STANDARD FORM SHOPPING CENTER LEASE BETWEEN AVG PARTNERS II, LLC a Delaware limited liability company

Exhibit 99.2

STANDARD FORM SHOPPING CENTER LEASE

BETWEEN

AVG PARTNERS II, LLC
a Delaware limited liability company

AND

PACIFIC PREMIER BANK,
a federal savings bank

TABLE OF CONTENTS

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STANDARD FORM SHOPPING CENTER LEASE

This Lease, dated as of August 1, 2005 (“Effective Date”) is made by and between the parties defined below in Article 1(a).

ARTICLE 1
TERMS AND DEFINITIONS

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Exhibits (indicated as Marked)

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IN WITNESS WHEREOF, the parties have executed this Lease, consisting of Articles 1 through 35 on pages 1 through 28 and each of the Exhibits marked above, inclusive, all of which are attached hereto and, in addition to this Article 1, constitute this Lease.

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ARTICLE 2
PREMISES

Landlord does hereby lease to Tenant and Tenant hereby leases from Landlord that certain space (herein called “Premises”), described in Article 1(b) and delineated in Exhibit ”A” .  The Premises are situated within a Shopping Center (the “Center”) located as set forth in Article 1(c).  The preliminary site plan of the Center and the location of the Premises are delineated on Exhibit ”A-1” (“Site Plan”) attached hereto and incorporated herein by reference.  The Common Area is defined in Article 25.

This Lease is subject to the terms, covenants and conditions herein set forth and Tenant covenants as a material part of the consideration of this Lease to keep and perform each and all of said terms, covenants and conditions by it to be kept and performed.

ARTICLE 3
USE

3-1.    Permitted Use. Tenant shall use the Premises for the purpose set forth in Article 1(d) and for no other purpose without Landlord’s prior written consent, as provided in 3-3 below.

3-2.    Exclusive Use.     Except for those uses permitted (presently and in the future) pursuant to existing leases (as of the Effective Date hereof) with other tenants, their assignees, or subtenants in the Center, Landlord covenants that during the term of this Lease and for so long as Tenant continuously operates the Premises for the use set forth in Article 1(d), Landlord shall not lease to, nor allow any other premises in the Center to operate as its primary business, the Tenant’s primary use set forth herein.  In the event that Tenant determines that another tenant or occupant of the Center has violated the provisions of this Article 3-2, it shall provide written notice to Landlord of such violation which notice shall include a detailed description of the nature of said violation.  Landlord shall not be in default under this Lease if another tenant or occupant violates the provisions of this Article 3-2 in violation of a written lease or occupancy agreement which complies herewith and to which Landlord is a party, provided that within thirty (30) days following Landlord’s receipt of Tenant’s notice, Landlord initiates appropriate action to cause said violation to cease (including the initiation of legal proceedings if necessary) and thereafter diligently prosecutes said violation to its legal conclusion.  If a violation of Landlord’s covenant in this Article 3-2 is not a breach of a written lease or occupancy agreement to which Landlord is a party, and said violation is not cured within ninety (90) days of Tenant’s notice, Tenant’s sole remedy shall be to either: (i) terminate this Lease, which termination shall be effective thirty (30) days following Tenant’s notice to terminate unless said violation ceases prior to the expiration of said thirty (30) day period, or (ii) not terminate this Lease (which shall be deemed Tenant’s decision, unless Tenant specifically elects to terminate) and sue Landlord for damages or specific performance, which action must be brought within one hundred twenty (120) days of Tenant’s notice.

3-3.    Change of Use.   If, after the Continuous Operations Period set forth in Article 5-9, Tenant intends to occupy and use the Premises for a purpose other than as set forth in Article 1(d) during the Initial Term of this Lease or during any renewal period hereunder, then prior to any change in use Tenant shall notify Landlord, in writing, of its desired use, and thereafter Landlord shall submit to Tenant, within thirty (30) days, a written list of existing exclusive use provisions for the Center. Tenant agrees that it shall not operate or allow the Premises to be operated (except as allowed by Article 3-1) in a way which would violate any future or existing exclusive to which Landlord has agreed in writing with any other tenant or occupant of the Center or which would violate any of the prohibited use restrictions set forth in Exhibit “H” .  Landlord may withhold its consent to any requested change of use if such use is not a retail use typically found in first class shopping centers in Southern California or which violates an exclusive use or restriction granted to another tenant or occupant of the Center.  A change of use shall occur whenever Tenant shall sell products other than as set forth in Article 1(d) from more than ten percent (10%) of the leasable area (as defined below in Article 4) of the Premises.

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ARTICLE 4
MINIMUM RENT

4-1.    Initial Minimum Monthly Rent.   Tenant agrees to pay to Landlord the minimum monthly rent set forth in Article 1(e) (“Minimum Rent”), without offset, deduction, notice, or demand in advance, on or before the first day of each and every successive calendar month during the Term hereof, commencing pursuant to Article 5-3 except that the first month’s Minimum Rent shall be paid in advance upon the execution hereof.  The Minimum Rent set forth herein shall be as described in Article 1(e). As used in this Lease, the phrase, “leasable area” means the area of any building or space within a building as measured from the outside of exterior walls and from the middle of demising walls.  Landlord and Tenant agree that for purposes of this Lease the leasable area of the Premises is deemed to be as set forth in Article 1 (b) and that such leasable area shall be set forth on the Confirmation Of Term and Rent (attached hereto as Exhibit ”E” ) to be executed by Landlord and Tenant within thirty (30) days of the date the term of this Lease commences.  Rent for any period which is less than one (1) month shall be a prorated portion of the monthly installment herein based upon a thirty (30) day month.  Minimum Rent shall be paid to Landlord in lawful money of the United States of America at the address set forth in Article 1(m) or such other place as Landlord may from time to time designate. 

4-2.    Monthly Minimum Rent Adjustment .  The monthly Minimum Rent shall be subject to adjustment as follows:

From the Rent Commencement Date (as defined in Article 5-3) through the expiration of the sixtieth (60 ^th ) full calendar month of the Term (as defined in Article 5-1), the monthly Minimum Rent shall be the Initial Monthly Minimum Rent as set forth in Article 1. 

Upon the commencement of the sixty-first (61 ^st ) month through the expiration of the Initial Term the Monthly Minimum Rent shall be Eleven-thousand four-hundred and ninety-six and 40/100 dollars ($11,496.40) .

Upon the commencement of Tenant’s first (1 ^st ) Option Period, if any, through the expiration of such option period, the Monthly Minimum Rent shall be Twelve-thousand eight-hundred and seventy-five and 97/100 dollars ($12,875.97) .

Upon the commencement of Tenant’s second (2 ^nd ) Option Period, if any, through the expiration of such option period, the Monthly Minimum Rent shall be Fourteen-thousand four-hundred and twenty-one and 08/100 dollars ($14,421.08) .

ARTICLE 5
TERM

5-1.    Lease Term.  The term of this Lease (“Term”) shall be for that period of time as set forth in Article 1(f) and shall be full calendar months, plus any partial month in which the Term commences.  The approximately twelve (12) calendar month period from the Term Commencement to the first anniversary thereof and each successive twelve (12) month period thereafter referred to in this Lease as a “Lease year.”  The parties hereto acknowledge that certain obligations under various articles hereof may commence prior to the Term (i.e., construction submittals, indemnities, and liability insurance) and the parties agree to be bound by these articles prior to commencement of the Term.

5-2.    Lease Term Commencement.   The Term shall commence (“Term Commencement”)  upon the date of delivery of possession of the Premises (“Delivery Date”) by the Landlord to the Tenant, the work identified on Exhibit “B” (“Landlord’s Work”) thereby being deemed by the Landlord and Tenant as being fully installed and completed. Landlord and Tenant shall confirm the Term Commencement by executing the Confirmation of Term and Rent as set forth in Article 4-1. 

5-2(a)  Zoning.  Prior to the date that possession of the Premises is delivered to Tenant the Premises will have been properly zoned for Tenant’s Use as identified in Article 1(d).  Notwithstanding the foregoing, if Tenant has not been granted all building and sign permits or waived such permit requirement within thirty (30) days after execution of this Lease, Tenant shall have the right to terminate this Lease on or before ten (10) days following the expiration of said thirty (30) day period.

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5-3.     Rent Commencement .  The date of commencement of the payment of Minimum Rent and all other charges and rents (the “Rent Commencement Date”) shall occur on or before the date which is the first to occur of (i) ninety (90) days after Landlord’s delivery of the Premises as defined in Article 5-2, or (ii) upon the date of Tenant’s opening for business.

5-4.    Construction and Fixture Period.   Tenant shall perform, at Tenant’s sole cost and expense, all of Tenant’s Work as set forth in Exhibit “C” , and equip the Premises with all trade fixtures, inventory and personal property suitable or appropriate to the regular and normal operation of Tenant’s business.  Tenant shall exercise reasonably diligent efforts to perform Tenant’s Work as set forth in Exhibit “C”, and shall open for business as soon as possible thereafter.

5-4(a). Tenant Improvement Allowance.   Provided Tenant is not in default of this Lease, Landlord shall pay to Tenant on or before the thirty (31st) day following Tenant’s filing of a Notice of Completion for Tenant’s Work, the tenant improvement allowance in the amount as set forth in Article 1 (k) provided the following occurs: 1) Tenant opens for business and occupies the Premises; 2) Tenant pays second month’s Minimum Rent; and 3) Tenant provides Landlord with all appropriate invoices and lien releases.

5-5.     Performance of Landlord’s Work.   The Premises shall be delivered to Tenant by Landlord within thirty (30) days following the mutual signing of this Lease in accordance with the requirements enumerated in Exhibit B.

5-6.    Performance of Tenant .  Tenant acknowledges that Landlord has, or will pledge the Lease and the rents and monies reserved hereunder as security for a loan or loans on the Center and that Tenant’s failure to perform as agreed in this Lease including but not limited to payment of rents, and opening for business, may cause Landlord to suffer the loss of a loan commitment or to create default of certain loan requirements.  In the event Tenant fails to perform and such failure causes Landlord to suffer damages such as penalties, forfeiture of loan fees, higher interest rates, or any other costs and damages, Tenant may be declared in default of this Lease.

5-7.    Tenant’s Right to Possession.   Prior to entry into or on the Premises Tenant shall provide to Landlord certificates of insurance evidencing the insurance which Tenant is required to obtain by Article 8, by Exhibit ”C” , and by any of the other provisions of this Lease; provided, however, Landlord may, at Landlord’s sole discretion, agree in writing to waive the requirement that certain certificates be provided during Tenant’s Construction and Fixture Period.  Further, Landlord shall not be required to deliver possession to Tenant for any reason, including but not limited to construction or fixturization by Tenant, until Tenant provides Landlord with all certificates of insurance required by Article 8 and with all plans and drawings required by Exhibit ”C” to this Lease.  Such delay shall not, however, delay the Term Commencement, Rent Commencement Date, or any other obligations of Tenant under this Lease.

5-8.    Option(s) to Extend Lease.   Provided Tenant is not in default (of which Tenant has received written notice and such default remains uncured) upon the giving of notice or commencement of any option period, Tenant shall have the number of successive options to extend the Term, and for their respective  periods of time, as identified in Article 1(f) hereof, each such option being an “Option Period”.  Each such extended term shall begin, respectively, upon the expiration of the Initial Term of this Lease or of this Lease as extended hereby and the same terms and conditions as herein set forth shall apply to each such extended term, except that the monthly Minimum Rent shall be readjusted pursuant to Article 4-2  hereof.

If Tenant shall elect to exercise the aforesaid option or options, it shall do so by giving written notice to Landlord not less than 180 days prior to the expiration of the then current Term of this Lease.  It shall be a condition of Tenant’s right to the second option to extend that Tenant has exercised and faithfully performed all of its obligations under this Lease during the first option period.

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5-9.    Recapture by Landlord.  Promptly following completion of construction of the Tenant Improvements, Tenant agrees to open its store for business under the trade name as identified in Article 1 and to operate continuously its business in the Premises, fully stocked and staffed, for a period of one (1) year (the “Continuous Operation Period”).  In the event that the Premises shall, at any time after such opening, be closed for business for a period of thirty (30) consecutive days or more, other than as a result of a remodeling or a cause or event referred to in Article 23 or 24, herein, or due to Tenant’s impending subletting of the Premises or assigning of its interest in this Lease (which shall be completed and the Premises reopened within one hundred and eighty (180) days), then at any time thereafter but prior to any day on which Tenant shall reopen for business or shall give notice to Landlord that Tenant intends to reopen the Premises for business (“Tenant’s Reopening Notice”), Landlord may, as its sole remedy, terminate this Lease by giving Tenant written notice thereof.  This Lease shall terminate on the thirtieth (30th) day after the giving of such written notice by Landlord.  If Tenant shall give Tenant’s Reopening Notice as provided above, Tenant shall reopen the Premises for business on or before the date specified in the Tenant’s Reopening Notice.

Anything to the contrary notwithstanding, the Premises may be closed for causes beyond the reasonable control of Tenant.  In addition, the Premises may be closed for weekend days, banking holidays, and for the purposes of remodeling the Premises. 

ARTICLE 6
SECURITY DEPOSIT

6-1.    Security Deposit.      Intentionally Omitted

ARTICLE 7
ADDITIONAL RENT

7-1.    Percentage Rent.      Intentionally Omitted

7-2.    Operating Expenses.

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At no time shall Tenant be required to pay nor shall Landlord invoice Tenant for any contribution to the payment of Operating Expenses, which amount includes any overlap or duplication between the maintenance, taxes or insurance expenses payable for the Premises and the maintenance, taxes or insurance for the Common Area.

With respect to real estate taxes, under no circumstances shall Tenant be liable for any interest, penalty or surcharge of any kind, if Tenant has timely paid Tenant’s pro rata share of taxes to Landlord as set forth in this Article 7-2.

In the event that Landlord at any time imposes upon users a fee or charge for use of space in the parking areas of the Center, the revenue derived therefrom shall be used to offset the maintenance and repair thereof, before any such maintenance or repair expense is passed through to Tenant.

(b)     Upon the Term Commencement,  Landlord may submit to Tenant a statement of the anticipated monthly Operating Expenses for the period between such commencement and the following January and Tenant shall pay these Operating Expenses on a monthly basis as Additional Rent concurrently with the payment of the Minimum Rent.  Tenant shall continue to make said monthly payments until notified by Landlord of a change thereof.  By April 1 of each year Landlord shall give Tenant a statement showing the total Operating Expenses for the Premises and the Center for the prior calendar year and Tenant’s allocable share thereof.  The first said statement shall be prorated from the Term Commencement.  In the event the total of the monthly payments which Tenant has made for the prior calendar year shall be less than Tenant’s actual share of such Operating Expenses then Tenant shall pay the difference in a lump sum within ten (10) days after receipt of such statement from Landlord and shall concurrently pay any difference between the monthly payments already made during the current calendar year based on the prior year’s anticipated monthly Operating Expenses and the amount of monthly payments which are then calculated as monthly Operating Expenses.

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Any overpayment by Tenant shall be credited toward the monthly Operating Expenses next coming due. Even though the Term shall have expired and Tenant shall have vacated the Premises, when the final determination is made of Tenant’s share of said Operating Expenses for the year in which this Lease terminates, Tenant shall immediately pay any increase due over the estimated Operating Expenses previously paid and, conversely, any overpayment made shall be immediately paid by Landlord to Tenant.  Failure of Landlord to submit statements as called for herein shall not be deemed to be a waiver of Tenant’s requirement to pay sums as herein provided. Tenant shall have the right to audit all Landlord’s records relating to the Operating Expenses one (1) time per Lease year upon ten (10) days prior written notice at the office of Landlord.  If the amount charged to Tenant has been overstated or understated, an appropriate payment shall be made within ten (10) days from completion of the audit.  If the amount charged to Tenant has been overstated by three percent (3%) or more, Landlord shall pay the reasonable, direct out-of-pocket cost of the audit.  Otherwise, the cost of the audit shall be paid for by Tenant.

Notwithstanding anything herein to the contrary, Tenant shall not be liable for amounts due under this provision which are not billed within the twelve (12) month period immediately following the end of the twelve (12) month period in which they accrued.

(c)     Landlord shall not be liable to Tenant or any of Tenant’s employees, officers, directors, shareholders, contractors, agents or invitees for any failure to  provide security for the Center and Common Areas or any failure or inadequacy of any security so provided by Landlord.

7-3.    Definition of Additional Rent .  All amounts and charges payable by Tenant under this Lease (or any amendments, addenda, exhibits, assignments, subleases, or other document purporting to modify or supplement this Lease) in addition to the Minimum Rent described in Article 4 above (including, without limitation, payments for Tenant’s Pro Rata Share of Operating Expenses as provided hereinabove in Article 7, interest, late charges, etc.) shall be considered and defined as “Additional Rent” for the purposes of this Lease, and the word “rent” in this Lease shall include such additional rent unless the context specifically or clearly implies that only the Minimum Rent is referenced.  Except as otherwise expressly provided in this Lease, Minimum Rent and Additional Rent shall be paid to Landlord without any prior demand therefor and without any deduction or offset whatever, in lawful money of the United States of America.

ARTICLE 8
INSURANCE AND INDEMNITY

8-1.    Insuring Party.   As used in this Article 8, the term “Insuring Party” shall mean the party who has the obligation to obtain the insurance required hereunder.  The Insuring Party shall be designated in each paragraph of this Article 8.  Whether the Insuring Party is Landlord or Tenant, Tenant shall, as Additional Rent for the Premises, pay the cost of all insurance so obtained as provided herein.

8-2.    Liability Insurance.   Tenant as the Insuring Party, at Tenant’s expense, shall obtain and keep in force during the Term, as the Insuring Party under this Article 8-2, a policy of commercial general liability insurance including coverage for bodily injury and property damage insuring Landlord and Tenant against any liability arising out of the ownership, use, occupancy, construction on or maintenance of the Premises and all areas appurtenant thereto, and including any and all of Tenant’s products and completed operations (“Tenant’s Liability Insurance”).  Such insurance shall be on an occurrence basis and shall provide combined single limit coverage of not less than One Million Dollars ($1,000,000).  The policy shall contain all broad form commercial general liability extensions including, if applicable, liquor liability, garage liability, garage keepers legal liability, auto liability (owned, non-owned, hired), and such other specific coverage as may be appropriate based upon Tenant’s use in the Premises.  Tenant shall also obtain fire and extended casualty insurance in the amount of ninety percent (90%) of the full replacement cost of the Tenant Improvements as defined below in Article 8-3(c).  The policy shall contain cross liability endorsements and shall insure performance by Tenant of the indemnity provisions of this Lease including all exhibits attached hereto.  The limits of said insurance shall not, however, limit the liability of Tenant hereunder.  If Tenant shall fail to procure and maintain said insurance, Landlord may, but shall not be required to, procure and maintain the same, but at the expense of Tenant, as Additional Rent. Said insurance shall have a Landlord’s protective liability and a lender’s loss payable endorsement attached thereto.

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Tenant shall include on such policies, as additional insureds, the entities or persons set forth in Article 1(l), and such other parties as Landlord shall reasonably from time to time require, and Tenant shall pay all premiums, if any, required to add the foregoing party(ies) as additional insureds and shall contain a provision requiring the insurance carrier to notify Landlord of any termination with not less than thirty (30) days notice.  Not more frequently than once every five (5) years or once during each option period, in the reasonable opinion of Landlord, the amount of liability insurance required hereunder is not adequate, Tenant shall increase said amount by no more than fifty percent (50%) of the amount thereof during the preceding year of the Term.  However, the failure of Landlord to require any additional insurance coverage shall not be deemed to relieve Tenant from any obligations under this Lease.

Landlord as the Insuring Party shall cause to be carried, during the Term commercial general liability insurance (hereinafter, “Landlord’s Liability Insurance”) for the Center and Common Area, naming Tenant as an additional insured providing coverage of not less than Three Million Dollars ($3,000,000.00), combined bodily injury and property damage liability in separate limits for each of the following; general aggregate, products-completed operations aggregate, each occurrence, personal & advertising injury, and fire damage, limits of Five Hundred Thousand Dollars ($500,000.00).  Landlord, upon written request by Tenant, shall promptly deliver to Tenant a certificate of Landlord’s Liability Insurance.  Landlord’s Liability Insurance shall require Landlord’s insurance carrier to notify Tenant at least thirty (30) days in advance of the cancellation of Landlord’s Liability Insurance.  Tenant agrees to reimburse to Landlord, Tenant’s share of Landlord’s annual total costs for the premiums for Landlord’s Liability Insurance.  Tenant’s share of Landlord’s Liability Insurance shall be calculated as the total premium multiplied by a fraction, the numerator of which shall be the leasable area in the Premises and the denominator of which shall be the leasable area covered by such policy.

8-3.    Landlord’s Property Insurance.

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8-4.    Insurance Policies .  Insurance required hereunder shall be in companies with a “General Policyholders Rating” of A or better as set forth in the most current issue of “Best Insurance Guide”.  Tenant shall deliver to Landlord copies of policies of such insurance or certificates evidencing the existence and amounts of such insurance with loss payable clauses satisfactory to Landlord.  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, within thirty (30) days prior to the expiration of such policies, furnish Landlord with renewals or “binders” thereof, or Landlord may order such insurance and charge the cost thereof to Tenant, which amount shall be payable by Tenant upon demand as Additional Rent.  Tenant shall not do or permit to be done anything which shall invalidate the insurance policies referred to in Article 8-3.  If Tenant does or permits to be done anything which shall increase the cost of the insurance policies referred to in Article 8-3, then Tenant shall forthwith upon Landlord’s demand reimburse Landlord for any additional premiums attributable to any act or omission or operation of Tenant causing such increase in the cost of insurance.  Tenant shall provide a lender’s loss payable endorsement in favor of Landlord with respect to insurance coverage required by this Article 8.

8-5.    Waiver of Claims; Waiver of Subrogation.   Tenant and Landlord each hereby waive any and all rights of recovery against the other or against the officers, employees, agents and representatives of the other, for loss of or damage to such waiving party or its property or the property of others under its control to the extent that such loss or damage is insured against under any insurance policy in force at the time of such loss or damages or is required under the terms of this Lease, whether or not in force.  Tenant and Landlord each, on behalf of their respective insurance companies insuring the property of either Tenant or Landlord against any such loss or damage, hereby waive any right of subrogation that any insurance company may have against Landlord or Tenant, as the case may be. The Insuring Party shall give notice to the insurance carrier or carriers that the foregoing mutual waiver of subrogation is contained in this Lease.  Notwithstanding, the waiver of subrogation will not be effective if its inclusion would cancel an insurance policy of any party.

8-6.    Indemnity .  Tenant shall indemnify and hold harmless Landlord from and against any and all claims, liabilities, losses, costs and damages arising from Tenant’s use of the Premises or from the conduct of Tenant’s business or from any activity, work or things done, permitted or suffered by Tenant and Tenant’s agents, contractors and employees and invitees in or about the Premises or elsewhere and shall further indemnify and hold harmless Landlord from and against any and all claims, liabilities, losses, costs and damages 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 intentional or negligent acts or omissions of Tenant, its employees, agents or invitees, or of any such claim or any action or proceeding brought thereon; and in case any action or proceeding be brought against Landlord by reason of any such claim, Tenant upon notice from Landlord shall defend the same at Tenant’s expense by counsel satisfactory to Landlord or reimburse Landlord for all costs and expenses, including reasonable attorneys’ fees incurred by Landlord in defending such action or prosecuting any cross-complaint.  Tenant, as a material part of the consideration to Landlord hereby assumes all risk of damage to property or injury to persons, in upon or about the Premises arising from any cause and Tenant hereby waives all claims in respect thereof against Landlord.  Such assumption and waiver shall not extend to any claims that are a result of Landlord’s gross negligence or willful misconduct.

8-7.    Exemption of Landlord from Liability.   Tenant hereby agrees that Landlord shall not unless caused by Landlord’s gross negligence or willful misconduct,  be liable for injury to Tenant’s business or any loss of income therefrom or for damage to Tenant’s Contents, Tenant Improvements, Tenant’s employees, invitees, customers, or any other person in or about the Premises, nor shall Landlord unless caused by Landlord’s gross negligence or willful misconduct,  by be liable for injury to the person of Tenant, Tenant’s employees, agents or contractors, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning, roof 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, or from other sources or places, and regardless of whether the cause of such damage or injury or the means of repairing the same is accessible to Tenant.  Landlord shall not be liable for any damages arising from any act or neglect of any other tenant, if any, of the Center in which the Premises are located.

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8-8.    Tenant’s Insurance.   Tenant shall maintain the following insurance coverage with respect to Tenant’s Contents and Tenant Improvements during the Term insuring Landlord, Tenant and any lender of record (the name of which has been provided to Tenant by Landlord), encumbering the Premises, with full waiver of subrogation:

8-9.    Commencement of Insurance.   All insurance and indemnity obligations of Tenant pursuant to this Lease, including all exhibits, shall commence upon Term Commencement or on the date on which Tenant first enters the Premises to perform any work on the Premises, including but not limited to construction or fixturization of the Premises, whichever comes first.  All insurance policies required of Tenant shall name as additional insured the parties set forth in Article 1(l).

ARTICLE 9
USES PROHIBITED

Tenant shall not do nor permit anything to be done in or about the Premises, nor bring or keep anything therein which is not within the permitted use of the Premises, or which will in any way increase the existing rate of or affect any fire or other insurance upon the Building or any of its contents, or cause a cancellation of any insurance policy covering said Building or the Center or any part thereof or any of its contents.  Tenant shall not do nor permit anything to be done in or about the Premises which will in any way obstruct or interfere with the rights of other tenants or occupants of the Building or the Center (including the exclusive and restrictive use rights of other tenants pursuant to Article 3-3) or injure or annoy them nor use or allow the Premises to be used for any immoral or unlawful purpose; nor shall Tenant cause, maintain or permit any nuisance in, on or about the Premises.  Tenant shall not commit nor allow to be committed any waste in or upon the Premises.  Tenant shall not use or allow the Premises to be used for any of the prohibited or exclusive uses set forth on Exhibit ”H” .

9-1.    Hazardous Waste.   Landlord represents that it has made or will make an investigation of the physical condition of the Premises and Center, that it is generally familiar with the present and prior uses of the Premises and Center and that to the best of its actual knowledge as of the Term Commencement there will not be any toxic or hazardous wastes or substances used, generated, stored, treated or disposed on the Center or Premises in violation of applicable law.  In the event that the presence of any hazardous wastes or substances is detected on the Premises in violation of any applicable law either (i) prior to the date Tenant takes possession of the Premises; or (ii) at any time during the Term solely as a part of or as a result of work by Landlord on/in the Premises, then in such event, Landlord shall contain, remove, detoxify and/or remediate such hazardous waste in compliance with all applicable laws and environmental regulations (the “remedial work”).

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All such remedial work shall be performed by Landlord at Landlord’s expense.  In the event that such remedial work is performed prior to Tenant opening for business, Tenant’s obligation to open shall be delayed until such remedial work is completed.  In the event that such remedial work is performed subsequent to Tenant opening for business, Tenant’s obligation to pay Minimum Rent shall be abated in direct proportion to the extent Tenant is unable to conduct its business upon the Premises as a result of such remedial work being necessary or while such remedial work is being performed.  Landlord hereby indemnifies Tenant from and against any loss, liability, claim or expense, including, without limitation, cleanup, engineering and attorneys fees and expenses that Tenant may incur by reason of the above representation being false or by reason of any investigation or claim of any governmental agency or third parties in connection therewith.  Landlord’s representations and indemnity to Tenant under this paragraph shall survive the cancellation or termination of this Lease.

Tenant shall not engage in any activities in or about the Premises or the Center that violate any federal, state or local laws, rules or regulations pertaining to hazardous wastes or hazardous substances.  Tenant shall promptly take all investigatory and/or remedial action reasonably required by Landlord or ordered by governmental authorities for the clean-up and remediation of any hazardous wastes or hazardous substances in or about the Premises or the Center created, caused or materially contributed to by Tenant or by Tenant’s employees, agents or invitees at Tenant’s sole expense.  Tenant shall provide all notices and/or reports required pursuant to the Safe Drinking Water and Toxic Enforcement Act of 1986, California Health and Safety Code Section 25249.5 et seq . and any other environmental law requiring notices and/or reports by Tenant with respect to hazardous wastes and/or hazardous substances stored, used or disposed of by Tenant with respect to hazardous wastes and/or hazardous substances stored, used or disposed of by Tenant at, in, on or around the Premises or the Center.  Tenant shall provide prompt written notice to Landlord of the existence of hazardous wastes and/or hazardous materials on the Premises and/or the adjoining property that is not in compliance with all applicable laws and regulations, and all notices of violation of such environmental laws received by Tenant.  Tenant shall defend, indemnify and hold Landlord and Landlord’s agents, employees and lenders, the Premises and the Center harmless from any and all claims, demands, liabilities, obligations, expenses and/or penalties arising out of or relating to the investigations, remediation and/or abatement of any hazardous wastes or hazardous substances located in or about the Premises or the Center or the elements surrounding same, to the extent created, caused or materially contributed to by Tenant or by Tenant’s agents, employees or subtenants, invitees, or any other party having possession or entering into or upon the Center by or under Tenant and/or Tenant’s failure to comply with its obligations under this paragraph.  The terms “hazardous wastes” and “hazardous substances” as used herein shall be deemed to include hydrocarbon products and asbestos.

Notwithstanding anything herein to the contrary, Tenant shall not be liable for the use, presence, disposal, storage, generation, release or threatened release of Hazardous Materials on, from or under the Premises by a prior occupant of the Premises or on or from the Center by another tenant in the Center or Landlord.  Landlord hereby waives, releases and discharges forever Tenant from all present and future claims, demands, suits, legal and administrative proceedings and from any and all liability for damages, losses, costs, liabilities, fees and expenses, present and future, arising out of or in any way connected with any condition of environmental contamination on, about or beneath the Premises caused by Landlord, any previous owner of the Center or land underlying the Center, a prior tenant or another tenant of the Center.

ARTICLE 10
COMPLIANCE WITH LAW

Tenant shall not use the Premises, nor permit anything to be done in or about the Premises, which will in any way conflict with any law, statute, ordinance or governmental rule or regulation or any conditions imposed by any CC&R’s or other deed restrictions now in force or which may hereafter be enacted or promulgated. 

Tenant shall, at its sole cost and expense, promptly comply with all laws, statutes, ordinances and governmental rules, regulations or requirements and any CC&R’s or deed restrictions now in force or which may hereafter be in force and with the requirements of any board of fire underwriters or other similar bodies now or hereafter constituted relating to or affecting the condition, use or occupancy of the Premises, excluding structural changes not related to or affected by Tenant’s specific use or improvements made by or under Tenant or Tenant’s acts.  The judgment of any court of competent jurisdiction or the admission of Tenant in any action against Tenant, whether Landlord be a party thereto or not, that Tenant has violated any law, statute, ordinance or governmental rule, regulation or requirement, CC&R’s, or deed restriction shall be conclusive of that fact as between Landlord and Tenant.

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ARTICLE 11
ALTERATIONS AND ADDITIONS

Tenant shall not make or allow to be made any alterations, additions, or improvements to or of the Premises or any part thereof exceeding Twenty Five  Thousand Dollars ($25,000) in cost without first obtaining the written consent of Landlord (which shall not be unreasonably withheld, conditioned, or delayed), and any alterations, additions or improvements to or of said Premises, including, but not limited to, wall covering, paneling and built-in cabinet work, but excepting movable furniture and trade fixtures, shall at once become a part of the realty and belong to Landlord and shall be surrendered with the Premises.  In the event Landlord consents to the making of any alterations, additions or improvements to the Premises by Tenant, the same shall be made by Tenant at Tenant’s sole cost and expense.  Notwithstanding anything to the contrary herein, no installation, alterations, additions or improvements to or of any electrical or mechanical system or outlet to or of the Premises, or any part thereof, shall be made, or allowed to be made by Tenant without first obtaining the written consent of Landlord.  Further, Tenant shall comply with all building codes and shall obtain the approval of and appropriate permits from any governmental agencies having jurisdiction.  Prior to the installation or alteration of any such Tenant Improvements, Landlord shall by written notice to Tenant notify Tenant if, upon the expiration or earlier termination of this Lease, Tenant must remove any Tenant Improvements as defined in subsection (c) of Article 8-3 of this Lease.  Upon expiration or early termination of this Lease, Tenant shall at Tenant’s sole cost and expense, forthwith and with all due diligence, remove any Tenant Improvements, alterations, additions or other improvements designated by Landlord to be removed together with trade fixtures, movable furniture and inventory; and Tenant shall, forthwith and with all due diligence, at its sole cost and expense, repair any damage caused by such removal whether such damage is to the Premises, the Building, or to any other property of Landlord. Tenant shall not be permitted to make any structural alterations, roof penetrations or exterior modifications to the Premises.

Notwithstanding the foregoing, Tenant shall have the right, from time to time, to make whatever nonstructural changes are necessary to the interior of the Premises in terms of decor, design and color usage as Tenant desires.

ARTICLE 12
REPAIRS

12-1.    Tenant’s Repairs.   By entry hereunder (as above provided), Tenant shall be deemed to have accepted the Premises as being in good, sanitary order, condition and repair.  Tenant shall, at Tenant’s sole cost and expense, keep the Premises and every part thereof in good condition and repair (except as hereinafter provided with respect to Landlord’s obligations) including, without limitation, the maintenance and repair of any storefront, doors, window casements, glazing, plumbing, pipes, electrical wiring and conduits, acoustical dropped ceiling systems, interior walls, including demising walls, light fixtures, and heating and air conditioning system.  Tenant shall obtain a service contract for repairs and periodic maintenance of said heating and air conditioning system with a company acceptable to Landlord, said maintenance contract to conform to the requirements under the warranty, if any, on said system, but in no event less often than quarterly.  Reasonable proof thereof of said maintenance contract shall be provided to the Landlord.  Tenant shall, upon the expiration or sooner termination of the Term, surrender the Premises to Landlord in good condition, broom clean, ordinary wear and tear and damage from causes beyond the reasonable control of Tenant excepted.  Any damage to adjacent premises caused by Tenant’s use of the Premises shall be repaired at the sole cost and expense of Tenant.  Unless caused by any act or omission of Tenant, nothing contained in this Article shall be deemed to require Tenant to make any alteration which is of a structural nature or which falls within Landlord’s repair/maintenance obligations hereunder.  Tenant shall not be required to make any repairs necessitated by the gross negligence or willful misconduct of Landlord, its agents or employees.

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12-2.    Landlord’s Repairs. Notwithstanding the provisions of Article 12-1 above, Landlord shall at its sole cost and expense, repair and maintain the following structural portions of the Building: foundation, floor slab, structural portions of interior load bearing walls (except painting), structural components of exterior walls, roof, columns, structural beams. Although Landlord is obligated under this Article 12-2 to repair and maintain those certain structural portions of the Building described in the preceding sentence, Tenant shall reimburse Landlord for the cost of such repair and maintenance for such repairs and maintenance as are required because of damage to such structural portions of the building caused in whole or in part by the act, neglect, fault or omission of any duty of Tenant, its agents, servants, employees, invitees.  If such repairs are required because of damage to such structural portions of the Building caused by breaking and entering, or for aesthetic maintenance of the exterior of the Premises (i.e., painting, the removal of graffiti), Tenant shall pay to Landlord the actual cost of making such repairs and maintenance.  Landlord shall not be liable for any failure to make such repairs or to perform any maintenance unless such failure shall persist for an unreasonable time after written notice of the need of such repairs or maintenance is given to Landlord by Tenant.  There shall be no abatement of rent and no liability of Landlord, to the same extent, by reason of any injury to or interference with Tenant’s business arising from the making by Landlord of any repairs, alterations or improvements in or to any portion of the Building or the Premises or in or to fixtures, appurtenances and equipment therein.

However, if Landlord fails to make any repairs required hereunder for a period of thirty (30) days after receipt of written notice, and the lack of repairs materially and adversely affects the operation of Tenant’s business, Tenant shall have the right to make such repairs at Landlord’s expense and Landlord shall pay Tenant’s reasonable out-of-pocket costs thereof within thirty (30) days after invoice therefor.

ARTICLE 13
LIENS

Tenant shall keep the Premises and the property upon which the Premises are situated free from any liens arising out of any work performed, materials furnished or obligations incurred by or on behalf of Tenant.  Landlord shall be entitled to post “Notices of Non-Responsibility” whenever Tenant is conducting any alterations or additions to the Premises.

ARTICLE 14
ASSIGNMENT AND SUBLETTING

Tenant shall not voluntarily, or by operation of law, assign, transfer, mortgage, sublet or otherwise transfer or encumber all or any part of Tenant’s interest in this Lease or in the Premises without Landlord’s prior written consent, which consent shall not be unreasonably withheld, delayed, or conditioned, taking into account the provisions of this Article 14.  Any attempted assignment, transfer, mortgage, encumbrance or subletting without such consent shall be void and shall constitute a breach of this Lease.  Regardless of Landlord’s consent, no subletting or assignment shall release Tenant from Tenant’s obligations or alter the primary liability of Tenant to pay the rent and to perform all other obligations to be performed by Tenant hereunder.  The acceptance of rent by Landlord from any person shall not be deemed to be a waiver by Landlord of any provision hereof and shall not relieve Tenant of any liability hereunder.  Consent to one assignment or subletting shall not be deemed a consent to any subsequent assignment or subletting.  Prior to such approval by Landlord of a subletting or assignment, Tenant shall provide Landlord with information concerning the proposed assignee’s or subtenant’s financial responsibility and its proposed use and business experience.  Further, if for any proposed assignment or sublease Tenant receives rent or other consideration either initially or over t