SB-2/A

As filed with the Securities and Exchange Commission on  March 20, 2007

Registration No. 333-140448

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

PRE-EFFECTIVE AMENDMENT NO. 1 TO

FORM SB-2

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

MANHATTAN BANCORP

(Name of Small Business Issuer in Its Charter)

United States	6021	20-5344927
(State or Other Jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
Incorporation or Organization)	Classification Code Number)	Identification No.)

2221 E. Rosecrans Avenue, Suite 131

El Segundo, California 90245

(310) 321-6164

(Address and Telephone Number of Organizational Offices)

2141 Rosecrans Avenue, Suite 1160

El Segundo, California  90245

 (Address of Principal Place of Business or Intended Principal Place of Business)

Jeffrey M. Watson

President and Chief Executive Officer

2221 E.  Rosecrans Avenue, Suite 131

El Segundo, California 90245

(310) 606-8000

(310) 606-8090(fax)

(Name, Address and Telephone Number of Agent for Service)

With a copy to:

Madge S. Beletsky, Esq.

King, Holmes, Paterno & Berliner, LLP

1900 Avenue of the Stars, 25th Floor

Los Angeles, California 90067

(310) 282-8911

(310) 282-8903 (fax)

Approximate Date of Proposed Sale to the Public:

As soon as practicable after the Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of earlier effective registration statement for the same offering.  o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.  o

CALCULATION OF REGISTRATION FEE

Title of Each Class  of Securities to be  Registered	Amount to be  Registered(1)	Proposed  Maximum  Offering Price Per  Share		Proposed  Maximum  Aggregate  Offering Price		Amount of  Registration Fee
Common Stock, no par value	3,000,000	$	10.00	$	30,000,000	$	3,210.00	(2)

The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

(1) Includes the maximum number of shares that may be issued in connection with this offering.

(2) Filing fee previously paid

The information in this prospectus is not complete and may be changed.  These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective.  This prospectus is not an offer to sell these securities nor does it solicit an offer to buy these securities in any state or other jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION –DATED MARCH 20, 2007

    PROSPECTUS

[LOGO] MANHATTAN BANCORP

2221 E. Rosecrans Avenue, Suite 131

El Segundo, California 90245

(310) 606-8000

(Organizational Office)

COMMON STOCK

$10.00 Per Share

2,150,000 to 3,000,000 Shares

We are a newly-formed holding company organized to own the shares of Bank of Manhattan, N.A., a proposed national bank in El Segundo, California.  We have filed an application to organize a national bank with the Comptroller of the Currency but have not yet received preliminary approval to organize.

We are offering up to 3,000,000 shares of common stock for sale on a best efforts basis.  We must sell a minimum of 2,150,000 shares to complete the offering.  The offering is expected to terminate on [Expiration Date].  We may extend this expiration date without notice to you until [Extended Expiration Date].  The minimum amount you may purchase is 2,500 shares.  Once submitted, orders are irrevocable unless the offering is terminated or is extended beyond [Extended Expiration Date].  If the offering is extended beyond [Extended Expiration Date], subscribers will have the right to modify or rescind their purchase orders.  Funds received during the offering will be held in an escrow account at Pacific Coast Bankers’ Bank.  If we terminate the offering, or if we do not receive final approval from the Comptroller of the Currency to open Bank of Manhattan, the escrow agent will promptly return your funds, without penalty, and with any interest earned.

This is our initial public offering, and no public market currently exists for our shares.  The offering price may not reflect the market price of our shares after the offering.  We have no present plans to list our shares on any national or regional trading exchange.

Seapower Carpenter Capital, Inc., dba Carpenter & Company, will assist us in selling our shares of common stock on a best efforts basis and is not required to purchase any shares of the common stock that are being offered for sale.  Our officers and directors will also assist in the sale of our shares.  Purchasers will not pay a commission to purchase shares of common stock in the offering. 

	Per Share		Minimum			Maximum
Public offering price	$	10.00	$	21,500,000		$	30,000,000
Estimated commission(1)	$	0.50	$	1,135,000	(2)	$	1,135,000	(2)
Proceeds to Manhattan Bancorp before offering expenses	$	9.50	$	20,365,000		$	28,865,000

(1)  We are offering our shares of common stock to the public on a “best efforts” basis through our officers and directors who are not entitled to receive any discounts or commissions for selling such shares.  Carpenter & Company may place up to a maximum of 2,000,000 shares in the offering.  Carpenter will be paid (i) a sales management and financial advisory fee equal to the lesser of 1% of the gross sales proceeds of all shares sold in the offering or $125,000, (ii) a placement agent fee equal to 5.0% of the aggregate gross proceeds of sales made through Carpenter’s efforts (resulting in a maximum fee of $1,000,000 if Carpenter places 2,000,000 shares), and (iii) a maximum of $10,000 in reimbursable expenses.  See “The Offering and Plan of Distribution—The Selling Agent” for a description of the commission and other fees to be paid by Manhattan Bancorp in connection with this offering.

(2)  Assumes Carpenter & Company places 2,000,000 shares in the event of either the minimum or the maximum offering.

This investment involves a high degree of risk, including a possible loss of your investment.

Please read “Risk Factors” beginning on page 5.

These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.  None of the Securities and Exchange Commission, the Office of the Comptroller of the Currency or any state securities regulator has approved or disapproved these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is                            , 2007

TABLE OF CONTENTS

SUMMARY	1
RISK FACTORS	5
FORWARD-LOOKING STATEMENTS	8
THE OFFERING AND PLAN OF DISTRIBUTION	8
HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING	11
OUR POLICY REGARDING DIVIDENDS	12
MARKET FOR OUR COMMON STOCK	13
OUR BUSINESS	13
MANAGEMENT’S PLAN OF OPERATION	18
REGULATION AND SUPERVISION	19
MANAGEMENT	26
EXECUTIVE COMPENSATION	30
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT	34
DESCRIPTION OF CAPITAL STOCK OF MANHATTAN BANCORP	35
TRANSFER AGENT AND REGISTRAR	36
EXPERTS	37
LEGAL MATTERS	37
INDEX TO FINANCIAL STATEMENTS	37
WHERE YOU CAN FIND ADDITIONAL INFORMATION	37

SUMMARY

The following summary highlights material information from this document and may not contain all the information that is important to you.  You should read this entire document carefully, including the section entitled “Risk Factors,” before making a decision to invest in our common stock.

In this prospectus, unless we specify otherwise, “Manhattan Bancorp,” “we,” “us,” or “our” mean Manhattan Bancorp, a California corporation.  “Bank of Manhattan” refers to Bank of Manhattan, N.A., (Proposed).

Our Company

Manhattan Bancorp is a California corporation recently formed for the purpose of owning all of the stock of Bank of Manhattan to be located in El Segundo, California.  Our principal activity will be the ownership of all of the outstanding common stock of Bank of Manhattan.  Following the receipt of preliminary approval of the Comptroller of the Currency to organize Bank of Manhattan, we will apply to the Federal Reserve System for authority to become a bank holding company.

Our corporate headquarters, and the main office of Bank of Manhattan, will be located at a leased facility at 2141 Rosecrans Avenue, Suite 1160, El Segundo, California 90245.

Bank of Manhattan

Upon issuance of its charter by the Comptroller of the Currency, Bank of Manhattan will operate as a typical community bank, offering general commercial banking services to small and medium-sized businesses and professionals in the South Bay, the Westside and the Los Angeles airport areas of Los Angeles County.

On December 12, 2006 we filed an application to organize Bank of Manhattan with the Comptroller of the Currency and an application with the FDIC for insurance of deposits.  We have not yet received preliminary charter approval from the Comptroller of the Currency or conditional approval for the insurance of our deposits from the FDIC.  We hope to secure these preliminary approvals no later than April 2007.

We believe we will obtain all final regulatory approvals to open the Bank of Manhattan by the third quarter of 2007.  We intend to open Bank of Manhattan as soon as we have the regulatory approvals and sell enough stock to appropriately capitalize the bank.

Our Organizers and Management

Manhattan Bancorp was organized by a group of businesspersons with significant ties in the communities in which Bank of Manhattan proposes to conduct business.  Eight of our nine organizers are directors of Manhattan Bancorp and have agreed to serve as directors of Bank of Manhattan.  Our directors and our one organizer who is not a director have also provided the initial capital of Manhattan Bancorp in order to provide funds for our organizational and offering expenses as well as for the organizational and pre-opening expenses of Bank of Manhattan.  For the names of and biographical information about our directors, see “Management — Background and Business Experience of Executive Officers and Directors.”

Jeffrey Watson, our President and Chief Executive Officer, has 23 years of banking experience.  He served most recently as the Executive Vice President and Chief Operating Officer for 1st Century Bank, N.A., Century City, California, a de novo national bank organized in 2003 which he joined in its organizational stage.  Previously, Mr. Watson served as the Executive Vice President—Chief Administrative Officer & Chief Lending Officer for Commercial Capital Bank, Irvine, California.  We have also identified individuals to serve as our Chief Operating Officer, Chief Credit Officer and our Chief Financial Officer.  Each of these individuals plans to join us following the receipt of preliminary approval to form Bank of Manhattan.  Our proposed Chief Operating Officer has served as the Senior Vice President and Chief Financial Officer of a commercial bank in Los Angeles, California since December 2003.  Previously, he served as the Vice President/Controller of a public community bank headquartered in the South Bay of Los Angeles from 1998 to 2003, and as that bank’s Assistant Vice President and Assistant Controller from 1995 to 1998.  Our proposed Chief Credit Officer has served as the Executive

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Vice President and Chief Credit Officer of a financial institution in Los Angeles County for more than the past two years and previously spent more than ten years as a consultant to commercial banking clients in credit administration and loan review.  Our proposed Chief Financial Officer has served as the Chief Financial Officer of several financial institutions in Southern California since 1982.  Since 2001, he has served as the Executive Vice President and Chief Financial Officer of a publicly-reporting bank.

Our eight-member board of directors provides a unique blend of professional experience that we believe will serve us well in meeting our goals of business development, community involvement and regulatory compliance.  Two of our directors, Harry “Duke” Chenoweth and Stephen P. Yost, have had careers in banking totaling 70 years.  One of our directors, Patrick E. Greene, has 13 years of experience as a director of a community bank in the South Bay of Los Angeles.  Other areas of expertise on our board include real estate investment and development and accounting.  Our directors intend to provide their insights into the banking needs within the community we will serve and are anticipated to be a major source of customer referrals.

Our Business Strategy

Our goal is to operate and grow Bank of Manhattan into a profitable community-oriented financial institution serving primarily small and medium-sized businesses, business service professionals and owners/owner-users of commercial, industrial and multi-family properties in the Los Angeles County market area.   To implement this business strategy, we will strive to:

·capitalize on the knowledge of our outside directors and executive management on the local banking market;

·maintain a strong asset quality by knowing our customers in order to minimize credit risk;

·maintain a marketing culture by empowering our customer relationship managers;

·leverage contacts of directors to support early stage growth;

·hands on management—both in our bank and within our target market;

·develop customer relationships to attract new core deposits with a low cost of funds; and

·meet the needs of our customers through a service-oriented approach to banking, which emphasizes delivering a consistent and quality level of professional service in the communities that we serve.

HIGHLIGHTS OF THE OFFERING

Securities offered	Between 2,150,000 and 3,000,000 shares of common stock, without par value
Shares outstanding at January 31, 2007	45,000 shares purchased by our directors and one organizer who is not a director in a private placement conducted prior to this offering in order to raise funds for our organizational and offering expenses as well as for the organizational and pre-opening expenses of Bank of Manhattan
Shares to be outstanding after the offering	2,195,000 in the event of the minimum offering and up to 3,045,000 in the event of the maximum offering

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Total public price	$21,500,000 if the minimum offering is sold and up to $30,000,000 if the maximum offering is sold
Minimum investment	2,500 shares ($25,000)
Expiration date	The offering will expire at 5:00 p.m., Pacific Time, on                , 2007, unless extended by us in our sole discretion to no later than [Extended Expiration Date].
Estimated offering expenses	A total of $1,273,175 in the event of both the minimum and maximum offering which includes $1,135,000 payable to our selling agent in commissions, sales management fee and estimated reimbursable expenses (assuming the selling agent places 2,000,000 shares of our common stock in both the minimum and maximum offering) and $138,175 in other offering expenses.
Net proceeds	$20,226,825 if the minimum offering is sold and up to $28,726,825 if the maximum offering is sold
Plan of distribution	Our executive officers and directors will solicit sales of shares in the offering. We have also retained Seapower Carpenter Capital, Inc., dba Carpenter & Company as our selling agent to place up to 2,000,000 shares in the offering.
Intention of our directors to buy shares	Our directors and executive officers intend to buy a total of 225,000 shares in this offering, or 10.5% of the shares available in the minimum offering and 7.5% of the shares available in the maximum offering. This is in addition to an aggregate of 40,000 shares which they purchased at $10.00 per share in a private placement which preceded this offering.  All shares to be purchased by our directors and executive officers are being purchased by them for investment purposes only, and not with a view toward resale.
Terms of the offering	You will subscribe for shares by sending the purchase price to Pacific Coast Bankers’ Bank, an escrow agent retained by us. The offering will terminate and all subscription funds will be returned by the escrow agent to subscribers, together with any interest earned on the funds, (i) if we have not sold a minimum of 2,150,000 shares by [Expiration Date], (ii) if we fail to close this offering for any reason or, (iii) if we do not receive final approval from the Comptroller of the Currency to open Bank of Manhattan. We may extend the expiration date of this offering to [Extended Expiration Date]in our sole discretion. The minimum investment by one subscriber is 2,500 shares; however, we may waive this minimum in our sole discretion. The maximum investment by one subscriber is 9.9% of our total shares outstanding following completion of the offering; however, the maximum may be waived in our sole discretion for insiders and others as may be necessary to meet the minimum offering requirements.

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Use of Proceeds	We will use the proceeds of the offering as follows: ·Capitalize Bank of Manhattan with $20,000,000 in the event of the minimum offering and up to $28,250,000 in the event of the maximum offering, to be used for general corporate purposes, including to fund loans and investments and to repay pre-opening expenses advanced by Manhattan Bancorp. ·Provide working capital to Manhattan Bancorp to be used for general corporate purposes, including payment of organizational costs and operating expenses. See “How we Intend to Use the Proceeds from the Offering”.
Dividends	We do not anticipate paying cash dividends in the foreseeable future. The only source of such dividends would be dividends paid by Bank of Manhattan. Bank of Manhattan does not anticipate paying any cash dividends to us in the foreseeable future because of the need to retain capital to support its growth and development. See “Our Policy Regarding Dividends.”
Risk Factors	You should read the “Risk Factors” section beginning on page 5 before deciding to purchase any of the shares offered.

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RISK FACTORS

Investing in Manhattan Bancorp stock is risky.  You should invest only if you determine that you can bear a complete loss of your investment.  In your determination, you should consider carefully the following factors:

You may have difficulty selling your shares should you desire to do so.  Our common stock will not, initially, be eligible for listing on any national or regional exchange or on the National Association of Securities Dealers Automated Quotation System, and we do not intend to seek any such listing.  However, we will seek the assistance of securities brokers in matching buyers and sellers of our common stock after Bank of Manhattan opens for business and we anticipate that our shares will be quoted on the OTC Bulletin Board within several months after we open for business, although there may not be securities brokers interested in making a market in our shares.  While your shares will be freely transferable, we are a new company without a public market for shares, and we do not anticipate that an active trading market in our common stock will develop as a result of this offering, and we cannot assure you that at least one securities broker will continue to make a market for our shares in the future.  If we would cease to be quoted on the OTC Bulletin Board, shareholders would find it more difficult to dispose of, or to obtain accurate quotations as to the market value of, our common stock, and the market value of our common stock would likely decline.

You may be overpaying for the shares because the offering price cannot be supported by value of assets or earnings.  Because we were only recently formed and Bank of Manhattan has not yet been organized, the pubic offering price could not be set by referencing historical measures of our financial performance.  The public offering price bears no relationship to our assets, book value, net worth or any other recognized criteria of value.  Therefore, the public offering price may not indicate the market value of our common stock after this offering.  The public offering price was arbitrarily determined by our directors based on several factors.  These factors included prevailing market conditions, comparable de novo bank holding company capitalizations and the amount of capital estimated as necessary to provide operating capital and to sustain any losses that we incur during our initial yeas of operation.  See “The Offering and Plan of Distribution—Determination of Offering Price.”

We will be a new banking business in a competitive environment; losses are likely to occur for at least the first two full years of operations. Manhattan Bancorp, the issuer of your shares, is a new business whose success will depend on Bank of Manhattan’s operations.  Bank of Manhattan also is a new business that will be successful only if the income earned on loans and investment securities and from fees is greater than the interest paid on deposits and other sources of funds and general operating expenses.  We do not expect to be profitable on a current basis for an entire year until at least the third full year of operations, if at all.

We could be at a disadvantage when competing for deposits and loans with larger institutions that have larger lending limits and established customer contacts.  As a new bank in an established market, Bank of Manhattan will be competing with other financial institutions for deposits, which will be our primary source of funds, and originating loans.  Our competition for deposits will come primarily from savings and commercial banks in the South Bay, Westside and the Los Angeles airport areas of Los Angeles County, and our competition for loans will come principally from commercial banks, savings institutions, mortgage banking firms, credit unions, finance companies, mutual funds, insurance companies and brokerage and investment banking firms.  We also will face additional competition from internet-based institutions.  These institutions may have competitive advantages over Bank of Manhattan because they have greater capitalization and other resources.  They also can offer potential depositors more convenient depository facilities and borrowers higher lending limits and certain other customer services which Bank of Manhattan may not be able to offer.   Bank of Manhattan may have to pay more to attract deposits.  This would hurt our earnings.  Bank of Manhattan may not be successful in attracting the deposits or originating the loans it will need to sustain its growth.

Community banking is our business model, and we may not be successful in attracting customers as a “community” bank.  Bank of Manhattan will be a so-called “community” bank.  In other words, we will exploit personal contacts by our directors, officers and our shareholders, as well as appropriately focused advertising and promotional activities, to appeal to businesses and individuals in search of personalized services likely to be offered by an independent, locally-owned and headquartered commercial bank.  Our overall identity as a community financial institution is our main selling point to our community.  However, ultimately we may not be successful in establishing Bank of Manhattan as the local community bank, and even if we do establish the bank, changes in how people bank, due primarily to technology, may make community banking less attractive than it has been in the past.

We are dependent on key employees, including Mr. Watson, and losing him could make it difficult to manage a new bank successfully, because qualified bank presidents are hard to find.  The success of Bank of

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Manhattan depends on our ability to attract and keep quality employees.  We are particularly dependent in the early years on the leadership of Jeffrey Watson, our President and Chief Executive Officer.  If Mr. Watson or any key employee does not perform as expected or suddenly quits, the bank’s operations could be adversely affected, possibly to the point of causing the bank to fail.   We will have an employment agreement with Jeffrey Watson, as well as with our Chief Credit Officer, our Chief Operating Officer and our Chief Financial Officer.

We may not be able to attract good employees because we will be competing for personnel with larger financial institutions.  Success in a commercial banking business is particularly dependent on employing experienced and service-oriented personnel at all levels.  We intend and are already making efforts to hire experienced lending and operations officers, but have no assurance that we can staff Bank of Manhattan with appropriate personnel when Bank of Manhattan opens for business.  Qualified employees will command competitive salaries

If Bank of Manhattan fails to open when anticipated, it will incur additional costs, which will make it more difficult to recoup your investment.  If we do not receive approval to open Bank of Manhattan, your investment will be returned to you, with interest.  There is a risk that Bank of Manhattan will not open as soon as expected or will not open at all.  We cannot open until we receive the required regulatory approvals and sell the minimum number of shares.  If our opening is delayed past the third quarter of 2007, we will incur unplanned expenses, which will make it more difficult for us to become profitable and will reduce the value of our stock.  This will make it harder for you to recover your investment.  If we do not receive approval to open Bank of Manhattan, either due to regulatory problems or a failure to sell sufficient shares of common stock, your entire investment will be returned to you, together with any interest earned on your subscription funds.  You will have lost the possible value of another venture that might have earned you a profit.

Manhattan Bancorp’s management may have interests that may be different from yours, and management controls Manhattan Bancorp.  Your interest as an investor in Manhattan Bancorp may be different from management, because management may want to continue to control the company, even if it means foregoing an attractive offer you might prefer.  Yet, management will exercise significant control over the selection of the Board of Directors and company policies.  They will be able to exercise control because after the offering, the executive officers and directors will own between 8.7% and 12.1% of the total shares outstanding, depending on the number of shares sold in the offering, and the executive officers and directors could, through the exercise of options anticipated to be granted to them upon Bank of Manhattan’s opening, acquire an additional 403,275 shares in the event of the minimum offering and 524,275 shares in the event of the maximum offering, which would give them between 22.1% and 25.7% of the total shares outstanding, assuming such options were  fully vested and fully exercised.

Your investment may be diluted because of stock options and the ability of management to offer stock to others.  The shares of Manhattan Bancorp do not have preemptive rights.  This means that you may not be entitled to buy additional shares if shares are offered to others.  Nothing restricts management’s ability to offer additional shares of stock for fair value to others in the future.  Your ownership interest in Manhattan Bancorp will be diluted in such event.  Further, when the directors, executive officers and key employees exercise their stock options, your ownership interest in Manhattan Bancorp will also be diluted.

We do not expect to pay cash dividends in the foreseeable future.  Our management presently intends to follow a policy of retaining earnings, if any, for the purpose of increasing our net worth and reserves during our initial years of operations.  Accordingly, it is anticipated that no cash dividends will be declared during the early stages of our development, and no assurance can be given that our earnings will permit the payment of dividends of any kind.  Further, we can only pay dividends if we receive dividends from Bank of Manhattan and there will be regulatory restrictions on the amount of dividends the Bank of Manhattan can pay to us.

We may experience loan losses in excess of our allowance for loan losses.  We will try to limit the risk that borrowers will fail to repay loans by carefully underwriting the loans we make, nevertheless losses can and do

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occur.  We will create an allowance for estimated loan losses in our accounting records, based on estimates of the following.

·industry standards;

·evaluation of economic conditions;

·regular reviews of the quality, mix and size of our overall loan portfolio;

·regular review of delinquencies;

·the quality of the collateral underlying our loans; and

·our experience with our loans once we have a history of operations.

We will maintain an allowance for loans losses at a level that we believe to be adequate to absorb any specifically identified losses as well as any other losses inherent in our loan portfolio However, changes in economic, operating and other conditions, including changes in interest rates, that are beyond our control, may cause our actual loan losses to exceed our future allowance estimates.  If the actual loan losses which we experience in the future exceed the amount that we reserve, it will hurt our business.  In addition, the Comptroller of the Currency, as part of its supervisory function, will periodically review Bank of Manhattan’s allowance for loan losses, and may require Bank of Manhattan to increase its provision for loan losses or to recognize further loan losses, based on its judgment, which may be different from that of our management.  Any increase in the allowance required by the Comptroller of the Currency could also hurt our business.

Poor economic conditions in Southern California may cause us to suffer higher default rates on our loans and decreased value of the assets we will hold as collateral.  A substantial majority of our assets and deposits will be generated in Southern California.  As a result, poor economic conditions in Southern California may cause us to incur losses associated with higher default rates and decreased collateral values in our loan portfolio.  In the early 1990s, the entire State of California experienced an economic recession that resulted in increases in the levels of delinquencies and losses for many of the state’s financial institutions.  In addition, economic activity slowed significantly immediately following the September 11, 2001 terrorist attacks.  A future decline in the Southern California economy would adversely affect our business.

Interest rate fluctuations and other conditions which are out of our control could harm profitability.  Our net interest income before provision for loan losses and net income will depend to a great extent on “rate differentials,” i.e., the difference between the income we receive from our loans, securities and other earning assets, and the interest expense we pay on our deposits and other liabilities.  These rates will be highly sensitive to many factors which will be beyond our control, including general economic conditions, both domestic and foreign, and the monetary and fiscal policies of various governmental and regulatory authorities, in particular, the Board of Governors of the Federal Reserve System.  It is impossible to predict the nature or extent of the effect on our operations of monetary policy changes or other economic trends over which we have no control, such as unemployment and inflation.  In addition, factors like natural resource prices, international conflicts and terrorist attacks and other factors beyond our control may adversely affect our business.

Our business may be adversely affected by the highly regulated environment in which we operate.  Our operations will be subject to extensive governmental supervision, regulation and control and recent legislation has substantially affected the banking business.  It cannot presently be predicted whether or in what form any pending or future legislation may be adopted or the extent to which the banking industry and the operations of Bank of Manhattan would be affected. Some of the legislative and regulatory changes may benefit us.  However, other changes could increase our costs of doing business or reduce our ability to compete in certain markets.

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FORWARD-LOOKING STATEMENTS

This prospectus includes “forward-looking statements” which may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated” and “potential.  Examples of forward-looking statements include, but are not limited to, estimates with respect to our financial condition, results of operations and business that are subject to various factors which could cause actual results to differ materially from these estimates.  These factors include, but are not limited to:

·changes in the real estate market and local economy;

·changes in interest rates;

·changes in laws and regulations to which we are subject, and

·competition in our primary market area.

Any or all of our forward-looking statements in this prospectus and in any other public statements we make may turn out to be wrong.  They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties.  Consequently, no forward-looking statement can be guaranteed

THE OFFERING AND PLAN OF DISTRIBUTION

Terms of the Offering

The expiration date of the offering is                     , 2007.  We may extend the expiration date to [Extended Expiration Date], without notice to subscribers.

The offering will terminate if by the expiration date at least 2,150,000 shares, representing the minimum offering, have not been subscribed for.  We reserve the right to terminate the offering before the expiration date even if the maximum offering of 3,000,000 shares has not been subscribed for as long as at least the minimum number of shares are subscribed for.

All subscription proceeds will be deposited in an escrow account with Pacific Coast Bankers’ Bank, who will act as escrow agent.  Subscribers’ checks will be transmitted to Pacific Coast Bankers’ Bank by noon of the next business day after receipt by any broker/dealer.  The funds held in the escrow account shall be invested in short-term certificates of deposit issued by the escrow agent.  If we do not sell at least 2,150,000 shares prior to the expiration date, or extended expiration date of this offering, or if we fail to close this offering for any reason, or if we do not receive final approval from the Comptroller of the Currency to open Bank of Manhattan, subscribers will receive a return of their subscription funds, plus any interest earned on those funds.  If we do close the offering, any interest earned on subscription funds will go to Manhattan Bancorp.

Our directors and executive officers intend to subscribe for at least 225,000 shares in this offering.  The directors and executive officers may, but are not obligated to, purchase additional shares if necessary to complete the minimum offering.  All shares purchased by persons affiliated with Manhattan Bancorp will be acquired for investment purposes only, and not with a view toward redistribution or sale to another party.  No subscriber will be permitted to purchase in the offering an amount of shares which would exceed 9.9% of the total number of shares outstanding upon completion of the offering, unless this limitation is waived by Manhattan Bancorp, in our sole discretion.  We may waive the 9.9% maximum subscription if necessary to sell the minimum offering amount in order to open Bank of Manhattan.

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Plan of Distribution; The Selling Agent

To assist in the marketing of our common stock, we have retained Seapower Carpenter Capital, Inc., dba Carpenter & Company, a broker/dealer registered with the National Association of Securities Dealers, Inc., who will assist us in the offering by:

·acting as our financial advisor for the stock offering;

·attending meetings with potential investors;

·managing our marketing and sales efforts in conjunction with our officers and directors; and

·using its best efforts to place up to $20 million of our common stock.

For these services, Carpenter & Company will receive a sales management fee equal to the lesser of (i) 1% of the gross proceeds from the offering or (ii) $125,000.  In addition, Carpenter & Company will receive a sales and placement fee of 5% of the gross proceeds from the offering derived from common stock placed by Carpenter & Company or a selected dealer engaged by Carpenter & Company, provided that Carpenter & Company and any selected dealer engaged by Carpenter & Company may not place more than an aggregate of 2,000,000 shares in this offering, for a total commission to Carpenter & Company and such selected dealers not to exceed $1,000,000.  Carpenter & Company will also be reimbursed for its reasonable out-of-pocket expenses in an amount not to exceed $10,000, without the consent of Manhattan Bancorp.

We will indemnify Carpenter & Company against certain liabilities, including liabilities under the Securities Act of 1933, as amended.  We will also indemnify Carpenter & Company against all claims, losses, actions, judgments, damages or expenses, including but not limited to reasonable attorneys’ fees, arising out of Carpenter & Company’s engagement, except that such indemnification shall not apply to Carpenter & Company’s own bad faith, willful misconduct or gross negligence.

All shares not placed by Carpenter & Company or selected dealer will be placed by our executive officers and directors; provided, however, that our executive officers and directors will not place any shares in the States of Texas, Washington, Virginia, Nebraska, Utah or New Hampshire, and any placement of shares in these states will be made solely by Carpenter & Company.  Our directors and executive officers who place shares in the offering will be reimbursed for their reasonable out-of-pocket expenses incurred in connection with the solicitation of offers to purchase our common stock.  None of our officers, directors or employees will be compensated in connection with their participation in the offering.

Method of Subscription

The minimum subscription is 2,500 shares or $25,000, but we reserve the right to accept subscriptions for less than the minimum subscription.  We may waive the minimum investment requirement in our sole discretion.

In order to purchase shares, you must:

·Complete and sign the subscription agreement accompanying this prospectus; and

·Make full payment for the purchase price for the shares in United States currency by check, bank draft or money order payable to “Pacific Coast Bankers Bank for Manhattan Bancorp Impound Account” or make full payment of the purchase price for the shares in United States currency by wire transfer of funds to the escrow account maintained at the office of the escrow agent for the purposes of accepting subscriptions, at Pacific Coast Bankers’ Bank, ABA No. 121042484, Account No. 1003245, Attention:  Impound Account FBO Manhattan Bancorp; and

·Deliver the subscription agreement, in person or by mail, together with full payment for the purchase price in the manner described above to Pacific Coast Bankers’ Bank, 340 Pine Street, Suite 401, San Francisco, California 94104, Attention:  Impound Account.

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The escrow agent, by accepting appointment, in no way endorses the purchase of shares by any person.  Pacific Coast Bankers’ Bank is acting only as an escrow agent in connection with the offering of securities described in this prospectus, and has not endorsed, recommended or guaranteed the purchase, value or repayment of these securities.  No assurance can be given that subscription funds can or will be invested at the highest rate of return available.

                Any subscription funds received by a broker/dealer will be forwarded to the Pacific Coast Bankers’ Bank by noon of the business day following receipt.  This offering will be conducted in compliance with SEC Rule 15c2-4 which addresses the prompt transmission of funds received by a broker/dealer to a properly appointed escrow agent.

Subscription Acceptance

Subscriptions are not binding until accepted by us.  Deposit of funds in the escrow account until the satisfaction of the conditions listed above will not be considered an acceptance of the subscription to which the funds relate.  We reserve the right to accept or reject subscriptions, in whole or in part, in our sole discretion.  This permits us to refuse to sell shares to any person submitting a subscription agreement or to accept part but not all of a subscription so that a subscriber might ultimately be issued fewer than the full number of shares for which he or she subscribes.  In determining which subscriptions to accept, in whole or in part, we may take into account the order in which subscriptions are received and a subscriber’s potential to do business with, or to refer customers to, Bank of Manhattan.

In the event we reject all or a part of your subscription, the escrow agent will refund by mail all or the appropriate portion of the amount paid in by you with the subscription, together with any interest earned thereon, promptly after the rejection.  This offering will be terminated, no shares will be issued and no subscription proceeds will be released from escrow to us unless we have accepted subscriptions and received payment for at least 2,150,000 shares, and we have received final approval from the Comptroller of the Currency to open Bank of Manhattan.  If these conditions don’t occur by                   , 2007 or by [Extended Expiration Date] or the offering is terminated early for other reasons, all subscription proceeds will be returned promptly by mail in full together with any interest earned thereon.  All costs and expenses of the offering and of organizing Manhattan Bancorp and Bank of Manhattan will be borne by our directors if all subscriptions are canceled.

We will issue and mail certificates representing the shares as soon as practicable after subscription proceeds are released from the escrow account.

Determination of Offering Price

The offering price is arbitrary in terms of value.  The price bears no relationship to our assets, book value, earnings or other established criteria of value.  We were only recently formed and Bank of Manhattan has not yet been organized.  Therefore, the public offering price could not be set by referencing historical measures of our financial performance.  In addition, prior to this offering, there has been no public market for our common stock. Therefore, the public offering price may not indicate the market price of our stock after this offering.  The offering price of $10.00 per share in this offering has been arbitrarily determined by our directors based on several factors, including prevailing market conditions, comparable de novo bank holding company capitalizations, and the amount of capital estimated as necessary to provide operating capital and to sustain any losses that we incur during our initial years of operations.  Since the offering price does not reflect the fair market value of our common stock, we can not assure you that any shares that you purchase may be resold at or above the offering price.

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HOW WE INTEND TO USE THE PROCEEDS FROM THE OFFERING

The amount of net proceeds will depend on the total number of shares of common stock sold in the offering and the expenses incurred in connection with the offering.  We estimate the net proceeds to be between $20.2 million in the event of the minimum offering and $28.7 million in the event of the maximum offering.

We intend to (i) infuse most of the net proceeds to capitalize Bank of Manhattan, (ii) to pay our organizational expenses and (iii) to retain the rest of the proceeds at the holding company level for capital needs that arise in the future.  We intend to capitalize Bank of Manhattan with $20 million in the event of the minimum offering and up to $28.25 million in the event of the maximum offering, provided we may maintain more working capital at the holding company level at the discretion of our Board of Directors as long as we capitalize Bank of Manhattan with at least $20 million.  Out of the net proceeds which we use to capitalize Bank of Manhattan, Bank of Manhattan will repay to us any amounts that we advance on behalf of Bank of Manhattan for its organizational and pre-opening expenses, including amounts we advance for tenant improvements and for furniture, fixtures and equipment.  We estimate that after repayment to us of advances we have made to Bank of Manhattan, Bank of Manhattan will have working capital of approximately $18.4 million in the event of the minimum offering and $26.6 million in the event of the maximum offering.  We expect Bank of Manhattan to use the working capital primarily to fund loans and investments.

Total organizational and pre-opening expenses for Bank of Manhattan are estimated at $1,642,468.  Of these total organizational and pre-opening expenses, we anticipate that approximately $400,000 of such amount will be spent on tenant improvements, $443,250 of such amount will be spent on furniture, fixture and equipment and $799,218 will be spent on other organizational and pre-opening expenses for Bank of Manhattan.  These other organizational and pre-opening expenses include payment of consulting and legal fees, pre-opening rent, pre-opening personnel compensation and benefits and computer equipment and software.

To date, we have been funding our organizational and offering expenses and the organizational and pre-opening expenses of Bank of Manhattan from the $450,000 capital contribution made by our directors and one organizer who is not a director.  We expect our total organizational and offering expenses (not including commissions and marketing fees) to be about $173,175, and Bank of Manhattan’s total organizational and pre-opening expenses, to be about $799,218 (not including furniture, fixtures and equipment and tenant improvements).  We will continue to incur these expenses through the date of the completion the offering and release of the subscription proceeds from the escrow account. In order to fund these expenses we have entered into a commitment letter with Western Commercial Bank to provide us with a revolving line of credit of $780,000, including a $293,000 carve out for a letter of credit to secure our obligations under the lease for our main office.  The commitment letter provides that the loan will be unsecured and guaranteed by our Chairman, Kyle Ransford.  The loan will bear interest at the rate of prime + .50% and will be for a term of six months. If we should require additional funds in addition to a third party line of credit in order to cover our organizational and offering expenses, and to cover any organizational and pre-opening expenses of the Bank of Manhattan, we anticipate that our directors would make further advances of funds, as needed, to cover our organizational and offering expenses and to cover any organizational and pre-opening expenses of the Bank of Manhattan.  Any third party loans and any advances made by our directors would be repaid to them upon the closing of the offering and repayment by Bank of Manhattan of any advances we have made.  See “Management’s Plan of Operation,” and “Executive Compensation — Certain Transactions.”

The following presentation of use of proceeds of the offering assumes that all of the regulatory approvals are received by us and the offering proceeds are released from the escrow account and Bank of Manhattan is fully capitalized by July 2007.

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	Minimum Shares			% of Net Proceeds		Maximum Shares			% of Net Proceeds
Offering Proceeds	$	21,500,000				$	30,000,000
Less:
Commissions, sales management fee and expenses (1)	$	1,135,000				$	1,135,000
Offering expenses(2)	$	138,175				$	138,175
Net offering proceeds	$	20,226,825		100.00	%	$	28,726,825		100.00	%
Anticipated use of proceeds by Manhattan Bancorp:
Capitalization of Bank of Manhattan through purchase of common stock	$	20,000,000		98.88	%	$	28,250,000		98.34	%
Organizational expenses Manhattan Bancorp (3)	$	35,000		0.17	%	$	35,000		0.12	%
Working capital	$	191,825		0.95	%	$	441,825		1.54	%
Total	$	20,226,825		100.00	%	$	28,726,825		100.00	%
Anticipated use of capital by Bank of Manhattan:
Organizational and pre-opening expenses	$	799,218	(4)	4.00	%	$	799,218	(4)	2.83	%
Furniture, fixtures and equipment	$	443,250	(4)	2.22	%	$	443,250	(4)	1.57	%
Tenant Improvements	$	400,000	(4)	2.00	%	$	400,000	(4)	1.42	%
Working capital	$	18,357,532		91.78	%	$	26,607,532		94.18	%
Total	$	20,000,000		100.00	%	$	28,250,000		100.00	%

(1)  Assumes Carpenter & Company places 2,000,000 shares in the event of both the minimum offering and the maximum offering.

(2)  Offering expenses consist of various filing fees, printing expenses, escrow agent fees, transfer agent fees and accounting and legal fees and expenses.

(3)  These expenses consist primarily of accounting fees and legal fees other than in connection with the offering.

(4)  These expenses will be advanced by Manhattan Bancorp prior to the opening of Bank of Manhattan, and will be reimbursed by Bank of Manhattan to Manhattan Bancorp following the capitalization of Bank by Manhattan Bancorp.

OUR POLICY REGARDING DIVIDENDS

Initially, our only source of dividends will be dividends paid to us by Bank of Manhattan.  Bank of Manhattan does not intend to pay any dividends to us during the early years of its operations so that it can retain capital to support its growth.  Payment of dividends by Bank of Manhattan is also limited by regulatory requirements and limitations.  See “Description of Capital Stock of Manhattan Bancorp—Common Stock—Dividends.”   Our future dividend policy will be subject to the discretion of our Board of Directors and will depend

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upon a number of factors, including future earnings, financial condition, liquidity and general business conditions.  No assurance can be given that our earnings will permit the payment of cash dividends in any amount in the future.

MARKET FOR OUR COMMON STOCK

As a recently organized company, we have never issued capital stock except for the shares issued to our directors and one organizer who is not a director in order to fund our organizational and offering expenses and to fund the advance of organizational and pre-opening expenses for Bank of Manhattan.  Accordingly, there is no established market for our stock.  Following the completion of the offering, we do not anticipate that our common stock will be actively traded for some time.  We have no current plans to list our shares on any exchange or to have them quoted on the National Association of Securities Dealers Automated Quotation System.

However, we will seek the assistance of securities brokers in matching buyers and sellers of our common stock after Bank of Manhattan opens for business, and we anticipate that our shares will be quoted on the OTC Bulletin Board within several months after we open for business, although there may not be securities brokers interested in making a market in our shares.

The development of an active trading market, whether or not a stock is reported on an exchange or listed for quotation on an inter-dealer quotation system, or the OTC Bulletin Board, depends on the existence of willing buyers and sellers.  Although we do not know the number of shareholders who will purchase shares in the offering, because we have a minimum offering requirement of 2,500 shares, we do not believe we will initially have enough shareholders for an active trading market to develop.  Only investors who have a long term interest should take part in this offering because investors may not be able to sell their shares when they desire or at a price equal to or above their original purchase price.

OUR BUSINESS

Manhattan Bancorp

Manhattan Bancorp was incorporated in the State of California on August 8, 2006 under the name Cardinal Bancorp.   On September 6, 2006 we filed a Certificate of Amendment to our Articles of Incorporation to change our name to First Manhattan Bancorp, and subsequently, on October 31, 2006, we filed a Certificate of Amendment to our Articles of Incorporation to change our name to Manhattan Bancorp.

Manhattan Bancorp has not yet engaged in any business activity.  Our initial business will be to own 100% of the shares of Bank of Manhattan.  We will file an application with the Federal Reserve for authority to become a bank holding company after we receive preliminary approval from the Comptroller of the Currency to organize Bank of Manhattan.  While we don’t know of any reason that we would not obtain this preliminary approval, or that we would not be able to comply with any conditions that might be contained in such approval, we cannot be certain that we will be able to obtain such approval or meet any condition that may be contained in any such approval.

At the present time, Manhattan Bancorp has no plans to engage in any activities other than acting as a bank holding company for Bank of Manhattan, although in the future, Manhattan Bancorp may consider engaging in other activities which are permissible for a bank holding company provided that engaging in such activities is deemed by the Board of Directors to be in the best interest of Manhattan Bancorp and its shareholders.

Initially, we will neither own nor lease any property, but will instead use the premises, equipment and furniture of Bank of Manhattan. At the present time, we intend to employ only persons who are officers of Bank of Manhattan to serve as our officers. These persons will not be separately compensated by us.

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Bank of Manhattan

On December 12, 2006 we filed an Application for Authority to Organize Bank of Manhattan with the Comptroller of the Currency.  We have not yet received preliminary approval to organize the Bank.  Once we receive preliminary approval to organize, our directors, who are also the organizers of Bank of Manhattan, will execute and file with the Comptroller of the Currency Bank of Manhattan’s Articles of Association and Organization Certificate, thereby establishing our corporate existence under the laws of the United States.

Bank of Manhattan also filed an Application for Insurance of Accounts with the Federal Deposit Insurance Corporation on December 12, 2006.  We have not yet received conditional approval of this application.

While we do not know any reason why we would not obtain approval from the Comptroller of the Currency to organize Bank of Manhattan, or from the FDIC to insure our accounts, or that we would not be able to comply with any condition that might be contained in these approvals, we cannot be certain that we will be able to obtain these approvals or meet any conditions that might be contained in these approvals.

We intend to commence operations in the third quarter of 2007 or as soon as reasonably practicable thereafter.  Licensing of Bank of Manhattan to commence operations is dependent upon compliance with certain conditions and procedures in accordance with federal banking laws, including the contribution to Bank of Manhattan of capital of at least $20,000,000 from this offering.   Any delay in the commence­ment of operations is likely to increase our estimated organization and pre-opening expenses.  See “How we Intend to Use the Proceeds from this Offering.”

As of the date of this prospectus, we have not conducted or been authorized to conduct a banking business.  Upon issuance of our charter by the Comptroller of the Currency, we will engage in the general commercial banking business.

Our Business Strategy

Our goal is to operate and grow Bank of Manhattan into a profitable community-oriented financial institution serving primarily small and medium-sized businesses, business service professionals and owners/owner-users of commercial, industrial, and multi-family properties in the Los Angeles County market areas, with particular emphasis on the South Bay, Westside and Los Angeles airport areas of Los Angeles County in Southern California.  To implement this business strategy, we will strive to:

·         capitalize on the knowledge of our outside directors and executive management on the local banking market;

·         maintain a strong asset quality by knowing our customers in order to minimize credit risk;

·         maintain a marketing culture by empowering our customer relationship managers;

·         leverage contacts of directors to support early stage growth;

·         hands on management—both in our bank and within our target market;

·         develop customer relationships to attract new core deposits with a low cost of funds; and

·         meet the needs of our customers through a service-oriented approach to banking, which emphasizes delivering a consistent and quality level of professional service in the communities that we serve.

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Banking Services Generally

We intend to establish deposit relationships with small and medium-sized businesses, their owners and key executives.  Our deposit generation efforts will be concentrated in seeking business checking and money market accounts.  In addition, we will market our deposit products to the local community and will offer a full range of deposit accounts, including non-interest bearing demand deposit accounts, interest bearing checking accounts, regular savings accounts, and certificates of deposit.  We will offer cash management services to our commercial checking account customers.  We will also offer other customary banking products and services, including, among other things, wire transfers, electronic bill presentment and payment and overdraft protection.

We will use the deposits we generate, as well as the proceeds from this offering and other sources of funds to originate loans.  We anticipate that the substantial majority of our loans will be loans secured by commercial real estate.  We will also make construction loans to support the construction and conversion of commercial and residential properties.   In addition to this commercial real estate orientation, we will extend traditional commercial and industrial loans.  To a much lesser extent, we will make home equity loans and installment loans.  We intend to hire loan officers and relationship managers on the basis of their previous experience serving the credit needs of the business community.  Our business plan does not contemplate transaction only loans, such as SBA financing, rather, we intend to generate loans reflective of comprehensive relationship banking.  We will not originate loans that are deemed sub-prime credits or predatory lending.  We will not conduct credit card operations.

We will also offer Internet banking service which will allow customers to review their account information, transact account transfers, issue stop payment orders, pay bills, transfer funds, order checks and inquire regarding credit products electronically through the Internet.  While we will not have an automated teller machine at our premises, we will offer debit cards to our customers which allow them access to a nationwide network of automated teller machines.  We do not presently anticipate operating a trust department for the foreseeable future.  Our deposits will be insured by the FDIC up to the applicable limits thereof, subject to approval of our application for insurance of accounts by the FDIC.  Additionally, like all national banks, we will be a member of the Federal Reserve System.

Lending Activities

We intend to have a loan portfolio comprised of quality credits and to achieve a diversification in our loan portfolio through a broad composition of product type, borrower characteristics, secondary collateral and industrial composition.  The underwriting criteria we will use, such as loan-to-value, debt service coverage, loan covenants and credit ratios will be comparable to that used by commercial banks with consistently high quality loan portfolios.  Further, our President and Chief Executive Officer, our proposed Chief Credit Officer and two of our directors have strong backgrounds in credit which should assist us in our goal of achieving a high quality loan portfolio.

Under national banking laws, Bank of Manhattan is limited in the amount it can loan to a single borrower to no more than 15% of the bank’s statutory capital base, unless the entire amount of the loan is secured by readily marketable collateral.  In no event, however, may the loan be greater than 25% of a bank’s statutory capital base.  We anticipate that our lending limit, assuming the minimum offering, will be approximately $3 million for unsecured loans and $5 million for loans fully secured by readily marketable collateral.

Credit Risks.  The principal economic risk associated with each category of loans that Bank of Manhattan expects to make is the creditworthiness of the borrower.  Borrower creditworthiness is affected by general economic conditions and the strength of the relevant business market segment.  General economic factors affecting a borrower’s ability to repay include inflation and employment rates, as well as other factors affecting a borrower’s customers, suppliers and employees.  The well-established financial institutions in our primary service areas are likely to make proportionately more loans to medium-to-large sized businesses than we will make.  Most of Bank of Manhattan’s anticipated commercial loans will likely be made to small-to-medium-sized businesses that may be less able to withstand competitive, economic and financial pressures than larger borrowers.  Specific risks associated with each type of loan we plan to make are discussed in more detail below.

Commercial Real Estate Loans.    Our lending staff will originate and underwrite commercial real estate loans primarily on Los Angeles County properties.  We intend to hold the substantial majority of commercial real estate loans in our portfolio; however, we may chose to sell participations in loans when the financing requested by a customer exceeds our legal lending limit or presents an unwanted concentration.  We will establish maximum loan-to-value ratios in line with regulatory guidelines for the categories of real property.

A commercial project financed must be supported by a market analysis or appraisal that evidences a viable purpose.  Underwriting standards for commercial real estate loans will vary depending upon the type of collateral.  The underwriting will be subject to an analysis of the ratio of net operating income to current debt service, vacancy

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rates of the relevant market, projected new commercial space coming on stream, leasing history and lease rate and the length of property ownership of the borrower.

We will finance both owner-occupied and non-owner—occupied properties and offer both fixed and floating rate loans.  Non-owner occupied commercial real estate loans are likely to be more prevalent in our initial years of operations as an initial source of earning assets as we seek to develop the borrowing relationships associated with commercial and industrial loans and loans on owner-occupied properties. Risks associated with commercial real estate loans include fluctuations in the value of real estate, tenant vacancy rates and the quality of the borrower’s management.

Construction Loans.  We will originate and underwrite loans to facilitate the financing of construction projects, including residential, small residential tract, multi-family and commercial properties.  Construction loans will adjust with changes in the commercial prime rate or comparable short-term market indices.  The average maturity of construction loans is estimated to be between 12 and 18 months.  Third-party inspectors, hired by Bank of Manhattan at the borrower’s cost, will conduct construction inspections before financing draws are extended. Risks associated with construction loans include fluctuation in the value of real estate, construction delays and un-budgeted increases in construction costs.

Commercial and Industrial Loans.  In addition to real estate loans, Bank of Manhattan will also extend unsecured and equipment-secured (non secured by real estate) loans and lines of credit for commercial and industrial uses.  The primary use of the commercial and industrial loans will be to provide cash flow and working capital, fund equipment purchases, tenant improvements or inventories and to finance accounts receivable.  As a secondary source of repayment, commercial and industrial loans may also be secured by real estate or other collateral.  Commercial loans may be secured (other than by real estate) by equipment, compensating balances, UCC filings, letters of credit and trade credit.  We will also extend unsecured, deposit-related, single-payment or installment commercial loans.

We anticipate that a majority of our commercial loans, including working capital and other unsecured loans, will re-price based upon changes in market rates.  Commercial loans will also include equipment financing, secured by UCC filings.  Equipment loans will generally be structured as fixed-rate loans with stated maturities, probably ranging from five to seven years.  Term loans will be extended to finance the acquisition of business entities, equipment and/or leasehold improvements.  Such term loans will be made to borrowers with a demonstrated history of profitable operations, a diverse customer base, with a typical term of three to five years.

Commercial loans carry more risk than real estate based loans.  Small to medium sized businesses generally have less capacity than large businesses or wealthy individuals to repay loans in the event of an economic downturn or other adversity.  The quality of a commercial borrower’s management and its ability both to properly evaluate changes in the supply and demand characteristics affecting its markets for products and services and to effectively respond to such changes are significant factors in a commercial borrower’s creditworthiness.  We will seek to mitigate these risks through careful underwriting.

Consumer Loans.  To a limited extend, Bank of Manhattan will provide credit to retail customers and for the personal needs of the principals and key employees of our business customers.  This consumer lending program will fit our strategy of becoming a relationship bank with our customer base.  Consumer loans typically will be home equity loans and home equity lines of credit.  The home equity loans typically will re-price with changes in market interest rates, typically with the commercial bank prime rate.  We may also extend installment lending, such as automobile or recreational vehicle financing as a special accommodation to a valued customer. Repayment of consumer loans depends upon the borrower’s financial stability and is more likely to be adversely affected by divorce, job loss, illness and personal hardships than repayment of other loans.  To mitigate these risks, the loan officer will review the borrower’s past credit history, past income level, debt history, and, when applicable, cash flow and determine the impact of all these factors on the ability of the borrower to make future payments on a loan.

Competition

The banking business in California generally, and specifically in the market area which we will serve, is highly competitive with respect to virtually all products and services and has become increasingly so in recent years.  The industry continues to consolidate and strong, unregulated competitors have entered banking markets with focused products targeted at highly profitable customer segments.  Many largely unregulated competitors are able to compete across geographic boundaries and provide customers increasing access to meaningful alternatives to banking services in nearly all significant products.  These competitive trends are likely to continue.  We will compete for loans and deposits with other commercial banks, as well as with savings and loan associations, credit unions, thrift and loan companies, and other financial and non-financial institutions.  With respect to commercial bank competitors, the business is largely dominated by a relatively small number of major banks with many offices operating over a wide geographical area, which banks have, among other advantages, the ability to finance wide-ranging and effective advertising campaigns and to allocate their investment resources to regions of highest yield

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and demand.  Many of the major banks operating in the area offer certain services which we will not offer directly (but some of which we intend to offer through correspondent institutions.)  By virtue of their greater total capitalization, such banks also have substantially higher lending limits than we will have.

In addition to other banks, our competitors will include savings institutions, credit unions, and numerous non-banking institutions, such as finance companies, leasing companies, insurance companies, brokerage firms, and investment banking firms.  In recent years, increased competition has also developed from specialized finance and non-finance companies that offer money market and mutual funds, wholesale finance, credit card, and other consumer finance services, including on-line banking services and personal finance software.  Strong competition for deposit and loan products affects the rates of those products as well as the terms on which they are offered to customers.  Mergers between financial institutions have placed additional pressure on banks within the industry to streamline their operations, reduce expenses, and increase revenues to remain competitive.  Competition has also intensified due to federal and state interstate banking laws, which permit banking organizations to expand geographically, and the California market has been particularly attractive to out-of-state institutions.  The Financial Modernization Act, which became effective March, 2000, made it possible for full affiliations to occur between banks and securities firms, insurance companies, and other financial companies, has also intensified competitive conditions.  (See “Regulation and Supervision – Financial Modernization Act” herein.)

Technological innovation has also resulted in increased competition in the financial services market.  Such innovation has, for example, made it possible for non-depository institutions to offer customers automated transfer payment services that previously have been considered traditional banking products.  In addition, many customers now expect a choice of several delivery systems and channels, including telephone, mail, home computer, ATMs, self-service branches, and/or in-store branches. In addition to other banks, the sources of competition for such products include savings associations, credit unions, brokerage firms, money market and other mutual funds, asset management groups, finance and insurance companies, and mortgage banking firms.  Further, the rise of “internet banking” may require us to compete with remote entities soliciting customers in our market areas via web based advertising and product delivery.

In order to compete effectively, we intend to create a sales and service culture that combines the experience of our senior officers, which includes the extensive sales orientation of larger financial institutions, with the commitment to service and a focus on the individual needs of our business customers that is found at the best community banks.  We will seek to provide a level of service and decision-making responsiveness not generally offered by larger institutions while at the same time providing a management sophistication not universally contained at local community banks.

Our primary service area consists of the County of Los Angeles, with a particular emphasis on the Westside, South Bay and Los Angeles airport areas.  As in most major U.S. cities, large banks dominate the banking industry in Los Angles County.  However, rather than these large financial institutions, we believe our primary competitors for the small and medium-sized business customer will be the community banks that can provide the service and responsiveness attractive to small and medium-sized business customers.

Within Los Angeles County, based on data from the FDIC as of June 30, 2006, there were 75 headquartered banks.  Of these 75 banks, 19 banks reported assets in excess of $1 billion bringing the count of “community-like” banks to 56.  Of these 56 banks with less than $1 billion in assets, there were eight banks owned by large out-of-state holding companies, and there were two industrial banks.  Of the remaining 46 banks, 19 had an Asian-American focus and one is Hispanic-owned.  Eliminating those banks, there are 26 traditionally-mainstream community banks in Los Angeles County.  Of those 26 banks, 11 are geographically distant not to be competitive with Bank of Manhattan, leaving a relevant competition of 15 banks within a 20 mile radius of Bank of Manhattan.  Of these 15 institutions, we believe that only seven are comparable to us in their small to medium-sized business lending concentration.

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Premises

We have entered into a lease for Bank of Manhattan’s main office and our corporate headquarters to be located at 2141 Rosecrans Avenue, Suite 1160, in the City of El Segundo.  The lease is for a term of seven years, with one option to renew for five years, commencing upon the completion of tenant improvements to the premises, which we currently estimate to be completed about June 1, 2007.  We will occupy approximately 7,600 square feet on the ground floor of a six-story multi-tenant building complex known as The Plaza at Continental Park.  The initial base rental will be $19,807 per month, with annual increases of 3% per year.  The lease provides that the landlord will provide us with an allowance of approximately $293,000 for tenant improvements and we anticipate that we will contribute an additional approximately $400,000 toward tenant improvements.  The lease also requires that we obtain a letter of credit in favor of our landlord in the amount of approximately $293,000 to secure our obligations under the lease.  We also anticipate spending an additional $443,250 towards furniture, fixtures and equipment at these premises.  The lease also provides that if we do not receive approval to open the Bank of Manhattan the lease will be terminated without any further cost to us.  Manhattan Bancorp is the initial tenant under the lease, but the lease will be assigned by us to Bank of Manhattan after the bank’s organization.

Until our new offices are completed, we have leased, from the same landlord who will lease to us our main office, organizational offices at a rate of $3,500 per month, on a month-to-month basis, at 2221 Rosecrans Avenue, Suite 131, El Segundo, California.

Employees

As of the date of this prospectus, Jeffrey Watson, our President and Chief Executive Officer and 3 other persons assisting in our organization are the only persons receiving compensation from us.  Mr. Watson has been retained pursuant to the terms of a consulting agreement until such time as the Bank of Manhattan opens for business.  Thereafter, Mr. Watson will be paid by the Bank of Manhattan pursuant to the terms of an employment agreement. See “Executive Compensation – Future Employment Agreements.”  At the time Bank of Manhattan opens for business we anticipate that we will have a total of 24 full time equivalent employees, including our executive officers.

MANAGEMENT’S PLAN OF OPERATION

Manhattan Bancorp was incorporated under the laws of the State of California on August 8, 2006 for the purpose of becoming a bank holding company that would own all of the outstanding shares of capital stock of Bank of Manhattan, a proposed national bank.  We anticipate that we will receive regulatory approval to open Bank of Manhattan during the third quarter of 2007, assuming this offering is successful, and open the bank shortly after that.  There can be no assurance however, that we will receive approval to open Bank of Manhattan or that the bank will open.

Prior to this offering the only material source of funds for Manhattan Bancorp has been the investment by our directors and our one organizer who is not a director in our shares for the purpose of providing organizational and offering expenses for Manhattan Bancorp and for advancing the organizational and pre-opening expenses for Bank of Manhattan.  Prior to this offering we sold an aggregate of 45,000 shares of our common stock to our eight directors ($50,000 per director) and our one organizer who is not a director in a private placement at the purchase price of $10.00 per share for total gross proceeds to us of $450,000.  In order to fund additional organizational and offering expenses for Manhattan Bancorp, and organizational and pre-opening expenses for Bank of Manhattan, we intend to obtain a working capital line from an unaffiliated third party lender to cover any shortfall in funding these expenses prior to the closing of the offering.  In this regard, we have entered into a commitment letter with Western Commercial Bank to provide us with a revolving line of credit of $780,000, including a $293,000 carve out for a letter of credit to secure our obligations under the lease for our main office.  The commitment letter provides that the loan will be unsecured and guaranteed by our Chairman, Kyle Ransford.  The loan will bear interest at the rate of prime + .50% and will be for a term of six months. If we should require additional funds in addition to a third party line of credit in order to cover our organizational and offering expenses, and to cover any organizational and pre-opening expenses of the Bank of Manhattan, we anticipate that our directors would make further advances of funds, as needed, prior to the opening of the Bank of Manhattan.  Any third party loans and any advances made by our directors would be repaid to them upon the closing of the offering. 

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Once Bank of Manhattan receives preliminary approval to organize from the Comptroller of the Currency, we will focus on completing the steps necessary to enable Bank of Manhattan to open for business, including preparing our site, our information systems, our computer software and hardware, our internal controls, and our policies and procedures.  We anticipate that we will spend approximately $400,000 for tenant improvements to our main office as well as an additional $443,250 for furniture, fixtures and equipment.  Other pre-opening expenses are anticipated to total $799,218, and include, among other things, occupancy expense, personnel expense, legal and consulting fees and computer equipment and software.  Jeffrey Watson, our President and Chief Executive Officer, is currently retained by us pursuant to the terms of a consulting agreement to provide his services with respect to the organization of Bank of Manhattan.  See “Executive Compensation – Consulting Agreement.”  We anticipate that our Chief Operating Officer, Chief Credit Officer and our Chief Financial Officer, will be retained by us as consultants soon after we receive preliminary approval to organize so that they can assist us with pre-opening matters for Bank of Manhattan.  These three individuals will be employed by us pursuant to employment agreements which will commence when the Bank of Manhattan opens for business.  See “Executive Compensation – Future Employment Agreements.”

Manhattan Bancorp is newly formed and it has, and the Bank of Manhattan when it is formed will have, no prior operating history.  Our operating results will depend on the operating results of the Bank of Manhattan.  Bank of Manhattan’s success and profitability will depend in large part on our ability to attract a customer base.   Initially, we will rely heavily on our directors as a source of customer referrals.  We will ask each of our directors to identify at least five quality client referrals per year over our initial three years of operations.  We intend to hire proven business development relationship managers and loan officers with marketing experience to contact these customers and generate loans and deposits.    However, there can be no assurance that we will be successful in attracting the quality customers that we will need to achieve profitability.  In addition to our four executive officers, when we commence operations we anticipate that we will have an additional 21 employees, including seven relationship managers (lending officers) and two credit analysts, for a total of 24 full time equivalent employees.

Bank of Manhattan will incur substantial operating expenses, and there are no assurances as to when, if ever, Bank of Manhattan will make a profit.  Assuming that we raise the minimum net proceeds from this offering, we presently believe that we will have sufficient capital resources to meet our commitments for at least the next twelve months of operations.

REGULATION AND SUPERVISION

Both federal and state law extensively regulate bank holding companies.  This regulation is intended primarily for the protection of depositors and the deposit insurance fund and not for the benefit of shareholders of Manhattan Bancorp.  The following is a summary of particular statutes and regulations affecting Manhattan Bancorp and Bank of Manhattan.  This summary is qualified in its entirety by the statutes and regulations.

Regulation of Manhattan Bancorp

Manhattan Bancorp will be a registered bank holding company under the Bank Holding Company Act of 1956, as amended, and will be regulated by the Federal Reserve Board.  Manhattan Bancorp will be required to file periodic reports with the Federal Reserve Board and such additional information as the Federal Reserve Board may require pursuant to the Bank Holding Company Act.  The Federal Reserve Board may conduct examinations of Manhattan Bancorp and its subsidiaries, which will include Bank of Manhattan.

The Bank Holding Company Act requires every bank holding company to obtain the prior approval of the Federal Reserve Board before acquiring substantially all the assets of any bank or bank holding company or

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ownership or control of any voting shares of any bank or bank holding company, if, after the acquisition, it would own or control, directly or indirectly, more than 5% of the voting shares of the bank or bank holding company.

Manhattan Bancorp will be prohibited by the Bank Holding Company Act, except in statutorily prescribed instances, from acquiring direct or indirect ownership or control of more than 5% of the outstanding voting shares of any company that is not a bank or bank holding company and from engaging directly or indirectly in activities other than those of banking, managing or controlling banks or furnishing services to its subsidiaries.  However, Manhattan Bancorp, subject to notification or the prior approval of the Federal Reserve Board, as applicable in each specific case, may engage in any, or acquire shares of companies engaged in, activities that are deemed by the Federal Reserve Board to be “so closely related to banking” or managing or controlling banks as to be a “proper incident thereto.”

In approving acquisitions by bank holding companies of companies engaged in banking-related activities, the Federal Reserve Board considers whether the performance of any activity by a subsidiary of the holding company reasonably can be expected to produce benefits to the public, including greater convenience, increased competition, or gains in efficiency, which outweigh possible adverse effects, including over-concentration of resources, decrease of competition, conflicts of interest, or unsound banking practices.

The Federal Reserve Board has adopted capital adequacy guidelines for bank holding companies on a consolidated basis substantially similar to those of the Comptroller of the Currency which will be applicable to Bank of Manhattan.  Regulations and policies of the Federal Reserve Board also require a bank holding company to serve as a source of financial and managerial strength to its subsidiary banks.  It is the Federal Reserve Board’s policy that a bank holding company should stand ready to use available resources to provide adequate capital funds to a subsidiary bank during periods of financial stress or adversity and should maintain the financial flexibility and capital-raising capacity to obtain additional resources for assisting a subsidiary bank.  Under certain conditions, the Federal Reserve Board may conclude that certain actions of a bank holding company, such as a payment of a cash dividend, would constitute an unsafe and unsound banking practice.

Manhattan Bancorp will be required to give the Federal Reserve Board prior written notice of any repurchase of its outstanding equity securities which (for a period of 12 months) is equal to 10% or more of Manhattan Bancorp’s consolidated net worth, unless certain conditions are met.

Bank holding company transactions with subsidiaries and other affiliates are restricted, including qualitative and quantitative restrictions on extensions of credit and similar transactions.

The securities of Manhattan Bancorp will also be subject to the requirements of the Securities Act, and matters related thereto will be regulated by the Securities and Exchange Commission.  Certain issuances may also be subject to the California’s corporate securities law as administered by the California Commissioner of Corporations.  Manhattan Bancorp, upon effectiveness of the registration statement of which this prospectus constitutes a part, will be subject to the public reporting requirements of the Securities and Exchange Act of 1934, as amended generally applicable to publicly held companies, under Section 15(d) of the Exchange Act.  Companies which file a registration statement under the Securities Act are required under Section 15(d) of the Exchange Act for at least a 12-month period after the effectiveness of such registration statement to file periodic quarterly and annual reports under the Securities Act.  If and when Manhattan Bancorp has more than 500 shareholders of record, it will be required to register its securities with the Securities and Exchange Commission under Section 12(g) of the Exchange Act at which time its filing of periodic reports, as well as certain other reporting obligations, will become mandatory.

Regulation of Bank of Manhattan

As a national banking association, Bank of Manhattan will be subject to regulation, supervision and examination by the Comptroller of the Currency.  It will also be a member of the Federal Reserve System and, as such, will be subject to applicable provisions of the Federal Reserve Act and the regulations promulgated thereunder

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by the Board of Governors of the Federal Reserve System.  In addition, the deposits of Bank of Manhattan will be insured by the Federal Deposit Insurance Corporation to a maximum of $100,000 per depositor, and up to a maximum of $250,000 with respect to certain retirement accounts.  For this protection, Bank of Manhattan will pay a quarterly assessment to the FDIC and will be subject to the rules and regulations of the FDIC pertaining to deposit insurance and other matters.  The regulations of those agencies will govern most aspects of Bank of Manhattan’s business, including the making of periodic reports by Bank of Manhattan, and Bank of Manhattan’s activities relating to dividends, investments, loans, borrowings, capital requirements, certain check-clearing activities, branching, mergers and acquisitions, reserves against deposits, the issuance of securities and numerous other areas.

The earnings and growth of Bank of Manhattan will largely be dependent on its ability to maintain a favorable differential or “spread” between the yield on its interest-earning assets and the rate paid on its deposits and other interest-bearing liabilities.  As a result, Bank of Manhattan’s performance will be influenced by general economic condi­tions, both domestic and foreign, the monetary and fiscal policies of the federal government, and the policies of the regulatory agencies, particularly the Federal Reserve Board.  The Federal Reserve Board implements national monetary policies (such as seeking to curb inflation and combat recession) by its open-market operations in United States Government securities, by adjusting the required level of reserves for financial institutions subject to its reserve requirements and by varying the discount rate applicable to borrowings by banks which are members of the Federal Reserve System.  The actions of the Federal Reserve Board in these areas influence the growth of bank loans, investments and deposits and also affect interest rates charged on loans and deposits.  The nature and impact of any future changes in monetary policies cannot be predicted.

Capital Adequacy Requirements

Bank of Manhattan will be subject to the regulations of the Comptroller of the Currency governing capital adequacy.  Those regulations incorporate both risk-based and leverage capital requirements.  The Comptroller has established risk-based and leverage capital guidelines for the banks it regulates, which set total capital requirements and define capital in terms of “core capital elements,” or Tier 1 capital and “supplemental capital elements,” or Tier 2 capital.  Tier 1 capital is generally defined as the sum of the core capital elements less goodwill and certain intangibles.  The following items are defined as core capital elements:  (i) common stockholders’ equity; (ii) qualifying non-cumulative perpetual preferred stock and related surplus; and (iii) minority interests in the equity accounts of consolidated subsidiaries.  Supplementary capital elements include:  (i) allowance for loan and lease losses (but not more than 1.25% of an institution’s risk-weighted assets); (ii) perpetual preferred stock and related surplus not qualifying as core capital; (iii) hybrid capital instruments, perpetual debt and mandatory convertible debt instruments; and (iv) term subordinated debt and intermediate-term preferred stock and related surplus.  The maximum amount of supplemental capital elements which qualifies as Tier 2 capital is limited to 100% of Tier 1 capital, net of goodwill.

Bank of Manhattan will be required to maintain a minimum ratio of qualifying total capital to total risk-weighted assets of 8.0% (“Total Risk-Based Capital Ratio”), at least one-half of which must be in the form of Tier 1 capital (“Tier 1 Risk-Based Capital Ratio”).  Risk-based capital ratios are calculated to provide a measure of capital that reflects the degree of risk associated with a banking organization’s operations for both transactions reported on the balance sheet as assets, and transactions, such as letters of credit and recourse arrangements, which are recorded as off-balance sheet items.  Under the risk-based capital guidelines, the nominal dollar amounts of assets and credit-equivalent amounts of off-balance sheet items are multiplied by one of several risk adjustment percentages, which range from 0% for assets with low credit risk, such as certain U. S. Treasury securities, to 100% for assets with relatively high credit risk, such as business loans.

The risk-based capital standards also take into account concentrations of credit and the risks of “non-traditional” activities (those that have not customarily been part of the banking business). The regulations require institutions with high or inordinate levels of risk to operate with higher minimum capital standards, and authorize the regulators to review an institution’s management of such risks in assessing an institution’s capital adequacy.

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The risk-based capital regulations also include exposure to interest rate risk as a factor that the regulators will consider in evaluating a bank’s capital adequacy, although interest rate risk does not impact the calculation of a bank’s risk-based capital ratios.  Interest rate risk is the exposure of a bank’s current and future earnings and equity capital arising from adverse movements in interest rates.  While interest risk is inherent in a bank’s role as financial intermediary, it introduces volatility to bank earnings and to the economic value of the bank.

Banks are also required to maintain a leverage capital ratio designed to supplement the risk-based capital guidelines.  Banks that have received the highest rating of the five categories used by regulators to rate banks and are not anticipating or experiencing any significant growth must maintain a ratio of Tier 1 capital (net of all intangibles) to adjusted total assets (“Leverage Capital Ratio”) of at least 3%.  All other institutions are required to maintain a leverage ratio of at least 100 to 200 basis points above the 3% minimum, for a minimum of 4% to 5%.  Pursuant to federal regulations, banks must maintain capital levels commensurate with the level of risk to which they are exposed, including the volume and severity of problem loans, and federal regulators may set higher capital requirements when a bank’s particular circumstances warrant.

Prompt Corrective Action Provisions

Federal law requires each federal banking agency to take prompt corrective action to resolve the problems of insured financial institutions, including but not limited to those that fall below one or more prescribed minimum capital ratios.  The federal banking agencies have by regulation defined the following five capital categories: “well capitalized” (Total Risk-Based Capital Ratio of 10%; Tier 1 Risk-Based Capital Ratio of 6%; and Leverage Capital Ratio of 5%); “adequately capitalized” (Total Risk-Based Capital Ratio of 8%; Tier 1 Risk-Based Capital Ratio of 4%; and Leverage Capital Ratio of 4%) (or 3% if the institution receives the highest rating from its primary regulator); “undercapitalized” (Total Risk-Based Capital Ratio of less than 8%; Tier 1 Risk-Based Capital Ratio of less than 4%; or Leverage Capital Ratio of less than 4%) (or 3% if the institution receives the highest rating from its primary regulator); “significantly undercapitalized” (Total Risk-Based Capital Ratio of less than 6%; Tier 1 Risk-Based Capital Ratio of less than 3%; or Leverage Capital Ratio less than 3%); and “critically undercapitalized” (tangible equity to total assets less than 2%).  A bank may be treated as though it were in the next lower capital category if after notice and the opportunity for a hearing, the appropriate federal agency finds an unsafe or unsound condition or practice so warrants, but no bank may be treated as “critically undercapitalized” unless its actual capital ratio warrants such treatment.

At each successively lower capital category, an insured bank is subject to increased restrictions on its operations.  For example, a bank is generally prohibited from paying management fees to any controlling persons or from making capital distributions if to do so would make the bank “undercapitalized.”  Asset growth and branching restrictions apply to undercapitalized banks, which are required to submit written capital restoration plans meeting specified requirements (including a guarantee by the parent holding company, if any).  “Significantly undercapitalized” banks are subject to broad regulatory authority, including among other things, capital directives, forced mergers, restrictions on the rates of interest they may pay on deposits, restrictions on asset growth and activities, and prohibitions on paying bonuses or increasing compensation to senior executive officers without FDIC approval.  Even more severe restrictions apply to critically undercapitalized banks.  Most importantly, except under limited circumstances, not later than 90 days after an insured bank becomes critically undercapitalized, the appropriate federal banking agency is required to appoint a conservator or receiver for the bank.

In addition to measures taken under the prompt corrective action provisions, insured banks may be subject to potential actions by the federal regulators for unsafe or unsound practices in conducting their businesses or for violations of any law, rule, regulation or any condition imposed in writing by the agency or any written agreement with the agency.  Enforcement actions may include the issuance of cease and desist orders, termination of insurance of deposits (in the case of a bank), the imposition of civil money penalties, the issuance of directives to increase capital, formal and informal agreements, or removal and prohibition orders against “institution-affiliated” parties.

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Safety and Soundness Standards

The federal banking agencies have also adopted guidelines establishing safety and soundness standards for all insured depository institutions.  Those guidelines relate to internal controls, information systems, internal audit systems, loan underwriting and documentation, compensation and interest rate exposure.  In general, the standards are designed to assist the federal banking agencies in identifying and addressing problems at insured depository institutions before capital becomes impaired.  If an institution fails to meet these standards, the appropriate federal banking agency may require the institution to submit a compliance plan and institute enforcement proceedings if an acceptable compliance plan is not submitted.

Premiums for Deposit Insurance

Bank of Manhattan will be a member of the Deposit Insurance Fund, maintained by the FDIC, and will pay deposit insurance assessments to the Deposit Insurance Fund.  The Deposit Insurance Fund was formed on March 31, 2006 following the merger of the Bank Insurance Fund and the Savings Association Insurance Fund in accordance with the Federal Deposit Insurance Reform Act of 2005.

In order to maintain the Deposit Insurance Fund, member institutions are assessed an insurance premium.  The amount of each institution’s premium is currently based on the balance of insured deposits and the degree of risk the institution poses to the Deposit Insurance Fund.  Under the assessment system, the FDIC assigns an institution to one of nine risk categories using a two-step process based first on capital ratios (the capital group assignment) and then on other relevant information (the supervisory subgroup assignment).  Each risk category is assigned an assessment rate.  Assessment rates currently range from 0% of deposits for an institution in the highest category (i.e., well-capitalized and financially sound, with no more than a few minor weaknesses) to 0.27% of deposits for an institution in the lowest category (i.e., undercapitalized and substantial supervisory concerns).

In addition to merging the insurance funds, the Federal Deposit Insurance Reform Act also granted the FDIC additional flexibility in establishing reserves in the Deposit Insurance Fund.  The Federal Deposit Insurance Corporation has issued proposed rules regarding the provisions of the Deposit Insurance Fund.  The finalization and implementation of these rules will likely affect the insurance premiums paid by all members of the Deposit Insurance Fund, including Bank of Manhattan.

In addition, all Federal Deposit Insurance Corporation-insured institutions are required to pay assessments to the Federal Deposit Insurance Corporation at an annual rate of approximately 0.0122% of insured deposits to fund interest payments on bonds issued by the Financing Corporation to fund the closing and disposal of failed thrift institutions by the Resolution Trust Corporation.  These assessments will continue until the Financing Corporation bonds mature in 2017.

Community Reinvestment Act

Bank of Manhattan will be subject to certain requirements and reporting obligations involving Community Reinvestment Act (“CRA”) activities.  The CRA generally requires the federal banking agencies to evaluate the record of a financial institution in meeting the credit needs of its local communities, including low and moderate income neighborhoods. The CRA further requires the agencies to take a financial institution’s record of meeting its community credit needs into account when evaluating applications for, among other things, domestic branches, consummating mergers or acquisitions, or holding company formations.  In measuring a bank’s compliance with its CRA obligations, the regulators now utilize a performance-based evaluation system which bases CRA ratings on the bank’s actual lending service and investment performance, rather than on the extent to which the institution conducts needs assessments, documents community outreach activities or complies with other procedural requirements.  In connection with its assessment of CRA performance, the agencies assign a rating of “outstanding,” “satisfactory,” “needs to improve” or “substantial noncompliance.”

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Other Consumer Protection Laws and Regulations

The bank regulatory agencies have been increasingly focusing attention on compliance with consumer protection laws and regulations.  Examination and enforcement has become intense, and banks have been advised to carefully monitor compliance with various consumer protection laws and their implementing regulations. The federal Interagency Task Force on Fair Lending issued a policy statement on discrimination in home mortgage lending describing three methods that federal agencies will use to prove discrimination: overt evidence of discrimination, evidence of disparate treatment, and evidence of disparate impact.  In addition to CRA and fair lending requirements, Bank of Manhattan will be subject to numerous other federal consumer protection statutes and regulations.  Due to heightened regulatory concern related to compliance with consumer protection laws and regulations generally, Bank of Manhattan may incur substantial compliance costs or be required to expend additional funds for investments in the local communities it serves.

Interstate Banking and Branching

The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 regulates the interstate activities of banks and bank holding companies and establishes a framework for nationwide interstate banking and branching.  Since June 1, 1997, a bank in one state has generally been permitted to merge with a bank in another state without the need for explicit state law authorization.  However, states were given the ability to prohibit interstate mergers with banks in their own state by “opting-out” (enacting state legislation applying equality to all out-of-state banks prohibiting such mergers) prior to June 1, 1997.

Since 1995, adequately capitalized and managed bank holding companies have been permitted to acquire banks located in any state, subject to two exceptions: first, any state may still prohibit bank holding companies from acquiring a bank which is less than five years old; and second, no interstate acquisition can be consummated by a bank holding company if the acquiror would control more then 10% of the deposits held by insured depository institutions nationwide or 30% percent or more of the deposits held by insured depository institutions in any state in which the target bank has branches.

In 1995 California enacted legislation to implement important provisions of the Riegle-Neal Act discussed above and to repeal California’s previous interstate banking laws, which were largely preempted by the Riegle-Neal Act.

A bank may establish and operate de novo branches in any state in which the bank does not maintain a branch if that state has enacted legislation to expressly permit all out-of-state banks to establish branches in that state.  However, California law expressly prohibits an out-of-state bank which does not already have a California branch office from (i) purchasing a branch office of a California bank (as opposed to purchasing the entire bank) and thereby establishing a California branch office or (ii) establishing a de novo branch in California.

The changes effected by the Riegle-Neal Act and California laws have increased competition in the environment in which Bank of Manhattan will operate to the extent that out-of-state financial institutions may directly or indirectly enter Bank of Manhattan’s market areas.  It appears that the Riegle-Neal Act has contributed to the accelerated consolidation of the banking industry.  While many large out-of-state banks have already entered the California market as a result of this legislation, it is not possible to predict the precise impact of this legislation on Bank of Manhattan and the competitive environment in which it will operate.

Financial Modernization Act

Effective March 11, 2000, the Gramm-Leach-Bliley Act, also known as the “Financial Modernization Act”, enabled full affiliations to occur between banks and securities firms, insurance companies and other financial service providers.  This legislation permits bank holding companies to become “financial holding companies” and thereby acquire securities firms and insurance companies and engage in other activities that are financial in nature.  A bank holding company may become a financial holding company if each of its subsidiary banks is “well capitalized” and

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“well managed” under applicable definitions, and has at least a satisfactory rating under the CRA by filing a declaration that the bank holding company wishes to become a financial holding company. 

The Financial Modernization Act defines “financial in nature” to include securities underwriting, dealing and market making; sponsoring mutual funds and investment companies; insurance underwriting and agency; merchant banking activities; and activities that the Board has determined to be closely related to banking.  A national bank also may engage, subject to limitations on investment, in activities that are financial in nature, other than insurance underwriting, insurance company portfolio investment, real estate development and real estate investment, through a financial subsidiary of the bank, if the bank is well capitalized, well managed and has at least a satisfactory CRA rating.  Subsidiary banks of a financial holding company or national banks with financial subsidiaries must continue to be well capitalized and well managed in order to continue to engage in activities that are financial in nature without regulatory actions or restrictions, which could include divestiture of financial subsidiaries.  In addition, a financial holding company or a bank may not acquire a company that is engaged in activities that are financial in nature unless each of the subsidiary banks of the financial holding company or the bank has a CRA rating of satisfactory or better. The Gramm-Leach-Bliley Act also imposes significant requirements on financial institutions with respect to the privacy of customer information, and modifies other existing laws, including those related to community reinvestment.

USA Patriot Act of 2001

The USA Patriot Act of 2001 was enacted in October 2001 in response to the terrorist attacks on September 11, 2001.  The Patriot Act is intended to strengthen United States law enforcement’s and the intelligence communities’ ability to work cohesively to combat terrorism on a variety of fronts.  The impact of the Patriot Act on financial institutions of all kinds has been significant and wide ranging.  The Patriot Act substantially enhanced existing anti-money laundering and financial transparency laws, and required appropriate regulatory authorities to adopt rules to promote cooperation among financial institutions, regulators, and law enforcement entities in identifying parties that may be involved in terrorism or money laundering.  Under the Patriot Act, financial institutions are subject to prohibitions regarding specified financial transactions and account relationships, as well as enhanced due diligence and “know your customer” standards in their dealings with foreign financial institutions and foreign customers.  For example, the enhanced due diligence policies, procedures, and controls generally require financial institutions to take reasonable steps:

·to conduct enhanced scrutiny of account relationships to guard against money laundering and report any suspicious transactions;

·to ascertain the identity of the nominal and beneficial owners of, and the source of funds deposited into, each account as needed to guard against money laundering and report any suspicious transactions;

·to ascertain for any foreign bank, the shares of which are not publicly traded, the identity of the owners of the foreign bank, and the nature and extent of the ownership interest of each such owner; and

·to ascertain whether any foreign bank provides correspondent accounts to other foreign banks and, if so, the identity of those foreign banks and related due diligence information.

The Patriot Act also requires all financial institutions to establish anti-money laundering programs, which must include, at minimum:

·the development of internal policies, procedures, and controls;

·the designation of a compliance officer;

·an ongoing employee training program; and

·an independent audit function to test the programs.

Bank of Manhattan intends to adopt comprehensive policies and procedures, and take all necessary actions, to ensure compliance with all financial transparency and anti-money laundering laws, including the Patriot Act.

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Sarbanes-Oxley Act of 2002

As a public company, we will be subject to the Sarbanes-Oxley Act of 2002, which implements a broad range of corporate governance and accounting measures for public companies designed to promote honesty and transparency in corporate America and better protect investors from corporate wrongdoing.  The Sarbanes-Oxley Act’s principal legislation and the derivative regulation and rule making promulgated by the Securities and Exchange Commission includes:

·the creation of an independent accounting oversight board;

·auditor independence provisions that restrict non-audit services that accountants may provide to their audit clients;

·additional corporate governance and responsibility measures, including the requirement that the chief executive officer and chief financial officer certify financial statements;

·a requirement that companies establish and maintain a system of internal control over financial reporting and that a company’s management provide an annual report regarding its assessment of the effectiveness of such internal control over financial reporting to the company’s independent accountants;

·a requirement that the company’s independent accountants provide an attestation report with respect to management’s assessment of the effectiveness of the company’s internal control over financial reporting (this requirement is currently proposed to become effective for companies like Bank of Manhattan which will not be an accelerated SEC filer for the company’s fiscal year ending on or after December 15, 2008);

·the forfeiture of bonuses or other incentive-based compensation and profits from the sale of an issuer’s securities by directors and senior officers in the twelve month period following initial publication of any financial statements that later require restatement;

·an increase in the oversight of, and enhancement of certain requirements relating to audit committees of public companies and how they interact with the company’s independent auditors;

·the requirement that audit committee members must be independent and are absolutely barred from accepting consulting, advisory or other compensatory fees from the issuer;

·the requirement that companies disclose whether at least one member of the committee is a “financial expert” (as such term is defined by the SEC) and if not, why not;

·expanded disclosure requirements for corporate insiders, including accelerated reporting of stock transactions by insiders and a prohibition on insider trading during pension blackout periods;

·a prohibition on personal loans to directors and officers, except certain loans made by insured financial institutions;

·disclosure of a code of ethics and the requirement of filing of a Form 8-K for a change or waiver of such code;

·mandatory disclosure by analysts of potential conflicts of interest; and

·a range of enhanced penalties for fraud and other violations.

MANAGEMENT

Executive Officers and Directors

The table below shows our directors’ and executive officers’ names, relationship to Manhattan Bancorp and Bank of Manhattan, age and occupation.  More detailed descriptions of the background and experience of our directors and executive officers are set forth below.  Each of our directors has been a director of Manhattan Bancorp since its inception and will become a director of Bank of Manhattan after we receive approval to organize Bank of Manhattan.

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Name	Relationship to Manhattan Bancorp and Bank of Manhattan	Age	Occupation
Chris W. Caras, Jr.	Director	33	Real Estate Broker
Harry “Duke” W. Chenoweth	Director	65	Retired Banker
Patrick E. Greene	Director	61	Business Owner
Christopher J. Growney	Director	34	Investment Advisor
Larry S. Murphy	Director	63	Accountant
Kyle S. Ransford	Chairman	35	Real Estate Investment and Development
Jeffrey M. Watson	President and Chief Executive Officer and a Director	47	Banking
Stephen P. Yost	Director	61	Retired Banker

The Comptroller of the Currency has the authority to disallow any of the above persons from assuming his designated position at Bank of Manhattan.

In addition, we have identified individuals to serve as our Chief Operating Officer, our Chief Credit Officer and as our Chief Financial Officer.  We expect these individuals to start with us in April 2007, following receipt of preliminary approval from the Comptroller of the Currency to charter the Bank of Manhattan.  Our proposed Chief Credit Officer has served as the Executive Vice President and Chief Credit Officer of a financial institution in Los Angeles County for more than the past two years and previously spent more than ten years as a consultant to commercial banking clients in credit administration and loan review. Our proposed Chief Operating Officer has served as the Senior Vice President and Chief Financial Officer of a commercial bank in Los Angeles, California since December 2003.  Previously, he served as the Vice President/Controller of a public community bank headquartered in the South Bay of Los Angeles from 1998 to 2003, and as that bank’s Assistant Vice President and Assistant Controller form 1995 to 1998.  Our proposed Chief Financial Officer has served as the Chief Financial Officer of several financial institutions in Southern California since 1982, serving most recently as the Executive Vice President and Chief Financial Officer of a publicly reporting bank since 2001.  Our proposed Chief Financial Officer is a certified public accountant. 

None of our directors other than Mr. Watson will devote his full time to the operations of Manhattan Bancorp and Bank of Manhattan, with such outside directors devoting such time as will enable them to fulfill their obligations as directors of Manhattan Bancorp and Bank of Manhattan.  None of our directors has agreed not to compete with Manhattan Bancorp or Bank of Manhattan following the conclusion of their service as a director of Manhattan Bancorp and Bank of Manhattan.

Background and Business Experience of Executive Officers and Directors

The following discussion provides information concerning the backgrounds and business experience of our executive officers and directors. 

Chris W. Caras, Jr. has served as a Vice President for the real estate brokerage firm of Grubb & Ellis in Los Angeles, California since July 2005, specializing in commercial real estate brokerage services.  He also serves as the President of Caras Homes, Inc., Hermosa Beach, California, a residential real estate development company which he founded in 2000.  Mr. Caras also is a Property Manager for Car-Gin Property Management, Inc. in Palos

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Verdes Estates, California, which position he has held since 1996.  From 2002 through July 2005 Mr. Caras served as a Principal of Newmark of Southern California, Inc., a real estate brokerage firm, and from 1999 to 2002 he served as an Associate in the Los Angeles office of Studley, a commercial real estate brokerage company.  Mr. Caras is a California Licensed Salesperson and a State Licensed Contractor.  He earned a Bachelor of Arts degree in Urban Development and City Planning from the University of California, Berkley.  Mr. Caras serves as a director of Manhattan Bancorp and is a proposed director of Bank of Manhattan. 

Harry (“Duke”) W. Chenoweth is a retired commercial banker.  From 2001 to 2004 he was the President and Chief Operating Officer of Barrister Executive Suites, Inc, of Los Angeles, which company provided executive office space for lease.  Prior to that he had over 30 years of commercial banking experience, serving as an Executive Vice President of Imperial Bank of Los Angeles from 1996 to 2001 and serving with Union Bank from 1969 through 1996, where he was most recently the Regional Vice President and Manager for the Los Angles Middle Market Banking and Southern California Corporate Banking divisions from 1993 to 1996.  Mr. Chenoweth earned a Bachelor of Science degree from Wittenberg University, Springfield, Ohio and a Masters in Business Administration degree from Bowling Green University, Bowling Green, Ohio.  Mr. Chenoweth serves as a director of Manhattan Bancorp and is a proposed director of Bank of Manhattan.  Mr. Chenoweth will serve as Chairman of our Compensation Committee.

Patrick E. Greene has been the President and owner of Greene’s Ready Mixed Concrete in Torrance, California since 1960.  Mr. Greene also served as a director of Bay Cities National Bank, Redondo Beach, California from 1982 to 1995.  He earned a Bachelor of Science degree in Business Administration from Loyola University, Los Angeles, California.  Mr. Greene serves as a director of Manhattan Bancorp and is a proposed director of Bank of Manhattan. 

Christopher J. Growney has been a principal in the New York office of Clearwater Advisors, LLC,  an investment advisory firm, since 2001.   Previously, he was an Investment Manager at Cisco Systems Investments, San Jose, California, from 1999 to 2001.  From 1997 to 1999 Mr. Growney was a fixed income trader and cash manager at The Patterson Capital Corporation, Los Angeles, California, and from 1995 to 1997 was an Assistant Fixed Income Trader/Marketer with Morgan Stanley Dean Witter, Inc., in New York, New York.  He earned a Bachelor of Arts degree in Finance from Southern Methodist University, Dallas, Texas.  He holds a Series 65 license administered by the National Association of Securities Dealers and is a Chartered Financial Analyst.  Mr. Growney serves as a director of Manhattan Bancorp and is a proposed director of Bank of Manhattan.  Mr. Growney will serve as Chairman of Bank of Manhattan’s Asset Liability Committee.

Larry S. Murphy has more than thirty-five years of experience evaluating accounting, auditing and business practices, including more than twenty-five years as a consultant.  He has been a Vice President of Freeman & Mills, Inc., a litigation consulting firm since 2000, and also served as a Vice President of this firm from 1994 to 1998.  Previously, he was with the consulting firm of Putnam Hayes & Bartless from 1994 to 1998.  Mr. Murphy holds a Bachelor of Science degree in accounting from San Diego State University.  He is a Certified Public Accountant and has been a member of the American Institute of CPAs and the California Society of CPAs since 1970.  Mr. Murphy serves as a director of Manhattan Bancorp and is a proposed director of Bank of Manhattan.  He serves as the Chairman of our Audit Committee.

Kyle A. Ransford has been the General Partner of Cardinal Real Estate Investments, a real estate acquisition company in El Segundo, California, since 2001.  He has also been the General Partner of Powerscourt Partners, a financial consulting firm, since 2000.  Previously, he was an Associate at the investment banking firm of Houlihan, Lokey, Howard & Zukin in Century City, California, from 1998 to 2000.  He was also the founder and general partner of KyMar, LLC, a real estate investment company from 1994 to 1996. Mr. Ransford earned a Bachelor of Science degree in Business Administration from Southern Methodist University, Dallas, Texas, and a Masters in Business Administration degree with a specialization in finance from the University of Southern California, Los Angeles.  Mr. Ransford is the Chairman of the Board of Manhattan Bancorp and is the proposed Chairman of the Board of Bank of Manhattan.

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Jeffrey M. Watson is the President and Chief Executive Officer and a director of Manhattan Bancorp.  He will also serve as the President and Chief Executive Officer and a director of Bank of Manhattan upon the completion of its organization.  Mr. Watson has a 23 year career in banking, having served most recently as the Executive Vice President and Chief Operating Officer of 1st Century Bank, N.A. of Century City, California, starting with that bank as its Executive Vice President and Chief Operating Officer in its formation stage in 2003 and continuing with that bank until starting the formation process for Bank of Manhattan in 2006. 1st Century Bank, N.A. had assets of approximately $200.8 million and $177.4 million at December 31, 2006 and September 30, 2006, respectively, and net income of approximately $53,000 and $12,000 for the year ended December 31, 2006 and the nine-months ended December 31, 2006, respectively. Previously, from 1999 to 2003, Mr. Watson served as the Executive Vice President—Chief Administrative Officer & Chief Lending Officer of Commercial Capital Bank and Chief Administrative Officer for Commercial Capital Bancorp, Irvine, California.  Prior to joining Commercial Capital Bank, Mr. Watson served as the Senior Vice President—Lending Manager at Hemet Federal Savings from 1998 to 1999 and from 1988  to 1998 Mr. Watson filled various positions at California United Bank, Encino, California, most recently serving as that bank’s Senior Vice President—Merger and Acquisitions Manager.   Mr. Watson earned a Bachelor of Science degree in Business Administration from San Diego State University and a Masters in Business Administration from California State University, Los Angeles.

Stephen P. Yost is a retired banker.  He served as the Executive Vice President/Manager of Special Credits and Credit Administrator at Comerica Bank, Long Beach, California from January 2001 until his retirement in March 2006.  Previously he was the Executive Vice President and Chief Credit Officer of Imperial Bank, Inglewood, California from 1998 through January 2001, and served as the Senior Vice President and Credit Officer at Mellon Bank, Los Angeles California from 1996 to 1998.  From 1970, until its merger will Wells Fargo in 1996, he held various positions at First Interstate Bank, San Francisco, California, serving as a Senior Vice President and Senior Credit Officer of that institution from 1989 until 1996.  Mr. Yost earned a Bachelor of Science degree in Economics from St. Mary’s College, Moraga, California and a Masters in Business Administration from the University of Santa Clara.  Mr. Yost serves as a director of Manhattan Bancorp and is a proposed director of Bank of Manhattan.  Mr. Yost will serve as Chairman of the Bank’s Loan Committee.

Board Committees and Director Independence

Our Board of Directors has determined that a majority of our current directors are “independent” as that term is defined in Nasdaq’s listing standards.  Specifically, the Board has determined that all of our directors other than Jeffrey M. Watson, our President and Chief Executive Officer, and Kyle Ransford, our Chairman and Corporate Secretary, are independent.  Further, we intend to maintain at least a majority of our Board as independent directors at all times. From time to time the Board appoints and empowers committees to carry out specific functions on behalf of the Board.  The following describes the current committees of the Board and their members: 

The Audit Committee:  Our Audit Committee oversees our financial reporting.  It appoints and evaluates our independent auditors and determines the compensation for our independent auditors.  The Audit Committee reviews with the independent auditors the proposed scope of, fees for, and results of, the annual audit.  It reviews the system of internal accounting controls and the scope and results of internal audits with the independent auditors and our management.  It pre-approves the audit and permissible non-audit services provided by the independent auditors.  Our Audit Committee consists of directors Murphy (chairman), Growney and Yost. 

The Board of Directors had determined that each member of the Audit Committee has sufficient accounting or related financial management expertise to serve on the Committee and that Larry Murphy meets the qualifications of an “audit committee financial expert” as such term is defined in the rules and regulations of the Securities and Exchange Commission.  The members of the Audit Committee are all independent directors.  In determining the independence of the members of the Audit Committee we used the definition of independence set forth in the listing standards of the National Association of Securities Dealers, Inc.  

Compensation Committee:  The Compensation Committee of the Board of Directors approves the employment of executive officers, and recommends the compensation for all executive officers and considers and makes recommendations to the Board of Directors concerning incentive compensation plans and equity-based plans in which directors and executive officers may be participants.  The Compensation Committee consists of directors Chenoweth (Chairman), Caras, Greene, Growney and Ransford.  The members of the Compensation Committee, other than Mr. Ransford who is our Corporate Secretary, are all independent directors.  In determining the independence of the members of the Compensation Committee we used the definition of independence set forth in the listing standards of the National Association of Securities Dealers, Inc.

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EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets for the compensation of our President and Chief Executive Officer for the year ended December 31, 2006.   Manhattan Bancorp had no other executive officers at December 31, 2006.

Name and Principal Position	Year	Salary			Bonus	Option Awards	Non-Equity Incentive Plan Compensa- tion	Change in Pension Value and Nonquali- fied Deferred Compensation Earnings	All Other Compensation	Total
Jeffrey M. Watson President and Chief Executive Officer	2006	$	49,998	(1)	—	—	—	—	—	$	49,998

(1)           Mr. Watson earned 3 months of consulting payments for consulting services rendered to Manhattan Bancorp from October 1, 2006 though December 31, 2006.  Mr. Watson has agreed to defer receipt of this payment until Bank of Manhattan opens for business.  See “Consulting Agreements.”

Consulting Agreements

Mr. Watson is a party to a consulting agreement with Manhattan Bancorp effective October 1, 2006 and continuing to the first to occur of (i) the final licensing of Bank of Manhattan, (ii) the date on which Mr. Watson is employed by Bank of Manhattan as an executive officer, or (iii)  the date on which Manhattan Bancorp terminates the consulting agreement.  The consulting agreement provides that in consideration for consulting services rendered in connection with the formation and organization of Bank of Manhattan, Mr. Watson will receive $11,167 per month commencing January 1, 2007.  In addition, upon the final licensing of the Bank of Manhattan and the execution of Mr. Watson’s employment agreement with the Bank of Manhattan, Mr. Watson will receive a final consulting payment of $49,998 (representing consulting fees of $16,667 per month for each of the three months ending December 31, 2006), plus an additional $5,500 per month for each month of the term of the consulting agreement beginning on or after January 1, 2007 and through the licensing of Bank of Manhattan.  Mr. Watson has agreed to defer receipt of all payments due to him under his consulting agreement until the Bank of Manhattan opens for business, at which time Mr. Watson would receive all payments due to him under the consulting agreement in one lump sum payment.

In addition, following the receipt of preliminary approval to charter the Bank of Manhattan, which we expect to receive by April 2007, we intend to retain each of our proposed Chief Operating Officer, Chief Credit Officer and our Chief Financial Officer on a consulting basis until they are employed by Bank of Manhattan upon its opening.  Prior to the opening of the Bank of Manhattan, each of our proposed Chief Operating Officer, Chief Credit Officer and Chief Financial Officer would provide consulting services at a rate of $9,166 per month (two-thirds of the officer’s proposed base salary once Bank of Manhattan opens).

Future Employment Agreements

Following its organization, Bank of Manhattan will enter into an employment agreement, the terms of which are subject to the approval of the Comptroller of the Currency, with Jeffrey M. Watson, who will be employed as Bank of Manhattan’s President and Chief Executive Officer, for a term of three (3) years commencing on the date Bank of Manhattan opens for business.  The employment agreement will provide that Mr. Watson shall devote his full working time to the business of Bank of Manhattan during the term of the agreement, and will provide for an initial annual base salary of $200,000, with annual increases in the discretion of Bank of Manhattan’s Compensation Committee, and bonuses, if any, to be determined in the Board’s sole discretion The employment agreement will also provide for the grant to Mr. Watson of an option to purchase a number of shares of the common stock of Manhattan Bancorp equal to 5% of the amount of shares of Manhattan Bancorp issued and outstanding immediately prior to the opening of the Bank of Manhattan at the fair market value of the stock on the date of grant.  The option will be for a term of ten years and will vest in equal installments over a period of three years, with the first installment to vest on the one year anniversary from the date of grant, the second installment to vest on the two year anniversary from the date of grant and the third installment to vest on the three year anniversary from the date of grant.  In addition, the employment agreement will provide that Mr. Watson will receive an additional option to purchase a number of shares of the authorized and unissued common stock of Manhattan Bancorp equal to 5% of the issued and outstanding shares of Manhattan Bancorp sold in our first subsequent non-underwritten public offering (which would include an offering where the underwriters participate on a best efforts basis) following this offering.  The option will be for a term of ten years and will vest over a period of three years in equal installments with the first installment to vest on the one year anniversary of the date of grant, the second installment to vest on the two year anniversary from the date of grant and the third installment to vest on the three year anniversary from the date of grant.  The right to receive this additional option will terminate on the commencement of an underwritten public offering by Manhattan Bancorp sold on a firm commitment basis.  Mr. Watson’s employment agreement will further provide that Mr. Watson will be entitled to an automobile allowance of $1,000 per month and payment of membership dues at a country club.  In the event Bank of Manhattan terminates the employment of Mr. Watson without cause, Mr. Watson will be entitled to receive a lump sum payment equal to 12 months’ base salary, plus continuation of his medical benefits for a period of 12 months. The employment agreement will not contain a provsion pursuant to which Mr. Watson will agree not to compete with Bank of Manhattan following his termination of employment.  Further, annual increases in Mr. Watson’s compensation are at the discretion of the full Board of Directors, and there is no provsion which requires any increase in compensation to be approved by a majority of disinterested directors or shareholders, although Mr. Watson would abstain from any vote with respect to his compensation.

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It is anticipated that our Chief Operating Officer, Chief Credit Officer and our Chief Financial Officer will enter into employment agreements with Bank of Manhattan, subject to approval by the Comptroller of the Currency, effective upon the opening of the Bank of Manhattan.  Each of these employment agreements will be for a term of three years and will provide for compensation to each of our Chief Operating Officer, Chief Credit Officer and our Chief Financial Officer of $165,000, per year, with annual increases in the discretion of the Bank of Manhattan’s Compensation Committee, and bonuses, if any, to be in the sole discretion of our board of directors.  These employment agreements will also provide for the grant to each of these individuals of an option to purchase a number of shares of the common stock of Manhattan Bancorp equal to 1.5% of the amount of shares of Manhattan Bancorp issued and outstanding immediately prior to the opening of the Bank of Manhattan at the fair market value of the stock on the date of grant.  The option will be for a term of ten years and will vest in equal installments over a period of three years with the first installment to vest on the one year anniversary from the date of grant, the second installment to vest on the two year anniversary from the date of grant and the third installment to vest on the three year anniversary from the date of grant.  Each of their respective employment agreements will also provide that our  Chief Operating Officer, Chief Credit Officer and our Chief Financial Officer will be entitled to an automobile allowance of $1,000 per month.  In addition, in the event Bank of Manhattan terminates the employment of any of these officers without cause, each will be entitled to receive a lump sum payment equal to 6 months’ base salary, plus continuation of his medical benefits for a period of 6 months.

Director Compensation

The directors of Manhattan Bancorp and organizing directors of Bank of Manhattan are not presently receiving any fees or other compensation for their attendance at board meetings and committee meetings or for performing other services in connection with the organization and operation of Bank of Manhattan.  Furthermore, they will not receive any fees or other compensation prior to our commencement of operations.  However, the Board of Directors may authorize the payment of directors’ fees after we have commenced operations if such fees appear to be appropriate. No approval of disinterested directors or shareholders will be required with respect to director compensation determined to be paid in the future. In addition, we anticipate that we will grant options to our directors to purchase our common stock following the opening of Bank of Manhattan.  See “Proposed Director and Executive Officer Stock Purchases and Option Grants.”

Future Stock Option Plan

Our board of directors intends to adopt a stock option plan for our officers, directors and employees,  subject to approval of our shareholders, the Comptroller of the Currency and the FDIC.  Under the proposed plan, we may grant options covering up to 30% of the shares sold in this offering.   All options must be granted at an exercise price of not less than 100% of the fair market value of the shares on the date of grant, with an exercise period of not longer than ten years, provided that any options issued during the one year period immediately following the initial public offering of Manhattan Bancorp must be issued at an exercise price of not less than the greater of the public offering price or 100% of the fair market value of the shares on the date of grant, with an exercise period of not longer than ten years.

The plan will permit us to grant either incentive stock options that qualify for special federal income tax treatment or non-qualified stock options that do not qualify for special treatment.  Incentive stock options may be granted only to employees and will not create federal income tax consequences when they are granted.  If they are exercised during employment or within three months after termination of employment, the exercise will not create federal income tax consequences.  When the shares acquired on exercise of an incentive stock option are resold, the seller must pay federal income taxes on the amount by which the sales price exceeds the purchase price.  This amount will be taxed at capital gain rates if the sale occurs at least two years after the option was granted and at least one year after the option was exercised.  Otherwise, it is taxed as ordinary income.

Non-qualified stock options may be granted to either employees or non-employees such as outside directors.  Incentive stock options that are exercised more than three months after termination of employment are treated as non-qualified stock options.  Non-qualified stock options will not create federal income tax consequences when they are granted.  When they are exercised federal income taxes must be paid by the individual on the amount

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by which the fair market value of the shares acquired by exercising the option exceeds the exercise price.  When the shares acquired on exercise of a non-qualified stock options are sold, the seller must pay federal income taxes on the amount by which the sales price exceeds the purchase price plus the amount included in ordinary income when the option was exercised.  This amount may be taxed at capital gains rates provided the individual holds the stock for a minimum of one year, which will vary depending upon the time that has elapsed since the exercise of the option. 

When a non-qualified stock option is exercised, we may be allowed a federal income tax deduction for the same amount that the option holder includes in his or her ordinary income.  When an incentive stock option is exercised, there is no tax deduction unless the shares acquired are resold sooner than two years after the option was granted or one year after the option was exercised.

 For any optionee, the aggregate fair market value (determined at the time of grant) of stock with respect to which incentive stock options are first exercisable by such optionee during any one calendar year may not exceed $100,000.  Options in excess of this amount, or which otherwise do not meet statutory requirements, will be deemed “non-qualified” options.

Proposed Director and Executive Officer Stock Purchases and Option Grants

The table below sets forth the total stock ownership of our directors prior to the opening of the Bank of Manhattan, and option grants to be made to our directors and executive officers following the opening of Bank of Manhattan, assuming both the minimum offering and the maximum offering.  FDIC policy does not permit us to grant options to our outside directors to purchase a number of shares in excess of the number of shares purchased by the outside directors prior to the opening of the Bank of Manhattan.  Each outside director, other than Kyle S. Ransford who serves as our Chairman and has contributed and will contribute substantial amounts of his time in connection with the organization of Bank of Manhattan, is to receive options to purchase the lesser of (i) 15,000 shares or (ii) the number of shares of our common stock the director purchases prior to the opening of Bank of Manhattan.  It is anticipated that all options will be granted for a term of ten years and will vest in equal installments, one-third on the first anniversary of the date of grant, one-third on the second anniversary of the date of grant and one third on the third anniversary of the date of grant.  All options will be granted at the fair market value of our common stock on the date of grant. Assuming the minimum offering, management anticipates that the compensation expense associated with the initial grant of options to directors and executive officers will be approximately $38,583 per month or approximately $463,000 charged annually to Manhattan Bancorp’s earnings during the first three years of operations.

Name	Total Shares to be  Owned Prior to  Opening	Option Shares to be Granted Minimum  Offering	Option Shares to be Granted Maximum Offering
Directors
Chris W. Caras, Jr.	10,000	10,000	10,000
Harry “Duke” W. Chenoweth	15,000	15,000	15,000
Patrick E. Greene	20,000	15,000	15,000
Christopher J. Growney	15,000	15,000	15,000
Larry S. Murphy	15,000	15,000	15,000
Kyle S. Ransford	150,000	109,750	150,000
Jeffrey M. Watson	25,000	109,750	152,250
Stephen P. Yost	15,000	15,000	15,000
Directors as a group	265,000	304,500	387,250
Other Executive Officers
Chief Operating Officer	0	32,925	45,675
Chief Credit Officer	0	32,925	45,675
Chief Financial Officer	0	32,925	45,675
Directors and Executive Officers as a Group	265,000	403,275	524,275

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Indemnification

Manhattan Bancorp’s Articles of Incorporation and Bylaws provide, among other things, for the indemnification of Manhattan Bancorp’s directors, officers and agents, and authorize the Board to pay expenses incurred by, or to satisfy a judgment or fine rendered or levied against, such agents in connection with any personal legal liability incurred by that individual while acting for the corporation within the scope of his or her employment.  Such provisions of Manhattan Bancorp’s Articles of Incorporation and Bylaws are subject to certain limitations imposed under state and federal law.  It is the policy of the Board of Directors that Manhattan Bancorp’s executive officers and directors shall be indemnified to the maximum extent permitted under applicable law and Manhattan Bancorp’s Articles of Incorporation and Bylaws. 

Manhattan Bancorp’s Articles of Incorporation also currently provide for the limitation or elimination of personal liability of the corporation’s directors to the corporation or its shareholders for monetary damages, to the extent permitted by California law.  However, under federal law, the Comptroller of the Currency may seek monetary damages from bank or bank holding company directors in cases involving gross negligence or any greater disregard of the duty of care, notwithstanding any provisions of state law which may permit limitations on director liability in such circumstances.

Manhattan Bancorp has obtained liability insurance covering all of its officers and directors and Bank of Manhattan expects to have similar insurance in force before the opening of Bank of Manhattan.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling Manhattan Bancorp under the provisions in Manhattan Bancorp’s Articles of Incorporation and Bylaws, Manhattan Bancorp has been informed that, in the opinion of the Securities and Exchange Commission, this kind of indemnification is against public policy as expressed in the Securities Act, and is therefore unenforceable.

Certain Transactions

There are no existing or proposed material inter­ests or transactions between us and any of our officers or directors outside the ordinary course of business, except as indicated herein.  Each of our directors and one organizer who is not a director has purchased shares of our common stock at a purchase price of $10.00 per share in a private placement conducted prior to this offering in order to provide organizational and offering expenses for Manhattan Bancorp and to advance pre-opening and organizational expenses to Bank of Manhattan.  Each of our eight directors and one organizer who is not a director has purchased 5,000 shares for an aggregate of 45,000 shares and aggregate proceeds to us of $450,000.  In addition, certain of our directors may advance funds prior to the conclusion of this offering if necessary to pay for our organizational and offering expenses as well as the organizational and pre-opening expenses of Bank of Manhattan.  Any funds advanced by the directors prior to the conclusion of this offering, will be repaid to the directors promptly following the conclusion of this offering.  In addition, our Chairman, Kyle Ransford, has provided a guarantee to enable us to obtain a $780,000 working capital line to fund our organizational and offering expenses, and the organizational and pre-opening expenses of Bank of Manhattan prior to the conclusion of this offering.  See “Management’s Plan of Operation.”  In addition, each of our directors will be granted stock

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options in consideration for services rendered to us during our organizational stage.   See “Executive Compensation — Proposed Director and Executive Officer Stock Purchases and Option Grants.”

We anticipate that our directors and officers and the companies with which they are associated, will have banking transactions with the Bank of Manhattan in the ordinary course of business.  It is the firm intention of the Board of Directors that any loans and commitments to lend included in such transactions will be made in accordance with all applicable laws and regulations and on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons of similar creditworthiness.  

All loans which may be made by our directors as well as all other future affiliate transactions will be made or entered into on terms that are no less favorable to us than those that can be obtained from an unaffiliated third party. 

SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT

The following table presents, for each of our directors and executive officer and our one organizer who is not a director (i) the number of shares beneficially owned by each such person as of February 1, 2007; (ii) the percentage of shares of our common stock beneficially owned by each such person as of the date of February 1, 2007; (iii) the number of shares each such person is anticipated to purchase in this offering, (iv) the total anticipated share ownership of such person following this offering (v) the percentage of our outstanding shares such person would own after the minimum offering assuming all anticipated shares purchases are made, and (vi) the percentage of our outstanding shares such person would own after the maximum offering assuming all anticipated share purchases are made.  The amounts that are anticipated to be purchased in this offering include shares that may be purchased through individual retirement accounts and by affiliates of our directors and executive officers. As set forth below, in the event of the maximum offering, our directors will own only 8.7% of the capital stock of Manhattan Bancorp.

Name	Share  Ownership  February 1,  2007	% Share  Ownership  February 1,  2007		Shares to be  Purchased  in Offering	Total Share  Ownership  Following  Offering	% Share  Ownership— Minimum  Offering		% Share  Ownership— Maximum  Offering
Beneficial Owner
Peter J. Boyes	5,000	11.1	%	0	5,000	0.22	%	0.16	%
Directors
Chris W. Caras, Jr.	5,000	11.1	%	5,000	10,000	0.46	%	0.33	%
Harry “Duke” W. Chenoweth	5,000	11.1	%	10,000	15,000	0.68	%	0.49	%
Patrick E. Greene	5,000	11.1	%	15,000	20,000	0.91	%	0.66	%
Christopher J. Growney(2)	5,000	11.1	%	10,000	15,000	0.68	%	0.49	%
Larry S. Murphy	5,000	11.1	%	10,000	15,000	0.68	%	0.49	%
Kyle S. Ransford	5,000	11.1	%	145,000	150,000	6.83	%	4.93	%
Jeffrey M. Watson	5,000	11.1	%	20,000	25,000	1.14	%	0.82	%
Stephen P. Yost	5,000	11.1	%	10,000	15,000	0.68	%	0.49	%
Other Executive Officers
Chief Credit Officer	0	0		0	0	0		0
Chief Financial Officer	0	0		0	0	0		0
Chief Operating Officer	0	0		0	0	0		0
All directors and executive officers as a group (11 persons)	40,000	88.9	%	225,000	265,000	12.07	%	8.70	%

(2)           These shares are held in the name of Canbeu Holdings, LLC of which Mr. Growney and his spouse are sole owners.

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DESCRIPTION OF CAPITAL STOCK OF MANHATTAN BANCORP

We are authorized to issue ten million (10,000,000) shares of common stock, without par value, and ten million (10,000,000) shares of preferred stock, without par value.  We currently expect to sell up to 3,000,000 shares of our common stock to purchasers of common stock in the offering.  An aggregate of 45,000 shares of our common stock have previously been issued to our directors and to one non-director organizer in connection with their funding our organizational expenses and the organizational and pre-opening expenses of Bank of Manhattan. We will not issue any shares of preferred stock in the offering.  Each share of our common stock will have the same relative rights as, and will be identical in all respect with, every other share of common stock, except that shares purchased by our directors prior to this offering will be “restricted shares” subject to certain resale limitations.  Upon payment of the purchase price for the common stock in this offering, all shares sold in this offering will be duly authorized, fully paid and non-assessable.

The shares of common stock:

·      are not deposit accounts and are subject to investment risk;

·      are not insured or guaranteed by the FDIC or any other government agency; and

·      are not guaranteed by Manhattan Bancorp or Bank of Manhattan

Common Stock

Voting Rights.  All voting rights are vested in the holders of our common stock.  Our shareholders have cumulative voting rights for the election of directors.  This means that a shareholder has the right to vote the number of shares owned by him or her for as many candidates as there are directors to be elected, or to cumulate his or her shares and give one candidate as many votes as the number of directors multiplied by the number of shares owned shall equal, or to distribute them on the same principle among as many candidates as he or she deems appropriate.

Each share has the same rights, preferences and privileges as every other share.  Each shareholder is entitled to one vote per share on any issue requiring a vote at any meeting (except as described above in connection with the election of directors), and will be entitled to participate in any liquidation, dissolution, or winding up on the basis of his or her pro rata share holdings. 

Dividends.  As a bank holding company that will initially have no significant assets other than our equity interest in Bank of Manhattan, our ability to declare dividends will depend primarily upon dividends we receive from Bank of Manhattan.  The dividend practice of Bank of Manhattan, like our dividend practice, will depend upon its earnings, financial position, current and anticipated cash requirements and other factors deemed relevant by the Bank of Manhattan’s Board of Directors at the time.  Bank of Manhattan does not intend to pay any cash dividends in its early years of operations.  See “Our Policy Regarding Dividends.” 

Bank of Manhattan’s ability to pay cash dividends to us is also subject to certain legal limitations.  No national bank may, pursuant to 12 U.S.C. Section 56, pay divi­dends from its capital; all dividends must be paid out

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of net profits then on hand, after deducting for expenses including losses and bad debts.  The payment of dividends out of net profits of a national bank is further limited by 12 U.S.C. Section 60(a) which prohibits a bank from declaring a dividend on its shares of common stock until the surplus fund equals the amount of capital stock, or if the surplus fund does not equal the amount of capital stock, until one-tenth of the bank’s net profits of the preceding half-year in the case of quarterly or semiannual dividends, or the preceding two consecutive half-year periods are transferred to the surplus fund before each dividend is declared. 

Pursuant to 12 U.S.C. Section 60(b), the approval of the Comptrol­ler of the Currency is required if the total of all dividends declared by Bank of Manhattan in any calendar year shall exceed the total of its net profits for that year combined with its net profits for the two preceding years, less any required transfers to surplus or a fund for the retirement of any preferred stock.  The Comptroller has adopted guidelines, which set forth factors which are to be considered by a national bank in determining the payment of dividends.  A national bank, in assessing the payment of dividends, is to evaluate the bank’s capital position, its maintenance of an adequate allowance for loan and lease losses, and the need to review or develop a comprehensive capital plan, complete with financial projections, budgets and dividend guidelines.  Therefore, the payment of dividends by Bank of Manhattan is also governed by its ability to maintain minimum required capital levels and an adequate allowance for loan and lease losses.  Additionally, pursuant to 12 U.S.C. Section 1818(b), the Comptrol­ler may prohibit the payment of any dividend which would constitute an unsafe and unsound banking practice.

Manhattan Bancorp’s ability to pay dividends is also limited by state corporation law.  The California General Corporation Law prohibits Manhattan Bancorp from paying dividends on the common stock unless: (i) its retained earnings, immediately prior to the dividend payment, equals or exceeds the amount of the dividend or (ii) immediately after giving effect to the dividend the sum of Manhattan Bancorp’s assets (exclusive of goodwill and deferred charges) would be at least equal to 125% of its liabilities and the current assets of Manhattan Bancorp would be at least equal to its current liabilities, or, if the average of its earnings before taxes on income and before interest expense of the two preceding fiscal years was less than the average of its interest expense of the two preceding fiscal years, at least equal to 125% of its current liabilities.

Shareholders are entitled to receive dividends only when and if declared by our Board of Directors.  Manhattan Bancorp presently intends to follow a policy of retaining earnings, if any, for the purpose of increasing the net worth and reserves of Manhattan Bancorp.  According­ly, it is anticipated that no cash dividends will be declared in the foreseeable future, and no assurance can be given that Manhattan Bancorp’s earnings will permit the payment of dividends of any kind in the future.   The future dividend policy of Manhattan Bancorp will be subject to the discretion of the Board of Directors and will depend upon a number of factors, including future earnings, financial condition, liquidity, and general business conditions.

Preferred Stock

 We will not issue any preferred stock in this offering and we have no current plans to issue any preferred stock after this offering.  Preferred stock may be issued with designations, powers, preferences and rights as the Board of Directors may from time to time determine.  The Board of Directors can, without shareholder approval, issue preferred stock with voting, dividend, liquidation and conversion rights that could dilute the voting strength of the holders of the common stock and may assist management in impeding an unfriendly takeover or attempted change in control. The Board of Directors may not offer preferred stock to the organizers of Manhattan Bancorp, including its directors, except on the same terms that the preferred stock is offered to all other existing or to new shareholders unless the issuance of the preferred stock is approved by a majority of Manhattan Bancorp’s independent directors who do not have an interest in the transaction and who have access, at the expense of Manhattan Bancorp, to either Manhattan Bancorp’s counsel or independent counsel that the independent directors may chose.

Shares Eligible for Future Sale

There will be an aggregate of between 2,195,000 shares and 3,040,000 shares of our common stock outstanding immediately following this offering, all of which will be eligible for sale upon completion of this offering except for shares held by our affiliates.  With respect to the 45,000  shares held by our affiliates which were acquired prior to this offering, our affiliates would have to wait for a period of one year from the acquisition of these shares to be able to resell these shares in a brokerage transaction in compliance with the  provisions of Rule 144.  With respect to the 225,000 shares anticipated to be purchased by our affiliates in this offering, these shares would be eligible for sale upon completion of this offering provided that our affiliates would have to comply with the provisions of Rule 144 (other than the holding period requirements) with respect to the resale of these shares.  No other restrictions are applicable to the sale, transfer or disposal of the shares held by our executive officers and directors.   The market price of our common stock could decline as a result of sales of substantial amounts of our common stock in the public market after this offering, or may even decline if there is a perception that such sales could occur.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock will be U.S. Stock Transfer Corporation, Glendale, California.

36

EXPERTS

The financial statements as of December 31, 2006 and for the period from June 19, 2006 (inception) to December 31, 2006 included in this prospectus and registration statement have been so included in reliance on the report of Hutchinson & Bloodgood, LLP, an independent registered pubic accounting firm, as set forth in their report appearing herein and has been so included in reliance upon such report given upon the authority of such firm as experts in auditing and accounting.

Hutchinson & Bloodgood, LLP has consented to the use of its name and statements with respect to it appearing in this prospectus.  

LEGAL MATTERS

The legality of our common stock has been passed upon for us by King, Holmes, Paterno & Berliner, LLP, 1900 Avenue of the Stars, 25th Floor, Los Angeles, California 90067.  King, Holmes, Paterno & Berliner has consented to the references to their opinion in this prospectus.

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-1
Balance Sheet as of December 31, 2006	F-2
Statement of Operations for the Period from June 19, 2006 (inception) to December 31, 2006	F-3
Statement of Stockholders’ Equity for the Period from June 19, 2006 (inception) to December 31, 2006	F-4
Statement of Cash Flows for the Period from June 19, 2006 (inception) to December 31, 2006	F-5
Notes to Financial Statements	F-6

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed a registration statement with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to the common stock offered in this prospectus.  As permitted by the rules and regulations of the Securities and Exchange Commission, this prospectus does not contain all the information set forth in the registration statement.  You may examine this information without charge at the public reference facilities of the Securities and Exchange Commission located at 100 F Street, NE, Washington, D.C.  20549.  You may obtain copes of this material from the Securities and Exchange Commission at prescribed rates.  You may obtain information on the operations of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330.  The Securities and Exchange Commission also maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Securities and Exchange Commission.  The address for this website is www.sec.gov.  Upon the effectiveness of the registration statement of which this prospectus is a part, we will be required to file reports electronically with the Securities and Exchange Commission as required by Section 15(d) of the Exchange Act of 1934, as amended.

37

Report of Independent Registered Public Accounting Firm

Board of Directors

Manhattan Bancorp

(A Development Stage Company)

El Segundo, California

We have audited the accompanying balance sheet of Manhattan Bancorp (the Company) as of December 31, 2006, and the related statements of operations, stockholders’ equity, and cash flows for the period from June 19, 2006 (inception) to December 31, 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2005, and the results of its operations and its cash flows for the period from June 19, 2006 (inception) to December 31, 2006 in conformity with accounting principles generally accepted in the United States of America.

/s/ Hutchinson & Bloodgood, LLP

Glendale, California

January 17, 2007

F-1

Manhattan Bancorp

(A Development Stage Company)

Balance Sheet

December 31, 2006

Assets
Cash	$	206,423
Property and equipment, net (Note 3)	23,031
Deposits (Note 7)	39,277
Total assets	$	268,731
Liabilities and Stockholders’ Equity
Accrued expenses	$	113,123
Commitments and contingencies (Note 7)
Stockholders’ equity (Note 4)
Common stock - no par value; 10,000,000 shares authorized; 42,500 shares issued and outstanding	425,000
Accumulated deficit	(269,392		)
Total stockholders’ equity	155,608
Total liabilities and stockholders’ equity	$	268,731

The accompanying notes are an integral part of this financial statement.

F-2

Manhattan Bancorp

(A Development Stage Company)

Statement of Operations

Period from June 19, 2006 (Inception) to December 31, 2006

Pre-opening expenses
Compensation and benefits	71,836
Occupancy and equipment	9,673
Legal and professional fees	152,252
Regulatory filing fee	25,000
General and administrative	10,631
Total pre-opening expenses	269,392
Loss before income taxes	(269,392		)
Provision for income taxes	—
Net loss	$	(269,392	)
Basic and diluted loss per share	$	(14.03	)

The accompanying notes are an integral part of this financial statement.

F-3

Manhattan Bancorp

(A Development Stage Company)

Statement of Stockholders’ Equity

Period from June 19, 2006 (Inception) to December 31, 2006

	Number of
	Shares	Common		Accumulated
	Outstanding	Stock		Deficit			Total
Balance at June 19, 2006 (Inception)	—	$	—	$	—		$	—
Issuance of common stock for cash to founders	42,500	425,000		—			425,000
Net loss	—	—		(269,392		)	(269,392		)
Balance, December 31, 2006	42,500	$	425,000	$	(269,392	)	$	155,608

The accompanying notes are an integral part of this financial statement.

F-4

Manhattan Bancorp

(A Development Stage Company)

Statement of Cash Flows

Period from June 19, 2006 (Inception) to December 31, 2006

Cash Flows from Operating Activities
Net loss	$	(269,392	)
Adjustments to reconcile net loss to net cash used in operating activities:
Net change in:
Depreciation	1,174
Deposits	(39,277		)
Accrued expenses	113,123
Net cash used in operating activities	(194,372		)
Cash Flows from Investing Activities
Purchase of premises and equipment	(24,205		)
Cash Flows from Financing Activities
Proceeds from issuance of common stock to founders	425,000
Net increase in cash and cash equivalents	206,423
Cash and Cash Equivalents at Beginning of Period	—
Cash and Cash Equivalents at End of Period	$	206,423
Supplementary Information
Interest paid on deposits	$	—
Income taxes paid	$	—

The accompanying notes are an integral part of this financial statement.

F-5

Manhattan Bancorp

(A Development Stage Company)

Notes to Financial Statements

December 31, 2006

Note 1.Nature of Business

Manhattan Bancorp (the Company) is a California corporation incorporated on August 8, 2006 for the purpose of becoming a bank holding company and owning all of the stock of Bank of Manhattan N.A. (proposed) to be located in El Segundo, California. Bank of Manhattan N.A. will operate as a community bank, offering general commercial banking services to small and medium-sized businesses and professionals in the South Bay, the Westside and the Los Angeles airport areas of Los Angeles County.  On December 12, 2006, the Company filed an application with the Comptroller of the Currency (OCC) to organize Bank of Manhattan N.A. and an application with the Federal Deposit Insurance Corporation (FDIC) for insurance of deposits.

The Company is targeting gross offering proceeds in the range of $21,500,000 to $25,000,000 and anticipates the bank opening in the third quarter of 2007.   The Company has assembled a strong management team and group of outside directors to lead the proposed bank in a healthy and affluent business community. The Company has also engaged a strong team of outside professionals who are very experienced and highly regarded for their services to the banking community especially with start-up banks. The Company’s ability to operate as a going concern could be negatively impacted in the event the event regulatory approvals are delayed or not obtained or in the event the Company is unable to raise the required capital on a timely basis.

Note 2.           Summary of Significant Accounting Policies

Use of Estimates

In preparing financial statements in conformity with accounting principles generally accepted in the United States, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the balance sheet, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. Cash consists of cash on deposit with Pacific Coast Bankers’ Bank.

F-6

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives. The straight-line method of depreciation is followed for financial reporting purposes, while both accelerated and straight-line methods are followed for income tax purposes.

Earnings (Loss) Per Share

The Company follows Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share. Basic earnings (loss) per share represents income available to common stock divided by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed conversion. There were no dilutive potential common shares outstanding at December 31, 2006, which has been adopted as the Company’s fiscal year-end. The weighted-average number of shares outstanding for the period ended December 31, 2006 was 19,196 for basic and diluted loss per share.

Income Taxes

Deferred income taxes are recognized for estimated future tax effects attributable to income tax carry forwards as well as temporary differences between income tax and financial reporting purposes. Valuation allowances are established when necessary to reduce the deferred tax asset to the amount expected to be realized.  Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted accordingly through the provision for income taxes.

Recent Accounting Pronouncements

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on its results of operations, financial position or cash flow.

F-7

Note 3.Property and Equipment

Property and equipment consisted of the following at December 31, 2006:

Computer equipment	$	24,205
Less accumulated depreciation	(1,174		)
	$	23,031

Depreciation expense for the period from June 19, 2006 (inception) to December 31, 2006 was $1,174.

Note 4.Stockholders’ Equity

The Company has authorized 10,000,000 shares of common stock and 10,000,000 shares of serial preferred stock.  During the period ended December 31, 2006, the Company issued 42,500 shares of common stock to its nine founders at $10 per share totaling $425,000. There was no serial preferred stock issued during the period ended December 31, 2006. Capital raising costs incurred through December 31, 2006 are insignificant.

Note 5.Stock Based Compensation

The Company intends to have a stock option plan adopted for its officers, directors and employees subject to approval by its shareholders, OCC and FDIC.  Under the proposed plan, the Company may grant options covering up to 30% of the shares outstanding at the close of the offering.   All options must be granted at an exercise price of not less than 100% of the fair market value of the shares on the date of grant, with a vesting period of three years and an exercise period of not longer than ten years.

F-8

Note 6.Income Taxes

The Bank had no income tax expense or benefit for the period ended December 31, 2006, as net operating losses were incurred and deferred tax assets remain unrecorded, since their realization is dependent on future taxable income.

The components of the net deferred tax asset are as follows at December 31, 2006:

Deferred tax assets:
Pre-opening expenses	$	110,945
Valuation allowance	(110,945		)
Net deferred tax asset	$	—

Note 7.Commitments and Contingencies

Operating Lease Commitments – Temporary Office

The Company leases temporary office space under an operating lease agreement through February 2007 and on a month-to-month basis thereafter. At December 31, 2006, the remaining future minimum rental payments under the lease amount to $7,000 for 2007.  Total rental expense for the period ended December 31, 2006 was $5,600.

Operating Lease Commitments – Permanent Office

At the December 31, 2006, the Company was in negotiations for a permanent office facility for the proposed banking operation. The proposed lease agreement includes a term of seven years with one renewal option of five years and minimum lease payments as follows:

Commencement through 12th month	$	237,682
From 13th to 24th month	244,812
From 25th to 36th month	252,156
From 37th to 48th month	259,721
From 49th to 60th month	267,513
From 61st to 72nd month	275,538
From 73rd to 84th month	283,804
	$ 1,821,226

F-9

The proposed lease agreement also requires a standby letter of credit to be issued in favor of the lessor to be drawn on by the lessor in the event of default as described in the proposed lease agreement. The initial amount of the letter of credit is approximately $293,000 ($45 per usable square foot of premises) and is reduced to approximately $147,000 upon completion of the ninth month of rental from the commencement date and expiring at the completion of the eighteenth month as prescribed under the lease agreement.

Capitalization Services Commitment

The Company has a financial advisory and consulting agreement with a consulting firm for the application services for Bank of Manhattan N.A. as well as offering services to raise capital. The agreement requires a sales management fee equal to the lesser of 1% of the gross offering proceeds or $125,000, and a sales and placement fee of 5% of the gross offering proceeds collected from investors identified by the consulting firm. At December 31, 2006, these costs have not yet been incurred.

Data Network Products/Services Purchase Agreement Commitment

The Company has an agreement with a vendor to provide the proposed bank’s information technology network products and services. The products and services under the agreement are valued at approximately $155,000. At December 31, 2006, the Company has $22,651 on deposit towards this agreement. In the event the Company is unsuccessful in formation of the proposed bank, costs in excess of the deposit may be incurred for products and services provided through the cessation date as described in the agreement.

F-10

MANHATTAN BANCORP

COMMON STOCK

Minimum of 2,150,000 Shares

Maximum of 3,000,000 Shares

Offering Price $10.00 per share

(2,500 Share Minimum Investment)

PROSPECTUS

Dealer Prospectus Delivery Obligation

Until the later of                 2007 or 90 days after commencement of the offering, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus.

                              , 2007

PART II:  INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24.  Indemnification of Directors and Officers

Section 317 of the California Corporations Code governs indemnification of the directors and officers of Manhattan Bancorp.  Under this section, officers and directors may be indemnified against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with proceedings other than derivative suits, in which such persons were parties or threatened to be made parties.  In order for the corporation to make indemnification, there must be a determination by (a) a majority vote of a quorum of the Board of Directors, consisting of directors who are not parties to such proceeding, (b) if such quorum of directors is not obtainable, by independent legal counsel in a written opinion, (c) approval of the shareholders pursuant to Section 153 of the California Corporations Code, with the shares owned by the person to be indemnified not being entitled to vote thereon, or (d) an order of the court in which such proceeding is or was pending that the officer or director acted in good faith in a manner such person reasonably believed to be in the best interests of the corporation, and in the case of a criminal proceeding, such person had no reasonable cause to believe the conduct of such person was unlawful.  This section further provides that indemnification may be paid in connection with derivative suits, in the same manner as described above, except that, with respect to derivative suits, the authority authorizing the indemnification must find that such person acted in good faith, in a manner such person believed to be in the best interests of the corporation and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under the circumstances.  Court approval is required for indemnification of expenses or amounts incurred in respect of any claim or matter in which a director or officer has been adjudged to be liable to the corporation in the performance of such person’s duty to the corporation.  No indemnification of expenses can be made under Section 317 in settling or otherwise disposing of a threatened or pending action, with or without action which is settled or otherwise disposed of without court approval.

Manhattan Bancorp’s Articles of Incorporation and Bylaws provide, among other things, for the indemnification of Manhattan Bancorp’s directors, officers and agents, and authorize the Board to pay expenses incurred by, or to satisfy a judgment or fine rendered or levied against, such agents in connection with any personal legal liability incurred by that individual while acting for the corporation within the scope of his or her employment.  Such provisions of Manhattan Bancorp’s Articles of Incorporation and Bylaws are subject to certain limitations imposed under state and federal law.  It is the policy of the Board of Directors that Manhattan Bancorp’s executive officers and directors shall be indemnified to the maximum extent permitted under applicable law and Manhattan Bancorp’s Articles of Incorporation and Bylaws.

Manhattan Bancorp’s Articles of Incorporation also currently provide for the limitation or elimination of personal liability of the corporation’s directors to the corporation or its shareholders for monetary damages, to the extent permitted by California law.  However, under federal law, the Comptroller of the Currency may seek monetary damages from bank or bank holding company directors in cases involving gross negligence or any greater disregard of the duty of care, notwithstanding any provisions of state law which may permit limitations on director liability in such circumstances.

Manhattan Bancorp has obtained liability insurance covering all of its officers and directors and Bank of Manhattan expects to have similar insurance in force before the opening of Bank of Manhattan.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling Manhattan Bancorp under the provisions in Manhattan Bancorp’s Articles of Incorporation and Bylaws, Manhattan Bancorp has been informed that, in the opinion of the SEC, this kind of indemnification is against public policy as expressed in the Securities Act, and is therefore unenforceable.

II-1

Item 25.  Other Expenses of Issuance and Distribution

Registration fee	$	3,210.00
Printing and engraving	$	7,965.00	*
Blue sky fees and expenses	$	20,000.00	*
Legal fees and expenses	$	85,000.00	*
Accounting fees and expenses	$	4,500.00	*
Escrow Agent fees	$	5,000.00	*
Transfer Agent Fees	$	2,500.00	*
Miscellaneous	$	10,000.00	*
Total	$	138,175.00

* estimates

Item 26.  Recent Sales of Unregistered Securities

From September 6, 2006 through January 30, 2007 the Company conducted a private placement of its common stock to its directors and  issued an aggregate of 45,000 shares of its common stock to its nine directors at a price of $10.00 per share for aggregate proceeds to the Company of $450,000.  There was no underwriting discounts, fees or commissions paid in connection with these transactions.

The sales were made to persons who had access to the kind of information which registration would disclose and who did not purchase the shares for resale to the public.  Also, these sales were made solely for the purposes of completing the initial organization of Manhattan Bancorp and to advance organizational and pre-opening expenses for Bank of Manhattan.  Accordingly, these sales constituted transactions by the issuer not involving a pubic offering, separate and apart from this offering, which were exempt from registration under Section 4(2) of the Securities Act of 1933 and Rule 506 of Regulation D promulgated thereunder.

II-2

Item 27.  Exhibits

1.1	Financial Advisory Services Agreement dated January 18, 2007 between Manhattan Bancorp and Seapower Carpenter Capital, Inc.*
3.1	Articles of Incorporation of Manhattan Bancorp and Amendments to Articles of Incorporation*
3.2	By-laws of Manhattan Bancorp and Amendment to By-Laws*
4.1	Specimen Stock Certificate
5.1	Opinion of King, Holmes, Paterno & Berliner, LLP regarding the legality of the securities to be offered
10.1	Form of Employment Agreement between Bank of Manhattan and Jeffrey Watson*
10.2	Lease for Main Office of Bank of Manhattan
10.3	Form of Stock Option Plan
10.4	Financial Advisory and Consulting Agreement dated November 1, 2006 between Carpenter & Company and SB Organizing Group.
10.5	First Amendment to Financial Advisory and Consulting Agreement dated March 7, 2007 between Carpenter & Company and SB Organizing Group.
23.1	Consent of Hutchinson & Bloodgood, LLP
23.2	Consent of King, Holmes, Paterno & Berliner (included in Exhibit 5)
24	Power of Attorney (included in signature page to registration statement)*
99.1	Form of Subscription Agreement*
99.2	Impound Account Agreement dated March 18, 2007 between Pacific Coast Bankers’ Bank and Manhattan Bancorp

* Previously filed

Item 28.  Undertakings

The small business issuer hereby undertakes:

(1)To file, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:

(i)include any prospectus required by section 10(a)(3) of the Securities Act of 1933;

(ii)reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information set forth in the registration statement.  Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

(iii)include any additional or changed material information on the plan of distribution.

II-3

(2)For determining liability under the Securities Act, to treat each post-effective amendment as a new registration statement of the securities offered, and the offering of securities at that time to be the initial bona fide offering.

(3)To remove from registration by means of a post-effective amendment any of the securities that remain unsold at the termination of the offering.

(4)For determining liability of the undersigned small business issuer under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned small business issuer undertakes that in a primary offering of securities of the undersigned small business issuer pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned small business issuer will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i)Any preliminary prospectus or prospectus of the undersigned small business issuer relating to the offering required to be filed pursuant to Rule 424;

(ii)Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned small business issuer or used or referred to by the undersigned small business issuer;

(iii)The portion of any other free writing prospectus relating to the offering containing material information about the undersigned small business issuer or its securities provided by or on behalf of the undersigned small business issuer; and

(iv)Any other communication that is an offer in the offering made by the undersigned small business issuer to the purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that, in the opinion of the Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the small business issuer of expenses incurred or paid by a director, officer or controlling person of the small business issuer in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the small business issuer will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against pubic policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

II-4

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of El Segundo, California on March 20, 2007.

Manhattan Bancorp
By:	/s/ Jeffrey M. Watson
	Jeffrey M. Watson
	President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jeffrey M. Watson and Kyle S. Ransford  and each or any one of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement was signed by the following persons in the capacities and on the dates stated.

Signature	Title	Date
/s/ Chris W. Caras, Jr*	Director	March 20, 2007
Chris W. Caras, Jr.
/s/ Harry “Duke” W. Chenoweth*	Director	March 20, 2007
Harry “Duke” W. Chenoweth

II-5

/s/ Patrick E. Greene*	Director	March 20, 2007
Patrick E. Greene
/s/ Christopher J. Growney*	Director	March 20, 2007
Christopher J. Growney
/s/ Larry S. Murphy *	Director	March 20, 2007
Larry S. Murphy
/s/ Kyle S. Ransford *	Chairman	March 20, 2007
Kyle S. Ransford
/s/ Jeffery M. Watson	Director, President and Chief Executive Officer and Chief Financial Officer	March 20, 2007
Jeffrey M. Watson	(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
/s/ Stephen P. Yost *	Director	March 20, 2007
Stephen P. Yost
* /s/ Jeffery M. Watson
Jeffery M. Watson
as Attorney-in-Fact

II-6

EX-4.1

Exhibit 4.1

COMMON STOCK		COMMON STOCK
NUMBER	[LOGO TO APPEAR HERE]	SHARES
MB 001
	MANHATTAN BANCORP	CUSIP 562754 10 1
INCORPORATED UNDER THE LAWS OF THE STATE OF CALIFORNIA		SEE REVERSE FOR CERTAIN DEFINITIONS

THIS CERTIFIES THAT

PROOF

is the record holder of

FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, NO PAR VALUE, OF

MANHATTAN BANCORP

Transferable on the books of the Corporation in person or by duty authorized attorney upon surrender of this Certification properly endorsed. This Certification is not valid until countersigned by the Transfer Agent and registered by the Registrar.

WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duty authorized officers.

DATED:
Jeffrey M. Watson	Kyle Ransford
PRESIDENT AND CHIEF EXECUTIVE OFFICER	SECRETARY

MANHATTAN BANCORP

The following abbreviations, when used in the inscription on the face of this certification shall be construed as though they were written out in full according to applicable laws or regulation.

TEN COM

-

as tenants in common

UNIF GIFT MIN ACT—

Custodian

TEN ENT

-

as tenants by the entireties

(Cust)

(Minor)

JT TEN

-

as joint tenants with right

under Uniform Gifts to Minors

of survivorship and not as

tenants in common

Act

(State)

UNIF TRF MIN ACT—

Custodian

(until age

)

(Cust)

under Uniform Transfers

(Minor)

to Minors Act

(State)

Additional abbreviations may also be used though not in the above list.

For Value received,	hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
		Shares
of the Common Stock represented by the within Certificate, and do(es) herby irrevocably constitute and appoint.
	Attorney
to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises.

Dated	X
	X
	NOTICE:	THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.

SIGNATURES GUARANTEED:

By
	THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

EX-5.1

Exhibit 5.1

[KING, HOLMES, PATERNO & BERLINER, LLP LETTERHEAD]

March 20,  2007

Manhattan Bancorp
2221 East Rosecrans Avenue, Suite 131
El Segundo, California 90245

Ladies and Gentlemen:

We have acted as counsel to Manhattan Bancorp, a California corporation (the “Company”), in connection with the proposed registration under the Securities Act of 1933, as amended, by the Company of an aggregate of up to 3,000,000 shares of common stock, without par value, of the Company (the “Shares”), and the related preparation and filing by the Company with the Securities and Exchange Commission of a Registration Statement on Form SB-2 (the “Registration Statement”).  In rendering the opinion set forth below, we do not express any opinion concerning law other than federal law and the law of the State of California.

We have examined originals or copies, certified or otherwise identified, of such documents, corporate records and other instruments, and have examined such matters of law, as we have deemed necessary or advisable for purposes of rendering the opinion set forth below, including but not limited to (i) the Company’s Articles of Incorporation, as amended; (ii) the Company’s Bylaws, as amended; (iii) the Registration Statement, including the prospectus contained therein and the exhibits thereto; and (iv) certain resolutions of the Board of Directors of the Company relating to the issuance of the Shares being registered under the Registration Statement.  We have also examined originals or copies of such documents, corporate records, certificates of public officials and other instruments, and have conducted such other investigations of law and fact, as we have deemed necessary or advisable for purposes of our opinion.  As to matters of fact, we have examined and relied upon the factual representations of the Company contained in the Registration Statement.  We have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures, the legal capacity of natural persons and the conformity to the originals of all documents submitted to us as copies.  In making our examination of any documents, we have assumed that all parties, other than the Company, had the corporate power and authority to enter into and perform all obligations thereunder, and, as to such parties, we have also assumed the due authorization by all requisite action, the due execution and delivery of such documents, and the validity and binding effect and enforceability thereof.

Based on the foregoing, we are of the opinion that the Shares have been duly authorized and, when issued as contemplated in the Registration Statement, will be validly issued and outstanding, fully paid and non-assessable.

In rendering the opinion set forth above, we have not passed upon and do not purport to pass upon the application of securities or “blue-sky” laws of any jurisdiction (except federal securities laws).

We consent to the filing of this opinion as an Exhibit to the Registration Statement and to the reference to our name in the Prospectus contained in the Registration Statement under the heading “Legal Matters.”

Very truly yours,

/s/ King, Holmes, Paterno & Berliner,LLP

King, Holmes, Paterno & Berliner, LLP

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EX-10.2

Exhibit 10.2

LEASE AGREEMENT

THIS LEASE AGREEMENT (this “Lease”) is made and entered into as of the 28th day of February, 2007, by and between Lessor and Lessee, as defined below.  Lessor hereby agrees to lease to Lessee and Lessee hereby agrees to lease from Lessor, the Premises, as defined below, pursuant to all of the terms and conditions set forth below:

ARTICLE 1 - DEFINED TERMS, GENERAL CONDITIONS AND PREMISES

Section 1.1Defined Terms and Covenants.  The terms listed below (“Defined Terms”) shall have the following meanings throughout this Lease, and the covenants described in this Section 1.1 shall have the same effect as the terms and conditions of the Lease:

(a)	Lessor:		The Plaza CP LLC
			a California limited liability company
(b)	Lessee:		Manhattan Bancorp.
			a California corporation
(c)	Premises:The crosshatched space shown on Exhibit “C-2” attached hereto and to be commonly known as 2141 Rosecrans Avenue, Suite 1160, El Segundo, California.
(d)	Building:The Building, all other buildings and office, commercial and retail space and all roads, walks, plazas, landscaped areas, improvements, facilities and common areas associated therewith, including the Parking Facilities (as hereinafter defined) shown on Exhibit “A-1” and the land legally described on Exhibit “A-2” (the property) on which the same are situated.
(e)	Property:That portion of Continental Park (depicted in Exhibit “A-3”) described in Exhibit “A-2.”
(f)	Deemed Rentable Area of the Building:		456,323 square feet.  Subject to Exhibit “A-1.”
(g)	Deemed Rentable Area of the Premises:		7,612 square feet.
	Deemed Usable Area of the Premises:		6,506 square feet.
(h)	Lessee’s Pro Rata Share:		1.6681%.  Subject to Article 4.
(i)	Term and Option To Extend:The Lease term shall be seven (7) years following the Commencement Date (the “Term”).  Notwithstanding the previous sentence, the Term will always terminate on the last day of the eighty-fourth (84th) full calendar month following the Commencement Date.  Lessee shall have one (1) option to extend the Term for five (5) years, pursuant to Rider No. One attached hereto.
(j)	Commencement Date:June 1, 2007.
(k)	Base Rental:	Lessee shall pay Base Rental as follows:

From June 1, 2007 to May 31, 2008: $19,791.20 per month;

From June 1, 2008 to May 31, 2009: $20,384.94 per month;

From June 1, 2009 to May 31, 2010: $20,996.49 per month;

From June 1, 2010 to May 31, 2011: $21,626.38 per month;

From June 1, 2011 to May 31, 2012: $22,275.17 per month;

From June 1, 2012 to May 31, 2013: $22,943.43 per month; and

From June 1, 2013 to May 31, 2014: $23,631.73 per month.

(l)	Deposit:	$23,631.73.  Subject to Article 5.
(m)	Base Year:	2007
(n)	Use:	General office and commercial banking.  Subject to Article 6.
(o)	Parking Privileges:Lessee is authorized to take up to a maximum of twenty-nine (29) parking permits.  Lessee must take a minimum of twenty-two (22) non-reserved permits. Customer’s of Lessee’s retail bank shall receive 30 minutes of free parking with proper validation by Lessee. The visitor parking rates currently in effect are $1.50 per 20-minutes, with a maximum $10.00 per-day rate. Except as relates to the free 30-minute validated parking privilege, Lessor may, in its sole discretion, modify the visitor parking rates for the Building from time to time during the term of the Lease. Lessor shall designate, at a location in the immediate  area of the Plaza entry, three (3) reserved parking spaces “For Manhattan Banc Customers Only”. Lessee shall receive a 20% discount when purchasing $1,000.00 worth of visitor parking validation in advance. Subject to Article 32.

	Lessee’s initials:
Reviewed:
	Lessor’s initials:

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(p)	Current Monthly Parking Permit Charges:Reserved Permits at $105.00 / Non-Reserved Permits at $65.00.  Subject to Exhibit “F.”
(q)	Lessor’s Construction Allowance:  $292,770.00 ($45.00 per usable square foot of Premises).  Subject to Exhibit “C.”
(r)	Normal Hours:Monday through Friday, from 7:30 a.m. to 6:30 p.m., Saturday, from 9:00 a.m. to 1:00 p.m., excepting state and/or federal holidays.  Lessee shall have access to the Premises twenty-four (24) hours, seven (7) days a week.  Subject to Exhibit “D.”

Section 1.2General Conditions.

(a)Unless this Lease provides for a contrary standard, whenever in this Lease the consent or approval of the Lessor or Lessee is required, such consent or approval shall not be unreasonably withheld or delayed (except, however, with respect to any Lessor consent, for matters which could possibly have an adverse effect on the Building’s plumbing, heating, mechanical, life safety, ventilation, air conditioning or electrical systems, which could affect the structural integrity of the Building, or which could affect the exterior appearance of the Building, Lessor may withhold such consent or approval in its sole discretion but shall act in good faith); and

(b)Unless a contrary standard or right is set forth in this Lease, whenever the Lessor or Lessee is granted a right to take action, exercise discretion, or make an allocation, judgment or other determination, Lessor or Lessee shall act reasonably and in good faith and take no action which might result in the frustration of the reasonable expectations of a sophisticated tenant and a sophisticated landlord concerning the benefits to be enjoyed under this Lease.

Section 1.3Lease of Premises.  Lessor leases to Lessee, and Lessee leases from Lessor, the Premises.

ARTICLE 2 - TERM

Section 2.1Effective Date.  This Lease shall become effective (the “Effective Date”) upon the approval of the Lessor’s lender on the Property (if lender’s prior approval is required) and when signed by Lessor and Lessee), but the Lease shall automatically become invalid, null and void if Lessee fail to obtain all necessary approvals to become a federally insured bank by October 1, 2007 (however, even though the Lease shall become invalid, null and void because of Lessee’s failure to obtain the necessary approvals to become a federally insured bank, the Letter of Credit that shall be provided to Lessor pursuant to Section 5.2 of the Lease shall not become invalid, but rather, Lessor shall be permitted to draw down on entire amount of the Letter of Credit to as liquidated damages representing Construction Costs incurred by Lessor as part of this Lease and future loss of Rent and Lessor shall be entitled to no further damages or compensation as a result of termination of the Lease.  All of the terms, conditions, covenants, rules and regulations of the Lease (other than the payment of Rent) shall apply as of the Effective Date.

Section 2.2Commencement Date.  The Term of this Lease and the Rent shall commence on the date indicated in Section 1.1(j) (the “Commencement Date”).  The Term of this Lease and the Rent shall commence on June 1, 2007, even though the Lessee Improvements to the Premises may not be completed by said date.

ARTICLE 3 - RENT

Section 3.1Payment of Base Rental.  Lessee shall pay the Base Rental, in advance, without prior notice, demand or billing statement, on or before the first day of each calendar month during the entire Term.  Concurrently with Lessee’s execution of this Lease and the submission thereof for Lessor’s execution, Lessee shall pay to Lessor the Base Rental payable hereunder for one full calendar month of the Term as set forth in Section 1.1(k).  On the Commencement Date, Lessee shall pay to Lessor the prorated Base Rental attributable to the month in which the Commencement Date occurs on a date other than the first day of a calendar month.

Section 3.2Governmental Assessments.  In addition to the Base Rental, Lessee shall pay, prior to delinquency, all personal property taxes, charges, rates, duties and license fees assessed against or levied upon Lessee’s occupancy of the Premises, or upon any Lessee Improvements, trade fixtures, furnishings, equipment or other personal property contained in the Premises (collectively, “Personal Property”).  Lessee shall cause such Assessments upon Personal Property to be billed separately from the property of Lessor.  Lessee hereby agrees to indemnify, defend and hold Lessor harmless from and against the payment of all such Assessments.

Section 3.3Special Charges for Special Services.  Lessee agrees to pay to Lessor, within ten (10) days following written demand, all charges, including labor costs, for any services, goods and/or materials, which shall include Lessor’s ten percent (10%) (excluding TI’s) administrative cost surcharge thereon, furnished by Lessor at Lessee’s request which are not otherwise required to be furnished by Lessor under this Lease without separate charge or reimbursement.

Section 3.4Definition of Rent.  Any and all payments of Base Rental (including any and all increases thereof) and any and all taxes, fees, charges, costs, expenses, insurance obligations, late charges, interest, and all other payments, disbursements or reimbursements which are attributable to, payable by or the responsibility of Lessee under

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this Lease (herein collectively referred to as the “Additional Rent”), constitute “rent” within the meaning of California Civil Code Section 1951(a).  Base Rental and Additional Rent are herein collectively referred to as “Rent.”  Any Rent payable to Lessor by Lessee for any fractional month shall be prorated based on a three hundred sixty-five (365) day year.  All payments owed by Lessee under this Lease shall be paid to Lessor in lawful money of the United States of America at the Lessor’s Address for Payment of Rent set forth in Section 34.1 or such other address as Lessor notifies Lessee in writing from time to time.  All payments shall be paid without deduction, setoff or counterclaim.

Section 3.5Late Charge.  Lessee acknowledges that the late payment of Rent will cause Lessor to incur damages, including administrative costs, loss of use of the overdue funds and other costs, the exact amount of which would be impractical and extremely difficult to ascertain.  Lessor and Lessee agree that if Lessor does not receive a payment of Rent within five (5) days after the date that such payment is due, Lessee shall pay to Lessor a late charge equal to ten percent (10%) of the delinquent amount, or the sum of twenty-five dollars ($25.00), whichever is greater, as liquidated damages for the damages which Lessor is likely to incur for the thirty (30) day period following the due date of such payment.  Further, all portions of Rent not paid within thirty (30) days following its due date and all late charges associated therewith shall bear interest at the Interest Rate (as defined below) beginning on the thirty-first (31st) day following the due date of such Rent and continuing until such Rent, late charges and interest are paid in full.  Acceptance of the late charge, and/or interest by Lessor shall not cure or waive Lessee’s default, nor prevent Lessor from exercising, before or after such acceptance, any and all of the rights and remedies for a default provided by this Lease or at law or in equity.  Payment of the late charge and/or interest is not an alternative means of performance of Lessee’s obligation to pay Rent at the times specified in this Lease.  Lessee shall pay Lessor a fee of thirty dollars ($30.00) for each non sufficient funds check that Lessor shall receive from Lessee.  The term “Interest Rate” shall mean the lower of (x) the maximum interest rate permitted by law or (y) five percentage points above the rate publicly announced from time to time by Bank of America N.T. & S.A. (or if Bank of America N.T. & S.A. ceases to exist, then the largest bank headquartered in the State of California) (“Bank”) as its Reference Rate.  If the use of the announced Reference Rate is discontinued by the Bank, then the reference to Reference Rate shall mean the announced rate, charged by the Bank which is from time to time substituted for such Reference Rate.  Whenever interest is required to be paid under this Lease, the interest shall be calculated from the date the payment was due (unless a late charge is assessed by Lessor, in which case the interest shall be calculated from the thirty-first (31st) day following the date the payment was due) or should have been due if correctly assessed or estimated (or any overcharge paid), until the date payment is made or the refund is paid or is credited against Rent next due.  However, there shall not be any credit against Rent unless expressly allowed by the terms of this Lease.

Section 3.6Acceleration of Base Rental Payments.  In the event a late charge becomes payable pursuant to Section 3.5 of this Lease for three (3) payments of any one or more elements of Rent within a twelve (12) month period, then all subsequent Rent payments shall immediately and automatically become payable by Lessee quarterly, in advance, by cashier’s check, instead of monthly.

Section 3.7Disputes as to Payments of Rent.  Lessee agrees to pay the Rent required under this Lease within the time limits set forth in this Lease.  If Lessee receives from Lessor an invoice or statement, which invoice or statement is sent by Lessor in good faith, and Lessee in good faith disputes whether all or any part of such Rent is due and owing, Lessee shall nevertheless pay to Lessor the amount of the Rent indicated on the invoice or statement until Lessee receives a final judgment from a court of competent jurisdiction (or when arbitration is permitted or required, receives a final award from an arbitrator) relieving or mitigating Lessee’s obligation to pay such Rent.  In such instance where Lessee disputes its obligations to pay all or part of the Rent indicated on such invoice or statement, Lessee shall, concurrently with the payment of such Rent, provide Lessor with a letter or notice entitled “Payment Under Protest,” specifying in detail why Lessee is not required to pay all or part of such Rent.  Lessee will be deemed to have waived its right to contest any past payment of Rent unless it has filed a lawsuit against Lessor (or when arbitration is permitted or required, filed for arbitration and has served Lessor with notice of such filing), and has served a summons on Lessor, within two (2) years of such payment.  Until an Event of Default by Lessee occurs, Lessor shall continue to provide the services and utilities required by this Lease.

ARTICLE 4 – OPERATING EXPENSE ADJUSTMENTS

Section 4.1Operating Expense Adjustments.  Lessee shall pay to Lessor, in addition to the Base Rental due pursuant to Section 3.1, an Operating Expense Adjustment during each successive calendar year of the Term after the Base Year, in the manner and at the times herein provided.  Such payments shall become due and owing when the Pro Rata Share of the aggregate annual Operating Expenses for any subsequent year of the Term exceeds the Pro Rata Share of the aggregate annual Operating Expenses for the Base Year (the “Excess Operating Expenses”).  Should the Termination Date be other than the last day of a subsequent year of the Term, Operating Expense Adjustment for such year shall be prorated.  This Article shall survive the termination of this Lease for a period of two years.

Section 4.2Procedure for Payment of Operating Expense Adjustments.  Lessee shall pay any Excess Operating Expenses, as follows:

(a)Commencing on the Commencement Date, Lessor may, from time to time but not more than twice annually, by ten (10) days notice to Lessee, reasonably estimate in advance the amounts Lessee shall owe on a monthly basis for Excess Operating Expenses for any full or partial calendar year of the Term.  In such event, Lessee shall pay such estimated amounts, on a monthly basis, on or before the first day of each calendar month, together

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with Lessee’s payment of Base Rental.  Such estimate may be reasonably adjusted from time to time by Lessor by written notice to Lessee.

(b)Within one hundred twenty (120) days after the end of each calendar year, or as soon thereafter as practicable, Lessor shall provide a statement (the “Statement”) to Lessee showing:  (i) the amount of actual Operating Expenses for such calendar year, (ii) any amount paid by Lessee toward Excess Operating Expenses during such calendar year on an estimated basis, and (iii) any revised estimate of Lessee’s obligations for Excess Operating Expenses for the current calendar year.

(c)If the Statement shows that Lessee’s estimated payments were less than Lessee’s actual obligations for Excess Operating Expenses for such year, Lessee shall pay the difference, whether or not the Term has expired or terminated.  If the Statement shows an increase in Lessee’s estimated payments for the current calendar year, Lessee shall pay the difference between the new and former estimates, for the period from January 1 of the current calendar year through the month in which the Statement is sent.  Lessee shall make such payments within thirty (30) days after Lessor sends the Statement.

(d)If the Statement shows that Lessee’s estimated payments exceeded Lessee’s actual obligations for Excess Operating Expenses, Lessee shall receive a credit of such difference against payments by Lessee next due.  If the Term shall have expired and no further payments of Excess Operating Expenses by Lessee shall be due, Lessee shall receive a refund of such difference within thirty (30) days after Lessor sends the Statement.

(e)So long as Lessee’s obligations hereunder are not materially adversely affected, Lessor reserves the right to reasonably change, from time to time, the manner or timing of the foregoing payments.  No delay by Lessor in providing the Statement (or separate Statements) shall be deemed a default by Lessor or a waiver of Lessor’s right to require payment of Lessee’s obligations for actual or estimated Excess Operating Expenses; provided that Lessee may not be charged in respect of any recalculation of or additional Operating Expenses incurred more than two (2) years prior to the year in which Lessor proposed to include such expenses, and all statements shall be initially rendered within twelve (12) months of the end of each year.

(f)If the Term commences other than on January 1, or ends other than on December 31, Lessee’s obligations to pay estimated and actual amounts toward Excess Operating Expenses for such first or final calendar years shall be prorated to reflect the portion of such years included in the Term.  Such proration shall be made by multiplying the total estimated or actual (as the case may be) Excess Operating Expenses for such calendar years by a fraction, the numerator of which shall be the number of days of the Term during such calendar year, and the denominator of which shall be 365.

Section 4.3Certain Defined Terms.  “Lessee’s Pro Rata Share” means the ratio of the Rentable Area of the Premises to the Rentable Area of the Building, both of which are subject to adjustment should there be an actual change in the size of the Premises or a change in the rentable area of the Building.  “Operating Expenses” are defined to be the sum of all costs, expenses, and disbursements, of every kind and nature whatsoever, and the Taxes, incurred by Lessor in connection with the ownership, management, use, maintenance, operation, administration and repair of all or any portion of the Building or the Property and all areas appurtenant thereto which provide access to or otherwise benefit the Building, including, but not limited to, the following:

(a)All utility costs not otherwise charged (pursuant to Section 3.3) directly to Lessee or any other tenant of the Property;

(b)All wages and benefits and costs of employees or independent contractors or employees of independent contractors engaged in the operation, supervision, maintenance and security of the Building;

(c)All expenses for janitorial, maintenance, security and safety services;

(d)Except as provided below and only to the extent allowed under subsection (j), all repairs to, replacements of, and physical maintenance of the Building, including the cost of all supplies, uniforms, equipment, tools and materials;

(e)All license, permit and inspection fees required in connection with the operation of the Building;

(f)All reasonable auditor’s or accounting fees and costs incurred in connection with the operation, maintenance, repair and replacement of the Building;

(g)All reasonable legal fees and costs incurred in connection with the operation, maintenance, repair and replacement of the Building;

(h)All reasonable fees for management services provided by a management company and/or by Lessor and/or an agent of Lessor;

(i)The annual amortization of costs, including financing costs, if any, incurred by Lessor after completion of the Building for any capital improvements installed or paid for by Lessor and required by any new (or change in) laws, rules or regulations of any governmental or quasi-governmental authority;

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(j)The annual amortization of costs, including financing costs, if any, of any equipment, device or capital improvement purchased or incurred as a labor-saving measure or to affect other economies in the operation or maintenance of the Building (provided the annual amortized cost does not exceed the actual cost savings realized and such savings do not redound primarily to the benefit of any particular tenant);

(k)All insurance premiums and other charges (including, without limitation, unreimbursed reasonable deductible amounts) incurred by Lessor with respect to the insuring of the Building including, without limitation, the following to the extent carried by the Lessor:  (i) fire and extended coverage insurance, windstorm, hail and explosion; (ii) riot attending a strike, civil commotion, aircraft, vehicle and smoke insurance; (iii) public liability, bodily injury and property damage insurance; (iv) elevator insurance; (v) workers’ compensation insurance for the employees specified in Section 4.3(b) above; (vi) boiler and machinery insurance, sprinkler leakage, water damage, property, burglary, fidelity and pilferage insurance on equipment and materials; (vii) loss of rent, rent abatement, rent continuation, business interruption insurance, and similar types of insurance; (viii) earthquake insurance; and (ix) such other insurance as is customarily carried by operators of other comparable first-class office buildings in Southern California;

(l)Such other usual costs and expenses incurred by Lessor and which are paid by other landlords for the purpose of providing for the on-site operation, supervision, management, security, servicing, maintenance, repair and replacement of first-class office buildings in Southern California;

(m)All actual taxes, assessments, levies, charges, water and sewer charges, rapid transit and other similar or comparable governmental charges (collectively, “Taxes”) levied or assessed on, imposed upon or attributable to the calendar year in question (i) to the Building, and/or (ii) to the operation of the Building, including, but not limited to, Taxes against the Building, personal property taxes or assessments levied or assessed against the Building, plus any tax measured by gross rentals received from the Building, together with any costs incurred by Lessor, including attorneys’ fees, in contesting any such Taxes but excluding any net income, franchise, capital stock, estate or inheritance taxes imposed by the State of California or the United States, or any City or other governmental authority, or by their respective agencies, branches or departments provided that, if at any time during that Term there shall be levied, assessed or imposed on Lessor or the Building by any governmental entity, any general or special, ad valorem or specific excised capital levy or other taxes on the payments received by Lessor under this Lease or other leases affecting the Building and/or any license fee, excise or franchise taxes measured by or based, in whole or in part, upon such payments, and/or transfer, transaction, or taxes based directly or indirectly upon the transaction represented by this Lease or other leases affecting the Building, and/or any occupancy, use, per capita or other taxes, based directly or indirectly upon the use or occupancy of the Premises or the Building, then all such taxes shall be deemed to be included within the definition of the term Taxes;

(n)All costs associated with those improvements, systems, signage, equipment, and installations that are designed by Lessor to serve or benefit the Building by facilitating the flow of traffic into or out of the Building and/or the parking structure(s) of the Building, whether or not located within, adjacent to, or near the Building and/or the parking structure(s) of the Building, amortized over their useful lives in connection with any capital items;

(o)Any building system maintenance contracts, insurance or other class of operating expense, unless such maintenance cost, insurance coverage or class of operating expense was carried during the Base Year or, in the alternative, the Base Year Operating Expenses have been grossed up to include what such maintenance, insurance or other operating costs would have cost had they been incurred during the Base Year; and

(p) Any recalculation of or additional costs incurred more than two (2) years prior to the year in which Lessor proposed such costs be charged.

Notwithstanding the foregoing, Operating Expenses shall not include the following expenses:

(1)wages, salaries or fringe benefits paid to any employees above the grade of building manager, or where employees devote time to properties other than the Building, the portion properly allocated to such other properties;

(2)leasehold improvements, alterations and decorations which are made in connection with the preparation of any portion of the Building for occupancy by a new tenant, or which improvements, alterations and decorations are not generally beneficial to all tenants of the Building;

(3)services performed for any tenant (other than Lessee) of the Building, whether at the expense of Lessor or such tenant, to the extent that such services are in excess of the services which Lessor is required to furnish under this Lease;

(4)costs incurred in connection with the making of repairs or replacements which are the obligation of another tenant or occupant of the Building;

(5)advertising, marketing, promotional, public relations or brokerage fees, commissions or expenditures

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(6)financing and refinancing costs in respect of any mortgage or security interest placed upon the Building or any portion thereof, including payments of principal, interest, finance or other charges, and any points and commissions in connection therewith;

(7)interest or penalties for any late or failed payments by Lessor under any contract or agreement unless resulting from Lessee’s failure to pay when and as due Lessee’s share of Operating Expenses;

(8)rent or other charges payable under any ground or underlying lease;

(9)costs of electrical or other utilities services furnished directly to any premises of other tenants of the Building if such service is separately metered for the Premises and such costs are separately charged to such other tenants;

(10)costs incurred in connection with Lessor’s preparation, negotiation, dispute resolution and /or enforcement of leases, including court costs and attorneys’ fees and disbursements in connection with disputes with prospective tenants, employees, consultants, management agents, leasing agents, purchasers or mortgagees;

(11)costs incurred in connection with any additions to or expansions of the Building;

(12)costs of repairs, restoration or replacements occasioned by fire or other casualty or caused by the exercise of the right of eminent domain, whether or not insurance proceeds or condemnation award proceeds are recovered or adequate for such purposes;

(13)expenditures for capital improvements or replacements except as allowed under Subsections (i) and (j) above;

(14)the cost of performing, correcting defects in, or inadequacies of, the Lessor’s work or of otherwise correcting defects (including latent defects) in the Building;

(15)the cost to make improvements, alterations and additions to the Building which are required in order to render the same in compliance with existing laws, rules, orders regulations and/or directives including the ADA;

(16)the cost of environmental monitoring, compliance, testing and remediation performed in, on, about and around the Building;

(17)any costs in the nature of fees, fines or penalties arising out of Lessor’s breach of any obligation (contractual or at law and including, without limitation, costs, fines, interest, penalties and costs of litigation incurred as a result of late payment of Taxes and /or utility bills), including attorney’s fees related hereto;

(18)any costs, charges or expenses in the nature of licenses, permits or inspection fees that are not part of routine maintenance or result from the act, omission or negligence of Lessor or another tenant;

(19)depreciation;

(20)amounts paid to subsidiaries or affiliates of Lessor for services rendered to the Building to the extent such amounts exceed the competitive costs for delivery of such services were they not provided by such related parties;

(21)management fees to the extent in excess of competitive rates;

(22)sculpture, paintings and other works of art.

If the Building does not have at least ninety-five percent (95%) of the usable area of the Building occupied during the entirety of any calendar year during the Term, then the Operating Expenses for such calendar year period shall be deemed to be equal to the total of (x) the Operating Expenses, that vary in amounts based upon the occupancy level of the building, including, but not limited to, janitorial, maintenance, utilities and property management, which would have been incurred by Lessor if ninety-five percent (95%) of the usable area of the Building had been occupied for the entirety of such calendar year (y) the actual Taxes as defined in Section 4.3(m) and (z) all other Operating Expenses incurred in such calendar year.  The annual amortization of costs as required above shall be determined by Lessor.  Operating Expenses shall be computed according to the cash or accrual basis of accounting, as Lessor may elect in accordance with generally accepted accounting principles employed by Lessor consistently applied.  Lessor shall have the right, in its discretion, to allocate and prorate any portion or portions or all of the Operating Expenses on a building-by-building basis, then Lessee’s Pro Rata Share shall, as to the portion of Operating Expenses so allocated, be based on the ratio of the Rentable Area of the Premises to the Rentable Area of the Building.

Section 4.4Review of Operating Expenses.  So long as no Event of Default (as defined in Article 17) has occurred, which remains uncured, Lessee shall have the right, at Lessee’s own expenses, for a period of one hundred eighty (180) days following receipt of each Statement, and after paying Lessor in full the amount indicated due and owing on said Statement, to inspect, at Lessor’s office during normal business hours, Lessor’s books and

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records directly related to the Operating Expenses for the preceding calendar year period in question (the “Inspection”). Lessee shall choose an independent firm or certified public accountant of national standing with commercial real estate experience (not being compensated on a contingency fee basis) to conduct the Inspection.  Lessee’s Inspection shall be completed within ten (10) business days after commencement thereof. Lessee agrees that any records reviewed or information obtained as part of the Inspection shall constitute confidential information of Lessor, which shall not be disclosed to anyone other than the accountants performing the Inspection, the principals of Lessee receiving said information, and their counsel and other representatives.  Lessee shall cause the firm or accountant chosen by Lessee to conduct the Inspection to sign a confidentiality agreement to provide all records reviewed or information obtained remain at all times confidential information of the Lessor. Disclosure of such confidential information to any other person by either Lessee or Lessee’s agent performing the Inspection may, at Lessor’s election, constitute a material breach of this Lease.  Lessee shall pay Lessor, on demand and as Additional Rent, Lessor’s invoice for (i) the photocopying of documents; and (ii) any other reasonable expense of Lessor incidental to Lessee’s Inspection. A copy of the results of Lessee’s Inspection shall be delivered to Lessor within thirty (30) days after Lessee’s completion of the Inspection. Lessee shall be entitled to no more than one (1) Inspection per calendar year.  If Lessee shall not have availed itself of such Inspection, Lessee shall be deemed to have accepted as final and determinative the amounts shown on the Statement.  If Lessee shall have availed itself of its right to inspect the books and records, and then disputes the accuracy of the information set forth in Lessor’s books and records with respect to the Statement, Lessee shall no later than six (6) months after receipt of the Statement (or its right to contest such charges shall be deemed waived) institute arbitration proceedings against Lessor in an arbitration proceeding governed by the rules of the American Arbitration Association to collect and recover any overpayments made by Lessee, and Lessee shall, within ten (10) days of having instituted such arbitration proceeding, serve Lessor with a copy of the complaint filed in such proceeding.  Lessee shall be precluded from contesting Operating Expenses and Lessor’s computations of the amounts payable by Lessor or Lessee pursuant to this Article 4 unless an arbitration complaint is filed and served within the aforesaid periods of time.

If Lessee institutes such arbitration proceedings, then the arbitrator shall have the power to, and shall inquire into and determine, not only whether or not Lessee was overcharged for any Excess Operating Expenses, but whether or not Lessee was undercharged for such Excess Operating Expenses.  At the conclusion of the arbitration, the arbitrator shall issue a ruling as to what the Excess Operating Expenses should have been had Lessor strictly complied with the provisions of this Lease.  If Lessor overcharged Lessee for Excess Operating Expenses, the amount of the overcharge shall be returned to Lessee within thirty (30) days following the conclusion of the arbitration.  If the arbitrator determines that Lessee was undercharged for Excess Operating Expenses, Lessee shall pay the amount of such undercharge to Lessor within thirty (30) days following the issuance of the arbitration ruling.

Should the arbitrator find errors in excess of three percent (3%) of the Statement, then Lessor shall be responsible for all reasonable fees and costs incurred by Lessee with respect to the arbitration proceeding.  Should the arbitrator find errors below three percent (3%) of the Statement, then Lessee shall be responsible for all reasonable fees and costs incurred by Lessor with respect to the arbitration proceeding.

Section 4.5Disproportionate Operating Charges.  Notwithstanding Sections 4.1 through 4.4 above, in the event Lessor should incur an Operating Expense during Lessee’s Term that Lessor reasonably determines was incurred by reason of Lessee’s specific use and/or occupancy of the Premises or the Additional Premises, which expense was materially disproportionate to the ordinary building Operating Expenses but for such use and/or occupancy by Lessee (a “Disproportionate Operating Charge”), then Lessor shall not include said Disproportionate Operating Charge within the Building Operating Expenses to calculate Lessee’s Pro Rata Share pursuant to Section 4.3 above, but rather, Lessee shall pay Lessor one hundred percent of the delta over and above said ordinary Operating Expenses as the same shall be determined by Lessor.

ARTICLE 5 - SECURITY DEPOSIT AND LETTER OF CREDIT

Section 5.1Security Deposit.  Concurrently with Lessee’s execution of this Lease and submission thereof for Lessor’s execution, Lessee shall pay the Deposit to Lessor, which Deposit shall be held by Lessor as security, for the full and faithful performance of Lessee’s covenants and obligations under the Lease.  The Deposit is not an advance Base Rental deposit, an advance payment of any other kind, or a measure of Lessor’s damages in case of Lessee’s default.  If Lessee fails to comply with the full and timely performance of any or all of Lessee’s covenants and obligations set forth in this Lease, including, but not limited to, the provisions relating to the payment of Rent, the removal of property and the repair of resultant damage, then Lessor may, from time to time, without notice to Lessee and without waiving any other remedy available to Lessor, use the Deposit, or any portion of it, to the extent necessary to cure or remedy such failure or to compensate Lessor for any or all damages sustained by Lessor resulting from Lessee’s failure to comply fully and timely with its obligations pursuant to this Lease.  Lessee shall immediately pay to Lessor on demand the amount so applied in order to restore the Deposit to its original amount, and Lessee’s failure to immediately do so shall constitute a default under this Lease.  If Lessee is in compliance with the covenants and obligations set forth in this Lease at the time which is sixty (60) days following the time of both the expiration (or earlier termination) of this Lease and Lessee’s vacating of the Premises, Lessor shall return the Deposit to Lessee promptly thereafter.  Lessor shall not be required to maintain the Deposit separate and apart from Lessor’s general or other funds, and Lessor may commingle the Deposit with any of Lessor’s general or other funds.  Lessee shall not at any time be entitled to interest on the Deposit.  Lessee hereby waives the provisions of Section 1950.7 of the California Civil Code and all other provisions of the law, now or hereafter in effect, which (i) establish the time frame by which a landlord must refund a security deposit under a lease, and/or (ii) provide that a landlord may claim from a security deposit only those sums reasonably

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necessary to remedy defaults in the payment of rent, to repair damage caused by a tenant or to clean the premises, it being agreed that Lessor may, in addition, claim those sums specified in this Article 5 above and/or those sums reasonably necessary to compensate Lessor for any loss or damage caused by Lessee’s default of this Lease, including, but not limited to, all damages or rent due upon termination of this Lease pursuant to Section 1951.2 of the California Civil Code.

Section 5.2Letter of Credit.Concurrently with Lessee’s execution of this Lease, Lessee shall deliver to Lessor, as protection for the full and faithful performance by Lessee of all of its obligations under this Lease and for all losses and damages Lessor may suffer (or which Lessor reasonably estimates that it may suffer) as a result of any breach or default by Lessee under this Lease, an irrevocable and unconditional negotiable standby letter of credit (the “Letter of Credit”), in the form attached hereto as Exhibit ”G” and containing the terms required herein, payable in the City of Los Angeles, California, running in favor of Lessor and issued by a solvent, nationally recognized bank with a long term rating of BBB or higher, under the supervision of the Superintendent of Banks of the State of California, or a national banking association, in the amount equal to $292,995.00 ($45.00 per usable square feet of Premises) (the “Letter of Credit Amount”).  The Letter of Credit shall (i) be “callable” at sight, irrevocable and unconditional, (ii) be fully assignable by Lessor, its successors and assigns, (iii) permit partial draws and multiple presentations and drawings, and (iv) be otherwise subject to the Uniform Customs and Practices for Documentary Credits (1993-Rev), International Chamber of Commerce Publication #500, or the International Standby Practices-ISP 98, International Chamber of Commerce Publication #590.  In addition to the foregoing, the form and terms of the Letter of Credit (and the bank issuing the same (the “Bank”) shall be acceptable to Lessor, in Lessor’s sole discretion.  Lessor, or its then managing agent, shall have the right to draw down an amount up to the face amount of the Letter of Credit if any of the following shall have occurred or be applicable:  (A) such amount is due to Lessor under the terms and conditions of this Lease, or (B) Lessee has filed a voluntary petition under the U. S. Bankruptcy Code or any state bankruptcy code (collectively, “Bankruptcy Code”), or (C) an involuntary petition has been filed against Lessee under the Bankruptcy Code, or (D) the Bank has notified Lessor that the Letter of Credit will not be renewed or extended through the LC Expiration Date, or (E) Lessee shall have failed to obtain all necessary approvals to become a federally insured bank by July 1, 2007.

The Letter of Credit will be honored by the Bank regardless of whether Lessee disputes Lessor’s right to draw upon the Letter of Credit.  The Letter of Credit shall be maintained in effect for the sum of $292,995.00 until the last calendar day of the ninth (9th) full calendar month following the Commencement Date, and then the Letter of Credit shall be reduced to the sum of $146,497.50, and shall continue in said amount until the last calendar day of the eighteen (18th) full calendar month following the Commencement Date, whereupon the Letter of Credit shall then expire (the “LC Expiration Date”).

The Letter of Credit shall provide that Lessor, its successors and assigns, may, at any time and without notice to Lessee and without first obtaining Lessee’s consent thereto, transfer (one or more times) all or any portion of its interest in and to the Letter of Credit to another party, person or entity, regardless of whether or not such transfer is separate from or as a part of the assignment by Lessor of its rights and interests in and to this Lease.  In connection with any such transfer of the Letter of Credit by Lessor, Lessee shall, at Lessee’s sole cost and expense, execute and submit to the Bank such applications, documents and instruments as may be necessary to effectuate such transfer, and Lessee shall be responsible for paying the Bank’s transfer and processing fees in connection therewith.  Lessee further covenants and warrants that it will neither assign nor encumber the Letter of Credit or any part thereof and that neither Lessor nor its successors or assigns will be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance.

Without limiting the generality of the foregoing, if the Letter of Credit expires earlier than the LC Expiration Date, Lessor will accept a renewal thereof (such renewal letter of credit to be in effect and delivered to Lessor, as applicable, not later than sixty (60) days prior to the expiration of the Letter of Credit), which shall be irrevocable and automatically renewable as above provided through the LC Expiration Date upon the same terms as the expiring Letter of Credit or such other terms as may be acceptable to Lessor in its sole discretion.  However, if the Letter of Credit is not timely renewed, or if Lessee fails to maintain the Letter of Credit in the amount and in accordance with the terms set forth in this Section 5.2, Lessor shall have the right to present the Letter of Credit to the Bank in accordance with the terms of this Section 5.2, and the proceeds of the Letter of Credit may be applied by Lessor against any Rent payable by Lessee under this Lease that is not paid when due and/or to pay for all losses and damages that Lessor has suffered or that Lessor reasonably estimates that it will suffer as a result of any breach or default by Lessee under this Lease.  Any unused proceeds shall constitute the property of Lessor and need not be segregated from Lessor’s other assets.

Lessee hereby acknowledges and agrees that Lessor is entering into this Lease in material reliance upon the ability of Lessor to draw upon the Letter of Credit upon the occurrence of any breach or default on the part of Lessee under this Lease.  If Lessee shall breach any provision of this Lease or otherwise be in default hereunder, Lessor may, but without obligation to do so, and without notice to Lessee, draw upon the Letter of Credit, in part or in whole, to cure any breach or default of Lessee and/or to compensate Lessor for any and all damages of any kind or nature sustained or which Lessor reasonably estimates that it will sustain resulting from Lessee’s breach or default of this Lease, including, but not limited to, all damages or rent due upon termination of this Lease pursuant to Section 1951.2 of the California Civil Code.  The use, application or retention of the Letter of Credit, or any portion thereof, by Lessor shall not prevent Lessor from exercising any other right or remedy provided by this Lease or by any applicable law, it being intended that Lessor shall not first be required to proceed against the Letter of Credit, and shall not operate as a limitation on any recovery to which Lessor may otherwise be entitled. Lessee agrees not to

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interfere in any way with payment to Lessor of the proceeds of the Letter of Credit, either prior to or following a “draw” by Lessor of any portion of the Letter of Credit, regardless of whether any dispute exists between Lessee and Lessor as to Lessor’s right to draw upon the Letter of Credit.  No condition or term of this Lease shall be deemed to render the Letter of Credit conditional to justify the issuer of the Letter of Credit in failing to honor a drawing upon such Letter of Credit in a timely manner.  Lessee agrees and acknowledges that (i) the Letter of Credit constitutes a separate and independent contract between Lessor and the Bank, (ii) Lessee is not a third party beneficiary of such contract, (iii) Lessee has no property interest whatsoever in the Letter of Credit or the proceeds thereof, and (iv) in the event Lessee becomes a debtor under any chapter of the Bankruptcy Code, neither Lessee, any trustee, nor Lessee’s bankruptcy estate shall have any right to restrict or limit Lessor’s claim and/or rights to the Letter of Credit and/or the proceeds thereof by application of Section 502(b)(6) of the U. S. Bankruptcy Code or otherwise.

Lessor and Lessee acknowledge and agree that in no event or circumstance shall the Letter of Credit or any renewal thereof or any proceeds thereof be (i) deemed to be or treated as a “security deposit” within the meaning of California Civil Code Section 1950.7, (ii) subject to the terms of such Section 1950.7, or (iii) intended to serve as a “security deposit” within the meaning of such Section 1950.7.  The parties hereto (A) recite that the Letter of Credit is not intended to serve as a security deposit and such Section 1950.7 and any and all other laws, rules and regulations applicable to security deposits in the commercial context (“Security Deposit Laws”) shall have no applicability or relevancy thereto, and (B) waive any and all rights, duties and obligations either party may now or, in the future, will have relating to or arising from the Security Deposit Laws.

ARTICLE 6 - USE

Section 6.1Restriction on Use.  Lessee shall not do or permit to be done in or about the Property, nor bring, keep or permit to be brought or kept therein, anything which is prohibited by the attached Exhibits “E” and “F” or by any standard form fire insurance policy or which will in any way increase the existing rate of, or affect, any fire or other insurance upon the Building or its contents, or which will cause a weight load or stress on the floor or any other portion of the Premises in excess of the weight load or stress which the floor or other portion of the Premises is designed to bear.  Lessee, at Lessee’s sole cost, shall comply with all laws (as defined in Section 21.2) affecting the Premises, and with the requirements of any Board of Fire Underwriters or other similar body now or hereafter instituted, and shall also comply with any order, directive or certificate of occupancy issued pursuant to any Laws, which affect the condition, use or occupancy of the Premises, including, but not limited to, any requirements of structural changes related to or affected by Lessee’s acts, occupancy or use of the Premises.  The judgment of any court of competent jurisdiction or the admission of Lessee in any action against Lessee, whether or not Lessor is a party to such action, shall be conclusive as between Lessor and Lessee in establishing such violation.  Lessee shall not conduct retail operations from the Premises or use the Premises for medical or dental offices or for any other office purpose which is different from the office operations permitted by Lessor of its other tenants in the Building.

Section 6.2Compliance by Other Lessees.  Lessor shall not be liable to Lessee for any other occupant’s or tenant’s failure to conduct itself in accordance with the provisions of this Article 6, and Lessee shall not be released or excused from the performance of any of its obligations under this Lease in the event of any such failure.

ARTICLE 7 - ALTERATIONS AND ADDITIONS

Section 7.1Lessee’s Rights To Make Alterations.  Following the date on which Lessee first occupies the Premises, Lessee, at its sole cost and expense, shall have the right upon receipt of Lessor’s consent, to make alterations, additions or improvements to the Premises if such alterations, additions or improvements are made in accordance with this Article 7, are normal for general office use, do not adversely affect the utility or value of the Premises or the Building for future tenants, do not alter the exterior appearance of the Building, are not of a structural nature, do not require excessive removal expenses and are not otherwise prohibited under this Lease (collectively, “Alterations”).  All such Alterations shall be made in conformity with the requirements of Section 7.2 below and at the option of Lessor with Lessor’s contractors.  Once the Alterations have been completed, such Alterations shall thereafter be included within the designation of Lessee Improvements and shall be treated as Lessee Improvements.

Section 7.2Installation of Alterations.  Provided the Lessor shall have previously given Lessee written approval and consent to Alterations, any Alterations installed by Lessee during the Term shall be done in strict compliance with all of the following:

(a)No such work shall proceed without Lessor’s prior approval of (i) Lessee’s contractor(s); (ii) certificates of insurance from a company or companies approved by Lessor, furnished to Lessor by Lessee’s Contractor(s), for combined single limit bodily injury and property damage insurance covering comprehensive general liability and automobile liability, in an amount not less than One Million Dollars ($1,000,000.00) per person and per occurrence and endorsed to show Lessor as an additional insured, and for workers’ compensation as required by law, endorsed to show a waiver of subrogation by the insurer to any claims Lessee’s contractor may have against Lessor, Lessor’s agents, employees, contractors and other tenants of the Building (provided, however, nothing in this Section 7.2(a) shall release Lessee of its other insurance obligations hereunder); and (iii) detailed plans and specifications for such work.

(b)All such work shall be done in a first-class workmanlike manner and in conformity with a valid building permit and all other permits and licenses when and where required, copies of which shall be furnished to Lessor

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before the work is commenced, and any work not acceptable to any governmental authority or agency having or exercising jurisdiction over such work, or not reasonably satisfactory to Lessor, shall be promptly replaced and corrected at Lessee’s expense.  Lessor’s approval or consent to any such work shall not impose any liability upon Lessor.  No work shall proceed until and unless Lessor has received at least ten (10) days notice that such work is to commence.

(c)Lessee shall immediately reimburse Lessor for any expense incurred by Lessor in reviewing and approving the plans and specifications for such work or by reason of any faulty work done by Lessee or Lessee’s contractors, or by reason of delays caused by such work, or by reason of inadequate cleanup.

(d)Lessee or its contractors will in no event be allowed to make plumbing, mechanical or electrical improvements to the Premises, or any structural modification to the Building without first obtaining Lessor’s written consent, which Lessor can withhold in its sole and absolute discretion.  Lessee may not make changes to, or install, acoustical or integrated ceilings, or partitions over 5’10” in height without first obtaining Lessor’s written consent.

(e)All work by Lessee shall be scheduled through Lessor and shall be diligently and continuously pursued from the date of its commencement through its completion; and

(f)Lessee shall obtain any bonds required by Lessor pursuant to Article 9 of this Lease.

Section 7.3Alterations and Improvements - Treatment at End of Lease.  All Alterations and Lessee Improvements made by or for Lessee, whether temporary or permanent in character, made either by Lessor or Lessee, including, but not limited to, all air-conditioning or heating systems, paneling, decorations, cabling, partitions and railings (except furniture or movable trade fixtures installed at the expense of Lessee) shall become the property of the Lessor and shall remain upon, and be surrendered with, the Premises as a part thereof at the termination of this Lease, without compensation to Lessee; provided, however, that at the election of Lessor, exercisable by notice to Lessee given at least sixty (60) days prior to the end of the Lease Term, Lessee shall, at Lessee’s sole expense, prior to the expiration of the Term (or within ten (10) days following the earlier termination of this Lease), remove from the Premises the Alterations and/or Lessee Improvements (or that portion of the Alterations and/or Lessee Improvements) required by Lessor to be removed, and repair all damage to the Premises caused by such removal.  Lessor shall have the right, upon reasonable notice to Lessee, to enter and fully inspect the entire Premises just prior to the expiration of the Term or earlier termination of this Lease to determine the condition of the Premises, and to ascertain what removals, if any, Lessor shall require of Lessee pursuant to the terms hereof.

All of Lessee’s Personal Property, including, but not limited to, moveable furniture, trade fixtures and equipment, not attached to the Building or the Premises, shall be completely removed by Lessee prior to the expiration of the Term (or within ten (10) days following the earlier termination of this Lease), provided, however, that Lessee shall repair all damage caused by such removal prior to the expiration of the Term (or within ten (10) days following the earlier termination of this Lease), and provided further, that any of Lessee’s Personal Property not so removed shall, at the option of Lessor, be deemed abandoned by Lessee and shall automatically become the property of Lessor (whereupon Lessor shall then be permitted to retain and/or dispose the same, or any part thereof, in any manner whatsoever, without liability to Lessee).

ARTICLE 8 - LESSEE’S REPAIRS AND CLEANING OBLIGATIONS

Section 8.1Lessee’s Repairs and Cleaning Obligations.  Lessee shall, at Lessee’s sole cost and expense, keep the Premises in good, clean and sanitary condition and repair at all times during the Term.  Lessee’s promise to keep the Premises in good, clean and sanitary condition and repair shall survive the expiration or earlier termination of this Lease.  All damage or breakage to any part or portion of the Premises, and all damage or breakage to any portion of the Property caused by the willful or negligent act or omission of Lessee or Lessee’s agents, employees, contractors, licensees, directors, officers, partners, trustees, visitors or invitees (collectively, “Lessee’s Employees”), shall be promptly repaired or replaced by Lessee, at Lessee’s sole cost and expense, to the satisfaction of Lessor. Lessor may make any repairs or replacements which are not made by Lessee within a reasonable amount of time (except in the case of emergency when such repairs or replacements can be made immediately), and charge Lessee for the cost of such repairs and replacements.  Lessee shall be solely responsible for the design and function of all of Lessee Improvements whether or not installed by Lessor at Lessee’s request.  Lessee waives all rights to make repairs or replacements to the Premises or to the Property at the expense of Lessor, or to deduct the cost of such repairs or replacements from any payment owed to Lessor under this Lease. If upon expiration or earlier termination of this Lease Lessee shall have failed to leave the Premises in good, clean and sanitary condition and repair, reasonable wear and tear excepted, then Lessor may use any portion of the Deposit necessary to compensate Lessor for costs, charges and expenses incurred by Lessor for Lessee’s failure to comply with its obligations stated herein.

ARTICLE 9 - NO LIENS BY LESSEE

Section 9.1No Liens by Lessee.  Lessee shall at all times keep the Premises, the Building and the Property free from any liens arising out of any work performed or allegedly performed, materials, furnished or allegedly furnished or obligations incurred by or for Lessee.  At any time Lessee either desires or is required to make any Alterations, Lessor may, in addition to the provisions of Article 7, require Lessee, at Lessee’s sole cost and expense, to obtain and provide to Lessor performance and payment bonds in a form and by a surety acceptable to Lessor and in an amount not less than one and one-half (1-1/2) times the estimated cost of such Alterations to insure Lessor against liability from mechanics’ and materialmen’s liens and to insure completion of the work and may also require such

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additional items or assurances as Lessor in its sole discretion may deem reasonable or desirable.  Lessee agrees to indemnify, defend, protect, and hold Lessor harmless from and against any and all claims for mechanics’, materialmen’s or other liens in connection with any Alterations, repairs, or any work performed, materials furnished or obligations incurred by or for Lessee.  Lessor reserves the right to enter the Premises for the purpose of posting such notices of non-responsibility as may be permitted by law, or desired by Lessor.

ARTICLE 10 - LESSOR’S MAINTENANCE AND REPAIR OBLIGATIONS

Section 10.1Scope of Lessor’s Repairs.  So long as no Event of Default (as defined in Article 17) has occurred, which remains uncured, Lessor shall maintain and repair the structural elements and the public and common areas of the Building as the same may exist from time to time, at all times in a manner consistent with first class office buildings in the Building’s market area.  Lessor shall have no obligation to make repairs under this Article 10 until a reasonable time after receipt of written notice of the need for such repairs.  In no event shall any payments owed by Lessee under this Lease be abated on account of Lessor’s failure to make repairs under this Article 10.

ARTICLE 11 - BUILDING SERVICES

Section 11.1Standard Building Services.  Subject to the full performance by Lessee of all of Lessee’s obligations under this Lease, Lessor shall furnish the Premises with the standard building services and utilities as set forth in the attached Exhibit “D.”

Section 11.2Additional Services.  Lessee agrees to pay immediately on demand all reasonable charges imposed by the Lessor from time to time for all building services and utilities supplied to or used by Lessee in excess of or in addition to those standard building services and utilities which Lessor agrees to provide to Lessee in accordance with Exhibit “D” (said excess and additional building services and utilities are referred to as “Additional Services”).  If Lessee is a habitual user of such Additional Services, Lessor may at any time cause a switch and/or metering system to be installed at Lessee’s expense (which expense Lessee shall pay within ten (10) business days of receipt of an invoice from Lessor covering the cost of such switch or metering system and the installation thereof) to measure the amount of building services, utilities and/or Additional Services consumed by Lessee or used in the Premises.  Lessee agrees to pay Lessor, within five (5) business days, for all such Additional Services consumed as shown by said meters, at the rates charged for such services by the local public or private utility furnishing the same, if applicable, plus any additional expense incurred by Lessor in keeping records or accounts of the Additional Services so consumed.

Section 11.3Lessor’s Right to Cease Providing Services.  Lessor reserves the right in its sole and absolute discretion with respect to item (a) below, and in its reasonable discretion with respect to item (b) below, but in no event in a manner that substantially interferes with Lessee’s normal business operations at the Premises, to reduce, interrupt or cease service of the heating, air conditioning, ventilation, elevator, plumbing, electrical systems, telephone systems and/or utilities services of the Premises, the Building or the Property, for any or all of the following reasons or causes:

(a)any accident, emergency, governmental regulation, or Act of God, including, but not limited to, any cause set forth in Article 29, or

(b)the making of any repairs, replacements, additions, alterations or improvements to the Premises or the Property until said repairs, additions, alterations or improvements shall have been completed.

No such interruption, reduction or cessation of any such building services or utilities shall constitute an eviction or disturbance of Lessee’s use or possession of the Premises or Property, or an ejection or eviction of Lessee from the Premises, or a breach by Lessor of any of its obligations, or entitle Lessee to be relieved from any of its obligations under this Lease, or result in any abatement of Rent.  In the event of any such interruption, reduction, or cessation, Lessor shall use reasonable diligence to restore such service where it is within Lessor’s reasonable control to do so.

ARTICLE 12 - ASSIGNMENT AND SUBLETTING

Section 12.1Right to Assign and Sublease.  Lessor and Lessee recognize and specifically agree that this Article 12 is an economic provision, like Rent, and that the Lessor’s right to recapture, and to share in profits, is granted by Lessee to Lessor in consideration of certain other economic concessions granted by Lessor to Lessee.  Lessee may voluntarily assign its interest in this Lease or in the Premises, or sublease all or any part of the Premises, or allow any other person or entity to occupy or use all or any part of the Premises, upon first obtaining Lessor’s prior written consent (except that no consent of Lessor shall be required for an assignment to an entity which acquires all or part of Lessee, or which is acquired in whole or in part by Lessee, or which is controlled directly or indirectly by Lessee, or which entity controls, directly or indirectly, Lessee (hereafter a “Qualified Financial Institution”), but only if (i) Lessee is not then in default of this Lease, (ii) such assignment or sublease does not conflict with or result in a breach of the permitted Use of the Premises, and (iii) such proposed assignee or sublessee of Lessee’s proposed assignment or sublease is not:

(a)a governmental entity or an educational institution;

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(b)a person with whom Lessor has negotiated for space in the Building or in Lessor’s other buildings in Continental Park during the twelve (12) month period ending with the date Lessor receives notice of such assignment, encumbrance or subletting;

(c)a present tenant in the Building or other space or building in Continental Park;

(d)a person whose tenancy in the Building or other space or building in Continental Park would violate any exclusivity arrangement which Lessor has with any other space or building in Continental Park;

(e)a person whose business operations are not comparable to the business operations of the then tenants in the Building leasing space similar to the Premises.

Any assignment, encumbrance or sublease without Lessor’s prior written consent other than to a Qualified Financial Institution shall be voidable, at Lessor’s election, and shall constitute a default by Lessee.  No consent to an assignment, encumbrance or sublease shall constitute a further waiver of the provisions of this Article 12.

Section 12.2Procedure for Assignment and Sublease/Lessor’s Recapture Rights.  Lessee shall advise Lessor by notice of (a) Lessee’s intent to assign, encumber or sublease this Lease, (b) the name of the proposed assignee or sublessee, and evidence reasonably satisfactory to Lessor that such proposed assignee or sublessee satisfies Section 12.1 of this Lease, and (c) the terms of the proposed assignment or subletting.  Lessor shall, within thirty (30) days of receipt of such notice, and any additional information requested by Lessor concerning the proposed assignee’s or sublessee’s financial responsibility, elect one of the following:

(i)Consent to such proposed assignment, encumbrance or sublease; or

(ii)Refuse such consent, which refusal shall be on reasonable grounds.

Section 12.3Conditions Regarding Consent to Sublease and Assignment.  As a condition for obtaining Lessor’s consent to any assignment, encumbrance or sublease, if Lessor so requests, Lessee shall require that the assignee or sublessee remit directly to Lessor on a monthly basis, all rent due to Lessee by said assignee or sublessee.  Lessee shall pay upon demand Lessor’s processing costs and attorneys’ fees incurred in determining whether to give such consent, not to exceed One Thousand Dollars ($1,000.00).  Notwithstanding any permitted assignment or subletting, Lessee shall at all times remain directly, primarily and fully responsible and liable for all payments owed by Lessee under this Lease and for compliance with all obligations under the terms, provisions and covenants of this Lease.  If for any proposed assignment or sublease, Lessee receives rent or other consideration (including, but not limited to, sums paid for the sale or rental of Lessee’s personal property or sums paid in connection with the supply of electricity or HVAC), either initially or over the term of the assignment or sublease, in excess of the rent required by this Lease, or, in the case of the sublease of a portion of the Premises, in excess of such rent fairly allocable to such portion, after appropriate adjustments to assure that all other payments called for hereunder are taken into account, Lessee shall pay to Lessor as additional rent fifty percent (50%) of all of the excess of each such payment of rent or other consideration received by Lessee within five (5) days of its receipt.  Furthermore, for any proposed sublease, the sublease agreement (a) shall require Lessee and Sublessee to send Lessor copies of any and all notices concerning the Premises that either party shall send to one another, and (b) shall require Sublessee to obtain a waiver of subrogation against Lessor from Sublessee’s insurers.  Lessor’s consent, if granted, to any assignment or sublease shall be deemed limited solely to said original assignment or sublease, and Lessor reserves the right to consent or to withhold consent with respect to any further or additional assignments, sublets or other transfers of the Lease.

Section 12.4Termination of Sublease upon Lease Termination.  If at any time prior to the expiration or termination of an approved Sublease the Lease shall expire or terminate for any reason whatsoever (or Lessee’s right to possession shall terminate without termination of the Lease), then the Sublease shall simultaneously expire and terminate. However, Sublessee agrees, at the election and upon the written demand of Lessor, and not otherwise, to attorn to Lessor for the remainder of the term of the Sublease, such attornment to be upon all of the terms and conditions of the Lease, with such reasonable modifications as Lessor may require (and if the Base Rental set forth in the Sublease is greater than the Base Rental set forth in the Lease then Sublessee agrees that the Base Rental set forth in the Sublease shall be substituted as the Base Rental to be paid to Lessor). The foregoing provisions of this Section 12.4 shall apply notwithstanding that, as a matter of law, the Sublease may otherwise terminate upon the termination of the Lease, and shall be self-operative upon such written demand of the Lessor, and no further instrument shall be required to give effect to said provisions; provided, however, Sublessee agrees to execute an attornment agreement, in the form and substance acceptable to Lessor, pursuant to which Sublessee confirms that the obligations owed to Lessee under the Sublease shall become obligations to Lessor for the balance of the term of the Sublease.

Section 12.5Affiliated Companies/Restructuring of Business Organization.  Occupancy of all or part of the Premises by a parent or wholly-owned subsidiary company of Lessee or by a wholly-owned subsidiary company of Lessee’s parent company (collectively, “affiliated companies”) shall not be deemed an assignment or subletting provided that any such affiliated companies were not formed as a subterfuge to avoid the obligations of this Article 12.

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ARTICLE 13 - SUBSTITUTED PREMISES

Section 13.1Substituted Premises.  Intentionally deleted.

ARTICLE 14 - INDEMNIFICATION; INSURANCE

Section 14.1Indemnification.  Lessee shall, at its expense, protect, defend, indemnify and hold Lessor and Lessor’s agents, contractors, licensees, employees, directors, officers, partners, trustees and invitees (collectively, “Lessor’s Employees”) and any and all of Lessor’s lessors and mortgagees (whose names shall have been furnished to Lessee) harmless from and against any and all claims, arising out of or in connection with Lessee’s use of the Premises, the Building or the Property, the conduct of Lessee’s business, any activity, work or things done, permitted or allowed by Lessee in or about the Premises or the Property, Lessee’s or Lessee’s Employees’ nonobservance or nonperformance of any statute, ordinance, rule, regulation or other Law, or any negligence or willful act or failure to act of Lessee or Lessee’s Employees.  Lessor shall, at its expense, protect, defend, indemnify and hold Lessee and Lessee’s agents, contractors, licensees, employees, directors, officers, partners, trustees and invitees (collectively, Lessee’s Employees”) harmless from and against any and all claims, arising out of or in connection with Lessor’s use of the Building or the Property, the conduct of Lessor’s business, any activity, work or things done, permitted or allowed by Lessor in or about the Property, Lessor’s or Lessor’s Employees’ nonobservance or nonperformance of any statute, ordinance, rule, regulation or other Law, or any negligence or willful act or failure to act of Lessor or Lessor’s Employees.  This indemnity shall survive the expiration or earlier termination of this Lease.

Section 14.2Insurance.  Effective as of the Effective Date, Lessee shall have the following insurance obligations:

(a)Liability Insurance.  Lessee shall obtain and keep in full force a policy of commercial general liability and property damage insurance (including automobile, personal injury, broad form contractual liability and broad form property damage) under which Lessee is named as the insured and Lessor, Lessor’s Employees and all of Lessor’s lessors and mortgagees (whose names from time to time shall have been furnished to Lessee) are named as additional insureds under which the insurer agrees to indemnify, protect, defend, and hold Lessor, its managing agent and all such lessors and mortgagees harmless from and against any and all costs, expenses and liabilities arising out of or based upon the indemnification obligations of this Lease.  The minimum limits of liability shall be a combined single limit with respect to each occurrence of not less than Two Million Dollars ($2,000,000.00).  The Lessee’s policy shall contain a separation of insureds clause identical in form and substance to the Separation of Insureds clause contained in the standard ISO form #CGOO 01 (11-88) and shall not otherwise eliminate cross-liability.  The policy also shall be primary coverage for Lessee and Lessor for any liability arising out of Lessee’s and Lessee’s Employees’ use, occupancy, maintenance, repair and replacement of the Premises and all areas appurtenant thereto.  Such insurance shall provide that it is primary insurance and not “excess over” or contributory with any other valid, existing and applicable insurance in force for or on behalf of Lessor.  Not more frequently than once each year, if, in the opinion of Lessor’s lender or of the insurance consultant retained by Lessor, the amount of public liability and property damage insurance coverage at that time is not adequate, Lessee shall increase the insurance coverage as reasonably required by either Lessor’s lender or Lessor’s insurance consultant consistent with insurance generally required to be maintained by landlords and tenants in the business of Lessee.

(b)Lessee’s Property Insurance.  Lessee, at its cost, shall maintain on all of its Personal Property, Lessee Improvements and Alterations, in, on, or about the Premises, a policy of standard fire and extended coverage insurance, with theft, negligence, water damage, fire damage, vandalism and malicious mischief endorsements, to the extent of at least full replacement value or replacement cost without any deduction for depreciation.  Such proceeds shall be used by Lessee exclusively for the repair, replacement and restoration of such Personal Property, Lessee Improvements and Alterations.  The “full replacement value” of the improvements to be insured under this Article 14 shall be determined by the company issuing the insurance policy at the time the policy is initially obtained.  Not less frequently than once every three (3) years, Lessor shall have the right to notify Lessee that it elects to have the replacement value redetermined by an insurance company or insurance consultant.  The redetermination shall be made promptly and in accordance with the rules and practices of the Board of Fire Underwriters, or a like board recognized and generally accepted by the insurance company, and each party shall be promptly notified of the results by the company.  The insurance policy shall be adjusted according to the redetermination.

(c)Worker’s Compensation.  Lessee shall maintain Worker’s Compensation and Employer’s Liability insurance as required by law with Employer’s Liability limits as required by law.

(d)Business Income.  Lessee shall maintain loss of income and business interruption insurance in such amounts as will reimburse Lessee for direct or indirect loss of earnings, attributable to all perils commonly insured against by prudent tenants or attributable to prevention of access to the Premises or to the Building as a result of such perils, but in no event in an amount less than the Rent and all additional rent payable hereunder for twelve (12) months.

(e)Other Coverage.  Lessee, at its cost, shall maintain such other insurance as Lessor may reasonably require from time to time.

(f)Insurance Criteria.  All the insurance required under this Lease shall:

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(i)Be issued by insurance companies admitted in the State of California, with a financial rating of at least an A:XIII status as rated in the most recent edition of Best’s Insurance Reports;

(ii)Be issued as a primary policy as respects any insurance maintained by the Lessor, and that any such insurance maintained by the Lessor is excess and noncontributory with this policy, provided the loss is caused by the negligence of the named insured.

(iii)Contain an endorsement requiring thirty (30) days’ written notice from the insurance company to both parties and to Lessor’s lender before cancellation or change in the coverage, scope, or amount of any policy; and

(iv)With respect to property loss or damage by fire or other casualty, a waiver of subrogation must be obtained, as required by Section 14.4.

(g)Evidence of Coverage.  As evidence of the insurance coverage required herein, except worker’s compensation, Lessee shall provide Lessor with endorsements from the insurance policies naming Lessor and Lessor’s affiliates, subsidiaries, successors, assigns, directors, officers, shareholders, partners, members, employees and lenders (“Lessor’s Parties”) as additional insured parties with respect to the coverage required.  Said endorsements, together with evidence of payment of premiums, shall be deposited with Lessor at least ten (10) days prior to the date which Lessor estimates the Commencement Date will occur, and on renewal of the policy not less than thirty (30) days before expiration of the term of the policy.  Lessor shall have the right to require Lessee to provide a certified copy of the actual insurance policy.

(h)No Limitation of Liability.  The insurance obligations of Lessee hereunder, and/or the limits on such insurance as described herein shall in no event waive, release or discharge Lessee of any or all other obligations and liabilities of Lessee contained in this Lease or otherwise.

Section 14.3Assumption of Risk.  Lessee, as a material part of the consideration to Lessor, hereby assumes all risk of damage to Lessee’s Personal Property, Lessee Improvements and Alterations or injury to persons, in, upon or about the Premises and/or the Property from any cause (except for damage or injury caused by the gross negligence or willful misconduct of Lessor) and Lessee hereby waives all such claims against Lessor.  Lessor and Lessor’s Employees shall not be liable for any damage to any of Lessee’s Personal Property by theft or otherwise.  Lessee shall give prompt notice to Lessor in case of fire or accidents in the Premises or in the Building.  Further, with the exception of Lessor’s gross negligence or willful misconduct, Lessor and Lessor’s Employees shall have no liability to Lessee or any of Lessee’s Employees for any damage, loss, cost or expense incurred or suffered by any of them (including, without limitation, damage to Lessee’s business).

Section 14.4Allocation of Insured Risks/Subrogation.  Lessor and Lessee release each other from any claims and demands of whatever nature for damage, loss or injury to the Premises and/or the Building, or to the other’s property in, on or about the Premises and the Building, that are caused by or result from risks or perils insured against under any insurance policies required by this Lease to be carried by Lessor and/or Lessee and in force at the time of any such damage, loss or injury.  Lessor and Lessee shall cause each insurance policy obtained by them or either of them to provide that the insurance company waives all right of recovery by way of subrogation against either Lessor or Lessee in connection with any damage covered by any policy.  Neither Lessor nor Lessee shall be liable to the other for any damage caused by fire or any of the risks insured against under any insurance policy required by this Lease.  If an insurance policy cannot be obtained with a waiver of subrogation, or is obtainable only by the payment of an additional premium charge above that charged by insurance companies issuing policies without waiver of subrogation, the party undertaking to obtain the insurance shall notify the other party of this fact.  The other party shall have a period of ten (10) days after receiving the notice either to place the insurance with a company that is reasonably satisfactory to the other party and that will carry the insurance with a waiver of subrogation, or to agree to pay the additional premium if such a policy is obtainable at additional cost.  If the insurance cannot be obtained or the party in whose favor a waiver of subrogation is desired refuses to pay the additional premium charged, the other party is relieved of the obligation to obtain a waiver of subrogation with respect to the particular insurance involved.

Section 14.5Lessor’s Insurance:  Lessor shall insure the Building throughout the Lease Term with a policy of standard fire and extended coverage insurance to the extent of at least full replacement value or replacement cost without any deduction for depreciation.  In addition, Lessor shall obtain and keep in full force a policy of commercial general liability and property damage insurance coverage applicable to the common areas of the Property.

ARTICLE 15 - DAMAGE OR DESTRUCTION

Section 15.1Loss Covered by Insurance.  If, at any time prior to the expiration or termination of this Lease, the Premises or the Building or the Property is wholly or partially damaged or destroyed by a casualty, the loss to Lessor from which is fully covered (except for the normal deductible) by insurance maintained by Lessor or for Lessor’s benefit, which casualty renders the Premises totally or partially inaccessible or unusable by Lessee in the ordinary conduct of Lessee’s business, then (provided that Lessor shall not be required to use the proceeds of such insurance for the purposes described in subsections (a) and (b) below):

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(a)Repairs Which Can Be Completed Within One Year.  Within sixty (60) days of notice to Lessor of such damage or destruction, Lessor shall provide Lessee with notice of its determination of whether the damage or destruction can be repaired within one (1) year of such damage or destruction without the payment of overtime or other premium.  If all repairs to such Premises or Building or Property can, in Lessor’s judgment, be completed within one (1) year following the date of notice to Lessor of such damage or destruction without the payment of overtime or other premium, Lessor shall, at Lessor’s expense, subject to Section 15.4 below, repair the same to substantially their former condition and this Lease shall remain in full force and effect and a proportionate reduction of Base Rental and Operating Expense Adjustment shall be allowed Lessee for such portion of the Premises as shall be rendered inaccessible or unusable to Lessee, and which is not used by Lessee, during the period of time that such portion is unusable or inaccessible and not used by Lessee; provided, that if the portion of the Premises accessible and usable by Lessee, does not permit the conduct of Lessee’s ordinary business at the Premises in substantially the manner and scope conducted prior to such casualty, Lessee shall receive a complete rental abatement.

(b)Repairs Which Cannot Be Completed Within One Year.  If all such repairs to the Premises or Building or Property cannot, in Lessor’s judgment, be completed within one (1) year following the date of notice to Lessor of such damage or destruction without the payment of overtime or other premium, Lessor shall notify Lessee of such determination and Lessor may, at Lessor’s sole and absolute option,  given within sixty (60) days after notice to Lessor of the occurrence of such damage or destruction. If Lessor does not elect to make the repairs, then either Lessor or Lessee may, by written notice to the other no later than ninety (90) days after the occurrence of such damage or destruction. If Lessor elects to make the repairs, Lessee may then elect to terminate this Lease as of the date of the occurrence of such damage or destruction upon written notice to Lessee within five (5) days of Lessee’s receipt of Lessor’s notice that Lessor elects to make the repairs, or, if Lessee should not elect to terminate the Lease, then Lessor shall repair such damage or destruction to substantially their former condition at Lessor’s expense, and in such event, this Lease shall continue in full force and effect, but the Base Rental shall be proportionately reduced in the amount and for the duration as hereinabove provided in Section 15.1(a).

Section 15.2Loss Not Covered By Insurance.  If, at any time prior to the expiration or termination of this Lease, the Premises or the Building or the Property is totally or partially damaged or destroyed from a casualty, which loss to Lessor is not fully covered (except for any deductible) by insurance maintained by Lessor or for Lessor’s benefit, and which damage renders the Premises inaccessible or unusable to Lessee in the ordinary course of its business, Lessor may, at its option, upon written notice to Lessee within sixty (60) days after notice to Lessor of the occurrence of such damage or destruction, and subject to Section 15.4 below, elect to repair or restore such damage or destruction to substantially their former condition, or Lessor may elect to terminate this Lease (provided Lessor shall not be required to use said insurance proceeds, if any, for the purposes described in this Section 15.2).  If Lessor elects to repair or restore such damage or destruction, this Lease shall continue in full force and effect but the Base Rental shall be proportionately reduced as provided in Section 15.1(a).  If Lessor does not elect by notice to Lessee to repair or restore such damage, this Lease shall terminate.

Section 15.3Substantial Damage; Damage During Final Year.  Notwithstanding anything to the contrary contained in Section 15.1 or 15.2:

(a)If the Building is damaged or destroyed to the extent that, in Lessor’s sole judgment, the cost to repair and/or restore the Building would exceed twenty-five percent (25%) of the full replacement cost of the Building, whether or not the Premises are at all damaged or destroyed, then Lessor shall have the right to terminate this Lease by written notice thereof to Lessee;

(b)If the Premises or the Building or the Property are wholly or partially damaged or destroyed within the final twelve (12) months of the Term of this Lease, and no renewal rights have been exercised by Lessee prior to such damage or destruction, then Lessor shall have the right to terminate this Lease by written notice thereof to Lessee; or

(c)If the Premises or the Building or the Property are wholly or partially damaged or destroyed within the final twelve (12) months of the Term of this Lease, and no renewal rights have been exercised by Lessee prior to such damage or destruction, and if, as a result of such damage or destruction, Lessee is denied access or use of the Premises for the conduct of its business operations for a period of ten (10) consecutive business days, then, Lessee may, at its option, by giving Lessor written notice no later than sixty (60) days after the occurrence of such damage or destruction, elect to terminate this Lease.

Section 15.4Exclusive Remedy.  This Article 15 shall be Lessee’s sole and exclusive remedy in the event of damage or destruction to the Premises and/or the Building, and Lessee, as a material inducement to Lessor’s entering into this Lease, irrevocably waives and releases Lessee’s rights under California Civil Code Sections 1932(2) and 1933(4) and any other applicable existing or future law permitting the termination of a lease agreement in the event of damage to, or destruction of, any part or all of the Premises and/or Building.  No damages, compensation or claim shall be payable by Lessor for any inconvenience, any interruption or cessation of Lessee’s business, or any annoyance, arising from any damage to or destruction of all or any portion of the Premises or the Building. In no event shall Lessor have any obligation to repair or restore any of Lessee’s personal property, trade fixtures or Alterations.

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ARTICLE 16 - EMINENT DOMAIN

Section 16.1Permanent Taking - When Lease Can Be Terminated.  If the whole of the Premises or Building, or so much of the Premises or Building as to prevent Lessee from conducting its ordinary business at the Premises in substantially the manner and scope then conducted at the Premises is taken, or access to the Premises or the Building or parking is materially and adversely affected by a taking, under the power of eminent domain, this Lease shall automatically terminate as of the date of final judgment in such condemnation, or as of the date possession is taken by the condemning authority, whichever is earlier.  A sale by Lessor under threat of condemnation shall constitute a “taking” for the purpose of this Article 16.  No award for any partial or entire taking shall be apportioned and Lessee assigns to Lessor all awards which may be made in such taking or condemnation, together with all rights of Lessee to such award, including, without limitation, any award of compensation for the value of all or any part of the leasehold estate created hereby; provided that nothing contained in this Article 16 shall be deemed to give Lessor any interest in or to require Lessee to assign to Lessor any award made to Lessee for (a) the taking of Lessee’s Personal Property, or (b) interruption of or damage to Lessee’s business, or (c) Lessee’s unamortized cost of the Lessee Improvements to the extent paid for by Lessee; provided further that Lessee’s award shall in no event diminish the award to Lessor.

Section 16.2Permanent Taking - When Lease Cannot Be Terminated.  In the event of a partial taking which does not result in a termination of this Lease under Section 16.1, Base Rental and Lessee’s share of Building Operating Expenses shall be proportionately reduced based on the portion of the Premises rendered unusable, and Lessor shall restore the Premises or the Building.

Section 16.3Temporary Taking.  No temporary taking of the Premises or any part of the Premises and/or of Lessee’s rights to the Premises or under this Lease shall terminate this Lease or give Lessee any right to any abatement of any payments owed to Lessor pursuant to this Lease, any award made to Lessee by reason of such temporary taking shall belong entirely to Lessee; provided, however, in no event shall an award to Lessee reduce any award to Lessor.  A temporary taking lasting more than forty-five (45) days shall be deemed to constitute a permanent taking.

Section 16.4Exclusive Remedy.  This Article 16 shall be Lessee’s sole and exclusive remedy in the event of a taking or condemnation.  Lessee hereby waives the benefit of California Code of Civil Procedure Section 1265.130.

Section 16.5Release Upon Termination.  Upon termination of this Lease pursuant to this Article 16, Lessee and Lessor hereby agree to release each other from any and all obligations and liabilities with respect to this Lease except such obligations and liabilities which arose or accrued prior to such termination.

ARTICLE 17 - DEFAULTS

Section 17.1Default by Lessee.  Each of the following shall be an “Event of Default” (sometimes referred to herein as a “default”) by Lessee and a material breach of this Lease:

(a)Lessee shall fail to make any payment owed by Lessee under this Lease, as and when due, and the Lessor shall have delivered a Notice to Pay or Quit.  Any such notice shall be in lieu of, and not in addition to, any notice required under Section 1161 of the California Code of Civil Procedure;

(b)Lessee shall fail to observe, keep or perform any of the terms, covenants, agreements or conditions under this Lease that Lessee is obligated to observe or perform, other than that described in subsection (a) above, for a period of thirty (30) days after notice to Lessee of said failure; provided, however, that if the nature of Lessee’s default is such that more than thirty (30) days are reasonably required for its cure, then Lessee shall not be deemed to be in default under this Lease if Lessee shall commence the cure of such default so specified within said thirty (30) day period and diligently prosecute the same to completion within sixty (60) days after the original notice to Lessee of said failure.  Such notice shall be in lieu of, and not in addition to, any notice required under Section 1161 of the California Code of Civil Procedure.

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

(d)The vacating or abandonment of the Premises by Lessee.

Section 17.2Default by Lessor.  Lessor shall not be in default in the performance of any obligation required to be performed under this Lease unless Lessor has failed to perform such obligation within thirty (30) days after the receipt of notice from Lessee specifying in detail Lessor’s failure to perform; provided, however, that if the nature of Lessor’s obligation is such that more than thirty (30) days are required for its performance, then Lessor shall

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not be deemed in default if it shall commence such performance within thirty (30) days and thereafter diligently pursue the same to completion within sixty (60) days after the original Notice to Lessor of such failure.  Lessee shall have no rights as a result of any default by Lessor until Lessee also gives thirty (30) days’ notice to any person who has a recorded interest pertaining to the Building or the Property and who has previously requested such notice in a document delivered to and acknowledged by Lessee and to whom Lessee has agreed to provide a cure right, specifying the nature of the default.  Such person shall then have the right to cure such default, and Lessor shall not be deemed in default if such person cures such default within thirty (30) days after receipt of notice of the default, or within such longer period of time as may reasonably be necessary to cure the default not exceeding an additional thirty (30) days.  If Lessor or such person does not cure the default, Lessee may exercise such rights or remedies as shall be provided or permitted by law to recover any damages proximately caused by such default.  Lessee agrees that, in the event that it becomes entitled to receive damages from Lessor, Lessee shall not be allowed to recover from Lessor consequential damages or damages in excess of the out-of-pocket expenditures incurred by Lessee as a result of a default by Lessor.  In any event, it is expressly understood and agreed that notwithstanding anything in this Lease to the contrary, and notwithstanding any applicable law to the contrary, the liability of Lessor hereunder (including any successor lessor) and any recourse by Lessee against Lessor shall be limited solely and exclusively to the interest of Lessor in and to the Property and Building, and neither Lessor, nor any of its constituent partners, shall have any personal liability therefor, and Lessee hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Lessee.

ARTICLE 18 - LESSOR’S REMEDIES AND RIGHTS

Section 18.1Termination of Lease.  In case of an Event of Default by Lessee, Lessor shall have the right, in addition to all other rights available to Lessor under this Lease or now or later permitted by law or equity, to terminate this Lease by providing Lessee with a notice of termination.  Upon termination, Lessor may recover any damages proximately caused by Lessee’s failure to perform under this Lease, or which are likely in the ordinary course of business to be incurred, including any amount expended or to be expended by Lessor in an effort to mitigate damages, as well as any other damages to which Lessor is entitled to recover under any statute now or later in effect. Lessor’s damages include the worth, at the time of any award, of the amount by which the unpaid Rent for the balance of the Term after the time of the award exceeds the amount of the Rent loss that the Lessee proves could be reasonably avoided.  The worth at the time of award shall be determined by discounting to present value such amount at one percent (1%) more than the discount rate of the Federal Reserve Bank in San Francisco in effect at the time of the award.  Other damages to which Lessor is entitled shall bear interest at the Interest Rate.

Section 18.2Continuation of Lease.  In accordance with California Civil Code Section 1951.4 (or any successor statute), Lessee acknowledges that in the event Lessee has breached this Lease and abandoned the Premises, this Lease shall continue in effect for so long as Lessor does not terminate Lessee’s right to possession, and Lessor may enforce all its rights and remedies under this Lease, including the right to recover the Rent as it becomes due under this Lease.  Acts of maintenance or preservation or efforts to re-let the Premises or the appointment of a receiver upon initiative of Lessor to protect Lessor’s interest under this Lease shall not constitute a termination of Lessee’s right to possession.

Section 18.3Right of Entry.  In case of an Event of Default by Lessee, Lessor shall also have the right, with or without terminating this Lease, to enter the Premises and remove all persons and personal property from the Premises, such property being removed and stored in a public warehouse or elsewhere at Lessee’s sole cost and expense for at least thirty (30) days, and after such thirty (30) day period, Lessor shall have the right to discard or otherwise dispose of such property without liability therefor to Lessee or any other person.  No removal by Lessor of any persons or property in the Premises shall constitute an election to terminate this Lease.  Such an election to terminate may only be made by Lessor in writing, or decreed by a court of competent jurisdiction.  Lessor’s right of entry shall include the right to remodel the Premises and re-let the Premises.  All costs incurred in such entry and re-letting shall be paid by Lessee.  Rents collected by Lessor from any other tenant which occupies the Premises shall be offset against the amounts owed to Lessor by Lessee.  Lessee shall be responsible for any amounts not recovered by Lessor from any other tenant which occupies the Premises.  Any payments made by Lessee shall be credited to the amounts owed by Lessee in the sole order and discretion of Lessor, irrespective of any designation or request by Lessee.  No entry by Lessor shall prevent Lessor from later terminating this Lease by written notice.  Notwithstanding anything to the contrary set forth in this Lease, Lessor shall not have the right to take possession of any of Lessee’s business records or the records of personal property located on the Premises of any customer of Lessee or any third party.  Furthermore, any rights and remedies granted to Lessee under this Lease or at law are subject to the power of the Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation and any other bank regulatory agencies to enter upon and assume control of the Premises and of any personal property located thereon.

Section 18.4Remedies.  Lessee hereby waives, for itself and all persons claiming by and under Lessee, all rights and privileges which it might have under any present or future law to redeem the Premises or to continue this Lease after being dispossessed or ejected from the Premises.  The rights and remedies of Lessor set forth in this Lease are not exclusive, and Lessor may exercise any other right or remedy available to it under this Lease, at law or in equity.

Section 18.5Lessor’s Right to Assign.  Lessor shall have the right to sell, encumber, convey, transfer and/or assign any and all of its rights and obligations under this Lease.

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ARTICLE 19 - ATTORNEYS’ FEES

Section 19.1Attorneys’ Fees.  If either Lessor or Lessee commences or engages in, or threatens to commence or engage in, any action, litigation, arbitration or proceeding against the other party arising out of or in connection with this Lease, the Premises, the Building or the Property, including, but not limited to, any action or proceeding (a) for recovery of any payment owed by either party under this Lease, or (b) to recover possession of the Premises, or (c) for damages for breach of this Lease, or (d) relating to the enforcement or interpretation of either party’s rights or obligations under this Lease (whether in contract, tort, or both), or (e) relating to any proceeding where either party is requesting a determination of rights and responsibilities under the Lease, the prevailing party shall be entitled to have and recover from the losing party reasonable attorneys’ fees and other costs and expenses incurred in connection with the action, litigation, arbitration or proceeding, including any attorney’s fees, costs and expenses incurred in preparation of said action, litigation, arbitration or proceeding, and also incurred on collection and appeal.  If Lessor becomes involved in any action, litigation, arbitration or dispute, threatened or actual, by or against anyone not a party to this Lease, but arising by reason of, or related to, any act or omission of Lessee or Lessee’s Employees, Lessee agrees to pay Lessor’s reasonable attorneys’ fees and other costs incurred in connection with the action, litigation, arbitration or dispute, regardless of whether an action, lawsuit or arbitration proceeding is actually filed.  If Lessee becomes involved in any action, litigation, arbitration or dispute, threatened or actual, by or against anyone not a party to this Lease, but arising by reason of or related to any act or omission of Lessor or Lessor’s Employees, Lessor agrees to pay Lessee’s reasonable attorneys’ fees and other costs incurred in connection with the action, litigation, arbitration or dispute, regardless of whether an action, lawsuit or arbitration proceeding is actually filed.

ARTICLE 20 - SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT

Section 20.1Obligations of Lessee.  This Lease and the rights granted to Lessee by this Lease are and shall be subject and subordinate at all times to (a) all ground or underlying leases affecting all or any part of the Property now or later existing and all amendments, renewals, modifications, supplements and extensions of this Lease, and (b) all deeds of trust or mortgages now or later affecting or encumbering all or any part of the Property and/or any ground or underlying leasehold estate; provided, however, that if Lessor elects at any time to have Lessee’s interest in this Lease be or become superior, senior or prior to any such instrument, then upon receipt by Lessee of written notice of such election, this Lease shall be superior, senior and/or prior to such instrument.  Lessee shall immediately execute all instruments and other documents required or desired by any lender or Lessor confirming the subordination and/or superiority, as applicable, of this Lease to such mortgage, deed of trust, ground or underlying lease.

Section 20.2Lessor’s Right to Assign.  Lessor’s interest in this Lease may be assigned to any mortgagee or trust deed beneficiary as additional security.  Nothing in this Lease shall empower Lessee to do any act without Lessor’s prior written consent which can, shall or may encumber the title of the owner of all or any part of the Property.

Section 20.3Attornment by Lessee.  In the event of the cancellation or termination of any or all ground or underlying leases affecting all or any part of the Building in accordance with its terms or by the surrender thereof, whether voluntary, involuntary or by operation of law, or by summary proceedings, or in the event of any foreclosure of any or all mortgages or deeds of trust encumbering all or any part of the Building by trustee’s sale, voluntary agreement, deed in lieu of foreclosure, or by the commencement of any judicial action seeking foreclosure, Lessee, at the request of the then landlord under this Lease, shall attorn to and recognize (a) the ground or underlying lessor, under the ground or underlying lease being terminated or canceled, and (b) the beneficiary or purchaser at the foreclosure sale, as Lessee’s landlord under this Lease, and Lessee agrees to execute and deliver at any time upon request of such ground or underlying lessor, beneficiary, purchaser or their successors, any and all instruments to further evidence such attornment.  Lessee hereby waives its right, if any, to elect to terminate this Lease or to surrender possession of the Premises in the event of any such cancellation or termination of such ground or underlying lease or foreclosure of any mortgage or deed of trust.

Section 20.4Non-Disturbance.  Notwithstanding any of the provisions of this Article 20 to the contrary, Lessee shall be allowed to occupy the Premises subject to the conditions of this Lease, and this Lease shall remain in effect until an Event of Default occurs or until Lessee’s rights hereunder are terminated because of an Eminent Domain proceeding pursuant to Article 16 or because of the occurrence of damage and destruction pursuant to Article 15.  Lessor agrees that it will endeavor to obtain and deliver to Lessee a non-disturbance in favor of Lessee from the present mortgage holder of the Building.  Said non-disturbance agreement shall be in recordable form and may be recorded by Lessee at Lessee’s election and expense.

Section 20.5Delivery of Instruments.  If Lessee fails to execute and deliver, within ten (10) days following request thereof by Lessor, any documents or instruments required by this Article 20, such failure may, at Lessor’s election, constitute a default under this Lease, which default, at Lessor’s option, shall not be curable.

ARTICLE 21 - RULES AND REGULATIONS

Section 21.1Rules and Regulations.  Effective as of the Effective Date, Lessee shall faithfully observe and comply with the rules and regulations pertaining to the Property (“Rules”), a copy of which is attached to this Lease as Exhibit “E,” and all reasonable modifications and additions to the Rules from time to time put into effect by Lessor; provided, however, that no modifications or additions to the Rules shall materially interfere with Lessee’s permitted use

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of the Premises as set forth in Section 6.1.  Lessor shall not be responsible to Lessee for the nonperformance of any of the Rules by any other occupant or tenant of the Property.

Section 21.2Certain Construction Requirements.  Prior to undertaking any physical work in or around the Premises, Lessee shall notify Lessor, in writing, of the exact nature and location of the proposed work and shall promptly supply such additional information regarding the proposed work as Lessor shall request.  After receipt of Lessee’s notice, Lessor may, to the extent appropriate, supply Lessee with the Building regulations and procedures for working in areas where there is a risk of coming into contact with materials or building systems which if not properly handled could cause health or safety risks, could damage such systems and/or the Building, or which could adversely impact any warranty relating thereto.  Lessee shall, at Lessee’s sole cost and expense, strictly comply with all such Building regulations and procedures established by Lessor and with all applicable Federal, state and local governmental statutes, ordinances, codes, rules, regulations, controls and guidelines (collectively, “Laws”).  Lessor shall have the right at all times to monitor the work for compliance with the Building regulations and procedures, the Rules and all Laws.  If Lessor determines that any applicable Laws or any Rules and/or any Building regulations or procedures are not being strictly complied with, Lessor may immediately require the cessation of all work being performed in or around the Premises until such time as Lessor is satisfied that the applicable Rules, Laws, regulations and procedures will be observed.  Lessor’s monitoring of any work in or around the Premises shall not be deemed a certification by Lessor of compliance with any applicable Laws, Rules, Building regulations or procedures or a waiver by Lessor of its right to require strict compliance with such Laws, Rules, regulations or procedures, nor shall such monitoring relieve Lessee from any liabilities relating to such work.

ARTICLE 22 - HOLDING OVER

Section 22.1Surrender of Possession.  Lessee shall surrender possession of the Premises immediately upon the expiration of the Term or termination of this Lease.  If Lessee shall continue to occupy or possess the Premises after such expiration or termination without the consent of Lessor, then unless Lessor and Lessee have otherwise agreed in writing, Lessee shall be a tenant from month-to-month.  All the terms, provisions and conditions of this Lease shall apply to this month-to-month tenancy except those terms, provisions and conditions pertaining to the Term, and except that the Base Rental shall be immediately adjusted upward upon the expiration or termination of this Lease to equal the greater of (a) one hundred fifty percent (150%) of the then prevailing monthly rental rate for similar commercial space, as determined by Lessor, or (b) one hundred fifty percent (150%) of the Base Rental for the Premises in effect under this Lease during the month which includes the day immediately prior to the date of the expiration or termination of this Lease.  This month-to-month tenancy may be terminated by Lessor or Lessee upon thirty (30) days’ prior notice to the other party.  In the event that Lessee fails to surrender the Premises upon such termination or expiration, then Lessee shall indemnify, defend and hold Lessor harmless against all loss or liability resulting from or arising out of Lessee’s failure to surrender the Premises, including, but not limited to, any amounts required to be paid to any tenant or prospective tenant who was to have occupied the Premises after said termination or expiration and any related attorneys’ fees and brokerage commissions.

Section 22.2Payment of Money After Termination.  No payment of money by Lessee to Lessor after the termination of this Lease by Lessor, or after the giving of any notice of termination to Lessee by Lessor which Lessor is entitled to give Lessee under this Lease, shall reinstate, continue or extend the Term of this Lease or shall affect any such notice given to Lessee prior to the payment of such money, it being agreed that after the service of such notice or the commencement of any suit by Lessor to obtain possession of the Premises, Lessor may receive and collect, when due, any and all payments owed by Lessee under this Lease, and otherwise exercise any and all of its rights and remedies.  The making of any such payments by Lessee or acceptance of same by Lessor shall not waive such notice of termination, or in any manner affect any pending suit or judgment obtained.

ARTICLE 23 - INSPECTIONS AND ACCESS

Section 23.1Inspections and Access.  Lessor may enter the Premises at all reasonable hours by means of a master key or otherwise for any reasonable purpose.  If Lessee shall not be personally present to open and permit an entry into the Premises at any time when such entry by Lessor is necessary or permitted under this Lease, Lessor may enter by means of a master key without liability to Lessee except for any failure to exercise due care for Lessee’s Personal Property, and without affecting this Lease.

ARTICLE 24 - NAME OF BUILDING AND CONTINENTAL PARK

Section 24.1Name of Building.  Lessee shall not use any name, insignia or logotype of the Building or Continental Park for any purpose other than for designating Lessee’s address.  Lessee shall not use any picture of the Building, the Property or Continental Park in its advertising, stationery or any other manner unless approved by Lessor.  Lessor expressly reserves the right in Lessor’s sole and absolute discretion, at any time to change the name, insignia, logotype or street address of the Building or the Property without in any manner being liable to Lessee.

ARTICLE 25 - SURRENDER OF LEASE

Section 25.1Surrender of Lease.  The voluntary or other surrender of this Lease by Lessee, shall not work a merger, and shall, at the option of Lessor, terminate all or any existing subleases or subtenancies, or may, at the option of Lessor, operate as an assignment to it of Lessee’s interest in any or all such subleases or subtenancies.

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ARTICLE 26 - WAIVER

Section 26.1Waiver.  No obligation, term, covenant, or agreement in this Lease shall be deemed waived unless such waiver is in writing and signed by the party so waiving the same. The waiver by Lessor or Lessee of any term, covenant, agreement or condition contained in this Lease shall not be deemed to be a waiver of any subsequent breach of the same or of any other term, covenant, agreement, condition or provision of this Lease, nor shall any failure to enforce compliance with any or all of the terms, covenants, agreements, conditions or provisions of this Lease (except as expressly provided in this Lease), or any custom or practice which may develop between the parties in the administration of this Lease, be construed to waive or lessen the right of Lessor or Lessee to insist upon the performance by the other in strict accordance with all of the terms, covenants, agreements, conditions and provisions of this Lease.  The subsequent acceptance by Lessor of any payment owed by Lessee to Lessor under this Lease, or the payment of Rent by Lessee, shall not be deemed to be a waiver of any preceding breach by Lessee of any term, covenant, agreement, condition or provision of this Lease, other than the failure of Lessee to make the specific payment so accepted by Lessor, regardless of Lessor’s or Lessee’s knowledge of such preceding breach at the time of the making or acceptance of such payment. No payment by Lessee, nor receipt by Lessor, of a lesser amount than the Rent or Additional rent required to be paid under this Lease will be deemed to be anything other than a payment on account of the earliest Rent or Additional Rent due hereunder.  No endorsement or statement on any check, or any letter accompanying any check or payment as Rent, will be deemed an accord and satisfaction. The delivery of Lessee’s keys to any employee or agent of Lessor will not constitute a termination of this Agreement unless Lessor has entered into a written agreement to that effect.

ARTICLE 27 - SALE BY LESSOR

Section 27.1Sale by Lessor.  In the event Lessor shall sell, assign, convey or transfer all or a part of its interest in the Building or any part of the Property, Lessee agrees to attorn to such transferee, assignee or new owner, and upon consummation of such sale, conveyance or transfer, Lessor shall automatically be freed and relieved from all liability and obligations accruing or to be performed from and after the date of such sale, transfer or conveyance.  Lessor shall have the right to subdivide the Property into separate legal lots or parcels and, without materially and adversely affecting the obligations of Lessee, the right to reallocate and adjust the rights, duties and obligations of Lessor and Lessee hereunder so that, as between Lessor and Lessee, those rights, duties and obligations relate only to the lots or parcels on which the Building is located and on which sufficient parking facilities are located to comply with Lessor’s obligations under this Lease.  To the extent that those rights, duties and obligations cannot be equitably allocated to only one lot or parcel, Lessor may elect to record a reciprocal easement agreement appurtenant to the Building.  If Lessor records such an agreement, Lessee shall subordinate this Lease to that agreement.

ARTICLE 28 - NO LIGHT AND AIR EASEMENT

Section 28.1No Light and Air Easement.  Any diminution or shutting off of light or air by any structure which may be erected on the land or upon lands adjacent to or in the vicinity of the Property shall not affect this Lease, abate any payment owed by Lessee under this Lease or otherwise impose any liability on Lessor.

ARTICLE 29 - FORCE MAJEURE

Section 29.1Force Majeure.  Lessor shall not be chargeable with, liable for, or responsible to Lessee for anything or in any amount for any failure to perform or delay caused by:  fire; earthquake; explosion; flood; hurricane; the elements; Acts of God or the public enemy; actions, restrictions, limitations or interference of governmental authorities or agents; war; invasion; insurrection; rebellion; riots; strikes or lockouts; inability to obtain necessary materials, goods, equipment, services, utilities or labor; or any other cause whether similar or dissimilar to the foregoing which is beyond the reasonable control of Lessor; and any such failure or delay due to said causes or any of them shall not be deemed a breach of or default in the performance of this Lease by Lessor.

ARTICLE 30 - ESTOPPEL CERTIFICATES

Section 30.1Estoppel Certificates.  Lessee shall, at any time and from time to time upon request of Lessor, within ten (10) days following notice of such request from Lessor, execute, acknowledge and deliver to Lessor in recordable form, a certificate (“Estoppel Certificate”) in writing in a form as Lessor or any of its lenders, prospective purchasers, lienholders or assignees may reasonably deem appropriate and which does not waive any rights of Lessee hereunder.  Lessee’s failure to deliver the Estoppel Certificate within this ten (10) day period may, at Lessor’s election, constitute a default hereunder which, at Lessor’s option, shall not be curable.

ARTICLE 31 - RIGHT TO PERFORMANCE

Section 31.1Right to Performance.  All covenants, conditions and agreements to be performed by Lessee under this Lease shall be performed by Lessee at Lessee’s sole cost and expense.  If Lessee shall fail to perform any such covenant, condition or agreement on its part to be performed under this Lease, and such failure shall continue for three (3) days beyond any applicable grace period for performance after notice thereof to Lessee (provided that no notice shall be required in cases of emergency), Lessor may, but shall not be  obligated to do so, without waiving or releasing Lessee from any obligations of Lessee under this Lease, perform any such act on Lessee’s part to be made or

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performed as provided in this Lease.  Any performance by Lessor of Lessee’s obligations shall not waive or cure any Default of Lessee for such failure.  All costs incurred by Lessor with respect to any such performance by Lessor (including reasonable attorneys’ fees) shall be immediately paid by Lessee to Lessor.

ARTICLE 32 - PARKING FACILITIES

Section 32.1Parking Facilities.  So long as Lessee complies with the terms, provisions and conditions of this Lease, Lessor shall maintain and operate, or cause to be maintained and operated, automobile parking facilities (“Parking Facilities”) in, adjacent to, or within a reasonable distance from the Building.  Lessee’s privileges during the term hereof with respect to the Parking Facilities shall be in accordance with the provisions of the attached Exhibit “F.”

ARTICLE 33 - SECURITY SYSTEMS

Section 33.1  Lessee’s Right to Install Security System.  If Lessee wishes to establish or install any automated and/or non-automated security system in, on or about the Premises, Lessee shall first notify Lessor of Lessee’s plan for any such system, and Lessor shall have the right to review and approve or disapprove said plan in Lessor’s discretion.  If Lessor approves any such plan and Lessee establishes or installs any automated and/or non-automated security system in, on or about the Premises (which shall then be considered a Lessee Improvement under this Lease) and should such system adversely affect the Premises or the Property or the desirability of the Premises or Building as office space, or as an office building, or have an adverse effect on other tenants, Lessor shall subsequently have the right to review Lessee’s security system from time to time and request Lessee to make changes in personnel and/or equipment.  Lessee shall make said requested changes immediately upon Lessor’s request.   Lessee shall have sole responsibility for the protection of itself, Lessee’s Employees and all property of Lessee and Lessee’s Employees located in, on or about the Premises or the Building or the Property, and the provisions of Section 14.3 shall, nevertheless, continue in full force and effect.

ARTICLE 34 - NOTICES

Section 34.1Notices.  All notices, requests, consents, approvals, payments in connection with this Lease, or communications that either party desires or is required or permitted to give or make to the other party under this Lease, shall only be deemed to have been given, made and delivered, when (a) made or given in writing and personally served; or (b) deposited in the United States mail, certified or registered mail, return receipt requested, postage prepaid to the respective addresses of Lessee or Lessor as set forth below; or (c) delivered by overnight delivery Federal Express/Airborne/United Parcel Service/DHL Worldwide Express/California Overnight with charges prepaid, notice to be effective on delivery if confirmed by the delivery service.  Lessor or Lessee may from time to time designate other addresses for notice purposes by written notice to the other in accordance herewith.

Lessee’s Address for Notices (before occupancy):	Manhattan Bancorp.
	2221 Rosecrans Ave, Suite 131
	El Segundo, California 90245
Lessee’s Address for Notices (after occupancy):	Manhattan Bancorp.
	2141 Rosecrans Avenue, Suite 1160
	El Segundo, California 90245
Lessee’s Address for Billing Purposes:	Manhattan Bancorp.
	2141 Rosecrans Avenue, Suite 1160
	El Segundo, California 90245
Lessor’s Address for Notices:	The Plaza CP LLC
	2041 Rosecrans Avenue, Suite 200
	El Segundo, California 90245
	Attention: Richard C. Lundquist
Copy to:	The Plaza CP LLC
	2041 Rosecrans Avenue, Suite 200
	El Segundo, California 90245
	Attention: Leonard E. Blakesley, Jr.
Lessor’s Address For Payment of Rent:
(a) If the payment is made by first class mail:	The Plaza CP LLC
	P.O. Box 80009
	City of Industry, CA 91716-8009
(b) If the payment is made by overnight delivery:	The Plaza CP LLC
	Attention: Lockbox #80009
	19935 E. Walnut Drive
	North Walnut, CA 91795

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ARTICLE 35 - MISCELLANEOUS

Section 35.1Authorization to Sign Lease.  If Lessee is a corporation, each individual executing this Lease on behalf of Lessee represents and warrants that he/she is duly authorized to execute and deliver this Lease on behalf of Lessee in accordance with a duly adopted resolution of Lessee’s Board of Directors, and Lessee warrants and represents that this Lease is binding upon Lessee in accordance with its terms.  If Lessee is a corporation, Lessee shall, concurrently with its execution of this Lease, deliver to Lessor upon its request a certified copy of a resolution of its Board of Directors authorizing the execution of this Lease.  If Lessee is a partnership or trust, each individual executing this Lease on behalf of Lessee represents and warrants that he/she is duly authorized to execute and deliver this Lease on behalf of Lessee in accordance with the terms of such entity’s partnership agreement or trust agreement, respectively, and Lessee warrants and represents that this Lease is binding upon Lessee in accordance with its terms.  If Lessee is a partnership or trust, Lessee shall, concurrently with its execution of this Lease, deliver to Lessor upon its request such certificates or written assurances from the partnership or trust as Lessor may request authorizing the execution of this Lease.

Section 35.2Entire Agreement.  This Lease contains the entire agreement between the parties respecting the Premises and all other matters covered or mentioned in this Lease.  This Lease may not be altered, changed or amended except by an instrument in writing specifically designated as an amendment to this Lease and signed by both parties hereto. Lessee acknowledges and agrees that no prior information provided or statements made by Lessor or Lessor’s agents (“Prior Information”) have in any way induced Lessee to enter into this Lease, and that Lessee has satisfied itself of all its concerns prior to entering into this Lease by conducting an independent investigation of the validity of such Prior Information.

Section 35.3Severability.  The illegality, invalidity or unenforceability of any term, condition or provision of this Lease shall in no way impair or invalidate any other term, provision or condition of this Lease, and all such other terms, provisions and conditions shall remain in full force and effect.

Section 35.4Covenants and Conditions.  All provisions, whether covenants or conditions, on the part of Lessee shall be deemed to be both covenants and conditions.

Section 35.5Gender, Definitions and Headings.  The words “Lessor” and “Lessee” as used herein shall include the plural as well as the singular and, when appropriate, shall refer to action taken by or on behalf of Lessor or Lessee by their respective employees, agents or authorized representatives.  Words in masculine or neuter gender include the masculine, feminine and neuter.  If there is more than one person constituting Lessee, the obligations hereunder imposed upon such persons constituting Lessee shall be joint and several.  The paragraph headings of this Lease are not a part of this Lease and shall have no effect upon the construction or interpretation of any part hereof.  Subject to the provisions of Articles 12 and 27, and except as otherwise provided to the contrary in this Lease, the terms, conditions and agreements of this Lease shall apply to and bind the heirs, successors, legal representatives and permitted assigns of the parties hereto.  Any reference to the word persons shall be deemed to include a corporation, a government entity, an individual, a general partnership, a limited partnership, a joint venture, a trust and/or an association.  This Lease shall be governed by and construed pursuant to the laws of the State of California.

Section 35.6Exhibits and Riders.  The Exhibits and Riders are attached to this Lease, and are hereby incorporated by this reference and made a part of this Lease.  In the event a discrepancy, ambiguity or variance should exist between terms and conditions in the Lease Agreement and in the exhibits and/or riders thereto, then the terms and conditions of the Lease Agreement shall prevail and control.

Section 35.7Modification for Lender.  Upon Lessor’s request, Lessee agrees to modify this Lease to meet the requirements of any or all lenders or ground lessors selected by Lessor who request such modification as a condition precedent to providing any loan or financing or to entering into any ground lease affecting or encumbering the Property or any part thereof, provided that such modification does not (a) increase Base Rental or other costs, (b) alter the Term, or (c) materially adversely affect Lessee’s rights under this Lease or materially increase Lessee’s obligations.

Section 35.8Transportation System Management Program.  Lessee hereby covenants and agrees, at its sole cost and expense, to participate in and cooperate with the requirements of any and all government promulgated or sponsored transportation system management programs adopted for the Building and Property.

Section 35.9Quiet Enjoyment.  Lessor covenants and agrees that Lessee, upon making all of Lessee’s payments as and when due under this Lease, and upon performing, observing and keeping the covenants, agreements and conditions of this Lease on its part to be kept, shall peaceably and quietly hold, occupy and enjoy the Premises during the Term of this Lease without hindrance or molestation from Lessor subject to the terms and provisions of this Lease.  Lessee covenants and agrees to comply with all rules and regulations of the Lease and with all Laws to enable other occupants of the Building to occupy and enjoy their premises without hindrance, molestation, intrusion and interference from Lessee.

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Section 35.10No Recordations.  Lessor and Lessee agree that in no event and under no circumstances shall this Lease be recorded by Lessee.

Section 35.11Time is of the Essence.  Subject to the provisions of Article 29 of this Lease, time shall be of the essence of this Lease and of each of the provisions hereof.

Section 35.12Cumulative Remedies.  No remedy or election provided, allowed or given by any provision of this Lease shall be deemed exclusive unless so indicated, but shall, whenever possible, be cumulative with all other remedies in law or equity.

Section 35.13Bankruptcy.  In the event the estate created hereby shall be taken in execution or by other process of law, or if Lessee shall be adjudicated insolvent or bankrupt pursuant to the provisions of any state or federal insolvency or bankruptcy law, or if a receiver or trustee of the property of Lessee shall be appointed by reason of Lessee’s insolvency or inability to pay its debts, or if any assignment shall be made of Lessee’s property for the benefit of creditors, then and in any of such events, Lessor may terminate this Lease by written notice to Lessee; provided, however, if the order of the court creating any of such disabilities shall not be final by reason of pendency of such proceeding, or appeal from such order, then Lessor shall not have the right to terminate this Lease so long as Lessee performs its obligations hereunder.

Section 35.14Confidentiality.  This Lease document and the terms of this Lease, and the covenants, obligations and conditions contained in this Lease shall remain strictly confidential.  Lessee agrees to keep such terms, covenants, obligations and conditions strictly confidential and to not disclose such matters to any other landlord, tenant, prospective tenant or broker.  Provided, however, Lessee may provide a copy of this Lease to a non-party solely in conjunction with Lessee’s reasonable and good faith effort to secure an assignee or sublessee for the Premises, and may disclose the terms of the Lease or file the Lease in connection with any securities or other regulatory filings.

Section 35.15Lessee’s Responsibility Regarding Hazardous Substances.

(a)Prohibition.  Lessee shall not cause or permit the manufacture, generation, storage, use, transportation, treatment, incineration, disposal, discharge or release of any Hazardous Substance in, on, under, from or about the Premises or the Property.  Notwithstanding the preceding sentence, Lessee may store and use supplies (in amounts not exceeding quantities normally used for Lessee’s approved use of Premises) containing Hazardous Substances so long as such supplies (a) are of a type and chemical composition commonly associated with Lessee’s approved use of Premises, (b) are stored and used only in such quantities as are reasonably incidental to such use and in compliance with any manufacturer’s directions or warnings and all applicable Laws, and (c) are disposed of by Lessee in compliance with applicable Laws.  Lessee shall store and use all such supplies in a manner which reduces to the greatest extent reasonably practical the threat of any release of any Hazardous Substance and shall promptly and with reasonable care clean up any such release to the satisfaction of Lessor and any governmental authority having jurisdiction thereof.  In no event shall Lessee use or store any asbestos-containing materials or PCBs on or about the Property or the Premises.

(b) Required Warnings.  Lessee shall give all warnings required by the California Safe Drinking Water and Toxic Enforcement Act of 1986 (California Health & Safety Code §§ 25249.5 et seq.), as amended from time to time, with respect to any exposures occurring in the Premises or as a result of Lessee’s use of the Premises or the Property.

(c) Environmental Problems.  If Lessee knows or has reasonable cause to believe that any Hazardous Substance is located or will come to be located on the Premises or Property (an “Environmental Problem”), whether or not caused or permitted by Lessee, Lessee shall immediately notify Lessor.  Lessee shall exercise reasonable care to avoid any Lessee Related Environmental Problem (as such term is defined below).  Lessee shall give any and all notices of any Lessee Related Environmental Problem required by applicable Environmental Protection Laws, including, without limitation, any notice required by Section 103 of the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. §§ 9601 et seq.) and any notice required by Sections 13271 or 13272 of the California Water Code, as each may be amended from time to time.  Lessee shall immediately give Lessor notice of any governmental investigation or any governmental or regulatory action, proceeding, order or decree relating to any Lessee Related Environmental Problem and, at Lessee’s expense, shall timely comply in all respects with any such order or decree, unless Lessor first notifies Lessee that Lessor intends to contest such order or decree.  Prior to commencing any corrective or remedial action with respect to any Environmental Problem (except for any such action taken to comply with an order or decree which Lessor has not elected to contest), Lessee shall obtain the consent of Lessor (which shall not be unreasonably withheld or delayed) and each governmental authority exercising jurisdiction with respect to such Environmental Problem.

(d)Lessor’s Access to Information.  Within ten (10) business days after Lessor’s request therefor (or within such shorter time as may be reasonably required by Lessor), Lessee shall provide Lessor with any information reasonably requested by Lessor, to enable Lessor to comply with any applicable Environmental Protection Law.

“Environmental Protection Law” means any applicable Law governing the manufacture, generation, storage, use, transportation, treatment, incineration, disposal, discharge, threatened discharge, release or threatened release of any

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Hazardous Substance, or otherwise relating to the protection of the environment or the health and safety of persons, including, without limitation, the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. §§ 9601 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. §§ 6901 et seq.), the Clean Air Act (42 U.S.C. §§ 7401 et seq.), the Water Pollution Prevention and Control Act (33 U.S.C. §§ 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the California Hazardous Substance Account Act (CA Health & Safety Code §§ 25300 et seq.), the California Hazardous Waste Control Act (CA Health & Safety Code §§ 25100 et seq.), the California Safe Drinking Water and Toxic Enforcement Act of 1986 (CA Health & Safety Code §§ 25249.5 et seq.) and the Porter Cologne Water Quality Control Act (CA Water Code §§ 13000 et seq.), as each may be amended from time to time.

“Hazardous Substance” means any hazardous, toxic, explosive, radioactive, infectious or dangerous substance, material, chemical, waste, contaminant or pollutant, including, without limitation, (a) any “hazardous substance” within the meaning of the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. §§ 9601 et seq.) or the Carpenter-Presley-Tanner Hazardous Substance Account Act (CA Health & Safety Code §§ 25300 et seq.), as each may be amended from time to time, (b) any “hazardous waste” within the meaning of the Resource Conservation and Recovery Act (42 U.S.C. §§ 6901 et seq.), as amended from time to time, (c) any “hazardous waste,” “extremely hazardous waste” or “restricted hazardous waste” within the meaning of the California Hazardous Waste Control Act (CA Health & Safety Code §§ 25100 et seq.), as amended from time to time, (d) any “hazardous substance”, “waste” or “sewage” as defined or used in the Porter Cologne Water Quality Control Act (CA Water Code §§ 13000 et seq.), as amended from time to time, (e) petroleum, including crude oil or any fraction thereof, (f) any natural gas, liquefied natural gas, natural gas liquid or synthetic gas usable for fuel (or mixtures of natural and synthetic gas), or (g) any other substance, material, chemical, waste, toxicant, pollutant or contaminant regulated by any applicable Environmental Protection Law.

“Lessee Related Environmental Problem” means any Environmental Problem resulting from or related to (a) any act or omission of Lessee or Lessee’s Employees, or (b) Lessee’s use of the Premises or any other part of the Property.

(e)Indemnity by Lessee.  If Lessee breaches its obligations stated in this Section 35.15, or if the presence of Hazardous Substances in, upon, under or about the Premises or other portions of the Building or Property caused or permitted by Lessee, Lessee’s Employees or Lessee’s sublessees or their invitees results in the contamination of the Premises or other portions of the Building, or if contamination of the Premises or other portions of the Project by Hazardous Substances otherwise occurs for which Lessee may be liable to Lessor for damages resulting therefrom, then Lessee shall indemnify, defend and hold Lessor and Lessor’s Employees harmless from and against any and all liabilities, costs, expenses, claims, judgments, damages, penalties, fines or losses (including, without limitation, diminution in value of the Premises or other portions of the Building, damages for the loss or restriction on use of rentable or usable space or of any amenity of the Premises or other portions of the Building, damages arising from any adverse impact on marketing of space in the Premises or other portions of the Building, and sums paid in settlement of claims, attorneys’ fees, consultants’ fees and experts’ fees) which arise after the execution date of this Lease or during the Term of this Lease or after the Term of this Lease as a result of such contamination.  This obligation of Lessee to indemnify, defend and hold Lessor harmless shall survive and extend beyond the expiration or earlier termination of this Lease.

(f)Indemnity by Lessor.  Lessor shall indemnify and hold Lessee harmless for any Hazardous Substance (as defined in Section 35.15(d) above), deriving or originating from use of the Premises prior to the commencement of the Lease, or introduced to the Building or Property during the Term from someone or a source other than Lessee or Lessee’s Employees.

Section 35.16Nondiscrimination.  The Lessee herein covenants by and for himself, his heirs, executors, administrators 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 sex, marital status, race, color, religion, creed, national origin or ancestry, in the leasing, subleasing, transferring, use or enjoyment of the Premises, nor shall the Lessee 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, sublessees, subtenants or vendees in the Premises.

Section 35.17No Offer.  The preparation of this Lease and/or the submission of this Lease to Lessee shall not be deemed an offer to lease the Premises or any other premises to Lessee.  This Lease shall only become binding upon Lessor and Lessee when it is fully executed and a fully executed original Lease is delivered by Lessor to Lessee.

Section 35.18Broker’s Commissions.  Lessor and Lessee each hereby represent and warrant to the other that it has not engaged or dealt with any real estate brokers, salesperson, finders or other persons entitled to any compensation relating to this Lease.  If Lessee’s or Lessor’s representation and warranty contained in this paragraph is inaccurate, then the party making the inaccurate representation hereby agrees to indemnify, defend, and hold the other harmless from and against any and all liabilities, costs and expenses (including, without limitation, attorneys’ fees) incurred in connection with the claims of any brokers, salespersons, finders or other persons.

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Section 35.19Joint and Several Obligations of Lessee.  If more than one individual or entity comprises Lessee, the obligations imposed on each individual or entity that comprises Lessee under this Lease shall  be joint and several.

Section 35.20Jurisdiction and Enforcement.  The parties hereto agree that this Lease Agreement is made and entered into in the County of Los Angeles, State of California, and that all legal actions relating to this Lease Agreement shall be filed and entertained in the Courts in and for the County of Los Angeles, State of California.

Section 35.21Compliance with Safety Regulations.  Lessee shall comply, and Lessee shall cause Lessee’s Employees to comply, with all safety, fire protection, and evacuation procedures and regulations established by Lessor or by any government agency.

Section 35.22Modifications to Building.  Lessor may elect to make certain modifications and improvements to the Building that may cause the building load factor and the rentable area of the Premises to change. Should this occur, then Lessee understands that upon substantial completion of said modifications / improvements, the rentable square footage for the Premises may increase / decrease, and Base Rent will increase / decrease by the proportion the revised rentable square feet bear to the rentable square feet shown on Section 1.1(g) above.

Section 35.23Electromagnetic Fields.  Lessor and Lessee hereby recognize and understand that the National Institute of Environmental Health Sciences (“NIEHS”) and the Department of Energy (“DOE”) have conducted research to understand the potential for health risks from exposure to extremely low frequency electric and magnetic fields (“ELF-EMF”), and that said research has lead the NIEHS and DOE to conclude: “Any scientific evidence to suggest that ELF-EMF exposure may pose health risk is weak (emphasis added).”  Because ongoing public concern over safety due to ELF-EMF exposure has prompted more research in this area, which research may subsequently conclude that adverse health effects may result from ELF-EMF exposure, Lessee hereby agrees that it shall not be entitled to claim any breach of warranty of quiet enjoyment, or any and all other damages, claims or losses based upon claims of injury or otherwise due to ELF-EMF exposure, it being deemed a material covenant on the part of Lessee, upon which Lessor relies in entering into this Lease, that Lessee hereby assumes the risk of any damage or injury to Lessee and to Lessee’s Employees flowing from ELF-EMF exposure.

Section 35.24Ban on Smoking.  Lessee understands that Lessor’s ventilation system in the Building connects to more than one premises and/or to the Building’s common areas, and that the City of El Segundo bans tenants from smoking within their own premises whenever a landlord’s ventilation system connects to more than one premises or to the Building’s commons areas.  Therefore, to prevent second-hand smoke from traveling through the Building’s ventilation system and adversely affecting non-smoking tenants in other premises or common areas, Lessee agrees (1) that it will not permit any of Lessee’s Employees to smoke in the Premises or anywhere within the Building, and (2) that it will implement reasonable measures to direct Lessee’s Employees to smoke outside the Building.

Section 35.25Financial Information Disclosure.  If reasonably required by Lessor, at any time and from time to time upon not less than thirty (30) days prior written request, Lessee shall deliver to Lessor (a) a current, accurate, complete, and detailed financial statement on Lessee to include a balance sheet, profit and loss statement, cash flow summary, and all accounting footnotes, prepared in accordance with generally accepted accounting principles consistently applied and certified by the Chief Financial Officer of Lessee to be a fair and true presentation of Lessee’s current financial position; (b) if reasonably required by Lessor, a current, accurate, complete, and detailed financial statement on Lessee audited by an independent Certified Public Accountant as of the end of the most recent fiscal year of Lessee; (c) current bank references for Lessee; and (d)  if available, a current Dun & Bradstreet Report about Lessee.  Lessee agrees that its failure to strictly comply with this Section shall constitute an Event of Default by Lessee under the Lease.

Section 35.26Interior Signage.  Lessor will provide Lessee, if so requested by Lessee, and at Lessee’s cost (using building standard materials and design) the following interior signage:  (a) one (1) tenant suite sign located at the entrance to Lessee’s Premises; and (b) one (1) directory strip sign located in the Building lobby.  Both signs will be provided for the display of the name and location of the Lessee of the Building shown in Section 1.1(b), and Lessor reserves the right to exclude any other names therefrom.

Section 35.27Restrictive Covenant.  During the Lease Term and during all extensions thereof, Lessee shall not use, nor shall Lessee permit its successors, assigns, officers, directors, shareholders, parent, affiliated and subsidiary corporations, or affiliated parties to use the Premises as a store, business, trade or profession (whether separately or as part of another entity) as a “salon” that engages in the sale, dispensing or providing, retail, or wholesale, of salon products and/or services, including, without limitation, facials, skin care treatments or products, massage, manicures, pedicures and hair styling. Lessee understands that by this reference Murad Salon, and Murad Salon’s successors and assigns, shall be deemed third party beneficiaries of said restrictive covenant.

Section 35.28Rights Reserved by Lessor.  Provided that the exercise of such rights does not unreasonably interfere with Lessee’s occupancy of the premises, Lessor shall have the following rights:

(a)Building and Property Operations.  To decorate and to make inspections, repairs, alterations, additions, changes, or improvements, whether structural or otherwise, in and about the Building and Property, or any

25

part thereof; to enter upon the Premises (after giving Lessee reasonable written notice thereof, except in cases of real or apparent emergency, in which case no notice shall be required) and, during the continuance of any such work, to temporarily close doors, entryways, public space, and corridors in the Building and Property; to interrupt or temporarily suspend Building services and facilities; to change the name of the Building and/or Property; and to change the arrangement and location of entrances or passageways, doors, and doorways, corridors, elevators, stairs, restrooms, or other public parts of the Building and/or Property;

(b)Security.  To take such reasonable measures as Lessor deems advisable for the security of the Building, the Property and its occupants, such as, but not limited to, evacuating the Building for cause, suspected cause, or for drill purposes; temporarily denying access to the Building; and closing the Building after normal business hours and on Sundays and holidays, subject, however, to Lessee’s right to enter when the Building is closed after normal business hours under such reasonable regulations as Lessor may prescribe from time to time;

(c)Prospective Purchasers and Lenders.  Upon twenty-four (24) hours prior written notice, to enter the Premises at all reasonable hours to show the Premises to prospective purchasers or lenders; and

(d)Prospective Lessees.  At any time during the last three (3) months of the Term (or earlier if Lessee has notified Lessor in writing that it does not desire to renew the Term) or at any time following the occurrence of an Event of Default, to enter the Premises at all reasonable hours to show the Premises to prospective tenants upon twenty-four (24) hours prior written notice.

Section 35.29Expansion Option.  In the event the tenant presently in occupancy of Suite 110 in the Building (the “Expansion Space”, comprising            usable square feet,              rentable square feet) should vacate the Expansion Space prior to the termination or earlier expiration of this Lease, then Lessee shall have the option (“Expansion Option”) to lease said Expansion Space subject to the following terms and conditions:

(a)The Expansion Space shall be added to the Premises demised under the Lease for a term commencing on the Expansion Space Commencement Date (defined below) and expiring upon the expiration or earlier termination of the Lease, and the term “Premises” used in the Lease shall thereafter be deemed to include the Expansion Space;

(b)The “Expansion Space Commencement Date” for the Expansion Space shall be the date which is the earlier of (i) the date Lessee, or any person occupying any of the Expansion Space with Lessee’s permission, commences business operations from the Expansion Space, or (ii) the date on which the Expansion Space is delivered to Lessee in broom-clean condition;

(c)The Base Rental and Operating Expense Adjustment to be paid by Lessee for the Expansion Space shall be the Base Rental and Operating Expense Adjustment then in effect for the Premises, on a rentable square foot basis; furthermore, Lessee’s Pro Rata Share of Operating Expenses shall be appropriately increased to reflect the addition of the Expansion Space to the Premises;

(d)Lessee shall not have the right to exercise the Expansion Option if at the time of exercise thereof, or on the Expansion Space Commencement Date, Lessee is in default beyond any applicable notice and cure period; and

(e)Lessor and Lessee shall execute and deliver appropriate documentation to memorialize the addition of the Expansion Space to the Premises hereunder and the terms and conditions of the Lease with respect to the Expansion Space, but any failure by Lessor or Lessee to execute and deliver any such documentation shall not change any of the terms and conditions provided herein.

Section 35.30Monument Sign.  Lessor grants Lessee the nonexclusive right to display its name in the building standard font on the monument sign of the Building (the “Monument Sign”) subject to the following provisions:

(a)Lessee’s right to display its name on the Monument Sign shall be automatically withdrawn by Lessor, without further notice to Lessee, sixty (60) days following the Commencement Date hereof, unless Lessee shall prior thereto pay Lessor the amount Lessor shall invoice Lessee for the cost to fabricate and install Lessee’s  name on the Monument Sign;

(b)Lessee’s right to display its name on the Monument Sign shall be withdrawn by Lessor following fifteen (15) days written notice to Lessee by Lessor if Lessee (a) occupies less than 3,000 rentable square feet of the Building; (b) sublets, in the aggregate, more than 4,380 rentable square feet of the premises, (c) assigns the Lease, other than to a Qualified Financial Institution, or (d) is in default of this Lease under Article 17 hereof;

(c)Lessee shall pay to Lessor, from time to time and within thirty (30) days after receipt of written demand, Lessee’s portion of all expenses incurred  by Lessor  that  are  attributable  to  the  lighting  (if applicable), maintenance, cleaning and repair of the Monument Sign during the period of time that Lessee’s name is on the Monument Sign.  Lessee’s portion of such expenses shall be calculated by Lessor by dividing such expenses equally among all lessees and occupants that have signs on the Monument Sign;

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(d)Commencing as of the Commencement Date (and prorated if the Commencement Date occurs on a date other than the first day of a calendar month), Lessee shall pay to Lessor rent for the sign, in advance, without prior notice, demand or billing statement, on or before the first day of each calendar month during the lease Term, in the sum of Two Hundred Dollars ($200.00) per month,

(e)Lessor shall have the right to relocate, redesign, and/or reconstruct the Monument Sign from time to time as determined by Lessor in Lessor’s sole discretion; and

(f)Upon termination and/or expiration of the Lease Term, Lessor shall permanently remove Lessee’s name from the Monument Sign, repair any damage to the Monument Sign that may result from the removal of Lessee’s name, and charge Lessee for all expenses and costs incurred in connection with said removal and repair.

The design, size, specifications, graphics, materials, colors, and lighting (if applicable) of the Exterior Identity Sign shall be determined by Lessor in Lessor’s sole discretion.

remainder of page intentionally left blank

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IN WITNESS WHEREOF, the parties acknowledge that each has carefully read each and every provision of this agreement and that each has fully entered into this agreement as of the date first appearing above of its own free will and volition.

“LESSOR”				“LESSEE”
The Plaza CP LLC				Manhattan Bancorp.
a California limited liability company				a California corporation
By:		The Plaza CP Corporation
		a Delaware corporation
		its Managing member
By:	/s/ Richard C. Lundquist			By:	/s/ Jeffrey M. Watson
			Richard C. Lundquist
			President	Print Name: Jeffrey M. Watson
				Title: President and CEO
By:	/s/ Leonard E. Blakesley, Jr.			By:
			Leonard E. Blakesley, Jr.
			Secretary	Print Name:
				Title:

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LIST OF EXHIBITS

A-1	Building
A-2	Legal Description
A-3	Continental Park
B	Intentionally Deleted
C	Construction Work Letter
C-1	Minimum Building Standard Lessee Improvement Finishes and Materials
C-2	Premises
C-3	Conduct of the Work and Rules of the Site
C-4	Continental Construction Project Close Out Package Acceptance Checklist
D	Building Standard Services and Utilities
E	Rules & Regulations
F	Parking Facilities
G.	Letter of Credit

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BUILDING

EXHIBIT “A-1”

1

LEGAL DESCRIPTION OF LAND

PARCEL 1:

THE SURFACE AND THAT PORTION OF THE SUBSURFACE WHICH LIES ABOVE A PLANE 450 FEET BELOW THE MEAN LOW WATER LEVEL OF THE PACIFIC OCEAN (AS SAID MEAN LOW WATER LEVEL IS ESTABLISHED BY U.S. COAST AND GEODETIC SURVEY BENCH ALONG THE SHORELINE) OF THE FOLLOWING DESCRIBED PROPERTY, SITUATED IN THE CITY OF EL SEGUNDO, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, TO WIT:

PARCEL 4, IN THE CITY OF EL SEGUNDO, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS SHOWN ON PARCEL MAP NO. 12659, FILED IN BOOK 124 PAGE 52 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

EXCEPT THEREFROM ALL OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS AND OTHER MINERALS, WHETHER SIMILAR TO THOSE HEREIN SPECIFIED OR NOT, WITHIN OR THAT MAY BE PRODUCED FROM SAID LAND, PROVIDED, HOWEVER, THAT THE SURFACE OF SAID LAND SHALL NEVER BE USED FOR EXPLORATION, DEVELOPMENT, EXTRACTION, REMOVAL OR STORAGE OF SAID OIL, GAS, ASPHALTUM AND OTHER HYDROCARBONS AND OTHER MINERALS, AND FURTHER PROVIDED NO INSTALLATION CONSTRUCTED THEREON SHALL BE DISTURBED IN ANY MANNER IN EXTRACTING SAID RESERVED MINERALS, AS RESERVED IN DEED FROM STANDARD OIL COMPANY OF CALIFORNIA, RECORDED DECEMBER 20, 1960, AS INSTRUMENT NO. 1622, IN BOOK D-1069 PAGE 595, OFFICIAL RECORDS.

PARCEL 2:

A NON-EXCLUSIVE RIGHT FOR VEHICULAR AND PEDESTRIAN USE TO AND FROM THE SOUTHERLY 12.50 FEET OF PARCELS 2 AND 3 OF SAID PARCEL MAP NO. 12659, FILED IN BOOK 124 PAGE 52 OF PARCEL MAPS, AS DISCLOSED IN THAT CERTAIN INSTRUMENT BY AND BETWEEN CONTINENTAL DEVELOPMENT CORPORATION, TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA, STATE OF CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEMS AND UNION BANK, RECORDED MARCH 29, 1985, AS INSTRUMENT NO. 85-342807, OFFICIAL RECORDS.

[more commonly known as:	2101 / 2121 / 2141
	Rosecrans Avenue
	El Segundo, California]

EXHIBIT “A-2”

1

CONTINENTAL PARK

EXHIBIT “A-3”

1

NOTICE OF COMMENCEMENT DATE

Intentionally Deleted

EXHIBIT “B”

1

CONSTRUCTION WORK LETTER

THIS CONSTRUCTION WORK LETTER (the “Agreement”) supplements the Lease to which this Agreement is attached.  The terms used herein shall have the same meanings as set forth in the Lease, unless such meanings are expressly contradicted herein.  In addition, all rights and remedies of Lessor and Lessee under the Lease shall apply in the event of a default in any of the provisions of this Agreement, and this Agreement is hereby made a part of the Lease.

1.Construction of Base Building

1.1Base Building Improvements.  Lessor has constructed and Lessee hereby accepts as constructed the Base Building Improvements consisting of a parking facility and building shell and core (collectively the “Base Building Improvements”).  The building shell and core includes the following:  (a) bare, trowel finished, concrete slab floors; (b) finished core area, including elevators and common area elevator lobbies, toilet rooms, electrical rooms, telephone rooms, janitorial closets, exit stairs and mechanical shafts; (c) primary heating, ventilation and air conditioning service stubbed out to the floor, including main supply air duct, base building digital control system (where applicable) for the HVAC and heating hot water supply mains (Lessee’s HVAC improvements to the Premises shall properly and without special requirements, interface and integrate with the Base Building HVAC and its Direct Digital Control System. Such interface and integration, as well as the design of the HVAC system for the Premises, including the distribution thereof shall be consistent and compatible with Lessor’s operating requirements and use only a proportionate share of the Building system’s capacity); (d) primary fire sprinkler system in open floor plan configuration (any modification to such sprinkler system for the Lessee shall be a part of the Lessee Improvements); (e) main electrical panels on each floor including breakers but no distribution; and (f) primary distribution for the fire safety system required by applicable code for unoccupied buildings (including the primary fire sprinkler system and alarms). Lessor, at Lessor’s sole cost and expense, shall also provide Lessee with a glass door entry per Lessor’s design, dimension and specification shown on the drawing attached hereto as Exhibit “C-5”. Modification and connection to the fire safety system for the Premises, as occupied, shall be a part of the Lessee Improvements. Any and all modifications to the Base Building Improvements mandated or otherwise required by application and/or interpretation of any federal, state, local or other applicable governmental statutes, ordinances, codes, rules, regulations, controls or guidelines (collectively, “Laws”) as a result of Lessee’s use of, and/or the construction of the Lessee Improvements (as defined in Section 1.2 below) within, the Premises shall be a part of the Lessee Improvements.  Thereafter, Lessee shall furnish and install within the Premises those improvements and items of general construction (the “Lessee Improvements”) shown on the plans and specifications diligently prepared by Lessee and approved by Lessor and Lessee pursuant to Section 2 below, in compliance with all applicable codes and regulations.  No portion or element of the Lessee Improvements in the sole judgment of Lessor, shall in any way be in conflict with or adversely impact the Building or any of its systems. All Lessee Improvements shall be constructed pursuant to this Work Letter.

1.2Lessee Improvements.  Lessee shall construct and install (collectively, “construct”) the Improvements to the Premises as set forth herein (the “Lessee Improvements”) pursuant to plans and specifications mutually approved by the Lessor and Lessee and prepared by the Building Architect.  The Lessee Improvements shall consist of, at a minimum, the “Building Standard Improvements” (which Building Standard Improvements are set forth in Exhibit “C-1” attached hereto and made a part hereof) in order to construct a standard office in the Premises, together with an HVAC control system (as specified by Lessor) which shall be connected to the Base Building HVAC control system in accordance with Lessor’s specifications and such other improvements as specified in the “Final Plans” (as hereinafter defined) or required by Law.  The cost of preparing the plans and specifications for the Lessee Improvements and the cost of constructing the Lessee Improvements shall, except as otherwise provided herein, be borne by Lessee.

1.3Lessor Supplied Improvements.  Lessor shall supply certain items of the Lessee Improvements including, but not limited to, partial distribution HVAC ductwork, electrical runs to lights, partial sprinkler system piping and sprinkler heads, window coverings and perimeter wall, core wall and column wrap drywall, which shall be valued in accordance with Lessor’s schedule of values for such items which Lessor shall have prepared for the Building for use by Lessee and other tenants.  Lessor shall receive credit against the Lessor’s Construction Allowance in an amount equal to the aggregate of the values of all such items supplied by Lessor to Lessee based on Lessor’s schedule of values for such items.

2.Plans and Specifications.

2.1Schematic Drawings.  If the Schematic Drawings depicting the layout of the Premises and the location of the Lessee Improvements therein (the “Schematic Drawings”) have already been prepared and approved by Lessor and Lessee prior to the full execution of this Lease (which includes this Agreement), then same shall be attached hereto as Exhibit “C-5”) and made a part hereof.  If the Schematic Drawings are not attached as Exhibit “C-5” hereto at the time this Lease is fully executed, then the following procedure shall be used to prepare and approve of the Schematic Drawings.  No later than five (5) days following the full execution of this Lease, Lessee shall meet with the Architect and provide such information as is necessary or appropriate for the Architect to prepare the Schematic Drawings.  Such Schematic Drawings, upon completion thereof (which in no event shall be more than thirty (30) days after the execution of this Lease), shall be submitted to Lessor and Lessee for approval.  Within five (5) days after Lessee’s receipt of such Schematic Drawings, Lessee shall notify Lessor and Architect of the changes, if any, which Lessee desires to make to such Schematic Drawings, which notice shall be in writing and shall identify with specificity the changes which Lessee desires to make and shall attach a copy of the Schematic Drawings initialed by Lessee and showing the desired changes

EXHIBIT “C”

1

(the “Lessee’s Schematic Notice”).  Within a reasonable time following Lessor’s receipt of the Schematic Drawings and Lessee’s Schematic Notice (but Lessor shall not be obligated to respond earlier than five (5) days after Lessor’s receipt of the Schematic Drawings and Lessee’s Schematic Notice), Lessor shall either approve or disapprove thereof.  If Lessor disapproves, Lessor shall specify in writing the changes which Lessor requires and the Schematic Drawings shall be revised by the Architect to reflect those changes described in Lessee’s Schematic Notice which are not disapproved by Lessor and such other items needed to satisfy Lessor’s objections thereto.  At Lessor’s request, upon completion of the revised Schematic Drawings, Lessor and Lessee shall initial same, thereby acknowledging their approval of the form of such Schematic Drawings.

2.2Final Plans.  Upon completion of the Schematic Drawings as revised in accordance with Paragraph 2.1 above, the Architect shall prepare final plans and specifications and working drawings (collectively the “Final Plans”) based upon and incorporating such Schematic Drawings as revised as provided hereinabove.  Upon completion of the Final Plans, same shall be submitted to Lessor and Lessee for approval.  If Lessor consents in writing thereto, such Final Plans may exclude certain finish specifications (such as, the color of paint or the color or design of wall or floor coverings) so long as such specifications are not needed in order to submit the Final Plans for Permits (as hereinafter defined) and so long as such specifications are delivered to Lessor for Lessor’s approval thereof within thirty (30) days after delivery to Lessor of the Final Plans.  Such finish specifications shall not be incorporated into the Lessee Improvements until same are approved by Lessor in writing.  Within ten (10) days after Lessee’s receipt of the Final Plans, Lessee shall notify Lessor and the Architect of the changes, if any, which Lessee desires to make to such Final Plans, which notice shall be in writing and shall identify with specificity the changes which Lessee desires to make and shall attach a copy of the Final Plans initialed by Lessee and showing the desired changes (the “Lessee’s Final Notice”).  Without Lessor’s prior consent, which shall not be unreasonably withheld or delayed, Lessee shall not change any portion of the Final Plans which incorporate the improvements depicted in the Schematic Drawings, as revised in accordance with Paragraph 2.1 above, or which is a natural progression of such improvements.  Within a reasonable time following Lessor’s receipt of the Final Plans and Lessee’s Final Notice (but Lessor shall not be obligated to respond earlier than ten (10) days after Lessor’s receipt of such Final Plans and Lessee’s Final Notice), Lessor shall approve or disapprove thereof.  If Lessor disapproves, Lessor shall identify in writing and with specificity the reason for Lessor’s disapproval, and the Final Plans shall be revised by the Architect to reflect those changes described in Lessee’s Final Notice which are not disapproved by Lessor and such other items needed to satisfy Lessor’s objections thereto.  The improvements depicted on the Final Plans, as so revised, shall constitute the “Lessee Improvements.”  At Lessor’s request, upon completion of the revised Final Plans, Lessor and Lessee shall initial same, thereby acknowledging their approval of the form of such Final Plans.

2.3Standard of Review by Lessee.  Lessee agrees that any changes which it desires to make as set forth in Lessee’s Schematic Notice and Lessee’s Final Notice shall be reasonable and made in good faith.  In the event Lessor and Lessee have any differences with respect to changes each desires to make to the Schematic Drawings or Final Plans, Lessor and Lessee shall promptly meet and use good faith efforts to resolve the differences.

2.4Accuracy of Plans and Specifications.  Notwithstanding the fact that Lessor shall review and denote revisions to the Schematic Drawings and Final Plans, and that Lessor shall have designated or approved of the Architect, Lessor shall not be liable in any way to Lessee or any other person or entity for any deficiencies in the Schematic Drawings or Final Plans, delays in the preparation and/or delivery thereof, or any errors or omissions by the Architect, nor shall same constitute a warranty or guaranty that the Final Plans are complete or accurate, or that the improvements depicted therein will comply with any Laws, or are sufficient for Lessee’s use or business.

3.Permits.  As soon as practicable following completion of the Final Plans, Lessee shall submit the Final Plans to all appropriate governmental authorities, pay the appropriate filing fees, and attempt to obtain all permits and approvals (the “Permits”) necessary or appropriate to allow the construction of the Lessee Improvements.  If, as part of the procedure of obtaining or attempting to obtain Permits, any governmental agencies or authorities request changes in the Final Plans, the Final Plans shall be modified to incorporate such changes unless Lessor or Lessee do not approve thereof, which approval shall not be unreasonably withheld.  The Architect shall promptly revise the Final Plans as required by such governmental agencies or authorities unless such required revisions are reasonably disapproved of by Lessor or Lessee.  If such Permits are not obtained within ninety (90) days following Lessor’s or the Architect’s submission of the Final Plans for such Permits, then Lessor shall have the option of terminating this Lease at any time thereafter upon at least ten (10) days’ prior written notice thereof to Lessee.  In the event of such termination, Lessee shall immediately pay all costs and expenses of the Architect relating to the preparation and completion of the Schematic Drawings and Final Plans for Permits, together with all fees and costs of submitting the Final Plans for Permits, and each party shall otherwise be released of all further liability arising under this Lease (except for those liabilities accruing prior to the termination).  Except as provided above, Lessor and Lessee shall otherwise each bear its own costs to the date of such termination.

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4.Construction.  Lessee’s approved general contractor, Greg Holwick Construction, Inc. (the “General Contractor”), shall construct the Lessee Improvements in accordance with the Final Plans for which Permits are issued as well as in accordance with all terms and conditions set forth in this Exhibit “C” and the attached Exhibit “C-1” (Minimum Building Standard Lessee Improvement Finishes & Materials) and Exhibit “C-3” (Conduct of The Work & Rules of the Site).  Lessor or such General Contractor shall commence and thereafter complete the construction of the Lessee Improvements in a reasonably diligent and first-class manner.  Furthermore, Lessee shall be required to use the following sub-contractors: Pyro-Comm for fire-life-safety systems, Qualco Fire Protection for sprinklers, Western Allied for DDC controls, R&R for electrical, and either ACCO, Western Allied, Air-Tech or Control Air for mechanical.  Lessor and Lessor’s General Contractor shall notify Lessee’s architect in writing of any changes in construction of the Premises due to field conditions or Building modifications that may occur and no such changes shall be made (whether or not they affect the cost of construction) without the Lessee’s consent, which consent shall not be unreasonably withheld unless such changes are necessary to preserve the structural integrity of the Building or Leased Premises or any Building Systems.  Before commencing any improvements or alterations work in the Premises, Lessee shall require all contractors of Lessee performing such work in the Premises to carry and maintain, at no expense to Lessor, any or all of the following insurance policies as determined by Lessor written by companies acceptable to Lessor:

(i)Commercial general liability insurance, which shall name Lessee and Lessor as additional insureds, in such amounts as required by Lessor and with any endorsements that Lessor requires;

(ii)Worker’s compensation insurance in such amounts required by law and covering all persons employed by said contractor and engaged in the work;

(iii)[If applicable] comprehensive automobile liability insurance in such amounts as required by Lessor; and

(iv)Insurance against such other perils or legal risks and in such amounts as Lessor may from time to time establish.  Upon Lessor’s request, Lessee shall furnish to Lessor duplicate original counterparts of any or all insurance policies required pursuant to this paragraph.

5.Costs of Construction – Lessee Improvements.  Lessee shall pay all construction costs which shall be defined as all costs and expenses incurred in the construction of the Lessee Improvements, (“Construction Costs”) in excess of the amount of the Lessor’s Construction Allowance, which shall be $45.00 per usable square foot of Premises (“Lessor’s Construction Allowance”).  Costs shall include, in addition to any other items or costs set forth elsewhere in this Construction Work Letter, without limitation the costs of:  (a) the Architect, engineers and space planners (including design fees and costs);  (b) materials including acquiring, fabricating or constructing such materials as may be required; (c) all fees and charges associated with plan check and permitting of the Lessee Improvements;  (d) testing and inspection, trash removal, contractor’s fees and general conditions;  (e) changes in the Base, Shell and Core work when such changes are required by the Construction Drawings, including all direct architectural and/or engineering fees and expenses incurred in connection therewith;  (f)  any changes to the Construction Drawings or Lessee Improvements;  (g) any repair of damage to the Building caused by Lessee or General Contractor in connection with the construction and installation of the Lessee Improvements;  (h) sales and use taxes; and (i) reimbursement to Lessor in a sum equivalent to five percent (5%) of the total Cost of Construction as and for Lessor’s Project Management Fee.  The Construction Costs after deduction of the Lessor’s Construction Allowance is referred to herein as the “Lessee’s Construction Costs.” Lessor shall pay Lessee the Lessor’s Construction Allowance within fifteen (15) days of completion of the Lessee Improvements, Lessee’s delivery to Lessor of all applicable items outlined in that certain attachment to this Exhibit and entitled “Continental Construction Project Close Out Package Acceptance Check List,” attached hereto as Exhibit “C-4”, and following receipt of a complete and accurate invoice package that shall contain:

(a)satisfactory evidence of Lessee’s payment towards said Lessee’s Construction  Costs (inclusive of all Change Orders, as defined in Section 6); and

(b)a certification of the status of completion of the Lessee Improvements by the Architect (and Lessee shall provide Lessor with the opportunity to make an inspection of the same); and

(c)copies of unconditional waivers and releases from Lessee’s General Contractor, subcontractors and materialmen of all liens covering the work and materials subject to the Lessee Improvements.

 6.Change Orders.  Lessor shall not be obligated to consent to, or make, any changes or additions requested by Lessee to the Final Plans once such Final Plans have been approved by Lessor and Lessee.  Any such changes or additions requested by Lessee and consented to by Lessor (“Change Orders”) shall be at the sole cost and expense of Lessee, and the increased cost of construction of the Lessee Improvements, including such Change Orders, shall be the responsibility of Lessee.  Lessee shall also be responsible for all costs and expenses resulting from or arising out of any delay in completing the construction of the Lessee Improvements as a result of such Change Orders. As compensation to Lessor for supervision of such Change Orders, the costs and expenses of the Change Orders shall also include an amount equal to fifteen percent (15%) of said costs and expenses.

7.Close Out Package.  Lessee acknowledges, at completion of construction, that the definition of “Final Plans and Specifications” includes the preparation and the delivery of all applicable items to Lessor outlined in

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that certain attachment to this Exhibit and entitled “Continental Construction Project Close Out Package Acceptance Check List,” which is attached hereto as Exhibit “C-4”.  Lessee further understands and acknowledges that the items provided in said check-list may be supplemented and/or amended by Lessor, from time to time, at Lessor’s sole discretion, to correspond to the particular construction project for Lessee.

8.No Miscellaneous Charges.  Neither Lessee nor the Contractor shall be charged for parking or for the use of electricity, water, toilet facilities and elevators during the construction of the Lessee Improvements.

9.Life-Fire Safety Codes, Etc.  Subject to Section 1.1 above, in the event that the Building and/or the Premises, as constructed, do not comply with life-fire safety codes, physical handicap codes, and/or earthquake safety codes in effect on the date of the Lease, and a result of such non-compliance the costs of designing and constructing the Lessee Improvements increases over what it would have been had the Building and Premises been in compliance with such codes, then Lessor shall pay and bear those increased costs in addition to (and not as part of) the Lessor’s Construction Allowance.

10.Description Of Depreciable Construction Costs. Lessee agrees that Lessor’s Tenant Improvement Allowance shall be applied towards the demolition and removal costs of the existing tenant improvements in the Premises (if applicable) and towards the cost of new separately depreciable building components (which shall be owned by Lessor) not related to the operation of the building as a whole, all of which shall be detailed on Exhibit “Z” attached hereto. Should no Exhibit “Z” be attached to the Lease at the time the parties shall execute this Lease then the following procedure shall be used to prepare and approve said Exhibit “Z” hereafter. No later than fifteen (15) days following Lessee’s occupancy of the Premises, Lessee shall provide Lessor with any and all information Lessor may reasonably request to enable Lessor to prepare said Exhibit “Z,” which the parties understand Lessor shall prepare in such a manner as to detail the items (e.g., window coverings, carpeting, mill work, etc.), construction work and other costs/charges Lessor shall designate as “depreciable building components not related to the operation of the Building as a whole.”  Such exhibit shall thereafter be attached to the Lease, following Lessee’s consent of the same (which consent shall not be unreasonably withheld, delayed or conditioned).  Should Lessee fail to consent to Lessor’s exhibit within fifteen (15) of Lessor’s delivery of the same to Lessee, such failure shall be an “Event of Default” by Lessee.

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MINIMUM BUILDING STANDARD LESSEE IMPROVEMENT

FINISHES & MATERIALS

2101/2121/2141 Rosecrans (Plaza)

(Revised 10/03/03)

The tenant improvements shall be constructed in accordance with Owner’s Building Standard Tenant Improvements, as follows:

06200 - FINISH CARPENTRY

A.TELEPHONE BACKBOARD:

Fire-rated 4’-0” x 4’-0” x 3/4” with 3” radius corners, painted Building Standard gray.

(Allowance - One (1) per Tenant space)

B.LUNCH ROOM CABINETS:

Furnish and install upper and lower plastic laminate faced cabinets and countertop, Melamine lined interiors. (Note: Countertop to have waterfall “dam” edge.)  Include cutout for sink and backing for wall hung cabinets.  Cabinet Laminate:  Pionite WX041-S, Anigre.  Counter Top:  Pionite AE021-S, Graphite Spectrum.

(Allowance - - 8’  lineal feet in the lunch room for tenant space over 10,000 usable sq. ft.)

08120 - ALUMINUM DOOR FRAMES

08210 - WOOD DOORS

08710 - FINISH HARDWARE

A.TENANT INTERIOR DOOR:

Doors - 3’-0” x 8’-0” solid particle board core, 1¾” thick plain sliced  maple wood veneer, pre-finished with clear satin open coat finish, pre-machined for lever handle latchset located 3’-6” above finish floor, and pre-fit.  Doors to be manufactured with 10” bottom rail.

Door Frames - 3’-0” x 8’-0” Western Integrated aluminum frame, anodized clear aluminum finish.

Latch Set - Schlage D53PD Rhodes lever handle cylindrical bored latchset, 630 finish.

Hinges - Two (2) pairs of fully mortised hinges per door, Stanley FBB179, 4½” x 4,” 630 finish.

Door Stop - Floor mounted door stop, Trimco W1213ES or Quality 331E5 630 finish, with spacers where required.

(Allowance -One (1) door assembly per 500 sq. ft. of  useable  floor area.)

Sidelights – 18” w x 8’ – 0” height to match adjacent door Timely of equal: 3/8” clear tempered glass; color clear anodized; sidelight to be integral part of door frame.

(Allowance - One (1) per interior door.)

B.TENANT ENTRY DOOR:

Door - 3’-0” x 8’-0” solid particle board core, 1¾” thick plain sliced  maple wood veneer, pre-finished with clear satin open coat finish, pre-machined for lever handle lockset located 3’-6” above finish floor, pre-fit, and labeled with a twenty (20) minute fire rating.  Doors to be manufactured with 10” bottom rail.

Door Frame - 3’-0” x 8’-0” Western Integrated aluminum frame, clear anodized aluminum finish, with twenty (20) minute fire rated label.

Lockset - Schlage L9453 lockset with 03 lever, 630 finish.

Hinges - - Two (2) pairs of fully mortised hinges per door, Stanley FBB179 4½” x 4,” 630 finish.

EXHIBIT “C-1”

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Closer - Norton 8502 closer with factory sprayed aluminum finish, control arm DN Tenant’s side of door.

Door Stop -Floor mounted door stop, Trimco W1213ES or Quality 331E5 630 finish, with spacers where required.

(Allowance - - Minimum required by code - one (1) door assembly for less than 3,000 sq. ft. of usable floor area; or two (2) door assemblies for more than 3,000 sq. ft. of usable floor area.)

09100 - METAL SUPPORT SYSTEM

09250 - GYPSUM WALLBOARD

A.STANDARD INTERIOR PARTITIONS:

Furnish and install partitions with 2 ½” x 25 gauge metal studs at 24” on center, one layer of 5/8” thick type “X” drywall on each side to underside of 8’-8” ceiling tile (at floors above the ground floor.)  Provide seismic bracing as required, and control joints and control joint sealants in partitions, as recommended by gypsum wall board manufacturer.  All joints are to be taped; visible joints to be spackled and sanded ready for painting.

(Allowance - - One (1) linear foot for each 20 usable square feet of floor area.)

B.GROUND FLOOR INTERIOR PARTITIONS

Furnish and install partitions with 2 ½” x 20 gauge metal studs at 16” on center, one layer of 5/8” thick type “X” drywall on each side to underside of 12’-0”± ceiling tile.  Provide seismic bracing as required, and control joints, and control joint sealants in partitions, as recommended by gypsum wall board manufacturer.  All joints are to be taped, visible joints to be spackled and sanded ready for painting.

(Allowance - - One (1) linear foot for each 20 usable square feet of floor area.

C.DEMISING PARTITIONS

Furnish and install partitions with 2½” x  25 gauge metal studs at 24” on center, slab to slab, at floors above the ground floor, with one layer of 5/8” thick type “X” drywall on each side.  Provide 2½” thick full batt sound insulation, seismic bracing as required, and control joints and control joint sealants in partitions, as recommended by gypsum wall board manufacturer.  All joints are to be taped; visible joints to be spackled and sanded ready for painting.  Caulk joint between bottom of wall board and the floor.

(Allowance - - One half (½) of the cost of demising partitions shall be allocated between adjacent tenants.)

D.GROUND FLOOR DEMISING PARTITIONS

Furnish and install extra height partitions, (15’ ± to underside of slab), with 2½” x  18 gauge metal studs at 16” on center, slab to slab, with one layer of 5/8” thick type “X” drywall on each side.  Provide 2½” thick full batt sound insulation, seismic bracing as required, and control joints and control joint sealants in partitions, as recommended by gypsum wall board manufacturer.  All joints are to be taped; visible joints to be spackled and sanded ready for painting.  Caulk joint between bottom of wall board and the floor.

(Allowance - - One half (½) of the cost of demising partitions shall be allocated between adjacent tenants.)

E.PUBLIC (TUNNEL) CORRIDOR PARTITIONS

Furnish and install tunnel corridor partitions at floors above the ground floor, with 2½” x  25 gauge metal studs at 24” on center, with one layer of 5/8” thick type “X” drywall on each side. Provide full 2½” thick sound attenuating fire blanket insulation 2½” thick full batt sound insulation.  All joints are to be taped; visible joints to be spackled and sanded ready for painting.  Caulk joint between bottom of wall board and the floor.

(Allowance - - One half (½) of the cost of public corridor partitions shall be allocated to that portion of a tenant’s space contiguous with the corridor.)

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F.GROUND FLOOR PUBLIC (TUNNEL) CORRIDOR PARTITIONS

Furnish and install tunnel corridor partitions at the ground floor with 2½” x  25 gauge metal studs at 24” on center, with one layer of 5/8” thick type “X” drywall on each side. Provide full 2½” thick sound attenuating fire blanket insulation.  All joints are to be taped; visible joints to be spackled and sanded ready for painting.  Caulk joint between bottom of wall board and the floor.

(Allowance - - One half (½) of the cost of public corridor partitions shall be allocated to tenants. )

G.WINDOW MULLION CLOSURE

Furnish and install one window mullion closure, as detailed, from sill to top of window pocket.

(Allowance - - One (1) for each 750 usable square feet of  floor area.)

Building Standard demising Partition Alternate gypboard modules & stud spacing - Furnish and install 40” wide gypboard with 20” stud spacing in lieu of specified 48” wide gypboard and 24” stud spacing, to facilitate handling for standard demising partitions.

H.TENANT MODULAR FURNITURE

Overhead storage or binder bins for Tenant installed modular furniture must be attached to a system panel.  Binder bins or overhead storage units cannot be attached directly to any interior or demising wall partitions.

09510 - ACOUSTICAL CEILING

A.ACOUSTICAL CEILING

Furnish and install 2’ x 2’ suspended ceiling system, USG Interiors, Inc., Donn Fine Line ceiling grid system, with Armstrong beveled Tegular Cirrus  ceiling tile, continuous within demised premises.  Grid system finish shall be white with white slots.  Provide compression posts and seismic bracing, and hanger wires for light fixtures, as required.  Include the cost of cutting tile for sprinklers, exit signs, and all other similar ceiling penetrations.  Permanent markings to be made on the floor to assure that grid will line up when the walls are removed.  Main runners to run east west.

(Allowance - - All ceilings within demised area.)

B.WALL ANGLES

Furnish and install Donn wall angles at ceiling penetrations and perimeter of walls that penetrate ceiling.

(Allowance - - All ceilings within demised area.)

09650 - RESILIENT FLOORING

A.VINYL COMPOSITION TILE

Furnish and install Armstrong Standard Excelon tile.  Provide floor preparation as required.  Color to be selected from Lessor’s standard samples.

(Allowance for 10% of the useable floor area)

B. BASE @ VCT FLOORING

Furnish and install 2½” top set cove rubber base, Burke or equal.  Color to be selected from Lessor’s standard samples.

(Allowance - - All walls at VCT areas.)

C.FLOORING TRANSITION REDUCER STRIP

Furnish and install vinyl reducer strips at transitions between carpet and VCT flooring.  Color as selected from Owner’s standard samples.

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(Allowance - - All carpet to VCT floor transitions.)

09680 - CARPET

A.CARPETING & PAD

Furnish and install Building Standard carpet by Designweave Design Basics Artiste. 30 oz. cut pile installed over Nova 5/16” pad, or Designweave Z6356-Techno – Loop Pile Graphic, 26 oz. .Provide floor preparation as required.  Color to be selected from Lessor’s standard samples

(Allowance - - Aggregate carpet and pad plus gluedown carpet allowance is 90% of the usable floor area.)

B.GLUE-DOWN CARPETING

Furnish and install Designweave Centrepoint 26 oz. level loop pile.  Color to be selected from Lessor’s standard samples.

(Allowance - - Aggregate carpet and pad plus gluedown carpet allowance is 90% of the usable floor area.)

C.CARPET BASE

Furnish and install 2½” top set straight rubber carpet base, Burke or equal.  Color to be selected from Owner’s standard samples

(Allowance - - All walls at carpeted areas.)

09900 - PAINTING

A.PARTITION WALL PAINT

Paint walls with two coats of water-base flat paint, (eggshell finish not allowed).  Color to be selected from Owner’s standard samples.

(Allowance - - All exposed surfaces of building standard partitions including column wraps, perimeter sill walls, and tenant side of building core walls and corridors.)

12512 - VERTICAL LOUVER BLINDS

A.VERTICAL LOUVER BLINDS - ABOVE GROUND FLOOR

Re-use existing hardware, furnish and install new 3½” perforated PVC louver blades manufactured by Sunstop, color white.  Replace missing end caps, pulleys and weights, and other accessories, matching existing hardware, as required

(Allowance - - One (1) per each exterior ground floor window.)

B.VERTICAL LOUVER BLINDS - GROUND FLOOR

Vertical louver blinds not allowed on ground floor for any interior courtyard space.

(Allowance – None.)

15200 - FIRE SPRINKLER HEAD REPLACEMENT

A.SPRINKLER HEAD REPLACEMENT

Furnish and install a new replacement brushed nickel plated escutcheon, ceiling-mounted, semi-recessed fire sprinkler head to match existing.

(Allowance - - As required)

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15400 - PLUMBING:

A.BUILDING STANDARD SINK (SK-1)

Furnish and install 18 gauge, self-rimming stainless steel sink with crumb cup and strainer, Elkay Lustertone, ADAR 2521, or equal by Just.  Include cost of punching sink for filtered water dispenser, and 75 LF each of waste, insulated water supply, and vent piping, and one core drilling for waste line.  Work on the drain lines in the plenum space below to be based on no tenant improvements in place that would inhibit access.

B.BUILDING STANDARD FAUCET (SK-1)

Furnish and install gooseneck spout with wristblade handles and flexible hose spray, chrome plated finish, Speakman SC-5795, or equal by Elkay, and connect to piping.

C.BUILDING STANDARD FILTER UNIT (WF-1)

Furnish and install a single cartridge filter assembly, Everpure QC4 BH, or equal below the sink and connect to piping.

D.BUILDING STANDARD WATER HEATER (EWH-1)

Furnish 120V, 1.5 KW, 10 gallon capacity, electric water heater suitable for mounting under counter top, Lochinvar JRC0010E, or equal by A.O. Smith, and connect to piping.

E.BUILDING STANDARD EXPANSION TANK (ET-1)

Furnish and install a pre-pressurized diaphragm-type expansion tank for potable water system, IAPMO/ASME rated.

F.BUILDING STANDARD GARBAGE DISPOSAL

Furnish and install Maytag Model No. FB20 with integral magnetic switch lid.  under-sink garbage disposal, and connect to drain line.  (Note: separate wall switch is not required.)

(Allowance - - One (1) each of above items in the lunch room, for tenant space over 10,000 usable sq. ft.)

15500 - HEATING, VENTILATING AND AIR CONDITIONING (HVAC):

A.INTERIOR ZONE VAV TERMINAL UNITS

Furnish and install one pressure independent VAV terminal unit, and specified ductwork from main supply air duct.  See specifications for complete description of work.

(Allowance - - One VAV unit per Interior Zone, area not to exceed 1,500 square feet.)

B.PERIMETER ZONES VAV TERMINAL UNITS

Furnish and install one pressure independent VAV terminal unit, and specified ductwork from main supply air duct.  The VAV terminal unit manufacturer shall furnish and install 120V/24V transformer and wiring. See specifications for complete description of work.

(Allowance - - One VAV unit per Perimeter Zone, area not to exceed 1,000  usable square feet.)

C.SUPPLY AIR DIFFUSERS

Furnish and install diffuser, grille and ductwork from perimeter fan coil duct or VAV terminal unit to supply air diffuser.

(Allowance - - One per 250 usable square feet.)

D.RETURN AIR GRILLES

Furnish and install return air grilles.

(Allowance - - One per 250 usable square feet.)

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E.PATCH EXISTING UNUSED DUCT TAPS.

Patch unused duct taps in the main supply air ductwork.

(Allowance - - All unused taps on the main supply air ducts.)

F.TRANSFER  AIR BOOTS

Furnish and install transfer air boots through non-rated slab to slab walls.

(Allowance - - One per demising wall)

15950 - BUILDING MANAGEMENT CONTROL SYSTEM

A.THERMAL SENSOR

Furnish and install one thermal sensor for each interior and each perimeter zone, and connect  to core and shell building management control system interface panel.

(Allowance - - One thermal sensor per zone.)

B.VAV CONTROL CONTROLLER

Furnish and install one Teletrol TSC-LE controller, air flow sensor, air flow station, and Belimo 24V AC bi-directional damper operator , and connect to core and shell building management control system interface panel.

(Allowance - - One per Tenant Improvement Building Standard VAV Zone.)

C.FAN COIL CONTROLLER

Furnish and install one Teletrol TSC-LE controller, current sensor and switch, and connect to core and shell building management control system interface panel.

(Allowance - - One prorate portion of usable square feet area served per fan coil unit.)

D.LIGHTING CIRCUIT CONTROLLER

Furnish and install one Teletrol controller for each lighting circuit, and connect to core and shell building management control system interface panel.

(Allowance - - One  per lighting circuit.)

E.POWER CIRCUIT TRANSFORMER & TRANSDUCER

Furnish and install one current transformer and Watt transducer for each 208-120V or 277-480V electrical power circuit, and connect to core and shell building management control system interface panel, to monitor and record electrical energy consumption.

(Allowance - - One each per power circuit.)

16000 - ELECTRICAL

A.DUPLEX WALL RECEPTACLES

Furnish and install wall mounted duplex outlet, complete with J-box, conduit and wire for 110 volt service.  Outlet to be white color, Leviton Decora Series.

(Allowance - - One per 200 sq. ft. of usable floor area, and one per Building Standard telephone backboard.)

B.GFI ELECTRICAL RECEPTACLES

Furnish and install GFI wall mounted duplex outlet, complete with J-box, conduit and wire for 110 volt service.  Outlet to be white color, Leviton Decora Series.

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(Allowance - - For each Lunch Room provided for tenant spaces over 10,000 usable square feet: one each per garbage disposal and water heater; and one per countertop circuit.)

C.MODULAR FURNITURE POWER CONNECTION

Furnish and install wall mounted J-box, conduit, and wire for specified number of required circuits to supply power to tenant provided modular furniture.  Installation shall comply with applicable code.  For installation of furniture not adjacent to a wall or column, the electrical connection shall be provided via a floor core.  Power poles are not allowed.  Note:  this requirement also applies to any and all telephone or data cabling to be installed in modular furniture.

(Allowance – None)

D.TELEPHONE OR DATA WALL OUTLET

Furnish and install one double-gang outlet box in stud wall, 3/4” empty conduit stubbed above ceiling, with pull wire, at each work station.

(Allowance - - Approximately one (1) per 200 sq. ft. of usable floor area.)

E.LIGHT SWITCHES

Furnish and install two single pole, wall-mounted bilevel switching (A/B).  Switches shall be white in color, rocker type, decora series by Leviton.

(Allowance - - One pair per 400 sq. ft. of usable floor area.)

F.AUDIBLE FIRE ALARM DEVICE

Furnish and install one wall-mounted building standard audible fire alarm, connected to fire alarm system.

(Allowance - - Minimum to meet code.)

G.VISUAL FIRE ALARM DEVICE

Furnish and install one wall-mounted building standard strobe light visual alarm, connected to fire alarm system.

(Allowance - - Minimum to meet code.)

H.VOLUNTARY ALTERNATE - COMBINATION FIRE ALARM

Furnish and install wall-mounted building standard combination strobe light and audible alarm, connected to fire alarm system, in lieu of separate units, as required by code.

(Allowance - - Minimum to meet code.)

I.EXIT SIGN

Furnish and install Lithonia, Precise Collection, green color lettering, connected to emergency power circuit, as required by code.

(Allowance - - The lesser of one (1) per 1,500 sq. ft. of usable floor area or the minimum number required by Code.)

J.2’ x 4’ LIGHT FIXTURE

Furnish and install Lithonia “Paramax” 2PM3 GA 332-18S 277V, 2’ x 4’ fully-recessed, 3” deep, 18 cell parabolic fluorescent light fixture, complete with electronic ballasts, necessary lighting circuit conduit and wiring; and three factory installed, GE F32T8/SP35 Trimline or Sylvania FO32/735 Octron  T8 3500Kº lamps, with a CRI of 75.  Pairs of fixtures to be connected in a slave/master configuration to meet Title 24 requirements, and to provide for sharing of one of the electronic ballasts between the pairs of fixtures.

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(Allowance - - One (1) per 100 sq. ft. of  usable floor area or as required by code.)

K.2’ X 2’ LIGHT FIXTURE

Furnish and install one 2’ x 2’ fully-recessed, 3” deep, 9 cell parabolic fluorescent light fixture, same series as 2’ x 4’ Lithonia fixture noted above, complete with electronic ballasts, necessary lighting circuit conduit and wiring; and three factory installed GE F32T8/U6/SP35 Trimline or Sylvania FO32/735/6 Octron T8 3500Kº lamps, with a CRI of 75. (Note: Pricing should take into account conduit and wire already in place for 277 Volt lighting circuits, which is to be utilized to the extent

(Allowance - - None.)

L.EMERGENCY LIGHTING CIRCUIT CONNECTIONS

Furnish and install required conduit and wire and connect lighting fixture to emergency lighting circuit.

(Allowance - - Minimum required by Code)

M.VAV TERMINAL UNIT & FAN COIL TRANSFORMERS

Furnish and install one 120 Volt / 24 Volt transformer, conduit and 120 Volt wiring, on each VAV terminal unit and each Fan Coil Unit.

(Allowance - - One per Perimeter Zone VAV Terminal Unit. [Perimeter Zone area not to exceed 1,000 square feet.] One per Interior Zone VAV Terminal Unit.  [Interior Zone area not to exceed 1,000 square feet.]  One per existing Fan Coil Unit.)

Note: It is the responsibility of the Lessee to install faceplates for telephone, television, data or other similar purposes, utilizing the Leviton Decora Series.  If a faceplate is not available within this manufacturer’s line for a special purpose, then Lessee may install a custom plate.  The custom plate may need to be a Leviton Decora Series antenna plate modified to suit the purpose, but in any event must match the Decora white finish.  If other than a standard or modified Leviton Decora Series plate, a color sample of the plate must be submitted to Landlord for approval prior to ordering and installing.

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PREMISES

Note: the cross-hatched space shown above (presently common area lobby space) shall be made a part of the Premises. Lessor, at Lessor’s sole cost and expense, shall improve the cross-hatched space by constructing all necessary demising walls, and by providing HVAC, dropped ceiling, lighting, fire/life/safety equipment and a glass-entry door to the space. The design of the lobby and entrance to the Premises shall be as shown on Exhibit “C-5”.

EXHIBIT “C-2”

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CONDUCT OF THE WORK

& RULES OF THE SITE

The following requirements shall apply to the conduct of the work and the operations of the Contractor.

1.Conditions Precedent to Start of Work

Before Contractor may move materials, equipment, personnel, or any other items on the site, Contractor must have delivered to Lessor:

a.a fully executed Contract Agreement with Lessee to perform the work of constructing the Lessee Improvements, and

b.a Certificate of Insurance conforming to the requirements of the Lease.  At no time shall the Contractor perform work at the project site without the insurance in force as required by the Lease.

2.Non-Exclusive Use Sites & Facilities

Other contractors may be at work at the site.  Contractor shall schedule its work so it does not interfere with, or impede the progress of other work at the site, including work done by Lessor’s own forces.  Any work that is in conflict shall be rescheduled by the Contractor without any Lessor liability for costs or expenses incurred in connection with such rescheduling.

3.Building Keying Requirements

Contractor shall contact Lessor’s Project Manager at the start of construction for instructions on the permanent building keying.  All permanent keying to be established by Lessor and the tenant during the hardware submittal approval process.

4.Lessor Approval to Start Work

Contractor will not be allowed to move into an area of the Building other than the Premises until approval is given by Lessor.

5.Contractor Storage Areas

Materials and tool storage will be limited to the areas for which access has been granted.  Space available to Contractor for his job office, lock-ups, etc., will be in the areas for which access has been granted by Lessor.

6.Contractor Clean-up

Contractor, at his expense, must clean up the work area recurrently on a daily basis and deposit all non-hazardous rubbish and waste material in containers located in the loading dock area, provided by the Lessor.  The Lessor will pay all costs associated with the rental, and transportation of the containers, and the disposal costs.  No open fires or rubbish burning is allowed.  Do not pour any materials or liquids down the building sanitary waste or storm drain lines.

7.Delivery & Distribution of Materials & Equipment

a.All material deliveries and debris removal shall be made as expeditiously as possible through the loading dock and service elevators, where applicable.  The Building has no dedicated freight elevators. All elevators are passenger/freight elevators, which the Contractor shall be responsible for protecting during use for construction purposes.

b.Materials may need to be delivered from exterior of Building by crane or fork lift and brought over balconies through sliding glass doors.  The Contractor and/or Lessee will be responsible for protecting existing improvements on the exterior, and responsible for repairing any damage caused by any Contractor or subcontractor activities on the exterior of the Buildings.  The location and scheduling of such hoisting is to be approved in advance by Lessor’s Project Manager. The loading dock area may be utilized for material deliveries with Lessor’s approval.

c.As conditions permit, the elevators will be available for use under the following conditions.  Service elevators cannot be monopolized during Normal Hours.  Contractor will be afforded

EXHIBIT “C-3”

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these facilities at such times during Normal Hours as is convenient to the Lessor. If these facilities are not available to Contractor during Normal Hours, Contractor shall make arrangements with the Lessor for use outside of Normal Hours.

d.Contractor will be afforded unloading areas as prearranged with the Lessor’s Project Manager.  All materials unloaded at these areas will be moved to the area of use immediately, and shall not be stored or used in a way which adversely impacts use of the Building.  Contract shall relocate any stored materials or equipment which interfere with the operation of the Building or other contractors at the Building.

8.Protection of Existing Improvements

a.At the start of Construction, and throughout the course of Construction, Contractor shall provide damp walk-off mats at entrances to construction areas from freight elevator and stairwells and shall protect all existing and new walls and flooring where needed, as directed by Lessor’s Project Manager, including protecting carpeted areas by covering with Masonite, if Lessor deems it necessary.

b.Lessee and/or Contractor shall also be responsible for damage caused by Contractor or his subcontractors to any other new or existing work.  Any such damages will be promptly repaired at no cost and to the satisfaction of the Lessor.

9.Designated Storage Areas

a.Any activity that in Lessor’s judgment materially interfere with existing tenants’ use of the their space, because of the noise or offensive odors generated, other disruptive activities, or health hazards created such as x ray work, must be done outside of Normal Hours, or other late or week-end non-office activities in the Building.

b.Contractor will be afforded on-site storage areas for materials and equipment, if available, in areas designated by Lessor’s project manager. Any stored material, shed, office, etc., which interferes with orderly progress of the work, or the operation of the building, shall promptly be relocated or removed from the site as directed by Lessor.  An approved flammable liquid storage locker shall be provided by the Contractor to store all flammables left on site.  Paints and thinners must be brought to site as needed and not stockpiled on the floor.  No linseed oil products may be used without expressed prior written permission of the Lessor.  Rags used with flammable materials shall not be stored on site.  Contractor is solely responsible for the safe-keeping and protection of all his stored material and that of his subcontractors.

10.Compliance With Codes, Laws & Regulations

Contractor shall comply with all applicable codes, laws and regulations pertaining to the Construction, including all safety and health regulations.  Spray painting may not be done during the day, without specific written permission from Lessor.  Permits, if required, must be secured from the Fire Department for any spray application and work must comply with all Fire Department regulations and those of other regulatory agencies having jurisdiction, including AQMD.

11.Delay or Interference With Other Work at the Site

a.Contractor will not engage in any labor practice that may delay or otherwise impact other work at the Building.

b.The Contractor shall in no way interfere with or endanger the normal pedestrian and vehicular traffic adjacent to the project site, nor interrupt the flow of traffic in and out of the Building.  The Contractor shall provide his own traffic control personnel as required, at its expense.

12.Designated Parking Areas

There will be designated parking on site made available for Contractor and subcontractor personnel, in areas designated by the Lessor’s project manager.

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13.Contractor Access to the Site & Work Area

Contractor and all subcontractor personnel, materials, tools and equipment are to enter and exit the building only through the service entrance and elevator, and are to go to the work floor(s) on the service elevators or stairwells only.  Use of the passenger elevators is expressly prohibited in all circumstances.  Lessor may at any time initiate a check-in/check-out system, for all people and materials in the Building, and the Contractor agrees to cooperate with any such system. Contractor shall secure its own work space after working hours, at the earliest opportunity.

14.Verifying Existing Conditions

Before ordering material or doing work which is dependent upon existing building conditions for proper size or installation, the Contractor shall verify all dimensions by taking measurements at the site and shall be responsible for correctness of same.  If there are any conflicts, notify CDC’s project manager.

15.Food Consumption on Site

The Lessor will control any vending machines, concessions, etc., permitted onsite at the Building.  Food shall be consumed in designated areas only, which the Contractor must keep in a cleaned-up condition and shall provide waste receptacle for workers’ use.

16.Identification Signs

Contractor shall not be permitted any identifying signage except for informational and directional signage as approved by the Lessor prior to installation

17.Contractor’s On-Site Supervision

At all times during his construction activities, Contractor shall have supervisory personnel onsite.  Such supervisory personnel shall be fully authorized to coordinate and authorize Contractor’s work, and respond for the Contractor, as necessary, so that all work proceeds in a timely and well-ordered fashion.  Contractor may be requested to carry a Lessor two-way radio to facilitate communications.

18.Cutting & Patching

No cutting or patching of Lessor’s premises or installations, or those of any building occupant, shall be permitted without Lessor’s prior written consent.

Requests for permission to do cutting shall included explicit details and description of work.  Such cutting and patching shall not diminish the structural integrity of the building components or systems. Contractors should be aware that the Building floor slabs are post-tensioned concrete.  Any x-ray work required, in connection with the cutting and patching, must be done outside of Normal Hours, and will require scheduling five days in advance to allow notification of other tenants.

19.Work in Occupied Areas

If any work is to be done in occupied areas, such work is to be done only with Lessor’s explicit written permission, when and as directed by Lessor.  Such work is to be done only under the direct supervision of a competent member of the Contractor’s staff.  The area is to promptly be repaired and returned to a fully functioning, complete, and clean condition.

20.Work on Base Building Systems

All Life/Safety systems of the Building are to be maintained, and all of the Contractor’s work is to be properly interfaced with and connected to the Base Building systems as required by the Lease and Laws, or by Building operation.  All construction is to be done in such a way as to protect all Base Building operations and warranties.

21.Final Cleanup

In addition to cleaning requirements described elsewhere, the Contractor shall, in preparation for substantial completion or occupancy of the project by each individual tenant, shall coordinate its final cleaning with Lessor’s final cleaning operations in the Contractor’s work area.  Contractor may utilize Lessor’s cleaning contractor, the cost for which the Contractor would negotiate and pay for directly.

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22.Verifications of Conditions

Before the Contractor starts work in the Premises, Contractor shall ascertain that the area is in a safe and sanitary condition, and shall maintain the area as necessary, (at Contractor’s sole cost and expense), in a safe and sanitary condition, and to standards meeting all applicable Laws.

23.Weekly Coordination/Job Progress Meetings

Lessor will require weekly coordination/job progress meetings.  The Contractor shall attend with a representative empowered to speak and act on the Contractor’s behalf.  The Contractor shall be responsible for preparing all meeting minutes, which designate the  responsible party for follow-up, and for distribution of those minutes within 48 hours of meeting.

24.As-Built Drawings

Contractor shall maintain a complete set of marked-up construction drawings prints, neatly drawn and legibly lettered, and used exclusively for the purpose.  Such as-built drawings, which are subject to Lessor inspection without notice, shall be prepared contemporaneously with all changes and additions to the Project. The as-built drawings shall be submitted to the Lessor’s project manager, prior to final payment in the required CADD form with paper copies as required.

25.Punch List Preparation

The Contractor shall notify Lessor’s Project Manager at least one week in advance of completion of construction.  A walk through and punch list shall be made on each job for distribution by Contractor.

26.Notification of Injuries

Lessor’s Project Manager shall be promptly notified in writing of any accident or injury to its personnel, representatives, assigns, visitors or any other persons on the premises, which result from the Contractor’s activities.

27.Coordination of Non-Regular Work Activities

All construction or on-site activity during other than Normal Hours will be coordinated before-hand with the Lessor.  Except in an emergency, a minimum of 24 hours notice will be required.

28.Coordination of Work With Assigned Subcontractors

Contractor shall provide electrical power to the DDC controls as soon as possible to allow timely completion of that work.  If necessary, provide separate circuits for the purpose. When lights are installed and circuits activated, the lights must be connected to the DDC Control System.  The cost of lights left on after Normal Hours will be assessed against the Contractor and deducted from the contract sum.

29.Site Prohibitions

No smoking is allowed in the building according to State Law.

No radios, or other amplified sound devices are allowed at the project site, and no pets or other animals are allowed on site, including parking areas.

No sunflower or other seeds, chewing tobacco, drugs or alcohol are allowed on site.

No persons impaired by drugs or alcohol are allowed on site.

30.Amendment to These Rules

These rules may be unilaterally amended or revised by Lessor from time to time and Lessor shall give Lessee notice thereof.

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CONTINENTAL CONSTRUCTION PROJECT CLOSE OUT PACKAGE ACCEPTANCE CHECK LIST

Continental Construction Project Close Out Package Acceptance Check List

Job Name:

Job Number:

Project Manager:

Contractor:

Date of City Final:

No Closeout Package Required (Explanation)

	Date	Date		Initials	Initials	Date	Initials
Item	Received	Rejected	Reason	(Const)	(PMgmt)	Complete	(Const)
Reproducible As Builts *
Architectural
Mechanical
Electrical
Plumbing
Fire / Life / Safety
Fire Sprinkler
Architectural Finish Specifications / Samples
Other Specifications
Key to Extinguisher Cabinets
Keys to Electrical Panels
Manufacturer Manuals & Equipment Cut Sheets
Warranties
Signed City Inspection Cards
Copies of Original Permit Set of Plans
Copies of Final/Unconditional Lien Releases

Follow Up Notes:

NOTES:

1.List of all subcontractors must be provided with the closeout package. A sub list shall also be provided at the beginning of the job. The list shall include: Company Name, Address, Contact person, Phone #, Fax #, Email Address, Contractor’s License # City Business License #, Supervisor’s Name and Phone #.

2.The Permit Application Card with building and fire inspection sign off.

3.City Permit Inspection Card with signoff signatures for building and fire.

4.Permit Set of Plans to be submitted in good & legible condition. (Not to be used as scrap paper or a doodle pad).

5.As Built Plans legibly marked with any changes, stamped with the contractors identifying stamp and stamped as, AS BUILT or RECORD SET and signed by the job superintendent or the job project manager with their name clearly printed adjacent to the signature. Two sets of plans, one shall be reproducible.

6.Fire Life Safety Permit Set stamped with the installing contractors identifying stamp and stamped as, AS BUILT and signed by the installing craft supervisor or Project Manager with their name clearly printed adjacent to the signature. Two sets, one (1) shall be reproducible.

7.Fire Sprinkler Permit Set stamped with the installing contractors identifying stamp and stamped as, AS BUILT and signed by the installing craft supervisor or project manager with their name clearly printed adjacent to the signature. Two sets, one (1) shall be reproducible.

8.Mechanical Permit Set stamped with the installing contractors identifying stamp and stamped as, AS

EXHIBIT “C-4”

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BUILT and signed by the installing craft supervisor or project manager with their name clearly printed adjacent to the signature. Two sets, one (1) shall be reproducible.

9.Air Balance Report stamped with the testing contractors identifying stamp signed by the test mechanic with their name clearly printed adjacent to the signature. Two sets. Note: Some buildings require “Certified Air Balance Reports.” The Air Balance Report shall have an accompanying drawing referencing each VAV and diffuser.

10.Electrical Permit Set stamped with the installing contractors identifying stamp and stamped as, AS BUILT and signed by the installing craft supervisor or project manager with their name clearly printed adjacent to the signature. Two sets, one (1) shall be reproducible.

11.Electrical Panel Schedules:  A current “as connected” Typed copy to be installed at the electrical panel and one copy of the same, included with the close out packages.

12.Plumbing Permit Set stamped with the installing contractors identifying stamp and stamped as, AS BUILT and signed by the installing craft supervisor or project manager with their name clearly printed adjacent to the signature. (Must show supply line shut offs & cleanouts locations, etc) Two sets, one (1) shall be reproducible.

13.Operating Manuals and Equipment Warranties: Original Copies of all equipment operating manuals and equipment warranties showing the start up dates. All warranties shall be dated as the date the General Contractors Warranty begins.

14.Conditional Waiver and Release Upon Final Payment original documents for every subcontractor who performed work on said job.

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GLASS DOOR ENTRY

EXHIBIT “C-5”

1

BUILDING STANDARD SERVICES AND UTILITIES

The furnishing of building services and utilities to Lessee shall be accomplished in accordance with and subject to the terms and conditions set forth in this Exhibit and elsewhere in this Lease.  Lessor reserves the right to adopt from time to time such reasonable modifications and additions hereto as Lessor may deem appropriate.

1.             Subject to the full performance by Lessee of all of Lessee’s obligations under this Lease, Lessor shall, during Normal Hours as set forth in Section 1.1 of this Lease (“Normal Hours”), provide the standard building services and utilities set forth in this Paragraph 1.  Lessor shall:

(a)           Provide automatic elevator facilities during all hours.

(b)           Provide to the Premises, during Normal Hours, heating, ventilating and air conditioning (“HVAC”) when in the judgment of Lessor, it may be required for the comfortable occupancy of the Premises for general office purposes (subject, however, to any governmental act, proclamation or regulation).  Lessor shall not be responsible for any room temperatures if Lessee’s lighting and receptacle loads exceed those listed in Paragraph 1(c) of this Exhibit, or if the Premises are used for other than general office purposes.

(c)           Provide to the Premises, during Normal Hours, electric current for routine lighting and the operation of general office machines such as typewriters, dictating equipment, desk model adding machines, photocopy machines and desk top computers incidental to the conduct of normal general office business, which use 110/220-volt electric power, not to exceed the reasonable capacity of Building Standard office lighting and receptacles, and not in excess of limits imposed by any governmental authority.  Specifically, the requirement shall not exceed an average of 3 watts per usable square foot of the Premises.  Lessee agrees, should its electrical installation or electrical consumption be in excess of the aforesaid use or extend beyond Normal Hours, to reimburse Lessor for the excess utilities as provided in Article 11 of this Lease.

(d)           Provide at all times reasonably necessary water for restrooms and other facilities, if any, furnished by Lessor in amounts in proportion to the size of the Premises relative to the Building.

(e)           Provide janitorial services to the Premises each evening, Monday through Friday (except state and/or Federal holidays), provided the Premises are used exclusively in accordance with Section 1.1 and Article 6 of this Lease, and are kept reasonably in order by Lessee.  Lessee shall pay to Lessor the cost of removal of any of Lessee’s refuse and rubbish, to the extent that the same exceeds the refuse and rubbish usually attendant upon the use of the Premises for general office purposes.  Lessor shall not be responsible or liable for any act or omission or commission on the part of the persons employed to perform said janitorial services, and said janitorial services shall be performed at Lessor’s direction without interference by Lessee or Lessee’s Employees.

2.             Lessor shall only have the obligation to replace Building Standard fluorescent light bulbs, tubes and ballasts in the Premises throughout the Term.   Only fluorescent and halogen lighting shall be permitted in the Premises.  The Lessor may, at Lessor’s sole discretion, adopt a system of periodic relamping and reballasting the Building Standard fluorescent fixtures on a group basis in accordance with good practice, but shall have no obligation to replace, repair, maintain, service or otherwise perform any work on any light fixtures in the Premises other than Lessor’s Building Standard fluorescent fixtures.  Lessee shall be solely responsible for the replacement, repair, maintenance and service, including all costs thereof relating to any lighting fixtures in the Premises which are not the Building Standard fluorescent fixtures.

3.             No electrical equipment, air conditioning or heating units, or plumbing additions shall be installed, nor shall any changes to the Building’s HVAC, electrical or plumbing systems be made without the prior written consent of Lessor, which consent shall be subject to Lessor’s sole and absolute discretion.  In the event any changes or additions are requested and provided, then Lessee understands and agrees to maintain and/or repair the equipment and/or additions installed.  Lessor reserves the right to designate and/or approve the contractor to be used by Lessee.  Any permitted installations shall be made under Lessor’s supervision.  Lessee shall pay any additional cost on account of any increased support to the floor load or additional equipment required for such installation, and such installations shall otherwise be made in accordance with Section 7.2 of this Lease.

4.             Lessor shall not provide in the Premises, reception outlets or television or radio antennas for television or radio broadcast or reception, and Lessee shall not install any such equipment without the prior written consent of Lessor, which consent can be withheld in Lessor’s sole and absolute discretion.

5.             Lessee shall not, without the prior written consent of Lessor, use any apparatus, machine or device in the Premises, which will in any way increase the amount of electricity or water usually furnished or supplied for use of the Premises as general office space, nor connect with electric current, except through existing outlets in the Premises, any apparatus or device for the purpose of using electric current in excess of that usually furnished or supplied for use of the Premises as general office space.

EXHIBIT “D”

1

6.             Lessee shall separately arrange with the applicable local public authorities, utility companies and telephone companies, as the case may be, for the furnishing of, and payment of, all telephone services as may be required by Lessee in the use of the Premises; provided, however, that Lessee shall neither bear the cost of nor be responsible for installation of the telephone wiring stubbed to the telephone room.  Lessee shall directly pay for such telephone services, including the establishment and connection thereof, at the rates charged for such services by said authority, telephone company or utility, and the failure of Lessee to obtain or to continue to receive such services for any reason whatsoever shall not relieve Lessee of any of its obligations under this Lease nor constitute a breach of this Lease by Lessor.

7.             Lessee agrees to cooperate fully at all times with Lessor to assure, and to abide by all regulations and requirements which Lessor may prescribe for the proper functioning and protection of the Building’s HVAC, electrical, security (if any) and plumbing systems.  Lessee shall comply with all Laws now in force or which may later be enacted or promulgated in connection with building services furnished to the Premises, including, without limitation, any governmental rule or regulation relating to the heating and cooling of the Building.

8.             Lessor shall provide to the Lessee at the time of Lessee’s move-in a minimum of two (2) sets of keys to the Lessee’s suite regardless of the size of the suite. A set of keys shall consist of one key for the entrance door to the suite and one key for the entrance door to the Building. In addition to the initial two (2) sets of keys the Lessor shall provide, as a standard allowance, one (1) set of keys per 1,000 usable square feet of the Premises. The costs of such keys shall be part of the Tenant Improvement Allowance, if there is one. All keys and locksmith charges for any other work (extra keys, interior suite door keys, or rekeying any lock in the suite after the move-in) shall be charged to the Lessee as an additional service.

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RULES AND REGULATIONS

1.             The sidewalks, entrances, exits, passages, parking areas, courts, elevators, vestibules, stairways corridors, terraces, lobbies or halls shall not be obstructed or used for any purpose other than ingress and egress.  The halls, passages, entrances, exits, elevators and stairways are not for the use of the general public, and Lessor shall retain the right to control and prevent access thereto of all persons whose presence, in the judgment of Lessor, is deemed to be prejudicial to the safety, character, reputation and interests of the Building and its tenants.  No tenant shall go up on the roof of the Building.

2.             No curtains, blinds, shades or screens shall be attached to or hung in, or used in connection with, any window of the Premises other than Lessor’s standard window covering; without Lessor’s prior written consent.  No electric ceiling fixtures, other than those installed by Lessor are permitted. Neither the interior nor exterior of any windows shall be coated or otherwise sunscreened without the prior written consent of Lessor.

3.             No sign, picture, placard, advertisement notice, lettering, direction or handbill shall be exhibited, distributed, painted, installed, displayed, inscribed, placed or affixed by any tenant on any part of the exterior of the Premises, the Building, the Property, or Continental Park, or the interior of the Premises which is visible from the exterior of the Premises, without the prior written consent of Lessor.  In the event of the violation of the foregoing by any tenant, Lessor may remove same without any liability, and may charge the expense incurred in such removal to the tenant violating this rule.  Interior signs on doors shall be inscribed, painted or affixed for each tenant by the Lessor at such tenant’s expense, and shall be of a size, color and style acceptable to the Lessor.  Nothing may be placed on the exterior of corridor walls or corridor doors other than Lessor’s building standard sign on the corridor door, applied and installed by Lessor.

4.             Lessee shall not, and Lessee shall not permit Lessee’s Employees to, drill into, or in any way deface any part of the Premises, Building, or Property.  No boring, cutting or stringing of wires or any floor coverings shall be permitted, except with the prior written consent of the Lessor.

5.             No bicycles, vehicles, birds or animals (except guide dogs) of any kind shall be brought into or kept in or about the Premises or the Building, and no birds or animals (except guide dogs) shall be brought into or kept in or about the Building.  No cooking shall be done or permitted by Lessee on the Premises, except that the preparation of coffee, tea, hot chocolate and similar items for Lessee shall be permitted, and Lessee shall also be permitted to heat foods in a microwave oven for use by Lessee or its employees; provided, however, that the power required shall not exceed that amount which can be provided by a 30-amp circuit.  No Lessee shall cause or permit any food, unusual or objectionable odors or smells to be produced or to permeate the Premises or common areas of the Building.

6.             The Premises shall not be used for manufacturing or for the storage of merchandise except as such storage may be incidental to the use of the Premises for general office purposes.  No Lessee shall occupy or permit any portion of the Premises to be occupied as an office for any persons other than those persons employed by Lessee and conducting the business of Lessee for which this Premises was originally rented without the prior written consent of Lessor.  No Lessee shall sell or permit retail sales of any goods or merchandise in or on its Premises.  No Lessee shall engage or pay any employees on its Premises except those actually working for such Lessee on its Premises, nor shall any Lessee, without Lessor’s prior written consent, use the Premises address in any advertisements for laborers working at a location other than the Premises.  No Premises shall be used for lodging or sleeping or for any immoral or illegal purposes.

7.             No Lessee shall make, or permit to be made, any noises which disturb other occupants of the Building, or Continental Park, whether by the use of any musical instrument, radio, television, phonograph, screening room, loud, unusual or disruptive noise, or in any other way.  No Lessee shall use, keep or permit to be used any foul or noxious gas or substance in, on or about the Premises.

8.             Lessee shall not at any time bring or keep, and Lessee shall not permit Lessee’s Employees to at any time bring or keep, within the Premises or the Building, any flammable, combustible or explosive fluid, chemical substance or material.  Electric spaceheaters shall not be used at any time by Lessee or Lessee’s Employees.

9.             No new or additional locks or bolts of any kind shall be placed upon any of the doors by Lessee, nor shall any changes be made in existing locks or the mechanism thereof without the prior written consent of Lessor.  If Lessor consents in writing to such a lock change, Lessee must furnish Lessor with a key.  Lessee must, upon the termination of its tenancy, give, return and restore to Lessor all keys of stores, offices, vaults and toilet rooms, either furnished to, or otherwise procured by Lessee, and in the event at any time of any loss of keys so furnished, Lessee shall pay to Lessor the cost of replacing the same or of changing the lock or locks opened by such lost key if Lessor shall deem it necessary to make such changes.

10.           Furniture, freight, packages, equipment, safes, bulky matter or supplies of any description shall be moved in or out of the Building, only after Lessor has been furnished with prior notice and approved thereof in writing and only during such hours and in such manner as may be prescribed by the Lessor from time to time.  The scheduling

EXHIBIT “E”

1

and manner of all Lessee move-ins and move-outs shall be subject to the discretion and approval of Lessor, and said move-ins and move-outs shall only take place after 7:00 p.m. on weekdays, on weekends, or at such other times as Lessor may designate.  Lessor shall have the right to approve or disapprove the movers or moving company employed by Lessee, and Lessee shall cause said movers to use only the loading facilities and elevators designated by Lessor.  In the event Lessee’s movers damage the elevator or any other part of the Property, Lessee shall immediately pay to Lessor the amount required to repair said damage.  The moving of safes or other fixtures or bulky or heavy matter of any kind must be done under the Lessor’s supervision, and the person employed by any Lessee for such work must be acceptable to Lessor, but such persons shall not be deemed to be agents or servants of the Lessor, and Lessee shall be responsible for all acts of such persons.  The Lessor reserves the right to inspect all safes, freight or other bulky or heavy articles to be brought into the Building and to exclude from the Building all safes, freight or other bulky or heavy articles which violate any of these Rules or this Lease of which these Rules are a part.  The Lessor reserves the right to determine the location and position of all safes, freight, furniture or bulky or heavy matter brought onto the Premises, and Lessor shall have the right to require that same be placed upon supports approved in writing by Lessor to distribute the weight.

11.           No furniture shall be placed in front of the Building, or in any lobby or corridor or balcony, without the prior written consent of Lessor.  Lessor shall have the right to remove all non-permitted furniture, without notice to Lessee, and at the expense of Lessee.

12.           Lessor reserves the right to disapprove any vendor, including but not limited to, those which provide the following services or products:  water, ice, towel, janitorial, maintenance, delivery, courier, private postal, or other like services.  No Lessee shall obtain or purchase food or beverages on the Property from any vendor or supplier except at hours and under regulations established by Lessor.

13.           Lessor shall have the right to prohibit any advertising by any Lessee which, in Lessor’s opinion, tends to impair the reputation of the Building or its desirability as an office building and, upon written notice from Lessor, Lessee shall immediately refrain from or discontinue such advertising.

14.           Lessor reserves the right to exclude from the Building between the hours of 6:00 p.m. and 7:00 a.m., Monday through Friday, and at all hours on Saturday, Sunday and state and/or Federal holidays, all persons who are not authorized by Lessee.  Such authorization shall be in accordance with procedures established by Lessor in its sole and absolute discretion.  Each Lessee shall be responsible for all persons whom it causes to be present in the Building and shall be liable to Lessor for all acts of such persons. In the case of invasion, riot, public excitement, Act of God, or other circumstance rendering such action advisable in Lessor’s opinion, Lessor reserves the right to prevent access of all persons, including Lessee, to the Building during the continuance of the same by such actions as Lessor may deem appropriate, including the closing and locking of doors.

15.           All of Lessee’s Employees, while in the Building and outside of the Premises, shall be subject to and under the control and direction of Lessor (but shall not be deemed to be an agent or servant of Lessor), and Lessee shall be responsible for all acts of such Lessee’s Employees.

16.           All doors opening onto public corridors shall be kept closed, except when in use for ingress and egress.  All doors leading to equipment and utility rooms shall be kept closed.

17.           Canvassing, soliciting and peddling in the Building are prohibited and each Lessee shall cooperate to prevent the same.

18.           All office equipment of any electrical nature (other than that office equipment which is typically used in normal office uses and which does not cause excessive vibration noise or annoyance) shall be placed by Lessee in the Premises in settings and locations approved in writing by Lessor, to absorb or prevent any vibration, noise or annoyance.

19.           No air conditioning unit or other similar apparatus shall be installed or used by Lessee without the prior written consent of Lessor.

20.           Lessee shall faithfully observe and comply with the terms of any and all covenants, conditions and restrictions recorded against the Property.

21.           Restrooms and other water fixtures shall not be used for any purpose other than that which the same are intended, and any damage resulting to the same from misuse on the part of Lessee shall be paid for by Lessee.  Each Lessee shall be responsible for causing all water faucets, water apparatus and utilities to be shut off before such Lessee leaves the Premises each day, and Lessee shall be liable for any waste or damage sustained by other tenants or occupants of the Building or Lessor as a result of Lessee’s failure to perform said duty.

22.           The Building is equipped with an electronic access control device.  Lessee shall give Lessor the sum of ten dollars ($10.00) for each identification key or card issued to Lessee as a deposit against the return of the identification key or card to Lessor.

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23.           The terms used in this Exhibit shall have the same meanings as defined in the respective Lease for each Lessee, unless a contrary meaning is expressly set forth herein. For all purposes of this Exhibit, (i) the term “Lessee” shall be defined as the respective tenant under each Lease to which this Exhibit is attached and to all other tenants of the Project and shall include and encompass each of those tenants’ employees, agents, contractors, licensees and invitees, and (ii) the term “Premises” shall be defined as the respective Premises leased under each Lease to which this Exhibit is attached and to the Premises of all other tenants of the Building.

24.           No distress sale, fire sale, bankruptcy sale, liquidation, relocation sale, closing sale, going-out-of business sale, auction, sheriff’s sale, receiver’s sale, or any other sale that, in Lessor’s opinion, adversely affects the reputation of the Building or suggests that the business operations are to be discontinued in the Premises shall be advertised or conducted in or about the Premises.

25.           Lessee shall not place any grease or cooking oil into any trash compactor, normal garbage containers, floor drains, sink drains or toilets.

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PARKING FACILITIES

So long as the Lease pertaining to the Premises remains in effect, and Lessee is not in default thereunder, Lessee shall, during the term of the Lease, (a) grant Lessee monthly parking privileges for Lessee, for Lessee’s employees, and for any additional persons agreed to by Lessor, for that number of automobiles in the aggregate set forth in Section 1.1 [Monthly Parking Permit Charges] at the monthly rates or charges from time to time established by Lessor in its sole discretion, and (b) park said automobiles in the Parking Facilities.  Lessor may, in its sole discretion, modify said rates or charges from time to time during the term of the Lease. In each case, Lessee shall enter into parking licenses or lease agreements or other arrangements then in use by Lessor (or Lessor’s operator) with respect to such monthly parking.  Lessor may, from time to time during the term of the Lease, relocate any or all of Lessee’s reserved parking spaces from one location to another within the Parking Facilities as Lessor may elect in its sole discretion.  Lessee understands that as a condition to its obtaining the parking privileges provided by the Lease, Lessee shall not charge any other person or company for parking.

A condition of any parking shall be compliance by all parkers with parking rules and regulations and all modifications and additions thereto from time to time established by Lessor (or Lessor’s operator) in their sole discretion, including any sticker or other identification system established by Lessor (or Lessor’s operator).  Lessor (and Lessor’s operator) shall not be responsible to Lessee for the non-performance of any of said rules and regulations by any other parker.  The rules and regulations for the Parking Facilities are as follows:

RULES AND REGULATIONS

1.             Parking hours are currently established from 7:30 a.m. to 6:30 p.m., Monday through Friday. Lessee shall have parking privileges during any other times or on Saturdays, Sundays, or state and/or Federal holidays, but Lessor shall not have the obligation to enforce reserved permits or the number of permits allocated to Lessee hereunder.  Lessor retains the right to change these hours or the manner of operation of the Parking Facility in the exercise of its reasonable discretion.  Overnight parking is at the vehicle owner’s risk.  Lessee must provide Lessor with written notification of any of its vehicles parked in the space for more than twenty-four (24) continuous hours.  Lessee shall provide Lessor with the make, model, color, license plate number, parking permit number, and shall indicate the date the vehicle will be parked overnight in the parking facilities.  Long-term vehicle storage is prohibited.  No vehicle may be parked in any stall for more than forty-eight (48) continuous hours.

2.             Automobiles must be parked entirely within the stall lines on the pavement.

3.             All directional signs and arrows must be observed.

4.             The speed limit shall be 5 miles per hour.

5.             Parking in areas not striped for parking is prohibited.

6.             Parking stickers or any other device or form of identification supplied by Lessor (or its operator) shall remain the property of Lessor (or its operator).  Such parking identification device must be displayed as required and may not be mutilated in any manner.  The serial number of the parking identification device may not be obliterated.  Parking identification devices are not transferable or assignable and any parking identification device in the possession of any unauthorized holder will be void.  There will be a deposit of $10.00 required for each parking card and a replacement charge to Lessee or person designated by Lessee of $10.00 for loss of any parking card, which amounts can be adjusted from time to time by Lessor at its discretion.

7.             The monthly rate for parking is payable one (1) month in advance and must be paid on or before the first day of each calendar month during the entire term of the Lease.  Failure to do so will automatically cancel all parking privileges and a charge at the prevailing daily rate will be due.  No deductions or allowances from the monthly rate will be made for the days a parker does not use the Parking Facilities.

8.             Lessor (and its operator) may refuse to permit any person who violates the within rules to park in the parking area, and any violation of the rules shall subject the automobile to removal from the parking area at the parker’s expense.  In either of said events, Lessor (or its operator) shall refund a pro rata portion of the current monthly parking rate, and Lessee shall immediately return to Lessor the parking card, sticker and any other form of identification supplied by Lessor (or its operator).

9.             Parking area managers or attendants are not authorized to make or allow any exceptions to these rules and regulations.

10.           Every parker is required to park and lock his/her own automobile.  All responsibility for any loss or damage to automobiles or any personal property therein is assumed by the parker.

EXHIBIT “F”

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11.           Loss or theft of parking identification devices from automobiles must be reported to the parking area manager immediately, and a lost or stolen report must be filed by the parker at that time.

12.           The Parking Facilities are for the sole purpose of parking one (1) automobile per permit, unless otherwise permitted or changed by Lessor.  Washing, waxing, cleaning or servicing of any vehicle by the parker of his/her agents is prohibited, except by persons expressly authorized in writing to do so, in advance, by Lessor.

13.           Lessor (and its operator) reserves the right to refuse the issuance of monthly stickers or other parking identification devices to any Lessee and/or its employees who refuse to comply with the above Rules and Regulations and all posted and unposted city, state or federal ordinances, laws or agreements.

14.           Any vehicle parked improperly may be towed away.  Lessor may place a “boot” on any vehicle improperly parked, and may levy a charge to remove the “boot.”  Lessee shall indemnify, hold and save harmless Lessor of any liability arising from the towing or booting of any vehicles belonging to Lessee or to Lessee’s Employees.

15.           No vehicle shall be parked as a “billboard” vehicle in the Parking Facilities.

16.           Lessee agrees to acquaint all employees with these Rules and Regulations.

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RIDER NO. ONE

OPTION TO EXTEND TERM

This Rider No. One for OPTION TO EXTEND (“Rider”) is attached and made a part of that certain Lease between The Plaza CP LLC, a California limited liability company (“Lessor”), and Manhattan Bancorp., a California corporation (“Lessee”), which Lease is dated February 28, 2007 (“Lease”).  Lessor and Lessee hereby agree that the following shall be included as part of said Lease:

1.             Grant of Option.  Lessee is hereby granted an option (sometimes called the “Renewal Option”) to extend the Term of the Lease upon all of the provisions contained in the Lease, except for Base Rental and for this Extended Term Rider, for a period of five (5) years (the “Option Term”).  Such option shall be exercised, if at all, by Lessee delivering written notice to Lessor of such exercise of such option (“Option Notice”) at least two hundred seventy (270) days, but not more than four hundred fifty (450) days before the expiration of the initial term.  Reference to the “Term” of the Lease as used in the Lease shall include the Option Term in the event the Renewal Option is exercised in accordance herewith.  Lessee shall have no other right to extend the term except as set forth in this section.

2.             Base Rental During Option Term.  In the event Lessee exercises its option to extend the Term of the Lease, as permitted herein, then the Base Rental for the Option Term shall be at the then current market value of comparable space within Continental Park, which shall be determined as hereinafter provided.  Additionally, and notwithstanding anything contained in the Lease to the contrary, throughout the Option Term Lessee and Lessee’s Employees shall pay the charges for parking in the Parking Facilities as are then in effect from time to time.  The Base Rental for the Option Term shall be determined as follows:

(a)           Within fifteen (15) days of receipt by Lessor of Lessee’s Option Notice, Lessor shall deliver written notice (the “Lessor’s Notice”) to Lessee advising Lessee of Lessor’s opinion of the fair market rental value (the “Value”) of the Premises;

(b)           If Lessor’s opinion of the Value of the Premises is acceptable to Lessee, then Lessee shall so notify Lessor in writing within fifteen (15) days of receipt by Lessee of Lessor’s Notice, and the Lease shall, thereafter, be extended for the Option Term.

(c)           In the event Lessee challenges Lessor’s opinion of the Value of the Premises, Lessee shall deliver written notice thereof (the “Lessee’s Notice”) to Lessor within fifteen (15) days of receipt by Lessee of  Lessor’s Notice.  In such Lessee’s Notice, Lessee shall also advise Lessor of Lessee’s opinion of the Value of the Premises.  If Lessee fails to deliver Lessee’s Notice to Lessor containing the required information within such fifteen (15) day time period, then same shall be considered as Lessee’s acceptance of Lessor’s Opinion of the Value of the Premises.  If Lessee timely delivers the Lessee’s Notice, and if Lessor and Lessee cannot agree upon the Value of the Premises within fifteen (15) days after Lessor’s receipt of Lessee’s Notice, then the Value of the Premises shall be determined by appraisal in accordance with this Rider.  All costs of such appraisal shall be paid by Lessee.

3.             Determination of Value by Appraiser.   Lessor and Lessee shall appoint a mutually acceptable MAI appraiser with at least five (5) years experience in valuing office buildings within the general area of the Premises to also determine whether Lessor’s or Lessee’s opinion of the Value is more accurate.  The decision of the appraiser shall be binding on both of the parties hereto.  The Value of the Premises as determined herein shall be the Base Rental for the Premises for the first year of the Option Term, which Base Rental shall be subject to increase each year thereafter, if any, as provided hereinabove.  Notwithstanding anything to the contrary contained herein, in no event shall the Base Rent and Operating Expense Adjustment for the first month of the Option Term be less than the Base Rent and Operating Expense Adjustment for the last full calendar month preceding the first month of the Option Term.

4.             Definition of Value of the Premises.  The Value of the Premises shall be determined based upon rentals then being charged for other space similarly situated and within Class A buildings located in the El Segundo/Manhattan Beach market of equivalent condition and amenities as the Building and the Project, taking into account the size, location, floor level, the length of the term of the Option Term, the extent of services to be provided, and any other relevant terms and conditions.  The term “tenant concessions” shall include, without limitation, so-called free rent, half rent or other reduced rent, free parking or reduced parking charges, load factor for rentable area of the Premises that is lower than that calculated in accordance with BOMA, etc.  All Base Rental payable during the Option Term shall be payable in the same manner and under the same terms and conditions as Base Rental is paid during the Initial Term.  In no event shall Lessor be obligated to construct any additional improvements within or about the Premises in connection with Lessee’s exercise of such option.

5.             Payment of Base Rental.  During the period of time the parties are determining the Value of the Premises, if such period extends beyond the scheduled expiration of the Initial Term, Lessee shall pay Lessor, as Base Rental, the amount which would be payable under Section 22.1 of the Lease if Lessee had held over possession of the Premises with Lessor’s consent, but had not exercised the Renewal Option.  If the monthly Base Rental for the first year of the Option Term, as determined herein, is different than the amount paid by Lessee as Base Rental during the period

OPTION TO EXTEND TERM

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of time following the end of the Initial Term of the Lease, then an adjustment shall be made effective as of the commencement of the Option Term, and one party shall pay the other party, within ten (10) days following the determination of the Base Rental for the first year of the Option Term, an amount sufficient to reconcile the amount so paid by Lessee as Base Rental as compared with the actual amount of Base Rental due.

6.             Option Personal.  The option granted to Lessee herein is personal to Lessee and may not be exercised or assigned voluntarily or involuntarily, by or to any person or entity other than the original Lessee or Qualified Financial Institution.  The option herein granted to Lessee is not assignable separate and apart from the Lease.  In the event that at the time this Option is exercisable by Lessee, the Lease has been assigned, or a sublease exists as to twenty percent (20%) or more of the Premises (except for an assignment or sublease to a Qualified Financial Institution), this Option shall automatically terminate and become null and void and Lessee, any assignee, or any sublessee, shall not have the right to exercise the Renewal Option.

7.             Effect Of Default On Option.

(a)           Lessee shall have no right to exercise the Renewal Option, notwithstanding any provision herein to the contrary, (i) during the time commencing from the date Lessor gives to Lessee a notice of default pursuant to Section 17.1 of the Lease and continuing until the default alleged in said notice of default is cured, (ii) during the period of time commencing on the date after a monetary obligation to Lessor is due from Lessee and unpaid (without any necessity for notice thereof to Lessee) and continuing until the obligation is paid, (iii) at any time after an event of default described in Sections 17.1(c) or (d) of the Lease (without any necessity for notice thereof to Lessee), or (iv) in the event that Lessor has given to Lessee three or more notices of default during the twelve (12) month period prior to the time that Lessee exercises such option.

(b)           The period of time within which such option may be exercised shall not be extended or enlarged by reason of Lessee’s inability to exercise such option.

8.             Miscellaneous.  Lessor and Lessee shall execute and deliver appropriate documentation to evidence any renewal of the Lease and the terms and conditions of the Lease during the Option Term.  All terms used herein shall have the same meanings as used in the Lease.  In the event of a conflict between the provisions of the Lease and those of this Rider, the terms of this Rider shall control.  Except as hereinabove provided, said Lease shall remain in full force and effect.

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LETTER OF CREDIT

Irrevocable Standby Letter of Credit no.

Amount: $292,995.00from the commencement date (the “Commencement date”) of that certain lease agreement dated February 28, 2007, by and between The Plaza CP LLC, a California limited liability company, and Manhattan Bancorp., a California corporation, continuing through the last calendar day of the ninth (9th) full calendar month following the Commencement Date (the “Reduction Date”), and then $146,497.50 from the first (1st) day following the Reduction Date through the last calendar day of the eighteen (18th) full calendar month following the Commencement Date (the “LC Expiration Date”).

Date of Issuance:

Beneficiary:

The Plaza CP LLC

2041 Rosecrans Avenue, Ste 200

El Segundo, CA 90245

Attention: Gian-Carlo M. Yanke, Esq.

1.We hereby establish our Irrevocable Standby Letter of Credit no.            at the request and for the account of the Manhattan Bancorp., in your favor and in the aggregate amount of $292,995.00from the Commencement Date through the Reduction Date, and thereafter in your favor in the aggregate amount of $146,497.50 through the Expiration Date, available by your draft at sight drawn on us bearing the clause “Drawn under [name of issuing bank] Letter of Credit no.          dated                    ” accompanied by a dated statement purportedly signed by an authorized officer certifying the following: “Manhattan Bancorp. is in default under the Lease Agreement dated January 23, 2007”;

2.This Letter of Credit shall be valid from the Date of Issuance hereof through the LC Expiration Date.

We hereby undertake with you that the draft and required documents drawn in strict compliance with the terms of this Letter of Credit will be duly honored by us if presented to this office prior to the LC Expiration Date in the manner described in Section 1 above.

This Letter of Credit is subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision) of the International Chamber of Commerce no. 500.

[NAME OF ISSUING BANK]

Authorized Signature	Authorized Signature
3116.012\81206.1

EXHIBIT “G”

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EX-10.3

Exhibit 10.3

MANHATTAN BANCORP

2007 STOCK OPTION PLAN

Adopted                           , 2007

1.             Purpose.  The purpose of the 2007 Stock Option Plan (the “Plan”) is to strengthen Manhattan Bancorp (the “Company”) and those corporations which are or hereafter become subsidiary corporations of the Company, within the meaning of Section 424(f) of the Internal Revenue Code of 1986, as amended (the “Code”), by providing to participating employees and directors added incentive for high levels of performance and for unusual efforts to increase the earnings of the Company and its subsidiary corporations.  The Plan seeks to accomplish these purposes and results by providing a means whereby such employees and directors may purchase shares of the common stock of the Company pursuant to (a) options granted pursuant to the Incentive Stock Option Plan (the “Incentive Plan”) (Division A hereof) which will qualify as incentive stock options under Section 422 of the Code (“Incentive Options”), or (b) options granted pursuant to the Non-Qualified Stock Option Plan (the “Non-Qualified Plan”) (Division B hereof) which are intended to be non-qualified stock options described in Treas. Reg. §1.83-7 to which Section 421 of the Code does not apply (“Non-Qualified Options”).  (Hereinafter, the term “Options” shall collectively refer to Incentive Options and Non-Qualified Options.).

2.             Administration.  This Plan shall initially be administered by the Board of Directors of the Company (the “Board of Directors”).  The Board of Directors may, in its sole discretion, from time to time, delegate such power and authority over the administration of the Plan as the Board of Directors deems appropriate to a committee composed of not fewer than three (3) directors of the Company.  If the administration of the Plan is delegated to such a committee (whether a Stock Option Committee or Compensation Committee), then the members of such committee must be independent, non-employee directors of the Company as defined by the rules of the NASD.  Nothing contained herein shall prevent the Board of Directors from delegating to such committee full power and authority over the administration of the Plan.

Any action of the Board of Directors (or committee) with respect to administration of the Plan shall be taken pursuant to a majority vote of its members; provided, however, that with respect to action by the Board of Directors (or committee) in granting an option to an individual director, such action must be authorized by the required number of directors without counting the interested director, who shall abstain as to any vote on his option.  An interested director may be counted in determining the presence of a quorum at a meeting of the Board of Directors (or committee) where such action will be taken.

Subject to the express provisions of the Plan, the Board of Directors (or the committee, if authorized) shall have the authority to construe and interpret the Plan, and to define the terms used therein, to prescribe, amend, and rescind rules and regulations relating to administration of the Plan, to determine the duration and purposes of leaves of absence which may be granted to participants without constituting a termination of their employment for purposes of the Plan, and to make all other determinations necessary or advisable for administration of the Plan.

Determinations of the Board of Directors (or the committee, if authorized) on matters referred to in this section shall be final and conclusive.

3.             Participation; Limitation on Amount of Outstanding Options.  All salaried officers and employees of the Company and its subsidiary corporations shall be eligible for selection to receive both Incentive and Non-Qualified Options.  Directors of the Company and its subsidiary corporations who are not also salaried officers or employees of the Company or a subsidiary corporation shall be eligible to receive only Non-Qualified Options under the Plan.    Subject to the express provisions of the Plan, the Board of Directors (or committee, if authorized) shall select from the eligible class and determine the individuals who shall receive Options, whether such Options shall be Incentive or Non-Qualified Options, and the terms and provisions of the Options (which need not be identical), and shall grant such Options to such individuals.  An individual who has been granted an Option (an “Optionee”) may, if such individual is otherwise eligible, be granted additional Options if the Board of Directors (or the committee, if authorized) shall so determine.

4.             Stock Subject to the Plan.  Subject to adjustment as provided in Section 13 hereof, the stock to be offered under the Plan shall be shares of the Company’s authorized but unissued common stock, without par value (hereinafter called “stock”), and the aggregate amount of stock to be delivered upon exercise of all Options granted under the Plan, whether Incentive or Non-Qualified Options, shall not exceed                                                                          (               ) shares [30% of the amount of the Company’s issued and outstanding shares of common stock to be sold in its initial public offering].  If any Option shall expire for any reason without having been exercised in full, the unpurchased shares subject thereto shall again be available for purposes of the Plan.

5.             Option Price.  The purchase price of stock subject to each Option shall be determined by the Board of Directors (or the committee, if authorized) but shall not be less than one hundred percent (100%) of the fair market value of such stock at the time such Option is granted.  As to any Incentive Option granted to an Optionee who, immediately before the Option is granted, owns beneficially more than ten percent (10%) of the outstanding stock of the Company, the purchase price must be at least one hundred ten percent (110%) of the fair market value of the stock at the time when such Option is granted.  The fair market value of such stock shall be determined in accordance with any reasonable valuation method, including the valuation methods described in Treas. Reg. § 20.2031-2.  The purchase price of any shares purchased shall be paid in full in cash at the time of each such purchase.

6.             Option Period.  Each Option and all rights or obligations hereunder shall expire on such date as the Board of Directors (or the committee, if authorized) may determine, but not later than ten (10) years from the date such Option is granted, and shall be subject to earlier termination as provided elsewhere in the Plan.  As to any Incentive Option granted to an Optionee who, immediately before the option is granted, owns beneficially more than ten percent (10%) of the outstanding stock of the Company (whether acquired upon exercise of Options or otherwise), such option must not be exercisable by its terms after five (5) years from the date of its grant.

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7.             Continuation of Employment.  In the case of employees, nothing contained in the Plan (or in any Option agreement) shall obligate the Company or its subsidiary corporations to employ any Optionee for any period or interfere in any way with the right of the Company or its subsidiary corporations to reduce such Optionee’s compensation.

8.             Exercise of Options.  Each Option shall be exercisable in such installments, which need not be equal, and upon such contingencies as the Board of Directors (or the committee, if authorized) shall determine; provided, however, that if an Optionee shall not in any given installment period purchase all of the shares which such Optionee is entitled to purchase in such installment period, such Optionee’s right to purchase any shares not purchased in such installment period shall continue until the expiration of such Option.  No Option or installment thereof shall be exercisable except with respect to whole shares, and fractional share interests shall be disregarded.  Options may be exercised by ten (10) days written notice delivered to the Company stating the number of shares with respect to which the Option is being exercised, together with cash in the amount of the purchase price for such shares.  No fewer than ten (10) shares may be purchased at one time unless the number purchased is the total number which may be purchased under the Option.  As a condition to the exercise of a Non-Qualified Option, in whole or in part, by an Optionee who is an employee of the Company (or who was an employee during the term of the option) the Optionee shall be required to pay to the Company, in addition to the purchase price for the shares being exercised, an amount equal to any taxes required to be withheld by the Company in order to enable the Company to claim a deduction in connection with the exercise of the Option.

Options may also be exercised by delivery to the Company of ten (10) days written notice stating the number of shares with respect to which the Option is being exercised, and by delivery to the Company of (i) an exercise notice instructing the Company to deliver the certificates for the shares purchased to a designated brokerage firm which shall sell the stock in the market as soon as the Option is exercised; and (ii) a copy of irrevocable instructions delivered to the brokerage firm to sell the shares acquired upon exercise of the Option and to deliver to the Company from the sale proceeds sufficient cash to pay the exercise price and applicable withholding taxes arising as a result of the exercise, with the balance of the sales proceeds, if any, after payment of any broker’s commission, credited to the Optionee’s brokerage account.

9.             Nontransferability of Options.  Each Option shall, by its terms, be nontransferable by the Optionee, other than by Will or the laws of descent and distribution, and shall be exercisable during such Optionee’s lifetime only by the Optionee.

10.           Cessation of Employment; Disability.  Except as provided in Sections 6 and 11 hereof, if an Optionee ceases to be employed by or to serve as a director of the Company or a subsidiary corporation for any reason other than death or disability, such Optionee’s Option shall expire three (3) months thereafter, and during such period after such Optionee ceases to be an employee or director, such Option shall be exercisable only as to those shares with respect to which installments, if any, had accrued as of the date on which the Optionee ceased to be employed by or ceased to serve as a director of the Company or such subsidiary corporation.  Except as provided in Sections 6 and 11 hereof, if an Optionee ceases to be employed by or ceases to serve as a director of the Company or a subsidiary corporation by reason of disability (within the meaning of Section 22(e)(3) of the Code), such Optionee’s Option shall expire not

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later than one (1) year thereafter, and during such period after such Optionee ceases to be an employee or director such Option shall be exercisable only as to those shares with respect to which installments, if any, had accrued as of the date on which the Optionee ceased to be employed by or ceased to serve as a director of the Company or such subsidiary corporation.

11.           Termination of Employment for Cause.  If an Optionee’s employment by or service as a director of the Company or a subsidiary corporation is terminated for cause, such Optionee’s Option shall expire immediately; provided, however, that the Board of Directors may, in its sole discretion, within thirty (30) days of such termination, waive the expiration of the Option by giving written notice of such waiver to the Optionee at such Optionee’s last known address.  In the event of such waiver, the Optionee may exercise the Option only to such extent, for such time, and upon such terms and conditions as if such Optionee had ceased to be employed by or ceased to serve as a director of the Company or such subsidiary corporation upon the date of such termination for a reason other than cause, disability, or death.  In the case of an employee, termination for cause shall include termination for malfeasance or gross misfeasance in the performance of duties, conviction of illegal activity in connection therewith, any conduct seriously detrimental to the interests of the Company or a subsidiary corporation, or removal pursuant to the exercise of regulatory authority by the Comptroller of the Currency, the FDIC, the Federal Reserve Board or other bank supervisory agency; and, in any event, the determination of the Board of Directors with respect thereto shall be final and conclusive.  In the case of a director, termination for cause shall include removal pursuant to Sections 302 or 304 of the California Corporations Code or removal pursuant to the exercise of regulatory authority by the Comptroller of the Currency, the FDIC, the Federal Reserve Board or other bank supervisory agency.

12.           Death of Optionee.  Except as provided in Section 6 hereof, if any Optionee dies while employed by or serving as a director of the Company or a subsidiary corporation or during the three (3) month or one-year period referred to in Section 10 hereof, such Optionee’s Option shall expire one (1) year after the date of such death.  After such death but before such expiration, the persons to whom the Optionee’s rights under the Option shall have passed by Will or by the applicable laws of descent and distribution shall have the right to exercise such Option to the extent that installments, if any, had accrued as of the date on which the Optionee ceased to be employed by or ceased to serve as a director of the Company or such subsidiary corporation.

13.           Adjustments Upon Changes in Capitalization.  If the outstanding shares of the stock of the Company are increased, decreased, or changed into, or exchanged for a different number or class of shares or securities of the Company, without receipt of consideration by the Company, through reorganization, merger, recapitalization, reclassification, stock split-up, stock dividend, stock consolidation, or otherwise, an appropriate and proportionate adjustment shall be made in the number and kind of shares as to which Options may be granted.  A corresponding adjustment changing the number or kind of shares and the exercise price per share allocated to unexercised Options, or portions thereof, which shall have been granted prior to any such change shall likewise be made.  Any such adjustment, however, in an outstanding Option shall be made without change in the total price applicable to the unexercised portion of the Option but with a corresponding adjustment in the price for each share subject to the Option.  No fractional shares of stock shall be issued under the Plan on account of any such adjustment.

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14.           Terminating Events.  Not less than thirty (30) days prior to a “Terminating Event” as defined below, the Board of Directors (or the committee, if authorized) shall notify each Optionee of the pendency of the Terminating Event.  Upon delivery of said notice, any Option granted prior to the Terminating Event shall be, notwithstanding the provisions of Section 8 hereof, exercisable in full and not only as to those shares with respect to which installments, if any, have then accrued, subject, however, to earlier expiration or termination as provided elsewhere in the Plan, and further subject to the condition that the Terminating Event in fact occurs.  Optionees shall then be entitled to exercise any Options or portions thereof commencing on the tenth (10th) day, and ending on the third (3rd) day, prior to the Terminating Event, or at such other times as may be specified by the Board of Directors in connection with the Terminating Event.  Upon the effective date of the Terminating Event, the Plan and any Options granted thereunder shall terminate, unless (i) provision is made in connection with the Terminating Event for assumption of Options theretofore granted, or substitution for such Options of new options covering stock of a successor employer corporation, or a parent or subsidiary corporation thereof, with appropriate adjustments as to the number and class of shares and prices, or (ii) in the case of a “change in control” as defined below, the Board of Directors in its sole discretion determines prior to the effective date of the Terminating Event that all outstanding Options and the Plan itself should continue in full force and effect.  In the case of such a determination by the Board of Directors, or in the event that any pending Terminating Event does not occur, the Plan and all outstanding Options thereunder shall continue in force with all original vesting schedules in effect.

For purposes of this Section 14, a “Terminating Event” shall include: (i) a reorganization, merger, or consolidation of the Company with one or more corporations as a result of which the Company will not be the surviving corporation, (ii) a sale of substantially all the assets and property of the Company to another person, corporation or entity, or (iii) a “change in control”, i.e., any other single transaction involving the Company (such as a tender offer) where there is a change in ownership of at least twenty-five percent (25%) of the Company’s outstanding shares, unless such change in ownership results from (i) a transfer of shares to another corporation in exchange for at least eighty percent (80%) control of that corporation, (ii) the issuance of additional shares of stock by the Company in a public stock offering, private placement or similar transaction, or (iii) any acquisition in which the Company will be the surviving entity.

15.           Exercise or Forfeiture of Options in the Event of Order to Increase Capital.  Notwithstanding any other provision of any Option granted hereunder, if Bank of Manhattan, N.A. becomes subject to any written order or directive by the Comptroller of the Currency or other banking regulatory agency requiring Bank of Manhattan, N.A. to increase capital, all outstanding Options under the Plan shall thereupon terminate and be of no further force and effect.

16.           Acceleration of Options.  Notwithstanding the provisions of Section 8 hereof or any provision to the contrary contained in any Option agreement, the Board of Directors (or the committee, if authorized), in its sole discretion, may accelerate the vesting of all or any Option then outstanding.  The decision by the Board of Directors to accelerate an Option or to decline to accelerate an Option shall be final.  In the event of the acceleration of the exercisability of Options as the result of a decision by the Board of Directors pursuant to this Section 16, each outstanding Option so accelerated shall be exercisable for a period from and after the date of

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such acceleration and upon such other terms and conditions as the Board of Directors may determine in its sole discretion, provided that such terms and conditions (other than terms and conditions relating solely to the acceleration of exercisability and the related termination of an Option) may not adversely affect the rights of any Participant without the consent of the Participant so adversely affected.  Any outstanding Option which has not been exercised by the holder at the end of such period shall terminate automatically at that time.

17.           Amendment and Termination by Board of Directors.  The Board of Directors may at any time suspend, amend, or terminate the Plan and may, with the consent of an Optionee, make such modification of the terms and conditions of such Optionee’s Option as it shall deem advisable; provided that, except as permitted under the provisions of Section 13 hereof, any amendment or modification of the Plan which would:

(a)           increase the maximum number of shares which may be purchased pursuant to Options granted under the Plan;

(b)           change the minimum option price;

(c)           increase the maximum term of Options provided for herein; or

(d)           permit Options to be granted to anyone other than a director, a salaried officer or an employee of the Company or a subsidiary corporation;

requires the approval of the Company’s shareholders as described below.  Any amendment or modification requiring shareholder approval shall be deemed adopted as of the date of the action of the Board of Directors effecting such amendment or modification and shall be effective immediately, unless otherwise provided therein, subject to approval thereof within twelve (12) months  before or after the effective date by shareholders of the Company holding not less than a majority of the voting power of the Company; provided, however, that the Board of Directors may amend the Plan in toto without shareholder approval if the Plan has not yet been approved by the shareholders.

Notwithstanding the above, the Board of Directors (or the committee, if authorized to do so) may grant to an Optionee, if such Optionee is otherwise eligible, additional Options or, with the consent of the Optionee, grant a new Option in lieu of an outstanding Option for a number of shares, at a purchase price and for a term which in any respect is greater or less than that of the earlier Option, subject to the limitations of Sections 5, 6 and A-2 hereof.

No Option may be granted during any suspension of the Plan or after termination of the Plan.  Amendment, suspension, or termination of the Plan shall not, without the consent of the Optionee, alter or impair any rights or obligations under any Option outstanding prior to such amendment, suspension or termination of the Plan.

18.           Time of Granting Options.  The time an Option is granted, sometimes referred to as the date of grant, shall be the day of the action of the Board of Directors (or the committee) described in the second sentence of Section 2 hereof, provided, however, that if appropriate resolutions of the Board of Directors (or the committee) indicate that an Option is to be granted as of and on some future date, the time such Option is granted shall be such future date.  If action

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by the Board of Directors (or the committee) is taken by the unanimous written consent of its members, the action of the Board of Directors (or the committee) shall be deemed to be at the time the last Board (or committee) member signs the consent.

19.           Privileges of Stock Ownership; Securities Laws Compliance; Notice of Sale.  No Optionee shall be entitled to the privileges of stock ownership as to any shares of stock not actually issued and delivered.  No shares shall be issued upon the exercise of any Option unless and until any then applicable requirements of any regulatory agencies having jurisdiction, and of any exchanges upon which stock of the Company may be listed, shall have been complied with fully.   The Company intends to register the securities reserved under the Plan under the Securities Act of 1933, as amended (the “Act”).  Upon such registration, the shares received by Optionees (other than affiliates) upon exercise of their Options will be freely tradable All Optionees shall agree to comply with all applicable federal and state securities laws in connection with any sale or other disposition of such common stock.  The Optionee shall give the Company notice of any sale or other disposition of any such shares not more than five (5) days after such sale or other disposition.

20.           Effective Date of the Plan.  The Plan shall be deemed adopted as of the date first shown herein and shall be effective immediately, subject to approval hereof within twelve (12) months before or after said date by shareholders holding not less than a majority of the voting power of the Company.

21.           Termination.  Unless previously terminated by the Board of Directors or as provided in Section 14 hereof, the Plan shall terminate at the close of business on                   , 2017 and no Options shall be granted under it thereafter, but such termination shall not affect any Option theretofore granted.

22.           Option Agreement.  Each Option shall be evidenced by a written stock option agreement executed by the Company and the Optionee and shall contain each of the provisions and agreements herein specifically required to be contained therein, including whether the Option is an Incentive Option or Non-Qualified Option, and such other terms and conditions as are deemed desirable and are not inconsistent with the Plan.

23.           Exculpation and Indemnification.  The Company shall indemnify and hold harmless a member or members of the Board of Directors (or the committee), in any action brought against such member or members to the maximum extent permitted by then applicable law and the Articles of Incorporation and Bylaws of the Company and any amendments thereto.

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DIVISION A

INCENTIVE STOCK OPTION PLAN

A-1.        Eligible Persons.  All salaried officers and employees of the Company and its subsidiary corporations shall be eligible for selection to participate in the Incentive Plan.  Notwithstanding any other provisions of the Plan to the contrary, no director of the Company or a subsidiary corporation who is not a salaried employee of the Company or a subsidiary corporation and no member of the committee may be granted options under the Incentive Plan.

A-2.        Limit on Exercisability of Options.  The aggregate fair market value (determined as of the time the Option is granted) of the stock for which any salaried officer or employee may be granted Incentive Options which are first exercisable during any one calendar year (under all Incentive Stock Option Plans of such employee’s employer and its parent and subsidiary corporations) shall not exceed One Hundred Thousand Dollars ($100,000).

A-3.        Incorporation by Reference.  The provisions of Sections 5, 6, 9, 10, 12, 17 and 21 of the Plan are hereby incorporated by this reference into this Incentive Stock Option Plan.

A-4.        Interpretation of Plan.  Options granted pursuant to the Incentive Plan are intended to be “incentive stock options” within the meaning of Section 422 of the Code, and the Incentive Plan shall be construed to implement that intent.  If all or any part of an Incentive Option shall not be deemed an “incentive stock option” within the meaning of Section 422 of the Code, said Option shall nevertheless be valid and carried into effect as a Non-Qualified Option.

DIVISION B

NON-QUALIFIED STOCK OPTION PLAN

B-1.         Eligible Persons.  All salaried officers and employees, and all directors of the Company and its subsidiary corporations shall be eligible for selection to participate in the Non-Qualified Plan.

B-2.         Interpretation of Plan.  Options granted pursuant to the Non-Qualified Plan are intended to be non-qualified stock options described in Treas. Reg. § 1.83-7 to which Section 421 of the Code does not apply, and the Non-Qualified Plan shall be construed to implement that intent.

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EX-10.4

Exhibit 10.4

New Bank and Bank Holding Company Formation:

Financial Advisory and Consulting Agreement

The following is the Financial Advisory and Consulting Agreement between CCFW, Inc., dba Carpenter & Company (“Carpenter”), its subsidiary Seapower Carpenter Capital, Inc. (“SCC”), and the SB Organizing Group (the “Client”), effective this 1st day of  November, 2006.

WHEREAS, the Client wishes to enter the banking business in the County of Los Angeles, utilizing (i) a bank holding company (established through formation, capitalization, opening, and successful operation of a prospective new entity) (the “BHC”) and (ii) a formation, capitalization, opening and successful operation of a new FDIC-insured financial institution (the “Bank”) (the Client, the BHC and the Bank are collectively referred to hereinafter as the “Client”); and

WHEREAS, the Client and Carpenter had previously entered into that certain New Bank Formation: Consulting Agreement dated October 6, 2005 (the “Initial Agreement”); and

WHEREAS, the Client and Carpenter desire to terminate for all purposes the Initial Agreement; and

WHEREAS, the Client wishes to retain Carpenter and SCC to provide financial advisory and consulting services in connection with these objectives, and Carpenter and SCC wish to be so retained.

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and conditions contained herein, the parties hereto agree as follows:

1)APPLICATION  SERVICES

a)Carpenter shall assist the Client in evaluating alternative corporate structures and developing the strategy for approval of the acquisition of the Bank by the BHC and filing an application with the Federal Reserve System (the “FRS”) for registration of the BHC as a bank holding company.

b)Carpenter shall assist the Client in developing the strategy for approval of a new bank charter, assembling its management team, and preparing and filing an application for (i) a national or state bank charter application to be submitted to one of the Comptroller of the Currency, the Office of Thrift Supervision or the Department of Financial Institutions (“Appropriate Regulator”), (ii) and to the Federal Deposit Insurance Corporation (“FDIC”) for the insurance of accounts.  (The FRS, the Appropriate Regulator and the FDIC are collectively referred to hereinafter as the “Banking Regulators”).

c)The major tasks to be performed by Carpenter will include:

i)Strategy

(1)Development of an overall strategy for the appropriate corporate structure and approval of the BHC, considering current regulatory policies and the specific plans and resources of Client.

(2)Development of an overall strategy for approval of the new charter, considering current regulatory policies and the specific plans and resources of Client.

(3)Identification of strengths and areas requiring improvement in the proposed location, management, Board of Directors, and business plan, and providing suggestions for remediation of areas requiring improvement.

ii)Regulatory Consulting

(1)Advice as to current regulatory practice and procedure with respect to approval of new bank charters and the registration of related bank holding companies.

(2)Communication with the Banking Regulators, as appropriate, during the application phase.

(3)Attendance at an application pre-filing conference with the Banking Regulators, and at such other regulatory meetings as are appropriate and necessary.

iii)Board of Directors and Management

(1)At the specific request of the Client, Carpenter, either directly or through the services of a qualified executive recruitment firm specializing in financial institutions, shall seek to identify and recruit specific senior officers and directors to complete or strengthen the Board of Directors or management team.

(2)Assistance in preparing the proposed president and/or CEO’s biographical data and, if appropriate and necessary, development of a case supporting the candidate’s approvability for the position of CEO of the bank.

(3)Advice on developing a balanced and approvable Board of Directors.

(4)Advice on the overall approvability of the management team, including the CEO, CFO, and CCO, and on potential improvements.

(5)Advice on the form and market rates of compensation for the senior management team.

(6)Advice on the volume and type of options to be granted under the stock option plan to officers and directors.

(7)Training senior officers and directors for the pre-filing meeting with the Banking Regulators, and for the field examination interviews conducted by representatives of the Banking Regulators.

(8)Attendance at other selected meetings with the Board of Directors.

iv)Preparation and Filing of The Applications

(1)Preparation of the economic documentation, banking and other data necessary to complete and file the charter application with the Appropriate Regulator.

(2)Assistance in the development and preparation of the business plan for the bank.

(3)Advice on appropriate levels of initial capitalization given the business plan assumptions.

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(4)Preparation of the pro forma bank financial statements for the first three years of operation.

(5)Analysis of community needs and completion of demographic analysis as required by the Appropriate Regulator and the FDIC to assess the public need for and convenience of a new bank.

(6)Assistance in the preparation of the bank’s policies and procedures to be filed with the applications.

(7)Assistance in preparing the Interagency Biographical and Financial Report and ancillary forms for each director, senior officer, and significant shareholder of the proposed bank.

(8)Preparation of the application for FDIC deposit insurance.

(9)Preparation of the application for registration of the BHC with the FRS.

(10)Assembly and submission of the charter, deposit insurance and BHC registration applications to the Banking Regulators.

(11)Assistance in responding to any deficiencies noted or questions posed by the Banking Regulators after the applications have been filed.

(12)Such other general consulting and assistance as is reasonably connected to the purposes of this Agreement.

2)CAPITALIZATION SERVICES

a)The Client will seek to raise the capital required as a condition of approval to open the Bank through a private placement (the “Offering”) of the common stock of the BHC (the “Securities”).  SCC shall assist the Client in this process as follows.

i)Strategy

(1)Assist the Client in the development of its overall marketing plan and strategy for the Offering and sale of the Securities to investors (“Investors”).

(2)Assist the Client in the development of specific plans, timelines, and benchmarks for measurement of success.

ii)Investor Identification and Stratification

(1)Stratify and analyze the target local Investor population.

(2)Develop marketing approaches for each major sub-group of Investors.

(3)Incorporate the results of stratification into the strategy for completion of the Offering.

iii)Marketing and Sales Materials

(1)Assist in developing the financial and operational argument for investment in the Offering, with supporting investment and return analysis from comparable banking institutions.

(2)In conjunction with the Client, develop the presentation and other supporting materials to be used by the Bank and SCC in meetings with and presentations to potential Investors.

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iv)Participation in Sales Events.

(1)Provide assistance in presentations to potential Investors on a schedule to be mutually agreed to.

(2)Coordinate development of the sales event schedule with Client.

(3)Assist as requested in planning for specific sales events.

(4)Assist in further presentations to Investors as reasonably required.

v)Management Consulting

(1)Provide planning, training and tracking assistance to the Client through the completion of the Offering.

(2)Coordinate with Client and Client’s other advisors in the preparation of an offering circular, and related marketing and sales materials.

(3)Provide Client director and officer training sessions on the offering process, responsibilities, and effective Investor identification and closing methods.

(4)Assistance in closing Investors’ subscriptions, including information agency services, advising on IRA/Keogh issues, and meeting with bankers, Board, and the investors as reasonably necessary.

b)SCC’s involvement in the Capitalization Services shall be pursuant to terms and conditions (excluding compensation and the basic description of services to be rendered) that shall be described in a separate written agreement to be entered into by the Client and SCC in connection with the commencement of delivery of the Capitalization Services.  It is further subject to receipt of all required regulatory approvals of the terms and arrangements for such services by applicable regulatory bodies.

c)Notwithstanding the foregoing or the terms of any separate written agreement describing the terms and conditions pursuant to which SCC shall deliver its capitalization services, the Client agrees and acknowledges that (i) any offering undertaken by SCC on behalf of the Client shall be conducted on a best efforts basis, (ii) shall not be underwritten, and (iii) that no guarantee of performance or sales success has or shall be given by SCC or relied upon by the Client.

3)ONGOING SERVICES

a)Following opening of the Bank and at the specific written request of the Bank, Carpenter and SCC shall provide the Bank and the BHC with ongoing consulting and financial advisory services to assist management and the Boards of Directors in enhancing and increasing shareholder value.  These services are described more fully below.

i)Strategic Consulting Services

(1)Following opening of the Bank, Carpenter shall provide the Bank and the BHC with a written quarterly report on financial performance of the Bank and the Bank’s common stock as follows:

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(a)Financial characteristics, including balance sheet and income statement composition, ALCO policy and asset-liability profile, asset quality indicators, and the components of income and expense of the Bank;

(b)Comparative review of performance of the Bank, with emphasis on relative performance compared to other de novo Banks;

(c)Business lines, including both asset and liability products and services, focusing on issues of diversification, income generation, and risk/reward balance;

(d)Common stock comparative performance, including the use of valuation indicators derived from a review of other comparable bank stocks; and

(e)Upon request, identification and evaluation of alternative sites for future branch expansion.

(2)Carpenter personnel shall be available to the Bank and the BHC for a reasonable amount of time to discuss the results of this quarterly analysis, and to provide other ongoing strategic advice, as necessary and appropriate.  Further, at least annually, Carpenter shall meet with the Board of Directors of both the Bank and the BHC to present a review of the information and analysis described above, and offer consulting and strategic comments based on that analysis.

ii)Financial Advisory Services

(1)During the term hereof, Carpenter or SCC (as Carpenter may decide in compliance with applicable law and regulation) shall provide ongoing financial advisory services to the BHC and the Bank, advising with respect to further offerings of securities or other capital placement by the Client, and advising with respect to potential Business Combinations (defined below) (all collectively described as “Strategic Transactions”)

(a)“Business Combination” means (a) any merger, consolidation, reorganization or other business combination pursuant to which the business of the Client is combined with or comes under common control with that of a Second Party, or (b) the acquisition, directly or indirectly, by a Second Party of more than 24.9% of the capital stock, or a all or a substantial portion of the assets of the Client, by way of tender or exchange offer, negotiated purchase or otherwise, whether effected, in any such case, in one transaction or a series of transactions.

b)Carpenter’s and SCC’s Ongoing Services as described herein shall be pursuant to terms and conditions (excluding compensation and the basic description of services to be rendered) that shall be described in separate written agreements to be entered into by the Client and Carpenter or SCC in connection with the commencement of delivery of the Ongoing Services.

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4)COMPENSATION

a)Application Services

i)The total fees for Application services will be $115,000.  Payment is based upon the following schedule:

(1)$55,000 as an initial fee, due and payable upon signing of this Agreement.

(2)$30,000 in-progress fee due forty-five days after receipt of the initial fee.

(3)$30,000 fee due upon filing of the application with the Appropriate Regulator.(1)

ii)Additional fees for Application services will be required for unusual delays caused by the Client, or for material changes to the application which require a significant update of the financial institution, community or director data.

b)Capitalization Services

i)Compensation to Carpenter or SCC for Capital Services shall be paid as follows:

(1)Sales Management Fee:  Upon closing of the Offering, the Client shall pay a sales management fee equal to the lesser of (a) 1% of the gross Offering proceeds and (b) $125,000.

(2)Sales and Placement Fee: Upon closing of the Offering, the Client shall pay a sales and placement fee equal to 5% of the gross Offering proceeds collected from any investors identified by SCC.

c)Ongoing Services

i)Following receipt of a request from the Client for delivery of the ongoing Strategic Consulting Services, the Client shall pay, as compensation for the Strategic Consulting Services, a fee of $5,000 per calendar quarter, following opening of the Bank.

ii)Compensation for advice with regard to Strategic Transactions shall be as follows:

(1)Following receipt of a request from the Client for delivery of services in connection with either a further offering of common stock or other capital placement, SCC shall be paid fees on terms comparable to those paid for similar services to other firms engaged in similar activities.

(1)  These fees are exclusive of any filing fees required by the Appropriate Regulator, which will be paid separately by the Client.  Applications filed with state or OCC regulatory authorities have filing fees ranging from $7,500 to $25,000.  The application to the FDIC for insurance of accounts does not currently have a filing fee.

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(2)Without regard to whether the Client requests that Carpenter provide financial advisory services, if during the period Carpenter and SCC are retained by the Client hereunder or within 12 months thereafter (a) a Business Combination is consummated with any Second Party identified by Carpenter or SCC as potentially interested in a Business Combination with the Client; or (b) the Client enters into a definitive agreement to engage in a Business Combination with any Second Party identified by Carpenter or SCC as potentially interested in a Business Combination with the Client, the Client shall pay Carpenter a non-refundable fee in an amount equal to 3% of the first $5 million of the Aggregate Purchase Price (defined below), and 2% of all sums above $5 million of the Aggregate Purchase Price (defined below), all payable at the closing of the Business Combination.

(a)“Aggregate Purchase Price” shall mean an amount equal to the sum of (a) the consideration agreed to be paid or exchanged for each outstanding share of each class of stock of the Company, plus (b) the consideration to be paid with respect to shares underlying unexercised options, warrants or other rights to purchase shares of any class of the Company’s securities minus any applicable exercise or strike price plus (c) the amount of any debt assumed (directly or indirectly) or repaid in connection with the Business Combination, plus (d) the net present value of any contingent payments (whether or not related to future earnings or operations and including payments to executive personnel in respect of salary, bonus or retention agreements) calculated based upon the assumption that the maximum aggregate amount or any consideration pursuant to the contingent payment provisions is received, plus (e) any extraordinary dividends or distributions paid on or prior to the closing in connection with the Business Combination.

(3)All fees arising from Strategic Transactions are payable at closing of the related Strategic Transaction.

d)Executive Recruitment

i)Compensation for recruitment of directors or senior officers shall be payable at the rate of $15,000 per director recruited, and industry standard fees for each senior officer.

ii)Compensation for executive and director recruitment shall be payable upon opening of the Bank.

iii)Carpenter’s services in connection with executive recruitment shall be pursuant to terms and conditions that shall be described in a separate written agreement to be entered into by the Client and Carpenter in connection with the commencement of such services.

iv)In its discretion, Carpenter may choose to use the services of a qualified third-party executive recruitment firm in connection with these services.  In such event, the fees payable for a successful search shall be paid by Carpenter to the search firm and no portion of such fee shall be retained by Carpenter.

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5)EXPENSE REIMBURSEMENT

The Client will reimburse Carpenter and SCC for its reasonable out-of-pocket expenses including travel and related costs incurred in connection with or arising out of their  activities under or contemplated by this Agreement. Such reimbursement, which is in addition to any compensation payable by the Client to Carpenter or SCC under this Agreement, shall be billed from time to time and paid within 30 days of submission.  Expenses for each of the Application Services and Capitalization Services phases shall not exceed $10,000 without the Client’s consent.  Expenses for the Ongoing Services phase shall be determined by agreement of the parties at the time of commencement of any Ongoing Services activity.

6)TERM

a)This agreement is effective as of the date first above written, and shall remain effective until that date which is three years from the date of opening of the Bank.  At that time and at each future expiration date, unless Carpenter or Client shall have provided the other party with written notice of its intention not to renew this Agreement within at least 30 days of the expiration date, this Agreement shall automatically renew for additional successive one year terms.

7)INDEMNIFICATION

a)The Client agrees to indemnify and hold Carpenter, SCC and their affiliates and their respective partners, directors, officers, employees, agents, and controlling persons (each such person being an “Indemnified Party”) harmless from and against any and all losses, claims, damages, expenses and liabilities, joint or several, to which such indemnified Party may become subject under applicable state or federal law, or otherwise, arising out of any actual or proposed Business Combination or Capital Placement, or the retention of Carpenter and SCC, or the services performed under this agreement by Carpenter or SCC, and will promptly reimburse such Indemnified Party for all expenses (including reasonable counsel fees and expenses) upon written request made from time to time, including expenses incurred in connection with the investigation of, preparation for, or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether civil, criminal, administrative or investigative in nature, and whether or not such indemnified Party is a party.  The Client will not be liable under this indemnification provision to the extent that any loss, claim, damage, liability, or expense is found in a final judgment by a court of competent jurisdiction to have resulted primarily from Carpenter’s or SCC’s bad faith, gross negligence, or willful misconduct.

b)The Client agrees to notify Carpenter and Carpenter and SCC agree to notify the Client promptly of the assertion against either of them or any other person of any claim or the commencement of any action or proceeding relating to any transaction contemplated by this agreement.

c)If any indemnification or reimbursement sought under this provision were for any reason not available to any Indemnified Party or insufficient to fully indemnify it as and to the

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extent contemplated by this provision, the Client will contribute to the amounts paid or payable by such Indemnified Person in a proportion that appropriately reflects the relative benefits to the Client and its equity owners on the one hand, and Carpenter or SCC on the other, in connection with the matters to which such indemnification or reimbursement relates and the relative faults of such parties, as well as any other equitable considerations. The Client, Carpenter and SCC agree that it would not be just and equitable if this contribution were determined by pro rata allocation or any other method that does not take into account such equitable considerations.  The relative benefits to the Client and its equity owners and to Carpenter with respect to the services to be provided under this Agreement will be deemed to be in the same proportion as (i) the anticipated total proceeds of any capital offering (whether or not consummated or); and (ii) the total proceeds of any M & A transaction (whether or not consummated) as compared to (iii) the aggregate compensation actually paid to Carpenter in connection with the services provided under this Agreement.  In no event will the Client contribute less than the amount necessary to ensure that all Indemnified Parties, in the aggregate, are not liable for any amounts in excess of the aggregate amount of compensation actually received by Carpenter under this Agreement.

d)In no event shall Carpenter be liable for any amount in excess of the aggregate amount of compensation actually received by Carpenter under this agreement.

e)The Client agrees to notify Carpenter and SCC, and Carpenter and SCC agree to notify the Client promptly of the assertion against it or any other person of any claim or the commencement of any action or proceeding relating to any transaction contemplated by this agreement.

f)In the event Carpenter or SCC appears as a witness in any action brought against the Client in which an Indemnified Party is not named as a defendant, the Client agrees to reimburse Carpenter or SCC for all reasonable expenses incurred and time expended by it in connection with its appearing as a witness.

8)CONFIDENTIALITY

a)During the course of this Agreement, the Client may learn from Carpenter or SCC data, discoveries, know-how, ideas, and other information which Carpenter considers to be proprietary and confidential, for example information relating to its internal processes, methods, documents, programs, operations, customers, and present and future business or marketing plans of Carpenter or SCC (“Confidential Information”).  Except as authorized by Carpenter in writing, the Client agrees to keep confidential and not to use, except in connection with the services to be provided under this Agreement all Confidential Information.   All Confidential Information (and any copies and notes thereof) shall remain the sole property of Carpenter.  Notwithstanding the foregoing, however, no obligation of confidentiality shall apply to the extent Confidential Information (i) is or becomes available to the public through no breach of this Agreement by the Client; (ii) is obtained by the Client from a third party who had the legal right to disclose the information to the Client; (iii) is already in the possession of the Client on the date this Agreement becomes effective; or

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(iv) is required to be disclosed by law, government regulation, or court order. The obligation of confidentiality with respect to Confidential Information shall continue for three years beyond the date of this Agreement.

9)OTHER TERMS

a)The parties agree that (i) in the event of incorporation of the BHC, it shall become a party to this Agreement, and (ii) upon approval of the charter application by the Appropriate Regulator, the Bank shall become a party to this Agreement, and, by written confirmation at that time, each of the BHC, if incorporated, and the Bank shall assume their appropriate benefits and obligations as described in this Agreement.

b)The Client acknowledges that while Carpenter shall provide advice and consultation with respect to obtaining approval of the BHC and the Bank, no warranty, expresses or implied, of the approval of any application is made by Carpenter.

c)The parties agree to take such further action as may be necessary and to execute any further documentation that may be required (meeting customary industry standards), in connection with future implementation of the additional services described in this Agreement.

d)The Client acknowledges that it is not relying on the advice of Carpenter for tax, legal or accounting matters, it is seeking and will rely on the advice of its own professionals and advisors for such matters and it will make an independent analysis and decision regarding any action taken based upon such advice.

e)In the event that an action or suit is brought to declare or enforce any term hereof or any obligation created hereunder, the prevailing party shall be entitled to recover from the losing party all reasonable costs and expenses incurred or sustained by such prevailing party in connection with such suit or actions, including attorney’s fees, costs and the prevailing statutory interest from the other party.

f)This agreement embodies the entire understanding of the parties with respect to the engagement of Carpenter, and both parties specifically acknowledge the termination of the Initial Agreement as of the date first above written.  This agreement may be modified or amended only by an instrument in writing signed by both parties.

g)THIS AGREEMENT WILL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD FOR CONFLICTS OF LAWS PRINCIPLES.  THE CLIENT HEREBY EXPRESSLY CONSENTS TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF CALIFORNIA FOR ANY LAWSUIT ARISING FROM OR RELATING TO THIS AGREEMENT.

h)If one or more of the provisions in this Agreement are deemed void by law, then the remaining provisions will continue in full force and effect.

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i)All parties acknowledge and agree that each of: (1) the parties are executing this Agreement voluntarily and without any duress or undue influence; (2) the parties has carefully read this Agreement and has asked any questions needed to understand the terms, consequences, and binding effect of this Agreement and fully understands them; and (3) the parties has sought the advice of an attorney of their respective choice if so desired prior to signing this Agreement.

If the foregoing is in accordance with your understanding, please sign and return to us one counterpart of this Agreement, whereupon this Agreement shall constitute a binding agreement between the Client, Carpenter and SCC.

CCFW Inc dba
CARPENTER & COMPANY		SB ORGANIZING GROUP
/s/ John D. Flemming		/s/ Jeffrey M. Watson
By:	John D. Flemming	By:	Jeffrey M. Watson
Its:	President	Its:	President and CEO
SEAPOWER CARPENTER CAPITAL, INC.
/s/ John D. Flemming
By:	John D. Flemming
Its:	President

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EX-10.5

Exhibit 10.5

Amendment to Financial Advisory and Consulting Agreement

The following is the first Amendment to Financial Advisory Services Agreement between Carpenter & Company (“Carpenter”) and SB Organizing Group (the “Client”), dated the 7th day of March, 2007.

RECITALS

WHEREAS, the Client and Carpenter entered in to that certain Financial Advisory and Consulting Agreement dated November 1, 2006 (the “Agreement”); and

WHEREAS, subsequent to execution of the Agreement the Parties have become aware of a drafting error in Section 4(c)(ii)(2) of the Agreement, specifically the prefatory clause in the first sentence that reads “Without regard to whether the Client requests that Carpenter provide financial advisory services”, and desire to amend that provision of the Agreement to remove the noted clause;

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Client and Carpenter hereto agree as follows:

1.Amendment to Section 4(c)(ii)(2):     The language of Section 4(c)(ii)(2) of the Agreement is amended to read in full as follows:

If during the period Carpenter and SCC are retained by the Client hereunder or within 12 months thereafter (a) a Business Combination is consummated with any Second Party identified by Carpenter or SCC as potentially interested in a Business Combination with the Client; or (b) the Client enters into a definitive agreement to engage in a Business Combination with any Second Party identified by Carpenter or SCC as potentially interested in a Business Combination with the Client, the Client shall pay Carpenter a non-refundable fee in an amount equal to 3% of the first $5 million of the Aggregate Purchase Price (defined below), and 2% of all sums above $5 million of the Aggregate Purchase Price (defined below), all payable at the closing of the Business Combination.

2.No other Amendments or Changes.   Except as expressly amended or modified by this Agreement, all of the terms and conditions of the Agreement shall remain unchanged and in full force and effect.

3.Definitions.           All capitalized terms used herein and not otherwise defined shall have the meanings given to them in the Agreement.

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

CCFW Inc dba
CARPENTER & COMPANY		SB ORGANIZING GROUP
/s/ John D. Flemming		/s/ Jeffrey Watson
By:	John D. Flemming	By:	Jeffrey Watson
Its:	President	Its:	President & CEO
SEAPOWER CARPENTER CAPITAL, INC.
/s/ John D. Flemming
By:	John D. Flemming
Its:	President

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACOCUNTING FIRM

To the Board of Directors
Manhattan Bancorp
El Segundo, California

We hereby consent to the use in this Registration Statement on Form SB-2 (Pre-effective Amendment No. 1) for Manhattan Bancorp, of our report dated January 17, 2007 with respect to the balance sheet of Manhattan Bancorp as of December 31, 2006 and the related statements of operations, stockholders’ equity, and cash flows for the period from June 19, 2006 (inception) to December 31, 2006.

/s/ Hutchinson and Bloodgood LLP

Hutchinson and Bloodgood LLP

Glendale, CA

March 20, 2007

EX-99.2

Exhibit 99.2

IMPOUND ACCOUNT AGREEMENT

This Impound Account Agreement (the “Agreement”) is made as of March 15, 2007 by and among Manhattan Bancorp, a California corporation (the “Company”) and Pacific Coast Bankers’ Bank, a California banking corporation (“Impound Agent”).

1.Recitals of Fact.

The Company was formed in order to be the holding company for Bank of Manhattan, N.A. (Proposed)(the “Bank”).  Bank of Manhattan has filed an application with the Comptroller of Currency (“Regulatory Agency”) to organize a commercial bank under the laws of the United States. The Company is conducting an initial public offering (the “Offering”) in order to raise funds to capitalize the Bank. The Company has filed a registration statement with the Securities and Exchange Commission to sell shares of its common stock on a best efforts basis.  The Company desires all funds received from various persons (the “Subscribers”) as subscriptions for shares of the Company’s stock in the Offering be placed in an impound account with a bank or trust company authorized to do business in California, and desires that Impound Agent act as the depository for such funds subject to such direction as may be made by the Regulatory Agency.  Company intends at this time to issue and sell a minimum of 2,150,000 shares and a maximum of 3,000,000 shares of its stock at a price of $10.00 per share and to deposit all funds received from the Subscribers as subscriptions for such shares with Impound Agent as depository.

2.Appointment of Impound Agent as Escrow Agent.

Company hereby appoints Pacific Coast Bankers’ Bank as Impound Agent and Pacific Coast Bankers’ Bank hereby accepts such appointment, subject to the terms and conditions set forth in this Agreement.

3.Subscription Funds Held in Impound Account.

All funds received from the issuance of shares of Company’s stock will be placed in an escrow account with Impound Agent (the “Impound Account”), to be held by Impound Agent subject to the order of the Regulatory Agency, and shall not become the property of or be released to Company unless and until otherwise released to Company by order of the Regulatory Agency.  All funds in the Impound Account, including any interest earned thereon, shall not be subject to the claims of any creditors of the Company or the Bank or any of their officers, directors, associates or affiliates until such funds in the Impound Account have been released to the Company pursuant to the terms of this Agreement.

4.Subscriptions for Shares.

a.   Subscription agreements for shares of Company’s stock will be completed and submitted to Impound Agent in triplicate, along with checks and other payment orders or wire transfer for the amount of the subscriptions.  Checks and other payment orders shall be made payable to “Pacific Coast Bankers Bank for Manhattan Bancorp Impound Account.”  Company will inform Impound Agent of its intent to accept or reject subscriptions or to accept a subscription in part.  If any subscriptions are rejected or accepted only in part Impound Agent will refund the

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rejected amount, including any interest actually earned thereon, to the Subscriber.  Upon the closing of the Offering, Impound Agent will return one copy of the subscription agreement to the Subscriber, return one copy to Company, and retain one copy for Impound Agent’s records.

b.   In the event that the Company engages one or more members of the National Association of Securities Dealers (each a “Member”) to participate in the effort to sell the shares of the Company’s stock, checks from Subscribers shall be transmitted to the Impound Agent by noon of the next business day after receipt by the Member.

5.Investment of Impound Funds.

All funds received from Subscribers as subscriptions for shares of Company’s stock which are accompanied by copies of executed subscription agreements for such subscriptions and by completed IRS Form W-9, including any interest earnings on such funds, will be placed in the Impound Account with Impound Agent, to be held by Impound Agent in the manner provided in this Agreement.

Upon the clearing of checks received for subscriptions for shares under normal banking practices and as and when directed in writing by Company, Impound Agent shall invest and reinvest available funds deposited with it pursuant to this Agreement in short-term certificates of deposit issued by the Impound Agent.  Impound Agent shall not be liable or responsible for any loss resulting from investments made pursuant to this Section 5, except for losses which result from the gross negligence or intentional misconduct of Impound Agent.

6.Term.

This Impound Agreement shall commence as of the date set forth above and shall expire upon distribution of the Impound Account as described in Section 7, below.

7.Distribution.

a.   Upon receipt of authorization from the Regulatory Agency to release the Impound Account (or portion thereof) to Company, such amount (including any interest earned thereon) shall be released to Company pursuant to Company’s written instruction signed by two of its officers, less the amount of any subscriptions (or portions thereof) the Company rejects in whole or in part as described in Section A hereof.  Such authorization shall be in the form of specific written instructions from the Regulatory Agency to Impound Agent.

b.   If Company with or without the approval of the Regulatory Agency directs Impound Agent to distribute the Impound Account to the Subscribers for any reason, including failure to sell the minimum number of shares offered in the Offering, then the Impound Account (including any interest-actually earned thereon) shall be distributed to the Subscribers as follows: each Subscriber, or a third party as specifically authorized in writing by such subscriber, shall receive the amount of his or her subscription, plus the Subscriber’s pro rata share of any interest actually earned through the investment of such amounts in Permitted Investments.

c.   In the event that the Impound Account is distributed pursuant to Section 7b, above, all remaining obligations of Company described in Section 9, 10a, 10b and 10f shall remain

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obligations of Company.  The obligations created pursuant to this Section 7c shall continue after the expiration of this Agreement.

d.   In the event that the Impound Account is distributed pursuant to Section 7b, above, or any refunds are distributed pursuant to 4a above, Impound Agent shall, as to each Subscriber, file Form 1099 with the State of California and the Internal Revenue Service, respectively.

8.Information to Company.

From time to time and at least weekly Impound Agent will provide Company with information relative to the total number of subscriptions received pursuant to this Agreement together with the aggregate number of shares for which subscriptions have been received and the total amount of funds received and collected, and the name and address of, and number of shares purchased by each subscriber.  Upon termination or expiration of this Agreement, Impound Agent shall provide an accounting of funds received, invested and disbursed pursuant to this Agreement together with a list of Subscriber names and addresses and the number of shares purchased by each Subscriber, and shall return all original subscription agreements to Company.

9.Unpaid Checks.

In the event that any check received by Impound Agent is returned unpaid by the drawee

bank, Impound Agent will resubmit the check to the drawee financial institution for repayment.  In the event that any such resubmitted check is returned unpaid a second time, Impound Agent may withdraw from the funds held by it pursuant to this Agreement the amount of that check together with an amount representing the applicable savings rate payable on the amount of the check for the period during which the funds are credited as available funds under this Agreement.  Impound Agent shall forward any such check to Company endorsed to Company without recourse.  In the event that any such check is returned to Impound Agent as unpaid after the funds represented thereby have been distributed to any person, upon notification by Impound Agent Company shall promptly pay the amount of that check to Impound Agent and Impound Agent shall forward the check to Company endorsed to Company without recourse.

10.Rights of Impound Agent.

a.   The Company agrees to pay the regular fees of Impound Agent, as stated on the attached fee schedule, as well as any reasonable fees for extraordinary services performed by Impound Agent pursuant to this Agreement and agreed to in writing by Company.  The Company  also agrees to pay and/or reimburse Impound Agent for its reasonable expenses and disbursements, including those of its agents, consultants and attorneys.  The obligations described in this Section 10a shall continue notwithstanding the expiration or termination of this Agreement for any reason.

b.   If conflicting demands are made or notices served by parties other than the Regulatory Agency  upon Impound Agent with respect to the Impound Account, Impound Agent shall be entitled to refuse to comply with any such claim or demand and to suspend performance of this Agreement so long as such disagreements shall continue; in so doing Impound Agent shall not be held liable for damages or interest to the Organizers of the Bank, to Bank, to Company or to any person (including but not limited to Subscribers) for failure to comply with such conflicting or adverse demands, Impound Agent shall be entitled to continue to refrain and refuse to act until:

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(i)   the rights of the adverse claimants have been finally adjudicated in a court assuming and having jurisdiction of the parties and/or the money, papers, and property involved in the claim or demand; and/or

(ii)  all differences have been settled by mutual agreement and Impound Agent has been notified of the settlement in a writing signed by all of the interested persons.

In the alternative, Impound Agent may file a suit in interpleader for the purpose of having the respective rights of the claimants adjudicated, and deposit with the court all money, papers, and property held pursuant to this Agreement, and the Company agrees to pay all costs, expenses and reasonable attorney’s fees incurred by Impound Agent in connection therewith, the amount thereof to be fixed and a judgment thereof to be rendered by the court in such suit; provided, however, that nothing in this Section 10b shall affect the obligations of the Company, the Organizers of the Bank and Impound Agent to immediately comply with all orders, demands and notices issued by the Regulatory Agency.

c.   Impound Agent shall act as a depository only and is not responsible or liable in any manner whatever for the sufficiency, correctness, genuineness or validity of any instrument deposited with it pursuant to this Agreement, or with respect to the form or execution of any such instrument, or the identity, authority, or rights of any person executing or depositing any such instrument.

d.   No notice, demand or change of instructions shall be of any effect unless made in a writing signed by all parties to this Agreement and mailed or delivered to an authorized officer of Impound Agent at the address set forth below for notices.

e . The Company agrees to hold harmless and indemnify Impound Agent, its directors, officers, employees and agents for any loss, cost, liability, damage or expense, including reasonable attorneys’ fees and expenses, arising out of or relating to this Agreement, the Impound Account, the performance of Impound Agent’s duties under this Agreement, or to any prospectus, disclosure document or any subscription agreement relating to this Agreement; provided, however, that no indemnification will be made for any act of willful misconduct or gross negligence of Impound Agent.

f.  Impound Agent:

(i) shall be deemed conclusively to have given and delivered any notice required to be given or delivered by it pursuant to this Agreement if the same is in writing, signed by any one of Impound Agent’s authorized officers and mailed to Company at the addresses set forth in this Agreement;

(ii) shall be entitled to consult with legal counsel and shall not be liable for any action taken or omitted by that counsel;

(iii) shall not, by act, delay, omission or otherwise, be deemed to have waived any rights or remedies under this Agreement unless such waiver is in a writing signed by Impound Agent; a waiver by Impound Agent of any right or remedy on any one occasion shall not be construed as a bar to or waiver of any such right or remedy on any future occasion;

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(iv) shall not be liable for any action taken or omitted to be taken in good faith, and shall be liable only for its own gross negligence or willful misconduct;

(v) shall be entitled to rely on any paper, request, certificate, schedule, notice or other document which it in good faith believes to be genuine and to have been signed or adopted by the proper party or parties;

(vi) shall under no circumstances be required to risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it,; and

(vii) shall have no duties or responsibilities except those expressly set forth in this Agreement, and the permissive right of Impound Agent to do things or omit to do things as set forth in this Agreement shall not be construed as a duty.

11.Representations Regarding Impound Agent.

Company represents and agrees that it has not made nor will it in the future make any representation that states or implies that Impound Agent has endorsed, recommended or guaranteed the purchase, value, or repayment of the securities offered for sale by Company.

12.Miscellaneous.

a.  This Agreement may be amended only by the written agreement of the Regulatory Agency, Company and Impound Agent.  This Agreement shall be governed by the laws of the State of California.

b.  This Agreement represents the entire agreement between Company and Impound Agent.

If Company or any of its officers, directors or agents has executed any other agreements or documents relating to the subject matter of this Agreement, or if any agreement is deposited under or arises out of this Agreement, Impound Agent shall not be deemed a party to or be responsible for any provision thereof unless expressly set forth in this Agreement or in a Schedule to this Agreement.  Impound Agent shall be under no duty to enforce any such other agreement.  In case of any conflict between this Agreement and any such other agreement or document or any Schedule thereto, the provisions of this Agreement shall be controlling.

c.  This Agreement may be executed and entered into in several counterparts, each of which shall be deemed to be an original, and all of which shall constitute but one and the same instrument.

d.  Impound Agent will not resign as Impound Agent under this Agreement after the receipt of any funds from Subscribers without the express written consent of Company.

e.  Impound Agent agrees that any state securities administrator in a state in which the Company is selling its securities in the Offering shall have the right to inspect and make copies of the records of the Impound Agent relating to its duties and obligations hereunder at any reasonable time wherever the records are located.

f.  Any notice, report, demand, waiver or consent required or permitted pursuant to this Agreement shall be in writing and shall be given by prepaid first class mail, addressed as follows:

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Impound Agent:

Mail Instructions

340 Pine Street, Suite 401

San Francisco, CA 94104

Attention:  Impound Account

Wire Instructions

Pacific Coast Bankers’ Bank
ABA No.   121042484

Attention:  Impound Account FBO
Manhattan Bancorp

To Company:

Manhattan Bancorp
2221 E. Rosecrans Avenue, Suite 131
El Segundo, California  90245

Attention: Jeffrey M. Watson

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IN WITNESS WHEREOF, Company and Impound Agent have executed the Agreement on the day and year first written above.

Manhattan Bancorp

By:			/s/ Jeffrey M. Watson
Its:	President and Chief Executive Officer
Pacific Coast Bankers’ Bank
(“Impound Agent”)
By:		/s/ Tracy Holcomb
Tracy Holcomb
Executive Vice President & COO

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SCHEDULE OF FEES

Schedule of Fees- Settlement Relationship
Basic Impound Account Fee		$2,500.00
Subscription Fee		$10.00 per Subscription
Rejected/Return Subscription Fee		$10.00 per Subscription
Return Checks		$10.00 per check
Miscellaneous Fees at cost:	Postage
	Envelopes
	Address Stamp
	Overnight Delivery
Fees are due and payable upon the release of funds to Company
Schedule of Fees- Impound Services Only
Basic Impound Account Fee		$5,000.00
Subscription Fee		$20.00 per Subscription
Rejected/Return Subscription Fee		$20.00 per Subscription
Return Checks		$20.00 per check
Miscellaneous Fees at cost:	Postage
	Envelopes
	Address Stamp
	Overnight Delivery
Fees are due and payable upon the release of funds to Company

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