by
approximately $28,000 and reduced non-interest expense by $60,000
partially offset by increased provision for income taxes of
$5,000.
Net Interest Income and Net Interest Margin
Net interest income was approximately $759,000 for the three
months ended March 31, 1996, an increase of $40,000 over the same
period in 1995. A reduction in interest expense of $151,000
largely offset by reduced interest income by $111,000 contributed
to this earnings improvement.
Loans, the largest component of earning assets, declined to
an average balance of $38.3 million for the first three months of
1996 from $45.1 million for the first three months of 1995 to
$38.3 million, with an average yield of 9.7% and 9.6%,
respectively. Investments in securities and Federal funds sold
rose to an average of $10.3 million for the first three months of
1996 from an average of $7.5 million for the first three months
of 1995, with an average yield of 5.7% earned during both
periods. Further, loan fee income decreased $8,000 for the first
three months of 1996 compared to 1995. The yield on earning
assets declined to 8.8% for the first three months of 1996 from
9.1% for the same period in 1995. The decline in yield on
earning assets can largely be attributed to a shift in the mix of
loans as a percent of loans where the percent of average loans to
average earning assets during the first three months of 1996
declined to 78.7% from 85.7% for the same period in 1995.
Average interest-bearing deposits decreased to $38.3 million
for the three months ended March 31, 1996 from $45.8 million for
the same period in 1995. Additionally, the average rate paid on
these deposits declined to 3.1% during the first three months in
1996 from 3.6% during the first three months in 1995. Further,
as a result of the recapitalization of Bancorp that occurred in
September 1995, other borrowing declined to $537,000 with an
average rate of 11.5% from $1.9 million at an average rate of
11.3%. The average rate paid on interest-bearing liabilities was
3.2% for the first three months of 1996 compared to 3.9% for the
same period in 1995. This decrease represents an overall
decrease in rates paid on deposit liabilities and a change in the
mix of interest bearing products.
As a result of these forgoing factors, the average yield on
earning assets increased to 6.3% for the first three months of
1995 from 5.5% for the same period in 1995.
Allowance and Provision for Loan Losses
The allowance for loan losses represents the amounts which
have been set aside for the specific purpose of absorbing losses
which may occur in the Bank's loan portfolio. The provision for
loan losses is an expense charged against operating income and
added to the allowance for loan losses. Management of the Bank
continues to carefully monitor the allowance for loan losses in
relation to the size of the Bank's loan portfolio and known risks
or problem loans.
The allowance for loan losses at SDNB was approximately
$641,000 at March 31, 1996 compared to approximately $639,000 at
December 31, 1995. The allowance for loan losses for SDNB
represented 1.7% of gross loans at March 31, 1996 and 1.6% at
December 31, 1995 and 1.8% at March 31, 1994. During the first
three months of 1996, the provision for loan losses was $35,000,
loan charge-offs were $12,000 and recoveries were $35,000. The
allowance for loan losses after the Liberty Acquisition was
approximately $2.4 million which represents 1.9% of gross loans
at March 31, 1996.
The Bank's four largest lending categories are: (I)
commercial real estate loans; (ii) other loans secured by real
estate; (iii) commercial loans and (iv) loans to individuals. At
March 31, 1996, these categories accounted for approximately 44%,
29%, 24% and 3% respectively. After the Liberty Acquisition,
these categories accounted for approximately 58.0%, 17.0%, 13.0
and 12.0%, respectively, of the Banks' total loan portfolio at
March 31, 1996.
Included among the Banks' portfolio of loans are SBA loans
made by the Banks guaranteed by the United States Government to
the extent of 75% to 90% of the principal and interest due on
such loans. Liberty is active in originating this type of loan.
Liberty generally sells the government guaranteed portion of
these loans to participants in the secondary market and retains
servicing responsibilities and the unguaranteed portion of the
loans. Liberty may in the future retain a greater portion of
these loans as more loans may be made for construction purposes
for which the Liberty holds the entire principal until completion
of the project and then sells the government guaranteed portion.
The government guaranteed portion of the SBA loans are sold
at a premium, a portion of which is immediately recognized as
income. The remaining premium, representing estimated normal
servicing fees or a yield adjustment on the portion of the SBA
loan retained by the Banks, is deferred and recognized as income
over the estimated life of the loan. Deferred SBA servicing fees
for Liberty were approximately $1.8 million at March 31, 1996.
The total SBA loan portfolio serviced by Liberty at March 31,
1996 was approximately $141.8 million and included in this
amount was approximately $32.8 million representing the portion
of the SBA loans retained by Liberty. The total SBA loan
portfolio serviced by SDNB at March 31, 1996 was approximately
$3.5 million and included in this amount was approximately $3.0
million representing the portion of the SBA loans retained by
SDNB.
<PAGE>
Non-Interest Income
Non-interest income increased by $28,000 for the first three
months of 1996 compared to the same period in 1995. This increase
was a result of increased deposit service charges by
approximately $5,000 and other service charges of $23,000.
Non-Interest Expenses
Non-interest expenses for the first three months of 1996
decreased approximately $60,000 compared to the first three
months of 1995. The majority of this improvement occurred in the
area of salaries and benefits with a $54,000 decrease for the
first quarter, a function of the reorganization of SDNB.
Occupancy expenses also decreased $8,000 but was partially offset
by other non-interest expenses.
Provision for Income Taxes
As a result of the earnings for the first three months of
1996, a provision for income taxes was made where there was no
provision for income tax made in the first three months of 1995.
Capital Resources
As of March 27, 1996, the Partnership invested approximately
$13.4 million in the registrant to fund the Liberty Acquisition.
In exchange for that investment, the registrant issued a total of
3,392,405 additional shares of Common Stock at a price per share
of $3.95, the registrant's book value per share as of December
31, 1995. At the Partnership's direction the registrant issued
1,764,000 of those shares of Common Stock, in the aggregate, to
certain limited partners of the Partnership (the "Direct
Holders") and the remaining 1,628,405 shares of Common Stock
directly to the Partnership. Giving effect to the issuance of
those shares to fund the Liberty Acquisition, the Partnership
owns 48.0% of the Common Stock and the Direct Holders own, in the
aggregate, 50.75% of the Common Stock.
Current risk-based regulatory capital standards generally
require banks and holding companies to maintain a ratio of
"core" or "Tier 1" capital (consisting principally of common
equity) to risk-weighted assets of at least 4%, a ratio of Tier 1
capital to adjusted total assets (leverage ratio) of at least 3%
and a ratio of total capital (which includes Tier 1 capital plus
certain forms of subordinated debt, a portion of the allowance
for loan losses and preferred stock) to risk-weighted assets of
at least 8%. Risk-weighted assets are calculated by multiplying
the balance in each category of assets according to a risk factor
which ranges from zero for cash assets and certain government
obligations to 100% for some types of loans, and adding the
products together.
As of March 31, 1996, Bancorp's combined Tier 1
risk-weighted capital ratio was 9.2%, the leverage ratio was 6.4%
and the total risk-weighted capital ratio was 10.8%. Liberty's
and SDNB's Tier 1 risk-weighted capital ratio, leverage ratio and
total risk-weighted capital ratios were 8.8%, 5.7%, 10.0% and
8.5%, 7.0%, 9.8%, respectively, on March 31, 1996. Bancorp has
agreed to fund the Commerce Acquisition in part by raising not
less than $11.1 million of additional equity through the sale of
Bancorp common stock. The Partnership has agreed to purchase up
to $16.1 million of common stock at a price per share of $3.95 in
connection with the Commerce Acquisition. Liberty and SDNB were
well capitalized as of March 31, 1996 for federal regulatory
purposes.
Liquidity
The asset-liability management process determines the size
and composition of the balance sheet and focuses on the
management of liquidity and interest rate risk. The purpose of
liquidity and balance sheet management is to ensure that funds
are available to meet customer needs, meet the financial
commitments of the Banks, and to reduce the Banks' exposure to
changing interest rates.
The Banks manage liquidity from both sides of the balance
sheet through the coordination of the relative maturities of its
assets and liabilities. The Banks enhance their liquidity
through the ability to raise additional funds in money markets
through Federal funds lines, repurchase agreements and selling of
a specified portion of its securities (securities available for
sale). The Banks maintain a level of liquidity that is
considered adequate to meet current needs. Liquid assets include
cash and due from banks, Federal funds sold, and securities
available for sale. At March 31, 1996, liquid assets totaled
approximately $80.2 million, or 36.0% of total assets, which
compares to $5.9 million, or 10.6% of total assets, at December
31, 1995 and $6.9 million, or 11.7% of total assets, at March 31,
1995.
Part II - Other Information
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities
Effective April 12, 1996, the registrant amended its
Certificate of Incorporation to increase the number of authorized
shares of common stock from 5,000,000 to 12,000,000.
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Effective April 12, 1996, the holders of a majority of the
registrant's outstanding shares of common stock approved by
written consent an amendment to the registrant's certificate of
incorporation to increase the number of authorized shares of
common stock from 5,000,000 to 12,000,000.
Item 5. Other Information
Not Applicable
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
The following exhibits are filed as part of the report:
Exhibit No. Description
Page
2.1 Agreement and Plan of Reorganization
*
dated October 26, 1995 by and among
Liberty National Bank, SDN Bancorp, Inc.
and Dartmouth Capital Group, L.P.
2.2 Agreement and Plan of Reorganization
**
dated April 23, 1996 by and between SDN
Bancorp, Inc. and Commerce Security Bank
3.1 Certificate of Incorporation of SDN
18
Bancorp, Inc. as restated to reflect the
Certificate of Amendment filed on April
12, 1996.
10.1 Subscription Agreement dated as of March
21
22, 1996 between SDN Bancorp, Inc. and
Dartmouth Capital Group, L.P. for shares of
SDN Bancorp, Inc. common stock
10.2 Subscription Agreement dated as of March
24
22, 1996 between SDN Bancorp, Inc. and
Dartmouth Capital Group, L.P. for shares of
SDN Bancorp, Inc. common stock
10.3 Lease Agreement for 7777 Center Avenue,
CE
Huntington Beach, California between
Alvamij Huntington Beach, Inc. as Landlord,
and Liberty National Bank, as Tenant, dated
August 20, 1981 and amended February 14, 1986
10.4 Lease Agreement for 17011 Beach Boulevard,
CE
Huntington Beach, California between
Liu Corp., as Landlord, and Liberty
National Bank, as Tenant, dated
December 15, 1995
10.5 Employment Agreement between Liberty
CE
National Bank and Philip S. Inglee
dated July 20, 1995
10.6 Employment Agreement between Liberty
CE
National Bank and Richard I. Ganulin
dated March 1, 1995
<PAGE>
Item 6. Exhibits and Reports on Form 8-K (continued)
Exhibit No. Description
Page
10.7 Employment Agreement between Liberty
CE
National Bank and Curt A. Christianssen
dated October 22,1993 and amended
August 17, 1995
10.8 Employment Agreement between Liberty
CE
National Bank and Catherine C. Clampitt
dated April 1,1995
10.9 Agreement to Provide Construction
CE
Inspection Services between Liberty
National Bank and J. Donald Hartfelder
(b) Reports on Form 8-K:
1) Letter of intent signed with Commerce Security Bank to
form a new holding company into which both companies
will merge, dated March 1, 1996
2) Completion of Liberty Acquisition, dated March 31, 1996
- -----------------------------
* Incorporated by reference to Exhibit 2 to Current Report on
Form 8-K dated October 26, 1995
** Incorporated by reference to Exhibit 2 to Current Report on
Form 8-K dated April 23, 1996
CE Exhibits filed in paper under cover of Form SE pursuant to
Rule 201 of Regulation S-T, with confirming copies filed
with this amended submission
SDN BANCORP, INC. AND SUBSIDIARIES
U.S. SECURITIES AND EXCHANGE COMMISSION FORM 10-QSB
SIGNATURES
Pursuant to the requirements of the U.S. Securities Exchange Act
of 1934, the Issuer has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
SDN
BANCORP, INC.
DATE: May 15, 1996 /s/ Robert P. Keller
----------------------
Robert P. Keller
President and Chief Executive Officer
DATE: May 15, 1996 /s/ Curt A. Christianssen
--------------------------
Curt A. Christianssen
Senior Vice President and
Chief Financial Officer
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
SDN BANCORP, INC.
SDN BANCORP, INC., a corporation organized and existing
under
and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation"), DOES HEREBY CERTIFY AS FOLLOWS:
That, pursuant to the provisions of Sections 141, 228 and
242
of the General Corporation Law of the State of Delaware, the
stockholders and the directors of the Corporation, by written
consent dated April 12, 1996, adopted the following resolution:
Article 4 of the Certificate of Incorporation of the
Corporation is hereby amended so that the authorized capital
stock of the Corporation shall consist of 12,000,000 shares
of
Common Stock with a par value of $.01 per share and
1,000,000
shares of Preferred Stock with a par value of $.01 per
share.
IN WITNESS WHEREOF, SDN BANCORP, INC. has caused this
Certificate of Amendment to the Certificate of Incorporation to
be
signed by its Secretary this 12th day of April, 1996.
By:___________________________
Michael K. Krebs,
Secretary
CERTIFICATE OF INCORPORATION
of
SDN BANCORP, INC.
1. Name. The name of the corporation is SDN Bancorp, Inc.
2. Registered Office and Agent. The address of the
registered office of the corporation in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, Wilmington, in the
County of New Castle. The registered agent at such address is
The
Corporation Trust Company.
3. Purpose. The purpose of the corporation is to engage
in
any lawful act or activity for which corporations may be
organized
under the General Corporation Law of Delaware.
4. Capitalization. The corporation shall be authorized
to
issue the following capital stock:
Number
Class Par Value
Authorized
Common Stock $.01
12,000,000
Preferred Stock $.01
1,000,000
5. Preferred Stock. The Board of Directors is expressly
authorized to provide for the issuance of all or any shares of
the
Preferred Stock, in one or more series, and to fix for each such
series such number of shares of stock thereof and such voting
powers, full or limited, or no voting powers, and such
designations, preferences and relative, participating, optional
or
other special rights and such qualifications, limitations or
restrictions thereof, as shall be set forth in the resolution or
resolutions adopted by the Board of Directors providing for the
issue of such series and as may be permitted by the General
Corporation Law of the State of Delaware.
6. Incorporator. The name and mailing address of the
incorporator is:
Paul E. Schedler
San Dieguito National Bank
135 Saxony Road
Encinitas, CA 92024-2797
7. Compromises or Arrangements. Whenever a compromise or
arrangement is proposed between this corporation and its
creditors
or any class of them and/or between this corporation and its
stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application
in a summary way of this corporation or of any creditor or
stockholder thereof or on the application of any receiver or
receivers appointed for this corporation under the provisions of
section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers
appointed for this corporation under the provisions of section
279
of Title 8 of the Delaware Code, order a meeting of the creditors
or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, to be
summoned in such manner as the said court directs. If a majority
in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to
any
compromise or arrangement and to any reorganization of this
corporation as a consequence of such compromise or arrangement,
the
said compromise or arrangement and the said reorganization shall,
if sanctioned by the court to which the said application has been
made, be binding on all the creditors or class of creditors,
and/or
on all the stockholders or class of stockholders, of this
corporation, as the case may be, and also on this corporation.
8. Business Combinations with Interested Stockholders.
The
corporation expressly elects not to be governed by Section 203 of
the Delaware General Corporation Law.
9. By-Laws. The Board of Directors may adopt, amend or
repeal the By-laws of the corporation, except that any By-law
adopted by the stockholders may be altered or repealed only by
the
stockholders if such By-law so provides.
10. Elections. The election of directors by the
stockholders need not be by written ballot unless the By-laws of
the corporation provide otherwise.
11. Personal Liability of Directors. No director shall be
personally liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director,
except
to the extent that such exculpation from liability is not
permitted
under the Delaware General Corporation Law as the same exists or
may be hereafter amended. This provision shall
not eliminate the liability of a director for any act or omission
occurring prior to the date upon which this provision becomes
effective. No amendment to or repeal of this provision shall
apply
to or have any effect on the liability or alleged liability of
any
director for or with respect to any acts or omissions of such
director occurring prior to such amendment or repeal.
IN WITNESS WHEREOF, the undersigned has executed this
instrument on September 25, 1995.
Paul E. Schedler /s/
---------------------
Paul E. Schedler
Incorporator
SDN BANCORP, INC.
COMMON STOCK
SUBSCRIPTION AGREEMENT
March 22, 1996
SDN Bancorp, Inc.
135 Saxony Road
Encinitas, California 92023-0926
Attn: Robert P. Keller, President and Chief Executive Officer
Dear Sirs:
1. Introduction. SDN Bancorp, Inc., a Delaware
corporation
and bank holding company ("SDN"), is offering to Dartmouth
Capital
Group, L.P., a Delaware limited partnership ("DCG" or the
"Subscriber"), shares of SDN's Common Stock, par value $0.01 per
share (the "Common Stock") (hereinafter, the shares of Common
Stock
may be referred to as the "Shares").
SDN has agreed to acquire Liberty National Bank in a
transaction (the "Liberty Acquisition") anticipated to be
consummated as of on or about March 31, 1996. SDN further
intends
in the near future to enter into a certain Agreement and Plan of
Reorganization with Commerce Security Bank ("CSB") (as hereafter
executed, and as may be thereafter amended, the "Reorganization
Agreement"), pursuant to which SDN will agree to acquire CSB (the
"CSB Acquisition") through a holding company to be formed
contemporaneously with such acquisition. DCG desires to commit
to
purchase Shares on the terms provided hereinafter to fund SDN's
acquisition of Liberty and CSB.
DCG hereby agrees with SDN as follows:
2. Purchase, Sale, Payment and Delivery of the
Shares. The
Subscriber hereby irrevocably subscribes for, and commits to
purchase from SDN (i) $13,400,100 (the "Liberty Commitment
Amount")
of Shares at or before the closing of the Liberty Acquisition,
and
(ii) up to $16.0 million (the "CSB Commitment Amount") of Shares
at
or before the closing of the CSB Acquisition. The price per
share
will in both cases be $3.95 (the "Purchase Price"), the book
value
per share of Common Stock at December 31, 1995.
3. Notice of Amount to be Funded. The number of Shares to
be purchased in connection with the Liberty Acquisition is a
fixed
amount equal to the Liberty Commitment Amount divided by the
Purchase Price. Within a reasonable period prior to the
anticipated Closing Date of the CSB Acquisition, SDN will deliver
to the Subscriber a written notice (a "CSB Acquisition Funding
Notice") indicating the number of Shares to be purchased by the
Subscriber in connection with the CSB Acquisition (the "CSB
Purchase Amount"), up to the Commitment Amount, and instructing
the
Subscriber to deliver the payment for the CSB Purchase Amount
into
an account maintained by SDN or its agent.
4. Payment. The Subscriber agrees to transfer payment
equal
to the Liberty Commitment Amount to an account specified by SDN,
in
immediately available funds, not later than March 27, 1996. SDN
shall deliver to the Subscriber or the Subscriber's designee(s),
promptly following receipt of the foregoing payment,
certificate(s)
evidencing the Shares purchased. Not less than three (3)
business
days after the delivery of any CSB Acquisition Funding Notice (or
such longer period as SDN may specify in such CSB Acquisition
Funding Notice), the Subscriber shall transfer payment for the
CSB
Purchase Amount to the account specified in such CSB Acquisition
Funding Notice, in immediately available funds. SDN shall
deliver
to the Subscriber or the Subscriber's designee(s), promptly
following receipt of such funds, certificate(s) evidencing the
Shares purchased.
5. Successors. This Agreement shall inure to
the
benefit of
and be binding upon SDN, the Subscriber and their respective
successors and permitted assigns. Nothing expressed herein is
intended or shall be construed to give any person other than the
persons referred to in the preceding sentence any legal or
equitable right, remedy or claim under or in respect of this
Agreement.
6. Termination. This Agreement shall terminate,
without
action by either party, upon the earliest to occur of the
following: (i) the termination of the January 24, 1996 Letter of
Intent between SDN and CSB in accordance with it terms; provided,
however, that if the Liberty Acquisition has not been consummated
as of such time, this Agreement shall not terminate until the
next
business day following the consummation or earlier abandonment of
the Liberty Acquisition; or (ii) the termination of the
Reorganization Agreement in accordance with its terms.
7. APPLICABLE LAW. THIS AGREEMENT SHALL BE
ENFORCED,
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF DELAWARE WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS
THEREOF.
* * *
Very truly yours,
DARTMOUTH CAPITAL GROUP, L.P.
By: Dartmouth Capital Group, Inc.
Its General Partner
By:
Name: Robert P. Keller
Title: President
This Subscription Agreement is hereby
confirmed and accepted as of the date first
above written.
SDN BANCORP, INC.
By:
Name: Robert P. Keller
Title: President and Chief Executive Officer
SDN BANCORP, INC.
COMMON STOCK
SUBSCRIPTION AGREEMENT
March 22, 1996
SDN Bancorp, Inc.
135 Saxony Road
Encinitas, California 92023-0926
Attn: Robert P. Keller, President and Chief Executive Officer
Dear Sirs:
1. Introduction. SDN Bancorp, Inc., a Delaware
corporation
and bank holding company ("SDN"), is offering to Dartmouth
Capital
Group, L.P., a Delaware limited partnership ("DCG" or the
"Subscriber"), shares of Common Stock, par value $0.01 per share
(the "Holdco Common Stock"), of a corporate successor and
intended
holding company to SDN, in organization ("Holdco"). Hereinafter,
the shares of Common Stock offered hereunder may be referred to
as
the "Holdco Shares". Capitalized terms used in this letter and
not
otherwise defined shall have the respective meanings assigned to
them in that certain Agreement and Plan of Reorganization between
SDN and Commerce Security Bank ("CSB") anticipated to be executed
within the near future (as hereafter executed, and as may be
thereafter amended, the "Reorganization Agreement").
SDN intends, by its execution of the Reorganization
Agreement,
to agree to form Holdco and to cause Holdco to acquire CSB. DCG
has entered into another Subscription Agreement (the "SDN Stock
Subscription") substantially simultaneously herewith pursuant to
which DCG has agreed to purchase up to $16.0 million (the "CSB
Commitment Amount") of SDN common stock to provide funds to SDN
for
SDN to consummate the Reorganization.
In the event of a Dissenting Share Capital Shortfall (as
hereinafter defined) arising from the contingencies described in
Section 2 below, Holdco may require funds after the Closing. DCG
desires to commit, solely in the event of such a Dissenting Share
Capital Shortfall and solely to the extent required herein, to
purchase Holdco Shares on the terms provided herein.
DCG hereby agrees with SDN as follows:
2. Funding Contingencies. This Subscription
Agreement is
intended to provide funds to Holdco solely in the event that
Holdco
requires additional capital in order to make payments to holders
of
Dissenting CSB Shares in connection with the Reorganization
where,
in the absence of such additional capital, such payments would
cause one or more of Holdco's capital ratios levels to fall to
levels below those mandated by prudent banking practice or by any
agreement with any bank regulator that is binding upon Holdco (a
"Dissenting Share Capital Shortfall"). DCG's obligations
hereunder
shall accrue only if Holdco has determined, in its reasonable
discretion, that there exists such a Dissenting Share Capital
Shortfall.
3. Purchase, Sale, Payment and Delivery of the
Shares. DCG
hereby irrevocably subscribes for, and commits to purchase from
Holdco, an amount (the "Purchase Amount") equal to the lesser of
the Dissenting Share Capital Shortfall or the arithmetic
difference
between the CSB Commitment Amount and the amount actually funded
by
DCG to SDN in contemplation of the Reorganization pursuant to the
SDN Stock Subscription. The price per share will be $3.95, the
book value per share of the Common Stock at December 31, 1995.
3.Funding Notices. In the event that Holdco determines that
there exists a Dissenting Share Capital Shortfall, Holdco will
deliver to the Subscriber one or more written notices ("Funding
Notices") indicating the basis for its determination of the
existence and amount the Dissenting Share Capital Shortfall and
the
Purchase Amount, and instructing the Subscriber to deliver the
payment for the Purchase Amount into an account maintained by
Holdco or its agent.
4. Payment. Not less than three (3) business days after
the
delivery of any Funding Notice (or such longer period as Holdco
may
specify in such Funding Notice), the Subscriber shall transfer
payment for the Purchase Amount to the account specified therein
in
immediately available funds. Holdco shall deliver to the
Subscriber and/or the Subscriber's designee(s), promptly
following
receipt of the Subscriber's payment for Shares, certificate(s)
evidencing the Shares purchased.
5. Successors. This Agreement shall inure to
the
benefit of
and be binding upon SDN, Holdco (upon its formation), the
Subscriber and their respective successors and permitted assigns.
SDN agrees to cause Holdco to execute a counterpart of this
Agreement promptly following upon Holdco's formation, whereupon
Holdco will be deemed to have ratified this Agreement and agree
to
be bound by this Agreement in all respects. Nothing expressed
herein is intended or shall be construed to give any person other
than the persons referred to in the two preceding sentences any
legal or equitable right, remedy or claim under or in respect of
this Agreement.
7. Termination. This Agreement shall terminate,
without
action by either party, upon the earliest to occur of the
following: (i) upon the last date for CSB Shareholders to perfect
their respective rights to dissent to the Reorganization pursuant
to Section 1300 et seq. of the California Corporations Code, in
the
event that no CSB Shareholder so perfects his or her rights; (ii)
upon the payment of all amounts to which holders of Dissenting
CSB
Shares are hereafter determined (by agreement, by order of a
court
of competent jurisdiction or otherwise) to be entitled; (iii)
upon
the termination of the January 24, 1996 Letter of Intent between
SDN and CSB in accordance with it terms; or (iv) upon the
termination of the Reorganization Agreement in accordance with
its
terms.
6. APPLICABLE LAW. THIS AGREEMENT SHALL BE
ENFORCED,
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF DELAWARE WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS
THEREOF.
Very truly yours,
DARTMOUTH CAPITAL GROUP, L.P.
By: Dartmouth Capital Group, Inc.
Its: General Partner
By:
Name: Robert P. Keller
Title: President
This Subscription Agreement is hereby
confirmed and accepted as of the date first
above written.
SDN BANCORP, INC.
By:
Name: Robert P. Keller
Title: President and Chief Executive Officer
RATIFICATION BY HOLDCO:
Holdco hereby ratifies, joins in and agrees to be
bound by this Subscription Agreement in all respects.
______________________________
[Holdco Name]
By:
Name: Robert P. Keller
Title: President and Chief Executive Officer
THIS DOCUMENT IS A COPY OF THE LEASE FILED ON MAY 15, 1996
PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION
FIRST ADDENDUM TO OFFICE LEASE
BY AND BETWEEN
ALVAMIJ HUNTINGTON BEACH, CA.
AND
LIBERTY NATIONAL BANK
THIS IS A FIRST ADDENDUM to that certain Office Lease
consisting of "Basic Lease Provisions" and "Additional Lease
Provisions"), dated as of August 20, 1981, by and between ALVAMIJ
HUNTINGTON BEACH, INC., a California corporation, as successor to
One Pacific Plaza, a joint venture ("Landlord"), and LIBERTY
NATIONAL BANK, a national banking association ("Tenant"), with
respect to the following facts:
RECITALS
A. Tenant presently occupies Suites 100, 205, 206 and
560 of that certain office building (the "Building") known as One
Pacific Plaza, located at 7777 Center Drive, Huntington Beach,
California. Tenant occupies Suite 100 pursuant to the terms of the
above-referenced Lease. Said premises consist of an aggregate
rentable square footage of 8,386 square feet.
B. Tenant occupies Suites 205 and 206, which consist of
1,823 and 1,044 rentable square feet, respectively, pursuant to
those certain Office Leases, dated December 30, 1982, and January
6, 1984, respectively (hereinafter the second Floor Leases").
C. Tenant occupies Suite 560, which consists of 1,282
rentable square feet, pursuant to that certain Office Lease, dated
March 22, 1984 (hereinafter fifth Floor Lease").
D. Suite 102 is located on the first floor of the
Building, consists of 5,172 rentable square feet, and constitutes
the entire remaining portion of the first floor not presently
occupied by Tenant, excluding therefrom approximately 720 rentable
square feet presently occupied by Coffee Plus. The current tenant
of Suite 102 has recently vacated said premises and Tenant desires
to lease said Suite 102 on the terms and conditions contained
herein.
E. Effective upon the commencement date of Tenant's
lease of said Suite 102, Tenant desires to cancel its Second Floor
Leases (consisting of an aggregate of 2,867 rentable square feet)
and its Fifth Floor Lease, and Landlord is willing to permit said
cancellation in accordance with the provisions of paragraph 8
hereof.
TERMS AND CONDITIONS
NOW, THEREFORE, the parties hereto hereby agree as
follows:
1. Addition of Expansion Space. Effective as of February
1, 1986 (or such earlier date as Tenant occupies Suite 102), the
Premises (as that term is defined at the first paragraph of that
certain Office Lease "Ground Floor Premises", dated August 20,
1981, by and between One Pacific Plaza, a joint venture, as
landlord, and Liberty National Bank, a national building
association, in organization, hereinafter referred to as the
"Lease") is hereby expanded to include Suite 102 consisting of
5,172 rentable square feet. Attached hereto as Exhibit "A" is a
drawing of the Premises, including both Suite 100 and Suite 102.
2. Modification of Basic Lease Provisions. Effective as
of February 1, 1986 (or such earlier date as Tenant occupies Suite
102), the Basic Lease Provisions are hereby amended as follows:
(a) Paragraph 2 is hereby amended to provide as
follows:
"2. Total Net Rentable Area of the Premises:
13,558 square feet, consisting of the following:
Suite 100: 8,386 square feet
Suite 102: 5,172 square feet
Total: 13,558 square feet
Total Net Rentable Area of the Building: 93,228
square feet."
(b) Paragraph 3 is hereby amended to provide as
follows:
"3. Initial Basic Annual Rent:
Suite 100: $176,106.00 (1.75 per square foot) as of
October 1, 1981.
Suite 102: $99,302.40 ($1.60 per square foot) as of
February 1, 1986
or such earlier date as Tenant occupies Suite
102).
Notwithstanding anything to the contrary
contained herein, Landlord agrees that Tenant
shall be obligated to pay to Landlord Basic
Annual Rent for Suite 102 equal to only fifty
percent (50%) of the rate set forth
hereinabove until the earlier of (i) the
cancellation of the Fifth Floor Lease and the
Second Floor Leases or (ii) March 16, 1986."
Paragraph 4 is hereby amended to provide as
follows:
"4. Initial Monthly Rental Installments:
Suite 100: $14,675.50 as of October 1, 1981.
Suite 102: $8,275.20 as of February 1, 1986 (or such
earlier date
as Tenant occupies Suite 102).
Notwithstanding anything to the contrary
contained herein, Landlord agrees that Tenant
shall be obligated to pay to Landlord Initial
Monthly Rental Installments for Suite 102
equal to only fifty percent 50%) of the rate
set forth hereinabove until the earlier of (i)
the cancellation of the Fifth Floor Lease and
the Second Floor Leases or (ii) March 16,
1986."
3. Additional Rent. Landlord and Tenant
herebyacknowledge and agree that, pursuant to the provisions of
paragraph 3.3 of Article 3 of the Lease, for the 1986 calendar year
Tenant shall pay to Landlord as Tenant's Proportionate Share (which
is agreed to be 14.83%) of the Estimated Total Operating Expenses
for 1986 the following monthly sums:
Premise Monthly Installment
Suite 100 $ 2,479.18
Suite 102 $ 1,486.00
Total Monthly Installment $ 3,965.18
Tenant's Proportionate Share in the amount of 14.83% was
computed by comparing the square footage of Suite 100 to 100% of
the square footage of the Building and by comparing the square
footage of Suite 102 to 95% of the square footage of the Building,
as follows: Suite 100 = 8,386 square feet - 93,228 square feet =
8.99% and Suite 102 = 5,172 square feet - 93,228 square feet x 95%
= 5.84%, and 8.99% + 5.84% = 14.83%.
4. Earthquake Insurance Limitation. The second
paragraph of paragraph 3.5 of the Lease, located on page 10(a)
thereof, is hereby amended to provide in full as follows:
"Notwithstanding anything contained in Section
3.5(e) to the contrary, that portion of Total
Operating Expenses to be paid by Tenant
allocable to insurance premiums for earthquake
coverage with respect to Suite 100 shall not
exceed EIGHT HUNDRED DOLLARS ($800.00) per
year through the end of 1982, and the sum of
EIGHT HUNDRED DOLLARS ($800.00) per year
increased by any increase in the Consumer
Price Index between October 1981 and October
of the calendar year preceding the calendar
year for which such computation is being made,
such adjustment to be made in the manner
provided in Section 2.2.2 above, but without
the seventy-five percent (75%) limitation
provided for in said Section. There shall be
no limitation on Tenant's share of earthquake
insurance premiums as to Suite 102, as to
which Tenant shall pay its entire 5.84%
Tenant's Proportionate Share. In addition,
Tenant shall not be required to pay any
portion of said earthquake insurance premiums
at such time, if ever, as any other tenant in
the Building is not responsible, directly or
indirectly, for a portion of said earthquake
insurance premiums".
5. Additional Space Needs. The fourth (4th) line of
paragraph 7.3 of the Lease, located on page 17(a) thereof, is
hereby amended to provide as follows: "Floors 2, 3, 4 and/or 5 in
the Building, specifying in such notice. . ."
6. Parking. Landlord agrees to provide adequate surface
parking of the Project, on a non-exclusive basis, for customer and
invitees of Tenant.
7. Signs.
(a) Notwithstanding anything to the contrary
contained at paragraph 43.1 of the Lease, Landlord hereby agrees
that Tenant may relocate its existing sign on the northeasterly
side of the Building to the northwesterly side of the Building, as
indicated on Exhibit "B" attached hereto, provided that said
relocation shall be at Tenant's sole cost and expense (including
the repair of the area to be vacated by the existing sign) and
further subject to Tenant complying with all applicable laws,
regulations and ordinances, including permit requirements of the
City of Huntington Beach and subject to approval of the
Architectural Committee of One Pacific Plaza Association.
(b) The last sentence of footnote 2 to paragraph
43.1 of the Lease is hereby amended to provide as follows:
"If Tenant vacates or does not operate within
the Building as a bank or other financial
institution (a temporary vacation due to
casualty damage, remodeling and similar
circumstances excepted), Tenant shall remove
its signs from the roof of the Building and
its right to use the roof of the Building for
signs under this section shall terminate".
8. Cancellation of Second Floor Leases and Fifth Floor
Lease. Provided that Tenant is not then in material default of
either this Lease, the Second Floor Leases or the Fifth Floor
Lease, Landlord and Tenant hereby agrees as follows:
(a ) Tenant shall vacate the Fifth Floor Lease
space no later than February 14, 1986. At such time as Tenant
vacates said Fifth Floor Lease space, said Fifth Floor Lease shall
be cancelled and of no further force or effect whatsoever.
(b) Tenant shall vacate the Second Floor Leases
space no later than March 15, 1986. At such time as Tenant vacates
said Second Floor Leases space, said Second Floor Leases shall be
canceled and of no further force or effect whatsoever.
9. Agreement of Non-Disturbance. Landlord hereby agrees
that it shall deliver to Tenant, on or before May 1, 1986, fully
executed copies of the Agreements of Non-Disturbance attached
hereto as Exhibits "B-1" and "B-2", without any change or
alteration whatsoever. Landlord represents that except for the
Trust Deeds referred to in Recitals B to said Agreements of
Non-Disturbance, there are no other liens or encumbrances against
the Building and the Premises as of the date hereof other than real
property taxes and assessments.
10. No Other Changes. Except as expressly amended hereby,
the Lease shall remain in full force and effect without any change
or alteration of any nature whatsoever.
Dated: February 14, 1986
"Landlord" "Tenant"
ALVAMIJ HUNTINGTON BEACH, INC., LIBERTY NATIONAL BANK,
a California Corporation a National Banking Association
By: /s/ illegible signature By: /s/James Ott
Its: Agent Its: EVP
By: /s/ James P. Dazo By: Robert Lavallee
Its: Asst Treasurer Its: Senior V.P.
<PAGE>
O F F I C E L E A S E
"GROUND FLOOR PREMISES"
BY AND BETWEEN
ONE PACIFIC PLAZA, A JOINT VENTURE
AS LANDLORD
AND
LIBERTY NATIONAL BANK
A National Banking Association (In Organization)
AS TENANT
One Pacific Plaza Building
Huntington Beach, California
<PAGE>
OFFICE LEASE
THIS LEASE is made this 20 day of August, 1981, between
ONE PACIFIC PLAZA, a joint venture, hereinafter called "Landlord"
and LIBERTY NATIONAL BANK, a National Banking Association (In
Organization), hereinafter called "Tenant."
LEASE OF PREMISES
Landlord hereby leases to Tenant and Tenant hereby hires
from Landlord, subject to all of the terms and conditions
hereinafter set forth, that certain office space consisting of a
portion of the ground floor (the "Premises") as shown in the
drawings attached hereto as Exhibit "A" and located in that certain
office structure being constructed on a portion of that certain
real property legally described as Parcel 1 shown on Parcel Map
79-585, in the City of Huntington Beach, County of Orange, State of
California, per Map filed in Book 144, pages 31-33 of Parcel Maps
in and for said County. Tenant shall have the right to construct
a vault adjacent to the Southeast corner of the Building on
foundations being installed by Landlord and, in such event, such
vault,shall be deemed to be a portion of the Premises. The
location of the said office structure (hereinafter called the
"Building") is shown on the first phase site plan attached hereto
as Exhibit "B". The commercial center of which the Building is a
part is hereinafter called the "Project" and is defined in paragraph
10 of the Basic Lease Provisions.
BASIC LEASE PROVISIONS
1. Building Name: One Pacific Plaza
Address: 7777 Center Drive, Huntington Beach, California
92647
2. Total Net Rentable Area of the Premises: 8,386 square feet.
Total Net Rentable Area of the Building: 92,730 square
feet.
3. Initial Basic Annual Rent: $180,600.00 ($1.75 per square
foot per month.)
4. Initial Monthly Rental Installments: $14,675.50
5. [Deleted]
6. Estimated Total Operating Expenses for each of calendar
year 1981 and calendar year for 1982:
$347.737.50
7. Term: Twenty (20) years plus four subsequent options of
five years each
8. Target Commencement Date: October 1, 1981
9. Security Deposit: $18,800 (See Article 4 of Additional
Lease Provision)
10. Declaration: That certain Declaration of Covenants,
conditions, Easements and Restrictions dated March 25, 1980,
encumbering the real property legally described as parcels 1
through 8 inclusive, as per the above described Parcel Map
(the "Project"), which Declaration was recorded March 26, 1980
in Book 13550, page 1015, Official Records of said County.
11. Broker: Grubb & Ellis
12. Address for Payment and Notices:
LANDLORD: TENANT:
ONE PACIFIC PLAZA LIBERTY NATIONAL BANK
7777 Center Drive At the Premises
Huntington Beach, CA 92647
With Copy To:
P. O. Box 8825
Fountain Valley, CA 92708
Attn: Guy Belcore
13. Lease Execution: In witness whereof, the parties hereto have
executed this Lease, consisting of the foregoing provisions
and of the Additional Lease Provisions which follow, as of the
date first above written.
THIS LEASE SHALL NOT BECOME ONE PACIFIC PLAZA,
EFFECTIVE UNTIL EXECUTED BY a joint venture
LANDLORD AND DELIVERED TO
TENANT AND THE SUBMISSION By JERWEL ENTERPRISES,
OF THIS FORM OF LEASE TO a partnership
TENANT BY LANDLORD, OR
LANDLORD'S AGENT, DOES NOT By:/s/ Gerald Klein
CONSTITUTE AN OFFER TO
LEASE. NO EMPLOYEE OR AGENT By BREDERO HUNTINGTON BEACH,
INC.
OF LANDLORD OR ANY PERSON a California corporation
WITH WHOM TENANT MAY HAVE
NEGOTIATED THIS LEASE HAS By: /s/ illegible signature
ANY AUTHORITY TO MODIFY THE Its:
TERMS HEREOF OR TO MAKE ANY "Landlord"
AGREEMENTS, REPRESENTATIONS,
OR PROMISES UNLESS THE SAME
ARE CONTAINED HEREIN OR ADDED
HERETO IN WRITING.
LIBERTY NATIONAL BANK,
a national banking association
(In Organization)
By: /s/ Richard M. Wilbur
Richard M. Wilbur,
An Organizer
By:/s/ Gaetano L. Belcore
Gaetano L. Belcore,
An Organizer
By:/s/ Robert R. Rigby
Robert R. Rigby,
An Organizer
MEMORANDUM OF ACTUAL COMMENCEMENT AND EXPIRATION DATES
Commencement Date: October 1, 1981
Expiration Date: September 30, 2001
<PAGE>
ADDITIONAL LEASE PROVISIONS
TERM
Article 1.
1.1 The term of this Lease shall be as shown in item
7of the Basic Lease Provisions and shall commence on the Target
Commencement Date as shown in Item 8 of the Basic Lease
Provisions or such later date as the Premises shall be tendered
to Tenant as set forth in Section 1.2 below. The date of
commencement as defined above, hereinafter called the
"Commencement Date," shall be confirmed in writing by the parties
promptly upon such commencement.
1.2 Landlord may tender the Premises to Tenant on or
after the Target Commencement date upon not less than thirty (30)
days prior written notice stating that the Premises will be ready
for Tenant's construction work on the date specified in such
notice. (Tenant acknowledges the receipt of said notice
specifying the date of October 1, 1981 as the date the Premises
will be ready for Tenant's construction work and agrees said
notice shall be deemed to have been given, as required by this
lease, more than thirty (30) days prior to October 1, 1981.) In
the event that Landlord does not tender the Premises to Tenant as
aforesaid by December 31, 1981, Tenant shall have the right to
erect a temporary banking facility at Tenant's expense and in
accordance with all applicable laws and regulations, on a portion
of the project agreeable to Landlord and Tenant. (Said location
shall be Building Pad E as shown on exhibit "B" and shall be
erected, if at all, in a good and workmanlike manner consistent
with applicable laws and the Declaration.) Such facility shall
be removed by Tenant no later than four (4) months after the
actual Lease Commencement Date, subject to extension by that
amount of time during which Tenant's construction work has been
delayed by labor trouble, events beyond the reasonable control of
Tenant, and acts of Landlord, but in any event no later than
thirty (30) days after Tenant opens for business from the
Premises and Tenant shall repair any damage resulting from the
erection and/or removal thereof. (Such removal shall include
the removal of all paving, landscaping, utility lines and other
improvements in connection therewith.) Subject to Paragraph 2.1
hereof, no rent shall be payable for the operation of such
temporary facility, but the insurance indemnity and hold harmless
and mechanic's lien provisions of this Lease shall apply from and
after the erection of said temporary facility to said facility
just as though said facility were the Premises. Tenant shall pay
all utility charges and taxes resulting therefrom and shall
maintain the same in good condition and repair. In the event
that Landlord does not tender the Premises in such manner to
Tenant by March 31, 1982, this Lease, at Tenant's option, shall
become null and void. The Premises shall be deemed ready for
Tenant's construction work upon the expiration of thirty (30)
days from the date said notice is sent, and when utilities to the
Premises necessary for Tenant's construction are operative and
Landlord has substantially completed the construction work to the
Building and the adjacent parking areas to be completed by
Landlord under Paragraph 1 of that certain Work Letter, of even
date herewith, executed by Landlord and Tenant (the "Work
Letter"), as evidenced by the issuance of a certificate of
occupancy or temporary certificate of occupancy for the Building
by the City of Huntington Beach. The term "substantial
completion" shall have the meaning set forth in the Work Letter.
1.3 Landlord hereby grants to Tenant four options to
extend the term of this Lease, each for a five year period
commencing when the prior term expires. Each option to extend
shall be exercised by Tenant giving Landlord written notice of
such exercise no later than six (6) months prior to the time that
the subject option period would commence. All of the terms and
provisions of this Lease shall apply during each such option
period, and rent shall be adjusted in the same manner, and at the
same time intervals, as during the initial term of this Lease. A
subsequent option may not be exercised unless all prior options
have been exercised.
RENT
Article 2.
2.1 Basic Annual Rent. Tenant agrees to pay as Basic
Annual Rent for the Premises the initial sum shown in Item 3 of
the Basic Lease Provisions, increased in the manner provided
below. The Basic Annual Rent shall be payable in equal monthly
installments as shown in Item 4 of the Basic Lease Provisions,
payable in advance commencing upon the expiration of the first
four (4) months of the term of this Lease, subject to extension
by that amount of time during which Tenant's construction work
has been delayed by acts of Landlord, and continuing on the first
day of each calendar month thereafter. If the term of this Lease
commences on a date other than the first day of a calendar month,
then the rent for the-partial calendar month during which Basic
Annual Rent is first payable shall be prorated in the proportion
that the number of days in such month following the expiration of
such four (4) month period bears to the number of days in that
calendar month, and such rent shall be paid upon the expiration
of said four (4) month period.
The term "Lease Year" shall mean each succeeding period
of twelve full calendar months after the Commencement Date during
the term except that the first such period shall include any
partial month at the commencement of the Lease Term. In addition
to said Basic Annual Rent, Tenant agrees to pay additional rent
as and when hereinafter provided in this Lease. Said Basic
Annual Rent and additional rent are hereinafter sometimes
referred to collectively as the "rent." The rent shall be
payable to Landlord, without deduction or offset or abatement
(except as specifically provided in this Lease), in lawful money
of the United States of America at the address for Landlord as
shown in Item 12 of the Basic Lease Provisions, or to such other
person or at such other place as Landlord may from time to time
designate in writing.
2.2 Rental Adjustments
2.2.1 Adjustment to Fair Market Value. The Basic
Annual Rent shall be adjusted to one hundred percent (100%) of
the fair market value as hereinafter set forth on the tenth
(l0th), twentieth (20th), twenty-fifth (25th), thirthieth (30th)
and thirty-fifth (35th) anniversary of the Commencement Date.
Each said dates for adjustment of the Basic Annual Rent are
hereinafter referred to as a "Rental Adjustment Date.") In no
event shall the Basic Annual Rent for the Premises be decreased
below the amount set forth in Item 3 of the Basic Lease
Provisions.
If the parties are unable to agree in writing on the amount
of the Basic Annual Rent pursuant to this Section 2.2.1 on or
before the date four (4) months preceding the Rental Adjustment
Date, then within ten (10) days after said date each party, at
its cost and by giving written notice to the other party, shall
appoint a real estate appraiser with at least five (5) years'
full-time commercial appraisal experience in Orange County to
appraise and set the fair market value of the Basic Annual Rent
for the Premises. If a party does not appoint an appraiser
within ten (10) days after the other party has given notice of
the name of its appraiser, the single appraiser appointed shall
be the sole appraiser and shall set such fair market value. If
the two appraisers are appointed by the parties as stated in this
paragraph, they shall meet promptly and attempt to set such fair
market value. If they are unable to agree within thirty (30)
days after the second appraiser has been appointed, they shall
jointly select a third appraiser meeting the qualifications
stated in this paragraph within ten (10) days after the last day
the two appraisers are given to set such fair market value. If
they are unable to agree on the third appraiser within such ten
(10) day period, either party, by giving ten (10) days' written
notice to the other, may apply to the American Arbitration
Association, for the selection of a third appraiser who meets the
qualifications stated in this paragraph. Provided that if said
American Arbitration Association fails to so select such third
appraiser within thirty (30) days of request, either party, by
giving ten (10) days prior written notice to the other, may apply
to the Presiding Judge of te Superior Court of Orange County or
to the President of the Orange County Real Estate Association for
the selection of a third appraiser who meets the qualifications
stated in this paragraph. Each of the parties shall bear
one-half of the cost of appointing the third appraiser and of
paying the third appraiser's fee.
Within thirty (30) days after the selection of the
third appraiser, a majority of the appraisers shall set the
fair-market value of the Basic Annual Rent for the Premises. If
a majority of the appraisers are unable to set such fair market
value within the stipulated period of time, the twoappraisals
closest together shall be added together and their total divided
by two; the resulting quotient shall be multiplied by, 100% and
the result shall be the Basic Annual Rent for the Premises
commencing on the Rental Adjustment Date.
The appraiser or appraisers so selected shall be
instructed to appraise the Premises, taking the age of the
Building and this Lease and all of the terms hereof (including
term, expenses and rent escalation provisions, and further based
upon the fact that this is a triple net Lease wherein Tenant pays
separately for taxes, insurance, maintenance and other operating
expenses) into account, without value being added by reason of
any leasehold improvements, trade fixtures or equipment installed
by Tenant, (but including the right to use adjacent Common Area
for drive-through facilities once the "Drive-Through Facilities",
as defined in Section 8.3 below, have been constructed) based, to
the extent feasible, upon rents then being charged to banks in
comparable locations for comparable space in multi tenant
buildings with similar features under comparable leases executed
within one (1) year of the subject Rental Adjustment Date (which
rent shall be adjusted to the then current value).
2.2.2 Additional Adjustments. In addition to all
other rental adjustments provided for in this Lease, the Basic
Annual Rent, as same may be adjusted pursuant to Section 2.2.1
hereof, shall be further adjusted as of the first day of the
fifth month of the third, sixth, ninth, twelfth, fifteenth and
eighteenth Lease Years and on the third anniversary date of each
subsequent Rent Adjustment Date thereafter (each such date
referred to as an "Adjustment Date"), to an amount equaling the
sum total of the current Basic Annual Rent plus the lesser of the
following two amounts.
A. That amount equal to the Basic Annual
Rent payable prior to the subject Adjustment Date during the
subject Lease Year multiplied by 8.5% for each Lease Year since
the next preceding Adjustment Date, Rent Adjustment Date, or the
Commencement Date through the subject Adjustment Date compounded
on an annual basis (i.e., 27.773% for three (3) years).
B. That amount equal to 75% of the
percentage adjustment in the "C.P.I.", as that term is
hereinafter defined, multiplied by the Basic Annual Rent payable
prior to the subject Adjustment Date as follows:
(1) As used in this Lease, the term
"C.P.I." shall be defined as the Consumer Price Index of the
Bureau of Labor Statistics of the U.S. Department of Labor for
All Urban Consumers, Los Angeles-Long Beach-Anaheim, California,
All-Items (1967=100). In the event the compilation and/or
publication of the C.P.I. 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 C.P.I.
shall be used to make such calculation. In the event that
Landlord and Tenant 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 arbitrators shall be paid
equally by Landlord and Tenant.
(2) The current Basic Annual Rent shall
be multiplied by a fraction, the numerator of which is the C.P.I.
of the month, three months preceding the subject Adjustment Date
and the denominator of which shall be the C.P.I. of the calendar
month, three months preceding the immediate prior Adjustment
Date, Rent Adjustment Date or the Commencement Date. The product
of such calculation shall be multiplied by 75%.
For example: Assume that the current Basic Annual
Rent immediately prior to the subject Adjustment Date is $10,000.
Assume further that three Lease Years will have elapsed by the
time of the subject Adjustment Date since the last rental
adjustment, and 75% of the percentage of C.P.I. adjustment for
those three Lease Year totals 22.8, using the above formula.
Since 22.8% is less than 27.773%, the new Basic Annual Rental (to
be divided by 12 for the monthly rent) effective as of the
subject Adjustment Date, would be as follows:
Current Basic Annual Rent = $10,000 x 1.228 =
$12,280.
If any rental adjustment contemplated by Section 2.2
has not been determined by the subject Rent Adjustment Date or
Adjustment Date, Tenant shall continue to pay the rent
theretofore payable until such adjustment is completed, at which
time Tenant shall pay to Landlord an amount sufficient to
compensate Landlord for any underpayment of rent, plus, if such
delay is due to factors beyond Landlord's control, interest on
such payment at the prime rate of interest then charged by the
Bank of America per annum from the date such underpayment would
have been due.
ADDITIONAL RENT
Article 3.
3.1 With respect to each calendar year during the
Lease, the Tenant shall pay in the installments provided below in
Section 3.3 and 3.4, as ADDITIONAL rent, in addition to the Basic
Annual Rent specified in Article 2 above, a sum equal to the
product of Tenant's Proportionate Share (as hereinafter defined)
and the amount of Total Operating Expenses (as hereinafter
defined), prorated for any partial calendar year.
3.2 "Tenant's Proportionate Share" shall be computed
by dividing the net rentable area of the Premises identified in
Item 2 of the Basic Lease Provisions by the total net rentable
area of the Building identified in said Item 2.
The term "net rentable area" as used herein shall be
computed by measuring from the inside surface of the outer
building walls. Specifically included in such area shall be all
area within the outside walls, air conditioning shafts and ducts
where a central air conditioning system eliminates floor fan
rooms, private stairs, private elevators, toilets, air
conditioning rooms, fan rooms, air ducts, janitor's closets, slop
sinks, electrical closets, telephone closets, and all enclosing
walls for the above items, all of which exclusively serve the
floor in which they are located, and columns and projections
necessary to the Building. The area of air conditioning and fan
rooms located on a rental floor serving more than the floor in
which located, together with their enclosing walls, shall be
apportioned and included as rental area of the floors which they
serve. Except as provided above, there shall be excluded
building stairs, fire towers, elevator shafts, flues, vents,
stacks, pipe shafts and vertical ducts, with their enclosing
walls serving more than one floor, all parking decks and lobby,
public vestibules, public telephone booths, ramps, loading docks
and other public areas on the first floor of the Building. Net
rentable area for divided floors shall include a proportionate
share of public corridors, public toilets, air conditioning
rooms, fan rooms, air ducts, janitor's closets, electrical
closets, telephone equipment closets and their enclosing walls.
3.3 Landlord shall provide to Tenant a written
estimate of Total Operating Expenses at least thirty (30) days
prior to the start of each calendar year of the Lease Term. With
respect to each such calendar year during the Lease Term, the
Tenant shall pay to Landlord, monthly in advance, one-twelfth
(l/12th) of Tenants Proportionate Share of the estimated Total
Operating Expenses for such year. For 1981 and 1982, said
payment shall be based on the Estimated Total Operating Expenses
set forth in Item 6 of the Basic Lease Provisions.
3.4 With1n one hundred twenty (120) days after the end
of every calendar year during the Lease Term, commencing with the
calendar year 1981 Landlord shall provide Tenant with a written
statement certified as true and correct of the actual Total
Operating Expenses and Tenant's Proportionate Share thereof for
that year broken down in reasonable detail by expense category.
If the amount payable by Tenant under Paragraph 3.1 hereof should
exceed the amount previously paid by Tenant with respect to such
year, then Tenant shall pay to the Landlord the additional amount
due to Landlord within ten (10) days, and, if the amount payable
by Tenant under Paragraph 3.1 should be less than the estimated
amount paid by Tenant with respect to such year, then Landlord
shall credit against future additional rent the amount of
overpayment by Tenant.
3.5 Total Operating Expenses are defined a those
expenses necessary to operate and maintain the Building,
including appurtenances, in a manner deemed reasonable and
appropriate and for the best interest of the Tenants in the
Building, limited, however, to such items accountable as expenses
pursuant to generally accepted accounting principles, including
the following:
(a) Wages, salaries and fringe benefits of all
employees of Landlord engaged in the operation and maintenance of
the Building; employer's Social Security taxes, unemployment,
taxes or insurance, and any other taxes which may be levied on
such wages and salaries; the cost of disability and
hospitalization insurance and pension or retirement benefits for
such employees; all of the foregoing limited, however, to costs
customarily charged to Tenants in comparably sized office
buildings in projects similar to the Project in Orange County
and/or Los Angeles County;
(b) All supplies and materials used in operation
and maintenance of the Building;
(c) Cost of water, sewer, and trash pick up for the
Building, including water heating and condensing and the cost of
power, gas, heating, lighting, air conditioning and ventilating
for the public and common areas of the Building, it being
understood and agreed that Tenant, at Tenant's expense, shall
separately meter the Premises for electricity and gas and pay the
cost of such utilities as separately metered;
(d) Cost of replacement of equipment and all
reasonably necessary maintenance and service agreements on
equipment, including alarm service, building mechanical
equipment, window cleaning and elevator maintenance and water,
heating and cooling systems;
(e) Cost of casualty and liability insurance in
customary amounts applicable to the Building and Landlord's
personal property used in connection therewith, including rental
loss and/or other endorsements from time to time deemed
appropriate by Landlord, also including earthquake coverage.
(Liability insurance with limits of up to $10,000,000 for any one
occurrence and $1,000,000 property damage shall be deemed
customary as of the date of this lease.) See the attached page
10(a).
(f) Cost of repairs and general maintenance;
(g) Any capital improvement made or installed
after the calendar year 1981 for purposes of saving labor or
otherwise reducing applicable operating costs, not to exceed the
aggregate estimated costs savings annualized on a straight-line
basis over the useful life of the capital improvements as
determined by Landlord in accordance with generally accepted
accounting principles and practices in effect at the time of
acquisition of the capital item.
Notwithstanding anything contained in Section
3.5(e) to the contrary, that portion of Total Operating Expenses
to be paid by Tenant allocable to insurance premiums for
earthquake coverage shall not exceed EIGHT HUNDRED DOLLARS
($800.00) per year through the end of 1982 and the sum of EIGHT
HUNDRED DOLLARS ($800.00) per year increased by any increase in
the Consumer Price Index between October 1981 and October of the
calendar year preceding the calendar year for which such
computation is being made, such adjustment to be made in the
manner provided in Section 2.2.2 above, but without the
seventy-five percent (75%) limitation provided for in said
Section.
(h) A pro rata share of all costs and charges
paid by Landlord as the owner of Parcel 1 as per the above
described Parcel Map 79-585 relating to the common and parking
areas within the Project pursuant to Section 4.2 or 4.5 of the
Declaration, which pro rata share shall be a fraction of the
numerator of which is the total building area within the Building
and the denominator of which is the total building area within
said Parcel 1, as the term building area is defined in the
Declaration;
(i) All taxes and assessments and governmental
charges whether federal, state, county or municipal, and whether
they be taxing districts or authorities presently taxing the
Building or by others, subsequently created or otherwise,
including license, permit and inspection fees and any other taxes
and assessments attributable to the Building or its operation,
including the land underlying the Building, and any tax or other
levy, however denominated, on or measured by the rental collected
by the Landlord with respect to the Building, or on the
Landlord's business of leasing the Building, but excluding taxes
on income. If Tenant, together with other tenants occupying in
excess of fifty percent (50%) of the net rentable area in the
Building, requests it to do so, Landlord will either exercise
any rights it may have to contest any increase in any tax
assessments or will pay any such tax under protest and permit
tenant and other Tenants of the Building to contest the same in
Landlord's name, but without cost or expense to Landlord. If
Landlord elects to contest any such assessment, which Landlord
may do whether or not Tenant or any other tenants request
Landlord to do so, all reasonable costs incurred by Landlord in
connection therewith shall be included within Total Operating
Expenses.
(j) The cost of all accounting and other
professional fees incurred in connection with the operation of
the Building, other than those incurred for (1) correction of
latent or patent construction defects of the Building, (2) the
delivery of services to specific tenants rather than the Building
in general, and (3) the enforcement of Landlord's right with
respect to other tenants of the Building.
(k) A management fee, not to exceed current market
rated, which may be payable to Landlord. (Any sums added to
Total Operating Expenses by this subparagraph (k) shall be
reducted by 14% before calculating Tenant's Proportionate Share.
3.6 Notwithstanding the foregoing, Total Operating
Expenses shall not include expenses for which the Landlord has
rights of reimbursement or indemnification (either by an insurer,
condemnor, tenant or otherwise); expenses incurred in leasing or
procuring tenants (including, without limitation, lease
commissions, advertising expenses, legal expenses, and expenses
of renovating space for tenants); legal expenses arising out of
disputes with tenants or the enforcement of the provisions of
any lease of space in the Building; interest or amortization
payments on any mortgage or mortgages, and rental under any
ground or underlying lease or leases; wages, salaries or other
compensation paid to any executive employees above the grade of
building manager; the cost of any work or service performed for
or facilities furnished to a tenant at the tenant's cost; the
cost of correcting defects (latent or otherwise) in the
construction of the Building or in the building equipment, except
that conditions (not occasioned by construction defects)
resulting from ordinary wear and tear shall not be deemed
defects; cost of capital improvements and depreciation or
amortization, (except as provided in Section 3.5(g) or otherwise
above). To the extent that any of the expenses described in
Section 3.5 are partially excluded from Total Operating Expenses
due to reimbursement or payment of a portion thereof by a tenant
of the Building, Tenant's Proportionate Share of the balance of
such expense shall be appropriately adjusted by excluding the net
rentable area leased to such tenant for purposes of the
computation required by Section 3.2.
3.7 Any operating expense increase for any calendar
year during the term of this Lease shall be apportioned so that
the Tenant shall pay its proportionate share of only that portion
of the increase for such year as falls within the term. This
provision shall survive the expiration or earlier termination of
the term of this Lease.
3.8 If any special assessments are included as part of
the real estate taxes and such assessment may be paid in
installments, the Tenant shall be obligated to pay only the
Tenant's proportionate share of the installment falling within
the term whether or not the Landlord pays such assessment in
installments.
3.9 In the event that at any time during the term of
this Lease, any governmental law, rule or regulation prohibits or
postpones in whole or in part any increase in the rent or other
sums payable by Tenant hereunder, then such increases under this
Lease shall be made to the maximum extent permissible by law at
the time provided in this Lease and/or at any time or times
thereafter such increase, or any portion thereof, may lawfully be
made and any such incrase in rent, or any portion thereof, or
other sums payable hereunder, or portions thereof, the payment of
which has been so prohibited or postponed, shall thereafter
become due and payable to the maximum extent and at the earliest
time or times permited by law.
.
3.10 Operating expenses for any year in which
occupancy of the Building is less than one hundred percent (100%)
shall be adjusted for the purposes of computing the amount
payable by Tenant under Section 3.1 above, to reflect at least
one hundred percent (100%) occupancy of the building.
SECURITY DEPOSIT
Article 4.
Tenant has deposited with Landlord the sum set forth in
Item 9 of the Basic Lease Provisions as security for the full and
faithful performance of every provision of this Lease to be
performed by Tenant. If Tenant defaults with respect to any
provision of this Lease, including but not limited to the
provisions relating to the payment of rent or the repair of
damage to the Premises caused by Tenant, Landlord may use, apply
or retain all or any part of this security deposit for the
payment of any rent or any other sum in default, the repair of
such damage to the Premises, or for the payment of any other
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 to the full extent permitted by law. If any
portion of said deposit is so used or applied, Tenant shall
within ten (10) days after written demand therefor deposit cash
with Landlord in an amount sufficient to restore the security
deposit to its original amount and Tenant's failure to do so
shall be a 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 upon
the last to occur of (i) the date two (2) years from and after
the Commencement Date of the lease term, or (ii) the date of
Tenant's substantial completion of the Tenant improvements within
the Premises to be constructed by Tenant pursuant to the Work
Letter, or (iii) upon condensed water for HVAC system installed
by Tenant's written notice to Landlord that Tenant has
substantially completed Tenant improvements within the Premises.
If Landlord fails to return said security deposit or any balance
thereof within ten (10) days of the last to occur of said dates,
said security deposit shall bear interest, for the benefit of
Tenant, at the "prime rate" of Bank of America NT & SA, plus
three percent, but not to exceed the maximum rate allowable by
law.
UTILITIES AND SERVICES
Article 5.
5.1 Landlord shall furnish to the Premises between the
hours of 7:00 a.m., and 7:00 p.m. Monday through Friday, and
between the hours of 8:00 a.m. and 1:00 p.m. Saturday, except
legal holidays, such amounts of air conditioning, as Landlord
furnishes for normal office purposes in other portions of the
Building taking into consideration at any given time the
availability of energy resources and prudent energy conservation
practices. During other hours Landlord will provide such air
conditioning, heating and ventilation upon not less than 24 hours
advance notice from Tenant to Landlord, and Tenant, upon
presentation of a bill therefor, shall pay Landlord for such
services on an hourly basis at the then prevailing rates
therefore as reasonably established by Landlord. If such service
is not a continuation of that furnished during regular business
hours, Tenant shall pay for a minimum of three (3) hours of such
service. Subject to provisions set forth below, Landlord shall
at all times furnish the Premises with elevator service, and
water for kitchen, lavatory and drinking purposes. Tenant shall
separately meter the Premises pursuant to Paragraph 3.5(c).
Landlord shall provide janitor service; provided, however, that
Tenant shall pay for any unusual janitorial services required by
reason of any non-Building Standard improvements in the Premises,
including without limitation wall coverings and floor coverings,
installed by or for Tenant under the Work Letter or otherwise,
provided further that Landlord shall deliver to Tenant, prior to
the Commencement Date, detailed specifications describing the
scope and frequency of such janitorial services. Tenant shall
have the option to provide its own janitorial service to the
Premises in lieu of the services provided by Landlord, in which
case the Estimated Total Operating Expenses shall be reduced by
$4,300. Such janitorial service shall include the replacement of
fluorescent fixtures as required. Tenant shall pay for
replacement of all other bulbs as required. Landlord shall not
be liable for any failure to furnish any of such services or
utilities when such failure is caused by accidents, strikes,
lockouts, other labor troubles, governmental action, shortages or
other conditions beyond Landlord's reasonable control, and Tenant
shall not be entitled to any damages nor shall any such failure
relieve Tenant of the obligation to pay the full rent reserved
herein or constitute or be construed as a constructive or other
eviction of Tenant. Notwithstanding the foregoing, Tenant shall,
at Landlord's option, upon not less than thirty (30) days prior
written notice, provide its own janitorial service to the
Premises, in lieu of the above services to be provided by
Landlord and, in such event, the said Estimated Total Operating
Expenses shall be reduced by $4,300.
5.2 Tenant will not without the written consent of
Landlord use any apparatus or device in the Premises, including
without limitation electronic data processing machines, punch
card machines and machines using current in excess of 110 volts,
which will in any way increase the amount of water usually
furnished or supplied for use of the Premises as general office
space or that would overload the electrical capacity of the
Premises or require the installation of new electrical lines; nor
connect any apparatus, machine or device with water pipes or
electric current (except through existing electrical outlets in
the Premises) for the purpose of using electric current or water,
except as provided in the Work Letter. Landlord agrees to grant
such consent when required for Tenant's installation of photo
reproduction machines and other equipment commonly used in the
banking business, provided that the installation of any
additional utility lines required for such use shall be the
responsibility of Tenant. If Tenant shall require electric
current in excess of that and for all other electrical current
metered to the Premises. Tenant shall first obtain the consent
of Landlord, which Landlord may reasonably refuse, to the use
thereof and Landlord may cause an electric current meter to be
installed in the Premises to measure the amount of electric
current consumed for any such other use. Tenant, however, may
connect to the hot water line and the condensed water line in the
ceiling above the Premises for heating and air conditioning
purposes. The cost of any such meter and of installation,
maintenance and repair thereof shall be paid for by Tenant and
Tenant agrees to pay Landlord promptly upon demand by Landlord
for all such electric current consumed for any such other use as
shown by said meter provided by the Building system installed by
Landlord pursuant to the Work Letter, at the rates charged for
such services by the local public utility furnishing the same,
plus any additional expense incurred in keeping account of the
electric current so consumed. If any lights, machines or
equipment (including, but not limited to computers) are used by
Tenant in the Premises which materially affect the temperature
otherwise maintained by the air conditioning system, or generates
substantially more heat in the Premises than would be generated
by the Building Standard lights and usual fractional horsepower
office equipment, Landlord shall have the right to install any
machinery and equipment which Landlord reasonably deems necessary
to restore temperature balance, including, but not limited to
modifications to the standard air conditioning equipment, and the
cost thereof, including the cost of installation and any
additional cost of operation and maintenance occasioned thereby,
shall be paid by Tenant to Landlord upon demand by Landlord.
USE OF PREMISES
Article 6.
Tenant shall use and occupy the Premises for the
conduct of a banking facility and purposes incidental thereto or
for any other general office purpose and for no other use or
purpose provided that such general office purpose is in
connection with the conduct and operation of a business commonly
conducted and operated from the ground floors of comparable
office buildings in the Orange and Los Angeles County areas and
provided further in no event may Tenant permit the occupancy and
use of the Premises by any governmental agency. In respect
thereto, Landlord shall not during the first ten (10) years of
the term of this Lease, lease any other space on the ground floor
of the Building to any other banking business (excluding thrift
and savings institutions), so long as the Premises are being used
for banking purposes. Tenant shall not use or occupy the Premises
for the purpose of any medical or dental office, clinic,
laboratory or similar business, without the prior written consent
of Landlord. Tenant shall not use or occupy the Premises in
violation of law and shall, upon five (5) days written notice
from Landlord, discontinue any use of Premises which is declared
by any governmental authority having jurisdiction to be a
violation of law. Tenant, at its sole cost and expense, shall
comply with any direction of any governmental authority having
jurisdiction which shall impose any duty upon Tenant or Landlord
with respect to the Premises or the use or occupation thereof, by
reason of the nature of Tenant's use or occupancy of the
Premises. Tenant shall not do or permit to be done anything which
will invalidate or increase the cost of any fire and extended
coverage insurance policy covering the Building and/or property
located therein Tenant shall promptly upon demand reimburse
Landlord for any additional premium charged for such policy by
reason of Tenant's failure to comply with the provisions of this
Article.
ACCEPTANCE OF PREMISES; RIGHT OF FIRST REFUSAL
Article 7.
7.1 Landlord hereby makes the following covenants,
warranties and representations to Tenant:
A. Landlord shall operate and maintain the
Building, other than portions leased to third parties, in a
clean, orderly and first class manner.
B. Landlord shall deliver to Tenant, prior to the
Commencement Date, a certificate of the architect/designer of the
Building certifying as to the Net Rentable Area of the Premises
and of the Building. If said areas are different than those set
forth in Item 2 of the Basic Lease Provisions, Landlord and
Tenant shall appropriately modify Tenant's Proportionate Share,
as defined in Section 3.1, the Initial Basic Annual Rent and
Monthly Rental Installments, as set forth in Items 3 and 4 of the
Basic Lease Provisions and the Estimated Total Operating
Expenses, as set forth in Item 6 of the Basic Lease Provisions.
C. Any and all patent and latent defects in the
Building, other than improvements installed by individual tenants
(including Tenant), shall be promptly repaired or reasonably
corrected by Landlord, at Landlord's expense, as soon as
reasonably possible after Landlord receives notice thereof and
other than patent defects in the Premises or which Tenant fails
to give Landlord written notice within the ninety (90) day period
specified in Section 7.2 below, which shall be repaired and
reasonably corrected by Tenant.
D. Landlord shal1 deliver to Tenant, prior to the
Commencement Date, a non-disturbance agreement from all lenders
having liens against the real property upon which the Building
is located, having priority to this Lease, which non-disturbance
agreement shall state that Tenant's quiet possession of the
Premises shall not be disturbed so long as Tenant is not in
"material breach", as defined in Section 21.1 below, of any of
the terms of this Lease.
7.2 Except as otherwise set forth in this Lease,
Tenant acknowledges that neither Landlord nor any agent of
Landlord has made any representation or warranty with respect to
the Premises or the Building or with respect to the suitability
or fitness of either for the conduct of Tenant's business or for
any other purpose. The taking of possession or use of the
Premises by Tenant for any purpose other than construction shall
conclusively establish that the Premises and the Building were at
such time in satisfactory condition (except for latent defects)
and in conformity with the provisions of this Lease in all
respects, except as to any items as to which Tenant shall give
Landlord written notice in reasonable detail within ninety (90)
days after Tenant takes such possession or commences such use of
the Premises or the term of this Lease otherwise commences as
provided in Article 1 above. Nothing contained in this Article 7
shall affect the commencement of the term of this Lease or the
obligation of Tenant to pay rent hereunder as provided in Article
2 above. Landlord shall promptly take such action as may
reasonably be required to remedy any actual defects of which it
is notified as provided above.
7.3 Following the expiration of the second year of the
term of this Lease, Tenant may, from time to time, notify
Landlord in writing that it desires to lease additional space on
Floors 2, 3 and/or 4 in the Building, specifying in such notice
the minimum and maximum size of the space Tenant desires to
lease. In the event that space on said floors, or any of them, in
the Building thereafter is available for lease, or will within
six (6) months become available for lease, satisfying the space
requirements set forth in the most recent notice from Tenant,
Landlord agrees to notify Tenant of such space and to give
toTenant a first opportunity to negotiate with Landlord to lease
such space and not to offer such space to or negotiate a lease
for such space with any third party while negotiations with
Tenant are proceeding. Landlord reserves the right to
discontinue negotiations with Tenant, at any time, by giving
written notice to Tenant, if Landlord determines, in its sole
discretion, that such negotiations are not likely to produce a
lease agreement on terms then satisfactory to Landlord, or if a
lease satisfactory to Landlord has not been executed within
thirty (30) days of Landlord's notice to Tenant of such space.
Space shallnot be deemed to be available for lease for the
purposes of this Section so long as Landlord is negotiating with
the then occupant of such space to re-lease such space and
Tenant's rights under this Section shall be subject to any and
all rights of first refusal, options to renew or extend and/or
expansion options either heretofore or hereafter granted to other
occupants of the Building or of the Project. Unless Tenant
notifies Landlord in writing within ten (10) days of its receipt
of any notice from Landlord of the availability of space in the
Building that it does not desire such space (upon Landlord's
receipt of such notice any rights of Tenant to negotiate for such
space under this Section shall terminate), Tenant's rights under
this Section 7.3 shall automatically terminate in the event that
Tenant refuses to lease such space on terms offered by Landlord
to Tenant upon Landlord's leasing such space to a third party for
a rent and upon terms not substantially less favorable to the
lessee than those rejected by Tenant. Nothing contained in this
Section shall be construed as obligating Landlord to divide space
becoming available for lease in order to satisfy Tenant's space
requirements. Tenant's sole remedy in the event of a default by
Landlord under this Section shall be to recover damages, it being
understood that Tenant hereby waives any right to specifically
enforce the provisions of this Section 7.3. (Provided such
notice includes the following statement in capital letters: "A
FAILURE TO RESPOND TO THIS NOTICE WITHIN TEN (10) DAYS OF RECEIPT
MAY RESULT IN A LOSS OF RIGHTS UNDER SECTION 7.3 OF YOUR LEASE
FOR GROUND FLOOR SPACE IN THE ONE PACIFIC PLAZA BUILDING,
HUNTINGTON BEACH, CALIFORNIA.")
ALTERATIONS AND EQUIPMENT
Article 8.
8.1 Tenant shall make no alterations, additions or
improvements to the Premises, other than usual decorating work,
without the prior written consent of Landlord, which consent
shall not be unreasonably withheld, and Landlord may impose as a
condition to such consent the right to approve
and to require a bond, in form and amount satisfactory to
Landlord, from the contractor selected by Tenant to perform such
work, the right to approve the contractor selected by Tenant to
perform such work and the requirements applicable to alterations,
additions or improvements in the Work Letter. All such
alterations, additions or improvements including, without
limitation, those constructed or installed by or under Tenant
pursuant to the Work Letter, shall become the property of
Landlord and shall be surrendered with the Premises, as a part
thereof, at the end of the tern hereof except those described on
the attached Exhibit "E".
8.2 All articles of personal property and all trade
fixtures, machinery and equipment, furniture and movable
partitions owned by Tenant or installed by Tenant at its expense
in the Premises shall be and remain the property of Tenant and
may be removed by Tenant at any time during the Lease Term when
Tenant is not in material default hereunder, provided that Tenant
repairs any damage to the Premises or the Building caused by such
removal. On the expiration of the term of this Lease, or on any
earlier termination of this Lease, Tenant shall remove all such
personal property, etc., in accordance with the provisions of
Article 22 below.
8.3 Subject to obtaining all requisite governmental
approvals and Tenant's compliance with all applicable laws and
the Declaration, Tenant shall have the right, at Tenant's sole
cost and expense, to install two (2) exterior drive through
banking lanes with appropriate electronic banking equipment
adjacent to the Ground Floor Premises as depicted on Exhibit "A,"
with the prior written consent of Landlord of the plans and
specifications for such work, which consent shall not
unreasonably be withheld. All construction of said drive-through
banking lanes shall comply with the provisions of Section 8.1 and
8.2 above and shall be performed in a manner so as to minimize,
to the extent reasonably possible, interference with the use and
operation of the Common Areas adjacent to the work site. Tenant
shall maintain the Drive-Through Facilities in good condition and
repair and promptly correct and/or restore any defects in or
damage resulting from casualty or condemnation to the
Drive-Through Facilities, at its sole cost and expense. All
utilities used in connection with the Drive-Through Facilities
shall be separately metered, at Tenant's expense, and Tenant
shall pay all utility costs incurred in connection therewith.
The Drive-Through Facilities shall be deemed to be a portion of
the Premises for the purposes of Articles 4, 6 through 15 and 22
of this Lease.
From and after the date that Tenant commences the
construction or the Drive-Through Facilities, the Basic Annual
Rent shall be increased by an amount equal to the product of nine
(9) (being the number of parking spaces or potential parking
spaces in any underground or multi-level parking garage or
structure within the Project to Tenant and other occupants of the
Building or, in the absence of any such garage or structure,
$360.00 and Monthly Rental Installments shall be proportionately
increased; provided that if Tenant elects to construct only one
drive-through lane, said increase shall be equal to the product
of nine times the then annual charge for unassigned parking
spaces in any such underground or multi-level parking garage or
structure or, in the absence of any such garage or structure,
$240.00 per year per space and Monthly Rental Installments shall
be proportionately increased.
LIENS
Article 9.
Tenant shall keep the Premises and the Building free
from any mechanics liens arising out of any work performed by or
under the materials furnished to or obligations incurred by or
under Tenant. Tenant agrees to defend, indemnify and hold
harmless Landlord from and against any such lien or claim or
action thereon, together with costs of suit and reasonable
attorneys' fees incurred by Landlord in connection with any such
claim or actions.
TAX ON TENANT'S PROPERTY
Article 10.
10.1 Tenant shall be liable for and shall pay prior to
delinquency all taxes levied against any personal property or
trade fixtures placed by Tenant in or about the Premises. If any
such taxes on Tenant's personal property or trade fixtures are
levied against Landlord or Landlord's property and if Landlord,
after a minimum of thirty (30) days prior written notice to
Tenant, pays the same, which Landlord shall have the right to do
regardless of the validity of such levy, but only under proper
protest if requested by Tenant, or if the assessed value of
Landlord's property is increased by the inclusion therein of a
value placed upon such personal property or trade fixtures of
Tenant and if Landlord, after written notice to Tenant, pays the
taxes based upon such increased assessment, which Landlord shall
have the right to do regardless of the validity thereof, but only
under proper protest if requested by Tenant, Tenant shall, upon
demand, as the case may be, repay to Landlord the taxes so levied
against Landlord, or the proportion of such taxes resulting from
such increase in the assessment; provided that, in any such
event, Tenant shall have the right, in the name of Landlord and
with Landlord's full cooperation, but at no cost to Landlord, to
bring suit in any court of competent jurisdiction to recover the
amount of any such taxes so paid under protest, any amount so
recovered to belong to Tenant.
10.2 If the Tenant improvements in the Premises,
whether installed and/or paid for by Landlord or Tenant and
whether or not affixed to the real property so as to become a
part thereof, are assessed for real property tax purposes at a
valuation higher than the valuation at which Tenant improvements
conforming to Landlord's "Building Standard" in other space in
the Building are assessed, then the real property taxes and
assessments levie against Landlord or Landlord property by reason
of such excess assessed valuation shall be deemed to be taxes
levied against personal property of Tenant and shall be governed
by the provisions of Section 10.1 above.
MAINTENANCE AND REPAIR
Article 11.
11.1 Subject to the provisions of Section 11.2 below
Tenant shall maintain the Premises and fixtures therein in good
condition and repair, and subject to the provisions of Article 17
below, shall reimburse Landlord for all repair thereto or to the
Building which are made necessary as a result of any misuse or
neglect by Tenant, or any of its officers, agents, employees,
contractors, licensees, visitors, guests or invitees, except to
the extent that such repairs are covered by insurance maintained
by Landlord. Tenant shall also maintain the HVAC system
installed by Tenant in the Premises.
11.2 Subject to the provisions of Article 5.1 and
Article 17 hereof Landlord shall repair and maintain the Building
structure and public areas, and the plumbing, elevator and
electrical systems servicing the Premises, the exterior sides of
demising walls, and exterior parking and landscaping (other than
those areas that are expressly the responsibility of Tenant).
Landlord shall not be liable for any failure to make any repairs
or to perform any maintenance unless such failure shall persist
for an unreasonable time after written notice (or telephone
notice in the case of emergency endangering life or property of
the need for such repairs or maintenance is given to Landlord by
Tenant. In any event, Tenant shall have the right to make such
repair upon Landlord's failure to do so in a reasonable time
following notice and to recover Tenant's reasonable costs of
making such repairs from Landlord. Except as provided in Article
1, 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 adjacent parking and common areas; provided, however, that
in making such repairs, alterations or improvements to the
Building, Landlord shall interfere as little as reasonably
practicable with the conduct of Tenant's business in the
Premises.
ENTRY AND I N S P E CT I ON
Article 12.
Tenant will permit Landlord and its agents at any time
in case of emergency, and otherwise upon 24 hours prior written
notice to Tenant, in such manner as to cause as little
disturbance to Tenant as reasonably practicable, to take all
required materials and equipment into the Premises, and perform
all required work therein, including the erection of scaffolding,
props, or other mechanical devices, for the purpose of making
alterations, repairs or additions to the Premises or to any other
portion of the Building as may be provided for by this Lease or
as may be mutually agreed upon by the parties or as Landlord may
be required to make by law or for maintaining any service
provided by Landlord to Tenant hereunder, without any rebate of
rent to Tenant for any loss of occupancy or damage, injury or
inconvenience thereby occasioned, unless resulting from the
negligence or improper behavior on the part of Landlord or its
agents or contractors. Tenant shall also permit Landlord and its
agent, upon 24 hour prior written request, to enter and/or pass
through the Premises or any part thereof, at reasonable times
during normal business hours and accompanied at all times by an
authorized agent of Tenant to inspect the Premises and/or to show
the Premises to holders of encumbrances of the interest of
Landlord under the Lease, or prospective purchasers, mortgagees
or lessees of the Building as an entirety, and during the period
of six (6) months prior to the expiration date of this Lease,
Landlord may exhibit the Premises to prospective tenants in the
same manner. Landlord shall also have the right to enter or
and/or pass through the Premises, or any part thereof, at such
times as such entry shall be required by circumstances of
emergency affecting the Premises or any other portion of the
Building. If during the last thirty (30) days of the term hereof
Tenant shall have removed substantially all of Tenant's property
and personnel from the Premises, Landlord may enter the Premises
and repair, alter and redecorate the same, without abatement of
rent and without liability to Tenant, and such acts shall have no
effect on this Lease.
HOLD HARMLESS AND NON-LIABILITY
Article 13.
Tenant agrees to hold harmless and to indemnify
Landlord, Landlord's partners and/or joint venturers and the
officers and/or partners of such partners and/or join venturers,
from and against any and all claims arising from injury of
persons, loss of life or damage to property occurring in or about
the Premises and from and against any and all costs, expenses and
liabilities (including without limitation reasonable attorney's
fees) incurred by Landlord, and/or said other indemnitees, or any
of them, and/or inconnection with any such claim or any
proceeding based thereon, to the extent such injury, loss of life
or damage arises out of the negligent or willful act or failure
to act of Tenant, or any of its officers, employees, agents,
con-tractors, licensees, visitors, guests or invitees, or out of
Tenant's breach of this Lease, or out of Tenant's use of the
Premises or the conduct of its business from the Premises, and
not arising out of the negligent or wilful act or failure to act
of Landlord or Landlords agents, contractors or invitees, nor by
patent or latent defects in the construction of the Building.
Except in the case of Landlord or Landlord's agents' or
contractors' negligence or wilful act, neither Landlord nor its
agents shall be 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 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. Neither Landlord nor its agents
shall be liable for interference with the light or other
incorporeal hereditaments, loss of business by Tenant. Tenant
shall give prompt notice to Landlord in case of fire or accidents
in the Premises or in the Building or defects therein.
Notwithstanding anything contained herein to the contrary,
Landlord shall not be required to reimburse Tenant for loss or
damage resulting from Landlord's or Landlord's agents' or
contractors' willful or negligent acts if and to the extent that
Tenant is reimbursed by insurance proceeds covering such acts.
Throughout the term of this Lease Tenant shall maintain
in effect comprehensive public liability and property damage
insurance with limits of liability of not less than ONE MILLION
DOLLARS ($1,000,000.00) combined single limit, naming Landlord as
an additional named insured under the
policy. The cost of naming Landlord as an additional insured on
said policy shall be borne by Tenant to the extent of the first
$100.00 with any excess in cost for so naming Landlord to be paid
by Landlord. Tenant agrees to furnish and to maintain with
Landlord at all times during the term of this
Lease, a current certificate evidencing the insurance required by
this Article, which certificate shall contain an agreement by the
insurer that said policy shall not be canceled or materially
changed without at least ten (10) days prior written notice to
such additional named insureds. Any such policy of insurance
shall be primary and not contributing with any insurance provided
by Landlord. Any such policy of public liability and property
damage insurance shall provide that any loss shall be payable to
Landlord notwithstanding any act or negligence of Tenant which
might otherwise result in the forfeiture of such insurance, if
available, but any additional charge for such provision shall be
paid by Landlord, unless Landlord waives the provisions of this
sentence .
WAIVER OF SUBROGATION
Article 14.
Landlord and Tenant hereby release the other from any
and all liability from or to the other party of every kind and
nature which may result from the perils of fire, lightning or
extended coverage perils which causes damage on or to the
Premises, the Building and/or property within the Building owned
by it, such waiver to include situations where the negligence of
one of the parties hereto or his agent, servant or representative
causes or contributes to the occurrence or the result of damage.
Each party agrees to furnish appropriate subrogation waiver
endorsements of their respective fire insurance companies.
ASSIGNMENT AND SUBLETTING
Article 15.
15.1. See page 23(a).
15.2. No subletting or assignment shall relieve Tenant
of its obligations to pay the rent and to perform all of the
other obligations to be performed by Tenant hereunder. The
acceptance by Landlord of any payment due hereunder from any
person, other than Tenant, shall not be deemed to be a waiver by
Landlord of any provision of this Lease or to be a consent to any
assignment, subletting or other transfer or interest.
TRANSFER OF LANDLORD'S INTEREST
Article 16.
In the event of any transfer or transfers of Landlord's
interest in the Premises or in the real property of which the
Premises are a part, other than a transfer for security purposes
only, the transferor shall be automatically relieved of any and
all obligations and liabilities on the part of Landlord accruing
from and after the date of such transfer, provided such
obligations and liabilities are assumed in writing by the
transferee.
16.1 Tenant shall not, either voluntarily or by
operation of law, assign, pledge or otherwise transfer al1 or any
part of Tenant's leasehold or permit the Premises to be occupied
by anyone other than Tenant or Tenant's employees or sublet the
Premises or any portion thereof, without Landlord's prior written
consent in each instance. Landlord agrees not to unreasonably
withhold its consent to any proposed assignment or sublease,
provided that such assignment or sublease is to a financially
responsible party with a good business reputation. Landlord's
consent given pursuant to this Section in one or more instances
shall not operate to exhaust Landlord's rights under this
Section. A voluntary or other surrender of this Lease by Tenant
or a mutual cancellation hereof shall not work a merger, and
shall, at the option of Landlord, terminate all or any existing
subleases or subtenancies or shall operate as an assignment to
Landlord of such subleases or subtenancies. If Tenant is a
corporation which, under the current guidelines published by the
Commissioner of Corporations of the State of California, is not
deemed a public corporation, or is an unincorporated association
or partnership the transfer, assignment or hypothecation of any
stock or interest in such corporation, association or partnership
in the aggregate in excess of twenty-five percent (25%) shall be
deemed an assignment within the meaning and provisions of this
Section, p ovided that this sentence shall not be applicable to
the transfer of shares in any corporation operating a bank from
the Premises, unless such transfer is in connection with a
transaction that includes or contemplates the use of the Premises
for a purpose other than as a bank, Tenant agress to reimburse
Landlord for Landlord's reasonable oasts and attorneys' fees
incurred in connection with the processing and documentation of
any such requested assignment, subletting, transfer, change of
cwrership or hypothecation of this Lease or Tenant's interest in
and to the Premises, not to exceed, however, $250.00 per request.
DAMAGE OR DESTRUCTION
Article 17.
17.1 In the event that the Premises or the Building,
or any portion or portions thereof, shall be damaged by fire,
explosion, windstorm or any other casualty, then Landlord shall
repair such damage as rapidly as reasonably possible, allowing
sufficient time for Landlord to settle with any applicable
insurer, and Tenant shall be entitled to an equitable abatement
of the Basic Annual Rent and all additional rent payable at such
time, based upon the extent to which the damage and Landlord's
making of such repairs shall interfere with the business carried
on by Tenant in the Premises. Notwithstanding the foregoing, if
the Premises and/or the Building shall be damaged by any casualty
which Landlord is otherwise obligated to repair, and such damage
shall be to the extent of more than twenty-five percent (25%) of
the value of the Building at the time of such damage, or should
such damage occur during the last twelve (12) months of the term
of this Lease, or should such damage be caused by a casualty not
covered by standard fire and extended coverage insurance or any
other insurance carried by Landlord and exceeds twenty percent
(20%) of the value of the Building at the time of such damage,
then Landlord may in any of such events, at its election upon
notice to Tenant given within thirty (30) days after such damage,
terminate this Lease effective as of the date of the casualty.
Notwithstanding the foregoing, there shall be no abatement of
rent by reason of any portion of the Premises being unusable for
a period equal to one (1) day or less. Unless this Lease is
terminated by Landlord pursuant to this section, Tenant may
terminate this Lease unless Landlord commences the restoration
and repair of such casualty damage required by this Section and,
subject to force majeure, substantially completes the work of
such restoration and repair and repair within eight (8) months of
the date of such casualty. See the attached page 24 (a).
17.2 No damages, compensation or claim shall be
payable by Landlord for inconvenience, loss of business or
annoyance arising from any repair or restoration of any portion
of the Premises or other portion of the Building. Landlord shall
use its best efforts to effect such repair or restoration
promptly and in such manner as not unreasonably to interfere with
Tenant's use and occupancy.
17.3 Landlord shall not be required to carry insurance
of any kind on Tenant's property and, except by reason of the
breach by Landlord of any of its obligations hereunder (subject
to the provisions of Article 14), shall not be obligated to
repair any damage thereto or to replace the same.
17.4 A total destruction of the Building shall
automatically terminate this Lease, provided, however, that
Tenant may thereafter for a period of not to exceed sixty (60)
days, enter the Premises for the purpose of salvaging personal
property and conducting investigations.
If the Premises cannot be occupied and used for banking
purposes as a result of casualty damage to the Premises or the
Building and if this Lease is not terminated under this Section
17.1 by reason of such casualty to the point tht the Premises can
be reoccupied for banking purposes, Landlord agrees to cooperate
reasonably with Tenant to permit Tenant's temporary use and
occupancy of such space until Tenant reasonably can reopen the
Premises for the conduct of its banking business. In such event,
Tenant shall execute a lease for such space on Landlord's then
standard form applicable to such space, modified to conform to
this Section, and pay the lesser of (I) the then market rate for
such space or (ii) a pro rata portion of the rent payabe under
this Lease prior to such casualty increased by the Additional
Rent payable under Article 3 for the preceding calendar year,
based on the ratio between the net rentable area in the Premises
and the net rentable area in such space to be leased by Tenant.
Any and all leasehold improvements required for the use and
occupancy of such space shall be constructed by Tenant, at
Tenant's sole cost and expense, shall be approved by Landlord,
which approval shall not unreasonably be withheld, and shall be
removed by Tenant promptlyupon th expiration of the term of such
lease and any damage resulting from such removal shall be
repaired by Tenant. A default by Tenant under any such lease
shall constitute a default under this Lease and any default under
this Lease by Tenant shall constitute a default by Tenant under
such new lease. Space previously leased and occupied by lessee
shall not be deemed available for lease so long as Landlord is
negotiating with the occupant of such space for a new lease
and/or an extension or renewal of an existing lease. Nothing
contained herein shall be construed as obligating Landlord to
divide any space available for lease so as to permit Tenant's
occupancy of less than all of the said space. Tenant agrees to
promptly repair and/or replace its leasehold improvements,
fixtures and equipment upon Landlord's completion of its repairs
to the Premises and/or the Building required for Tenant's work
and the use and occupancy of the Premises. If such suitable
space in the Building is not available following any such
casualty, if this Lease is not terminated under Section 17.1
above and if there is an unleased vacant building pad in any
portion of the Project, then owned by Landlord, free of option
and/or purchase agreements, Landlord agrees to rent space upon
such building pad, or upon any portion of the common area in the
Project, to Tenant for the erection and operation of a temporary
banking facility, pursuant to plans for such work approved by
Landlord (such approval shall not unreasonably be withheld) for
the temporary term contemplated above. Tenant shall pay as
rental for such use a proportionate share of the rental then
payable hereunder, based upon the net rentable area occupied by
Tenant in such temporary facility to the net rentable area of the
Premises, together with a pro rata share of the expenses
described in Section 35(h) allocable to the parcel upon which
Tenant's temporary facilities are situated under the Declaration
based upon the ratio between the building area (as defined in the
Declaration) in such temporary facility to the total building
area allowed to be constructed on such parcel under the
Declaration. Except for term, location of the leased premises and
rental, such rental agreement shall be upon the terms
contemplated in Section 1.2 above; provided that if such
temporary facility is located on a building pad, Tenant's tax
liability shall include the land tax allocable to the land area
occupied by such temporary facility.
EMINENT DOMAIN
Article 18.
18.1 If the whole of the Premises or so much thereof as
to render the balance unusable by Tenant shall be taken under
power of eminent domain, this Lease shall automatically terminate
as of the date of such condemnation, or as of the date possession
is taken by the condemning authority, whichever is earlier. No
taking of the Drive-Through Facilities shall be deemed to render
the balance of the Premises unusable by Tenant. No award for any
partial or entire taking shall be apportioned, and Tenant hereby
assigns to Landlord any award which may be made in any taking or
condemnation affecting the Premises or any portion of the
Project, together with any and all rights of Tenant now or
hereafter arising in or to the same or any part thereof,
provided, however, that nothing contained herein shall be deemed
to give Landlord any interest in or to require Tenant to assign
to Landlord any award made to Tenant for the taking of the
unamortized value of improvements installed by or under Tenant,
amortized on a straight-line basis over the last twenty-five (25)
years of the term of this Lease, including any unexercised
extension options.)
18.2 In the event of a partial taking which does not
result in a termination of this Lease, rent shall be abated in
proportion to the part of the Premises so made unusable by
Tenant.
EXHIBIT C
RULES AND REGULATIONS ATTACHED
TO AND MADE A PART OF
OFFICE LEASE
1. The sidewalks, entrances, passages, courts,
elevators, vestibules, stairways, corridors or halls of the
Building shall not be obstructed or used for any purpose other
than ingress and egress. The halls, passages, entrances,
stairways, balconies and roof are not for the use of the general
public, and Landlord shall in all cases retain the right to
control and prevent access thereto by all persons whose presence
in the judgment of the Landlord shall be prejudicial to the
safety, character, reputation or interests of the Building and
its tenants, provided that nothing herein contained shall be
construed to prevent such access by persons with whom Tenant
normally deals in the ordinary course of its business unless such
persons are engaged in illegal activities or violate Landlord's
applicable rules and regulations. No tenant and no employees of
any tenant shall go upon the roof of the Building without the
writing consent of Landlord.
2. No awnings or other projections shall be attached
to the outside walls of the Building without the prior written
consent of Landlord. No hanging planters, television sets or
other objects shall be attached to or suspended from ceilings
without the prior written consent of Landlord. No curtains,
blinds, shades or screens shall be attached to or hung in, or
used in connection with, any window or door of the Building,
without the prior written consent of Landlord. Except as
otherwise specifically approved by Landlord, all electrical
ceiling fixtures hung in offices or spaces along the perimeter of
the Building must be fluorescent, of a quality, type, design and
bulb color approved by Landlord.
3. No signs, advertisement or notice shall be
exhibited, painted or affixed by any tenant on any part of, or so
as to be seen from the outside of, his premises or the Building
without the prior written consent of the Landlord. In the event
of the violation of the foregoing by any tenant, Landlord may
remove same without any liability, and may charge the expense
incurred in such removal to the tenant violating this rule. The
Building lobby directory tablet shall be inscribed, painted or
affixed for each tenant by Landlord and shall be of a size, color
and style acceptable to Landlord.
4. The wash room partitions, mirrors, wash basins and
other plumbing fixtures shall not be used for any purpose other
than those for which they were constructed, and no sweepings,
rubbish, rags or other substances shall be thrown therein. All
costs incurred to correct damage resulting from any misuse of the
fixtures by a tenant or such tenant's servants, employees,
agents, visitors or licensees shall be promptly reimbursed
Landlord by such tenant upon demand.
5. No tenant shall mark, paint, drill into, or in any
way deface any part of his premises or the Building without the
prior written consent of Landlord. No boring, cutting or
stringing of wires or laying of linoleum or other similar floor
coverings shall be permitted except with the prior written
consent of Landlord and as Landlord may direct.
6. No bicycles, vehicles, vending machines or animals
of any kind shall be brought into or kept in or about the
Building and no cooking shall be done or permitted by any tenant
on his premises except that the preparation of coffee, tea, hot
chocolate and similar items for the tenant and its employees and
business visitors shall be permitted. No tenant shall cause or
permit any unusual or objectionable odors to escape from his
premises. Landlord acknowledges that Tenant's premises will
include an employee's kitchen with stove and microwave for use by
employees and caterers catering Board of Director's meetings and
other bank related meetings and bank related activities and
agrees that nothing contained in this Paragraph 6 shall be
construed as prohibiting such use of the premises, provided that
offensive cooking odors do not escape from the premises.
7. No premises within the Building shall be used for
manufacturing or for the storage of merchandise without
Landlord's prior written consent, except as such storage may be
incidental to the use of such premises for general office
purposes. No tenant shall occupy or permit any portion of his
premises to be occupied as an office for a public stenographer or
typist, or for the manufacture or sale of liquor, narcotics, or
tobacco in any form, or as a medical office, or as a barber shop,
manicure shop or employment agent, except with Landlord's prior
written consent. No tenant shall engage or pay any employees on
his premises except those actually working for such tenant on his
premises nor advertise for laborers giving an address at his
premises. No portion of the Building shall be used for lodging
or sleeping without Landlord's prior written consent nor for any
immoral or illegal purpose.
8. No tenant shall make, or permit to be made any
unseemly or disturbing noises, sounds or vibrations or disturb or
interfere with occupants of this or neighboring buildings or
premises or those having business with them whether by the use of
any musical instrument, radio, phonograph, unusual noise, or in
any other way.
9. No tenant shall throw or permit to be thrown anything
out of doors or down the passageways.
10. No tenant shall at any time bring or keep or permit
to be brought or kept upon his premises any inflammable,
combustible or explosive fluid, chemical or substance. No tenant
shall do or permit anything to be done in his premises, or bring
or keep anything therein, which shall in any way increase the
rate of fire insurance on the Building or on the property kept
therein, or obstruct or interfere with the rights of other
tenants, or in any way injure or annoy them, or conflict with the
regulations of the Fire Department or the fire laws, or with any
insurance policy upon the Building or any part thereof, or with
any rules and ordinances established by the local health
authority or other governmental authority.
11. All removals, or the carrying in or out of any
safes, freight, furniture, or bulky matter of any description
must take place during the hours which the Landlord may determine
from time to time. The moving of safes or other fixtures or bulky
matter of any kind must be made upon previous notice to the
manager of the Building and under his supervision and the persons
employed by any tenant for such work must be acceptable to the
Landlord. The Landlord reserves the right to inspect all safes,
freight or other bulky articles to be brought into the Building.
The Landlord reserves the right to prohibit or impose conditions
upon the installation in the Premises of heavy objects which
might overload the Building floors.
12. No tenant shall purchase or otherwise obtain for
use in his premises, water, ice, towel, vending machine,
janitorial, maintenance or other services of any kind except from
persons authorized by Landlord, and at hours and under
regulations fixed by Landlord.
13. Landlord shall have the right to prohibit any
advertising by any tenant which, in Landlord's opinion, tends to
impair the reputation of the Building or its desirability as an
office building and upon written notice from Landlord any tenant
shall refrain from or discontinue such advertising.
14. Landlord reserves the right to exclude from the
Building between the hours of 7 p.m. and 7 a.m. and at all hours
of Sundays and legal holidays all persons who do not present a
pass to the Building signed by the Landlord. The Landlord shall
furnish passes to persons for whom any tenant
requests the same in writing. Each tenant shall be responsible
for all persons for whom he requests passes and shall be liable
to the Landlord for all acts of such persons.
15. Any persons employed by any tenant to do janitor
work, shall, while in the Building and outside of his premises,
be subject to and under the control and direction of the manager
of the Building (but not as an agent or servant of said manager
or of the Landlord, and tenant shall be responsible for all acts
of such persons). Except with Landlord's prior written
permission, no tenant shall permit janitorial services to be
performed during the hours of 7:00 a.m. to 6:00 p.m. Mondays
through Fridays.
16. All doors opening into public corridors shall be
kept closed, except when in use for ingress and egress.
17. The requirements of tenants will be attended to only
upon application to the building manager's office of the
Building.
18. Canvassing, soliciting and peddling in the Building
are prohibited and each tenant shall cooperate to prevent the
same.
19. All office equipment of any electrical or
mechanical nature shall be placed by tenants in their premises in
settings approved by Landlord, to absorb or prevent any
vibration, noise or annoyance.
20. No air conditioning unit or other similar
apparatus shall be installed or used by any tenant without the
written consent of Landlord.
21. There shall not be used, in any space, or the
public halls of the Building, either by any tenant or others, any
hand trucks except those equipped with rubber tires and side
guards.
22. Landlord will direct electricians as to where and
how telephone or telegraph wires are to be introduced. No boring
or cutting for wires or stringing of wire will be allowed without
written consent of Landlord. The location of telephones, call
boxes and other office equipment affixed to the premises shall be
subject to the approval of Landlord.
23. Tenants shall cooperate with Landlord in obtaining
maximum effectiveness of the cooling system when outside
temperatures are in excess of 65 by closing drapes when the
sun's rays fall directly on windows of the Premises. Tenant
shall not obstruct, alter or in any way impair the efficient
operation of Landlord's heating, ventilating and air conditioning
system and shall not place bottles, machines, parcels or any
other articles on the induction unit enclosure so as to interfere
with air flow. Tenant shall not tamper with or change the
setting of any thermostats or temperature control valves.
SIGN CRITERIA
"None "
Exhibit "D"
<PAGE>
EXHIBIT "E"
1. Vault door.
2. Safety deposit boxes, including frames.
3. Chandeliers.
4. Teller counters and booth.
5. Telephone and other communication systems, including
cables for service, business and printing.
6. Computer and computer cable systems.
7. Decorator items, such as wood carvings attached to
ceilings or walls (other than wall coverings such as
fabrics and/or paneling and molding), provided that any damage to
ceilings and/or walls resulting from such removal is
repaired by Tenant.
CONDITION SUBSEQUENT
Article 19.
Tenant shall use its best efforts and diligently pursue
obtaining the approval of this Lease by the Comptroller of the
Currency of the United States Government. In the event Tenant
does not obtain such approval within 45 days after mutual
execution hereof, Landlord may terminate this Lease by giving
written notice of such termination to Tenant at any time prior to
the date such approval is obtained by Tenant. In the event that
the Comptroller of the Currency disapproves of this Lease by
giving written notice of such disapproval to Tenant and in the
further event that Landlord is unwilling to make modifications to
this Lease required to obtain such approval within thirty (30)
days of Landlord's receipt of a copy of said notice of
disapproval, Tenant may terminate this Lease by giving written
notice of such disapproval to Landlord. Tenant agrees to promptly
deliver a copy of any such notice of disapproval received by
Tenant to Landlord. In the event of such termination, each of
the parties shall be excused from all covenants and obligations
to be performed or observed after the date of such termination,
and all deposits, moneys, plans and drawings delivered to
Landlord by Tenant shall be returned to Tenant.
PARKING
Article 20.
20.1 Subject to Section 20.4 and 20.5 below, Landlord
shall maintain at all times, and without
fee to Tenant, Tenant's employees or invitees, and with free
validation2, for use as a visitor and temporary parking area, the
portion or portions of the parking area cross-hatched on Exhibit
"B", which shall provide for 20 parking spaces immediately
adjacent to the Premises for the exclusive use of Tenant's
invitees. Said cross-hatched portion of the parking area shall
not be relocated or altered in any material way without Tenant's
approval, which approval shall not unreasonably be withheld, and
no specific parking spaces shall be assigned to any person within
such cross-hatched portion of the parking area, provided,
however, that Tenant may erect parking identification and
limitation signs in this area with Landlord's prior written
consent, which shall not be unreasonably withheld. Landlord
hereby designates Tenant as the agent of Landlord to enforce the
exclusivity of said parking area, and Tenant may take all
reasonable action necessary to so enforce such exclusivity,
provided that Tenant indemnify Landlord from and against any
liability or loss by reason of such action. Landlord shall not
be responsible for the improper use of said parking area by
unauthorized persons. No monthly charges or parking charges
shall be payable with respect to said twenty parking spaces
during the first ten (10) years of the term of this Lease and if
a system of validated parking is instituted, Tenant shall be
entitled to free validated parking for said twenty spaces.
20.2 Except as otherwise provided in paragraph 20.5
hereof, and in addition to the parking described in Paragraph
20.1 hereof, Tenant and Tenant's employees and invitees shall be
entitled, at no cost, fee, or expense whatsoever to Tenant or
Tenant's employees or invitees, (the monthly charges and
validated parking charges described in Section 20.3 below
excepted), to the nonexclusive use in common with Landlord and
others designated by Landlord of such parking facilities as may
from time to time be constructed and maintained for such purposes
by Landlord upon or adjacent to the real property of which
Building is a portion. Tenant agrees to comply with and to cause
its employees and invitees to comply with such reasonable rules
and regulations with respect thereto as Landlord may from time to
time establish. Such rules and regulations may include, but
shall not be limited to the restriction of designated areas for
drive-through banking, restaurant or other drive-through
facilities, periodic and/or seasonal sales activities and the
designation of specific parking spaces and/or areas for parking
by Tenant and/or other occupants of the Building or Project and
their respective employees. Landlord shall not be liable to
Tenant by reason of the failure of any other occupant of the
Building and/or Project to comply with such rules and
regulations, provided that Landlord takes reasonable action to
enforce such rules and regulations. Notwithstanding footnote 1
in this Section 20.2 and Section 20.3 to the contrary no monthly
charge or parking charge shall be payable for surface parking
during the first five (5) years of the term of this Lease and if
a validated parking system is instituted, Tenant shall be
entitled to free validated parking for the use of such surface
parking spaces.
20.3 Landlord reserves the right, but shall not be
obligated, to (i) construct underground or multi-level parking
garages and/or structures, subject, however, to such monthly
rates and other charges that may be established or allowed by
Landlord, or by the operator of such parking areas, at any time
or from time to time during the term of this lease including
monthly rates as permitted by (i) above, (such monthly rates for
Tenant and its employees), shall not exceed monthly rates charged
other tenants in the Building, nor shall such rates exceed, in
any event, the sum of $30.00 per assigned space per month during
the first year such garage and/or structure is operated and the
sum of $20.00 per unassigned space per month during the first
such year of operation, not shall such rates exceed those charged
for assigned and unassigned parking spaces in comparable parking
garages in the County of Orange, State of California, (ii) to set
aside and reserve parking garages and/or structures or areas for
use by certain occupants of the Project, their employees and/or
invitees and/or to institute systems of pay or validated parking
therein, and/or to limit parking in such areas to temporary
parking or temporary parking for use by certain occupants of the
Project, their employees and/or invitees, (iii) to institute
valet parking areas and systems on the Project, or portions
thereof, (iv) subject to Section 20.2 above, to alter and/or
modify the layout and design of the parking and driveway areas
from time to time constructed within or proposed to be
constructed within the Project; provided that Landlord shall at
all times, subject only to condemnation and/or other governmental
restriction, provide or cause to be provided sufficient parking
spaces for the Building to satisfy the parking requirements of
the City of Huntington Beach then applicable to the Building.
20.4 Tenant agrees that parking spaces designated for
use by Tenant, its employees, subtenants and the employees of its
subtenants may be either on the surface or within a parking
garage and Tenant agrees to park and to cause its employees,
subtenants and the employees of its subtenants to park within
parking spaces or areas from time to time designated by Landlord
for such purpose, provided that Tenant shall have the
preferential right to select the location of not more than 35
spaces for standard sedan type automobiles during the term of
this Lease for the exclusive use of Tenant, its employees and
invitees on the first or second floor of the parking structure.
In the event that such a parking structure is constructed within
the Project, provided that Tenant makes such selection within
thirty (30) days of Tenant's receipt of written request from
Landlord to make such selection, together with a floor plan of
the structure showing entrances, exits and parking spaces.
Landlord agrees not to make such a request of Tenant prior to the
commencement of construction of said structure. Tenant shall
further have the right to reduce the number of spaces used by
Tenant or Tenant's employees upon not less than thirty (30)days
written notice to Landlord and the operator of the parking
structure.
20.5 In the event that any parking surcharge or
regulatory fee, however designated, should be imposed upon or
levied or assessed against the Project, or any portion thereof,
on or on account of the parking spaces thereon, by any
governmental agency or authority pursuant to the "Clean Air Act",
or any plan implemented pursuant to such Act or any enactment
amendatory or in substitution thereof, or pursuant to any other
governmental act or decree, Tenant acknowledges that Landlord and
the other owners of the Project may elect to impose a parking
charge or additional parking charge upon the users of the parking
areas within the Project in order to recover any such surcharge
or fee from the users of such parking spaces. In the event that
Landlord and said other owners do not elect to collect any such
surcharge or fee from the users of the parking areas within the
Project by instituting such a parking charge, that portion of any
such surcharge or fee payable by Landlord, as the owner of Parcel
1, as per the above described Parcel Map, pursuant to law or
under any agreement for allocation with other owners of the
Project, shall be included within Total Operating Expenses as
defined in Section 3.5.
DEFAULTS AND REMEDIES
Article 21.
21.1 The occurrence of any of the following shall
constitute a material default and breach of this Lease by Tenant:
(i) Any failure by Tenant to pay the rental or
to make any other payment required to be made by Tenant
hereunder, where such failure continues for five (5) days after
written notice thereof by Landlord to Tenant.
(ii) The abandonment or vacation of the Premises
by Tenant.
(iii) Any failure by Tenant to observe and
perform any other provision of this Lease to be observed or
performed by Tenant, where such failure continues for thirty (30)
days (except where a different period of time is specified in
this Lease) after written notice by Landlord to Tenant. If the
nature of such default is such that the same cannot reasonably be
cured within such thirty-day period, financial inability
excepted, Tenant shall not be deemed to be in default if Tenant
shall within such period commence such cure and thereafter
diligently prosecute the same to completion.
21.2 In the event of any such default by Tenant, then,
in addition to any other remedies available to Landlord at law or
in equity, Landlord shall have the immediate option to terminate
this Lease and all rights of Tenant hereunder by giving Tenant
written notice of such election to terminate. In the event that
Landlord shall elect to so terminate this Lease then Landlord may
recover from Tenant:
(i) the worth at the time of award of any unpaid
rent which had been earned at the time of such termination; plus
(ii) the worth at the time of award of the amount
by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such
rental loss Tenant proves could have been reasonably avoided;
plus
(iii) the worth at the time of award of the amount
by which the unpaid rent for the balance of the term after the
time of award exceeds the amount of such rental loss the Tenant
proves could be reasonably avoided; plus
(iv) any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's
failure to perform his obligation under this Lease or which in
the ordinary course of things would be likely to result there
from, and
(v) at Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from
time to time by applicable law.
The term "rent" as used herein shall be deemed to be
and to mean the Basic Annual Rent and all other sums required to
be paid by Tenant pursuant to the terms of this Lease. As used
in subparagraphs (i) and (ii) above, the "worth at the time of
award" is computed by allowing interest at the rate charged by
Bank of America NT&SA on commercial loans to its most
creditworthy customers (prime rate) as of the date thirty (30)
days preceding the date of the award. As used in subparagraph
(iii) above, the "worth at the time of award" is computed by
discounting such amount at the discount rate of the Federal
Reserve Bank of San Francisco at the time of award, but not
greater than ten percent (10%).
21.3 In the event of any such default by Tenant,
Landlord shall also have the right, with or without terminating
this Lease, to reenter the Premises and remove all persons and
property from the Premises; such property may be removed and
stored in a public warehouse or elsewhere at the cost of and for
the account of Tenant.
21.4 In the event of the vacation or abandonment of
the Premises by Tenant or in the event that Landlord shall elect
to re-enter as provided above or shall take possession of the
Premises pursuant to legal proceeding or pursuant to any notice
provided by law then if Landlord does not elect to terminate this
Lease as provided in this Article 21, then Landlord may from time
to time, without terminating this Lease, either recover all
rental as it becomes due or relet the Premises or any part
thereof for such term or terms and at such rental or rentals and
upon such other terms and conditions as Landlord in its sole
discretion may deem advisable with the right to make alterations
and repairs to the Premises.
21.5 In the event that Landlord shall elect to so
relet, then rentals received by Landlord from such reletting
shall be applied: First, to the payment of any indebtedness other
than rent due hereunder from Tenant to Landlord; second, to the
payment of any cost of such reletting; third, to the payment of
the cost of any alterations and repairs to the Premises; fourth,
to the payment of rent due and unpaid hereunder; and the residue,
if any, shall be held by Landlord and applied in payment of
future rent as the same may become due and payable hereunder.
Should that portion of such rentals received from such reletting,
during any month which is applied by the payment of rent
hereunder, be less than the rent payable during that month by
Tenant hereunder, then Tenant shall pay such deficiency to
Landlord immediately upon demand therefor by Landlord. Such
deficiency shall be calculated and paid monthly. Tenant shall
also pay to Landlord as soon as ascertained, any costs and
expenses incurred by Landlord in such reletting or in making such
alterations and repairs not covered by the rentals received from
such reletting.
21.6 No re-entry or taking possession of the Premises
by Landlord pursuant to this Article 21 shall be construed as an
election to terminate this Lease unless a written notice of such
intention be given to Tenant or unless the termination thereof be
decreed by a court of competent jurisdiction. Notwithstanding any
reletting without termination by Landlord because of any default
by Tenant, Landlord may at any time after such reletting elect to
terminate this Lease for any such default.
21.7 In the event of the material and undisputed
default of Tenant hereunder, Landlord shall have the right at
Landlord's option, to suspend or discontinue the services
specified in Article 5, above, or any part thereof, during the
continuance of any such default and any such suspension or
discontinuance shall not be deemed or construed to be an eviction
or ejection of Tenant.
SURRENDER OF PREMISES; REMOVAL OF PROPERTY
Article 22.
22.1 Upon the expiration of the term of this Lease, or
upon any earlier termination of this Lease, Tenant shall quit and
surrender possession of the Premises to Landlord in as good order
and state of repair as the same are now or hereafter may be
improved by Landlord or Tenant, reasonable wear and tear and
repairs which are Landlord's obligation excepted, and shall,
without expense to Landlord, remove or cause to be removed from
the Premises all debris and rubbish, all furniture, equipment and
trade fixtures, free-standing cabinet work, moveable partitioning
and other articles of personal property owned by Tenant or
installed or placed by Tenant at its expense in the Premises and
all similar articles of any other persons claiming under Tenant,
and Tenant shall repair all damages to the Premises resulting
from such removal.
22.2 Whenever Landlord shall re-enter the Premises as
Article 21 hereof, or as otherwise provided in any property of
Tenant not removed by Tenant upon the expiration of the term of
this Lease (or within forty-eight (48) hours after a termination
by reason of Tenant's default), as provided in this Lease, shall
be considered abandoned and Landlord may remove any or all of
such items and dispose of the same in any manner or store the
same in a public warehouse or elsewhere for the account and at
the expense and risk of Tenant, and if Tenant shall fail to pay
the cost of storing any such property after it has been stored
for a period of ninety (90) days or more, Landlord may sell any
or all of such property at public or private sale, in such manner
and at such times and places as Landlord, in its sole discretion,
may deem proper, without notice to or demand upon Tenant, for
the payment of all or any part of such charges or the removal of
any such property, and shall apply the proceeds of such sale:
First, to the cost and expenses of such sale, including
reasonable attorneys' fees actually incurred; second, to the
payment of the cost of or charges for storing any such property;
third, to the payment of any other sums of money which may then
or thereafter be due to Landlord from Tenant under any of the
terms hereof; and fourth, the balance, if any, to Tenant.
22.3 All fixtures, equipment, alterations, additions,
improvements and/or appurtenances attached to or built into the
Premises prior to or during the Term, whether by Landlord at its
expense or at the expense of Tenant or both, shall, be and remain
part of the Premises and shall not be removed by Tenant at the
end of the term the fixtures itemized on the attached Exhibit
"E", excepted such fixtures, equipment, alterations, additions,
improvements and/or appurtenances shall include but not be
limited to: All floor coverings, drapes, panelings, molding,
doors, vaults, plumbing systems, HVAC ducts, fans and other
equipment, lighting systems, silencing equipment communication
systems, all fixtures and outlets for the systems mentioned above
and for all telephone, radio, telegraph and television purposes,
and any special flooring or ceiling installations, except those,
if any, itemized on the attached Exhibit "E".
COSTS OF SUIT
Article 23.
23.1 If Tenant or Landlord shall bring any action for
any relief against the other, declaratory or otherwise, arising
out of or under this Lease, including any suit by Landlord for
the recovery of rent or possession of the Premises, the losing
party shall pay the successful party a reasonable sum for
attorney's fees in such suit and such attorney's fees shall be
deemed to have accrued on the commencement of such action and
shall be paid whether or not such action is prosecuted to
judgment.
23.2. Should Landlord, or Tenant, without fault on its
part, be made party to any litigation instituted by the other or
by any third party against the other, or by or against any person
holding under or using the Premises or the Building by license of
the other, or for the foreclosure of any lien for labor or
material furnished to or for Tenant or Landlord or any such other
person or otherwise arising out of or resulting from any act or
transaction of Tenant or Landlord or of any such other person,
each party covenants to save and hold the other harmless from any
judgment rendered against them or the Premises or any part
thereof, and all costs and expenses, including reasonable
attorneys' fees, incurred by either party in or in connection
with such litigation.
WAIVER
Article 24.
The waiver by Landlord or Tenant of any breach of any
term, covenant or condition herein contained shall not be deemed
to be a waiver of such term, covenant or condition as to 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 Tenant to pay the
particular rental so accepted, regardless of Landlord's knowledge
of such preceding breach at the time of acceptance of such rent.
HOLDING OVER
Article 25.
If Tenant holds over after the term hereof, with or
without the express or implied consent of Landlord, such tenancy
shall be from month to month only, and not a renewal hereof or
any extension for any further term, and in such case Basic Annual
Rent shall be payable in the monthly amount payable immediately
preceding the expiration of the lease term and at the time
specified in Articles 2 and 3 hereof, and such month to month
tenancy shall be subject to every other term, covenant and
agreement contained herein, including the payment of additional
rent under Article 3. Nothing contained in this Article 25 shall
be construed as consent by Landlord to any holding over by Tenant
and Landlord expressly reserves the right to require Tenant to
surrender possession of the Premises to Landlord as provided in
Article 22 above forthwith upon the expiration of the term of
this Lease or other termination of this Lease.
SUBORDINATION
Article 26.
Tenant agrees that this Lease shall be subject and
subordinate to any first mortgage, or first trust deed heretofore
or hereafter placed by Landlord or its successors in interest
upon its interest in said Premises to secure the payment of
monies loaned, interest thereon, and other obligation, in whole
or in part, at the option of the holder of such first mortgage or
first deed of trust, provided that such first trust deed lender
first delivers to Tenant a nondisturbance agreement in a form
satisfactory to Tenant, Tenant agrees to execute and deliver,
upon demand of Landlord, any and all instruments desired by
Landlord subordinating in the manner requested by Landlord this
lease to such mortgage, trust deed or like encumbrance. The
subordination of this Lease to any such mortgage, deed of trust
or other encumbrance shall, however, be subject to the condition
that in the event of the sale of the real property of which the
Premises are a part upon foreclosure or upon the exercise of a
power of sale, Tenant will attorn to the purchaser and recognize
the purchaser as the Landlord under this Lease.
.
RULES AND REGULATIONS
Article 27.
The Rules and Regulations attached hereto as Exhibit
"C" by this reference are hereby incorporated herein and made a
part hereof. Tenant agrees to abide by and comply with said Rules
and Regulations and any reasonable and nondiscriminatory
amendments, modifications and/or additions thereto as may
hereafter te adopted and published by written notice to tenants
by Landlord for the safety, care, security, good order, and/or
cleanliness of the Premises and/or the Building. Landlord shall
not be liable to Tenant for any violation of such rules and
regulations by any other tenant, provided that Landlord takes
reasonable actions to enforce the terms of such rules and
regulations, including any reguired legal action, required to
either (i) prevent interference with Tenant's use of the Premises
arising from such violation, or (ii) insure that the Building is
operated and used in a manner consistent with other first-class
office buildings in the Southern California area. This Section
shall not require Landlord to institute legal action to enforce
Paragraph 24 of Exhibit "C".
DE F I NED TERMS
Article 28.
The words "Landlord" and "Tenant", as used herein shall
include the plural as well as the singular. Words used in
neuter gender include the masculine and feminine and words used
in the masculine or feminine gender include the neuter. If there
be more than one Tenant, the obligations hereunder imposed upon
Tenant shall be joint and several. The headings or 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 thereof.
HEIRS AND ASSIGNS
Article 29.
Subject to the provisions of Article 15 hereof relating
to assignment and subletting, this Lease is intended to and does
bind the heirs, executors, administrators, personal
representatives, successors and assigns of any and all of the
parties hereto.
TIME OF ESSENCE
Article 30.
Time is of the essence of this Lease.
SEPARABILITY
Article 31.
If any term or provision of this Lease shall be held
invalid or unenforceable to any extent, the remainder of this
Lease shall not be affected thereby and each term and provision
of this Lease shall be valid and enforceable to the fullest
extent permitted by law.
ENTIRE AGREEMENT
Article 32.
This instrument along with any exhibits and attachments
or other documents affixed hereto or referred to herein
(including without limitation the Work Letter) constitutes the
entire and exclusive agreement between Landlord and Tenant
relative to the Premises herein described, and this agreement and
said exhibits and attachments may be altered, amended or revoked
only by an instrument in writing signed by both-Landlord and
Tenant. Landlord and Tenant hereby agree that all prior or
contemporaneous oral agreements, understandings, and/or practices
relative to the leasing of the Premises are merged in or revoked
by this agreement.
WORK LETTER
Article 33.
The Premises shall be finished in accordance with the
Work Letter.
RIGHT OF LANDLORD TO PERFORM
Article 34.
All covenants and agreements to be performed by Tenant
under any of the terms of this Lease shall be performed by Tenant
at Tenant's sole cost and expense and without any abatement of
rent. If Tenant shall fail to pay any sum of money, other than
rent, required to be paid by it hereunder or shall fail to
perform any other act on its part to be performed hereunder,
including without limitation providing or evidencing the
provision of any insurance and/or the payment or any lien, and
such failure shall continue beyond any applicable grace period
set forth in Article 21, Landlord may, but shall not be obligated
so to do, and without waiving or releasing Tenant from any
obligations of Tenant, make any such payment, obtain any such
insurance, pay any such lien or perform any such other act on
Tenant's part to be made or performed as in this Lease provided.
All sums so paid by Landlord and all necessary incidental costs,
together with interest thereon at the maximum rate permitted by
law per annum but not to exceed the prime rate charged from time
to time by Bank of America NT & SA plus 5% from the date of such
payment by Landlord, shall be payable to Landlord on demand and
Tenant covenants to pay any such sums, and Landlord shall have
(in addition to any other right or remedy of Landlord) the same
rights and remedies in the event of the nonpayment thereof by
Tenant as in the case of default by Tenant in the payment of the
rent.
INTEREST ON TENANT'S OBLIGATIONS
Article 35.
Any amount due from Tenant to Landlord (other than
interest) which is not paid when due shall bear interest at the
"prime rate" of Bank of America NT & SA or the maximum rate
permitted by law per annum, whichever is less, until paid (to the
extent enforceable by law), but the payment of such interest
shall not excuse or cure the default.
NOTICES
Article 36.
All notices which Landlord or Tenant may be required,
or may desire, to serve on the other may be served, as an
alternative to personal service, by mailing the same by
registered or certified mail, postage prepaid, addressed as set
forth in Item 12 of the Basic Lease Provisions and if so mailed
shall be deemed to have been served or given twenty-four (24)
hours after deposit in the U.S. Mails. Either party may change
the address for notices set forth in Item 12 by giving written
notice of such change of address to the other.
QUIET ENJOYMENT
Article 37.
Landlord covenants and agrees that Tenant, upon paying
the basic annual rent, additional rent and all other charges
herein provided for and observing and keeping the covenants,
agreements and conditions of this Lease on its part to be kept,
shall have the right to lawfully and quietly have, occupy and
enjoy the Premises during the term of this Lease without
hindrance or molestation of anyone lawfully claiming by, through
or under Landlord, subject, however, to the matters herein set
forth.
ESTOPPEL CERTIFICATES
Article 38.
38.1 Tenant agrees at any time and from time to time
upon not less than ten (10) days prior notice by Landlord to
execute, acknowledge and deliver to Landlord a statement in
writing certifying that this Lease is unmodified and in full
force and effect (or if there have been modifications, that the
same is in full force and effect as modified and stating the
modifications), and the dates to which the basic rent, additional
rent and other charges have been paid in advance, if any, and
stating whether or not to the best knowledge of the signer of
such certificate, Landlord is in default in performance of any
covenant, agreement or condition contained in this Lease and, if
so, specifying each such default of which the signer may have
knowledge, it being intended that any such statement delivered
pursuant to this section may be relied upon by any prospective
purchaser of the fee of the Building or any mortgages thereof or
any assignee of any mortgage upon the fee of the Building.
38.2 Landlord agrees at any time and from time to time
upon not less than twenty (20) days prior notice by Tenant to
execute, acknowledge and deliver to Tenant a statement in writing
certifying that this Lease is unmodified and in full force and
effect (or if there shall have been modifications that the same
is in full force and effect as modified and stating the
modifications) and the dates to which the basic rent, additional
rent and other charges have been paid in advance, if any, and
stating whether or not to the best knowledge of the signer of
such certificate Tenant is in default in the performance of any
covenant, agreement or condition contained in this Lease and, if
so, specifying each such default of which the signer may have
knowledge, it being intended that any such statement delivered
pursuant to this Section may be relied upon by any prospective
assignee of the Tenant's interest in this Lease.
ACCESS, CHANGES IN BUILDING
FACILITIES, NAME
Article 39.
39.1 The surfaces of all walls and doors bounding the
Premises (including exterior building walls, core corridor walls
and doors and any core corridor entrance), but excluding inside
surfaces of walls and doors bounding the Premises and any space
in or adjacent to the Premises used for shafts, stacks, pipes,
conduits, fan rooms, ducts, electric or other utilities, sinks or
other building facilities, and the use thereof, as well as access
thereto through the Premises with prior written notice to Tenant
during normal business hours or otherwise accompanied by an
officer of Tenant as to time of desired access for the purposes
of operation, maintenance, decoration and repair, are reserved to
Landlord. Notwithstanding the foregoing, Tenant may install
building signs on the exterior of the Building as permitted by
Article 43 below.
39.2 Tenant shall permit Landlord to install, use and
maintain pipes, ducts and conduits within the demising walls,
bearing columns and ceilings of the Premises.
39.3 Subject to the terms and conditions of Article 3
of the Work Letter, Landlord reserves the right, at any time
before or after completion of the Building, without incurring any
liability to Tenant therefor, to make such changes in or to the
Building and the fixtures and equipment thereof, as well as in or
to the street entrances, halls, passages, concourse, elevators,
escalators, stairways and other improvements thereof, as it may
deem necessary or desirable, so long as such changes do not
affect the size of the Premises in an adverse manner and so long
as Tenant operates a bank from the Premises, Landlord agrees to
describe the Building by Tenant's bank name on Building
directories.
NONDISCRIMINATION
Article 40.
Tenant herein covenants by and for himself, his heirs,
executors, administrators, personal representatives, successors
and assigns, and all persons claiming under or through him, and
this Lease is made and accepted upon and subject to the following
conditions: That there shall be no discrimination against or
segregation of any person or group of persons, on account of
race, color, creed, sex, national origin, or ancestry, in the
leasing, sub-leasing, transferring, use, occupancy, tenure or
enjoyment of the Premises herein leased nor shall Tenant himself,
or any person claiming under or through him, establish or permit
any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or
occupancy of tenants, lessees, subtenants, sublessees or vendees
of the Premises.
BROKERS
Article 41.
The parties recognize as the broker who procured this
Lease the firm specified in Item ll of the Basic Lease
Provisions, and agree that Landlord shall be solely responsible
for the payment of brokerage commissions to said broker and that
Tenant shall have no responsibility therefor unless written
provision to the contrary has been made a part of this Lease. If
Tenant has dealt with any other person or real estate broker in
respect to leasing or renting space in the Building, Tenant shall
be solely responsible for the payment of any fee due said person
or firm and Tenant shall hold Landlord free and harmless against
any liability in respect thereto.
PROJECT - NO WARRANTY
Article 42.
Nothing contained herein, including without limitation
the first phase site plan attached hereto as Exhibit "B" and/or
in the Declaration shall be construed as obligating Landlord to
construct any improvements within the Project, except for the
Building and the adjacent parking and common areas required by
applicable governmental authorities, nor as a representation or
warranty by Landlord that any portion of the Building or of other
buildings which may be constructed within the Project will be
devoted to any particular use or occupied by any particular
tenant or type of tenant. Landlord reserves the right from time
to time to add or to delete property from the Project and to
amend or terminate, in whole or in part, the covenants,
restrictions and easements established by the Declaration without
Tenant's approval or consent, provided that following any such
addition or deletion continues to be reasonable ingress and
egress to and from the Building and adjacent public streets and
sufficient parking spaces to satisfy the then applicable parking
code requirements of the City of Huntington Beach and provided
further that no such amendment or termination of the said
Declaration that is consistent with Tenant's rights hereunder
shall be binding upon Tenant.
SIGNS
Article 43.
43.1 Subject to approval of all appropriate
governmental authorities, and complying with all applicable laws,
Tenant shall have the exclusive right to install and affix, at
Tenant's sole cost and expense, exterior building signs on the
northeasterly and southwesterly sides of the Building, as
permitted by the regulating municipal authority, p rovided such
signs consist of the name of a bank then operating from the
Premises. Tenant may also install canopy signs on any canopy
constructed as a part of the Drive-Through Facilities, as
permitted by the regulating municipal authority. So long as
Tenant does not use the Premises for a purpose other than as a
bank, Landlord shall not allow any signs on the sides of the roof
to the building, other than the two (2) signs permitted Tenant by
this Section. If Tenant vacates or uses the Premises for a
purpose other than as a bank (a temporary vacation due to
casualty damage, remodeling, etc., excepted) Tenant shall remove
its signs from the roof of the building and its rights to use the
roof of the building for signs under this Section shall
terminate. Landlord reserves the right for other occupants of
the Building to install signs on the exterior sides of the
Building, except those portions of the exterior sides of the
Building enclosing the Premises on or below the first floor
and/or first floor canopy. Except for signs consistent with the
sign criteria set forth on the attached Exhibit "D", if any, the
size, location and design of any exterior roof signs to be
installed by Tenant shall be subject to the prior approval of
Landlord, which approval shall not unreasonably be withheld.
Tenant shall maintain and repair in a good and sightly condition
and pay any and all utility costs for its exterior signs.
Nothing contained herein shall be construed as a representation
by Landlord that governmental permits and approvals for either of
said signs may be obtained.
THIS DOCUMENT IS A COPY OF THE LEASE FILED ON MAY 15, 1996
PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION
OFFICE LEASE
BETWEEN
LIU CORP.,
A CALIFORNIA CORPORATION
AND
LIBERTY NATIONAL BANK,
A NATIONAL BANKING ASSOCIATION
TABLE OF CONTENTS
Paragraph Page
1. Basic Lease Provisions. . . . . . . . . . . . . . . . . . . . . .1
2. Premises, Parking and Common Areas. . . . . . . . . . . . . . . .2
3. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
4. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. Security Deposit. . . . . . . . . . . . . . . . . . . . . . . . .4
6. Use . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
7. Maintenance, Repairs, Alterations and
Common Area Service. . . . . . . . . . . . . . . . . . . . 5
8. Insurance; Indemnity. . . . . . . . . . . . . . . . . . . . . . 7
9. Damage or Destruction . . . . . . . . . . . . . . . . . . . . . .8
10. Real Property Taxes . . . . . . . . . . . . . . . . . . . . . . .9
11. Utilities and Services. . . . . . . . . . . . . . . . . . . . . .9
12. Assignment and Subletting . . . . . . . . . . . . . . . . . . . 10
13. Default; Remedies . . . . . . . . . . . . . . . . . . . . . . . 11
14. Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . 12
15. Estoppel Certificate. . . . . . . . . . . . . . . . . . . . . . 12
16. Landlord's Liability. . . . . . . . . . . . . . . . . . . . . . 13
17. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . 13
18. Interest on Past-due Obligations. . . . . . . . . . . . . . . . 13
19. Time of Essence . . . . . . . . . . . . . . . . . . . . . . . . 13
20. Additional Rent . . . . . . . . . . . . . . . . . . . . . . . . 13
21. Incorporation of Prior Agreements; Amendments . . . . . . . . . 13
22. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
23. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
24. Recording . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
25. Holding Over. . . . . . . . . . . . . . . . . . . . . . . . . . 14
26. Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . 14
27. Covenants and Conditions. . . . . . . . . . . . . . . . . . . . 14
28. Binding Effect; Choice of Law . . . . . . . . . . . . . . . . . 14
29. Subordination . . . . . . . . . . . . . . . . . . . . . . . . . 14
30. Attorneys Fees. . . . . . . . . . . . . . . . . . . . . . . . . 14
31. Landlord's Access . . . . . . . . . . . . . . . . . . . . . . . 14
32. Auctions . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
33. Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
34. Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
35. Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
36. Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
37. Quiet Possession. . . . . . . . . . . . . . . . . . . . . . . . 15
38. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . 15
39. Security Measures-Landlord's Reservations . . . . . . . . . . . 15
40. Easements . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
41. Performance Under Protest . . . . . . . . . . . . . . . . . . . 16
42. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
43. Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
44. No Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
45. Lender Modification . . . . . . . . . . . . . . . . . . . . . . 16
46. Multiple Parties. . . . . . . . . . . . . . . . . . . . . . . . 16
47. Defined Terms and Marginal Headings . . . . . . . . . . . . . . 16
48. Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
49. Substituted Premises. . . . . . . . . . . . . . . . . . . . . . 16
50. Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . 16
51. Addendum . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Exhibit "A-1" Floor Plans
Exhibit "A-2" Plot Plan of Building
Exhibit "B" Rules and Regulations
Exhibit "C" Conference Center Reservation/Rental Agreement
Exhibit "D" Exterior Signage
Exhibit "E" Work Letter
<PAGE>
OFFICE LEASE
This OFFICE LEASE (the "Lease") is made this 15th day of
December, 1995, by and between LIU CORP., a California
corporation with its office and place of business located at
17011 Beach Blvd, Suite 826, Huntington Beach, California 92647
("Landlord"), and Liberty National Bank, a National Banking
Association, (hereinafter called "Tenant"). With offices and
place of business located at 17011 Beach Blvd., Huntington
Beach, CA 92647.
LEASE OF PREMISES
Landlord hereby leases to Tenant and Tenant hereby hires
from Landlord, subject to all of the terms and conditions
hereinafter set forth, those certain premises (hereinafter called
the "Premises") described in Section 1.1 below, and shown
attached hereto as Exhibit "A-1". Said Premises are located in
the that certain multi-story Office Tower "Office Tower" situated
in the "Building Project" located on land situated in the City of
Huntington Beach, County of Orange, State of California, all as
set forth in paragraph 1.2 of the Basic Lease Provisions. The
following Basic Lease Provisions are an integral part of this
Lease. In the event of any conflict between any Basic Lease
Provision and the balance of this Lease, the latter shall
control.
1. Basic Lease Provisions
1.1 Leased Premises: Suites 100 & 120, of the Office
Tower, consisting of approximately 4,216 useable square feet and
4,722 rentable square feet. The parties agree that 4,216 shall
be the figure used for any calculations based on useable square
feet, and 4,722 shall be the figure used for any calculations
based on rentable square feet.
1.2 Office Tower and Building Project: The Building
Project is commonly described as being located at the Southwest
corner of Beach Blvd. and Warner Avenue, with the Office Tower
address being 17011 Beach Boulevard, in the City of Huntington
Beach, County of Orange, State of California.
1.3 Use of Premises: Retail Banking and General Offices,
subject to paragraph 6.
1.4 Lease Term: Approximately five (5) years and two (2)
months, commencing upon Tender of Possession, ("Commencement
Date") and ending on the last day of the second month following
the fifth anniversary of the Commencement Date, ("Expiration
Date").
The parties shall designate the exact Commencement Date
in a letter or amendment to be attached to this Lease at the time
such actual Commencement Date is ascertained.
Since the Base Rent schedule under this Lease is set
forth by month number, in the event the Commencement Date is
other than the first day of a month, then that first partial
month of this lease shall be at the same rate as scheduled for
month 1, with the first full month of this lease being considered
month 1 for purposes of the rent schedule.
1.5 Base Rent: $1.40 per rentable square foot, $6,610.80
per month, payable in advance on the first day of each month, per
paragraph 4.1.
1.6 Base Rent Increases: Fixed for the initial lease term.
1.7 Total Paid Upon Lease Execution: $13,882.68, which
represents the first month's Base Rent and the Security Deposit.
1.8 Security Deposit: $7,271.88
1.9 Tenant's Share of Operating Expenses: ("Additional
Rents") as defined in paragraph 4.2. Expense stop: 1996 Base
Year.
a) Office Tower:
(1) Premises Area: 4,722 rentable sq. ft.
(2) Total Building Area: 205,833 Sq.Ft.
(3) Tenant's Pro-Rate Share: 2.29%
b) Building Project Common Areas:
(1) Premises Area: 4,722 rentable sq. ft.
(2) Total Project Rentable Square Footage: 307,811
Sq.Ft.
(3) Tenant's Pro-Rata Share: 1.53%
1.10 Address for Notices:
LANDLORD:
LIU CORP.
c/o Birtcher Properties
17011 Beach Blvd., Suite 826
Huntington Beach, CA 92647
TENANT:
LIBERTY NATIONAL BANK
Attention: Philip S. Inglee,
President & CEO
7777 Center Avenue
Huntington Beach, CA 92647
1.11 Brokers: CB Commercial and Travers Realty Corporation
2. Premises, Parking and Common Areas.
2.1 Premises: The Premises as set forth in paragraph
1.1 located within the Office Tower identified in paragraph 1.2
of the Basic Lease Provisions. The Premises, the Office Tower,
the Common Areas (as hereinafter defined), the land upon which
the same are located, along with all other buildings, parking
structures, and improvements thereon, are hereinafter
collectively referred to as the "Building Project".
2.2 Vehicle Parking: (a) So long as Tenant is not in
default, and subject to the rules and regulations attached hereto
as Exhibit "B", and as may be modified by Landlord from time to
time, Tenant shall be entitled to use parking spaces within the
parking structure in the Building Project. Tenant and Tenant's
employees will be required to park their vehicles in the parking
structure. If however, Tenant commits, permits or allows any of
the prohibited activities described in the Lease or the rules and
regulations then in effect, then Landlord shall have the right to
terminate Tenant's use of the parking structure or other parking
area. Upon receipt of such notice, Tenant shall be prohibited
from using the parking structure or other parking area and said
vehicle involved will be subject to removal at the vehicle
owner's sole cost and expense.
(b) If Landlord elects or is required to limit or
control parking by customers or invitees of the Building Project
or any other method of assessment, or any program for free or
reduced cost transportation, Tenant agrees to participate in such
validation, assessment or transportation program under such
reasonable rules and regulations as are from time to time
established by Landlord with respect thereto. In the event
Landlord undertakes a voluntary reduction in the number of
parking spaces without consent of Tenant, and such reduction
creates an unreasonable negative impact on Tenant's business, the
parties agree to meet in good faith to attempt to resolve the
issue after written demand to Landlord from Tenant. If such
issue is not resolved by the parties within fifteen days from
Tenant's notice date, then provided Tenant gives Landlord further
written notice within said fifteen days, Tenant, as its sole
remedy, shall be permitted to terminate this Lease, effective in
thirty days from termination notice date.
2.3 Common Areas - Definition: The term "Common Areas" is
defined as all areas and facilities outside the Premises and
within the exterior boundary line of the Building Project that
are provided and designated by the Landlord from time to time for
the general non-exclusive use of Landlord, and of other tenants
of the Building Project and their respective employees,
suppliers, shippers, customers and invitees, including but not
limited to common entrances, lobbies, corridors, stairways and
stairwells, public restrooms, elevators, escalators, parking
areas to the extent not otherwise prohibited by this Lease,
loading and unloading areas, trash areas, roadways, sidewalks,
walkways, parkways, ramps, driveways, landscaped areas and
decorative walls.
2.4 Common Areas - Rules and Regulations: Tenant agrees to
abide by and to conform to the rules and regulations attached
hereto with respect to the Building Project, and to cause its
employees, suppliers, shippers, customers and invitees to so
abide and conform. Landlord or such other person(s) as Landlord
may appoint shall have the exclusive control and management of
the Common Areas and shall have the right, from time to time, to
modify, to amend and to enforce said rules and regulations as to
Tenant, their agents, employees and invitees of the Building
Project.
2.5 Common Areas - Changes: Landlord shall have the right,
in Landlord's sole discretion, from time to time:
a) To make changes to the Building interior and
exterior and Common Areas, including, without limitation, changes
in the location, size, shape, number, and appearance thereof,
including but not limited to the lobbies, windows, stairways, air
shafts, elevators, escalators, restrooms, driveways, entrances
parking spaces, parking areas, loading and unloading areas,
ingress, egress, direction of traffic, decorative walls,
landscaped areas and walkways;
b) To close temporarily any of the Common Areas for
maintenance purposes so long as reasonable access to the Premises
remains available;
c) To designate other land and improvements outside
the boundaries of the Building Project to be a part of the Common
Areas, provided that such other land and improvements have a
reasonable and functional relationship to the Building Project;
d) To add additional buildings and improvements to
the Common Areas;
e) To use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Building
Project, or any portion(s) thereof;
f) To do and perform such other acts and make such
other changes in, to or with respect to the Building Project as
Landlord may, in the exercise of its reasonable business
judgment, deem appropriate.
3. Term.
3.1 Term: The term and Commencement Date of this Lease
shall be as specified in paragraph 1.4 of the Basic Lease
Provisions.
3.2 Delay in Possession: (a) Notwithstanding the
Commencement Date, if for any reason Landlord cannot deliver
possession of the Premises to Tenant, and subject to paragraph
3.2.2, Landlord shall not be subject to any liability therefor,
nor shall such failure affect the validity of this Lease or the
obligations of Tenant hereunder nor extend the term hereof; but
in such case, Tenant shall not be obligated to pay rent or
perform any other obligation(s) of Tenant under the terms of this
Lease, except as may be otherwise provided in this Lease, until
possession of the Premises is tendered to Tenant, as hereinafter
defined.
(b) In the event, through no acts or omissions of
Tenant, its agents, employees and/or contractors, Landlord is
unable to make a Tender of Possession of the Premises to Tenant
by July 1, 1996, then Tenant, as Tenant's sole remedy, shall be
permitted to terminate this lease, receive a refund of any
prepaid rent and any security deposit paid to Landlord.
3.2.1 Possession Tendered - Defined: Possession of the
Premises shall be deemed tendered to Tenant ("Tender of
Possession") upon the occurrence of the following events: (i)
the Office Tower utilities are ready for use in the Premises, and
(ii) upon substantial completion of Tenant Improvements to be
constructed by Landlord per Exhibit "E", attached hereto, and
(iii) Tenant has been provided access to the Premises.
3.2.2 Delays Caused by Lessee: Tenant shall be liable
for all of the terms and conditions of this Lease immediately
upon Landlord's Tender of Possession. There shall be no
abatement of rent, for any delays in possession of the Premises
by Tenant following Tender of Possession caused by any acts or
omissions of Tenant, its agents, employees and or contractors.
3.3 Early Possession: If Tenant occupies the Premises
prior to the Commencement Date, with Landlord's consent, such
occupancy shall be subject to all provisions of this Lease, such
occupancy shall not change the Expiration Date and Tenant shall
pay rent in accordance with the Lease for such occupancy.
4. Rent.
4.1 Base Rent: Subject to adjustment as hereinafter
provided in paragraph 4.2 and except as may be otherwise
expressly provided in this Lease, Tenant shall pay to Landlord
the Base Rent for the Premises set forth in paragraph 1.5 of the
Basic Lease Provisions, without offset or deduction. Tenant
shall pay Landlord upon execution hereof the Base Rent described
in paragraph 1.7 and Additional Rents payable under paragraph 1.9
of the Basic Lease Provisions. If the Commencement Date occurs
on a day other than the first day of a calendar month, Base Rent
and Additional Rents as defined in 4.2 shall be paid as if for a
full month and Base Rent and Additional Rent for the second month
shall be prorated on a daily basis, which proration shall be
calculated in accordance with Landlord's general accounting
practices. All Rents due under this Lease shall be paid in
lawful money of the United States of America at Landlord's
address as stated herein. If any check of Tenant should for any
reason fail to clear the bank and the proceeds are not credited
to Landlord's account, Tenant shall be assessed a fee of fifty
dollars ($50.00) for such check, and shall thereafter tender such
Rents by Cashier's Check which shall also include any other
applicable charges including, but not limited to, a late charge
and an interest charge as provided herein. Rent shall be
payable in lawful money of the United States to Landlord at the
address stated herein or to such other persons or at such other
places as Landlord may designate in writing.
4.2 Operating Expenses: If Operating Expenses (as defined
below) for any calendar year commencing with 1997 exceed the
Operating Expenses for the Base Year, Tenant shall pay to
Landlord "Additional Rent", Tenant's Share of such increase in
Operating Expenses. Tenant shall pay monthly to Landlord as
"Additional Rents" during the term hereof, in addition to the
Base Rent, Tenant's Share, as hereinafter defined, of all
Operating Expenses, as hereinafter defined, during each calendar
year of the term of this Lease, in accordance with the following
provisions:
a) "Tenant's Share" is defined, for purposes of this
Lease, as the percentages set forth in paragraph 1.9 of the Basic
Lease Provisions, which percentages have been determined by
dividing the approximate square footage of the Premises by the
total approximate square footage of the rentable space contained
in the Office Tower and the Building Project. It is understood
and agreed that the square footage figures set forth in the Basic
Lease Provisions are approximations which Landlord and Tenant
agree are reasonable and shall not be subject to revision except
in connection with an actual change in the size of the Premises
or a change in the rentable space in the Office Tower and/or the
Building Project.
b) "Operating Expenses" is defined, for purposes of
this Lease, to include all costs, if any, incurred by Landlord in
the exercise of its reasonable discretion, for:
(i) The administration, management, operations,
repair, maintenance, and replacement, in neat, clean, safe, good
order and condition, of the Office Tower and the Building
Project, including but not limited to, the following:
(aa) The Common Areas, including 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, pool and/or fountain.
(bb) All heating, air conditioning,
plumbing, electrical systems, life safety equipment,
telecommunication systems and other equipment used in common by,
or for the benefit of tenants or occupants of the Office Tower
and the Building Project, including elevators and escalators,
tenant directories, doors, locks and related hardware, fire
detection systems, including sprinkler system maintenance and
repair.
(ii) Trash disposal, janitorial and security
services, pest control;
(iii) Any other service to be provided by
Landlord that is elsewhere in this Lease stated to be an
"Operating Expense";
(iv) The cost of the premiums for the
liability and property insurance policies to be maintained by
Landlord under paragraph 8 hereof;
(v) The amount of the real property taxes to be
paid by Landlord under paragraph 10.1 hereof;
(vi) The cost of water, sewer, gas,
electricity, and other publicly mandated services to the Building
Project;
(vii) Labor, salaries and applicable fringe
benefits and costs, materials, supplies and tools, used in
maintaining and/or cleaning the Building Project and accounting
and a management fee attributable to the operation of the
Building Project;
(viii) Replacing and/or adding improvements that
might be mandated by any governmental agency.
(c) Any management fee charged (in Tenant's Share) to
the Tenant as provided in 4.2(b)(i) and 4.2(b)(vii) as part of
the Operating Expenses shall be fifteen percent (15%) of all
Operating Expenses (exclusive of said management fee), or the
actual management fee incurred by Landlord (provided such is
consistent with customary fees being charged by management
companies in the area for similar Office Building Projects),
whichever is greater. The "management fee" is separate from
labor costs for on-site management and maintenance personnel.
Landlord shall be entitled to a 15% management and administration
fee which reasonably represents the estimated costs and expenses
incurred by Landlord in performing these services.
(d) Operating Expenses shall not include any expenses
paid by any Tenant directly to third parties, or as to which
Landlord is otherwise reimbursed by any third party, other
tenant, or by insurance proceeds.
(e) Tenant's Share of Operating Expenses shall be
payable by Tenant within ten (10) days after a reasonably
detailed statement of actual expenses is presented to Tenant by
Landlord. At Landlord's option, however, an amount may be
estimated by Landlord from time to time of Tenant's Share of
annual Operating Expenses and the same shall be payable monthly
or quarterly, as Landlord shall designate, during each calendar
year of the Lease Term, on the same day as the Base Rent is due
hereunder. In the event that Tenant pays Landlord's estimate of
Tenant's share of Operating Expenses as aforesaid, Landlord shall
deliver to Tenant within ninety (90) days after the expiration of
each calendar year a reasonably detailed statement showing
Tenant's share of the actual Operating Expenses incurred during
the preceding year. Failure to issue said statement within the
ninety (90) days does not release Tenant of liability. If
Tenant's payments under this paragraph 4.2(e) during said
preceding calendar year exceeded Tenant's Share as indicated on
said statement, Tenant shall be entitled to a credit in the
amount of the overpayment against Tenant's Share of Operating
Expenses next falling due. If Tenant's payments under this
paragraph during said preceding calendar year were less than
Tenant's Share as indicated on said statement, Tenant shall pay
to Landlord the amount of the deficiency within ten (10) days
after delivery by Landlord to Tenant of said statement. Failure
of Landlord to issue said statement during the prescribed time
shall not relieve Tenant of liability for any amounts due.
(f) With respect to any calendar year or partial
calendar year during the term of this Lease in which the Office
Tower is not occupied to the extent of ninety-five percent (95%)
of the rentable area thereof, the annual Operating Expenses for
such period shall, for the purposes hereof, be increased to the
amount which would have been incurred had the Office Tower been
occupied to the extent of ninety-five percent (95%) of the
rentable area thereof at the same rate of Operating Expenses per
square foot of rentable area as that actually incurred during
such calendar year or partial calendar year.
4.3 Annual Rent Increases: If applicable to this Lease
pursuant to paragraph 1.6 of the Basic Lease Provisions, during
the term of this Lease, or any extension hereof, the Base Rent
payable herein shall not be increased.
5. Security Deposit: Tenant shall deposit with Landlord upon
execution hereof the security deposit set forth in paragraph 1.8
of the Basic Lease Provisions as security for Tenant's faithful
performance of Tenant's obligations hereunder. If Tenant fails
to pay rent or other charges due hereunder, or otherwise defaults
with respect to any provision of this Lease, Landlord may use,
apply or retain all or any portion of said deposit for the
payment of any rent or other charge in default for the payment of
any other sum to which Tenant may become obligated by reason of
Tenant's default, or to compensate Landlord for any loss or
damage which Landlord may suffer thereby. If Landlord so uses or
applies all or any portion of said deposit, Tenant shall within
ten (10) days after written demand therefore deposit certified
funds with Landlord in an amount sufficient to restore said
deposit to the full amount of the then Security Deposit of Tenant
plus an administrative fee of $100.00. If the monthly Base Rent
and/or Additional Rents hereunder shall, from time to time,
increase during the term of this Lease, Tenant shall, at the time
of such increase, deposit with Landlord additional money as a
security deposit so that the total amount of the security deposit
held by Landlord shall at all times bear the same proportion to
the then current Base Rent and Additional Rents as the initial
security deposit bears to the initial Base Rent and Additional
Rents set forth in paragraphs 1.5, 1.8 and 1.9 of the Basic Lease
Provisions. Landlord shall not be required to keep said security
deposit separate from its general accounts. If Tenant performs
all of Tenant's obligations hereunder, said deposit, or so much
thereof as has not heretofore been applied by Landlord, shall be
returned, without payment of interest or other increment for its
use, to Tenant (or, at Landlord's option, to the last assignee,
if any, of Tenant's interest hereunder) at the expiration of the
term hereof, but only after Tenant has vacated the Premises. No
trust relationship is created herein between Landlord and Tenant
with respect to said security deposit. In no event shall Tenant
request nor attempt to apply, any portion of said security
deposit, for any period of this Lease, towards any unpaid or
future rents due hereunder.
6. Use.
6.1 Use: The Premises shall be used and occupied only for
the purpose set forth in paragraph 1.3 of the Basic Lease
Provision and Tenant shall not otherwise use or permit any
unauthorized uses without the prior written consent of Landlord.
Landlord does not warrant that the Building Project is
appropriately zoned for Tenant's proposed or intended uses of
this leased space. Tenant assumes all responsibility and risk
therefore. Notwithstanding the above, Landlord warrants that, as
of the date of execution of this Lease, the property's municipal
zoning permits a retail bank branch and general office use.
6.2 Compliance with Law: Tenant shall, at Tenant's sole
cost and expense, promptly comply with all applicable statutes,
ordinances, rules, regulations, orders, covenants and
restrictions of record, and requirements of any fire insurance
underwriters or rating bureaus, now in effect or which may
hereafter come into effect, whether or not they reflect a change
in policy from that now existing, during the term or any part of
the term hereof, relating in any manner to the Premises and the
occupation and use by Tenant of the Premises. Tenant shall
conduct its business in a lawful manner and shall not use or
permit the use of the Premises or the Common Areas in any manner
that will tend to create waste or a nuisance or shall tend to
unreasonably disturb other occupants of the Building Project.
6.3 Condition of Premises: (a) Landlord shall deliver the
Premises to Tenant in a clean condition on the Commencement Date
unless Tenant is already in possession. Tenant acknowledges that
Landlord nor any of its agents has not made any representations
or warranty with respect to the Premises or the Building Project.
Possession of the Premises by Tenant shall conclusively establish
that the Premises and the Building Project were at such time of
Tenant's initial possession, in good and sanitary order,
condition and repair.
(b) Except as otherwise provided in this Lease, Tenant
hereby accepts the Premises and the Building Project in their
condition existing as of the Commencement Date or the date that
Tenant takes possession of the Premises, whichever is earlier,
subject to all applicable zoning, municipal, county and state
laws, ordinances and regulations governing and regulating the use
of the Premises, and any easements, covenants, or restrictions of
record, and accepts this Lease subject thereto and to all matters
disclosed thereby and by any exhibits attached hereto. Tenant
acknowledges that it has satisfied itself by its own independent
investigation that the Premises are suitable for its intended
use, and that neither Landlord nor Landlord's agent or agents
have made any representation or warranty as to the present or
future suitability of the Premises, Common Areas, or Building
Project for the conduct of Tenant's business. Subject to Section
2.2(b), Landlord expressly reserves the right to change the
configuration and location of the parking facilities and Common
Areas within the boundaries of the Building Project and such
changes shall not effect Tenant's obligations under this Lease.
7. Maintenance, Repairs, Alterations and Common Area
Service.
7.1 Landlord's Obligations: Landlord shall, and subject to
Section 4.2, keep in good condition and repair the foundations,
bearing walls (excluding surface maintenance such as painting)
and structural portions of the roof (excluding the roof membrane)
of the Premises unless the cause for such maintenance and repairs
are caused in part or in whole by any act, neglect, fault or
omission by Tenant, its agents, servants, employees, invitees, or
caused by breaking and entering, in which case Tenant shall pay
Landlord the actual cost of such maintenance and repairs
concurrently with the next payment of Base Rent plus a 20%
administration charge of such actual costs. Except as provided
in paragraph 9.5, there shall be no abatement of rent or
liability of Tenant on account of any injury or interference with
Tenant's business with respect to any improvements, alterations
or repairs made by Landlord to the Building Project or any part
thereof. Tenant waives the right to make repairs at Landlord's
expense under Section 1942 of the California Civil Code, or under
any law, statute or ordinance now or hereinafter in effect, or to
terminate this Lease because of Landlord's failure to keep the
Premises in good order, condition and repair.
7.2 Tenant's Obligations: a) Notwithstanding Landlord's
obligation to deliver the Premises in good condition and repair,
Tenant shall be responsible for payment of the cost to Landlord
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 Tenant or the Premises, to
the extent such cost is attributable to causes beyond normal wear
and tear. Tenant shall be responsible for the cost of painting,
cleaning, repairing and or replacing wall coverings, carpets and
to repair or replace any Premises improvements that are not
ordinarily a part of the Building or that are above then Building
standards. Landlord may, at its option, upon reasonable notice,
elect to have Tenant perform any particular such maintenance or
repairs the cost of which is otherwise Tenant's responsibility
hereunder.
b) On the last day of the term hereof, or on any
sooner termination, Tenant shall surrender the Premises to
Landlord in the same condition as received, ordinary wear and
tear excepted, clear and free of debris. Any damage or
deterioration of the Premises shall not be deemed ordinary wear
and tear if the same could have been prevented by good
maintenance practices by Tenant. Tenant shall repair any damage
to the Premises occasioned by the installation or removal of
Tenant's trade fixtures, alterations, furnishings and equipment.
Except as otherwise stated in this Lease, Tenant shall leave the
air lines, power panels, electrical distribution systems,
lighting fixtures, air conditioning, window coverings, wall
coverings, carpets, wall paneling, ceilings and plumbing on the
premises and in good and operating condition.
7.3 Alterations and Additions:
a) Tenant shall not, without Landlord's prior written
consent, make any alterations, improvements, additions, Utility
Installations or repairs in, on or about the Premises or the
Building Project. As used in this paragraph 7.3 the term
"Utility Installation" shall include carpeting, window and wall
coverings, power panels, electrical distribution systems,
lighting fixtures, air conditioning, plumbing, and telephone and
telecommunication wiring and equipment. At the expiration of the
term, Landlord may require the removal of any or all of said
alterations, improvements, additions or Utility Installations,
and the restoration of the Premises and the Building Project to
their prior condition, at Tenant's expense. Should Landlord
permit Tenant to make its own alterations, improvements,
additions or Utility Installations, Tenant shall use only such
contractor as has been expressly approved by Landlord in writing,
and Landlord may require Tenant to provide Landlord, at Tenant's
sole cost and expense, a lien and completion bond in an amount
equal to one and one-half times the estimated cost of such
improvements, to insure Landlord against any liability for
mechanic's and/or materialmen's liens and to insure completion of
the work. Should Tenant make any alterations, improvements,
additions, or Utility Installations without the prior written
approval of Landlord, or use a contractor not expressly approved
by Landlord, Landlord may at any time during the term of this
Lease, require Tenant to remove any part or all of the same.
b) Any alterations, improvements, additions or
Utility Installations in or about the Premises or the Building
Project that Tenant shall desire to make shall be presented to
Landlord in written form, with proposed detailed plans. Tenant
agrees to reimburse Landlord upon written demand to Tenant for
all costs and expenses (including, without limitation, any
architects' and/or engineers' fees) incurred by Landlord in
approving or disapproving Tenant's plans for such alteration,
improvement, addition or Utility Installation. If Landlord shall
give its consent to Tenant's making such alteration, improvement,
addition or Utility Installation, the consent shall be deemed
conditioned upon Tenant acquiring a permit to do so from the
applicable governmental agencies, furnishing a copy thereof to
Landlord prior to the commencement of the work, and compliance by
Tenant with all conditions of said permit in a prompt and
expeditious manner.
c) Tenant shall pay, when due, all claims for labor
or materials furnished to or for Tenant at or for use in the
Premises, which claims are or may be secured by any mechanic's or
materialmen's lien against the Premises, the Building or the
Building Project, or any interest therein.
d) Tenant shall give Landlord no less than ten (10)
days' notice prior to the commencement of any work in the
Premises by Tenant, and Landlord shall have the right to post
notices of non-responsibility in or about the Premises or the
Office Tower as provided by law. If Tenant shall, in good faith,
contest the validity of any such lien, claim or demand, then
Tenant shall, at its sole cost and expense defend itself and
Landlord against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the
enforcement thereof against the Landlord or the Premises, the
Office Tower or the Building Project, upon the condition that if
Landlord shall require, Tenant shall furnish to Landlord a surety
bond satisfactory to Landlord in an amount equal to such
contested lien claim or demand indemnifying Landlord against
liability for the same and holding the Premises, the Building and
the Building Project free from the effect of such lien or claim.
In addition, Landlord may require Tenant to pay Landlord's
reasonable attorneys' fees and costs in participating in such
action if Landlord shall decide it is to Landlord's best interest
so to do.
e) All alterations, improvements, additions and
Utility Installations (whether or not such Utility Installations
constitute trade fixtures of Tenant) which may be made to the
Premises by Tenant, including but not limited to, floor
coverings, panelings, doors, drapes, built-ins, moldings, sound
attenuation, lighting and telephone or communication systems,
conduit, wiring and outlets, shall be made and done in a good and
workmanlike manner and of good and sufficient quality and
materials and shall be the property of Landlord and remain upon
and be surrendered with the Premises at the expiration of the
Lease term, unless Landlord requires their removal pursuant to
paragraph 7.2(b), in which case Tenant shall bear all cost and
expense for such removal and repair of the Premises. Provided
Tenant is not in default, notwithstanding the provisions of this
paragraph 7.3(e), Tenant's personal property and equipment, other
than that which is affixed to the Premises so that it cannot be
removed without material damage to the Premises or the Office
Tower, and other than Utility Installations, shall remain the
property of Tenant and may be removed by Tenant subject to the
provisions of paragraph 7.2(b). Tenant shall make any repairs
necessary as a result of such removal.
f) Tenant shall at its sole expense, provide Landlord
with as-built plans and specifications for any alterations,
improvements, additions or Utility Installations.
7.4 Utility Additions: Landlord reserves the right to
install new or additional utility facilities throughout the
Building Project for the benefit of Landlord or Tenant, or any
other tenant of the Building Project, including, but not limited
to such utilities as plumbing, electrical systems, security
systems, communication systems, fire protection and detection
systems, so long as such installations do not unreasonably
interfere with Tenant's use of the Premises.
8. Insurance; Indemnity.
8.1 Liability Insurance - Tenant: Tenant shall,
at Tenant's expense, obtain and keep in force during the term, or
any extension of this Lease, a policy of Comprehensive General
Liability insurance utilizing an Insurance Services Office
standard form with Broad Form General Liability Endorsement
(GL0404), or equivalent, in an amount of not less than $1,000,000
per occurrence of bodily injury and property damage combined or
in a greater amount as reasonably determined by Landlord. Said
policy of insurance shall insure Tenant with Landlord as an
additional insured against liability arising out of the use,
occupancy or maintenance of the Premises. Compliance with this
requirement of insurance shall not, however, limit the liability
of Tenant hereunder.
8.2 Liability Insurance - Landlord: Landlord shall obtain
and keep in force during the term or any extension of this Lease,
a policy of Combined Single Limit Bodily Injury and Broad Form
Property Damage Insurance, plus coverage against such other risks
Landlord deems advisable from time to time, insuring Landlord,
but not Tenant, against liability arising out of the ownership,
use, occupancy or maintenance of the Building Project in an
amount not less than $5,000,000.00 per occurrence.
8.3 Property Insurance - Tenant: Tenant shall, at
Tenant's expense, obtain and keep in force during the term of
this Lease for the benefit of Tenant, replacement cost fire and
extended coverage insurance, with vandalism and malicious
mischief, sprinkler leakage and earthquake sprinkler leakage
endorsements, in an amount equal to not less than 100% of the
full replacement cost, as the same may exist from time to time,
of all of Tenant's personal property, fixtures, equipment and
tenant improvements.
8.4 Property Insurance - Landlord: Landlord shall obtain
and keep in force during the term of this Lease a policy or
policies of insurance covering loss or damage to the Building
Project improvements, but not Tenant's personal property,
fixtures, equipment or tenant improvements, in the amount of the
full replacement cost thereof, as the same may exist from time to
time, utilizing Insurance Services Office standard form, or
equivalent, providing protection against all perils included
within the classification of fire, extended coverage, vandalism,
malicious mischief, plate glass, and such other perils as
Landlord deems advisable or may be required by a lender having a
lien on the Building Project. In addition, Landlord shall obtain
and keep in force, during the term of this Lease, a policy of
rental value insurance covering a period of one year, with loss
payable to Landlord, which insurance shall also cover all
Operating Expenses for said period. Tenant will not be named in
any such policies carried by Landlord and shall have no right to
any proceeds therefrom. The policies required by these
paragraphs 8.2 and 8.4 shall contain such deductibles as Landlord
or the aforesaid lender may determine. In the event that the
Premises shall suffer damage as defined in paragraph 9.1 hereof,
the deductible amounts under the applicable insurance policies
shall be deemed an Operating Expense. Tenant shall not do or
permit to be done anything which shall invalidate the insurance
policies carried by Landlord. Tenant shall pay the entirety of
any increase in the property insurance premium for the Building
Project over what it was immediately prior to the commencement of
the term of this Lease if the increase is specified by Landlord's
insurance carrier as being caused by the nature of Tenant's
occupancy or any act or omission of Tenant.
8.5 Insurance Policies: Tenant shall deliver to landlord
copies of liability insurance policies required under paragraphs
8.1 and 8.3 or certificates evidencing the existence and amounts
of such insurance within seven (7) days after the Commencement
Date of this Lease. No such policy shall be cancelable or
subject to reduction of coverage or other modification except
after thirty (30) days prior written notice to Landlord. Tenant
shall, at least (30) days prior to the expiration of such
policies, furnish Landlord with renewals thereof.
8.6 Waiver of Subrogation: Tenant and Landlord each
hereby release and relieve the other, and waive their entire
right of recovery against the other, for direct or consequential
loss or damage arising out of or incident to the perils covered
by property insurance carrier by such party, whether due to the
negligence of Landlord or Tenant or their agents, employees,
contractors and/or invitees. If necessary all property insurance
policies required under this Lease shall be endorsed to so
provide.
8.7 Indemnity: Subject to the provisions of paragraph 8.9,
Tenant shall indemnify and hold harmless Landlord and its agents,
employees, licensees and contractors, Landlord's master or ground
lessor, partners and lenders, from and against any and all claims
for damage to the person or property of anyone or any entity
arising from Tenant's use of the Building Project, or from the
conduct of Tenant's business or from any activity, work or things
done, permitted or suffered by Tenant in or about the Premises or
elsewhere and shall further indemnify and hold harmless Landlord
from and against any and all claims, costs and expenses 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 omission of Tenant, or any of Tenant's
agents, contractors, employees or invitees and from and against
all costs, attorney's fees, expenses and liabilities incurred by
Landlord as the result of any such use, conduct, activity, work,
things done, permitted or suffered, breach, default or
negligence, and in dealing reasonably therewith, including but
not limited to the defense or pursuit of any claim or any action
or proceeding involved therein, and in case an action or
proceeding be brought against Landlord by reason of any such
matter, Tenant upon notice from Landlord shall defend the same at
Tenant's expense by counsel reasonably satisfactory to Landlord
and Landlord shall cooperate with Tenant in such defense.
Landlord need not have first paid any such claim in order to be
so indemnified.
8.8 Exemption of Landlord from Liability: Subject to the
provisions of paragraph 8.9, Tenant hereby agrees that Landlord
shall not be liable for injury to Tenant's business or any loss
of income therefrom or for loss of or damage to the goods, wares,
merchandise or other property of Tenant, Tenant's employees,
invitees, customers, or any other person in or about the Premises
or the Building Project. Landlord shall not be liable for injury
to the person of Tenant, Tenant's employees, agents, invitees,
customers or contractors, whether such damage or injury is caused
by or results from theft, fire, steam, electricity, gas, water or
rain, or from the breakage, leakage, obstruction or other defects
of pipe, sprinklers, wires, telecommunication wiring and
equipment, appliances, plumbing, air conditioning or lighting
fixtures, or from any other cause, whether said damage or injury
results from conditions arising upon the Premises or upon other
portions of the Building Project, or from other sources or
places, or from new construction of the repair, alteration or
improvement of any part of the Building Project, or of the
equipment, fixtures or appurtenances applicable thereto, and
regardless of whether the cause of such damage or injury or the
means of repairing the same is inaccessible. Landlord shall not
be liable for any damages arising from any act or neglect of any
other tenant, occupant or user of the Building Project, nor from
the failure of Landlord to enforce the provisions of any other
lease of any other tenant of the Building Project.
Notwithstanding the foregoing, Landlord will not be exempt from
liability for its own gross negligence or wilful misconduct.
8.9 No Representation of Adequate Coverage: Landlord
makes no representation that the limits or forms of coverage of
insurance specified in this paragraph 8 are adequate to cover
Tenant's property or obligations under this Lease.
9. Damage or Destruction
9.1 Definitions:
a) "Premises Damage" shall mean if the Premises are
damaged or destroyed to any extent.
b) "Office Tower Partial Damage" shall mean if the
Building of which the Premises are a part is damaged or destroyed
to the extent that the cost to is less than fifty percent (50%)
of the then Replacement Cost of the Building.
c) "Office Tower Total Destruction" shall mean if the
Building of which the Premises are a part is damaged or destroyed
to the extent that the cost to repair is fifty percent (50%) or
more of the then Replacement Cost of the Building.
d) "Insured Loss" shall mean damage or destruction
which was caused by an event required to be covered by the
insurance described in Paragraph 8. The fact than an Insured
Loss has a deductible amount shall not make the loss an uninsured
loss.
e) "Replacement Cost" shall mean the amount of money
necessary to be spent in order to repair or rebuild the damaged
area to the condition that existed immediately prior to the
damage occurring, excluding all improvements made by tenants.
9.2 Premises Damage; Office Tower Partial Damage.
a) Insured Loss: Subject to the provisions of
paragraphs 9.4 and 9.5, if at any time during the term or any
extension of this Lease, there is damage which is an Insured Loss
and which falls into the classification of either Premises Damage
or Office Tower Partial Damage, then Landlord shall, as soon as
reasonably possible and to the extent the required materials and
labor are readily available through usual commercial channels, at
Landlord's expense, repair such damage (but not Tenant's
fixtures, equipment, personal property or Tenant improvements,
which Tenant shall restore at Tenant's expense), to its condition
existing immediately prior to damage, and this Lease shall
continue in full force and effect without set off or abatement of
any rents.
b) Uninsured Loss: Subject to the provisions of
paragraphs 9.4 and 9.5, if at any time during the term or any
extension of this Lease, there is damage which is not an Insured
Loss and which falls within the classification of Premises Damage
or Office Tower Partial Damage, unless caused by a negligent or
willful act of Tenant (in which event Tenant shall make the
repairs at Tenant's expense), which damage prevents Tenant from
making any substantial use of the Premises, Landlord may at
Landlord's option either (i) repair such damage as soon as
reasonably possible at Landlord's expense, in which event this
Lease shall continue in full force and effect, or (ii) give
written notice to Tenant within thirty (30) days after the date
of the occurrence of such damage of Landlord's intention to
cancel and terminate this Lease as of the date of the occurrence
of such damage, in which event this Lease shall terminate as of
the date of the occurrence of such damage.
9.3 Office Tower Total Destruction: Subject to the
provisions of paragraphs 9.4 and 9.5, if at any time during the
term of this Lease there is damage, whether or not it is an
Insured Loss, which falls into the classification of Office Tower
Total Destruction then Landlord may at Landlord's option either
(i) repair such damage or destruction as soon as reasonably
possible at Landlord's expense (to the extent the required
materials are readily available through usual commercial
channels) to its condition existing immediately prior to the
damage, (but not Tenant's fixtures, equipment or tenant
improvements, which Tenant shall restore at Tenant's expense),
and this Lease shall continue in full force and effect, or (ii)
give written notice to Tenant within thirty (30) days after the
date of occurrence of such damage of Landlord's intention to
cancel and terminate this Lease, in which case this Lease shall
terminate as of the date of the occurrence of such damage.
9.4 Damage Near End of
Term: If at any time during the last twelve (12) months of
the term of this Lease there is damage which prevents Tenant from
making substantial use of the Premises, either party may cancel
and terminate this Lease as of the date of occurrence of such
damage by giving written notice to the other party within 30 days
after the date of occurrence of such damage.
9.5 Abatement of Rent; Tenant's Remedies. In the event
Landlord repairs or restores the Building or Premises pursuant to
the provisions of this Paragraph 9, and any part of the Premises
are not usable (including loss of use due to loss of access or
essential services), the rent payable hereunder (including
Lessee's Share of Operating Expenses) for the period during which
such damage, repair or restoration continues shall be abated,
provided (1) the damage was not the result of the negligence of
Tenant, and (2) such abatement shall be equal to that proportion
which the floor area rendered unusable bears to the gross floor
area of the Premises. Except for said abatement of rent, if any,
Tenant shall have no claim against Landlord for any damage
suffered by reason of any such damage, destruction, repair or
restoration.
(b) If Landlord shall be obligated to repair or
restore the Premises or the Building under the provisions of this
Paragraph 9 and shall not commence such repair or restoration
within ninety (90) days after such occurrence, or if Landlord
shall not complete the restoration and repair within six (6)
months after such occurrence, Tenant may at Tenant's option
cancel and terminate this Lease by giving Landlord written notice
of Tenant's election to do so at any time prior to the
commencement or completion, respectively, of such repair or
restoration. In such event this Lease shall terminate as of the
date of such notice.
(c) Tenant agrees to cooperate with Landlord in
connection with any such restoration and repair, including but
not limited to the approval and/or execution of plans and
specifications required.
9.6 Termination-Advance Payments. Upon termination of
this Lease pursuant to this Paragraph 9, an equitable adjustment
shall be made concerning advance rent and any advance payments
made by Tenant to Landlord. Landlord shall, in addition, return
to Tenant so much of Tenant's security deposit as has not
theretofore been applied by Landlord.
9.7 Waiver: Landlord and Tenant waive the provisions of
any statute which relate to termination of leases when leased
property is destroyed and agree that such an event shall be
governed by the terms of this Lease.
10. Real Property Taxes:
10.1 Payment of Taxes: Landlord shall pay the real
property tax, as defined in paragraph 10.3, applicable to the
Building Project subject to reimbursement by Tenant of Tenant's
share of such taxes in accordance with the provisions of
paragraph 4.2 herein.
10.2 Additional Improvements: Tenant shall pay to Landlord
at the time that Operating Expenses are payable under paragraph
4.2 the entirety of any increase in real property tax if assessed
solely by reason of additional improvements placed upon the
Premises by Tenant or at Tenant's request.
10.3 Definition of "Real Property Tax:" As used herein,
the term "real property tax" shall include any form of real
estate tax or assessment, general, special, ordinary or
extraordinary, and any license fee, commercial rental tax,
improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed on the Building Project
or any portion thereof by any authority having the direct or
indirect power to tax, including any city, county, state or
federal government, or any school, agricultural, sanitary, fire,
street, drainage or other improvement district thereof, as
against any legal or equitable interest of Landlord in the
Building Project or in any portion thereof, as against Landlord's
right to rent or other income therefrom, and as against
Landlord's business of leasing the Building Project. The term
"real property tax" shall also include any tax, fee, levy,
assessment or charge (a) in substitution of, partially or
totally, any tax, fee, levy, assessment or charge hereinabove
included within the definition of "real property tax", or (b) the
nature of which was hereinbefore included within the definition
of "real property tax," or (c) which is imposed for a service or
right not charged prior to June 1, 1978, or, if previously
charged, has been increased since June 1, 1978, or (d) which is
imposed as a result of a change in ownership, as defined by
applicable local statutes for property tax purposes, of the
Building Project or which is added to a tax or charge
hereinbefore included within the definition of real property tax
by reason of such change of ownership, or (e) which is imposed by
reason of this transaction, any modification or changes hereto,
or any transfers hereof.
10.4 Joint Assessment: If the improvements or property, the
taxes for which are to be paid separately by Tenant under
paragraph 10.2 or 10.5 are not separately assessed, Tenant's
portion of that tax shall be equitably determined by Landlord
from the respective valuations assigned in the assessor's work
sheets or such other information (which may include the cost of
construction) as may be reasonably available. Landlord's
reasonable determination thereof, in good faith, shall be
conclusive.
10.5 Personal Property Taxes:
a) Tenant shall pay prior to delinquency all taxes
assessed against and levied upon trade fixtures, furnishings,
equipment and all other personal property of Tenant contained in
the Premises or elsewhere.
b) If any of Tenant's said personal property shall be
assessed with Landlord's real property, Tenant shall pay to
Landlord the taxes attributable to Tenant's personal property
within ten (10) days after receipt of a written statement setting
forth the taxes applicable to Tenant's property.
11. Utilities and Services.
11.1 Services Provided by Landlord: Provided that Tenant
is not in default hereunder, Landlord agrees to furnish or cause
to be furnished to the Premises the utilities and services
described, subject to the conditions and in accordance with the
standards set forth below:
(a) Landlord shall provide automatic elevator
facilities Monday through Friday, excepting therefrom all
holidays recognized by Landlord, hereinafter collectively
referred to as "generally accepted business days," from 8:00 a.m.
to 6:00 p.m., and on Saturdays from 8:00 a.m. to 12:00 noon, and
have at least one elevator available for use at all other times.
(b) On generally accepted business days from 8:00 a.m.
to 6:00 p.m. and on Saturdays from 8:00 a.m. to 12:00 noon (and
at all other times for a reasonable additional charge to be fixed
by Landlord), Landlord shall ventilate the Premises and furnish
air conditioning when required for the reasonable and comfortable
occupancy of the Premises during such days and hours, subject to
any requirements or standards relating to, among other things,
energy conservation, imposed or established by governmental or
cooperative organizations. Landlord shall make available at
Tenant's expense after-hours power, including light and air
conditioning to each floor of the Building which shall be
controlled by digital control or other central control system
selected by Landlord. Any charges for after-hours power and air
conditioning and the cost thereof shall be determined by Landlord
and confirmed in writing to Tenant.
(c) Landlord shall furnish to the Premises at all
times, subject to interruptions beyond Landlord's control,
electric current as required by the Building standard office
lighting (approximately 40 to 55 candles per square foot) and
receptacles (approximately one (1) watt per square foot). At all
times Tenant's use of electric current shall never exceed the
capacity of the feeders to the Building or the risers or wiring
installation. Tenant shall not install nor use nor permit the
installation or use of any computer or electronic data processing
equipment in the Premises without the prior written consent of
Landlord.
(d) Landlord shall provide janitorial services to the
Premises comparable to those provided to other first class Office
Towers in the vicinity provided the same are used exclusively as
offices and are kept reasonably in order by Tenant. Tenant shall
pay Landlord the cost of removal of any of Tenant's refuse and
rubbish, to the extent that the same exceeds the refuse and
rubbish usually attendant upon the use of premises as offices.
(e) Landlord shall replace, as necessary, the
fluorescent tubes in the Office Tower standard lighting fixtures
installed by Landlord. If Tenant fails to make any replacement
of Tenant's light bulbs within five (5) days after written notice
from Landlord, Landlord may make such replacement within five (5)
days after written notice from Landlord and charge the cost of
labor and materials involved therein to Tenant, as Additional
Rent.
(f) Area thermostats are provided for the comfort of
tenants. However, the misuse and damage to any such thermostat by
Tenant will result in the Tenant incurring the entire cost of
replacement and reinstallation, plus a 20% servicing fee based on
the actual cost of such repair.
12. Assignment and Subletting.
12.1 Terms and Conditions Applicable to Assignment and
Subletting: Tenant may not (a) sell, assign, sublease, transfer,
or hypothecate the whole or any part of its interest under this
Lease, (b) sublet the whole or any part of the Premises, or (c)
allow the occupancy of the whole or any part of the Premises by
another without in each case obtaining the prior written consent
of Landlord, which shall not be unreasonably withheld.
Notwithstanding any permitted assignment or subletting, Tenant
shall at all times remain directly, primarily and fully
responsible and liable for the payment of rent and for compliance
with all obligations under the terms, provisions and covenants of
this Lease. Upon the occurrence of an "Event of Default" (as
defined in Article 13, below) if the Premises or any part thereof
are then sublet, Landlord, in addition to any other remedies
herein provided or provided by law, may at its option collect
directly from such sublessee all rents becoming due to Tenant
under such sublease and apply such rents against any sums due to
Landlord from Tenant hereunder, and no such collection shall be
construed to constitute a novation or release of Tenant from the
further performance of Lessee's obligations under this Lease.
Any sale, assignment, transfer of hypothecation of Tenant's
interest under this Lease, and any proposed subletting or
occupancy of the Premises not in compliance with this Article 12
shall be void and shall, at the option of Landlord exercisable by
Notice to Tenant, terminate this Lease. This Lease shall not be
assignable by operation of law, except that if Tenant is a
natural person, this Lease shall be binding upon and inure to the
benefit of the estate of Tenant.
12.2 Subletting: In the event Tenant desires to sublet all
or any portion of the Premises, Tenant shall give not less than
thirty (30) days' prior written notice thereof to Landlord
setting forth the name of the proposed subtenant, the term,
rental rate and any other relevant particulars to the proposed
subletting, including without limitation, evidence satisfactory
to Landlord that the proposed subtenant will immediately occupy
and thereafter use the sublet portion of the Premises for the
entire time of the sublease, a description of the proposed use of
the Premises and financial statements of the proposed subtenant.
Upon such subletting the subtenant shall furnish a certificate to
Landlord verifying the total consideration that it will pay for
the sublease.
12.3 Assignment: Tenant shall in no event assign less than
its entire interest in this Lease. In the event Tenant desires
to assign all (but not less than all) of its interest under this
Lease, Tenant shall give not less than thirty (30) days' prior
written notice thereof to Landlord setting forth the name of the
proposed assignee, the terms of the assignment, and any other
relevant particulars of the proposed assignment, including
without limitation, evidence satisfactory to Landlord that the
proposed assignee will immediately occupy and thereafter use the
entire premises for the remaining term of the Lease, a
description of the proposed use of the Premises and financial
statements of the proposed assignee. Upon such assignment the
assignee shall furnish a certificate to landlord verifying the
total consideration paid the Tenant of the assignment.
12.4 Landlord's Consent: Upon receipt of written notice
from Tenant of Tenant's desire to either sublet all or any
portion of the Premises or to assign its entire interest under
the Lease, Landlord shall have a period of thirty (30) days to
notify Tenant of the exercise of any one of the following two
options:
(a) Landlord's approval of the sublease or assignment.
In such event Landlord shall have the right to collect the excess
rental, if any, resulting from the new lease or sublease, as set
forth in Section 51.7, or;
(b) Disapprove of the proposed sublease or assignment,
provided that such disapproval will be based upon reasonable
grounds
In the event Landlord fails to notify Tenant within thirty
(30) days, as aforesaid, it shall be deemed as approval of the
proposed sublease or assignment.
12.5 Landlord's Expenses: Any requests for the consent of
Landlord to an assignment or subletting of this Lease shall be
accompanied by a payment in the amount of Five Hundred Dollars
($500.00) representing Landlord's cost of administration in
reviewing Tenant's request and the information pertaining
thereto. Landlord shall not be required to respond to any such
request without payment, as aforesaid.
13. Default; Remedies.
13.1 Default. The occurrence of any one or more of the
following events shall constitute a material default under the
terms of this Lease by Tenant:
a) Notwithstanding the foregoing, vacation or
abandonment of the Premises for a period of not to exceed sixty
(60) days shall not be a default under this lease so long as
Tenant is actively marketing the space to procure replacement
tenants for all or a portion of the Premises.
b) Any breach by Tenant of any of the covenants,
conditions or provisions of paragraphs 7.3(a),(b), or (d)
(alternations), 12.1 (assignment or subletting), 13.1(a)
(vacation or abandonment), 13.1(e) (insolvency), 13.1(f) (false
statement), 15(a) (estoppel certificate), 29(b) (subordination),
32 (auctions), or 40(a) (easements), all of which are hereby
deemed to be material, non-curable defaults without the necessity
of any notice by Lessor to Lessee thereof.
c) 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 from Landlord to
Tenant. In the event that Landlord serves Tenant with a Notice
to Pay Rent or Quit pursuant to Section 1161 of the California
Code of Civil Procedure such Notice to Pay Rent or Quit shall
also constitute the notice required by this subparagraph.
d) 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 those referenced in
subparagraphs (b) and (c), above, where such failure shall
continue for a period of thirty (30) days after written notice
thereof from Landlord to Tenant; provided, however, that if the
nature of Tenant's noncompliance 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 commenced such cure
within said thirty (30) day period and thereafter diligently
pursues such cure to completion. To the extent permitted by law,
such thirty (30) day notice shall constitute the sole and
exclusive notice required to be given to Tenant under Section
1161 of the California Code of Civil Procedure.
e) (i) The making by Tenant of any general
arrangement or general assignment for the benefit of creditors;
(ii) Tenant becoming a "debtor" as defined in 11 U.S.C. Section
101 or any successor statute thereto (unless, in the case of a
petition filed against Tenant, the same is dismissed within sixty
(60) days); (iii) the appointment of a trustee or receiver to
take possession of substantially all of Tenant's assets located
at the Premises or of Tenant's 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 within thirty (30)
days.
f) The discovery by Landlord that any financial
statement given to Landlord by Tenant, or its successor in
interest or by any guarantor of Tenant's obligation hereunder,
was materially false.
13.2 Remedies. In the event of any material default or
breach of the terms of this Lease by Tenant, Landlord may at any
time thereafter, with or without notice or demand and without
limiting Landlord in the exercise of any right or remedy which
Landlord may have by reason of such default:
a) Terminate Tenant's right to possession of the
Premises by any lawful means, in which case this Lease and the
term hereof shall terminate and Tenant shall immediately
surrender possession of the Premises to Landlord. In such event
Landlord shall be entitled to recover from Tenant:
i) the worth at the time of award of any unpaid
rent which has been earned at the time of such termination, plus
ii) the worth at the time of award of the amount
by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such
rental loss Tenant proves could have been reasonable avoided,
plus
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 Tenant
proves could have been reasonably avoided, plus
iv) any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's
failure to perform under this Lease or which in the ordinary
course of things would be likely to result therefrom.
As used in subsections i) and ii) the "worth at the
time of award" is computed by allowing interest at the rate of
ten percent (10%) per annum. As used in subsection iii) the
"worth at the time of award" is computed by discounting such
amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of award plus one percent (1%). For the
purposes of this paragraph the term "rent" shall include the
monthly rent and all other sums required to be paid by Lessee
under this Lease.
b) Maintain Tenant's right to possession in which
case this Lease shall continue in effect whether or not Tenant
shall have vacated or abandoned the Premises. In such event
Landlord shall be entitled to enforce all of the Landlord's
rights and remedies under this Lease, including the right to
recover the Rents as they become due hereunder.
c) Pursue any other remedy now or hereafter available
to Landlord under the laws or judicial decisions of the State of
California. Unpaid installments of Rents and other unpaid
monetary obligations of Tenant under the terms of this Lease
shall bear interest from the date due at 12% per annum or the
maximum rate then allowed by law, whichever is greater.
13.3 Default by Landlord. Landlord shall not be in default
under the terms of this lease unless Landlord fails to perform
obligations required of Landlord within a reasonable time, but in
no event later than thirty (30) days after Landlord's receipt of
written notice from Tenant specifying wherein Landlord has
failed to perform such obligation; provided, however, that if the
nature of Landlord's obligation is such that more than thirty
(30) days are required for performance, then Landlord shall not
be in default if Landlord commences performance within such 30
day period and thereafter diligently pursues the same to
completion.
13.4 Late Charges. Tenant hereby acknowledges that late
payment by Tenant to Landlord of Base Rent, Tenant's Share of
Operating Expenses or other sums due hereunder will cause
Landlord to incur costs not otherwise 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 on Landlord by the terms of any mortgage or trust deed
covering the Building Project. Accordingly, if any installment
of Base Rent, Operating Expenses or any other sum due from Tenant
shall not be received by Landlord or Landlord's designee within
five (5) days after such amount shall be due, then without any
requirement for notice to Tenant, Tenant shall pay to Landlord a
late charge equal to five percent (5%) of such overdue amount.
The parties hereby agree that such late charge represents a fair
and reasonable estimate of the costs Landlord will incur by
reason of late payment by Tenant. Acceptance of such late charge
by 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.
14. Condemnation. If the Premises or any portion thereof or the
Building Project are taken under the power of eminent domain, or
sold under the threat of the exercise of said power (all of which
are herein called "condemnation"), this Lease shall terminate as
to the part so taken as of the date the condemning authority
takes title or possession, whichever first occurs; provided that
if so much of the Premises or the Building Project are taken by
such condemnation as would in Landlord's opinion substantially
and adversely affect the operation and profitability of Tenant's
business conducted from the Premises, Landlord shall have the
option, upon written notice to Tenant within thirty (30) days
after Landlord shall have given Tenant written notice of such
taking (or in the absence of such notice, within thirty (30) days
after the condemning authority shall have taken possession), to
terminate this Lease as of the date of condemning authority takes
such possession or may move Tenant to a substituted premises in
accordance with the provisions of paragraph 15. Common Areas
taken shall be excluded from the Common Areas usable by Tenant
and no reduction of rent shall occur with respect thereof.
Landlord shall have the option, in its sole discretion, to
terminate this Lease as of the taking of possession by the
condemning authority, by giving written notice to Tenant of such
election within thirty (30) days after receipt of notice of a
taking by condemnation of any part of the Premises or the
Building Project. Any award for the taking of all or any part of
the Premises or the Building Project under the power of eminent
domain or any payment made under threat of the exercise of such
power shall be the property of Landlord. In the event that this
Lease is not terminated by reasons of such condemnation, Landlord
shall to the extent of severance damages received by Landlord in
connection with such condemnation, repair any damage to the
Premises caused by such condemnation. Tenant shall pay any
amount in excess of such severance damages required to complete
such repair for its improvements. Tenant shall have the right to
pursue its own claims against a condemning authority for its own
damages, if any.
15. Estoppel Certificate.
a) Each party (as "responding party") shall at any time
upon ten (10) days prior written notice from the other party
("requesting party") execute, acknowledge, and deliver to the
requesting party a statement in writing: (i) 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 are paid in advance,
if any, and (ii) acknowledging that there are not, to the
responding party's knowledge, any uncured defaults on the part of
the requesting party, or specifying such defaults if any are
claimed. Any such statement may be conclusively relied upon by
any prospective purchaser or encumbrancer of the Building Project
or of the business of Tenant.
b) At the requesting party's option, the failure to
deliver such statement within such time shall be a material
default of this Lease by the party who is to respond, without any
further notice to such party, or it shall be conclusive upon such
party that (i) this Lease is in full force and effect, without
modification except as may be represented by the requesting
party, (ii) there are no incurred defaults in the requesting
party's performance, and (iii) if Landlord is the requesting
party, not more than one month's rent has been paid in advance.
c) If Landlord desires to finance, refinance, or sell the
Building Project, or any part thereof, Tenant hereby agrees to
deliver to any lender or purchaser designated by Landlord such
financial statements of Tenant as may be reasonably required by
such lender or purchaser. Such statements shall include the past
three (3) years' financial statements of Tenant. All such
financial statements shall be received by Landlord and such
lender or purchaser in confidence and shall be used only for the
purposes herein set forth.
16. Landlord's Liability. The term "Landlord" as used herein
shall mean only the owner or owners, at the time in question, of
the fee title or a lessee's interest in a ground lease of the
Building Project and in the event of any transfer of such title
or interest, Landlord herein named shall be relieved from any and
all liability thereafter to be performed. The obligations
contained in this Lease to be performed by Landlord shall be
binding on Landlord's successors and assigns, only during their
respective periods of ownership.
17. 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.
18. Interest on Past-due Obligations. Except as expressly
herein provided, any amount due to Landlord not paid when due
shall bear interest at 12% per annum or the maximum rate then
allowable by law, whichever is greater, on judgments and any
other amount due but not yet paid by the prescribed time, from
the date due. Payment of such interest shall not excuse nor cure
any default by Tenant under this Lease.
19. Time of Essence. Time is of the essence with respect to
the obligations to be performed under this Lease.
20. Additional Rent. All monetary obligations of Tenant to
Landlord under the terms of this Lease including but not limited
to Tenant's Share of Operating Expense increase any other
expenses payable by Tenant hereunder shall be deemed to be Rent.
21. Incorporation of Prior Agreement; Amendments. This Lease
contains all agreements of the parties with respect to any matter
mentioned herein. No prior or contemporaneous agreement or
understanding pertaining to any such matter contained in this
Lease shall be effective. This Lease may be modified in writing
only, signed by the parties in interest at the time of the
modification. Except as otherwise stated in this Lease, Tenant
hereby acknowledges that neither Landlord nor any employee nor
agents of any of said persons has made any oral or written
warranties or representations to Tenant relative to the condition
or use by Tenant of the Premises or the Building Project and
Tenant acknowledges that Tenant assumes all responsibility
regarding the Occupational Safety Health Act, the legal use and
adaptability laws and regulations in effect during the term of
this Lease.
22. Notices. Any notice required or permitted to be given
hereunder shall be in writing and shall be given by certified or
registered mail to Tenant or to Landlord at the address noted in
paragraph 1.10 of the Basic Lease Provisions or as otherwise
provided in writing. Mailed notices shall be deemed given upon
actual receipt thereof at the address required. Either party may,
by giving notice to the other, specify a different address for
notice purposes except that upon Tenant's taking possession of
the Premises, the Premises shall constitute Tenant's address for
notice purposes. A copy of all notices required or permitted to
be given to Landlord hereunder shall be concurrently transmitted
to such party or parties at such addresses as Landlord may from
time to time hereafter designate by notice to Tenant.
23. Waivers. No waiver by Landlord or any provision hereof
shall be deemed a waiver of any other provision hereof of any
subsequent breach by Tenant of the same or any other provision.
Landlord's consent to, or approval, of, any act shall not be
deemed to render unnecessary the obtaining of Landlord's consent
to or approval of any subsequent act by Tenant. The acceptance
of rent hereunder by Landlord shall not be a waiver of any
preceding breach of Tenant of any provision hereof, other than
the failure of Tenant to pay the particular rent so accepted,
regardless of Landlord's knowledge of such preceding breach at
the time of acceptance of such rent.
24. Recording. Either Landlord or Tenant shall, upon request
of the other, execute, acknowledge and deliver to the other a
"short form" memorandum of this Lease for recording purposes. At
termination of this Lease, Tenant shall execute, acknowledge and
deliver to Landlord, within five (5) days after written demand
from Landlord to Tenant, any quitclaim deed or other document as
may be reasonably requested by any reputable title insurance
company to remove this Lease as a matter affecting title to the
Premises.
25. Holding Over. If Tenant, with Landlord's written consent,
remains in possession of the Premises or any part thereof after
the Expiration Date or sooner termination of the lease term
hereof, such occupancy shall be a tenancy from month to month
upon all the provisions of this Lease pertaining to the
obligations of Tenant, except that the Rents payable shall be one
hundred twenty-five percent (125%) of the Rents payable
immediately preceding the Expiration Date of this Lease.
Acceptance by Landlord of rent after expiration or earlier
termination of this Lease shall not constitute a consent to a
holdover hereunder or result in a renewal hereof. The foregoing
provisions of this paragraph are in addition to and do not affect
Landlord's right of re-entry or any other rights of Landlord
hereunder or as otherwise provided by law.
26. 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.
27. Covenants and Conditions. Each provision of this Lease
to be performed by Tenant shall be deemed both a covenant and a
condition.
28. Binding Effect; Choice of Law. Subject to any provisions
hereof restricting assignment or subletting by Tenant, this Lease
shall bind the parties, their personal representatives,
successors and assigns. This Lease shall be governed by the laws
of the State of California and any litigation concerning this
Lease between the parties hereto shall be initiated in the County
of Orange, California.
29. Subordination; Non-Disturbance.
a) This Lease, at Landlord's option, shall be subordinate
to any ground lease, mortgage, deed of trust, or any other
hypothecation or security now or hereafter placed upon the
Building Project and to any and all advances made on the
security thereof and to all renewals, modifications,
consolidations, replacements and extensions thereof. If any
mortgagee, trustee or ground lessor shall elect to have this
Lease prior to the lien of its mortgage, deed of trust or ground
lease, and shall give written notice thereof to Tenant, this
Lease shall be deemed prior to such mortgage, deed of trust or
ground lease, whether this Lease is dated prior or subsequent to
the date of said mortgage, deed of trust or ground lease or the
date of recording thereof.
b) Tenant agrees to execute any documents required to
effectuate any attornment, a subordination, or to make this Lease
prior to the lien of any mortgage, deed of trust or ground lease,
as the case may be. Tenant's failure to execute such documents
within ten (10) days after written demand shall constitute a
material default by tenant hereunder without further notice to
Tenant or at Landlord's option. Landlord shall execute such
documents on behalf of Tenant as Tenant's attorney-in-fact.
Tenant does hereby make, constitute and irrevocable appoint
Landlord as Tenant's attorney-in-fact and in Tenant's name, place
and stead, to execute such documents in accordance with this
paragraph 29(b).
c) In the event Tenant wishes to obtain a non-disturbance
agreement from any existing trust deed holder(s) on the subject
property, Landlord agrees to present such agreement, furnished by
Tenant, to said trust deed holder(s) for execution. Landlord
makes no guarantees, however, as to whether or not a lender will
execute same.
30. Attorney's Fees.
a) If either party herein brings an action to enforce the
terms hereof or declares rights hereunder, the prevailing party
in any such action, trial or appeal thereon, shall be entitled to
his reasonable attorneys' fees to be paid by the losing party as
fixed by the court in the same or a separate suit.
b) Landlord shall be entitled to reasonable attorneys'
fees and all other 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.
31. Landlord's Access.
a) Landlord and Landlord's agents shall have the right to
enter the Premises at reasonable times for the purpose of
inspecting the same, performing any services required of
Landlord, showing the same to prospective purchasers, lenders, or
lessees, taking such safety measures, erecting such scaffolding
or other necessary structures, making such alterations, repairs,
improvements or additions to the Premises or to the Building
Project as Landlord may reasonably deem necessary or desirable
and the erecting, using and maintaining of utilities, services,
pipe and conduits through the Premises and/or other premises as
long as there is no material adverse effect to Tenant's use of
the Premises. Landlord may at any time, place in or about the
Premises or the Office Tower any ordinary "For Sale" signs and
Landlord may at any time during the last 180 days of the term
hereof place on or about the Premises any ordinary "For Lease"
signs.
b) All activities of Landlord pursuant to this paragraph
shall be without abatement of rent, nor shall Landlord have any
liability to Tenant for the same.
c) Landlord 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 any eviction. Tenant waives any
charges for damages or injuries for interference with Tenant's
property or business in connection therewith.
32. Auctions. Tenant shall not conduct, nor permit to be
conducted, either voluntarily or involuntarily, any auction upon
the Premises or the Building Project without first having
obtained Landlord's prior written consent. Notwithstanding
anything to the contrary in this Lease, Landlord shall not be
obligated to exercise any standard or reasonableness in
determining whether to grant such consent. The holding of any
auction on the Premises or common areas in violation of this
paragraph shall constitute a material default of this Lease.
33. Signs. Tenant shall not place any sign upon the Premises
or the Building Project without Landlord's prior written consent.
Under no circumstances shall Tenant place a sign on any roof of
the Building Project.
34. Merger. The voluntary or other surrender of this Lease by
Tenant, or mutual cancellation thereof, or a termination by
Landlord, shall not work a merger, and shall, at the option of
Landlord, terminate all or any existing subtenancies or may, at
the option of Landlord, operate as an assignment to Landlord of
any or all of such subtenancies.
35. Consents. Except for paragraphs 33 (Auctions) and 34
(Signs) herein, wherever in this Lease the consent of one party
is required to an act of the other party such consent shall not
be unreasonably withheld or delayed.
36. Guarantor. In the event that there is a guarantor of this
Lease, said guarantor shall have the same obligations as Tenant
under this Lease.
37. Quiet Possession. Upon Tenant paying the Rents for the
Premises 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 of the
provisions of this Lease. The individuals executing this Lease
on behalf of Landlord represent and warrant to Tenant that they
are fully authorized and legally capable of executing this Lease
on behalf of Landlord and that such execution is binding upon all
parties holding an ownership interest in the Building Project.
38. Force Majeure. If the performance by Landlord of any of its
obligations or undertakings under this Lease is interrupted or
delayed by any occurrence not occasioned by the conduct of
Landlord or its agents, whether that occurrence is an act of God
or public enemy, or whether that occurrence is caused by war,
riot, storm, earthquake, or other natural forces, or by the acts,
omissions, requests or conduct of Tenant or anyone not a party to
this Lease, then Landlord shall be excused from any further
performance for whatever period of time after the occurrence is
reasonable necessary, in the Landlord's sole discretion, to
remedy the effects of that occurrence. In such an event, Tenant
shall be entitled to equitable rental abatement during the period
of delay caused by such Force Majeure.
39. Security Measures-Landlord's Reservations.
39.1 Tenant hereby acknowledges that Landlord shall have no
obligation whatsoever to provide guard service or other security
measures for the benefit of the Building Project or Tenant's
Premises. Tenant shall assume all responsibility for the
protection of Tenant, its agents, customers, and invitees and the
personal property thereof. Nothing herein contained shall
prevent Landlord, at Landlord's sole option, from providing
security protection for the Building Project, or any part
thereof, in which event the cost thereof shall be included within
the definition of Operating Expenses, as set forth in paragraph
4.2.
39.2 Landlord shall have the following rights:
a) To change the name, address or title of the entire
Building Project and/or the Office Tower in which the Premises
are located;
b) To, at Tenant's expense, provide and install
Office Tower standard graphics on the door of the Premises and
such portions of the Common Areas as Landlord shall deems
appropriate;
c) To permit any Tenant the exclusive right to
conduct any business as long as such exclusive use does not
conflict with any rights expressly given herein;
d) To place such signs, notices or displays as
Landlord reasonably deems necessary or advisable upon the roof,
exterior of the Office Tower or the Building Project or on pole
signs in the Common Area.
39.3 Tenant shall not:
a) Use a representation (photographic or otherwise)
of the Office Tower or the Building Project or its name(s) in
connection with Tenant's business without the prior written
consent of Landlord;
b) Suffer or permit anyone, except in an emergency,
to go upon the roof of the Office Tower.
40. Easements.
a) Landlord reserves to itself the right, from time to
time, to grant such easements, rights and dedications as Landlord
deems necessary or desirable, and to cause the recordation of
Parcel Maps and restrictions, so long as such easements, rights,
dedications, Maps and restrictions do not unreasonably interfere
with the use of the Premises by Tenant. Tenant shall sign any of
the aforementioned documents upon request of Landlord or failure
to do so shall constitute a material default of this Lease by
Tenant without the need for further notice to Tenant.
b) The obstruction of Tenant's view, air or light by any
structure erected in the vicinity of the Office Tower, whether by
Landlord or third parties, shall in no way affect this Lease nor
impose any liability upon Landlord.
41. 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 under the
provisions of this Lease.
42. Authority. If Tenant is a corporation, trust or general
or limited partnership, Tenant, and each individual executing
this Lease on behalf of such entity, represents and warrants that
such individual is duly authorized to execute and deliver this
Lease on behalf of said entity. If Tenant is a corporation, trust
or partnership, Tenant shall deliver to Landlord evidence of such
authority satisfactory to Landlord prior to execution of this
Lease.
43. Conflict. Any conflict between the printed provisions,
Exhibits or Addenda of this Lease and the typewritten or
handwritten provisions, if any, shall be controlled by the
typewritten or handwritten provisions.
44. No Offer. Preparation of this Lease by Landlord's agent and
submission of same to Tenant shall not be deemed an offer to
Tenant to lease. This Lease shall become binding upon Landlord
and Tenant only when fully executed by both parties.
45. Lender Modification. Tenant agrees to make such reasonable
modifications to this Lease as may be reasonably required by an
institutional lender in connection with the obtaining of normal
financing or refinancing of the Building Project.
46. Multiple Parties. If more than one person or entity is
named as either Landlord or Tenant herein, except as otherwise
expressly provided herein, the obligations of the Landlord or
Tenant herein shall be the joint and several responsibility of
all persons or entities named herein as such Landlord or Tenant,
respectively.
47. Defined Terms and Marginal Headings. The words "Landlord"
and "Tenant" as used herein shall each include the plural as well
as the singular. If more than one person is named as Tenant the
obligations of each person are joint and several. The headings
to the paragraphs of this Lease are for convenience only and are
not a part of this Lease and shall have no effect upon the
construction or interpretation of any part hereof.
48. Broker. The parties recognize as the broker(s) who
negotiated this Lease the party or parties whose name or names
are stated in Section 1.11 of the Basic Lease Provisions, and
agree that Landlord shall be solely responsible for the payment
of brokerage commissions to said broker(s) and that Lessee shall
have no responsibility therefore unless written provision to the
contrary has been made.
Tenant represents and warrants that it has not dealt with or
employed any broker or agent as its representative in the
negotiation for or the obtaining of this Lease other than the
broker, if any, listed in said Section 1.11 as its sole and
exclusive agent (if any), and agrees to indemnify and hold
harmless Landlord against all costs or liability for compensation
claimed by any broker or agent (other than the broker, if any,
listed in said Section 1.11 as its sole and exclusive agent (if
any) and all attorneys' fees expended in connection therewith.
49. Substituted Premises. Paragraph deleted.
50. Hazardous Materials. Tenant agrees that Tenant, its agents
and contractors, licensees, or invitees shall not handle, use,
manufacture, store or dispose of any flammables, explosives,
radioactive materials, hazardous wastes or materials, toxic
wastes or materials, or other similar substances, petroleum
products or derivatives (collectively "Hazardous Materials") on,
under, or about the Premises, without Landlord's prior written
consent (which consent may be given or withheld in Landlord's
sole discretion), provided that Tenant may handled, store, use or
dispose of products containing small quantities of Hazardous
Materials, which products are of a type customarily found in
offices and households (such as aerosol cans containing
insecticides, toner for copies, paints, paint remover, and the
like), provided further that Tenant shall handle, store, use and
dispose of any such Hazardous Materials in a safe and lawful
manner and shall not allow such Hazardous Materials to
contaminate the Premises or the environment.
(a) Without limiting the above, Tenant shall reimburse,
defend, indemnify and hold Landlord harmless from and against any
and all claims, losses, liabilities, damages, costs and expenses,
including without limitation, loss of rental income, loss due to
business interruption, and attorneys fees and costs, arising out
of or in any way connected with the use, manufacture, storage, or
disposal of Hazardous Materials by Tenant, its agents or
contractors on, under or about the premises including, without
limitation, the costs of any required or necessary investigation,
repair, cleanup or detoxification and the preparation of any
closure or other required plans in connection herewith, whether
voluntary or compelled by governmental authority. The indemnity
obligations of Tenant under this clause shall survive any
termination of the Lease.
(b) Notwithstanding anything set forth in this Lease,
Tenant shall only be responsible for contamination of Hazardous
Materials or any cleanup resulting directly therefrom, resulting
directly from matters occurring or Hazardous Materials deposited
(other than by contractors, agents or representatives controlled
by Landlord) during the Lease term, and any other period of time
during which Tenant is in actual or constructive occupancy of the
Premises. Tenant shall take reasonable precautions to prevent
the contamination of the Premises with Hazardous Materials by
third parties. Landlord warrants that, to the best of Landlord's
actual knowledge, at the time of lease execution there are no
Hazardous Materials, as defined herein, except ordinary
janitorial and other products customarily used in connection with
maintenance of the property and stored at the Premises in the
proper manner and in compliance with all laws, and in quantities
or applications that do not present a danger to the health or
safety of Tenant. As used herein, the term "Hazardous
Material(s)" means any chemical, substance, material, object,
condition or waste, or combination thereof, which (i) is defined
as a hazardous substance, hazardous material, hazardous waste,
pollutant, toxic material, or contaminant under any Environmental
Law; (ii) is a petroleum hydrocarbon, including crude oil or any
fraction thereof; (iii) may be hazardous to human health or
safety or the environment due to its harmful or potentially
harmful properties or effects, including toxicity, corrosivity,
flammability, explosivity, infectiousness, radioactivity,
carcinogenicity, or reproductive toxicity; or (iv) is regulated
pursuant to any Environmental Law.
(c) It shall not be unreasonable for Landlord to withhold
its consent to any proposed Assignment or Sublease if (i) the
proposed Assignee's or Subtenant's anticipated use of the
Premisses involves the generation, storage, use, treatment or
disposal of Hazardous Materials; (ii) the proposed Assignee or
Subtenant has been required by any prior landlord, lender, or
governmental authority to take remedial action in connection with
Hazardous Materials contaminating a property if the contamination
resulted from such Assignee's or Subtenant's actions or use of
the property in question; or (iii) the proposed Assignee or
Subtenant is subject to an enforcement order issued by any
governmental authority in connection with the use, disposal, or
storage of a hazardous material.
(d) Notwithstanding any statement to the contrary in this
paragraph 50, Landlord warrants that as of the Commencement Date,
to the best of Landlord's knowledge, the Premises are free of
asbestos.
51. Addendum. The provisions in this Section 51 shall
supersede and override any other provisions in this Lease to the
extent the same are inconsistent.<PAGE>
ADDENDUM
51.1 Tenant Improvements. a) Landlord, at Landlord's sole
cost and expense, shall provide Tenant with a tenant improvement
allowance, which shall not exceed Ten dollars ($10.00) per usable
square foot (4,216 usable square feet x $10.00 = $42,160.00), and
shall utilize building standard materials in accordance with a
mutually agreed upon space plan and specifications and as
outlined in the Work Letter attached hereto as Exhibit "E".
Landlord will, at Tenant's option, amortize additional tenant
improvement dollars, up to and not to exceed an additional two
dollars ($2.00) per useable square foot, (for a total of $12.00
per sq. ft.), at an interest rate of ten percent (10%) per annum,
payable with the monthly Base Rent over the initial term of the
Lease.
b) Notwithstanding any provision in the Lease to the
contrary, including Sections 7.2 and 7.3, upon vacating of the
Premises by Tenant, Tenant shall not be required to remove any
interior improvements that were part of the initial tenant
improvements installed prior to occupancy, nor any improvements
subsequently installed or made, unless, as a condition to
Landlord's consent to allow such additional improvements,
Landlord specified, in writing, the need to remove same at the
end of the lease term.
51.2 Space Planning and Construction Drawings: Landlord
shall pay to Tenant's space planner up to $0.09 per usable square
foot for preliminary space planning and $0.45 per usable square
foot for Construction Drawings. Landlord reserves the right to
have its architect review all plans associated with the Space
Plans and Construction Drawings. These amounts shall be included
in the overall tenant improvement allowance of $10.00 per usable
square foot.
51.3 Free Base Rent. Provided Tenant is not in default of
the terms and conditions of the Lease during months two (2) and
three (3) of the initial lease term, Landlord shall abate the
Base Rent for month two (2) and three (3) of the initial Lease
Term.
51.4 Conference Center. Provided Tenant is not in default and
the Conference Center on the 2nd Level of the Office Tower is
available, for general use of the Office Tower Tenants, Tenant
shall receive free usage for up to four (4) hours per month for
the term of the Lease. Tenant shall be responsible for cleaning
and any other costs associated with the use of the Conference
Center in accordance with the Reservation/Rental Agreement
attached as Exhibit C.
51.5 Option to Extend. Subject to all the terms of this
paragraph and provided that Tenant is not in default under the
terms and conditions of the Lease, Tenant shall have and is
hereby granted the option to extend the term of the Lease for Two
(2) additional period of Five (5) years ("the Option Period").
The Option Period shall commence immediately upon the expiration
of the initial Term of the Lease.
a) Tenant may exercise the option only by written notice
to Landlord giving at least 180, but not more than 365 days prior
to the expiration of the then current Term. If this option is
not so exercised by such date it shall automatically expire.
Time is of the essence in exercising this option. This option
can be exercised only with respect to the area constituting the
Premises.
b) The Base Rent for the option period shall be the then
prevailing Fair Market Rental rate for like space in comparable
Office Towers.
c) The term "Fair Market Rental" shall mean and refer to
the annual amount per square foot that a willing, comparable,
non-renewal tenant would pay, and a willing, comparable, landlord
in the area would accept at arms length (excluding any special
concessions being given or made).
(i) Procedure for Determination of Fair Market
Rental. Within fifteen (15) days ("outside Agreement Date"),
following the date Tenant exercises its Option (but in no event
more than 180 days prior to expiration of the then current term),
Tenant and Landlord shall use their reasonable best efforts in
good faith and with due diligence to agree upon the Fair Market
Rental. If Landlord and Tenant are unable to reach agreement on
the Fair Market Rental within thirty (30) days, then within ten
(10) days after said period, Landlord and Tenant shall
simultaneously each submit to the other in a sealed envelope
their good faith estimate of the Fair Market Rental at the end of
said ten (10) day period (the "Estimated Fair Market Rental").
If the higher of the said estimates is not more than one hundred
five percent (105%) of the lower of such estimates, the Fair
Market Rental shall be the average of the Estimated Fair Market
Rentals. If otherwise, then, within five (5) business days after
submission of the estimates, either party may submit the question
to appraisal in accordance with the following procedure:
(ii) Within twenty (20) days after either party
request appraisal, the parties shall select a mutually acceptable
MAI appraiser with experience in appraising comparable space in
the area. If the parties cannot agree on an appraiser within
said twenty (20) day period, then within five (5) business days
thereafter, each party shall select an independent MAI appraiser
meeting the above criteria, and within ten (10) days thereafter
the two appointed appraisers shall select a third appraiser
meeting the above criteria, and the third appraiser shall
determine the Fair Market Rental. If the two appraisers selected
by Landlord and Tenant cannot agree on thee third appraiser, the
third appraiser shall be selected by the then sitting presiding
judge of the Superior Court of California in and for Orange
County.
(iii) Once the appraiser or appraisers have been
selected as provided herein, then as soon thereafter practicable,
the appraisers shall determine, in their opinion, the Fair Market
Rental. The appraiser or appraisers shall render a decision
pursuant thereto within thirty (30) days.
(iv) Each party shall be responsible for costs,
charges and fees of its respective appointee, and shall share
equally in the costs, charges and fees of the third appraiser.
51.6 Parking. Landlord shall provide Tenant with three (3)
designated twenty (20) minute parking spaces in the surface
parking lot ("L" section) adjacent to the Office Tower, for the
term of the Lease and any extensions thereof. Bank employees
shall be entitled to park in the parking structure without
payment of a parking fee to Landlord. The number of parking
spaces for the Premises shall be on the basis of 3.4 spaces per
1,000 rentable square feet of Tenant's rentable space, rounded
down to a whole number.
51.7 Right to Sublease or Assign. In the event Tenant receives
any excess rental consideration in conjunction with an agreement
providing for the assignment or sublease of the Leased Premises,
(excluding the payments due to Landlord under this Lease), Tenant
shall share fifty percent (50%) of said excess rental
consideration with Landlord less direct costs of subleasing, such
as reasonable brokerage commissions and tenant improvement costs,
if any. Notwithstanding anything to the contrary that may be
contained in the Lease, including Section 12, an assignment or
subletting to a parent or subsidiary shall not require Landlord's
consent.
51.8 Monument Signage. Provided Landlord maintains monument
signs at the corner of Beach Boulevard and Warner Avenue and Ash
Street and Warner Avenue, Tenant shall, subject to city approval,
be authorized to install two (2) sign placards at each location
as described in Exhibit "D" attached hereto, on said monument
sign.
51.9 Directory Signage. Landlord, at Landlord's sole cost and
expense, shall provide Tenant with one (1) directory signs to be
located on the directory board on the Plaza Level.
51.10 Office Tower Signage. Tenant shall be authorized
to install one eyebrow sign to be located approximately four (4)
horizontal bands (above the palm tree level) above the main
entrance of the Office Tower on the north east side, subject to a
mutually agreed upon location, at no additional rental rate
increase. Additionally, Landlord shall allow Tenant to have
eyebrow ATM signage on the lowest spandrel of the Office Tower,
located on the west side. Said signage is personal to tenant and
not transferrable. Said authorization shall expire if Tenant
does not install the sign within twelve (12) months of Tenant's
occupancy. Tenant shall be responsible for all costs associated
with the installation, maintenance, insurance and ultimate
removal of the sign. Said sign is subject to City and Landlord
approval based upon the project sign criteria mandated by the
City of Huntington Beach, attached hereto as Exhibit "D". A
likeness of said signage is encompassed within Exhibit "D",
attached hereto. Tenant shall remove sign at the end of the
Lease Term or upon vacating the Premises, whichever occurs first.
In the event Tenant fails to do so, Landlord may after providing
written notice to Tenant remove sign at Tenant's expense.
51.11 Building Project Name. Landlord shall change the
name of the Building Project prior to the occupancy of Tenant, so
that the name being promoted by Landlord is no longer "Guardian
Center".
51.12 Office of the Comptroller of the Currency ("OCC")
Approval. Landlord shall allow ninety (90) days, from the date
of full Lease execution, for Tenant to obtain OCC approval to use
the Premises as a retail banking location. Until Tenant receives
OCC approval, Landlord shall be permitted to continue marketing
the space and accept back-up offers. In the event Tenant does
not obtain final written OCC approval within said ninety (90)
days, then Tenant may terminate this lease by providing Landlord
with written notice of such termination within said ninety (90)
day period, and Landlord shall refund all monies paid by Tenant
less any costs incurred for Space Planning and Construction
Documents.
51.13 Arbitration. The parties agree that certain
specific disputes arising out of this Lease shall be resolved by
arbitration under the rules of the American Arbitration
Association, and not by court. These disputes shall be limited
to the following: Disputes over square footage, Commencement or
Expiration dates, classification of any expense as "Operating
Expenses", parking, exercise of options, and any Landlord
obligations, including refunds of security deposits at lease
termination.
Unless specifically mentioned above, all other disputes shall
be excluded from the obligation to arbitrate. Non-payment of
rents and/or non-performance by Tenant of any covenant to provide
insurance coverage shall be specifically excluded from any
obligation to arbitrate and may be pursued through an unlawful
detainer action by Landlord. Any matter within the jurisdiction
of the probate court shall also be excluded from arbitration. In
the event any dispute covered by arbitration is believed to
affect the rent amount owing, rent as established by the Landlord
shall continue to be paid in full pending final determination
through the arbitration process, at which time the parties shall
make the necessary reimbursements to comply with the award.
51.14 Structural Defect. Notwithstanding any other
provision of this Lease, Landlord, without passing through the
costs to Tenant, shall be responsible for repairs of all latent
defects in the structural components or mechanical systems of the
Office Tower and Building Project, other than routine maintenance
and minor repairs in the normal course of operations.
51.15 Exclusions from Operating Expenses. The following
items shall not be passed through to Tenant as part of the
"Operating Expenses":
a) Capital improvements or replacements, other than
costs which, in accordance with general accounting and management
principles, would be considered an expense of maintaining,
operating, managing or repairing the Office Building Project.
b) Repairs or other work occasioned by fire, windstorm,
or other casualty or by the exercise of eminent domain, or any
expenditure for which the Landlord is reimbursed from any source.
c) Attorney's fees, costs and disbursements and other
expenses incurred in connection with negotiations or disputes
with tenants, other occupants, prospective tenants or occupants
of the building.
d) Renovating or decorating space for other tenants or
occupants of the building.
e) Costs incurred due to violation by Landlord or any
tenant of the terms and conditions of any lease; any costs,
fines, or penalties incurred due to violations by Landlord of any
governmental rule or authority.
f) Overhead of Landlord for services on or to the real
property or the Office Building, to the extent that the costs of
such services exceed competitive costs of such services were they
not rendered by a subsidiary or affiliate; any compensation paid
to clerks, attendants or other persons in commercial concessions
operated by Landlord.
g) Interest on debt or amortization payments on any
mortgage, and rental under any ground lease.
h) Advertising and promotional expenses for the purposes
of securing tenants for the property.
I) Costs for sculpture, paintings, or other objects of
art.
j) Rentals and other related expenses incurred in
leasing air conditioning equipment or systems, elevators, or
other permanent equipment ordinarily considered to be of a
capital nature, except equipment which is used in providing
janitorial services and which is not affixed to the Office
Building; the value of lost income to the Landlord of any office
space in the Office Building which is utilized for the management
of the Office Building Project.
k) Financing costs, including but not limited to points,
commitment fees and legal fees.
l) Costs incurred by Landlord to remedy and defects in
the design of or materials used in, or the defective installation
of the structural steel or other framing, roof, foundations, and
underground utilities forming part of or servicing the Office
Building or the real property.
m) Landlord's costs in removing substances considered
detrimental to the environment or to the health of building
occupants, including the cost of removal and/or disposition of
cooling system or other chemicals used in the operation of the
Office Building, unless such substances are placed on the Office
Building Project by Tenant.
n) Any fines, penalties, or interest paid by Landlord as
a result of late payment of real estate taxes.
o) Leasing or other brokerage commissions.
p) Depreciation.
q) Franchise, estate, succession, inheritance, profit,
capital gains, capital stock, transfer and personal or corporate
income taxes (excluding any rental tax), imposed upon any part of
the Office Tower or Building Project including the related common
areas;
r) The cost of any repairs, alterations, additions,
changes, improvements, replacements or other items, which, under
generally accepted accounting principals, are classified as
capital improvements or capital expenditures (including without
limitation any items amortized or depreciated), except for items
of a relatively minor and reasonable costs incurred in the daily
maintenance of the property.
s) Overhead and profit increments paid to the Landlord
or to subsidiaries or affiliates of the Landlord, for services in
the Building Project to the extent the same exceeds the costs of
such services if rendered by qualified, first class, unaffiliated
third parties on a competitive basis.
51.15 American Disability Act ("ADA"): To the best of Landlord's
knowledge, the Premises
and common areas, in their existing use, comply with, and Landlord is not
in violation of, any applicable
federal, state, county or local statutes, laws, regulations rules,
ordinances, codes, licenses, and permits
(other than some ADA improvements that Landlord is in the process of
making pursuant to the City of
Huntington Beach Building Permit number 086376).
Tenant shall not have any responsibility (either to act or pay for
any cost) to correct any existing
violations. Any such cost incurred by the Landlord to correct any of the
violations listed above shall not be a
party of the building's operating expenses, or deducted from any tenant
improvement allowance.
LANDLORD AND TENANT HAVE CAREFULLY READ AND REVIEWED THIS LEASE
AND EACH TERM AND PROVISION CONTAINED HEREIN. THE PARTIES HAVE
ALSO HAD AMPLE OPPORTUNITY TO HAVE THEIR RESPECTIVE ATTORNEYS
REVIEW THE CONTENTS HEREIN AND, BY 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 LANDLORD AND TENANT WITH RESPECT TO THE PREMISES.
IN WITNESS WHEREOF, the parties hereto have executed this Lease, consisting of
the foregoing provisions and paragraphs 1 through 51, together with
Exhibits "A-1"
through "E", incorporated herein by this reference, as of the date first above
written.
"LANDLORD" "TENANT"
LIU CORP., Liberty National Bank,
a California corporation a National Banking
Association
By: /s/ Mimi Liu By:/s/ Philip S. Inglee
Mimi Liu Philip S. Inglee
Secretary/Treasurer President and Chief Executive
Officer
Date: 2/23/96 Date: 2/2/96
EXHIBIT "A-1"
FLOOR PLANS<PAGE>
EXHIBIT "A-2"
PLOT PLAN OF BUILDING
<PAGE>
EXHIBIT "B"
RULES AND REGULATIONS FOR GUARDIAN CENTER TENANTS
1. Tenant shall not obstruct or interfere with the rights of
other tenants of the Office Tower, or of persons having business
in the Building Project ("OBP"), or in any way injure or annoy
such tenants or persons.
2. Tenant shall only use Premises for the purpose stated in
Section 1.3. Tenant shall not use the Premises for lodging,
sleeping, cooking, or for any immoral or illegal purpose or for
any purpose that will damage the Premises or the OBP, or the
reputation thereof, or for any purposes other than those
specified in the Lease.
3. Canvassing, soliciting and peddling in the OBP prohibited
without the prior written approval of Landlord. Tenant shall not
disturb, solicit, or canvass any occupant of the Center without
the prior written approval of Landlord.
4. Tenant shall not bring or keep within the Premises any
animal, bicycle or motorcycle.
5. Tenant shall not conduct mechanical or manufacturing
operations, cook or prepare food, or place or use any
inflammable, or hazardous fluid, substance, or device in or about
the Premises without the prior written consent of Landlord.
Tenant shall comply with all rules, orders, regulations of the
applicable Fire Rating Bureau, or any other similar body, and
Tenant shall not commit any act or permit any object to be
brought or kept in the Premises which shall increase the rate of
fire insurance on the Premises or on property located therein.
6. Tenant shall not use the Premises for manufacturing or for
the storage of goods, wares or merchandise, except as such
storage may be incidental to the use of the Premises for general
retail purposes and except in such portions of the Premises as
may be specifically designated by Landlord for such storage.
Tenant shall not occupy the Premises or permit any portion of the
Premises to be occupied for the manufacture or direct sale of
liquor, narcotics, or tobacco in any form, or as a medical
office, music or dance studio or employment agency. Tenant shall
not conduct in or about the Premises any auction, public or
private, without the prior written approval of Landlord, except,
provided Tenant is a Bank, reasonable foreclosure sales of
personal and real property conducted in the Bank's normal course
of business.
7. Tenant shall not install or use in the Premises any
additional air conditioning unit, engine, boiler, generator,
machinery, heating unit, stove, water cooler, ventilator,
radiator or any other similar apparatus without the prior written
consent of Landlord, and then only as Landlord may direct.
8. Tenant shall not use in the Premises any machines, other
than standard office machines such as typewriters, calculators,
personal computers, copying machines and similar machines,
without the prior written approval of Landlord. All office
equipment and any other device of any electrical or mechanical
nature shall be placed by Tenant in the Premises in settings
approved by Landlord, so as to absorb or prevent any vibration,
noise, or annoyance. Tenant shall not cause improper noises,
vibrations or odors within the OBP.
9. Tenant shall move all freight, supplies, furniture,
fixtures and other personal property into, within and out of the
OBP at such times and through such entrances as may be designated
by Landlord, and such movement of such items shall be under the
supervision of Landlord. Landlord reserves the right to inspect
all such freight, supplies, furniture, fixtures and other
personal property to be brought into the OBP and to exclude from
the OBP, all such objects which violate any of these rules and
regulations of the provisions of the Lease. Tenant shall not
move or install such objects in or about the Premises in such a
fashion as to unreasonably obstruct the activities of other
Tenants, and all such moving shall be at the sole expense, risk
and responsibility of Tenant. Tenant shall not use any hand
trucks other than those equipped with rubber tires and side
guards in the delivery, receipt or other movement of freight,
supplies, furniture, fixtures and other personal property to,
from, or within the OBP.
10. Tenant shall not place within the Premises any safes,
copying machines, computer equipment other than desktop personal
computers or other objects of unusual size or weight, nor shall
Tenant place within the Premises any objects which exceed the
floor weight specifications of the Premises without the prior
written consent of Landlord. The placement and positioning of
all such objects within the Premises shall be prescribed by
Landlord and such objects shall, in all cases, be placed upon
plates or footings of such size as shall be prescribed by
Landlord.
11. Tenant shall not deposit any trash, refuse, cigarettes, or
other substances of any kind within or outside of the Premises,
except in the refuse containers provided therefore. Tenant shall
not introduce into the Premises any substance which might add an
undue burden to the cleaning or maintenance of the Premises or
the OBP. Tenant shall exercise its best efforts to keep the
sidewalks, entrances, passages, courts, lobby areas, garages or
parking areas, elevators, escalators, stairways, vestibules,
public corridors and halls in and about the OBP (hereinafter
"Common Areas") clean and free from rubbish.
12. Tenant shall use the Common Areas only as a means of
ingress and egress, and Tenant shall permit no loitering by any
persons upon Common Areas or elsewhere within the OBP. The
Common Areas and roof of the OBP are not for the use of the
general public, and Landlord shall in all cases retain the right
to control or prevent access thereto by all persons whose
presence, in the judgment of Landlord, shall be prejudicial to
the safety, character, reputation or interests of the OBP and its
tenants. Tenant shall not enter the mechanical rooms, air
conditioning rooms, electrical closets, janitorial closets, or
similar areas or go upon the roof of the Center without the prior
written consent of Landlord.
13. Tenant shall not use the washrooms, restrooms and plumbing
fixtures of the Premises and appurtenances thereto for any other
purpose than the purposes for which they were constructed, and
Tenant shall not deposit any sweepings, rubbish, rags or other
improper substances therein. Tenant shall not waste water by
interfering or tampering with the faucets or otherwise. In the
event Tenant or Tenant's servants, employees, agents,
contractors, licenses, invitees, guests or visitors cause any
damage to such washrooms, restrooms, plumbing fixtures or
appurtenances, Tenant shall pay to Landlord the costs of repair
or replacement plus a 20% administrative charge.
14. Tenant shall not hang any banners, signs and/or posters
(hereinafter collectively referred to as "Signs") of any kind
whatsoever in any exterior portion of the "Main Building
Structure" of the Leased Premises (the exterior portion of the
Main Building Structure as used herein, shall include but not be
limited to, the exterior side of all walls, windows and any and
all portions of patio areas of the Leased Premises), without the
prior written approval from Landlord and the City of Huntington
Beach, as specifically required by Article 961, Sections
9610.4(i) and 9610.9(a) of the City of Huntington Beach Sign
Code. In the event Tenant fails to obtain the prior written
approval of both Landlord and the City of Huntington Beach,
Landlord shall notify Tenant of its non-compliance with the City
Sign Code and these Rules and Regulations. Tenant shall
immediately comply with Landlord's demand to remove such Sign. If
Tenant should fail or refuse to remove such Sign, Tenant shall
thereafter be assessed a $200 per day fine by Landlord and shall
also be subject to any and all prosecution, penalties and fines
which the City of Huntington Beach may thereafter impose. Upon
removal of any wall decorations, banners, signs, or installations
or floor coverings by Tenant, any damage to the walls or floors
shall be repaired by Tenant at Tenant's sole cost and expense.
a. This Paragraph 14 shall apply to all work performed in the
Premises including without limitation, installation of
telephones, telegraph equipment, electrical devices and
attachments and installations of any nature affecting floors,
walls, woodwork, trim, windows, ceiling, equipment or any other
portion of the Premises.
b. Tenant shall refer all contractors' representatives,
installation technicians, janitorial workers and other mechanics,
artisans and laborers rendering any service in connection with
the repair, maintenance or improvement of the Premises to
Landlord for Landlord's approval and/or supervision before
performance of any such service.
c. The means by which telephone, telegraph and similar wires
are to be introduced to the Premises and the location of
telephones, call boxes, and other office equipment affixed to the
Premises shall be subject to the prior written approval of
Landlord. Plans and specifications for such work, prepared at
Tenant's sole expense, shall be submitted to Landlord and shall
be subject to Landlord's prior written approval in each instance
before the commencement of work. Work done without said approval
shall be restored upon the termination of the Lease at Landlord's
option at Tenant's expense. All installations, alterations and
additions shall be constructed by Tenant in a good and
workmanlike manner and only good grades of materials shall be
used in connection therewith.
15. Landlord shall have the right to prohibit any publicity,
advertising or use of the name of the Office Tower or the OBP by
Tenant which, in Landlord's opinion, tends to impair the
reputation of the Office Tower, or the OBP, or its desirability
for offices and retail operations and upon written notice from
Landlord, Tenant shall refrain from or discontinue any such
publicity, advertising or use of the OBP name.
16. The sashes, sash doors, skylights, windows and doors that
reflect or admit light or air into the Common Areas shall not be
covered or obstructed by Tenant through placement of objects upon
windowsills or otherwise. Tenant shall cooperate with Landlord
in obtaining maximum effectiveness of the cooling system of the
Premises by closing blinds and other window coverings when the
sun's rays fall upon windows of the Premises. Tenant shall not
obstruct, alter or in any way impair the efficient operation of
Landlord's heating, ventilation, air conditioning, electrical
wire, safety or light systems, nor shall Tenant tamper with or
change the setting of any thermostat or temperature control
valves in the Premises. Tenant shall give Landlord prompt notice
of all accidents to or defects in air-conditioning equipment,
plumbing, electric facilities, or any part of the appurtenances
of the Premises.
17. Subject to applicable fire or other safety regulations,
all doors opening onto Common Areas and all doors upon the
perimeter of the Premises shall be kept closed and, during non-business hours,
locked, except when in use for ingress or egress.
If Tenant uses the Premises after regular business hours or on
non-business days Tenant shall lock any entrance doors to the
Premises used by Tenant immediately after using such doors.
Tenant shall exercise reasonable precaution in the protection of
their personal property from loss or damage by keeping doors to
unattended areas locked. Tenant shall also report any thefts or
losses to the Landlord or security personnel as soon as
reasonably possible after discovery and shall also notify the
Landlord and security personnel of the presence of any persons
whose conduct is suspicious or causes a disturbance.
18. Employees of Landlord shall not receive or carry messages
for or to Tenant or any other person, nor contract with nor
render free or paid services to Tenant or Tenant's servants,
employees, contractors, jobbers, agents, invitees, licensees,
guests or visitors. In the event that any of Landlord's
employees perform any such services, such employees shall be
deemed to be the agents of Tenant regardless of whether or how
payment is arranged for such services and Tenant thereby
indemnifies and holds Landlord harmless from any and all
liability in connection with any such services and any associated
injury or damage to property or injury or death to persons
resulting therefrom.
19. All keys to the exterior of the Premises shall be obtained
by Tenant from Landlord, and Tenant shall pay to Landlord a
reasonable deposit determined by Landlord from time to time for
such keys. Tenant shall not make duplicate copies of such keys.
Tenant shall not install additional locks or bolts of any kind
upon any of the doors or windows of, or within, the Premises
without written prior consent of Landlord, nor shall Tenant make
any changes in existing locks or the mechanisms thereof. Tenant
shall, upon the termination of its tenancy, provide Landlord with
the combinations to all combination locks on safes, safe cabinets
and vaults and deliver to Landlord all keys to the Premises and
all interior doors, cabinets, and other key-controlled mechanisms
therein, whether or not such keys were furnished to Tenant by
Landlord. In the event of the loss of any key furnished to
Tenant by Landlord, Tenant shall pay to Landlord the cost of
replacing the same or of changing the lock or locks opened by
such lost key if Landlord shall deem it necessary to make such a
change, plus a 20% administrative charge.
20. For purposes hereof, the terms "Landlord", "Tenant", and
"Premises" are defined as those terms as defined in the Lease to
which these Rules and regulations are attached. Wherever Tenant
is obligated under these Rules and Regulations to do or refrain
from doing an act or things, such obligation shall include the
exercise by Tenant of its best efforts to secure compliance with
such obligation by the servants, employees, contractors, jobbers,
agents, invitees, licensees, guests and visitors of Tenant.
21. No person shall disturb the occupants of the OBP by the
use of any musical instruments, the making of unseemly noises, or
other unreasonable use.
22. Tenant, its employees, agents, customers, and invitees
shall have the right to use parking space provided by Landlord
but not so as to unreasonably interfere with the similar parking
rights of other tenants.
23. No vending machines or machines of any description shall
be installed, maintained, or operated upon the Premises without
the prior written consent of Landlord.
24. Temporary inconvenience occasioned by construction in or
near the OBP shall not be deemed to disturb Tenant as a part of
the covenant of quiet enjoyment and possession.
25. Landlord is not responsible to any Tenant for the
nonobservance or violation of the Rules and Regulations by any
other Tenant.
26. Storage of vehicles or equipment in the parking area is
prohibited. Landlord has the right to enforce this restriction
by removal and storage of vehicles or equipment and such cost of
storage and removal shall be borne by Tenant. Tenant shall
observe designated restricted parking areas, such as visitor
parking, fire lanes, handicap parking, and loading zones.
Landlord has the right to enforce this parking rule by removal
and storage of Tenant's vehicles at the expense of Tenant.
27. Tenant shall not be permitted to use any area of the
Office Tower outside of Tenant's Premises for storage of
supplies, furnishings, equipment, or personal property without
prior written consent of Landlord.
28. Landlord shall not be responsible to the Tenant, their
agents, employees, customers, or invitees for any loss of money,
jewelry, or other personal property from the Premises or Common
Areas. Landlord shall not be responsible to Tenant for any
damages to any property therein from any cause whatsoever whether
such loss or damage occurs when an area is locked against entry
or not.
29. Tenant will not be permitted to locate furnishings or
cabinets adjacent to mechanical or electrical access panels or
over air conditioning outlets so as to prevent operating
personnel from servicing such units as routine or emergency
access may require. Cost of moving such furnishings for
Landlord's access will be borne by Tenant.
30. Tenant will be responsible for any damage to carpeting and
flooring as a result of rust or corrosion of file cabinets, pot
holders, roller chairs, and metal objects and plants.
31. Tenant shall permit Landlord six (6) months prior to the
termination of this Lease to show Premises during business or
nonbusiness hours to prospective tenants however, Landlord shall
not unreasonably disturb Tenant's business.
32. Tenant valet parking, if applicable, shall be conducted in
accordance with the following current guidelines (which may be
modified at Landlord's discretion upon 15 days prior written
notice to Tenant). 1. Parking for valet vehicles shall be
permitted in allocated marked stalls only (which stalls may be
relocated at Landlords discretion upon 15 days prior written
notice to Tenant). 2. Valet service and parking shall be
conducted only between the hours of 5 p.m. and 1 a.m., seven days
a week. 3. The valet drop-off area and key station may be
located within the green canopy adjacent to the Office Tower. 4.
Only a single lane of valet vehicles will be permitted in the
drop-off area. 5. Keys are required to remain in the ignition of
valet vehicles left at the drop-off area. 6. Tenant shall keep
fire lanes clear of valet vehicles at all times. 7. Tenant shall
be responsible for conducting and maintaining its valet service
in full compliance with all federal, state and municipal laws and
regulations affecting such activity. 8. Tenant shall be solely
responsible for (a) policing the area to be used for valet drop-off and
parking; (b) all costs associated with the valet service
and incidents thereto; and (c) all liabilities arising from the
operation of the valet service. 9. Tenant and/or its designated
agent, at its sole cost and expense, shall provide proof of, and
maintain in full force and effect, comprehensive liability
insurance with respect to the Premises and operations of its
valet service in an amount not less than one million dollars
($1,000,000) combined single limit bodily injury, personal
injury, death and property damage liability per occurrence,
subject to such increases in an amount as Landlord may reasonably
require from time to time. Policy or policies to include a
provision that (a) coverage shall be primary with respect to any
loss or claim arising directly or indirectly out of the
operations of Tenant and/or its designated agent, any policies
carried by Landlord shall be excess and non-contributing with
such polity or policies, and (b) that Landlord and Landlord's
Agent shall be additional named insured under such policy or
policies, and (3) a provision that insurer will not cancel, or
materially change the coverage provided by such policy without
first giving Landlord thirty (30) days prior written notice.
PARKING RULES
1. Parking areas shall be used only for parking by vehicles no
longer than full size, passenger automobiles herein called
"Permitted Size Vehicles." Vehicles other than Permitted Size
Vehicles are herein referred to as "Oversized Vehicles."
2. Tenant shall not permit or allow any vehicles that belong
to or are controlled by Tenant or Tenant's employees, suppliers,
shippers, customers, or invitees to be loaded, unloaded, or parked
in areas other than those designated by Landlord for such
activities.
3. Parking stickers or identification devices shall be the
property of Landlord and shall be returned to Landlord by the
holder thereof upon termination of the holder's parking
privileges. Tenant will pay such replacement charge as is
reasonably established by Landlord for the loss of such devices.
4. Landlord reserves the right to refuse the sale of monthly
identification devices to any person or entity that willfully
refuses to comply with the applicable rules, regulations, laws,
and/or agreements as set forth by the Landlord.
5. Landlord reserves the right to relocate all or a part of
parking spaces from floor to floor, within one floor, and/or to
reasonably adjacent offsite location(s), and to reasonably
allocate them between compact and standard size spaces, as long as
the same complies with applicable laws, ordinances, and
regulations.
6. Users of the parking area will obey all posted signs and
park only in the areas designated for vehicle parking.
7. Unless otherwise instructed, every person using the parking
area is required to park and lock his own vehicle. Landlord will
not be responsible for any damage to vehicles, injury to persons,
or loss of property, all of which risks are assumed by the party
using the parking area.
8. Validation, if established, will be permissible only by
such method or methods as Landlord and/or its licensee may
establish at rates generally applicable to visitor parking.
9. The maintenance, washing, waxing, or cleaning of vehicles
in the parking structure or Common Areas is prohibited.
10. Tenant shall be responsible for seeing that all of its
employees, agents, and invitees comply with the applicable parking
rules, regulations, laws, and agreements.
11. Landlord reserves the right to modify these rules and/or
adopt such other reasonable and non-discriminatory rules and
regulations as it may deem necessary for the proper operation of
the parking area.
12. Such parking use, as is herein provided, is intended merely
as a license only, and no bailment is intended or shall be created
hereby.
13. Any vehicle not parked in a marked stall shall be towed at
vehicle owner's expense.
14. No overnight parking shall be permitted without prior
consent of Landlord.
15. If Tenant or its' employees park in any non-designated
parking area, Landlord may charge Tenant, as an additional charge,
twenty-five dollars ($25.00) per day for each day or partial day
such vehicle is parked in any part of the common areas other than
that designated.
16. Landlord reserves the right to designate reserved parking
spaces in the parking areas.
17. Landlord reserves the right to require Tenant and its
employees to park vehicles on designated levels of the parking
structure.
18. Tenant acknowledges that it is responsible and agrees to
comply with existing and future South Coast Air Quality Management
District (SCAQMD) mandates and requirements imposed on major
employers in Southern California.
By execution below, I acknowledge that I understand and agree to
abide by all the Rules and Regulations stated above.
"TENANT"
Liberty National Bank,
a National Banking Association
By: /s/ Philip S. Inglee
Philip S. Inglee
President and Chief Executive Officer
Date: 2/2/96
EXHIBIT "C"
CONFERENCE CENTER RESERVATION/RENTAL AGREEMENT
Date_____________________________________
Tenant's Tenant's
Name____________________________________ Suite_______________________
Reservation Date/Time:
Date_____________________________ Time_____________________________
_____ Hourly (Minimum 2 hours)
_____ _ Day
_____ One (1) Day
Floor Plan Set-UP..........No. 1 _____ No. 2 _____ No. 3
_____ No. 4 _____
Coffee Supplies
Required.............................................Yes ______ No _______
10 persons...$15.00 _____ 25 persons...$20.00
_____
50 persons...$50.00 _____ 75 persons...$75.00
_____
Acknowledgment and Agreement:
I hereby agree and acknowledge that the terms and conditions of
the Lease by and between LIU CORP. and
_____________________________________________ will be applicable
when leasing and utilizing the Conference Center, Suite 210, as
stated above.
In addition, the security deposit may be retained in part or in
whole as payment for any damage to the carpet, walls, furniture,
fixtures and equipment as a result of our usage.
__________________________________________ ___________________________
Tenant Signature Date
(Authorized Agent)
**************************************************************************
(To be completed by Property Management)
Security Deposit:
Date Received ____________________ Check No. _______________ Amount $_____
Held on Account __________________ Check No. _______________ Amount $___
Check Returned _______________________________________________ _____________
Tenant Signature Date
<PAGE>
EXHIBIT "D"
EXTERIOR SIGNAGE
1. Monument Signage: Tenant shall be entitled to install, at
Tenant's sole cost and expense, four (4) monument placards at the
Center; two (2) placards on the monument sign at the corner of
Beach Blvd. & Warner Avenue and two (2) placards on the monument
sign at the corner of Ash Street & Warner Avenue. These sign
placards shall be submitted to the Landlord for approval and
installed by Landlord's sign contractor.
The locations of the tenant placards, as depicted below, do not
necessarily reflect the exact location of specified tenant
placards.
Tenant will be granted:
Sign A - Two (2) large placards;
Sign B - Two (2) small placards.
2. Exterior Signage: Planned Sign Program No. 84-2 as Approved
by the City of Huntington Beach:
A. GENERAL PROVISIONS:
l. No sign shall be installed, erected, altered, or
reconstructed without prior City approval and issuance of
appropriate Building Division permits.
a) Prior to submittal for plan check and issuance of
permits, the sign plans must be approved by the owner or owner's
representative.
b) UL listed housing or sleeving shall be required for all
wall signage.
2. Copy shall be limited to the establishment's name and/or
product name.
a) Box-type or can signs are prohibited.
b) Exposed raceway signs are prohibited.
c) Each letter, numeral or unit, shall comply with the
following color specifications:
(1) Approved letter colors are #72358 red and #899
turquoise.
(2) Approved letter return and trim cap color shall
be #899 turquoise.
(3) Transparent sign faces are prohibited.
3. No tenant shall affix or maintain upon the exterior walls of
the premises or the buildings or in the parking lot and landscape
areas any signs other than as permitted herein except with the
City's and landlord's approvals.
a) Temporary signs, such as banners, can only be permitted
in accordance with Section 976C.16 of the Huntington Beach
Ordinance Code.
b) Each retail or restaurant tenant may place on their
service or delivery door one sign indicating the name of their
business name in white lettering not to exceed 3" in height nor
more that 100 square inches. This sign shall be located at a
height of 5'6".
B. WALL SIGNAGE:
1. Each tenant in the retail/restaurant buildings adjacent to
the Office Tower establishment shall be permitted one illuminated
reverse aluminum pan channel letter sign:
a) To be located only on the space and on the surface
specially provided for same of the building exterior.
b) No other signage is permitted on the exterior of the
premises.
c) Tenants with a corner unit will be permitted two signs
providing the sign area does not exceed the maximum allowed by
City codes or as designated in this sign criteria.
2. Maximum letter height for the retail establishments shall be
twenty-four (24) inches.
3. Minimum letter size shall be ten (10) inches.
4. Sign length shall not exceed 75% of leasehold width.
Signage area shall be centered on facia vertically.
5. Upper and lower case letters from the top of the ascender to
the bottom of the descender shall not exceed thirty-six (36)
inches in overall height.
6. Maximum letter height for Holiday Health Spa and the Edwards
Cinemas shall be thirty (30) inches.
7. Signage for the retail establishments shall not exceed the
provisions of Section 9760.10 of the Huntington Beach Ordinance
Code.
8. Signs shall be illuminated in such a way to create a back-lit effect.
<PAGE>
LEASE SPECIFICATIONS
BY AND BETWEEN
LIU CORP., A CALIFORNIA CORPORATION AND
LIBERTY NATIONAL BANK
FOR SIGNS AT GUARDIAN CENTER
3. Exterior Signage (Likeness):
<PAGE>
A. GENERAL PROVISIONS:
1. The design and construction of Tenant's exterior sign must
receive written approval by Landlord prior to fabrication and
installation.
2. Tenant shall not hang any banners, signs and/or posters
(hereinafter collectively referred to as "Signs") of any kind
whatsoever in any exterior portion of the leased premises without
the prior written approval from Landlord and the City of
Huntington Beach. (Please refer to the Rules and Regulations
attached to and made a part of the Lease.)
3. All signs shall be in accordance with Section 976C.16 and/or
Section 9760.10 of the Huntington Beach Ordinance Code.
4. Tenant shall pay for all signs, their installation
(including final connection, transformers and all other labor and
materials) and maintenance. Tenant's sign contractor must file,
pay for and obtain any licenses, permits and variances as required
for sign installation.
5. Tenant will notify Landlord of the installation schedule no
less than twenty four (24) hours prior to the scheduled
installation.
B. BLUE PRINTS/DRAWINGS:
1. In order to obtain the Landlord's written approval for each
sign two (2) blue prints/drawings, which will depict size, color,
material, location, etc., will be submitted with a written request
for approval. One (1) blue print/drawing will be retained for
Landlord's records. Upon the written approval (denoted on the
blue print) one original blue print will be returned to the Tenant
or Tenant's sign contractor. A plot plan indicating location of
Tenant sign must be included.
2. Neon tubing sizes, colors, wattage and intensity must be
depicted on blue prints.
3. Tenant should allow three (3) to five (5) working days for
Landlord's written approval.
C. FABRICATION AND INSTALLATION:
The fabrication and installation of all signs shall be subject
to the following restrictions:
1. All Channel letters are to be fabricated with .060 aluminum
sheet. Seams on letter returns to be welded sanded and buffed
prior to painting. Channelume, Channel Classic and Channel LET-R-edge will not
be permitted.
2. Three and one-half inch (3 1/2") deep letter returns.
3. Neon tubing will be 13 millimeters.
4. 30 MA high power factor transformers must be used. No
exposed lamps will be permitted.
5. All penetrations of the building structure required for sign
installation shall be sealed in a watertight condition and be
patched to match adjacent finish.
6. No sign company labels will be permitted on the exposed
surfaces of the signs except those required by Underwriters Laboratories
(UL) which shall be placed in an inconspicuous
location.
7. The Landlord shall provide primary electrical service
terminations to the signage area on the rear side of the parapet
wall.
8. All signs shall conceal all necessary wiring, ballasts,
transformers, starters and other necessary equipment within their
individual letters or behind storefront construction.
9. It will be the responsibility of the Tenant's sign
contractor to verify all conduit and transformer locations and
service prior to fabrication.
10. The contractor who installs the signage will provide a
Certificate of Insurance for property and liability insurance in
the amount of $1,000,000 naming Landlord and Landlord's agent as
additional insureds prior to the installation of any signs.
11. The contractor who installs the signage will comply with
all City and State building codes.
12. Further information regarding contractors and signage can
be obtained in the Lease.
D. NON-CONFORMANCE
1. Any sign that is installed by Tenant which is not in
conformance with the approved drawings shall be corrected by
Tenant within fifteen (15) days after written notice by Landlord.
In the event Tenant's sign is not brought into conformance within
said fifteen (15) day period, then Landlord shall have the option
to correct said sign at Tenant's sole cost and expense.
EXHIBIT "E"
WORK LETTER
This Exhibit "E" is attached to and made a part of that certain
Lease dated October 30th, 1995, by and between LIU CORP., a
California corporation ("Landlord"), and Liberty National Bank,
hereinafter called "Tenant") for the Premises known as 17011
Beach Blvd., Suites 100 and 120, Huntington Beach, California
92647.
1. APPLICATION OF EXHIBIT
Capitalized terms used and not otherwise defined herein shall
have the same definitions as set forth in the Lease. The
provisions of this Work Letter shall apply to the planning and
completion of leasehold improvements requested by Tenant (the
"Tenant Improvements") for the fitting out of the initial
Premises, as more fully set forth herein.
2. LANDLORD AND TENANT PRE-CONSTRUCTION OBLIGATIONS
a) Preliminary Space Plans. Pursuant to paragraph 51.2
Tenant's space planner will develop preliminary space plans for
the Tenant Improvements ("the Preliminary Space Plans"), which
include, without limitation, sketches and/or drawings showing
locations of doors, partitioning, electrical fixtures, outlets and
switches, plumbing fixtures and other requirements, which are
subject to mutual agreement by Landlord and Tenant and determined
by Tenant as required for its use of the Premises. Landlord and
Landlord's Architect shall be entitled, in all respects, to rely
upon all information supplied by Tenant regarding the Tenant
Improvements.
b) Working Drawings. Within twenty-one (21) days following
OCC approval of this Lease Tenant's Architect shall prepare
working drawings ("the Working Drawings") for the Tenant
Improvements based upon the approved Preliminary Space Plans. The
Working Drawings shall include architectural drawings for the
Tenant Improvements based on the Preliminary Space Plans.
Notwithstanding the Preliminary Space Plans, in all cases the
Working Drawings (i) shall be subject to Landlord's final
approval, which approval shall not be unreasonably withheld, (ii)
shall not be in conflict with building codes for the City or
County or with insurance requirements for a fire resistive Class A
Office Tower, and (iii) shall be in a form satisfactory to
appropriate governmental authorities responsible for issuing
permits and licenses required for construction.
c) Approval of Working Drawings. Tenant or Tenant's Architect
shall submit the Working Drawings to Landlord for Landlord's and
Landlord's Architects review to confirm compliance with the
Preliminary Space Plan, and Tenant shall notify Landlord and
Tenant's Architect within five (5) business days after delivery
thereof of any requested revisions. Within five (5) days after
receipt of Landlord's notice, Tenant's Architect shall make all
approved revisions to the Working Drawings and submit two (2)
copies thereof to Tenant and Landlord for its final review and
approval, which approval shall be given within three (3) business
days thereafter. Concurrently with the above review and approval
process, Tenant's Architect may submit all plans and
specifications to City and other applicable governmental agencies
in an attempt to expedite City approval and issuance of all
necessary permits and Licenses to construct the Tenant
Improvements as shown on the Working Drawings. Any changes which
are required by City or other governmental agencies shall be
immediately submitted to Landlord and Tenant for review and
reasonable approval.
d) Schedule of Critical Dates. Set forth below is a schedule
of certain critical dates relating to Landlord's and Tenant's
respective obligations for the design and construction of the
Tenant Improvements. Such dates and the respective obligations of
Landlord and Tenant are more fully described elsewhere in this
Work Letter. The purpose of the following schedule is to provide
a reference for Landlord and Tenant and to make certain the Final
Approval Date occurs as set forth herein. Following the Final
Approval Date, Tenant shall be deemed to have released Landlord to
commence construction of the Tenant Improvements as set forth in
Section 4 below.
Reference Date Due Responsible
Party
A. "Preliminary Space Plan Approval" Thirty (30) days after
Board Approval Tenant & Landlord
B. "Working Drawings Completion" Twenty-one (21) days after
OCC Tenant & Landlord
Approval
C. "Working Drawings Review" Five (5) business days
after Tenant's Tenant & Landlord
Architect submits the Working
Drawings to Landlord & Tenant
D. "Working Drawings Revisions" Five (5) business days
after Tenant & Tenant & Landlord
Landlord return the Working Drawings
to Tenant's Architect
E. "Final Approval Date" Three (3) business days
after Tenant's Tenant & Landlord
Architect submits the revised Working
Drawings to Landlord & Tenant
3. BUILDING PERMIT
After the Final Approval Date has occurred, Tenant's Architect
shall, if Tenant's Architect has not already done so, submit the
Working Drawings to the appropriate governmental body or bodies
for final plan checking and a building permit. Tenant's
Architect, with Landlord's and Tenant's cooperation, shall cause
to be made any change in the Working Drawings necessary to obtain
the building permit; provided, however, after the Final Approval
Date, no changes shall be made to the Working Drawings without the
prior written approval of both Landlord and Tenant, and then only
after agreement by Tenant to pay any excess costs resulting from
such changes.
4. CONSTRUCTION OF TENANT IMPROVEMENTS
After the Final Approval Date has occurred and a building permit
for the work has been issued, Landlord shall, through a
construction contract ("Construction Contract") with a reputable,
licensed contractor selected by Landlord ("Contractor"), cause the
construction of the Tenant Improvements to be carried out in
substantial conformance with the Working Drawings in a good and
workmanlike manner using first-class materials. The costs
associated with the construction of the Tenant Improvements shall
be paid as set forth in Section 5 and 6 of this Work Letter.
Landlord shall see that the construction complies with all
applicable building, fire, health, and sanitary codes and
regulations, the satisfaction of which shall be evidenced by a
certificate of occupancy for the Premises.
5. TENANT IMPROVEMENT ALLOWANCE
Landlord shall provide Tenant with a Tenant Improvement
Allowance as set forth in Section 51.1 of the Lease towards the
cost of the design, purchase and construction of the Tenant
Improvements, including without limitation design, engineering and
consulting fees (collectively, the "Tenant Improvement Costs").
The Tenant Improvement Allowance shall be used for payment of the
following Tenant Improvements Costs:
(i) Preparation by Tenant's Architect of the Preliminary
Space Plans and the Working Drawings as provided in Section 2 of
this Work Letter, including without limitation all fees charged by
City (including without limitation fees for building permits and
plan checks) in connection with the Tenant Improvements work in
the Premises;
(ii) Construction work for completion of the Tenant
Improvements as reflected in the Construction Contract;
(iii) All contractors' charges, general conditions,
performance bond premiums and construction fees; and
(iv) Tenant Improvements which shall be depicted on the
approved Preliminary Space Plans.
In the event that Tenant does request modifications, changes or
alterations of the Tenant Improvements from what is shown on said
approved Preliminary Space Plans, or causes any Tenant Delays as
defined in Section 7 of this Work Letter, then all associated
costs that exceed the Tenant Improvement Allowance shall be borne
by Tenant. If Tenant does seek to modify, change or alter the
Tenant Improvements from the approved Preliminary Space Plans, or
does cause a Tenant Delay, Tenant shall pay to Landlord any excess
costs resulting therefrom in accordance with Section 6 of this
Work Letter.
6. CHANGE ORDERS
Tenant may from time to time request and obtain change orders
before or during the course of construction provided that: (i)
each such request shall be reasonable, shall be in writing and
signed by or on behalf of tenant, and shall not result in any
structural change in the Building, as reasonably determined by
Landlord, (ii) all additional charges and costs, including without
limitation architectural and engineering costs, construction and
material costs, and processing costs of any governmental entity
shall be the sole and exclusive obligation of Tenant, and (iii)
any resulting delay in the completion of the Tenant Improvements
shall be deemed a Tenant Delay and in no event shall extend the
Commencement Date of the Lease. Upon Tenant's request for a
change order, Landlord shall as soon as reasonably possible submit
to Tenant a written estimate of the increased or decreased cost
and anticipated delay, if any, attributable to such requested
change. Within three (3) business days of the date such estimated
costs adjustment and delay are delivered to Tenant, Tenant shall
advise Landlord whether it wishes to proceed with the change
order, and if Tenant elects to proceed with the change order,
Tenant shall remit, concurrently with Tenant's notice to proceed,
the amount of the increased costs that exceed the Tenant
Improvement Allowance, if any, attributable to such change order.
Unless Tenant includes in its initial change order request that
the work in process at the time such request is made be halted
pending approval and execution of a change order, Landlord shall
not be obligated to stop construction of the Tenant Improvements,
whether or not the change order relates to the work then in
process or about to be started.
7. TENANT DELAYS
In no event shall the Commencement Date of the Lease be extended
or delayed due or attributable to delays due to the fault of
Tenant ("Tenant Delays"). Tenant Delays shall include, but are
not limited to, delays caused by or resulting from any one or more
of the following:
a) Tenant's failure to timely review and reasonably approve
the Working Drawings or to furnish information to Landlord or
Landlord's Architect for the preparation by Landlord or Landlord's
Architect of the Working Drawings;
b) Tenant's request for or use of special materials, finishes
or installations which are not readily available, provided that
Landlord shall notify Tenant in writing that the particular
material, finish, or installation is not readily available
promptly upon Landlord's discovery of same;
c) Change orders requested by Tenant;
d) Interference by Tenant or by Tenant's Agents with
Landlord's construction activities;
e) Tenant's failure to approve any other item or perform any
other obligation in accordance with and by the dates specified
herein or in the Construction Contract;
f) Tenant's requested changes in the Preliminary Space Plans,
Working Drawings or any other plans and specifications after the
approval thereof by Tenant or submission thereof by Tenant to
Landlord;
g) Tenant's failure to approve written estimates of costs in
accordance with this Work Letter; and
h) Tenant's obtaining or failure to obtain any necessary
governmental approvals or permits for Tenant's intended use of the
Premises, other than building permits that Landlord shall obtain.
If the Commencement Date of the Lease is delayed by any Tenant
delays, whether or not within the control of Tenant, then the
Commencement Date of the Lease and the payment of Rent shall be
accelerated by the number of days of such delay. Landlord shall
give Tenant written notice within a reasonable time of any
circumstance that Landlord believes constitutes a Tenant Delay.
8. TRADE FIXTURES AND EQUIPMENT
Tenant acknowledges and agrees that Tenant is solely responsible
for obtaining, delivering and installing in the Premises all
necessary and desired furniture, trade fixtures, equipment and
other similar items, and that Landlord shall have no
responsibility whatsoever with regard thereto. Tenant further
acknowledges and agrees that neither the Commencement Date of the
Lease nor the payment of Rent shall be delayed for any period of
time whatsoever due to any delay in the furnishing of the Premises
with such items.
9. FAILURE OF TENANT TO COMPLY
Any failure of Tenant to comply with any of the provisions
contained in this Work Letter within the times for compliance
herein set forth shall be deemed a default under the Lease. In
addition to the remedies provided to Landlord in this Work Letter
upon the occurrence of such a default by Tenant, Landlord shall
have all remedies available at law or equity to a landlord against
a defaulting tenant pursuant to a written lease, including but not
limited to those set forth in the Lease.
"TENANT"
Liberty National Bank,
a National Banking Association
By:/s/ Philip S. Inglee
Philip S. Inglee
President and Chief Executive Officer
Date: 2/2/96
THIS DOCUMENT IS A COPY OF THE EMPLOYMENT AGREEMENT FILED ON MAY
15, 1996 PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made on this 20th day of July, 1995, between
LIBERTY NATIONAL BANK ("Bank"), having a principal place of
business at One Pacific Plaza, 7777 Center Avenue, Huntington
Beach, California 92647, and PHILIP S. INGLEE ("Executive"), whose
residence is 3692 Aquarius Drive, Huntington Beach, California
92749.
W I T N E S S E T H
WHEREAS, Bank is a national banking association duly organized,
validly existing, and in good standing under the laws of the
United States of America, with power to own property and carry on
its business as it is now being conducted;
WHEREAS, Bank desires to continue to avail itself of the skill,
knowledge and experience of Executive in order to insure the
successful management of its business; and
WHEREAS, the parties hereto desire to specify the terms of
Executive's continued employment by Bank;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, it is agreed that from and after July 15,
1995 (the "Effective Date"), the following terms and conditions
shall apply to Executive's said employment:
A G R E E M E N T
A. TERM OF EMPLOYMENT
1. Term. Bank hereby employs Executive and Executive
hereby accepts employment with Bank for the period commencing on
the Effective Date and running through and including December 31,
1997 (the "Term"), subject, however, to prior termination of this
Agreement as hereinafter provided. Where used herein, "Term"
shall refer to the entire period of employment of Executive by
Bank hereunder, whether for the period provided above, or whether
terminated earlier as hereinafter provided.
B. DUTIES OF EXECUTIVE
1. Duties. Subject to the powers by law vested in the
Board of Directors of Bank and in Bank's shareholders, Executive
shall perform the duties of President and Chief Executive Officer
of Bank, which includes, but are not limited to those duties
specified on Bank's Job Description for the position of President
and Chief Executive Officer, and includes the following:
(a) Executive shall assume overall responsibility for
planning, directing, coordinating and evaluating all Bank
activities;
(b) Executive shall assume overall responsibility for
formulating and administering Bank-wide policies and procedures
subject only to approval of the Board of Directors, intended to
meet the goals and objectives of Bank;
(c) Executive shall manage Bank's stockholder
relationships;
(d) In light of the Bank's CRA Policy, Executive shall
represent Bank and provide leadership in key community
activities to maintain a responsible citizen stature for Bank;
(e) Executive shall provide guidance of personnel
activities that effect the key management team to ensure the
acquisition and retention of quality Bank officers who will work
together toward the attainment of Bank goals;
(f) To the best of his ability, Executive shall ensure
Bank's adherence to all governmental rules and regulations; and
(g) Executive shall promote a favorable image of Bank as
being business-oriented, aggressive, community oriented,
responsible and service minded.
However, in the event of a "Corporate Reorganization," as
hereinafter defined, the duties of Executive may be changed by the
mutual consent of Executive and the Board of Directors of Bank
from Chief Executive Officer to Chief Operating Officer without
resulting in a rescission of this Agreement. Notwithstanding any
such change from the duties originally assigned and specified
above, or hereafter assigned, the employment of Executive shall be
construed as continuing under this Agreement as modified. During
the Term, Executive shall perform exclusively the services herein
contemplated to be performed by Executive faithfully, diligently
and to the best of Executive's ability, consistent with the
highest standards of the banking industry and in compliance with
all applicable laws and Bank's Articles of Association and Bylaws.
2. Conflicts of Interests. Except as permitted by the
prior written consent of the Board of Directors of Bank, Executive
shall devote Executive's entire productive time, ability and
attention to the business of Bank during the Term and Executive
shall not directly or indirectly render any services of a
business, commercial or professional nature, to any other person,
firm or corporation whether for compensation or otherwise, which
are in conflict with Bank's interests.
C. COMPENSATION
1. Base Salary. For Executive's services hereunder, Bank
shall pay or cause to be paid as base salary to Executive the
amount of Fourteen Thousand Five Hundred Eighty-Three Dollars and
Thirty-Three Cents ($14,583.33) per month during the Term,
beginning with the Effective Date. Said salary shall be payable
in equal installments in conformity with Bank's normal payroll
period. Executive's base salary shall be reviewed by the Board of
Directors during the first calendar quarter of each year and
Executive shall receive such base salary increases, if any, as the
Board of Directors, in its sole discretion, shall determine.
2. Bonus Program. Executive shall be entitled to
participate in the Bank's Pay for Performance bonus program or
such other programs which may be approved by the Board of
Directors from time to time to replace the Bank's Pay for
Performance bonus program.
3. Additional Bonuses. In addition, Executive may
receive such additional bonuses, if any, as the Board of
Directors, in its sole discretion, shall determine.
4. Incentive Compensation.
(a) As an incentive to Executive to maximize shareholder
value and to continue his employment with Bank in the event of a
"Corporate Reorganization," as hereinafter defined, Executive
shall be entitled to incentive compensation equal to 2.4% times
the amount by which the "Value Attributed to Bank" in the
Corporate Reorganization exceeds Eleven Million Five Hundred
Thousand Dollars ($11,500,000), payable within thirty (30) days
after the Corporate Reorganization.
(b) For purposes of this Agreement, a "Corporate
Reorganization" shall be deemed to have occurred: (i) in the
event of a merger or consolidation where Bank is not the
surviving corporation, except where Bank's shareholders exchange
their interests in Bank for more than fifty percent (50%)
control of the surviving corporation; (ii) in the event of a
transfer of all or substantially all of the assets of Bank; or
(iii) in the event of any other corporate reorganization where
there is a change in ownership of more than fifty percent (50%),
except as may result from a transfer of shares to another
corporation in exchange for more than fifty percent (50%)
control of that corporation. Thus, for example, a Corporate
Reorganization will not be deemed to have occurred if one
hundred percent (100%) ownership of Bank is transferred to a
holding company, so long as those individuals who were
shareholders of Bank prior to the transfer own more than fifty
percent (50%) of the holding company after the transfer.
(c) For purposes of this Paragraph C.4, "the Value
Attributed to Bank" shall be determined by reference to the
value assigned pursuant to the Corporate Reorganization;
provided, however, in the event Bank's Common Stock is converted
into another security pursuant to the Corporate Reorganization,
Executive shall be entitled to receive the value so determined,
in cash.
(d) Executive shall be entitled to incentive compensation
pursuant to this Paragraph C.4 even in the event the Corporate
Reorganization occurs after the Term hereof, provided a letter
of intent for the Corporate Reorganization has been executed by
all parties to the Corporate Reorganization during the Term; and
provided further, in the event Executive dies after the signing
of the letter of intent, Executive's spouse, or if his spouse
does not survive him, Executive's estate, shall receive fifty
percent (50%) of the incentive compensation Executive would
have been entitled to receive.
D. EXECUTIVE BENEFITS
1. Vacation and Sick Pay. Executive shall be entitled to
five (5) weeks vacation each calendar year during the Term,
provided, however, that at least two (2) weeks of said vacation
(the "Mandatory Vacation") shall be taken consecutively.
Executive shall not be entitled to vacation pay in lieu of
vacation, and any vacation time not used in excess of the
Mandatory Vacation shall be deemed waived, unless otherwise
approved in advance by the Board of Directors or accumulated in
accordance with Bank's Personnel Policy. Executive shall also be
entitled to sick pay in accordance with Bank's Personnel Policy.
2. Automobile. During the Term hereunder Bank shall
provide Executive with use of a Bank-furnished automobile
consistent with Bank's Personnel Policy. Bank shall pay all
operating expenses of any nature whatsoever with regard to the
automobile, provided that Executive furnishes to the Bank adequate
records and other documentary evidence required by federal and
state statutes and regulations issued by the appropriate taxing
authorities for the substantiation of such expenditures as
deductible expenses of Bank and not as deductible compensation to
Executive. Bank shall procure and maintain in force an automobile
liability insurance policy on such automobile, with coverage
including Executive, for comprehensive with extended coverage,
collision for actual cash value of the vehicle with no more than
Two Hundred Fifty Dollars ($250) deductible, and for bodily
injury, death or property damage, in limits no less than Five
Hundred Thousand Dollars ($500,000) for any one person, Five
Hundred Thousand Dollars ($500,000) for any one accident, and Five
Hundred Thousand Dollars ($500,000) for property damage.
3. Group Medical and Life Insurance Benefits. Bank shall
provide for Executive, at Bank's expense, participation in
medical, accident, disability, and health and life insurance
benefits equivalent to the normal and customary benefits currently
available under the California Banker's Association Group
Insurance Program for an employee of Executive's salary level;
provided, however, Executive's life insurance benefits shall equal
at least Four Hundred Twenty Thousand Dollars ($420,000), of which
Bank shall be named as beneficiary for Fifty Thousand Dollars
($50,000) of the policy proceeds. Upon termination of this
Agreement, at its expiration, or upon a voluntary termination of
Executive in accordance with the terms hereof, Executive shall
retain the conversion rights of the life insurance policy. Should
Executive elect to convert the policy, Bank shall retain no rights
in said policy. Executive's disability insurance coverage shall
provide for annual disability benefits of not less than sixty-six
and two-thirds percent (66 2/3%) of the amount of Executive's
annualized base salary, payable monthly and commencing with the
first month of disability. Said insurance coverages shall be in
existence or shall take effect as of the Effective Date hereof and
shall continue throughout the Term. Bank's liability to Executive
for any breach of this Paragraph D.3 shall be limited to the
amount of premiums payable by Bank to obtain the coverages
contemplated herein.
4. Annual Physical. Bank shall arrange for and pay all
fees, charges and expenses in connection with a mandatory, annual
executive physical of Executive, to be scheduled within thirty
(30) days of Executive's birthday.
5. Country Club Membership. During the Term, Bank shall
pay all monthly costs associated with Executive's membership at
such county club(s) as deemed appropriate by the Board of
Directors of Bank.
6. Financial Planning. During the Term, Bank shall pay
to or for the benefit of Executive up to the sum of One Thousand
Dollars ($1,000.00) per year for the purposes of personal
financial planning services, tax planning and preparation,
investment planning and/or estate planning of Executive.
E. BUSINESS EXPENSE REIMBURSEMENT
1. Business Expenses. Executive shall be entitled to
reimbursement by Bank for any ordinary and necessary business
expenses incurred by Executive in the performance of Executive's
duties and in acting for Bank during the Term, which types of
expenditures shall be determined by the Board of Directors,
provided that:
(a) Each such expenditure is of a nature qualifying it as
a proper deduction on the federal and state income tax returns
of Bank as a business expense and not as deductible compensation
to Executive; and
(b) Executive furnishes to Bank adequate records and other
documentary evidence required by federal and state statutes and
regulations issued by the appropriate taxing authorities for the
substantiation of such expenditures as deductible business
expenses of Bank and not as deductible compensation to
Executive.
F. TERMINATION
1. Termination. Bank may terminate this Agreement at any
time without further obligation or liability to Executive, by
action of the Board of Directors:
(a) If Executive fails to perform or habitually neglects
Executive's duties;
(b) If Executive engages in illegal activity which
materially adversely affects Bank's reputation in the community
or which evidences the lack of Executive's fitness or ability to
perform Executive's duties as determined by the Board of
Directors in good faith;
(c) If Executive has committed any act which would cause
termination of coverage under Bank's Bankers Blanket Bond as to
Employee, as distinguished from termination of coverage as to
Bank as a whole;
(d) If Executive is deceased; or
(e) If Executive is found to be physically or mentally
incapable of performing Executive's duties for a period of
ninety (90) days or greater by the Board of Directors, in good
faith. Such termination shall not prejudice any remedy which
Bank may have at law, in equity, or under this Agreement.
Termination pursuant to this Paragraph F.1 shall become
effective two (2) days after notice of termination.
2. Action by Supervisory Authority. This Agreement shall
terminate immediately without further liability or obligation to
Executive or Bank:
(a) If Bank is closed or taken over by the Comptroller of
the Currency or other supervisory authority, including the
Federal Deposit Insurance Corporation; or
(b) If such supervisory authority should exercise its
cease and desist powers to remove Executive from office.
3. Merger or Transfer of Assets. This Agreement shall
not be terminated due to: (a) a merger where Bank is not the
surviving corporation; (b) a consolidation; or (c) a transfer of
all or substantially all of the assets of Bank. Bank shall take
all actions necessary to insure that the surviving or resulting
corporation, if other than Bank, or transferee of Bank's assets is
bound by and shall have the benefit of the provisions of this
Agreement. In the case of dissolution, this Agreement shall be
terminated.
4. Termination Without Cause. Notwithstanding
anything to the contrary herein, this Agreement may be terminated
at any time without cause by Bank upon five (5) days' written
notice of termination to Executive and by Executive upon ninety
(90) days' written notice of termination to Bank. In the event
Bank elects to terminate this Agreement pursuant to this Paragraph
F.4, Executive shall be entitled to compensation equal to twelve
(12) months' base salary, all due and payable within thirty (30)
days after termination; provided, however, in the event Bank
elects to terminate this Agreement pursuant to the provisions
hereof and there has been a "Corporate Reorganization," as defined
herein, Executive shall be entitled to compensation equal to
twenty-four (24) months' base salary, all due and payable within
thirty (30) days after termination. In addition, Bank shall pay
premiums for Executive's major medical, dental, disability and
life insurance coverages for a period of twelve (12) months;
Executive shall be entitled to continue to use the Bank-furnished
vehicle for a period of twelve (12) months; and Bank shall pay to
Executive, within thirty (30) days after termination, an amount
equal to the total automobile expenses paid by Bank for the
previous twelve (12) month period on behalf of Executive. In the
event Executive elects to terminate this Agreement pursuant to the
provisions hereof, Bank and Executive shall not be entitled to any
compensation.
5. Effect of Termination. In the event of the
termination of this Agreement prior to the completion of the Term
for any of the reasons specified in Paragraphs F.1, F.2, or F.4,
Executive shall also be entitled to the salary earned by Executive
prior to the date of termination as provided for in this
Agreement, computed pro rata up to and including that date, and
accrued but unused vacation time (to the extent accumulated in
accordance with Paragraph D.1); but Executive shall be entitled to
no further compensation for services rendered after the date of
termination.
G. GENERAL PROVISIONS
1. Trade Secrets. During the Term, Executive will have
access to and become acquainted with what Executive and Bank
acknowledge are trade secrets, to wit, knowledge or data
concerning Bank, including its operations and business, and the
identity of customers of Bank, including knowledge of their
financial condition, their financial needs, as well as their
methods of doing business. Executive shall not disclose any of
the aforesaid trade secrets, directly or indirectly, or use them
in any way, either during the Term or for a period of one (1) year
after the termination of this Agreement, except as required in the
course of Executive's employment with Bank.
2. Covenant Not to Interfere. Executive hereby covenants
and agrees that he will not now, or for a period of one (1) year
after termination and for any period during which Executive
receives any compensation from Bank, whether pursuant to Paragraph
F.4 or otherwise, Executive shall not disrupt, damage, impair or
interfere with the business of the Bank, whether by way of
interfering with or raiding its employees, disrupting its
relationships with customers and their agents, representatives or
vendors, or otherwise. After termination of employment, Executive
is not, however, restricted from being employed by or engaged in a
competing business.
3. Return of Documents. Executive expressly agrees that
all manuals, documents, files, reports, studies, instruments or
other materials used and/or developed by Executive during his
employment with Bank are solely the property of Bank, and that
Executive has no right, title or interest therein. Upon
termination of Executive's employment, Executive or Executive's
representative shall promptly deliver possession of all of said
property to Bank in good condition.
4. Notices. Any notice, request, demand or other
communication required or permitted hereunder shall be deemed to
be properly given when personally served in writing, when
deposited in the United States mail, postage prepaid, or when
communicated to a public telegraph company for transmittal,
addressed to the party at the address appearing at the beginning
of this Agreement. Either party may change its address by written
notice in accordance with this paragraph.
5. Benefit of Agreement. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their
respective executors, administrators, successors and assigns.
6. Applicable Law. Except to the extent governed by the
Laws of the United States, this Agreement is to be governed by and
construed under the laws of the State of California.
7. Captions and Paragraph Headings. Captions and
paragraph headings used herein are for convenience only and are
not a part of this Agreement and shall not be used in construing
it.
8. Invalid Provisions. Should any provisions of this
Agreement for any reason be declared invalid, void, or
unenforceable by a court of competent jurisdiction, the validity
and binding effect of any remaining portion shall not be affected,
and the remaining portions of this Agreement shall remain in full
force and effect as if this Agreement had been executed with said
provision eliminated.
9. Entire Agreement. This Agreement contains the entire
agreement of the parties. It supersedes any and all other
agreements, either oral or in writing, between the parties hereto
with respect to the employment of Executive by Bank except any
Stock Option Agreements between Executive and Bank. Each party to
this Agreement acknowledges that no representations, inducements,
promises, or agreements, oral or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not
embodied herein, and that no other agreement, statement, or
promise not contained in this Agreement shall be valid or binding.
This Agreement may not be modified or amended by oral agreement,
but only by an agreement in writing signed by Executive and by
Bank, through a duly authorized officer.
10. Arbitration. In the event that any dispute shall
arise between the parties concerning the provisions of this
Agreement or the performance of any part of the obligations
hereunder, or in the event of an alleged breach of this Agreement
by any of the parties hereto, and the parties are unable to
mutually adjust and settle same, such dispute or disputes shall be
submitted to binding arbitration pursuant to the applicable rules
of the American Arbitration Association, and the decision and
determination of the arbitrators shall be final and conclusive.
The prevailing party shall be entitled to attorneys' fees and
costs.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
LIBERTY NATIONAL BANK
By /s/ Richard M. Wilbur
----------------------
By
/s/ Philip S. Inglee
----------------------
Philip S. Inglee
THIS DOCUMENT IS A COPY OF THE EMPLOYMENT AGREEMENT FILED ON MAY 15,
1996 PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made effective March 1, 1995,
between LIBERTY NATIONAL BANK ("Bank"), having a principal place of
business at One Pacific Plaza, 7777 Center Avenue, Huntington Beach,
California 92647, and RICHARD I. GANULIN ("Executive"), whose
residence is 9532 Zetland Drive, Huntington Beach, California 92646.
W I T N E S S E T H
WHEREAS, Bank is a national banking association duly organized,
validly existing, and in good standing under the laws of the United
States of America, with power to own property and carry on its
business as it is now being conducted;
WHEREAS, Bank desires to continue to avail itself of the skill,
knowledge and experience of Executive in order to insure the
successful management of its business; and
WHEREAS, the parties hereto desire to specify the terms of
Executive's continued employment by Bank:
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, it is agreed that from and after March 1,
1995, (the "Effective Date"), the following terms and conditions
shall apply to Executive's employment:
A G R E E M E N T
A. TERM OF EMPLOYMENT
1. Term. Bank hereby employs Executive and Executive hereby
accepts employment with Bank for the period commencing on the
Effective Date and running through and including the last day of
February 1997 (the "Term"), subject, however, to prior termination
of this Agreement as permitted by law or as hereinafter provided.
Where used herein, "Term" shall refer to the entire period of
employment of Executive by Bank hereunder, whether for the period
provided above, or whether terminated earlier.
B. DUTIES OF EXECUTIVE
1. Duties. Subject to the powers by law vested in the Board
of Directors of Bank and in Bank's shareholders, Executive shall
perform the duties of Senior Executive Vice President and Credit
Administrator of Bank. In that capacity, Executive is primarily
responsible for the successful acquisition and management of the
Bank's loan portfolio. Executive is also responsible for the
supervision and training of personnel in the following departments:
Real Estate Finance, Business Banking Group, SBA Loan Group, Credit
Adjustment and Centralized Loan Servicing and Credit Analysis.
Executive's duties include, but are not limited to, those duties
specified on Bank's Job Description for the position of Credit
Administrator/Senior Executive Vice President, a copy of which is
attached as Exhibit "A" hereto.
The duties and position of Executive may be changed from time to
time by the Board of Directors of Bank without resulting in a
rescission of this Agreement. Notwithstanding any such change from
the duties originally assigned and specified above, or hereafter
assigned, the employment of Executive shall be construed as
continuing under this Agreement as modified. During the Term,
Executive shall perform exclusively the services herein contemplated
to be performed by Executive faithfully, diligently and to the best
of Executive's ability, consistent with the highest standards of the
banking industry and in compliance with all applicable laws, Bank's
Articles of Association and Bylaws and Bank's policies, as modified
from time to time.
2. Conflicts of Interests. Except as permitted by the prior
written consent of the Board of Directors of Bank, Executive shall
devote Executive's entire productive time, ability and attention to
the business of Bank during the Term and Executive shall not directly
or indirectly render any services of a business, commercial or
professional nature to any other person, firm or corporation whether
for compensation or otherwise, which are in conflict with Bank's
interest.
C. COMPENSATION
1. Base Salary. For Executive's services hereunder, Bank
shall pay or cause to be paid as base salary to Executive the amount
of Eight Thousand Three Hundred Thirty-Three Dollars and Thirty-Three
Cents ($8,333.33) per month during the Term, beginning with the
Effective Date. Said salary shall be paid in equal pro rata, bi-monthly
installments in conformity with Bank's normal payroll period.
Executive's base salary shall be reviewed by the Board of Directors,
during the first calendar quarter of each year and Executive shall
receive such base salary increases, if any, as the Board of
Directors, in its sole discretion, shall determine.
2. Incentive Program. Executive shall be eligible to
participate in any Bank Incentive programs which may be approved by
the Board of Directors from time to time.
3. Year End Bonuses. In addition, Executive may receive
such additional bonuses, if any, as the Board of Directors, in its
sole discretion, shall determine.
D. EXECUTIVE BENEFITS
1. Vacation and Sick Pay. Executive shall accrue five (5)
weeks vacation during each calendar year of employment. Executive
is encouraged to use all accrued vacation pay each calendar year.
In each calendar year, Executive shall take at least two (2) weeks
of said vacation (the "Mandatory Vacation") consecutively. Unused
vacation, if any, may be carried forward from one year to the next.
The maximum vacation that Executive may have at any time shall be
seven (7) weeks vacation pay, at Executive's current annual vacation
accrual rate. If Executive's earned, but unused vacation pay reached
the maximum, Executive shall not accrue any additional vacation
benefits. If Executive later uses enough vacation pay to fall below
the maximum, Executive will resume earning vacation pay from that day
forward. Executive shall also be entitled to sick pay in accordance
with Bank's Personnel Policy.
2. Automobile. Except as hereafter provided, during the
Term hereunder Bank shall provide Executive with use of a Bank-furnished
automobile (the "Automobile"). Bank shall pay all
operating expenses of any nature whatsoever with regard to the
Automobile, provided that Executive furnishes to the Bank adequate
records and other documentary evidence required by federal and state
statutes and regulations issued by the appropriate taxing authorities
for the substantiation of such expenditures as deductible expenses
of Bank and not as deductible compensation to Executive. Bank shall
procure and maintain in force an automobile liability insurance
policy on the Automobile, with coverage including Executive, for
comprehensive with extended coverage, collision for actual cash value
of the vehicle with no more than Two Hundred Fifty Dollars ($250)
deductible, and for bodily injury, death or property damage, in
limits no less than Five Hundred Thousand Dollars ($500,000) for any
one person, Five Hundred Thousand Dollars ($500,000) for any one
accident, and Five Hundred Thousand Dollars ($500,000) for property
damage.
(a) Bank reserves, in its sole discretion, the right to
determine, at any time, and after thirty (30) days notice, the
Automobile shall no longer be made available to Executive. Upon
notice to Executive that Bank has elected to exercise such
discretion, Executive shall have the option of purchasing the
Automobile at fair market value, but not less than the value as to
which the Automobile is carried on the Bank's books. Alternatively,
Executive shall promptly surrender the Automobile to Bank.
(b) If Bank elects to exercise its discretion to no
longer make the Automobile available to Executive, Executive shall
thereafter receive a monthly automobile allowance in an amount to
be determined by the Board of Directors at such time.
3. Group Medical and Life Insurance Benefits. Bank shall
provide, at Bank's expense, participation in medical, accident,
disability, and health and life insurance benefits equivalent to the
normal and customary benefits currently available under the
California Bankers' Association Group Insurance Program for an
employee of Executive's salary level; provided, however, Executive's
life insurance benefits shall equal at least Two Hundred Fifty
Thousand Dollars ($250,000), of which Bank shall be named as
beneficiary for Twenty-Five Thousand Dollars ($25,000) of the policy
proceeds. Upon termination of this Agreement, at its expiration, or
upon a voluntary termination of Executive, in accordance with the
terms hereof, Executive shall retain the conversion rights of the
life insurance policy. Should Executive elect to convert the policy,
Bank shall retain no rights in said policy. Executive's disability
insurance coverage shall provide for annual disability benefits of
not less than sixty-six and two-thirds percent (66 2/3%) of the
amount of Executive's annualized base salary, payable monthly and
commencing with the ninety-first day of disability. Said insurance
coverage shall be in existence or shall take effect as of the
Effective date hereof and shall continue throughout the Term. Bank's
liability to Executive for any breach of this Paragraph D.3 shall be
limited to an amount equal to one (1) year of premiums payable by
Bank to obtain the applicable coverage(s) contemplated herein.
4. Financial Planning. During the term of this Agreement,
Bank shall pay to or for the benefit of Executive, an amount not to
exceed One Thousand Dollars ($1,000) annually for the purpose of
personal financial planning services, tax planning and preparation,
investment planning and/or estate planning of Executive.
E. BUSINESS EXPENSE REIMBURSEMENT
1. Business Expense. Executive shall be entitled to
reimbursement by Bank for any ordinary and necessary business
expenses incurred by Executive in the performance of Executive's
duties and in acting for Bank during the Term, which types of
expenditures shall be determined by the Board of Directors, provided
that:
(a) Each such expenditure is of a nature qualifying it
as a proper deduction on the federal and state income tax returns of
Bank as a business expense and not as deductible compensation to
Executive; and
(b) Executive furnishes to Bank adequate records and
other documentary evidence required by federal and state statutes and
regulations issued by the appropriate taxing authorities for the
substantiation of such expenditures as deductible business expenses
of Bank and not as deductible compensation to Executive.
F. TERMINATION
1. Termination by the Board of Directors. Executive is an
officer of Bank, appointed by the Board of Directors. Under the
National Bank Act and this Agreement, Executive serves at the
pleasure of the Board of Directors and is subject to dismissal by the
Board at any time, without further obligation or liability to
Executive. In the event Bank elects to dismiss Executive and
terminate this Agreement, upon Executive's execution and delivery to
Bank of an original Separation Agreement and General Release in a
form and with content acceptable to the Board of Directors, Executive
shall be entitled to compensation equal to six (6) months' base
salary, to be paid in six (6) equal monthly installments, beginning
on the first day of the month after termination and continuing
thereafter on the first day of the five (5) subsequent months.
However, if there has been a "Corporate Reorganization" and the Bank
elects to terminate this Agreement pursuant to the provisions hereof,
Executive, if terminated within twelve (12) months of said
"Corporate Reorganization," shall be entitled to compensation equal
to twelve (12) months' base salary, to be paid in six (6) equal
monthly installments, beginning on the first day of the month after
termination and continuing thereafter on the first day of the five
(5) subsequent months. For purposes of this paragraph F.1., a
Corporate Reorganization shall be deemed to have occurred upon the
occurrence of any of the following: (i) the sale of substantially all
of the assets of the Bank; (ii) the sale, exchange or other
disposition, in one transaction, of more than 50% of the Bank's
outstanding common stock; (iii) the termination of the Bank's
business and distribution of its assets in liquidation; (iv) the
merger or consolidation of the Bank in a transaction in which the
Bank's shareholders receive less than 50% of the outstanding shares
of the new or continuing entity.
2. Action by Supervisory Authority. This Agreement shall
terminate immediately without further liability or obligation to
Executive or Bank:
(a) If Bank is closed or taken over by the Comptroller
of the Currency or other supervisory authority, including the Federal
Deposit Insurance Corporation; or
(b) If such supervisory authority should exercise its
cease and desist powers to remove Executive from office.
3. Merger or Transfer of Assets. This Agreement shall not
be terminated due to: (a) the sale or transfer of substantially all
of the assets of the Bank; (b) the sale, exchange or other
disposition, in one transaction, of more than 50% of the Bank's
outstanding common stock; (c) the merger or consolidation of the Bank
in a transaction in which the Bank's shareholders receive less than
50% of the outstanding shares of the new or continuing entity. In
the case of dissolution and distribution of the Bank's assets, this
Agreement shall be terminated.
4. Termination by Executive. Executive may terminate his
employment with Bank, and this Agreement, upon sixty (60) days'
written notice of termination to Bank.
5. Effect of Termination. In the event of the termination of
Executive or this Agreement prior to the completion of the Term for
any of the reasons specified in this Paragraph F, Bank reserves the
right to relieve Executive of duties at any time after receiving
notice of termination. Executive shall be entitled to the salary
earned by Executive prior to the Effective Date of Termination, as
determined by the Board of Directors, computed pro rata up to and
including that date, and accrued but unused vacation time (to the
extent accumulated in accordance with Paragraph D.1); but Executive
shall be entitled to no further compensation for services rendered
after the Effective Date of Termination.
G. GENERAL PROVISIONS
1. Trade Secrets. During the Term, Executive will have
access to and become acquainted with what Executive and Bank
acknowledge are trade secrets, to wit, knowledge or data concerning
Bank, including its operations and business, and its customers'
financial condition, their financial needs and methods of doing
business. Executive shall not disclose any of the aforesaid trade
secrets,directly or indirectly, or use them in any way, except as
required in the course of Executive's employment with Bank.
2. Covenant Not to Interfere. Executive hereby covenants
and agrees that he will not now, or for a period of one (1) year
after termination, disrupt, damage, impair or interfere with the
business of Bank, whether by way of interfering with or raiding its
employees, disrupting its relationships with customers and their
identities, agents, representatives or vendors, or otherwise. After
termination of employment, Executive is not, however, restricted
from being employed by or engaged in a competing business.
3. Return of Documents. Executive expressly agrees that all
manuals, documents, files, reports, studies, instruments or other
materials used and/or developed by Executive during his employment
with Bank are solely the property of Bank, and that Executive has no
right, title or interest therein. Upon termination of Executive's
employment, Executive or Executive's representative shall promptly
deliver possession of all of said property to Bank in good condition.
4. Notices. Any notice, request, demand or other
communication required or permitted hereunder shall be deemed to be
properly given when personally served in writing, when deposited in
the United States mail, postage prepaid, or when communicated to a
public telegraph company for transmittal, addressed to the party at
the address appearing at the beginning of this Agreement. Either
party may change its/his address by written notice in accordance with
this paragraph.
5. Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective executors, administrators, successors and assigns.
6. Applicable Law. Except to the extent governed by the
laws of the United States, this Agreement is to be governed by and
construed under the laws of the State of California.
7. Captions and Paragraph Headings. Captions and paragraph
headings used herein are for convenience only and are not a part of
this Agreement and shall not be used in construing it.
8. Invalid Provisions. Should any provision of this
Agreement for any reason be declared invalid, void, or unenforceable
by a court of competent jurisdiction, the validity and binding effect
of any remaining portion shall not be affected, and the remaining
portions of this Agreement shall remain in full force and effect as
if this Agreement had been executed with said provision eliminated.
9. Entire Agreement. This Agreement contains the entire
agreement of the parties. It supersedes any and all other
agreements, either oral or in writing, between the parties hereto
with respect to the employment of Executive by Bank, except any Stock
Option Agreements between Executive and Bank. Each party to this
Agreement acknowledges that no representations, inducements,
promises, or agreements, oral or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not
embodied herein, and that no other agreement, statement or promise
not contained in this Agreement shall be valid or binding. This
Agreement may not be modified or amended by oral agreement, but only
by an agreement in writing signed by Chairman of the Board and
Executive.
10. Arbitration.
(a) If any dispute, controversy or claim arises out of
or relates to this contract, the parties agree first to try to settle
the dispute by mediation under the Rules of Judicial Arbitration &
Mediation Services (JAMS) before resorting to arbitration.
Thereafter, any dispute, controversy or claim not resolved by
mediation shall be settled by binding arbitration in accordance with
the Rules of JAMS, and judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction
thereof.
(b) The arbitrator shall determine which is the
prevailing party and shall include in the award that party's actual
attorneys' fees and costs.
(c) As soon as practicable after selection of the
arbitrator, the arbitrator or his or her designated representative
shall determine a reasonable estimate of anticipated fees and costs
of the arbitrator, and render a statement to each party setting forth
that party's pro rata share of said fees and costs. Thereafter, each
party shall, within ten (10) days of receipt of said statement,
deposit said sum with the arbitrator. Failure of any party to make
such a deposit shall result in a forfeiture by the non-depositing
party of the right to prosecute or defend the claim which is the
subject of the arbitration, but shall not otherwise serve to abate,
stay or suspend the arbitration proceedings.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
LIBERTY NATIONAL BANK Date
By /s/ Richard M Wilbur 7-13-95
Chairman of the Board of Directors
RICHARD I. GANULIN Date
By /s/ Richard I. Ganulin 7-12-95
THIS DOCUMENT IS A COPY OF THE EMPLOYMENT AGREEMENT FILED ON MAY
15, 1996 PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made on this 22nd day of October, 1993,
between LIBERTY NATIONAL BANK ("Bank"), having a principal place
of business at One Pacific Plaza, 7777 Center Avenue, Huntington
Beach, California 92647, and CURT A. CHRISTIANSSEN ("Executive"),
whose residence is 2716 Cheryl Court, Simi Valley, California
93063.
W I T N E S S E T H
WHEREAS, Bank is a national banking association duly organized,
validly existing, and in good standing under the laws of the
United States of America, with power to own property and carry on
its business as it is now being conducted;
WHEREAS, Bank desires to avail itself of the skill, knowledge
and experience of Executive in order to insure the successful
management of its business; and
WHEREAS, the parties hereto desire to specify the terms of
Executive's employment by Bank;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, it is agreed that from and after October
22, 1993, (the "Effective Date"), the following terms and
conditions shall apply to Executive's said employment:
A. TERM OF EMPLOYMENT
1. Term. Bank hereby employs Executive and Executive
hereby accepts employment with Bank for the period commencing with
the Effective Date and terminating on December 31, 1996 (the
"Term"), subject, however, to prior termination of this Agreement
as hereinafter provided. Where used herein, "Term" shall refer to
the entire period of employment of Executive by Bank hereunder,
whether for the period provided above, or whether terminated
earlier as hereinafter provided.
B. DUTIES OF EXECUTIVE
1. Duties. Executive shall perform the duties of Chief
Financial Officer of Bank, which includes, but are not limited to
those duties specified on the Bank's Job Description for the
position of Chief Financial Officer, subject to the powers by law
vested in the Board of Directors of Bank and in Bank's
shareholders. However, the duties of Executive may be changed
from time to time by the mutual consent of Executive and Bank
without resulting in a rescission of this Agreement.
Notwithstanding any such change from the duties originally
assigned and specified above, or hereafter assigned, the
employment of Executive shall be construed as continuing under
this Agreement as modified. During the Term, Executive shall
perform exclusively the services herein contemplated to be
performed by Executive faithfully, diligently and to the best of
Executive's ability, consistent with the highest and best
standards of the banking industry and in compliance with all
applicable laws and Bank's Articles of Association and Bylaws.
2. Conflicts of Interests. Except as permitted by the
prior written consent of the Board of Directors of Bank, Executive
shall devote Executive's entire productive time, ability and
attention to the business of Bank during the Term and Executive
shall not directly or indirectly render any services of a
business, commercial or professional nature, to any other person,
firm or corporation whether for compensation or otherwise, which
are in conflict with Bank's interests.
C. COMPENSATION
1. Base Salary. For Executive's services hereunder, Bank
shall pay or cause to be paid as base salary to Executive the
amount of Seven Thousand Six Hundred Twenty-five Dollars ($7,625)
per month during the Term, beginning with the Effective Date. The
month of October, 1993, and any month during which Executive's
employment may be terminated shall be prorated accordingly.
2. Bonus Program. Executive shall be entitled to
participate in the Higgins bonus program or any bonus program
which may be approved by the Board of Directors from time to time
to replace the Higgins program.
3. Performance Bonus. Executive may receive additional
performance bonuses, if any, as the Board of Directors, in its
sole discretion, shall determine.
4. Fixed Bonuses. Executive shall receive bonuses in the
following amounts and at the following times: (i) $6,700 six
months after commencement of employment; (ii) $6,700 on the first
anniversary after commencement of employment; (iii) $6,700 on the
second anniversary after commencement of employment; and (iv)
$6,700 on the third anniversary after commencement of employment;
provided, however, Executive shall not be entitled to receive any
bonus payment(s) due after Executive's employment is terminated if
terminated pursuant to Paragraphs F.1., F.2. or F.3., or if
terminated by Executive pursuant to Paragraph F.4., except if
Executive terminates his employment for "Good Cause," as
hereinafter defined, in which case Executive shall be entitled to
receive the bonus payment(s) due after termination of his
employment.
5. Good Cause.
(a) In the event there has been a "Change in Control"
of Bank, as hereinafter defined, Executive may terminate his
employment for "Good Cause," as hereinafter defined. Termination
pursuant to this Paragraph C.5. shall be effective thirty (30)
days after notice of termination.
(b) For purposes of this Paragraph C.5., a "Change in
Control" shall be deemed to have occurred: (i) in the event of a
merger or consolidation where Bank is not the surviving
corporation, except where Bank's shareholders exchange their
interests in Bank for more than fifty percent (50%) control of the
surviving corporation; (ii) in the event of a transfer of all or
substantially all of the assets of Bank; (iii) in the event of any
other corporate reorganization where there is a change in
ownership of more than fifty percent (50%), except as may result
from a transfer of shares to another corporation in exchange for
more than fifty percent (50%) control of that corporation; or (iv)
in the event of a change or changes in the composition of the
Board of Directors of Bank resulting in a majority of the present
directors not constituting a majority of the Board of Directors;
provided that in making such determination directors who were
elected by, or on the recommendation of, such present majority,
shall be included as a present director.
(c) For purposes of this Paragraph C.5., the
following shall constitute "Good Cause": (i) subsequent to a
Change in Control of Bank, and without Executive's express written
consent, the assignment to Executive of any duties substantially
inconsistent with Executive's positions, duties, responsibilities
and status with Bank immediately prior to the Change in Control,
or a substantial change in Executive's reporting responsibilities,
titles or offices as in effect immediately prior to the Change in
Control, or any removal of Executive from or any failure to re-elect Executive
to any of such positions, except in connection
with the termination of Executive's employment pursuant to
Paragraphs F.1. or F.2., or as a result of Executive's retirement,
or by Executive other than for "Good Cause"; (ii) subsequent to a
Change in Control of Bank, a twenty percent (20%) or greater
reduction by Bank in Executive's base salary as in effect on the
Effective Date or as the same may be increased from time to time;
(iii) subsequent to a Change in Control of Bank and without
Executive's express written consent, Bank's requiring Executive to
be based anywhere other than within fifteen (15) miles of Bank's
present head office location, exclusive of required travel on Bank
business; or (iv) subsequent to a Change in Control of Bank, the
failure by Bank to obtain the assumption of the agreement to
perform this Agreement by any successor as contemplated in
Paragraph G.5. hereof.
D. EXECUTIVE BENEFITS
1. Vacation and Sick Pay. Executive shall be entitled to
a reasonable vacation during the Term, in accordance with Bank's
Personnel Policy; provided, however, that at least two (2) weeks
of said vacation (the "Mandatory Vacation"), shall be taken
consecutively. Executive shall also be entitled to sick pay in
accordance with Bank's Personnel Policy.
2. Group Medical and Life Insurance Benefits. During the
Term Bank shall provide for medical and life insurance benefits to
Executive in accordance with Bank's standard employee benefits.
E. BUSINESS EXPENSES AND REIMBURSEMENT
1. Business Expenses. Executive shall be entitled to
reimbursement by Bank for any ordinary and necessary business
expenses incurred by Executive in the performance of Executive's
duties and in acting for Bank during the Term, which types of
expenditures shall be determined by the Board of Directors,
provided that:
(a) Each such expenditure is of a nature qualifying
it as a proper deduction on the federal and state income tax
returns of Bank as a business expense and not as deductible
compensation to Executive; and
(b) Executive furnishes to Bank adequate records and
other documentary evidence required by federal and state statutes
and regulations issued by the appropriate taxing authorities for
the substantiation of such expenditures as deductible business
expenses of Bank and not as deductible compensation to Executive.
2. Reimbursement. Executive agrees that, if at any time
payment made to Executive by Bank, whether for salary or whether
as business expense reimbursement, shall be disallowed in whole or
in part as a deductible business expense by the appropriate taxing
authorities, Executive shall reimburse Bank to the full extent of
such disallowance, with interest thereon at the rate of six
percent (6%) per annum, from the date of disallowance.
F. TERMINATION
1. Termination. Bank may terminate this Agreement at any
time without further obligation or liability to Executive, by
action of the Board of Directors:
(a) If Executive fails to perform or habitually
neglects Executive's duties;
(b) If Executive engages in illegal activity which
materially adversely affects Bank's reputation in the community or
which evidences the lack of Executive's fitness or ability to
perform Executive's duties as determined by the Board of Directors
in good faith;
(c) If Executive has committed any act which would
cause termination of coverage under Bank's Bankers Blanket Bond as
to Employee, as distinguished from termination of coverage as to
Bank as a whole;
(d) If Executive is deceased; or
(e) If Executive is found to be physically or
mentally incapable of performing Executive's duties for a period
of sixty (60) days or greater by the Board of Directors, in good
faith. Such termination shall not prejudice any remedy which Bank
may have at law, in equity, or under this Agreement. Termination
pursuant to this Paragraph F.1 shall become effective two (2) days
after notice of termination.
2. Action by Supervisory Authority. This Agreement shall
terminate immediately without further liability or obligation to
Executive:
(a) If Bank is closed or taken over by the
Comptroller of the Currency or other supervisory authority,
including the Federal Deposit Insurance Corporation; or
(b) If such supervisory authority should exercise its
cease and desist powers to remove Executive from office.
3. Merger or Corporate Dissolution. In the event of a
merger where Bank is not the surviving corporation, in the event
of a consolidation, in the event of a transfer of all or
substantially all of the assets of Bank, or in the event of any
other corporate reorganization this Agreement shall not be
terminated. Bank shall take all actions necessary to insure that
the surviving or resulting corporation, if other than the Bank, or
the transferee of Bank's assets, is bound by and shall have the
benefit of the provisions of this Agreement. In the case of the
Bank's dissolution, this Agreement shall be terminated.
4. Termination Without Cause. Notwithstanding anything
to the contrary herein, Executive's employment may be terminated
at any time, without cause by Bank, upon five (5) days' written
notice of termination to Executive, and Executive's employment may
be terminated at any time by Executive upon ninety (90) days'
written notice of termination to Bank. In the event Bank elects
to terminate Executive's employment pursuant to the provisions
hereof, Executive shall be entitled to compensation equal to
three (3) months' base salary, payable in equal installments
over a three (3) month period in conformity with Bank's normal
payroll periods. In the event Executive elects to terminate his
employment pursuant to the provisions hereof, including Paragraph
C.5., Bank shall not be entitled to any compensation.
5. Effect of Termination. In the event of the
termination of this Agreement prior to the completion of the Term
for any of the reasons specified in Paragraphs F.1 through F.4,
Executive shall be entitled to the salary earned by Executive
prior to the date of termination as provided for in this
Agreement, computed pro rata up to and including that date and
accrued but unused vacation time; but Executive shall be entitled
to no further compensation for services rendered after the date of
termination.
G. GENERAL PROVISIONS
1. Trade Secrets. During the Term, Executive will have
access to and become acquainted with what Executive and Bank
acknowledge are trade secrets, to wit, knowledge or data
concerning Bank, including its operations and business, and the
identity of customers of Bank, including knowledge of their
financial condition, their financial needs, as well as their
methods of doing business. Executive shall not disclose any of
the aforesaid trade secrets, directly or indirectly, or use them
in any way, either during the Term or for a period of one (1) year
after the termination of this Agreement, except as required in the
course of Executive's employment with Bank.
2. Covenant Not to Compete. Executive hereby covenants
and agrees that for a period of one (1) year after termination of
Executive's employment and for any period during which Executive
receives any compensation from Bank, whether pursuant to Paragraph
F.4 or otherwise, Executive shall not engage in the business of
banking within a ten (10) mile radius of Bank's head office,
whether as employee, agent, consultant, principal, partner, 10%
shareholder, director, or otherwise; provided, however, this
covenant shall not apply if Bank terminates Executive's employment
pursuant to Paragraph F.4. or if Executive terminates his
employment pursuant to Paragraph F.4. for other than Good Cause.
3. Return of Documents. Executive expressly agrees that
all manuals, documents, files, reports, studies, instruments or
other materials used and/or developed by Executive during his
employment with Bank are solely the property of Bank, and that
Executive has no right, title or interest therein. Upon
termination of Executive's employment, Executive or Executive's
representative shall promptly deliver possession of all of said
property to Bank in good condition.
4. Notices. Any notice, request, demand or other
communication required or permitted hereunder shall be deemed to
be properly given when personally served in writing, when
deposited in the United States mail, postage prepaid, or when
communicated to a public telegraph company for transmittal,
addressed to the party at the address appearing at the beginning
of this Agreement. Either party may change its address by written
notice in accordance with this paragraph.
5. Benefit of Agreement. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their
respective executors, administrators, successors and assigns.
6. Applicable Law. Except to the extent governed by the
Laws of the United States, this Agreement is to be governed by and
construed under the laws of the State of California.
7. Captions and Paragraph Headings. Captions and
paragraph headings used herein are for convenience only and are
not a part of this Agreement and shall not be used in construing
it.
8. Invalid Provisions. Should any provisions of this
Agreement for any reason be declared invalid, void, or
unenforceable by a court of competent jurisdiction, the validity
and binding effect of any remaining portion shall not be affected,
and the remaining portions of this Agreement shall remain in full
force and effect as if this Agreement had been executed with said
provision eliminated.
9. Entire Agreement. This Agreement contains the entire
agreement of the parties. It supersedes any and all other
agreements, either oral or in writing, between the parties hereto
with respect to the employment of Executive by Bank except any
Stock Option Agreements between Executive and Bank. Each party to
this Agreement acknowledges that no representations, inducements,
promises, or agreements, oral or otherwise, have been made by any
party, or anyone acting on behalf of any party, which are not
embodied herein, and that no other agreement, statement, or
promise not contained in this Agreement shall be valid or binding.
This Agreement may not be modified or amended by oral agreement,
but only by an agreement in writing signed by Bank and Executive.
10. Arbitration. In the event that any dispute shall
arise between the parties concerning the provisions of this
Agreement or the performance of any part of the obligations
hereunder, or in the event of an alleged breach of this Agreement
by any of the parties hereto, and the parties are unable to
mutually adjust and settle same, such dispute or disputes shall be
submitted to binding arbitration pursuant to the applicable rules
of the American Arbitration Association, and the decision and
determination of the arbitrators shall be final and conclusive.
The prevailing party shall be entitled to attorneys' fees and
costs.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
LIBERTY NATIONAL BANK
By /s/ Philip S. Inglee
--------------------
Philip S. Inglee,
President
& Chief Executive Officer
By /s/ Curt A. Christianssen
-------------------------
CURT A. CHRISTIANSSEN
SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
This Second Amendment to Employment Agreement between Liberty
National Bank, a national banking association ("Bank"), and Curt A.
Christianssen ("Executive") is made effective on the 17th day of
August, 1995 (the "Effective Date"), with reference to the
following:
RECITALS
WHEREAS, Bank and Executive have previously entered into an
Employment Agreement dated October 22, 1993, which was amended on
July 20, 1995 (the "Employment Agreement");
WHEREAS, the Board of Directors of Bank has determined that it
is in the best interest of Bank to negotiate with various entities
in order to effect a reorganization and recapitalization of Bank
which would involve an acquisition by or merger with another
entity; and
WHEREAS, Executive's effors will play an instrumental role in
the success of the negotiations and ultimately the consummation of
the acquisition or merger;
AGREEMENT
NOW, THEREFORE, in consideration of the covenants contained
herein, it is agreed that from and after the Effective Date:
1. Amendement
Paragraph C.6 of the Employment Agreement shall be amended as
set forth below:
"6. Bonus. Executive shall be entitled to and shall receive a
bonus in the amount of $25,000 within ten (10) days of the
date that an acquisition or merger of the Bank is effected.
This bonus shall be effective only upon the closing of a
merger or acquisition during the Term."
2. First Amendment
The First Amendment dated July 20, 1995, is hereby superseded.
3. Continued Effect
All other terms and conditions of the Employment Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, this Second Amendment to Employment
Agreement has been duly executed and delivered as of the Effective
Date.
LIBERTY NATIONAL BANK
By: /s/ Philip S. Inglee
--------------------
Philip S. Inglee
President and CEO
/s/ Curt A. Christianssen
--------------------------
Curt A. Christianssen
THIS DOCUMENT IS A COPY OF THE EMPLOYMENT AGREEMENT FILED ON MAY 15,
1996 PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made effective April 1, 1995,
between LIBERTY NATIONAL BANK ("Bank"), having a principal place of
business at One Pacific Plaza, 7777 Center Avenue, Huntington Beach,
California 92647, and CATHERINE C. CLAMPITT ("Senior Vice
President"), whose residence is 200 Paris Lane, #316, Newport Beach,
California 92663.
W I T N E S S E T H
WHEREAS, Bank is a national banking association duly organized,
validly existing, and in good standing under the laws of the United
States of America, with power to own property and carry on its
business as it is now being conducted;
WHEREAS, Bank desires to continue to avail itself of the skill,
knowledge and experience of Senior Vice President in order to insure
the successful management of its business; and
WHEREAS, the parties hereto desire to specify the terms of Senior
Vice President's continued employment by Bank:
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, it is agreed that from and after April 1,
1995, (the "Effective Date"), the following terms and conditions
shall apply to Senior Vice President's employment:
A G R E E M E N T
A. TERM OF EMPLOYMENT
1. Term. Bank hereby employs Senior Vice President and
Senior Vice President hereby accepts employment with Bank for the
period commencing on the Effective Date and running through and
including March 31, 1997 (the "Term"), subject,
however, to prior termination of this Agreement as permitted by law
or as hereinafter provided. Where used herein, "Term" shall refer
to the entire period of employment of Senior Vice President by Bank
hereunder, whether for the period provided above, or whether
terminated earlier.
B. DUTIES OF SENIOR VICE PRESIDENT
1. Duties. Subject to the powers by law vested in the Board
of Directors of Bank and in Bank's shareholders, Senior Vice
President shall perform the duties of Senior Vice President and SBA
Department Manager of Bank. In that capacity, Senior Vice President
is primarily responsible for managing all facets of the SBA Loan
Department. Senior Vice President is also responsible for SBA loan
marketing, packaging, underwriting, documentation and disbursement.
Senior Vice President's duties include, but are not limited to,
those duties specified on Bank's Job Description for the position of
SBA Department Manager/Senior Vice President, a copy of which is
attached as Exhibit "A" hereto.
The duties and position of Senior Vice President may be
changed from time to time by the Board of Directors of Bank without
resulting in a rescission of this Agreement. Notwithstanding any
such change from the duties originally assigned and specified above,
or hereafter assigned, the employment of Senior Vice President shall
be construed as continuing under this Agreement as modified. During
the Term, Senior Vice President shall perform exclusively the
services herein contemplated to be performed by Senior Vice President
faithfully, diligently and to the best of Senior Vice President's
ability, consistent with the highest standards of the banking
industry and in compliance with all applicable laws, Bank's Articles
of Association and Bylaws and Bank's policies, as modified from time
to time.
2. Conflicts of Interests. Except as permitted by the prior
written consent of the Board of Directors of Bank, Senior Vice
President shall devote Senior Vice President's entire productive
time, ability and attention to the business of Bank during the Term
and Senior Vice President shall not directly or indirectly render any
services of a business, commercial or professional nature to any
other person, firm or corporation whether for compensation or
otherwise, which are in conflict with Bank's interest.
C. COMPENSATION
1. Base Salary. For Senior Vice President's services
hereunder, Bank shall pay or cause to be paid as base salary to
Senior Vice President the amount of Four Thousand One Hundred Sixty-Six Dollars
and Sixty-Seven Cents ($4,166.67) per month during the
Term, beginning with the Effective Date. Said salary shall be paid
in equal pro rata, bi-monthly installments in conformity with Bank's
normal payroll period. Senior Vice President's base salary shall be
subject to review and adjustment by the Board of Directors at any
time, and no less often than concurrently with her annual review.
2. Commissions. Senior Vice President shall receive
commissions for SBA and Piggyback 7a 504 (a non-SBA guaranteed
first trust deed on commercial property, combined and backed by an
SBA guaranteed second deed of trust) Loans submitted by her to the
SBA for approval, based upon the premium Bank receives from the sale
of the loan on the secondary market. Senior Vice President shall be
paid 11% of the premium on Broker SBA and Piggyback transactions on
SBA and Piggyback Loans, 15% of the premium on Non-Broker SBA and
Piggyback transactions and 13% of the premium on Bank employee
referred SBA and Piggyback transactions submitted by her.
Commissions are subject to penalties applied against earned
commissions for documentation deficiency resulting in a repair during
the first year of a loan limited to 10% of paid commission
3. Year End Bonus. Senior Vice President shall be eligible
for a bonus equivalent to 1.5% of SBA department premiums, as of
December 31 of each year, provided, however, that Senior Vice
President shall not be eligible or qualified to receive a Year End
Bonus unless she continues to be employed by the Bank at the
conclusion of the annual audit by which the department premium is
verified. If, for any reason, Senior Vice President is not employed
by the Bank at the end of a calendar year and at the end of the
subsequent annual audit, Senior Vice President shall not be eligible
or qualified for any Year End Bonus, or any part thereof.
4. Automobile Allowance. Senior Vice President shall
receive an automobile allowance of $750.00 per month. Said allowance
shall be paid in equal pro rata, bi-monthly installments in
conformity with Bank's normal payroll period.
5. Automobile Telephone Reimbursement. Senior Vice
President shall be reimbursed for automobile telephone charges
directly related to Bank business up to a maximum of $350.00 per
month.
D. BENEFITS
1. Vacation and Sick Pay. Senior Vice President shall be
entitled to vacation during the Term, in accordance with Bank's
Personnel Policy; provided, however, that at least two (2) weeks of
said vacation (the "Mandatory Vacation"), shall be taken
consecutively. Senior Vice President shall also be entitled to sick
pay in accordance with Bank's Personnel Policy.
2. Group Medical and Life Insurance Benefits. During the
Term, Bank shall provide for medical, accident, disability and life
insurance benefits to Senior Vice President in accordance with Bank's
standard employee benefits.
E. TERMINATION
1. Termination by the Board of Directors. Senior Vice
President is an officer of Bank, appointed by the Board of Directors.
Under the National Bank Act and this Agreement, Senior Vice President
serves at the pleasure of the Board of Directors and is subject to
dismissal by the Board at any time, without further obligation or
liability to Senior Vice President. In the event Bank elects to
dismiss Senior Vice President and terminate this Agreement, upon
Senior Vice President's execution and delivery to Bank of an original
Separation Agreement and General Release in a form and with content
acceptable to the Board of Directors, Senior Vice President shall be
entitled to compensation equal to four (4) months' base salary, to
be paid in four (4) equal monthly installments, beginning on the
first day of the month following expiration of the Revocation Period
provided for in the Separation Agreement and General Release and
continuing thereafter on the first day of the three (3) subsequent
months.
2. Action by Supervisory Authority. This Agreement shall
terminate immediately without further liability or obligation to
Senior Vice President or Bank:
(a) If Bank is closed or taken over by the Comptroller
of the Currency or other supervisory authority, including the Federal
Deposit Insurance Corporation; or
(b) If such supervisory authority should exercise its
cease and desist powers to remove Senior Vice President from office.
3. Merger or Transfer of Assets. This Agreement shall not
be terminated due to: (a) a merger where Bank is not the surviving
corporation; (b) a consolidation; or (c) a transfer of all or
substantially all of the assets of Bank. In the case of dissolution,
this Agreement shall be terminated.
4. Termination by Senior Vice President. Senior Vice
President may terminate her employment with Bank, and this Agreement,
upon sixty (60) days written notice of termination to Bank.
5. Effect of Termination. In the event of the termination
of Senior Vice President or this Agreement prior to the completion
of the Term for any of the reasons specified in this Paragraph E,
Senior Vice President shall be entitled to the salary earned by
Senior Vice President prior to the Effective Date of Termination, as
determined by the Board of Directors, computed pro rata up to and
including that date, and accrued but unused vacation time (to the
extent accumulated in accordance with Paragraph D.1); but Senior Vice
President shall be entitled to no further compensation for services
rendered after the Effective Date of Termination. Senior Vice
President shall receive commissions for SBA loans submitted by her
to the SBA and/or approved by the Bank for submission to the SBA
prior to the Effective Date of Termination. Such commissions will
be paid as previously outlined in Paragraph C, Sub-paragraph 2.
F. GENERAL PROVISIONS
1. Trade Secrets. During the Term, Senior Vice President
will have access to and become acquainted with what Senior Vice
President and Bank acknowledge are trade secrets, to wit, knowledge
or data concerning Bank, including its operations and business, and
its customers' financial condition, their financial needs, and
methods of doing business. Senior Vice President shall not disclose
any of the aforesaid trade secrets, directly or indirectly, or use
them in any way, except as required in the course of Senior Vice
President's employment with Bank.
2. Covenant Not to Interfere. Senior Vice President hereby
covenants and agrees that she will not now, or for a period of one
(1) year after termination, disrupt, damage, impair or interfere with
the business of Bank, whether by way of interfering with or raiding
its employees, disrupting its relationships with customers, , loan
packagers, representatives, vendors, or otherwise. Senior Vice
President furthers covenants and agrees that she will not now, or for
a period of four (4) months after termination, disrupt, damage,
impair or interfere with the business of Bank by way of disrupting
its relationships with brokers. After termination of employment,
Senior Vice President is not, however, restricted from being employed
by or engaged in a competing business.
3. Return of Documents. Senior Vice President expressly
agrees that all manuals, documents, files, reports, studies,
instruments or other materials used and/or developed by Senior Vice
President during her employment with Bank are solely the property of
Bank, and that Senior Vice President has no right, title or interest
therein. Upon termination of Senior Vice President's employment,
Senior Vice President or Senior Vice President's representative shall
promptly deliver possession of all of said property to Bank in good
condition.
4. Notices. Any notice, request, demand or other
communication required or permitted hereunder shall be deemed to be
properly given when personally served in writing, when deposited in
the United States mail, postage prepaid, or when communicated to a
public telegraph company for transmittal, addressed to the party at
the address appearing at the beginning of this Agreement. Either
party may change its/her address by written notice in accordance with
this paragraph.
5. Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective executors, administrators, successors and assigns.
6. Applicable Law. Except to the extent governed by the
laws of the United States, this Agreement is to be governed by and
construed under the laws of the State of California.
7. Captions and Paragraph Headings. Captions and paragraph
headings used herein are for convenience only and are not a part of
this Agreement and shall not be used in construing it.
8. Invalid Provisions. Should any provision of this
Agreement for any reason be declared invalid, void, or unenforceable
by a court of competent jurisdiction, the validity and binding effect
of any remaining portion shall not be affected, and the remaining
portions of this Agreement shall remain in full force and effect as
if this Agreement had been executed with said provision eliminated.
9. Entire Agreement. This Agreement contains the entire
agreement of the parties. It supersedes any and all other
agreements, either oral or in writing, between the parties hereto
with respect to the employment of Senior Vice President by Bank,
except any Stock Option Agreements between Senior Vice President and
Bank. Each party to this Agreement acknowledges that no
representations, inducements, promises, or agreements, oral or
otherwise, have been made by any party, or anyone acting on behalf
of any party, which are not embodied herein, and that no other
agreement, statement or promise not contained in this Agreement shall
be valid or binding. This Agreement may not be modified or amended
by oral agreement, but only by an agreement in writing signed by the
Chairman of the Board and Senior Vice President.
10. Arbitration. If any dispute, controversy or claim arises
out of or relates to this contract, the parties agree first to try
to settle the dispute by mediation under the Rules of Judicial
Arbitration & Mediation Services (JAMS) before resorting to
arbitration. Thereafter, any dispute, controversy or claim not
resolved by mediation shall be settled by binding arbitration in
accordance with the Rules of JAMS, and judgment upon the award
rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
(a) The arbitrator shall determine which is the
prevailing party and shall include in the award that party's actual
attorneys' fees and costs.
(b) As soon as practicable after selection of the
arbitrator, the arbitrator or his or her designated representative
shall determine a reasonable estimate of anticipated fees and costs
of the arbitrator, and render a statement to each party setting forth
that party's prorata share of said fees and costs. Thereafter, each
party shall, within ten (10) days of receipt of said statement,
deposit said sum with the arbitrator. Failure of any party to make
such a deposit shall result in a forfeiture by the non-depositing
party of the right to prosecute or defend the claim which is the
subject of the arbitration, but shall not otherwise serve to abate,
stay or suspend the arbitration proceedings.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
LIBERTY NATIONAL BANK
By /s/ Richard M. Wilbur
CATHERINE C. CLAMPITT
By /s/ Catherine C. Clampitt
THIS DOCUMENT IS A COPY OF THE AGREEMENT FOR SERVICES FILED ON MAY
15, 1996 PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION
AGREEMENT
THIS AGREEMENT is made this 31st day of January, 1996, by and
between LIBERTY NATIONAL BANK, a national banking association,
with offices at One Pacific Plaza, 7777 Center Avenue, Huntington
Beach, California 92647 ("Bank") and J. DON HARTFELDER, an
individual residing at 3906 Humboldt Drive, Huntington Beach,
California 92649 ("Hartfelder") hereby agree as follows:
RECITALS:
A. Bank wishes to obtain professional, cost effective
inspections for its construction loan projects.
B. Hartfelder, a director of the Bank, is willing to provide
such inspection services to Bank on an independent
contractor basis.
C. As a licensed architect, Hartfelder can provide a high
Level of expertise not generally available to independent
banks. As a director of the Bank, Hartfelder is a known,
stable entity with a major vested interest in the total
success of Bank's construction loan projects.
AGREEMENT
1. Services To Be Provided. Hartfelder shall provide the
Bank with construction loan inspection services.
Hartfelder's duties shall conform to the standard
duties generally required from construction inspectors
by the banking industry, including but not limited to
field inspections, office consultations, professional
evaluations, and preparation of reports. In addition,
Hartfelder shall spend an estimated average of two and
a half (2 1/2 ) days as needed, per week reviewing and
approving vouchers.
2. Independent Contractor Status. Hartfelder's
relationship to Bank shall be that of an independent
contractor. Hartfelder shall not be considered as
having an employee status and shall not, by virtue of
this Agreement, participate in any plan, arrangements
or distributions by Bank pertaining to or in
connection with its employees, including, but not
limited to, any health insurance, workman's
compensation, pension, stock, bonus, profit sharing or
similar benefits, but not including benefits resulting
from his relationship as a director of the Bank.
Hartfelder shall be responsible for all reports and
obligations with respect to his own Social Security,
income tax withholding, unemployment compensation, and
similar matters.
-1-
As an independent contractor, Hartfelder shall have the
sole authority to control and direct the performance of his
services, subject to the performance criteria outlined by
Bank. All services shall be subject to Bank's general
right of review to assure their satisfactory completion.
Hartfelder shall have no authority to enter into written or
oral contracts on behalf of Bank.
Nothing in this Agreement shall be construed as creating a
partnership, joint venture or agency relationship between
Hartfelder and Bank.
3. All Services Are To Be Performed At Bank's Discretion.
All work performed by Hartfelder shall be performed
upon Bank's request and at Bank's sole discretion.
Bank may hired additional construction inspectors from
time to time, and nothing in this Agreement shall be
construed as guaranteeing a minimum work assignment to
Hartfelder. Although it is estimated that Hartfelder
will perform an average of sixty (60) inspections per
month, together with two (2) half days per week
reviewing and approving vouchers, the actual work
performed by Hartfelder may increase or decrease at
Bank's discretion.
4. Hartfelder May Perform Inspection Services For Others.
It is specifically understood and agreed that
Hartfelder may perform construction inspection
services for clients other than Bank, and that the
performance of such services shall not be subject to
the terms of this Agreement, but shall instead be
subject only to the terms of the Agreement between
Hartfelder and such other clients.
5. Compensation For Services. The first ten (10) inspections
per calendar month shall be compensated at $100 per
inspection. The following thirty (30) inspections shall be
compensated at $75 per inspection. Any additional
inspections per calendar month shall be compensated at $50
per inspection.
For inspection of a project located outside a 60 mile
radius of Liberty National Bank, Mr. Hartfelder shall be
paid $.28 per mile for travel to and from the project
beyond the 60 mile radius.
Hartfelder shall be compensated for his services in
reviewing and approving vouchers on the basis of an
equivalent of one (1) inspection for every four hours spent
in performing such administrative work.
Compensation shall be payable to Hartfelder on a monthly
basis, upon receipt of invoice.
-2-
6. Express Limitation On Compensation. Notwithstanding
anything to the contrary in paragraph 5 above, it is hereby
expressly agreed that in no event shall Hartfelder's
monthly compensation, divided by the total number of
inspections allocated to Hartfelder, exceed the average
expenses per inspection experienced by other similar
independent banks in Bank's trade areas, as researched and
updated from time to time. Bank's mode of computing such
"average expense", including its selection of at least
three (3) "similar independent banks" for sampling
purposes, shall be at the Bank's sole discretion.
7. Indemnification. Hartfelder agrees to indemnify, defend
and hold Bank harmless from and against any and all claims,
demands, actions, suits, losses and/or damages arising out
of (a) Hartfelder's unlawful or negligent acts or omissions
in connection with this Agreement; (b) Hartfelder's
performance of services for clients other than Bank' and
injuries allegedly suffered by Hartfelder while performing
the services contemplated by this Agreement.
Bank agrees to indemnify, defend and hold Hartfelder
harmless from and against any and all claims, demands,
suits, losses and/or damages arising out of (a) Bank's
unlawful or negligent acts or omissions in connection with
this Agreement; (b) the negligence or unlawful conduct of
Bank, its employees, representatives or agents; and
injuries allegedly suffered by Bank, its employees,
representatives, agents and/or subcontractors.
This indemnification provision shall be independent of any
other indemnification agreement between Hartfelder and
Bank.
8. Insurance. Hartfelder shall maintain the following
insurance in amounts satisfactory to Bank:
Errors & Omissions Insurance Policy in the minimum amount
of $250,000 to be maintained.
9. Term. Unless terminated earlier as set forth below in
paragraph 10, the initial term of this Agreement shall be
one year. At the end of the initial term, the parties may
negotiate an additional term or terms, on such terms and
conditions as the parties may mutually agree upon at that
time.
10. Termination By Either Party. This Agreement may be
canceled with or without cause, by either party
hereto. Said cancellation shall be effective 30 days
after written notice of such intent to cancel is
delivered to the other party.
-3-
11. Compliance With The Law. Hartfelder and Bank agree to
comply with all applicable laws and government
regulations. No instruction by either party shall be
construed in a way that would require the other party
to violate any law or regulation.
12. No Assignment. Neither Hartfelder nor Bank may assign
or subcontract any right or duty associated with this
Agreement without the prior written consent of the
other.
13. Waivers. Either party may delay enforcing its rights
under this Agreement without losing them. Any waiver
of a right by either party must be in writing and
shall not be deemed to be a waiver of other rights or
of the same right at another time.
14. Arbitration. Any controversy or claim arising out of or
related to this agreement, or the breach thereof, shall be
settled by arbitration in accordance with the Rules of the
American Arbitration, and judgement upon the award rendered
by the arbitrator may be entered in any court having
jurisdiction thereof. Provisional relief may, but need
not, be sought in a court of law while arbitration
proceedings are pending, and any relief granted by such
court shall remain effective until the matter is finally
resolved through arbitration. Final resolution through
arbitration may include any remedy or relief that the
arbitrator deems just and equitable, including permanent
injunctive relief or specific performance relief, or both,
and the arbitrator is specifically empowered to award such
relief, which shall then become a court judgement. Venue
and jurisdiction for any arbitration or legal action
regarding this Agreement shall be the State of California.
15. Amendment. This Agreement may be amended only by a written
document signed by both parties.
16. California Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
California.
17. Entire Agreement. This Agreement contains all of the
promises, covenants, undertakings and obligations of the
parties concerning the subject of this Agreement and
neither party is relying upon any statement, promise or
agreement, except as set forth in this Agreement. All work
in progress at the time this Agreement is executed shall be
governed by the terms of this Agreement.
-4-
18. Notices. Any notices required by this Agreement shall be
sent to the other party at the address set forth above, or
at such other address as the party may request in writing
from time to time.
Dated: , 1996
/s/ J. Don Hartfelder
--------------------------------
J. Don Hartfelder, an individual
LIBERTY NATIONAL BANK
By: /s/ Philip S. Inglee
---------------------------
Philip S. Inglee
Title: President & Chief Executive Officer
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<CURRENCY> U.S. DOLLARS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<PERIOD-TYPE> 3-MOS
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0
0
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