**Exhibit10.24**

 

BROADSTONE PLAZAII

 

 

SHOPPING CENTERLEASE

 

BETWEEN

 

OPUS WESTCORPORATION,

a Minnesotacorporation

(“LANDLORD”)

AND

WESTERN SIERRANATIONAL BANK,

a national bankingassociation

(“TENANT”)

 

WESTERN SIERRANATIONAL BANK

(TENANT’S TRADENAME)

 

----

 

###### **TABLE OF CONTENTS**

 
| BASIC LEASE PROVISIONS |
|------------------------|
|                   |
| ARTICLE  1             | RENT |
|                   | 1.1 | Annual Minimum Rent |
|                   | 1.2 | Payment of Annual Minimum  Rent |
|                   | 1.3 | Additional Rent |
|                   | 1.4 | Place of Payment |
|                   |   |   |
| ARTICLE  2             | [INTENTIONALLY DELETED] |
|                   |   |
| ARTICLE  3             | LEASE YEAR |
|                   |   |
| ARTICLE  4             | TAXES AND  OTHER FORMS OF ADDITIONAL RENT |
|                   | 4.1 | Definition of Taxes |
|                   | 4.2 | Tenant’s Pro Rata Share of  Taxes |
|                   | 4.3 | Protest of Taxes |
|                   | 4.4 | Taxes and Assessments on Rent |
|                   | 4.5 | Miscellaneous Taxes |
|                   | 4.6 | Changes to Taxes |
|                   | 4.7 | Recalculation of  Tenant’s Pro Rata Share |
|                   |   |   |
| ARTICLE  5             | COMMON AREA AND  OPERATING EXPENSES |
|                   | 5.1 | Common Area |
|                   |   | 5.1.1 | Maintenance and Use of Common Area |
|                   |   | 5.1.2 | Control of and Changes to  Common Area |
|                   |   | 5.1.3 | Employee Parking |
|                   |   | 5.1.4 | Declarations |
|                   | 5.2 | Operating Expenses |
|                   |   | 5.2.1 | Definition of Operating  Expenses |
|                   |   | 5.2.2 | Payment of Operating Expenses |
|                   |   | 5.2.3 | Recalculation of Tenant’s  Pro Rata Share |
|                   |   |   |
| ARTICLE  6             | TENANT’S CONDUCT OF  BUSINESS |
|                   | 6.1 | Permitted Use |
|                   | 6.2 | Exclusive Use |
|                   | 6.3 | Trade  Name |
|                   | 6.4 | Operating Covenants |
|                   | 6.5 | Hours of Business |
|                   | 6.6 | Compliance With  Exclusive Use Provisions |
|                   | 6.7 | Increase in Insurance |
|                   | 6.8 | Hazardous Materials |
|                   |   | 6.8.1 | Definition of Hazardous  Materials |
|                   |   | 6.8.2 | Assignment and Subletting |
|                   | 6.9 | Compliance with Laws and  Other Requirements |
|                   | 6.10 | Prohibited Uses |
|                   | 6.11 | Advertising |
|                   | 6.12 | Shopping Center Name |
|                   |   |   |
| ARTICLE  7             | UTILITY SERVICES |
|                   | 7.1 | Gas, Electricity and Water |
|                   | 7.2 | Heating and Air  Conditioning |
|                   | 7.3 | Payment Terms for Landlord Supplied  Utilities |
|                   | 7.4 | Tenant Supplied Utilities |
|                   | 7.5 | Waiver of Liability |
|                   | 7.6 | Sewer Impact Fee Credit |
|                   |   |   |
| ARTICLE  8             | POSSESSION OF THE PREMISES |
|                   | 8.1 | Delivery of Possession |
|                   | 8.2 | Substantial Completion |
|                   | 8.3 | Acceptance of Premises |
|                   | 8.4 | Opening Date |
|                   | 8.5 | Certificates |
|                   | 8.6 | Tenant’s Work and Signage |
|                   |   |   |
| ARTICLE  9             | OVERDUE AMOUNTS -  SECURITY DEPOSIT |
|                   | 9.1 | Interest on Past Due Obligations |
|                   | 9.2 | Late Charge |
|                   |   |   |
| ARTICLE 10             | CARE  OF THE PREMISES; SIGNS AND STOREFRONT; USE OF ROOF |
|                   | 10.1 | Tenant’s Maintenance  Obligations |
|                   | 10.2 | Landlord’s  Maintenance Obligations |
|                   | 10.3 | Storefront Modifications |
|                        |  |  |  |  |

 

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|        | 10.4                                 | Signage                                                                      |
|-------------|--------------------------------------|------------------------------------------------------------------------------|
|        | 10.5                                 | Tenant’s Repair Obligations                                             |
|        | 10.6                                 | Landlord’s Rights to Exterior of  Premises                              |
|        | 10.7                                 | Roof Satellite Dish                                                          |
|        | 10.8                                 | Landlord’s Right of Entry                                               |
|        |                                 |                                                                         |
| ARTICLE  11 | INSURANCE                            |
|        | 11.1                                 | Landlord’s Property  Insurance Obligations                              |
|        | 11.2                                 | Tenant’s Property  Insurance Obligations                                |
|        | 11.3                                 | Landlord’s Liability  Insurance Obligations                             |
|        | 11.4                                 | Tenant’s Liability  Insurance Obligations                               |
|        | 11.5                                 | Additional Insurance  Obligations of Tenant                                  |
|        | 11.6                                 | Indemnification                                                              |
|        | 11.7                                 | Waiver                                                                       |
|        | 11.8                                 | Tenant’s Waiver                                                         |
|        | 11.9                                 | Deductible                                                                   |
|        | 11.10                                | Tenant’s Property                                                       |
|        | 11.11                                | Blanket Insurance Policy                                                     |
|        | 11.12                                | Commencement of Insurance  Obligations                                       |
|        | 11.13                                | Increased Premiums Due to Use  of Premises                                   |
|        | 11.14                                | Failure to Provide Evidence of  Insurance                                    |
|        |                                 |                                                                         |
| ARTICLE 12  | CERTAIN RIGHTS  RESERVED BY LANDLORD |
|        | 12.1                                 | Regulate Heavy Equipment                                                     |
|        | 12.2                                 | Exclusive Businesses                                                         |
|        | 12.3                                 | Emergency Entry                                                              |
|        | 12.4                                 | Exhibition of Premises                                                       |
|        | 12.5                                 | Right of Landlord to Perform                                                 |
|        |                                 |                                                                         |
| ARTICLE 13  | ALTERATIONS AND  IMPROVEMENTS        |
|        | 13.1                                 | Procedure For Tenant’s Improvements                                     |
|        | 13.2                                 | Bond Requirements                                                            |
|        | 13.3                                 | Written Notification Required                                                |
|        | 13.4                                 | Freedom From Liens                                                           |
|        | 13.5                                 | Alterations Part of Premises                                                 |
|        |                                 |                                                                         |
| ARTICLE 14  | ASSIGNMENT AND SUBLETTING            |
|        | 14.1                                 | Restriction                                                                  |
|        | 14.2                                 | Notice  to Landlord                                                          |
|        | 14.3                                 | Landlord’s Recapture Rights                                             |
|        | 14.4                                 | Landlord’s Consent; Standards                                           |
|        | 14.5                                 | Additional Rent                                                              |
|        | 14.6                                 | Landlord’s Costs                                                        |
|        | 14.7                                 | Continuing Liability of Tenant                                               |
|        | 14.8                                 | Non-Waiver                                                                   |
|        |                                 |                                                                         |
| ARTICLE 15  | DAMAGE BY FIRE OR  OTHER CASUALTY    |
|        | 15.1                                 | Tenantable Within 180 Days                                                   |
|        | 15.2                                 | Not Tenantable Within 180 Days                                               |
|        | 15.3                                 | Shopping Center  Substantially Damaged                                       |
|        | 15.4                                 | Landlord’s Repair Obligations                                           |
|        | 15.5                                 | Rent Apportionment                                                           |
|        | 15.6                                 | Waivers of California Statutes                                               |
|        |                                 |                                                                         |
| ARTICLE 16  | EMINENT DOMAIN                       |
|        | 16.1                                 | Tenant’s Termination                                                    |
|        | 16.2                                 | Tenant’s  Participation in Condemnation Award and Partial Condemnations |
|        |                                 |                                                                         |
| ARTICLE 17  | SURRENDER OF PREMISES                |
|        | 17.1                                 | Surrender of Possession                                                      |
|        | 17.2                                 | Tenant Retaining Possession                                                  |
|        |                                 |                                                                         |
| ARTICLE 18  | DEFAULT - REMEDIES                   |
|        | 18.1                                 | Covenants and Conditions                                                     |
|        | 18.2                                 | Events  of Default                                                           |
|        |                                 | 18.2.1                                                                       | Failure to Pay |
|        |                                 | 18.2.2                                                                       | Vacation or Abandonment |
|        |                                 | 18.2.3                                                                       | Failure to Pay on Three Occasions |
|        |                                 | 18.2.4                                                                       | Failure to Perform |
|        |                                 | 18.2.5                                                                       | Prohibited Transfer |
|        |                                 | 18.2.6                                                                       | Failure to Comply  with Environmental Laws |
|        |                                 | 18.2.7                                                                       | Other Defaults |
|        | 18.3                                 | Landlord’s Remedies                                                     |
|        |                                 | 18.3.1                                                                       | Termination of Possession |
|             |                                      |                                                                              |  |  |

 

ii

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|       |                                    | 18.3.2                                    | Re-Entry and Removal                    |
|------------|-----------------------------------------|-------------------------------------------|-----------------------------------------|
|       |                                    | 18.3.3                                    | No Termination; Recovery of Rent        |
|       |                                    | 18.3.4                                    | Reletting the Premises                  |
|       |                                    | 18.3.5                                    | Written Notice of Termination  Required |
|       |                                    | 18.3.6                                    | Remedies Cumulative; No Waiver          |
|       | 18.4                                    | Legal  Costs                              |
|       | 18.5                                    | Landlord’s Consent                   |
|       | 18.6                                    | Waiver of Damages for Re-entry            |
|       | 18.7                                    | Default By Landlord                       |
|       |                                    |                                      |
| ARTICLE 19 | SUBORDINATION                           |
|       | 19.1                                    | Lease Subordinate                         |
|       | 19.2                                    | Attornment                                |
|       | 19.3                                    | Tenant’s  Notice of Default          |
|       | 19.4                                    | Declarations                              |
|       |                                    |                                      |
| ARTICLE 20 | BANKRUPTCY OR INSOLVENCY                |
|       | 20.1                                    | Bankruptcy                                |
|       | 20.2                                    | Covenants Upon Bankruptcy  Filing         |
|       | 20.3                                    | No  Waiver of Default                     |
|       | 20.4                                    | Lease Under Bankruptcy Code               |
|       | 20.5                                    | Conditions                                |
|       |                                    |                                      |
| ARTICLE 21 | RADIUS RESTRICTION                      |
|       |                                    |
| ARTICLE 22 | OTHER PROVISIONS                        |
|       |                                    |
| ARTICLE 23 | AMERICANS WITH  DISABILITIES ACT        |
|       |                                    |
| ARTICLE 24 | CONSTRUCTION OF  LEASEHOLD IMPROVEMENTS |
|       | 24.1                                    | Leasehold Improvements                    |
|       | 24.2                                    | Landlord’s Construction  Obligations |
|       | 24.3                                    | Final Plans and Specifications            |
|       | 24.4                                    | Tenant’s Obligations                 |
|       | 24.5                                    | Change Requests                           |
|       | 24.6                                    | Tenant’s Representative              |
|       |                                    |                                      |
| ARTICLE 25 | MISCELLANEOUS                           |
|       | 25.1                                    | Time  is of the Essence                   |
|       | 25.2                                    | Memorandum of Lease                       |
|       | 25.3                                    | Joint and Several Liability               |
|       | 25.4                                    | Broker                                    |
|       | 25.5                                    | Estoppel Certificates                     |
|       | 25.6                                    | Notices                                   |
|       | 25.7                                    | Landlord’s Agent                     |
|       | 25.8                                    | Quiet Possession                          |
|       | 25.9                                    | Successors                                |
|       | 25.10                                   | Severability                              |
|       | 25.11                                   | Landlord’s Liability                 |
|       | 25.12                                   | Transfers by Landlord                     |
|       | 25.13                                   | Headings                                  |
|       | 25.14                                   | Entire Agreement                          |
|       | 25.15                                   | Modifications or Amendments               |
|       | 25.16                                   | Landlord Control                          |
|       | 25.17                                   | Utility Easement                          |
|       | 25.18                                   | Not Binding Until Properly Executed       |
|       | 25.19                                   | Building Rules and Regulations            |
|       | 25.20                                   | Tenant’s Compliance                  |
|       | 25.21                                   | Force  Majeure                            |
|       | 25.22                                   | Tenant Obligations Survive  Termination   |
|       | 25.23                                   | No Implication of Exclusive Use           |
|       | 25.24                                   | Tenant’s Waiver                      |
|       | 25.25                                   | Tenant Authorization                      |
|       | 25.26                                   | Laws  of California to Govern             |
|       | 25.27                                   | Rights Cumulative                         |
|       | 25.28                                   | No Partnership or Joint  Venture          |
|       | 25.29                                   | Attorneys’ Fees                      |
|       | 25.30                                   | Tenant’s Financial  Statements       |
|       | 25.31                                   | Shopping Center Expansion                 |
|       | 25.32                                   | No Representation                         |
|       | 25.33                                   | Option  to Renew                          |
|       | 25.34                                   | Permit Contingency                        |
|       | 25.35                                   | ATM                                       |
|       | 25.36                                   | Counterparts                              |
|            |                                         |                                           |                                         |  |

 

iii

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| EXHIBIT  “A” – Site Plan                                                         |
|-------------------------------------------------------------------------------------------------|
| EXHIBIT “A-1” – Premises Location                                                |
| EXHIBIT “B” – Rules and Regulations                                              |
| EXHIBIT “C” – [Intentionally Deleted]                                            |
| EXHIBIT “D” – Shopping Center Use Restrictions and  Existing Exclusives          |
| EXHIBIT “E” – Sign Criteria                                                      |
| EXHIBIT “F” – Outline Specifications                                             |
| EXHIBIT “G” – Commencement Date Memorandum                                       |
| EXHIBIT “H” –  Non-Disturbance, Attornment, Estoppel and Subordination Agreement |

 

iv

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**SHOPPING CENTER LEASE**

**FOR BROADSTONE PLAZA**

 

#### **BASIC LEASE PROVISIONS**

 
| 1.     |   | **LANDLORD:**                 |   | Opus West Corporation,  a Minnesota corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|--------|-------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 2.     |   | **TENANT:**                   |   | Western Sierra National  Bank, a national banking association                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |   |                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 3.     |   | **TENANT’S TRADE NAME:** |   | Western Sierra National  Bank                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |   |                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 4.     |   | **SHOPPING CENTER:**          |   | Broadstone Plaza Phase  II (“Shopping Center”):   Location:  City of Folsom, County  of Sacramento, State of California as more fully described on **Exhibit  “A”**.  Tenant acknowledges  that the Shopping Center shall initially consist of that portion of the  Broadstone Plaza identified on **Exhibit “A”** as “Shopping Center”.  Landlord reserves the right, from time to  time during the term of this Lease, to cause the Shopping Center to be  combined with the adjacent real property identified on the site plan as  “Phase I” and/or any adjacent pad parcel(s), in which case the “Shopping  Center” for purposes of this Lease shall thereafter refer to both of the  “Shopping Center” as initially defined together with Phase I and/or such  adjacent pad parcel(s).  Nothing  herein shall require Landlord to cause such combination to occur.  The term “ Shopping Center” shall exclude,  after the sale thereof by Landlord, any pad parcels.  The Shopping Center, along with all  improvements located thereon, is hereinafter referred to as the “Shopping  Center Tract.” |
|   |   |                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 5.     |   | **PREMISES:**                 |   | Address:  2779 East Bidwell Street, Folsom,  California, as depicted on **Exhibit “A-1”**.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   |                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 6.     |   | **RENTABLE AREA:**            |   | Approximately 7,175  square feet.  The exact square footage  of the Premises shall be calculated and certified by Landlord’s architect  upon completion of the Leasehold Improvements (as herein defined).  In the event the actual square footage as  calculated by Landlord’s architect is more or less than 7,175 square feet of  floor area, appropriate adjustments shall be made to Annual Minimum Rent and  Tenant’s proportionate share (for purposes of allocating Operating Expenses  and Taxes (as defined below) and other purposes in this Lease) to reflect the  actual square footage and such adjustment shall be set forth in the  Commencement Date Memorandum (as herein defined).  The aforesaid space leased to Tenant is hereinafter referred to  as the “Premises.”                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |   |                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 7.     |   | **LEASE TERM:**               |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |   |                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |   | Basic Term:                   |   | Ten (10) years,  computed from the first day of the first calendar month on or after the Rent  Commencement Date (the “Term” or “Lease Term”).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |   |                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |   | Renewal Options:              |   | Tenant shall have two (2) five (5) year renewal options exercisable  pursuant to the terms of this Lease.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |   |                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 8.     |   | **KEY DATES:**                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |   |                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |   | Opening Date:                 |   | Ninety (90) days after  Substantial Completion (defined below) of the Premises (“Opening Date”).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   |                          |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |   | Rent Commencement Date:       |   | The earlier of (a) the  date Tenant initially opens for business or (b) ninety (90) days after  Substantial Completion of the Premises (“Rent Commencement Date” or  “Commencement Date”).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

 

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|   |   | Delivery of Premises:    |   | Upon delivery of  written notice to Tenant of Substantial Completion of the Premises (“Delivery  Date”). |
|--------|--------|--------------------------|--------|--------------------------------------------------------------------------------------------------------------------|
|   |   |                     |   |                                                                                                               |
| 9.     |   | **ANNUAL MINIMUM RENT:** |   |                                                                                                               |

 
|        |   | **Years** |   | *****Annual  Rent** |       | *****Monthly  Rent** |   | **Price  P.S.F./Mo.** |   |
|-------------|--------|-----------|--------|---------------------|------------|----------------------|--------|-----------------------|--------|
| Basic Term: |   | 1-5       |   | $                   | 258,300.00 |                 | $      | 21,525.00             |   | $ | 3.00 |   |
|        |   | 6-10      |   | $                   | 297,045.00 |                 | $      | 24,753.75             |   | $ | 3.45 |   |

 
|          |   | **Years** |   | *****Annual  Rent** |       | *****Monthly  Rent** |   | **Price  P.S.F./Mo.** |   |
|---------------|--------|-----------|--------|---------------------|------------|----------------------|--------|-----------------------|--------|
| Renewal Terms |   | 11-15     |   | $                   | 341,817.00 |                 | $      | 28,484.75             |   | $ | 3.97 |   |
|          |   | 16-20     |   | $                   | 392,616.00 |                 | $      | 32,718.00             |   | $ | 4.56 |   |

 

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*** Based upon a Premisesconsisting of 7,175 rentable square feet

 
| 10.    |   | **USE OF PREMISES:**       |   | The Premises shall be  occupied and used by Tenant for any lawful use, including the operation of an  ATM in accordance with Section 25.35; provided, however, that any such use  shall not in any way violate any of the provisions set forth on **Exhibit  “D”** hereto or any provision of this lease hereafter deemed to be  an additional provision of **Exhibit “D.”** |
|--------|--------|----------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                       |   |                                                                                                                                                                                                                                                                                                                                                                                             |
| 11.    |   | **LATE CHARGE:**           |   | Five percent (5%) of  amount due.                                                                                                                                                                                                                                                                                                                                                                |
|   |   |                       |   |                                                                                                                                                                                                                                                                                                                                                                                             |
| 12.    |   | **BROKER(S):**             |   | CB Richard Ellis, Inc.  Potter Taylor and Company                                                                                                                                                                                                                                                                                                                                                |
|   |   |                       |   |                                                                                                                                                                                                                                                                                                                                                                                             |
| 13.    |   | **ADDRESSES FOR NOTICES:** |   |                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   |                       |   |                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   | LANDLORD:                  |   | Opus West Corporation                                                                                                                                                                                                                                                                                                                                                                            |
|   |   |                       |   | 6160 Stoneridge Mall  Road, Suite 360                                                                                                                                                                                                                                                                                                                                                            |
|   |   |                       |   | Pleasanton,  California  94588                                                                                                                                                                                                                                                                                                                                                              |
|   |   |                       |   | Attn:  Director, Real Estate Development                                                                                                                                                                                                                                                                                                                                                    |
|   |   |                       |   |                                                                                                                                                                                                                                                                                                                                                                                             | Broadstone Plaza |
|   |   |                       |   | Fax No.:  (925) 463-9368                                                                                                                                                                                                                                                                                                                                                                    |
|   |   |                       |   | Telephone No.:  (925) 463-9254                                                                                                                                                                                                                                                                                                                                                              |
|   |   |                       |   |                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   | With a copy to:            |   | Opus Corporation                                                                                                                                                                                                                                                                                                                                                                                 |
|   |   |                       |   | 2415 East Camelback Road, Suite 800                                                                                                                                                                                                                                                                                                                                                              |
|   |   |                       |   | Phoenix, Arizona   85016-4201                                                                                                                                                                                                                                                                                                                                                               |
|   |   |                       |   | Attn:  Legal  Department                                                                                                                                                                                                                                                                                                                                                                    |
|   |   |                       |   | Fax No.:   (602) 468-7045                                                                                                                                                                                                                                                                                                                                                                   |
|   |   |                       |   | Telephone No.:   (602) 468-7000                                                                                                                                                                                                                                                                                                                                                             |
|   |   |                       |   |                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   |                       |   | Opus West Management Corporation                                                                                                                                                                                                                                                                                                                                                                 |
|   |   |                       |   | 6160 Stoneridge Mall Road, Suite 360                                                                                                                                                                                                                                                                                                                                                             |
|   |   |                       |   | Pleasanton, California  94588                                                                                                                                                                                                                                                                                                                                                               |
|   |   |                       |   | Attn:   Property Manager                                                                                                                                                                                                                                                                                                                                                                    |
|   |   |                       |   |                                                                                                                                                                                                                                                                                                                                                                                             | Broadstone Plaza |
|   |   |                       |   | Fax No.:   (925) 463-9368                                                                                                                                                                                                                                                                                                                                                                   |
|   |   |                       |   | Telephone No.:   (925) 463-9254                                                                                                                                                                                                                                                                                                                                                             |
|   |   |                       |   |                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   |                       |   | Gallagher & Kennedy, P.A.                                                                                                                                                                                                                                                                                                                                                                    |
|   |   |                       |   | 2575 East Camelback Road                                                                                                                                                                                                                                                                                                                                                                         |
|   |   |                       |   | Phoenix, Arizona   85016                                                                                                                                                                                                                                                                                                                                                                    |
|   |   |                       |   | Attn:   Gregory L. Mast                                                                                                                                                                                                                                                                                                                                                                     |
|   |   |                       |   | Fax No.:   (602) 530-8500                                                                                                                                                                                                                                                                                                                                                                   |
|   |   |                       |   | Telephone No.:   (602) 530-8000                                                                                                                                                                                                                                                                                                                                                             |
|   |   |                       |   |                                                                                                                                                                                                                                                                                                                                                                                             |
|   |   | TENANT:                    |   | Western Sierra National Bank c/o                                                                                                                                                                                                                                                                                                                                                                 |
|   |   |                       |   | Western Sierra Bancorp                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |                       |   | 4080 Plaza Goldorado Circle                                                                                                                                                                                                                                                                                                                                                                      |
|   |   |                       |   | Cameron Park, California  95682                                                                                                                                                                                                                                                                                                                                                             |
|   |   |                       |   | Attn:  Kirk  N. Dowdell                                                                                                                                                                                                                                                                                                                                                                     |
|   |   |                       |   | Fax No.:   (530) 676-2817                                                                                                                                                                                                                                                                                                                                                                   |
|   |   |                       |   | Telephone No.:   (530) 677-5600                                                                                                                                                                                                                                                                                                                                                             |

 

 

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|   |   | With a copy to:                    |   | Goldsberry, Freeman & Swanson    |
|--------|--------|------------------------------------|--------|--------------------------------------|
|   |   |                               |   | 777 – 12th Street, Suite 250    |
|   |   |                               |   | Sacramento, California  95814   |
|   |   |                               |   | Attn:   Forrest Plant, Jr.      |
|   |   |                               |   | Fax No.:   (916) 448-8628       |
|   |   |                               |   | Telephone No.:   (916) 448-0448 |
|   |   |                               |   |                                 |
| 14.    |   | **ADDRESS  FOR RENT****PAYMENTS:** |   | Opus West Management Corporation     |
|   |   |                               |   | 2415 East Camelback Road, Suite 840  |
|   |   |                               |   | Phoenix, Arizona   85016-4201   |
|   |   |                               |   | Attn:                                | Property Manager |
|   |   |                               |   |                                 | Broadstone Plaza |
|   |   |                               |   | Fax No.:   (602) 912-8880       |
|   |   |                               |   | Telephone No.:   (602) 912-8881 |

 

The foregoingprovisions (“Basic Lease Provisions”) are intended to supplement and/orsummarize the provisions set forth in the balance of this Lease.  If there is any conflict between any of theBasic Lease Provisions and the balance of this Lease, the balance of this Leaseshall control.

 

 

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**SHOPPINGCENTER LEASE**

**FOR BROADSTONE PLAZA**

 

THIS LEASEAGREEMENT (the “Lease”), is entered into as of the 24th day of May, 2002(“Effective Date”) by and between OPUS WEST CORPORATION, a Minnesota corporation(“Landlord”), and WESTERN SIERRA NATIONAL BANK, a national banking association(“Tenant”).

 

**ARTICLE 1**

 

**RENT**

 

1.1                                 **Annual Minimum****Rent**.  Tenant covenants and agrees to pay toLandlord, without set off, deduction or demand Annual Minimum Rent as set forthin Section 9 of the Basic Lease Provisions.

 

1.2                                 **Payment of Annual Minimum****Rent**.  Commencing on the Rent Commencement Date,Tenant shall pay the monthly installments of Annual Minimum Rent on or beforethe first day of each month, in advance. Should the Term of this Lease commence or terminate on a day other thanthe first day of a calendar month, then the Rent for such partial month shallbe equal to the product obtained by multiplying the number of days of the Termincluded in the partial month by a fraction, the numerator of which is theAnnual Minimum Rent and the denominator of which is 365.  No payment by Tenant or receipt by Landlordof a lesser amount than the monthly Rent herein stipulated shall be deemed tobe other than on account of the earliest stipulated Rent, nor shall anyendorsement or statement on any check or any letter accompanying any check orpayment as Rent be deemed an accord and satisfaction, and Landlord shall acceptsuch check or payment without prejudice to Landlord’s right to recover thebalance of such Rent or pursue any other remedy available to Landlord underthis Lease or at law or in equity.  TheAnnual Minimum Rent set forth in Section 1.1 shall be subject to adjustmentpursuant to Section 4 of the Basic Lease Provisions.

 

1.3                                 **Additional Rent**.  In addition to the Annual Minimum Rentpayable by Tenant under the provisions of this Article 1, Tenant shall pay, asadditional rent (“Additional Rent”), all other charges, sums or amountspermitted to be imposed against it under any other Article of this Lease.  Payments of Additional Rent shall be madeconcurrently with the next succeeding installment of Annual Minimum Rentfollowing notice of the same, unless a different time for such payment isspecified in this Lease.  If any suchamounts or charges are not paid at the time provided in the Lease, they shallnevertheless be collectible as Additional Rent with the next installment ofAnnual Minimum Rent falling due; however, nothing herein contained shall bedeemed to suspend or delay the payment of any amount of money or charge at thetime the same becomes due and payable hereunder, or limit any other remedy ofLandlord.  Annual Minimum Rent andAdditional Rent are collectively referred to as “Rent”.  Rent shall be payable, without deduction,offset, prior notice or demand, in lawful money of the United States.  All payments received by Landlord fromTenant shall be applied to the oldest payment obligation owed by Tenant toLandlord.  No designation by Tenant,either in a separate writing or in a check or money order, shall modify thisclause or have any force or effect.

 

1.4                                 **Place of Payment**.  Tenant shall pay Annual Minimum Rent, andAdditional Rent to Landlord at the address specified in Section 14 of the BasicLease Provisions or to such other address and/or person as Landlord may fromtime to time designate in writing to Tenant.

 

**ARTICLE 2**

 

**[INTENTIONALLYDELETED]**

 

**ARTICLE 3**

 

**LEASE YEAR**

 

The term “LeaseYear” shall mean, each consecutive twelve (12) month period during the Term,commencing on the Commencement Date, except that if the Commencement Date isnot the first day of a calendar month then the first Lease Year shall be aperiod beginning on the Commencement Date and ending on the last day of thecalendar month in which the Commencement Date occurs plus the following twelve(12) calendar months.

 

**ARTICLE 4**

 

**TAXES AND OTHER FORMS OF ADDITIONAL RENT**

 

4.1                                 **Definition of****Taxes**.  Tenant shall pay to Landlord during the Termof this Lease as Additional Rent its proportionate share of all Taxes.  The term “Taxes” shall include taxes andassessments against the land, buildings or improvements comprising the ShoppingCenter Tract that are levied or assessed by any lawful authority during each calendaryear, including without limitation all personal property taxes of Landlordrelating to Landlord’s personal property located on the Shopping Center Tractand used or useful in connection with the operation and maintenance thereof,and all other governmental charges, general and special, ordinary andextraordinary, foreseen, as well as unforeseen, of any kind and naturewhatsoever, or other tax, however described, which is levied or assessed by the

 

 

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United States of Americaor the state in which the Shopping Center Tract is located or any city,municipality or political subdivision thereof, against Landlord or all or anypart of the Shopping Center Tract excluding however any net income tax, estatetax, transfer tax or inheritance tax of Landlord.  The term “Taxes” shall also include (a) all charges, fees,license fees, business license fees, commercial rent taxes, levies, penaltiesand assessments which are levied by any authority having the direct or indirectpower to tax, including any city, county, state, or federal government, or anyschool, agriculture, lighting, drainage, or other improvement district thereofwith respect to the Shopping Center Tract and any improvements, fixtures,equipment, and property of Landlord, real or personal, located in or on theShopping Center Tract or used in connection with the operation of the ShoppingCenter Tract, (b) any tax, surcharge, assessment, or service or other fee whichshall be levied or collected in addition to or in lieu of real estate orpersonal property taxes, other than taxes levied directly on Tenant forTenant’s personal property, (c) any excise, sales, transaction, privilege, orother tax or levy, however denominated, imposed upon or measured by the Rentreserved under this Lease, Landlord’s business of operating the Shopping CenterTract, or revenues derived therefrom or on the parking spaces in the ShoppingCenter Tract, (d) any tax or charge for fire protection, streets, sidewalks,road maintenance, refuse or other services provided to the Premises by anygovernmental entities, (e) any tax imposed upon the transaction or based upon areassessment of the Premises due to a change in ownership or transfer of all orpart of Landlord’s interest in the Premises, (f) any charge, fee, levy or taxreplacing any tax previously included within the definition of Taxes, it beingacknowledged by Landlord and Tenant that Proposition 13 was adopted by thevoters of the State of California in the June 1978 election and thatassessments, taxes, fees, levies and charges may be imposed by governmentalagencies for such services as fire protection, street sidewalk and roadmaintenance, refuse removal and for other governmental services formerlyprovided without charge to property owners or occupants and (g) any and allcosts (including, without limitation, the fees of experts, tax consultants andattorneys) incurred by Landlord should Landlord elect to negotiate or contestthe amount of any Taxes in formal or informal proceedings before the taxinggovernmental agency.  The Taxes to bepaid by Tenant under this Lease shall be the Taxes assessed for a particularyear notwithstanding that such Taxes may be payable in a subsequent year.  Taxes for any partial calendar year duringthe Term shall be prorated based upon the portion of such calendar year whichis within the Term.  For the calendaryears in which this Lease commences and terminates, the provisions of thisArticle shall apply, and Tenant’s liability for its share of the Taxes for suchyears shall be subject to a pro rata adjustment based on the number of days ofsaid calendar year during which the Term of this Lease is in effect.  In no event shall Taxes include any interestcharges or penalties imposed for Landlord’s failure to make payments on accountof Taxes in a timely manner unless such failure is due to Tenant’s failure topay its share of Taxes in the manner provided in this Article 4.

 

4.2                                 **Tenant’s Pro Rata Share****of Taxes**.  Subject to Section 4.7, Tenant’s share ofTaxes shall be equal to the product obtained by multiplying the Taxes by afraction, the numerator of which shall be the number of square feet of thefloor area of the Premises and the denominator of which shall be the number ofrentable square feet of floor area of all buildings in the Shopping CenterTract owned by Landlord, as the same may vary from time to time (hereinafter“Total Floor Area”).  Tenant’s share ofthe Taxes shall be paid in monthly installments on or before the first day of eachcalendar month, in advance, in an amount estimated by Landlord; provided, thatin the event Landlord is required under any mortgage covering the ShoppingCenter Tract to escrow Taxes, Landlord may, but shall not be obligated to, usethe amount required to be so escrowed as a basis for its estimate of themonthly installments due from Tenant hereunder.  Upon receipt of all tax bills and assessment bills attributableto any calendar year during the Term hereof, Landlord shall furnish Tenant witha written statement of the actual amount of Tenant’s share of the Taxes forsuch calendar year.  In the event thetotal amount of monthly installments paid by Tenant pursuant to this Articledoes not equal the sum due from Tenant as shown on such statement, then Tenantshall pay to Landlord the deficiency within thirty (30) days of receipt of suchstatement, or Landlord shall issue to Tenant at the time the statement isfurnished, a credit invoice for such excess, as the case may be.  A copy of a tax bill or assessment billsubmitted by Landlord to Tenant shall at all times be sufficient evidence ofthe amount of Taxes against the property to which such bill relates.  Prior to or at the commencement of the Termof this Lease and from time to time thereafter throughout the Term hereof,Landlord shall notify Tenant in writing of Landlord’s estimate of Tenant’smonthly installments due hereunder. Landlord’s and Tenant’s obligations under this Article shall survive theexpiration of this Lease.

 

4.3                                 **Protest of****Taxes**. Landlord shall also have the right, but not the obligation, to contestthe amount or validity, in whole or in part, of any Taxes by appropriateproceedings conducted in the name of Landlord or in the name of Landlord andTenant.  Notwithstanding anything inthis Article to the contrary, all costs and expenses incurred by Landlordduring negotiations for or contests of the amount of Taxes shall be includedwithin the term “Taxes”.  In the event arefund is obtained, Landlord shall issue a credit invoice for same, suchportion to be based upon the percentage of the original Taxes paid by Tenantfrom which the refund was derived. Tenant hereby waives any right it may have by statute or otherwise toprotest Taxes.

 

4.4                                 **Taxes and Assessments on****Rent**.  In addition to the foregoing, Tenant shallpay as Additional Rent, all other sums and charges required to be paid byTenant under this Lease, and any tax or excise on rents, all other sums andcharges required to be paid by Tenant under this Lease, and gross receipts tax,transaction privilege tax or other tax, however described, which is levied orassessed by the United States of America, the state in which the ShoppingCenter Tract is located or any city, municipality or political subdivisionthereof against Landlord in respect to the Annual Minimum Rent, Additional Rentor other charges reserved under this Lease or as a result of Landlord’s receiptof such rents or other charges accruing under this Lease; provided, however,Tenant shall have no obligation to pay net income taxes of Landlord.

 

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4.5                                 **Miscellaneous Taxes**.  In addition to the foregoing, Tenant at alltimes shall be responsible for and shall pay, prior to delinquency, all taxesassessed or levied upon its occupancy of the Premises, and/or leaseholdimprovements, upon the trade fixtures, furnishings, equipment, and all otherpersonal property of Tenant located in or about the Premises and when possible,Tenant shall cause such leasehold improvements, trade fixtures, furnishings,equipment and other personal property to be assessed and billed separately fromthe property of Landlord.  In the eventany or all of Tenant’s leasehold improvements, trade fixtures, furnishings,equipment or other personal property, or Tenant’s occupancy of the Premises, shallbe assessed and taxed with the property of Landlord, Tenant shall pay toLandlord its share of such taxes within thirty (30) days after delivery toTenant by Landlord of a statement in writing setting forth the amount of suchtaxes applicable to Tenant’s personal property.  Landlord shall determine the basis of prorating and dividing anyof those assessments and its determination shall be binding.  No taxes, assessments, fees or chargesreferred to in this Section shall be considered Taxes under the provisions ofSection 4.1.

 

4.6                                 **Changes to Taxes**.  Landlord and Tenant recognize thepossibility of changes and/or limitations on the amount of taxes which can beassessed on land, buildings and improvements, including the Shopping CenterTract.  Landlord and Tenant furtherrecognize and acknowledge that as a result of any such changes in structure orlimitations on amount, the amount of Taxes of the type which have appeared onassessor’s tax statements prior to the date hereof may decrease.  Landlord and Tenant further recognize thatthere may be imposed new forms of taxes, assessments, charges, levies or fees,or there may be an increase in certain existing taxes, assessments, charges,levies or fees placed on, or levied in connection with the ownership, leasing,occupancy or operation of the Shopping Center or the Premises.  All such new or increased taxes,assessments, charges, levies or fees which are in lieu of, or imposed orincreased as a result of, or arising out of any change in the structure of, thecurrent tax system, or for the purpose of funding special assessment districtstheretofore funded by taxes, shall also be included within the meaning ofTaxes.

 

4.7                                 **Recalculation of Tenant’s Pro Rata****Share**.  Notwithstanding anything to the contrary inthis Lease, Landlord may elect, from time to time, to have Taxes for anyportion of the Shopping Center Tract calculated and paid separately from theremainder of the Shopping Center Tract. Upon such election by Landlord, Tenant’s share of Taxes shall be calculatedwithout reference to any excluded portion of the Shopping Center Tract(notwithstanding that Tenant’s share for other purposes hereunder may then becalculated on a basis which includes such excluded portion), so that (i) Taxesshall be reduced to exclude the taxes from the excluded portion of the ShoppingCenter Tract and (ii) the denominator of the fraction determining Tenant’sshare of taxes shall include only the number of rentable square feet of floorarea of all buildings in the non-excluded portion of the Shopping CenterTract.  It is agreed that, as pad orbuilding sites in the Shopping Center Tract are sold to third parties, Landlordshall have the option to require that Taxes shall not include real propertytaxes and assessments relating thereto, nor shall the denominator of thefraction determining Tenant’s share of Taxes include any floor area of anybuilding constructed thereon.

 

**ARTICLE 5**

 

**COMMON AREA AND OPERATING EXPENSES**

 

5.1                                 **Common Area**.  Theterm “Common Area” means the entire area designated from time to time byLandlord for the common use or benefit of the occupants of the Shopping Centerand other persons entitled to use the same, including, without limitation,parking lots (permanent and temporary), landscaped and vacant areas, passagesfor trucks and automobiles, area-ways, roads, walks, roof, curbs, corridors,courts and arcades, together with facilities such as washrooms, comfort rooms,lounges, drinking fountains, toilets, stairs, ramps, shelters, community rooms,porches and bus stations, with facilities appurtenant to each, and commonutility facilities, water filtration and treatment facilities (including, butnot limited to, treatment plants and settling ponds), whether located within oroutside of the Shopping Center (provided, however, the costs and expenses ofsuch facilities included within Section 5.2 below shall include only thoserelated to the operation, maintenance, repair or replacement of the ShoppingCenter).

 

5.1.1                        **Maintenance and****Use of Common Area**.  The Common Area shall be maintained inaccordance with the requirements set forth in the Declarations (definedbelow).  The use and occupancy by Tenantof the Premises shall include the non-exclusive use of the Common Area (exceptareas used in the maintenance or operation of the Shopping Center) in commonwith Landlord and other Tenants of the Shopping Center and their customers andinvitees to the extent provided in the Declarations.  Any such use shall be subject to the Declarations and thoseprovisions contained in the rules and regulations set forth in **Exhibit “B”**concerning the use of the Common Area, established by Landlord from time totime.  Landlord shall operate andmaintain the Common Area or shall cause the same to be operated and maintainedin a manner deemed by Landlord reasonable or appropriate for the ShoppingCenter.  Subject to the Declarations andthe rules and regulations and subject to the rights of other tenants, licenseesand concessionaires already or to be granted therein, the Common Area is herebymade available to Tenant and its employees, agents, customers and invitees fortheir reasonable nonexclusive use in common with others, including othertenants and their employees, agents, customers, invitees, and Landlord for thepurposes for which constructed.

 

5.1.2                        **Control of and Changes****to CommonArea**.  Landlord shall havesole and exclusive control of the Common Area, as well as the right to makechanges to the Common Area.

 

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Landlord’s rights shallinclude, but not be limited to, the right to (a) restrain the use of the CommonArea by unauthorized persons; (b) utilize from time to time any portion of theCommon Area for promotional, entertainment and related matters; (c) placepermanent or temporary kiosks, displays, carts or stands in the Common Area andto lease same to Tenants; (d) temporarily close any portion of the Common Areafor repairs, improvements or alterations, to discourage noncustomer use, toprevent dedication or an easement by prescription, or for any other reasondeemed sufficient in Landlord’s judgment; (e) change the shape and size of theCommon Area, add, eliminate or change the location of improvements to theCommon Area, including, without limitation, buildings, parking areas, roadwaysand curb cuts, and construct buildings on the Common Area; (f) constructsurface or elevated parking areas and facilities; (g) establish and change thelevel of parking surfaces; (h) close all or any portion of the Common Area tosuch extent as may, in the opinion of Landlord’s counsel, be necessary toprevent a dedication thereof or the accrual of any rights to any person or tothe public therein or to make repairs or alterations; to close temporarily anyor all portions of the Common Area, and (i) do and perform such other acts inand to said area and improvements as, in the exercise of good businessjudgment, Landlord shall determine to be advisable with a view to theimprovement of the convenience and use thereof by tenants and their agents, contractors,employees, licensees, customers and, business invitees.  Tenant shall not solicit business or displaymerchandise within the Common Area, or distribute handbills thereon, or takeany action which would interfere with the rights of other persons to use theCommon Area without the prior written consent of the Landlord.

 

5.1.3                        **Employee Parking**.  In order to discourage non-customer parkingin the Common Area, Landlord may designate what portions of the Common Area, ifany, shall be used for automobile or other parking by tenants and theiremployees, concessionaires, subtenants and licensees, and Tenant shall requireits employees, concessionaires, subtenants and licensees to park in suchdesignated areas.  In accordance withthe preceding sentence, Tenant shall require its employees to park only inthose parking spaces of the Common Area parking facility designated as“Tenant’s Employee Parking Area” on **Exhibit “A”**.  In addition to all other rights and remedies available hereunder,Landlord shall be entitled to enforce this provision by requiring the paymentby Tenant of such amount per automobile as may be determined to be appropriateby Landlord from time to time for each day per automobile an automobile drivenby an employee of Tenant, Tenant’s agent, occupant, concessionaire or licenseeis found parked within the Common Area but outside of the specified area.

 

5.1.4                        **Declarations**.  The term “Declarations” means any “declaration of covenants,conditions and restrictions and grant of easements”, any “restrictive easementagreement”, any “parking lot maintenance agreement” or any similar documentaffecting all or any part of the Shopping Center, whether recorded as of thedate of execution of this Lease, or recorded thereafter, including, withoutlimitation, the Restriction Agreement and Grant of Easements for Folsom PowerCenter, recorded July 10, 1998, Series No. 199807100988, Official Records ofSacramento County, California (the “Senior Declaration”), as amended by thatcertain instrument entitled First Amendment to Restriction Agreement and Grantof Easements for Folsom Power Center, recorded September 3, 1999, Series No.199909031081, Official Records of Sacramento County, California, that certaininstrument entitled Assignment of Rights, recorded November 12, 1999, SeriesNo. 199911121519, Official Records of Sacramento County, California and thatcertain instrument entitled Second Amendment to Restriction Agreement and Grantof Easements for Folsom Power Center, September 18, 2001, in Book 20010918,Page 1177, Official Records of Sacramento County, California (collectively, the“Amended Senior Declaration”), and any supplemental declarations that arerecorded (the “Supplemental Declaration”), the Junior Declaration of Covenants,Conditions and Grant of Easements for Folsom Power Center, recorded September3, 1999, Series No. 199909031082, Official Records of Sacramento County,California (the “Junior Declaration”), as amended by that certain FirstSupplemental to the Junior Declaration of Covenants, Conditions andRestrictions and Grant of Easements for Folsom Power Center, recorded July 18,2000, Book 20000718, Point 0878, Official Records of Sacramento County,California, that certain Second Supplemental to the Junior Declaration ofCovenants, Conditions and Restrictions and Grant of Easements for Folsom PowerCenter, recorded August 8, 2000, Book 20000808, Page 0909, Official Records ofSacramento County, California, that certain Third Supplemental to the JuniorDeclaration of Covenants, Conditions and Restrictions and Grant of Easementsfor Folsom Power Center, recorded October 31, 2000, Book 200001031, Page 1810,Official Records of Sacramento County, California, that certain FourthSupplemental to the Junior Declaration of Covenants, Conditions andRestrictions and Grant of Easements for Folsom Power Center, recorded December21, 2000, Book 200001221, Page 1221, Official Records of Sacramento County,California, and that certain Amendment to Junior Declaration of Covenants,Conditions and Restrictions and Grant of Easements for Folsom Power Center,recorded September 18, 2001, Book 20010918, Page 1176, Official Records ofSacramento County, California (collectively, the “Amended Junior Declaration”),and any supplemental declarations that are recorded (the “Supplemental JuniorDeclaration”).

 

5.2                                 **Operating Expenses**.  Tenant shall pay, as Additional Rent, toLandlord during the Term its proportionate share of the costs and expenses ofoperating, maintaining, repairing and replacing the Common Area (“OperatingExpenses”).  Subject to Section 5.2.3,Tenant’s proportionate share of Operating Expenses shall be equal to theproduct obtained by multiplying the total of such Operating Expenses by afraction, the numerator of which shall be the number of square feet of thefloor area of the Premises and the denominator of which shall be the TotalFloor Area.

 

5.2.1                        **Definition of Operating****Expenses**.  The term “Operating Expenses” shall mean andinclude, without limitation, all expenses, costs and amounts of every kind andnature that Landlord pays or incurs during the lease year because of or inconnection with the ownership, operation,

 

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management, maintenance,repair, replacement or restoration of the Common Area, all sums expended inconnection with the Common Area for operating, maintaining, repairing,lighting, cleaning, sealing, striping, heating, air conditioning, ventilating,inspecting, painting (including painting of the exterior of buildings of the ShoppingCenter), and insuring (including liability insurance for personal injury,death, and property damage and contractual liability, fidelity bonds forpersonnel, insurance against fire, theft or other casualties, rent loss,workmen’s compensation and employer’s liability, and including any “deductible”cost incurred in connection with any covered loss, all costs and expenses ofservice and maintenance contracts, including but not limited to, HVAC, windowsand general cleaning, removing of snow, ice, debris and surface water, securitypolice, electronic intrusion and fire control and telephone alert system,machinery and equipment depreciation, all costs and expenses for inspecting,repairing and maintaining machinery and equipment used in the operation of theCommon Area, all costs and expenses of inspecting, maintaining, repairing andreplacing storm and sanitary drainage systems, sprinklers and other fireprotection systems, and electrical, gas, water, telephone and irrigationsystems, all costs and expenses for operating, maintaining, repairing andreplacing off-site improvements (including costs of operating, maintaining,repairing and replacing off-site detention areas and utility costs for trafficsignals), all costs and expenses of traffic regulation, directional signs andtraffic consultants, fees for permits, program services, and loudspeakersystems, all costs and expenses of planting and replacing flowers, shrubberyand planters, all costs and expenses (other than those of a capital nature) ofreplacement of, and repairing, paving, curbs, sidewalks, walkways, roadways,loading docks, roof, parking surfaces, landscaping, drainage, utilities,lighting facilities, and signage, costs and assessments of any property ownersassociation covering the Shopping Center, all costs of uniforms, supplies andmaterials used in connection with the operation and maintenance of the ShoppingCenter, all salaries and other compensation and benefits of all persons engagedin the operation, maintenance or security of the Common Area, together withother fringe benefits including employer’s social security taxes, unemploymenttaxes, insurance and other compensation, benefits and payments and any otherexpense imposed on Landlord, its contractors or subcontractors, pursuant to lawor pursuant to any collective bargaining agreement covering employees engagedin the management of the Shopping Center or the operation, maintenance, repairor replacement of the Common Area, and administrative and overhead costs equalto 12% of the foregoing Common Area costs and expenses, any fees, charges andother costs including management fees (or amounts in lieu of such fees),consulting fees, legal fees and accounting fees of all persons engaged byLandlord or otherwise reasonably incurred by Landlord in connection with theoperation, maintenance, management and repair of the Shopping Center and CommonArea.  The Operating Expenses shall notinclude any capital improvement to the Shopping Center, except as describedbelow, nor shall it include repairs, restoration or other work occasioned byfire, windstorm or other insured casualty, expenses incurred in leasing orprocuring tenants, leasing commissions, advertising expenses, expenses forrenovating space for new tenants, legal expenses incident to enforcement byLandlord of the terms of any lease, interest or principal payments on anymortgage or other indebtedness of Landlord, nor shall it include expenses forconstructing or renovating the exterior of the buildings in the ShoppingCenter.  Notwithstanding the foregoing,in the event Landlord installs equipment in or makes improvements oralterations to the Shopping Center that would be considered capitalexpenditures and that are for the purpose of reducing energy costs, maintenancecosts or other Operating Expenses or are replacements for existing improvementsor are required under any governmental laws, regulations, or ordinances(including any accessibility statute) which were not required at the datepermits for construction of the Shopping Center were obtained, Landlord mayinclude in Common Area expenses the cost of such equipment and suchimprovements and alterations, including reasonable charges for interest on suchinvestment and reasonable charges for depreciation on the same so as to amortizesuch investment over the reasonable life of such equipment, improvement oralteration as reasonably determined by Landlord.

 

5.2.2                        **Payment of Operating****Expenses**.  Tenant’s proportionate share of theOperating Expenses for each Lease Year shall be paid in monthly installments onthe first day of each calendar month, in advance, in an amount estimated byLandlord from time to time.  If, for anyreason, Landlord is unable to provide to Tenant the estimate of any of suchcharges prior to the commencement of any calendar year, then Tenant shallcontinue to pay monthly the same amount of such charges as was applicable forthe previous month until receipt of such estimate, at which time, Tenant shallcommence paying as of the first day of the calendar month after delivery ofsuch new estimate, the new estimated amounts and the difference between theprevious charges and the new estimated amounts.  Within ninety (90) days after the end of each Lease Year,Landlord shall furnish Tenant with a statement of the actual amount of Tenant’sproportionate share of the Operating Expenses for such period.  In the event the total of Tenant’s monthlyinstallments for any Lease Year does not equal Tenant’s proportionate share asshown on such statement, then Tenant shall promptly pay Landlord anydeficiency, or Landlord, upon receipt of such annual statement, shall issue toTenant a credit invoice for such excess which shall be credited againstTenant’s future payments of Operating Expenses, as the case may be.

 

5.2.3                        **Recalculation of Tenant’s****Pro RataShare**.  Notwithstandinganything to the contrary in this Lease, Landlord may elect, from time to time,to have other tenants or owners of a portion of the Shopping Center operate andmaintain the Common Area located on such other tenant’s or owner’s leased orowned portion of the Shopping Center, in which event such other tenants orowners (and not Landlord) shall be responsible for the operation andmaintenance of such portion of the Common Area.  In such event, Tenant’s proportionate share of Operating Expensesshall be calculated by (i) excluding from all the Operating Expenses the costsand expenses all costs and expenses incurred by the tenants and ownersperforming or maintaining their own portion of the Common Area, and (ii)including in the denominator of the fraction determining Tenant’s share thereofonly the number of rentable square feet of floor area of all buildings owned orleased by parties other than the tenants or owners performing or maintainingtheir own portion of the Common Area.

 

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**ARTICLE 6**

 

**TENANT’SCONDUCT OF BUSINESS**

 

6.1                                 **Permitted Use**.  Subject to the provisions of this Article,the Premises shall be used and occupied solely for the use set forth in Section10 of the Basic Lease Provisions and for no other use or purpose whatsoever(the “Permitted Use”).

 

6.2                                 **Exclusive Use**.  Subsequent to the date of this Lease, solong as Tenant is not in default hereunder, Landlord agrees, during the timethat Tenant constitutes the “Tenant” under this Lease, that all new leases forspace in the Shopping Center will contain a provision (herein called a“Restrictive Use Clause”) which shall prohibit the Tenant thereunder fromconducting as its primary business at the Shopping Center (i) a state ornational bank, (ii) a state or federal savings and loan, (iii) a trust companyor (iv) subject to the remaining provisions of this Section, a state or federalcredit union.  If Tenant discontinuesthe operation of a bank as its primary business at the Premises, thenLandlord’s obligations under this Section shall automatically terminate and allRestrictive Use Clauses shall be deemed null and void.  This agreement of Landlord shall operateonly to the extent Landlord’s covenants and agreements contained in thisSection are not contrary to public policy or contrary to law and, in the eventsuch covenants and agreements are deemed contrary to law, such covenants andagreements shall become automatically and immediately null and void and shallbe deemed revoked.  Anything herein tothe contrary notwithstanding, Tenant agrees to indemnify, defend and holdLandlord harmless from any claim, cost, loss or damage (including reasonableattorneys’ fees) incurred or alleged against Landlord by any person, firm orcorporation whatsoever by reason of Landlord’s compliance, or attemptedcompliance, with the terms and conditions of this Section (provided, however,that Landlord shall have no obligation to enforce such Restrictive UseClauses), and in the event Landlord or its successors or assigns are madesubject to any action, proceeding or penalty with respect to the provisions ofthis Section, Tenant agrees to indemnify, defend and hold Landlord harmlessfrom any cost, loss, claim or expense in respect thereto.  This Section shall not apply to any leasesentered into by Landlord prior to the date of this Lease (including, withoutlimitation, that certain Shopping Center Lease between Landlord and HeritageCommunity Credit Union, a California corporation, dated December 14, 2001) norto any amendments nor renewals of such leases. In the event of any violation of a Restrictive Use Clause by anothertenant of the Shopping Center, Landlord shall not be in breach of this Lease,and Tenant’s sole and exclusive remedy with respect to such violation shall beto attempt to cause such tenant to cease violating the Restrictive Use Clausecontained in its Lease.

 

6.3                                 **Trade Name**. Subject to Article 14, Tenant shall use in the transaction of businessin the Premises the trade name, if any, set forth in Section 3 of the BasicLease Provisions; provided, however, in the event Tenant is transactingbusiness in the majority of its stores engaged in the Permitted Use, or anyportion of such use, in the metropolitan area in which the Shopping Center islocated under a different trade name, Tenant shall transact business in thePremises under the same trade name as used in the majority of such stores.

 

6.4                                 **Operating Covenants**.  Tenant agrees to open the Premises to thepublic on or before the Commencement Date. Tenant shall not at any time abandon the Premises, but shall in goodfaith continuously throughout the term of this Lease conduct and carry on inthe entire Premises the Permitted Use. Tenant shall:  (a) comply withthe Rules and Regulations of Landlord as such may be amended from time to time;(b) secure and maintain a business license and all other applicablegovernmental approvals; (c) operate continuously and uninterruptedly in theentire Premises the business which it is permitted to operate under theprovisions of this Lease; (d) employ its best judgment, efforts and abilitiesto operate the business conducted by it on the Premises in a manner calculatedto produce the maximum profitable and practical volume of sales andtransactions obtainable and to enhance the reputation and attractiveness of thePremises; (e) at all times, keep and maintain within the Premises an adequatestock of merchandise and trade fixtures to service and supply the usual and ordinaryrequirements of its customers; (f) keep the Premises and interior and exteriorportions of windows, doors and all other glass or plate glass fixtures in aneat, clean, sanitary and safe condition; (g) warehouse, store or stock onlysuch merchandise as Tenant intends to offer for sale at retail; (h) use foroffice space or other non-selling purposes only such space as is reasonablyrequired for Tenant’s business; (i) keep sidewalks adjacent to the Premisesclean from visible trash, papers, oil, gum and other debris and (j) operate itsbusiness with a stock of merchandise comparable in style and type to thoseoffered at its other stores engaged in the Permitted Use, or any portion ofsuch use, in the metropolitan area in which the Shopping Center is located, ina high class and reputable manner to maximize sales from the Premises.

 

6.5                                 **Hours of Business**.  Except to the extent Tenant may beprohibited from being open for business by applicable law, ordinance orgovernment regulation, Tenant shall, except during reasonable periods ofrepairing, cleaning and decorating, not to exceed seven (7) days, keep thePremises open to the public for business during weekdays from 9:00am to 5:00pm,with adequate and competent personnel in attendance on all such days and duringall such hours.  Tenant shall not berequired to open for business on Thanksgiving Day, Christmas Day, New Year’sDay or Easter or any other holiday observed by the Federal Reserve Bank andshall be permitted to close for business up to two (2) additional days perLease Year.

 

6.6                                 **Compliance With Exclusive Use****Provisions**.  Tenant acknowledges that various tenants oroccupants of the Shopping Center have been or will be granted exclusive useswithin the Shopping Center, and no part of the Premises shall be used for anypurpose or in any way that violates

 

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any of the provisions setforth on **Exhibit“D”** hereto or any provision hereafter deemed to be an additionalprovision of **Exhibit “D”** pursuant to this Section 6.6.  Tenant agrees that neither it nor anysuccessor, assign, concessionaire, subtenant or assignee shall use thePremises, or any part thereof, in any way that would violate any of theprohibited uses listed on **Exhibit “D”** or hereafter deemed to be anadditional provision thereof, and notwithstanding the Provisions of Article 19,Tenant shall be in immediate default under this Lease if Tenant violates theprovisions of this Section 6.6.  Tenantacknowledges that Landlord may hereafter grant other exclusive uses to othertenants or occupants of the Shopping Center or other prohibited uses for thebenefit of such other tenant or occupant, and Tenant agrees that neither it norany successor, assign, concessionaire, subtenant or assignee shall use thePremises, or any part thereof, in any way that would violate any such exclusiveor prohibited use hereafter granted of which Tenant has received writtennotice, so long as such exclusive or prohibited use does not prohibit the useof the Premises for the Permitted Use. Upon receipt by Tenant of written notice of any such exclusive orprohibited use hereafter granted, such exclusive or prohibited use shallautomatically be deemed to be an additional provision of **Exhibit “D”** hereto, so longas such exclusive or prohibited use does not prohibit the use of the Premisesfor the Permitted Use.  Tenant covenantsand agrees that it will not withhold or delay its written acknowledgment of theaddition of any such additional exclusive or prohibited use to **Exhibit “D”**if such acknowledgment is requested in writing by Landlord, and in the eventTenant fails to furnish such written acknowledgment of such addition withinfifteen (15) days after Tenant’s receipt of Landlord’s written requesttherefor, Tenant shall be deemed to have given such written acknowledgment asof the expiration of such 15-day period.

 

6.7                                 **Increase in Insurance**.  Tenant shall not do or permit anything to bedone in or about the Premises nor bring or keep anything therein which will, inany way, increase the existing rate of, invalidate, or affect in any other wayany fire or other insurance carried on the Premises and/or the Shopping CenterTract or any of its contents, or cause a cancellation of any insurance policycovering the Shopping Center Tract or any part thereof or any of itscontents.  Notwithstanding anything tothe contrary contained herein, Tenant shall promptly, upon demand, reimburseLandlord for the full amount of any additional premium charged for such policyby reason of Tenant’s failure to comply with the provisions of this Section6.7, it being understood that such demand for reimbursement shall not beLandlord’s exclusive remedy.

 

6.8                                 **Hazardous Materials**.  Tenant shall not cause or permit anyHazardous Materials (defined below) to be brought upon, kept or used in orabout the Premises or Shopping Center by Tenant, its agents, employees,contractors or invitees, and shall not conduct or authorize the use,generation, transportation, storage, treatment or disposal at the Premises or theShopping Center of any Hazardous Materials other than those expresslypermitted, in writing, by Landlord.  IfTenant breaches the obligation stated above, or if the presence of HazardousMaterials on the Premises, or Shopping Center caused or permitted by Tenant(including Hazardous Materials specifically permitted and identified below)results in contamination to the Premises, or Shopping Center, or any portion ofthe real property surrounding the Project (the “Adjacent Property”), or ifcontamination of the Premises, or Shopping Center, or Adjacent Property byHazardous Materials otherwise occurs for which Tenant is legally liable toLandlord for damages resulting therefrom, then Tenant shall be liable andresponsible for, without limitation, (i) removal from the Premises, or ShoppingCenter, or Adjacent Property of any Hazardous Materials and the cost of suchremoval; (ii) damages to persons or property in or on the Premises, or ShoppingCenter, or Adjacent Property; (iii) claims resulting therefrom; (iv) finesimposed by any governmental agency; and (v) any other liability as provided bylaw.  In addition to the foregoing,Tenant shall indemnify, protect, defend and hold Landlord, its agents andcontractors harmless from any and all claims, judgments, damages, penalties,fines, costs, liabilities and losses (including, without limitation, diminutionin value of the Premises, or Shopping Center, or Adjacent Property), damagesfor the loss or restriction on use of rentable or usable space or of any amenityof the Premises, or Shopping Center, or Adjacent Property, damages arising fromany adverse impact on marketing of space in the Shopping Center or the AdjacentProperty, and sums paid in settlement of claims, attorneys’ fees, consultantfees and expert fees, which arise during or after the Lease Term as a result ofsuch contamination.  Thisindemnification of Landlord by Tenant includes, without limitation, costsincurred in connection with any investigation of site conditions or anycleanup, remedial, removal or restoration work required by any federal, stateor local governmental agency or political subdivision because of HazardousMaterials present in the soil or ground water on or under the Shopping Centerand arising out of breach of Tenant’s obligation under this Section 6.8.  Without limiting the foregoing, if thepresence of any Hazardous Materials within the Shopping Center caused orpermitted by Tenant results in any contamination of the Premises, or ShoppingCenter, Tenant shall promptly take all actions, at its sole expense, as arenecessary to return the Premises, or Shopping Center to the condition existingprior to the introduction of any such Hazardous Material, provided thatLandlord’s approval of such action shall first be obtained, which approvalshall not be unreasonably withheld so long as such actions would notpotentially have any material adverse long term or short term effect on theShopping Center or the Adjacent Property and are permitted by any lender ofLandlord having a first priority lien on the Shopping Center.

 

6.8.1                        **Definition of Hazardous****Materials**.  As used herein, the term “HazardousMaterials” or “Hazardous Material” means any hazardous or toxic substance,material or waste which is or becomes regulated by any local governmentalauthority, the State of California or the United States Government.  Hazardous Materials include, withoutlimitation, any material or substance which is or becomes (i) defined as a“hazardous waste,” “extremely hazardous waste” or “restricted hazardous waste”under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, ofthe California Health and Safety Code, Division 20, Chapter 6.5 (HazardousWaste Control Law), (ii) defined as a “hazardous substance” under Section 25316of the California Health and Safety Code, Division 20, Chapter 6.8(Carpenter-Presly-Tanner Hazardous Substance Account Act), (iii) defined as a“hazardous

 

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material,” “hazardoussubstance” or “hazardous waste” under Section 25501 of the California Healthand Safety Code, Division 20, Chapter 6.95 (Hazardous Materials ReleaseResponse Plans and Inventory), (iv) defined as a “hazardous substance” underSection 25281 of the California Health and Safety Code, Division 20, Chapter6.7 (Underground Storage of Hazardous Substances), (v) petroleum or petroleumproduct or fraction thereof, (vi) asbestos, (vii) listed under Section 6.8 anddefined as hazardous or extremely hazardous pursuant to Article 11 of Title 22of the California Administrative Code, Division 4, Chapter 20, Article 11 ofTitle 22 of the California Administrative Code, Division 4, Chapter 20, (viii)designated as a “hazardous substance” pursuant to Section 311 of the FederalWater Pollution Control Act (33 U.S.C. Section 1317), (ix) defined as“hazardous waste” pursuant to Section 1004 of the Federal Resource Conservationand Recovery Act, 42 U.S.C. Section 6901 et. seq. (42 U.S.C. Section 6903), or(x) defined as a “hazardous substance” pursuant to Section 101 of theComprehensive Environmental Response Compensation and Liability Act, 42 U.S.C.Section 601 et. seq. (42 U.S.C. Section 9601). The term “Hazardous Materials” also includes, without limitation, anymaterial or substance which is (a) defined or listed as a “hazardous waste”,“extremely hazardous waste”, “restrictive hazardous waste” or “hazardoussubstance” or considered a waste, condition of pollution or nuisance under anyother environmental law; (b) polychlorinated biphenyl; (c) flammable explosives;(d) urea formaldehyde; and/or (e) substances known by the State of Californiato cause cancer and/or reproductive toxicity. It is the intent of the parties hereto to construe the terms “HazardousMaterials” and “environmental law” in their broadest sense.

 

6.8.2                        **Assignment and Subletting**.  If (i) any anticipated use of the Premisesby any proposed assignee or subtenant involves the generation, storage, use,treatment or disposal of Hazardous Materials, or (ii) the proposed assignee orsubtenant has been required by any prior landlord, lender or governmentalauthority to take remedial action in connection with Hazardous Materialscontaminating a property and the contamination resulted from such party’saction or use of the property in question, it shall not be unreasonable forLandlord to withhold its consent to an assignment or subletting to suchproposed assignee or subtenant. Landlord may require that the proposed assignee or subtenant provideinformation and/or a certification executed by an authorized corporate officerwith respect to the foregoing matters.

 

6.9                                 **Compliance with Laws and****OtherRequirements**.  Tenant shallcause the Premises to comply in all material respects with all laws,ordinances, regulations and directives of any governmental authority havingjurisdiction including, without limitation, any certificate of occupancy andany law, ordinance, regulation, covenant, condition or restriction affectingthe building or Shopping Center which is applicable to the Premises(collectively “Applicable Laws”). Tenant shall not use the Premises or permit the Premises to be used inany manner which (i) violates any Applicable Laws, (ii) causes or is reasonablylikely to cause damage to the Premises or Shopping Center, (iii) violates arequirement or condition of any fire and extended insurance policy covering thePremises and/or Shopping Center or increases the cost of such policy, (iv)constitutes or is reasonably likely to constitute a nuisance, annoyance orinconvenience to other tenants or occupants of the Shopping Center or itsequipment, facilities or systems, (v) interferes with, or is reasonably likelyto interfere with, the transmission or reception of microwave, television,radio, telephone or other communications signals by antenna or other facilitieslocated in the Shopping Center; or (vi) violates any of the Rules andRegulations for the Shopping Center. Tenant shall also comply with all laws, ordinances and regulationsregarding the disclosure of the presence or danger of Hazardous Materials.

 

6.10                           **Prohibited Uses**.  Tenant shall not (i) conduct within thePremises any fire, auction, bankruptcy or liquidation (whether of merchandiseonly or of the entire business of Tenant) sales, (ii) advertise that Tenant is“going out of business”, (iii) permit any objectionable or unpleasant odors ornoises to emanate from the Premises, (iv) place or permit any radio,television, loudspeaker, amplifier or other sound broadcasting system on theroof or outside the Premises or where the same can be seen or heard fromoutside the building or in the Common Area, (v) place an antenna, awning orother projection on the exterior of the Premises, (vi) operate or permit theoperation of any amusement or arcade type games in the Premises, (vii) use, orpermit to be used, the malls or sidewalks adjacent to the Premises, or anyother premises outside such space for the sale or display of any merchandise orfor any other business, occupation, or undertaking except as permitted below,or (viii) take any other action which in the exclusive judgment of Landlordexercised in good faith would constitute a nuisance or would disturb orendanger other tenants of the Shopping Center or interfere with their use oftheir respective premises, or which would tend to injure the reputation of theShopping Center.  Sidewalk sales orother outside activities of Tenant shall be prohibited, unless in conjunctionwith a promotion by all tenants and occupants on the Shopping Center Tract.

 

6.11                           **Advertising**. Subject to Landlord’s prior written reasonable approval as to content,medium and location, Landlord shall authorize Tenant, at Tenant’s election andat Tenant’s sole cost and expense, to place a temporary “Opening Soon” sign onthe exterior of the Premises; provided, however, that such sign shall in allevents comply with the Declarations (including, without limitation, anyrestrictions therein as to the location of same within the Shopping Center) andany applicable governmental laws, regulations or other requirements, andprovided further that Tenant shall remove such sign on or before theCommencement Date.  Tenant shall notaffix upon the Premises any other sign, advertising placard, name, insignia,trademark, descriptive material or other like item unless approved in writingby Landlord in advance or required by State and Federal law or regulation.  No advertising medium shall be utilized byTenant within the Premises which can be heard or seen outside the Premises,including without limitation, flashing lights, searchlights, loudspeakers,phonographs, radios or televisions. Tenant shall not display, paint or place any handbill, bumper sticker orother advertising

 

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devices on any vehicleparked in the Common Area.  Tenant shallnot distribute any handbills or other advertising matter in the ShoppingCenter.

 

6.12                           **Shopping Center Name**.  Tenant shall use the name of the ShoppingCenter in its advertising as the address reference for the Premises only andnot for any other purpose.  Landlordreserves the right, in its sole discretion, to change the name and logo of theShopping Center at any time.

 

**ARTICLE 7**

 

**UTILITYSERVICES**

 

7.1                                 **Gas, Electricity****and Water**.  Landlord agrees to cause to be provided aspart of the Leasehold Improvements mains, conduits and other facilities whichare capable of supplying electricity, gas, water and sewer service to thePremises in substantial accordance with the specifications attached hereto as **Exhibit “F”**.  Tenant hereby acknowledges the limits of thedesign standard of the electrical service to be furnished to the Premises asreflected on the specifications attached hereto as **Exhibit “F”** and, ifadditional capacity or wiring is required by Tenant, Tenant, after obtainingLandlord’s approval with respect to the same, shall install such additionalcapacity or wiring at Tenant’s own expense, provided it is permitted underState and local code.  Tenant shall payfor all electricity, water and sewer service provided to the Premises and allsuch utilities shall be separately metered to the Premises.

 

7.2                                 **Heating and Air Conditioning**.  As part of the Leasehold Improvements,Landlord shall install a system including all duct work to heat, air conditionand ventilate the Premises in substantial accordance with the specificationsattached hereto as **Exhibit “F”**.  Tenant shall pay the cost for all such heating, air conditioningand ventilation service provided to the Premises, including the cost ofmaintenance, repair and replacement of same. Landlord, at its sole option, may arrange for a preventative maintenancecontract for the HVAC units; provided, however, Landlord shall provide Tenantthirty (30) days prior written notice of its intent to so arrange for apreventive maintenance contract for the HVAC units.  The costs for such a maintenance contract will become a part ofthe Operating Expenses.  Tenant willalso carry insurance covering said equipment which may be self-insured asprovided herein and will provide proof of insurance satisfactory to Landlord onsaid equipment upon occupancy.

 

7.3                                 **Payment Terms for****Landlord Supplied Utilities**.  Notwithstanding anything to the contrarycontained herein, Landlord may, if it so elects, furnish one or more utilityservices to Tenant, and in such event Tenant shall purchase the use of suchservices as are tendered by Landlord, and shall pay within thirty (30) daysfrom receipt of invoice as Additional Rent the rates established therefor byLandlord, which shall not exceed the rates which would be charged for the sameservice if furnished directly by the local public utility companies.  All said billings shall be based uponTenant’s actual consumption of such utility services.  Landlord may at any time upon forty-five (45) days notice toTenant discontinue furnishing any such service without obligation to Tenantother than to connect the Premises to the public utility, if any, furnishingsuch service.  If Tenant fails to payany charges referred to in this Article when due, Landlord may pay the charge,and Tenant agrees to reimburse Landlord for any amount paid by Landlord plusinterest thereon at the Interest Rate specified in Section 9.1.

 

7.4                                 **Tenant Supplied Utilities**.  Landlord reserves the right, from time totime, to make reasonable and non-discriminatory modifications to the abovestandards for utilities and services. Tenant agrees to make all arrangements for and to be solely responsiblefor the direct payment of all separately metered or separately charged utilityservices, including, without limitation, all utility hook-up connectioncharges, fees and taxes, supplied to Tenant for Tenant’s use in or about thePremises (including without limitation electric, natural gas, telephone, cabletelevision and any other special utility requirements of Tenant), if any, tothe Premises or to the Tenant and shall make such payments to the respectiveutility companies prior to delinquency. Such amounts shall not be included as Operating Expenses.

 

7.5                                 **Waiver of Liability**.  No interruption in, or temporary stoppageof, any of the aforesaid services caused by repairs, renewals, improvements,alterations, strikes, lockouts, labor controversy, accidents, inability toobtain fuel or supplies, or other causes shall be deemed an eviction ordisturbance of Tenant’s use and possession, or render Landlord liable fordamages, by abatement of Rent or otherwise or relieve Tenant from anyobligation herein set forth. Furthermore, Landlord shall not be liable under any circumstances forloss of, or injury to, property or for injury to, or interference with,Tenant’s business including, without limitation, loss of profits orconsequential damages, however occurring, through or in connection with orincidental to (a) any failure to supply any heat, air conditioning, elevator,cleaning, lighting, security or other service Landlord has agreed to supply,(b) any surges or interruptions in electricity, or (c) the breakage or failureof any telephone lines, wires or cables in the Premises or Shopping Center,whether or not caused by any negligence of Landlord or by Landlord’sinstallation of, maintenance of or failure to maintain any of theforegoing.  In no event shall Landlordbe required to provide any heat, air conditioning, electricity or other servicein excess of that permitted by voluntary or involuntary guidelines or laws,ordinances or regulations of any governmental authority.

 

7.6                                 **Sewer Impact Fee Credit**.  Tenant acknowledges that, in connection withLandlord obtaining Landlord’s permits relating to the development of theShopping Center, Landlord was required to pay a sewer impact fee to the City ofFolsom, California (the “City”).  Inconnection with the payment of such sewer impact fee by Landlord, Landlordreceived from the City a credit (the “Credit”) for such sewer impact fee, whichCredit is intended to be applied against the costs to Landlord of obtainingtenant improvement permits for buildings at the Shopping Center from time totime.  The parties acknowledge

 

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that Tenant will beperforming construction of the Tenant’s improvements in the Premises.  In the event that at the time Tenant obtainsa building permit for construction of such Tenant improvements, the Cityapplies a portion of the Credit against the fees otherwise payable by Tenant inconnection with obtaining Tenant’s permit, then in that event Tenant herebyagrees to pay to Landlord, within thirty (30) days following issuance ofTenant’s permit for the construction of Tenant’s improvements in the Premises,a sum equal to the portion of the Credit applied by the City in connection withthe issuance of Tenant’s permit. Tenant’s payment to Landlord shall be accompanied by a copy of Tenant’spermit together with a schedule of the fees paid by Tenant in connectiontherewith.  Any portion of the Creditapplied in connection with the issuance of Tenant’s permit shall be paid byTenant to Landlord within said thirty (30) day period.

 

**ARTICLE 8**

 

**POSSESSIONOF THE PREMISES**

 

8.1                                 **Delivery of Possession**.  Landlord shall give Tenant at least ten (10)days’ prior written notice of the approximate date of Substantial Completionand delivery of possession of the Premises (“Delivery of the Premises”).  If the Premises is delivered and Tenantaccepts possession of the Premises on a date earlier than the date ofSubstantial Completion of the Leasehold Improvements, all covenants, agreementsand obligations (other than Rent and the obligation to operate) shall commenceon such earlier date, and the Rent reserved herein and the Term shall commenceon the Rent Commencement Date.

 

8.2                                 **Substantial Completion**.  For purposes of this Lease, the phrase“Substantial Completion” or “Substantially Completed” shall mean that theLeasehold Improvements have been constructed and installed by Landlordsubstantially in accordance with the specifications attached hereto as **Exhibit “F”**.  If on the date the Leasehold Improvementsare substantially complete there should remain items of construction orfinishing work to be completed which do not materially interfere with Tenant’suse, occupancy or enjoyment of the Premises, Landlord and Tenant shall withinthirty (30) business days from the date the Leasehold Improvements aresubstantially complete prepare a written list (the “Punch List”) of suchuncompleted items.  Landlord agrees tocomplete the Punch List item(s) within that time period which is reasonable forcompletion of such items.  In the eventof any dispute as to work performed or required to be performed by Landlord orthe existence of any Punch List item(s) or the completion thereof in accordancewith the terms of the Lease, such dispute shall be decided by Landlord’sarchitect which decision shall be final and binding upon the parties.

 

8.3                                 **Acceptance of Premises**.  Subject to the preceding paragraph, theacceptance of possession by Tenant shall be deemed conclusively to establishthat the Premises and all other improvements of the Shopping Center required tobe constructed by Landlord for use thereof by Tenant hereunder have beencompleted unless Tenant notifies Landlord in writing within thirty (30) daysafter the Commencement Date.  Tenantwaives any claim as to matters not listed in said notice.

 

8.4                                 **Opening Date**. Tenant shall open the Premises to the public for business no later thanthe Opening Date and shall thereafter continuously hold the Premises open forbusiness in accordance with Article 6 hereof.

 

8.5                                 **Certificates**.  Within ten (10) days after Landlord’s request therefor, but in noevent earlier than the Opening Date, Tenant shall deliver to Landlord (a) anexecuted copy of the Commencement Date Memorandum (in the form attached heretoas **Exhibit“G”**), and (b) the Certificate of Occupancy for the Premises issuedby the appropriate governmental agency.

 

8.6                                 **Tenant’s Work****and Signage**.  Upon Substantial Completion and Delivery of the Premises toTenant, Tenant shall proceed with due diligence to cause Tenant’s improvementsto be performed, and to install Tenant’s exterior signage (which shall beinstalled no later than the Rent Commencement Date), furniture, fixtures andequipment.

 

**ARTICLE 9**

 

**OVERDUEAMOUNTS - SECURITY DEPOSIT**

 

9.1                                 **Interest on Past Due****Obligations**.  Any installment of Annual Minimum Rent,Additional Rent, or other charges to be paid by Tenant accruing under theprovisions of this Lease, which is not paid when due, shall bear interest atthe rate of Prime percent plus two percent (2%) per annum from the date whenthe same is due until the same shall be paid, but if such rate exceeds themaximum interest rate permitted by law, such rate shall be reduced to thehighest rate allowed by law under the circumstances (the “Interest Rate”).  For purposes of this Lease, the term “Prime”shall mean the rate announced from time to time by Bank of America, N.A., as itsprime or reference rate.  If Bank of Americashall cease to announce its prime or reference rate, then Landlord shall selectthe rate of another financial institution to be substituted therefor.  Tenant’s covenants to pay the Annual MinimumRent and the Additional Rent are independent of any other covenant, condition,provision or agreement herein or elsewhere contained.

 

9.2                                 **Late Charge**. Tenant hereby acknowledges that the late payment by Tenant to Landlordof Annual Minimum Rent, Additional Rent or other charges to be paid by Tenantaccruing under the provisions of this Lease, will cause Landlord to incurunanticipated costs, the exact amount of which will

 

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be extremely difficult toascertain.  Such costs include, but arenot limited to, processing and accounting charges and late charges which may beimposed on Landlord by the terms of any encumbrance covering the ShoppingCenter.  Accordingly, if any installmentof Annual Minimum Rent, Additional Rent or other charges to be paid by Tenantaccruing under the provisions of this Lease shall not be received by Landlordor Landlord’s designee within ten (10) days after the date due, Tenant shallpay to Landlord a late charge equal to five percent (5%) of the overdue amount.  The parties agree that the amount of suchlate charge represents a fair and reasonable estimate of the costs and expensesthat would be incurred by Landlord by reason of late payment by Tenant.  Acceptance of such late charge by Landlordshall in no event constitute a waiver of Tenant’s default with respect to suchoverdue amount, nor shall such acceptance prevent Landlord from exercising anyof the other rights and remedies granted hereunder or by law to Landlord.

 

**ARTICLE 10**

 

**CARE OF THE PREMISES; SIGNS AND STOREFRONT; USE OF ROOF**

 

10.1                           **Tenant’s Maintenance Obligations**.  Tenant will (a) keep the inside and outsideof all glass in the doors and windows of the Premises clean; (b) keep allexterior store front surfaces of the Premises clean; replace promptly, at itsexpense, any broken door closers and any cracked or broken glass of thePremises with glass of like kind and quality; (c) maintain the Premises and theloading dock contiguous thereto, if any, at its expense in a clean, orderly andsanitary condition and free of insects, rodents, vermin and other pests; (d)keep any garbage, trash, rubbish or refuse removed at its expense on a regularbasis and temporarily stored in the Premises in accordance with local codes or,if in Landlord’s sole judgment it provides trash removal service for alltenants, Tenant shall participate in and pay Landlord for such service; ifLandlord shall install compactors within the Shopping Center in lieu ofproviding trash pick-up, Tenant shall use said compactor service as designatedby Landlord in such times and in such manner as Landlord shall direct, and forthe use of said compactor service, Tenant agrees to pay as Additional Rent, areasonable monthly charge as determined by Landlord, which may be adjusted byLandlord as of the first day of each Lease Year to reflect any increase ordecrease in the rates for said service; (e) keep all mechanical apparatus freeof vibration and noise which may be transmitted beyond the Premises; (f) complywith all laws, ordinances, rules and regulations of governmental authorities,including without limitation, the Act (as herein defined), and allrecommendations of the insurance services office and/or Landlord’s insurancecarrier now or hereafter in effect relative to the use and occupancy of thePremises and the transaction of the business of Tenant in the Premises; and (g)light the show windows of the Premises and exterior signs until one-half hourafter the closing of the Shopping Center and replace promptly all light bulbsand tubes when no longer serviceable. Tenant will not, without the written consent of Landlord, place ormaintain any merchandise or other articles outside of the Premises; use orpermit the use of any loudspeakers, phonographs, public address systems,flashing, moving and/or rotating lights, sound amplifiers, radio or broadcastswithin the Premises which are in any manner audible or visible outside thePremises; cause or permit odors to emanate or be dispelled from the Premises;solicit business or distribute advertising material within the Shopping Centerexcept within the Premises; or permit the parking of delivery vehicles so as tounreasonably interfere with the use of any driveway, walk, parking area, mallor other portion of the Common Area in the Shopping Center.  Except as otherwise provided in thisArticle, the Premises shall at all times be kept in good order, condition andrepair, reasonable wear and tear excepted, of equal quality with the originalwork by Landlord and Tenant at Tenant’s own cost and expense and in accordancewith the Declarations, the Rules and Regulations of the Shopping Center, alllaws, directions, rules and regulations of regulatory bodies or officialshaving jurisdiction in that regard.  IfTenant refuses or neglects to commence repairs within ten (10) days afterreceipt of written demand, or if Tenant fails to complete such repairs within areasonable time thereafter, Landlord may make the repairs without liability toTenant for any loss or damage that may accrue to Tenant’s stock or business byreason thereof, and if Landlord makes such repair, Tenant shall pay to Landlordthe costs thereof with interest at the Interest Rate from the date ofcompletion of such repairs and delivery of an invoice therefor until repayment.

 

10.2                           **Landlord’s Maintenance Obligations**.  Subject to including the costs thereof inOperating Expenses pursuant to Article 6 hereof, Landlord shall keep or causeto be kept the foundations, the four outer walls, roof, downspouts and guttersof the building of which the Premises are a part and, to the extent Tenant orother tenants are not obligated to maintain the same, all utility systems,lines, conduits and appurtenances thereto located within the Shopping CenterTract in good repair, ordinary wear and tear excepted; provided however, if theneed for such repair is attributable to or result from the business activitybeing conducted within the Premises, or if any repairs or replacements arenecessitated by the negligence, gross negligence, or willful misconduct ofTenant or anyone claiming under Tenant or by reason of Tenant’s failure toobserve or perform any conditions or agreements contained in this Lease orcaused by alterations, additions or improvements made by Tenant, or anyoneclaiming under Tenant, then, in such case, the cost thereof shall be the soleresponsibility of Tenant and Tenant agrees to reimburse Landlord for any costsand expenses incurred by Landlord with respect to such repair.  Subject to the foregoing, it is agreed andunderstood that Tenant shall only be responsible for keeping in good repair theutility systems, lines, conduits and appurtenances thereto located within thePremises and solely and exclusively serving the Premises.  Landlord shall commence repairs it isrequired to do hereunder as soon as reasonably practicable after receivingwritten notice from Tenant of the necessity of such repairs, but in no eventshall Landlord be required to make any other repairs, subject to the provisionsof Article 15 and Article 16 herein and Landlord shall have no liability forany damage or injury arising out of any condition or occurrence causing a needfor such repairs.  Tenant waives theprovisions of Sections 1941 and 1942 of the Civil Code of the State ofCalifornia, or any superseding statute, and of any other law permitting Tenantto make repairs at Landlord’s expense.

 

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10.3                           **Storefront Modifications**.  Unless required by local, State or Federallaw or regulation, Tenant shall not, without Landlord’s prior written consent,(i) make any changes to or paint the store front; or (ii) install any exteriorlighting, decorations, banners or temporary or portable signs; or (iii) affixsigns, advertisements, banners, or other material to the outside of storewindows nor to the exterior of any doors, nor to any exterior columns orstorefront walls.

 

10.4                           **Signage**.  All ofTenant’s signage is subject to the reasonable prior approval of Landlord, andshall comply with the Declarations all applicable laws, rules, regulations, orordinances and the Sign Criteria for the Shopping Center, attached hereto as **Exhibit “E”**and incorporated herein by reference. Tenant shall maintain its signage in good condition and repair duringthe Lease Term.  All of Tenant’s signagemust be tastefully and professionally done and the use of hand-scribed signs ofany kind is expressly prohibited. Landlord reserves the right to remove unauthorized signage.  Tenant agrees to have erected and/orinstalled and fully operative on or before the Commencement Date all signs inaccordance with Landlord’s Sign Criteria. Tenant, upon vacation of the Premises, or the removal or alteration ofits sign for any reason, shall be responsible for the repair, painting and/orreplacement of the building fascia surface where signs are attached.  Any signs or letterings placed onstorefronts, monument signs and pylon signs shall be paid for by Tenant.  If, as a result of a renovation of theShopping Center by Landlord, Landlord requests that Tenant’s exteriorstorefront sign be removed, all storage costs, reinstallation costs, and costsfor fabrication of a different sign of comparable dimensions, type andcharacter, if required, shall be at the sole cost and expense of Landlord andwill be done by Landlord and Landlord shall fabricate such different sign basedupon Tenant’s plans and specifications complying with Landlord’s sign criteria.

 

10.5                           **Tenant’s Repair Obligations**.  Tenant will repair promptly, at its expense,any damage to the Premises or any other improvements within the Shopping CenterTract (i) caused by Tenant or anyone claiming by or through Tenant or (ii)caused by the installation or removal of Tenant’s property, regardless of faultor by whom such damage shall be caused, unless caused by Landlord, its agents,contractors, employees or licensees; if Tenant shall fail to make such repairsas aforesaid, Landlord may make the same (provided Landlord has given Tenantnotice of its intent to make such repairs and Tenant has not commenced suchrepairs within ten (10) days following receipt of said notice) and Tenantagrees to pay the cost thereof to Landlord together with interest at theInterest Rate from the date of commencement of said repairs until repayment.

 

10.6                           **Landlord’s Rights to****Exterior ofPremises**.  Subject to Tenant’srights under Section 10.7, Landlord shall have the exclusive right to use allor any part of the roof of the Premises for any purpose; to erect additionalstories or other structures over all or any part of the Premises; to erecttemporary scaffolds and other aids to construction on the exterior of thePremises, provided that access to the Premises shall not be denied; and toinstall, maintain, use, repair and replace within the Premises pipes, ducts,conduits, wires and all other mechanical equipment serving other parts of theShopping Center Tract.  Landlord maymake any use it desires of the side or rear walls of the Premises, providedthat such use shall not encroach on the interior of the Premises.

 

10.7                           **Roof Satellite****Dish**.  Subject to the provisions of this Section10.7, Tenant may use a portion of the roof to install, operate and maintain, atTenant’s sole cost and expense, a microwave dish or similar antenna fortelecommunications solely for Tenant’s personal use within the Premises **(“TelecommunicationsEquipment”)**.  Tenant willinstall the Telecommunications Equipment only in a location determined byLandlord in Landlord’s sole and absolute discretion.  Tenant’s installation, maintenance, replacement and removal ofany Telecommunications Equipment must comply with the requirements of anyBuilding roof warranties, all provisions of Article 13 governing alterations,and the other terms and conditions of this Lease.  Tenant’s installation, operation and maintenance is subject toTenant receiving and maintaining all governmental approvals required for theTelecommunications Equipment and otherwise complying with the Declarations andall governmental laws, rules, regulations and ordinances relating thereto.  The Telecommunications Equipment must not interferewith any existing Shopping Center equipment or other tenants’ equipment.  Upon prior notice to Landlord, Tenant willbe allowed reasonable access to the Telecommunications Equipment area for thepurpose of maintaining and servicing such equipment.  All Telecommunications Equipment (i) will remain the personalproperty of Tenant, (ii) will be located and maintained at Tenant’s sole costand risk, (iii) must be properly removed by Tenant at the end of the Termpursuant to the provisions of Article 13 and (iv) is subject to acceptablescreening of same at Tenant’s sole cost and expense, such screening to bereasonably pre-approved by Landlord and, in all events, such screening tocomply with the Declarations and all governmental laws, rules, regulations andordinances relating thereto . Notwithstanding anything to the contrary in this Lease, in the eventthat Landlord’s insurance obligations under this Lease increase as a result ofTenant’s installation, operation or maintenance of the TelecommunicationsEquipment, any such increase shall be borne solely by Tenant and not byLandlord or any other tenants leasing space in the Shopping Center.

 

10.8                           **Landlord’s Right of****Entry**.  Landlord, its agents, contractors andemployees, may enter the Premises at all reasonable times during Tenant’snormal business hours to: (a) examine the Premises; (b) perform any obligationto, or exercise any right or remedy of, Landlord under this Lease; (c) makerepairs, alterations, improvements or additions to the Premises or to otherportions of the Shopping Center as Landlord deems necessary or desirable; (d)perform work necessary to comply with laws, ordinances, rules or regulations ofany public authority or of any insurance underwriter; (e) serve, post or keepposted any notices required or allowed under the provisions of this Lease,including, but not limited to, notices of non-responsibility for alterations,and (f) perform work that Landlord deems necessary to

 

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prevent waste or deterioration in connection with the Premises.  Tenant shall not be entitled to an abatementor reduction of Annual Minimum Rent or Additional Rent if Landlord exercisesany rights reserved in this Section. Landlord shall conduct its activities on the Premises hereunder in amanner that will minimize any inconvenience, annoyance or disturbance toTenant.  Landlord shall not be liable inany manner for any inconvenience, disturbance, loss of business, nuisance, orother damage arising out of Landlord’s entry on the Premises as provided inthis Section, except damages resulting from the negligent or intentionallywrongful acts or omissions of Landlord, or its authorized representatives.  The provisions of this Section 10.8 shallnot in any way limit Landlord’s emergency entry rights under Section 12.3.

 

**ARTICLE 11**

 

**INSURANCE**

 

11.1                           **Landlord’s Property Insurance****Obligations**.  Landlord shall maintain a policy ofinsurance equivalent to ISO special form coverage insuring the Shopping CenterTract for the benefit of Landlord in an amount equal to the full replacementcost thereof without coinsurance (excluding foundation, grading and excavationcosts) against:

 

(a)                                  Lossor damage by fire; and

 

(b)                                 Suchother risk or risks of a similar or dissimilar nature as determined byLandlord, including, but without limiting the generality of the foregoing,windstorms, hail, explosion, vandalism, malicious mischief, civil commotion,earthquake and flood and such other coverage as may be deemed appropriate byLandlord, provided such additional coverage is obtainable.

 

Except as otherwise expressly provided in this Lease, Landlord’sinsurance obligations shall in no way limit or modify any of the obligations ofTenant under any provision of this Lease. Tenant shall be obligated to pay the Rent or other charges to be paidfor by Tenant as called for hereunder in the event of damage to or destructionof the Premises or the Shopping Center Tract if such damage or destruction isoccasioned by the willful act or omission of Tenant or its agents oremployees.  Insurance premiums paid byLandlord for insurance coverage required under this Article 11 shall be aportion of the “Operating Expenses” described in Article 5 hereof.

 

11.2                           **Tenant’s Property Insurance****Obligations**.  Tenant shall maintain at its sole expense apolicy of insurance equivalent to ISO special form coverage insuring all of itsmachinery, equipment, furniture, fixtures, all leasehold improvements andalterations, personal property (including also property under the care,custody, or control of Tenant, except the Landlord’s property) and businessinterests that may be located in, upon or about the Premises insured for thebenefit of Tenant in an amount equal to the full replacement cost thereofwithout coinsurance against:

 

(a)                                  Lossor damage by fire; and

 

(b)                                 Suchother risk or risks of a similar or dissimilar nature as are now, or may in thefuture be, customarily covered with respect to a tenant’s machinery, equipment,furniture, fixtures, all leasehold improvements and alterations, personalproperty and business located in a building similar in connection, generallocation, use, occupancy and design to the Shopping Center Tract, including,but without limiting the generality of the foregoing, windstorms, hail, explosions,vandalism, theft, malicious mischief, civil commotion, water damage of anytype, including sprinkler leakage, bursting of pipes, or explosion in an amountnot less than the replacement cost thereof and such other coverage as Tenant orLandlord may deem appropriate or necessary.

 

The proceeds ofsuch insurance shall be used for the repair or replacement of the property soinsured, except that the proceeds applicable to any leasehold improvements oralterations shall be paid to Landlord and Landlord shall be named as a losspayee in such insurance policy with respect to any such proceeds for leaseholdimprovements and alterations.  Tenantwaives, releases and discharges Landlord from all claims or demands whatsoeverwhich Tenant may have or acquire arising out of damage to or destruction of themachinery, equipment, furniture, fixtures, personal property and business ofTenant occasioned by fire or other cause, whether such claim or demand mayarise because of the negligence or fault of Landlord and its agents,contractors, employees, licensees or otherwise, and Tenant agrees to look tothe insurance coverage only in the event of such loss.

 

11.3                           **Landlord’s Liability Insurance****Obligations**.  Landlord shall, as a portion of theOperating Expenses defined in Article 5, maintain, for its benefit and thebenefit of its managing agent, commercial general liability insurance againstclaims for personal injury, death or property damage occurring upon, in orabout the Shopping Center Tract, such insurance to afford protection toLandlord and its managing agent.

 

11.4                           **Tenant’s Liability Insurance****Obligations**.  Tenant shall, at Tenant’s sole cost andexpense but for the mutual benefit of Landlord, its managing agent and Tenant,maintain commercial general liability insurance against claims for personalinjury, death or property damage occurring upon, in or about the Premises(including so-called “Dram Shop” or liquor liability coverage if the Premisesare permitted to be used for serving or dispensing alcoholic beverages;provided, however, nothing herein contained shall be deemed as permitting suchuse without the consent of Landlord, in its sole and

 

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absolute discretion), such insurance to afford protection to Landlord,its managing agent and Tenant with a combined single limit per occurrence ofnot less than Three Million and No/100 Dollars ($3,000,000.00).  Such policies of insurance shall be writtenin companies reasonably satisfactory to Landlord, naming Landlord, its managingagent and any other parties designated by Landlord as additional insuredsthereunder, and such policies, or a memorandum or certificate of suchinsurance, including an additional insured endorsement and any otherendorsements required by Landlord shall be delivered to Landlord endorsed“Premium Paid” by the company or agency issuing the policy or accompanied byother evidence satisfactory to Landlord that the premium has been paid.  All policies shall indicate they may not becanceled or modified without thirty (30) days prior written notice toLandlord.  At such time as insurancelimits required of tenants in shopping centers comparable to the ShoppingCenter in the area in which the Shopping Center is located are generallyincreased to greater amounts, Landlord shall have the right to reasonablyrequire such greater limits as may then be customary.  Tenant agrees to include in such policy the contractual liabilitycoverage insuring Tenant’s indemnification obligations provided forherein.  Any such coverage shall beindicated in the policy as primary to any liability coverage secured byLandlord.  Such insurance shall alsoafford coverage for all claims based upon acts, omissions, injury or damage, whichclaims occurred or arose (or the onset of which occurred or arose) in whole orin part during the policy period.

 

11.5                           **Additional Insurance Obligations****of Tenant**.  In addition to the other insuranceobligations of Tenant as set forth in this Article 11, Tenant agrees throughoutthe term of this Lease to maintain in full force and effect (i) business incomeinsurance in such amounts as will reimburse Tenant for loss of earning for aperiod of at least twelve (12) months, (ii) plate glass insurance covering allplate glass on the Premises at full replacement value, and (iii) worker’scompensation insurance and employer’s liability insurance in the greater amountof One Million Dollars ($1,000,000.00) or the amounts required by law.

 

11.6                           **Indemnification**.  Tenant shall indemnify, protect, defend andhold Landlord and Landlord’s directors, officers, shareholders, employees,agents, lenders and managing agent (collectively “Landlord Parties”) harmlessfrom and against any and all liability, loss, cost or expense, including,without limitation, attorneys’ fees and costs (including those incurred inenforcing this provision) that may arise from a third party claim that (i)arises from any breach or default on the part of Tenant in the performance ofany covenant or agreement on the part of Tenant to be performed pursuant to theterms of this Lease; (ii) arises out of any bodily injury, personal injury orproperty damage occurring to such third party at the Premises, even ifresulting from the negligent act or omissions of Landlord or of Landlord Parties;or (iii) is caused by Tenant or Tenant’s employees, representatives, agents,contractors, or licensees.  In case anyaction or proceeding is brought against Landlord or Landlord Parties and such aclaim is a claim from which Tenant is obligated to indemnify Landlord pursuantto this Section, Tenant, upon notice from Landlord, shall resist and defend theaction or proceeding by counsel reasonably satisfactory to Landlord.  The obligations of Tenant under this Sectionshall survive termination of this Lease.

 

11.7                           **Waiver**. Notwithstanding anything to the contrary contained in this Lease,neither party, nor its officers, directors, shareholders, employees, agents,nor invitees, nor, in the case of Tenant, its subtenants, shall be liable tothe other party or to any insurance company (by way of subrogation orotherwise) insuring the other party for any loss or damage to any building,structure, or other tangible property, when such loss is caused by any of theperils which are or could be insured against under a standard ISO special formcoverage policy, even though the loss or damage might have been caused by thenegligence of such party, its employees and agents, but excluding any loss ordamage caused by intentionally wrongful actions or omissions.  If, by reason of the foregoing waiver,either party is unable to obtain the insurance required under this Article 11,the waiver shall be deemed not to have been made by that party.  If either party is unable to obtain the insurancerequired under this Article 11 without the payment of any addition premiumtherefor, then unless the party claiming the benefit of the waiver agrees topay the other party for the cost of the additional premium within thirty (30)days after notice setting forth the requirement and the amount of theadditional premium, the waiver will be of no force and effect between the otherparty and the claiming party.  Eachparty shall use reasonable efforts to obtain the insurance required under thisArticle 11 from a company that does not charge an additional premium or, ifthat is not possible, from a company that charges the lowest additionalpremium.  Each party shall give theother party notice at any time when it is unable to obtain insurance with sucha waiver of subrogation without the payment of an additional premium, and theforegoing waiver shall be effective until thirty (30) days after notice isgiven.  Each party represents that itscurrent insurance policies allow such waiver.

 

11.8                           **Tenant’s Waiver**.  Tenant agrees, to the extent permitted bylaw, except for claims due solely to Landlord’s intentional misconduct, thatLandlord or Landlord Parties shall not be liable, and Tenant waives all claims,for damage to property and business sustained during the term of this Lease byTenant occurring in or about the Shopping Center, resulting directly orindirectly from any existing or future condition, defect, matter or thing inthe Premises, the Shopping Center or any part thereof, or from equipment orappurtenances becoming out of repair, or from accidents or from any occurrenceor act or omission of Landlord or Landlord Parties or any tenant or occupant ofthe Shopping Center or any other person. This paragraph shall apply especially, but not exclusively, to damagecaused as aforesaid or by the flooding of basements or other sub-surface areas,or by refrigerators, sprinkling devices, air conditioning apparatus, water,snow, frost, steam, excessive heat or cold, falling plaster, broken glass,sewage, gas, odors or noise, or the bursting or leaking of pipes or plumbingfixtures, and shall apply equally, whether any such damage results from the actor omission of other tenants or occupants in the Shopping Center or any otherpersons, and whether such damage be caused by or result from any of the

 

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aforesaid, or shall be caused by or result from other circumstances ofa similar or dissimilar nature.  Theforegoing waiver shall not apply to damage that is covered by Landlord’sinsurance required to be carried under this Article 11.

 

11.9                           **Deductible**. Anything herein to the contrary notwithstanding, in the event any damageto the Shopping Center Tract results from any act or omission of Tenant or itsagents, contractors, employees, invitees, customers or licensees, and all orany portion of Landlord’s loss is deductible, Tenant shall pay to Landlord theamount of such deductible loss (not to exceed $2,500 per event).

 

11.10                     **Tenant’s Property**.  All property in the Shopping Center orwithin the Premises belonging to Tenant or its agents, contractors, employees,licensees, customers or invitees shall be at the risk of Tenant only.  Landlord shall not be liable for damagethereto or theft, misappropriation or loss of such property, and Tenant agreesto defend and hold Landlord Parties harmless and indemnify them against claimsand liability for injuries to such property. The foregoing limitation on liability shall not apply to damage or lossthat is covered by Landlord’s insurance required to be carried under thisArticle 11.  In addition, Tenantacknowledges and understands that safety and security devices, services andprograms provided by Landlord, if any, while intended to deter crime and ensuresafety, may not in any given instance prevent theft or other criminal acts, orensure safety of persons or property and that any risk that any safety orsecurity device, service or program may not be effective, or may malfunction,or may be circumvented by a criminal, is assumed by Tenant and that Landlordshall not have any responsibility or liability for providing or failing toprovide any of the foregoing.

 

11.11                     **Blanket Insurance****Policy**.  Anything herein to the contrarynotwithstanding, Tenant shall not be precluded from taking out insurance of thekind and in the amount provided for in this Article under a blanket insurancepolicy or policies (certificates thereof reasonably satisfactory to Landlordshall be delivered to Landlord) which may cover other properties owned oroperated by Tenant as well as the Premises; provided, however, that suchpolicies of blanket insurance shall, as respects the Premises, contain thevarious provisions required of such an insurance policy by the foregoingprovisions of this Article and, for liability insurance, must be made specificallyapplicable to the Premises and this Lease on a “per location” basis and, forproperty insurance, must include “agreed amount, no coinsurance” provisions.

 

11.12                     **Commencement of Insurance****Obligations**.  Commencing as of the Delivery Date orTenant’s earliest possession of the Premises and continuing during the Term,Tenant shall, at its sole cost and expense, procure, pay for and keep in fullforce and effect all of the types of insurance required under this Article 11,in at least the amounts and in the form specified herein.

 

11.13                     **Increased Premiums Due****to Use ofPremises**.  Tenant shall notdo any act in or about the Premises which will increase the insurance ratesupon the building of which the Premises are a part.  Tenant agrees to pay to Landlord upon demand the amount of anyincrease in premiums for insurance resulting from Tenant’s use of the Premises,whether or not Landlord shall have consented to the act on the part of Tenant.

 

11.14                     **Failure to Provide****Evidence of Insurance**.  In the event Tenant fails to provideLandlord with evidence of insurance required under this Article, Landlord may,but shall not be obligated to, without further demand upon Tenant, and withoutwaiving or releasing Tenant from any obligation contained in this Lease, obtainsuch insurance and Tenant agrees to repay, upon demand all such sums incurredby Landlord in effecting such insurance. All such sums shall become a part of the Additional Rent payablehereunder, but no such payment by Landlord shall relieve Tenant from anydefault under this Lease.

 

**ARTICLE 12**

 

**CERTAIN RIGHTS RESERVED BY LANDLORD**

 

Landlord reservesthe following rights exercisable without notice and without liability to Tenant(including but not limited to a right of entry to effectuate the followingrights) and without effecting an eviction, constructive or actual, ordisturbance of Tenant’s use or possession, or giving rise to any claim forsetoff or abatement of rent:

 

12.1                           **Regulate Heavy****Equipment**.  To approve the weight, size and location ofsafes and other heavy equipment and articles in and about the Premises and theShopping Center and to require all such items to be moved into and out of theShopping Center and the Premises only at such times and in such manner asLandlord shall direct in writing.

 

12.2                           **Exclusive Businesses**.  Subject to Section 6.2 of this Lease, togrant to anyone the exclusive right to conduct any particular business orundertaking in the Shopping Center.

 

12.3                           **Emergency Entry**.  Notwithstanding anything to the contrary inthis Lease, Landlord and its agents may enter the Premises at any time in caseof emergency and shall have the right to use any and all means which Landlordmay deem proper to open such doors during an emergency in order to obtain entryto the Premises.  Any entry to thePremises obtained by Landlord in the event of an emergency shall not, under anycircumstances, be construed or deemed to be a forcible or unlawful entry into,or detainer of, the Premises, or to be an eviction of Tenant from the Premisesor any portion thereof.

 

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12.4                           **Exhibition of****Premises**.  Tenant shall permit Landlord and its agents,upon reasonable notice, to enter and pass through the Premises or any partthereof at reasonable times during normal business hours to:  (a) post notices of nonresponsibility; (b)exhibit the Premises to holders of encumbrances on the interest of Landlordunder the Lease and to prospective purchasers, mortgagees or Tenants of theBuilding; and (c) during the period of six (6) months prior to the expirationof the Lease Term or upon the termination of the Lease or Tenant’s vacation orabandonment of the Premises, exhibit the Premises to prospective Tenantsthereof.  In addition to the foregoing,Landlord may post customary “For Sale” or “For Lease” signs on thePremises.  If during the last month ofthe Lease Term, Tenant shall have removed substantially all of Tenant’sproperty and personnel from the Premises, Landlord may enter the Premises andrepair, alter, and redecorate the same, without abatement of Rent and withoutliability to Tenant; and such acts shall have no effect on this Lease.

 

12.5                           **Right of Landlord to****Perform**.  All covenants and agreements to be performedby Tenant under any of the terms of this Lease shall be performed by Tenant atTenant’s sole cost and expense and without any abatement of Rent.  If Tenant shall fail to pay any sum ofmoney, other than Rent due Landlord, required to be paid by it hereunder or shallfail to perform any other act on its part to be performed hereunder, including,but not limited to, the failure to commence and complete repairs promptly andadequately, and the failure to remove any liens or otherwise to perform any actor fulfill any obligation required of Tenant under this Lease, Landlord may,but shall not be obligated to do so, and without waiving or releasing Tenantfrom any obligations of Tenant, make any such payment or perform any such otheract on Tenant’s part to be made or performed as in this Lease provided.  All sums so paid by Landlord and allnecessary incidental costs, together with an administrative charge in theamount of fifteen percent (15%) of any costs incurred by Landlord, and interestat the rate specified in Article 9 accruing from the date paid or incurred byLandlord until reimbursed to Landlord by Tenant, shall be payable to Landlordby Tenant as Rent on demand and Tenant covenants to pay all such sums.  Landlord shall have (in addition to anyother right or remedy of Landlord) the same rights and remedies in the event ofTenant’s nonpayment of such sums, as in the case of default by Tenant in thepayment of Rent to Landlord.

 

**ARTICLE 13**

 

**ALTERATIONSAND IMPROVEMENTS**

 

13.1                           **Procedure For****Tenant’s Improvements**.  Tenant shall not make any modifications, improvements,alterations, additions or installations in or to the Premises (hereinafterreferred to as the “Work”) without Landlord’s prior written consent, whichconsent shall not be unreasonably withheld. Along with any request for Landlord’s consent and before commencement ofthe Work or delivery of any materials to be used in the Work to the Premises orinto the Shopping Center, Tenant shall furnish Landlord with plans andspecifications, names and addresses of contractors, copies of contracts, necessarypermits and licenses, insurance certificates, evidence of safety programs, anindemnification in such form and amount as may be reasonably satisfactory toLandlord, a performance and payment bond executed by a commercial suretyreasonably satisfactory to Landlord and in an amount equal to the cost of theWork and the payment of all liens for labor and material arising therefrom, andsuch other information concerning the Work as Landlord may request.  Tenant agrees to defend and hold Landlordforever harmless from any and all claims and liabilities of any kind anddescription which may arise out of or be connected in any way with saidmodifications, improvements, alterations, additions or installations.  All Work shall be done only by contractorsor mechanics reasonably approved by Landlord and at such time and in suchmanner as Landlord may from time to time reasonably designate.  All Work done by Tenant, its agents,employees, or contractors shall be done in such a manner as to avoid labordisputes.  Tenant shall pay the cost ofall such modifications, improvements, alterations, additions or installations(including a reasonable charge for Landlord’s services and for Landlord’sinspection and engineering time), and also the cost of painting, restoring, or repairingthe Premises and the Shopping Center occasioned by such modifications,improvements, alterations, additions or installations.  Upon completion of the Work, Tenant shallfurnish Landlord with contractor’s affidavits or unconditional lien releases andfull and final waivers of liens, and receipted bills covering all labor andmaterials expended and used.  The Workshall comply with all insurance requirements and all laws, ordinances, rulesand regulations of all governmental authorities including without limitationthe Act (as herein defined) and shall be constructed in a good and workmanlikemanner.  Tenant shall permit Landlord toinspect construction operations in connection with the Work at any time.  Landlord shall have the right to immediatelycease construction operations if Tenant fails to meet the requirements of thisArticle.  Tenant shall not be allowed tomake any alterations, modifications, improvements, additions, or installationsif such action results or would result in a labor dispute or otherwise wouldmaterially interfere with Landlord’s operation of the Shopping Center.  Landlord, by written notice to Tenant givenat or prior to termination of this Lease, may require Tenant to remove any improvements,additions or installations installed by Tenant in the Premises at Tenant’s solecost and expense, and repair or restore any damage caused by the installationand removal of such improvements, additions, or installations; provided,however, the only improvements, additions or installations which Tenant shallremove shall be those specified in such notice.  Notwithstanding anything to the contrary contained herein, Tenantshall be permitted to perform Work not affecting the structural, electrical ormechanical systems of the Premises or the Shopping Center which does not in theaggregate cost more than $25,000.00 in any twelve (12) month period (butsubject to all the other terms of this Article other than (i) the requirementsset forth in the second sentence of this Article and (ii) furnishing Landlordwith contractors’ affidavits and lien waivers if requested by Landlord),provided Tenant notifies Landlord at least ten (10) days prior to thecommencement of such Work and delivers to Landlord a copy of the plans for suchwork, if Tenant has arranged to have plans prepared therefor.

 

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13.2                           **Bond Requirements**.  All bonds required to be obtained by Tenantpursuant to the terms of this Lease shall be California private work bondsissued by an admitted corporate surety reasonably acceptable to Landlord andshall name Landlord as a dual obligee. Any bonds obtained by Tenant shall be recorded in accordance withCalifornia Civil Code Section 3235 et seq., or any successor statute orlaw.  Upon obtaining each bond requiredunder this Lease, Tenant shall promptly submit a copy thereof to Landlord.

 

13.3                           **Written Notification****Required**.  Tenant will notify Landlord in writingthirty (30) days prior to commencing any alterations, additions or improvementsto the Premises which have been approved by Landlord so that Landlord shallhave the right to record and post notices of non-responsibility on thePremises.

 

13.4                           **Freedom From****Liens**. Tenant shall keep the Premises, all other property therein and the ShoppingCenter free from any liens arising out of any Work performed, materialfurnished or obligations incurred by Tenant, and Tenant shall indemnify,protect, defend and hold Landlord harmless from any liens and encumbrancesarising out of any Work performed or material furnished by or at the directionof Tenant.  In the event that Tenantshall not, within ten (10) days following the imposition of any such lien,cause such lien to be released of record by payment or posting of a properbond, Landlord shall have, in addition to all other remedies provided hereinand by law, the right, but not the obligation, to cause the same to be releasedby such means as it shall deem proper, including payment of and/or defenseagainst the claim giving rise to such lien. All such sums paid by Landlord and all expenses incurred by it inconnection therewith, including attorneys’ fees and costs, shall be payable asAdditional Rent to Landlord by Tenant on demand with interest at the ratespecified in Article 9 accruing from the date paid or incurred by Landlorduntil reimbursed to Landlord by Tenant.

 

13.5                           **Alterations Part****of Premises**.  Any additions to, or alterations of, thePremises, except as specified in Tenant’s notice to Landlord, shall become atonce a part of the Premises and belong to Landlord without compensation toTenant provided, however, that notwithstanding the foregoing, Landlord shallhave the right within thirty (30) days after the expiration or soonertermination of this Lease to require Tenant to remove, at Tenant’s sole costand expense any alterations installed by Tenant and Tenant shall promptlycomplete such removal, repairing any damage caused thereby to the reasonablesatisfaction of Landlord.

 

**ARTICLE 14**

 

**ASSIGNMENTAND SUBLETTING**

 

14.1                           **Restriction**.  Exceptfor any Permitted Transfer (as defined below), without the prior writtenconsent of Landlord, Tenant shall not, either voluntarily or by operation oflaw, assign, encumber, or otherwise transfer this Lease or any interest herein,or sublet the Premises or any part thereof, or permit the Premises to beoccupied by anyone other than Tenant or Tenant’s employees (any suchassignment, encumbrance, subletting, occupation or transfer is hereinafterreferred to as a “Transfer”).  Forpurposes of this Lease, the term “Transfer” shall also include (a) if Tenant isa partnership, the withdrawal or change voluntarily, involuntarily or byoperation of law, of a majority of the partners, or a transfer of a majority ofpartnership interests, within a twelve month period, or the dissolution of thepartnership, and (b) if Tenant is a closely held corporation (i.e., whose stockis not publicly held and not traded through an exchange or over the counter) ora limited liability company, the dissolution, merger, consolidation, division,liquidation or other reorganization of Tenant, or within a twelve month period:(i) the sale or other transfer of more than an aggregate of 50% of the votingsecurities of Tenant (other than to immediate family members by reason of giftor death) or (ii) the sale, mortgage, hypothecation or pledge of more than anaggregate of 50% of Tenant’s net assets. A Transfer in violation of the foregoing shall be void and, atLandlord’s option, shall constitute a material breach of this Lease.  For purposes of this Article 14, a“Permitted Transfer” means Tenant’s assignment of all of its rights under thisLease to any corporation, partnership or other business entity which either (a)controls, is controlled by, or is under common control with Tenant, (b) resultsfrom a merger or consolidation of or with Tenant, or (c) acquires substantiallyall the assets of Tenant; provided that in each case all of the followingconditions are met: (i) such assignee has a net worth at least equal to thegreater of (1) the net worth of Tenant as of the Effective Date or (2) the networth of Tenant as of the date of such assignment, as evidenced by financialstatements prepared by an unbiased third party accountant in accordance withgenerally accepted accounting principles provided to Landlord at least ten (10)business days prior to the date of the proposed Permitted Transfer; (ii) thebusiness and operations of the assignee qualify as the Permitted Use; (iii) noEvent of Default by Tenant exists under this Lease at the time of the proposedPermitted Transfer; (iv) Tenant gives Landlord not less than ten (10) businessdays’ prior written notice of such assignment; and (v) Landlord receives awritten instrument reasonably acceptable to Landlord whereby the assignee assumesTenant’s obligations under this Lease within five (5) business days after theeffective date of the assignment.  Forpurposes of the preceding sentence, the term “control” means not less than afifty percent (50%) equity interest in the applicable corporation, partnershipor other business entity.

 

14.2                           **Notice to****Landlord**. Except for any Permitted Transfer, if Tenant desires to assign thisLease or any interest herein, or to sublet all or any part of the Premises,then at least thirty (30) days but not more than one hundred eighty (180) daysprior to the effective date of the proposed assignment or subletting, Tenantshall submit to Landlord in connection with Tenant’s request for Landlord’sconsent:

 

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(a)                                  Astatement containing (i) the name and address of the proposed assignee orsubtenant; (ii) such financial information with respect to the proposedassignee or subtenant as Landlord shall reasonably require; (iii) the type ofuse proposed for the Premises; and (iv) all of the principal terms of theproposed assignment or subletting; and

 

(b)                                 Four(4) originals of the assignment or sublease on a form approved by Landlord andfour (4) originals of the Landlord’s Consent to Sublease or Assignment andAssumption of Lease and Consent in a form acceptable to Landlord.

 

14.3                           **Landlord’s Recapture Rights**.  Except for any Approved Sublease (as definedbelow) or Permitted Transfer, at any time within twenty (20) business daysafter Landlord’s receipt of all (but not less than all) of the information anddocuments described in Section 14.2 above, Landlord may, at its option bywritten notice to Tenant, elect to: (a) sublease the Premises or the portionthereof proposed to be sublet by Tenant upon the same terms as those offered tothe proposed subtenant; (b) take an assignment of the Lease upon the same termsas those offered to the proposed assignee; or (c) terminate the Lease in itsentirety or as to the portion of the Premises proposed to be assigned orsublet, with a proportionate adjustment in the Rent payable hereunder if theLease is terminated as to less than all of the Premises.  If Landlord does not exercise any of theoptions described in the preceding sentence, then, during the above-describedtwenty (20) business day period, Landlord shall either consent or deny itsconsent to the proposed assignment or subletting.

 

14.4                           **Landlord’s Consent;****Standards**.  In determining whether to grant its consentto the Tenant’s sublet or assignment request (excluding any PermittedTransfer), Landlord may consider any reasonable factor.  Landlord and Tenant agree that failure tosatisfy any one of the following factors, or any other reasonable factor, willbe reasonable grounds for denying Tenant’s request:

 

(a)                                  financialstrength of the proposed subtenant/assignee, as evidenced by audited financialstatements certified by an independent public accountant, must be at leastequal to that of the existing Tenant as of the date hereof and as of the dateof assignment;

 

(b)                                 businessreputation of the proposed subtenant/assignee must be satisfactory to Landlord;

 

(c)                                  useof the Premises by the proposed subtenant/assignee (i) will not violate orcreate any potential violation of any laws and will be for only the PermittedUse; (ii) will not violate any other agreements affecting the Premises,Landlord or other tenants at the Shopping Center including but not limited toexclusive agreements entered into between Landlord and other tenants or ownersat the Shopping Center and the Declaration; (iii) will complement Landlord’stenant mix at the Shopping Center; and (iv) will not constitute a nuisance orwould disturb or endanger other tenants of the Shopping Center or interferewith their use of their respective premises, or which would tend to injure thereputation of the Shopping Center;

 

(d)                                 percentagerents of the proposed subtenant/assignee, or the prospect of percentage rents,must be at least equal to those as the existing Tenant;

 

(e)                                  managerialand operational skills of the proposed subtenant/assignee must be at leastequal to those of the existing Tenant; and

 

(f)                                    Tenantagrees that its personal business skills and philosophy were an importantinducement to Landlord for entering into this Lease and that Landlord mayreasonably object to the transfer of the Premises to another tenant whoseproposed use, while permitted by this Lease, would involve a different quality,manner or type of business skill than that of Tenant.

 

Notwithstandinganything to the contrary contained within this Section, Landlord shall consentto a sublet request by Tenant in the event that (i) such request is made afterthe earlier to occur of (1) October 1, 2002 or (2) the date on which allleasable space in the Shopping Center is leased to third party tenants and allsuch tenants have taken occupancy of their respective premises and commencedthe operations of their respective businesses within same, (ii) the subtenantthereunder shall not be permitted to occupy any portion of the Premises untilafter December 31, 2002, (iii) at no time shall such subtenant be permitted touse any portion of the subleased premises for any food related use, and (iv) atall times during the term of such sublease, the annual minimum rent (exclusiveof “additional rent”, as such term is defined in this Lease) that suchsubtenant shall be required to pay shall be equal to or greater than $2.75 persquare foot of the subleased premises (the “Approved Sublease”).

 

14.5                           **Additional Rent**.  If Landlord consents to any assignment orsubletting hereunder, one-half (1/2) of the amount by which all sums or othereconomic consideration received by Tenant in connection with such assignment orsubletting (after deducting Tenant’s reasonable costs [which costs may includecommissions payable by Tenant to third party brokers, architectural,engineering, design and space planning costs, and a reasonable tenantimprovement allowance to such assignee/sublessee] incurred in connection withsuch assignment or subletting), whether denominated as Rent or otherwise,exceeds, in the aggregate, the total sum which Tenant is obligated to payLandlord under this Lease (prorated to reflect obligations allocable to lessthan all of the Premises under a sublease) shall be paid to Landlord promptlyafter receipt as additional Rent under the Lease without affecting or reducingany other obligation of Tenant hereunder.

 

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14.6                           **Landlord’s Costs**.  If Tenant shall Transfer this Lease or allor any part of the Premises or shall request the consent of Landlord to anyTransfer (including, without limitation, a Permitted Transfer), Tenant shallpay to Landlord as Additional Rent Landlord’s costs related thereto, includingLandlord’s reasonable attorneys’ fees and a minimum fee to Landlord of FiveHundred Dollars ($500.00).

 

14.7                           **Continuing Liability****of Tenant**.  Notwithstanding any Transfer, Tenant shallremain as fully and primarily liable for the payment of Rent and for theperformance of all other obligations of Tenant contained in this Lease to thesame extent as if the Transfer had not occurred; provided, however, that anyact or omission of any transferee, other than Landlord, that violates the termsof this Lease shall be deemed a violation of this Lease by Tenant.

 

14.8                           **Non-Waiver**.  Theconsent by Landlord to any Transfer shall not relieve Tenant, or any personclaiming through or by Tenant, of the obligation to obtain the consent ofLandlord, pursuant to this Article 14, to any further Transfer.  In the event of an assignment or subletting,Landlord may collect Rent from the assignee or the subtenant without waivingany rights hereunder and collection of the Rent from a person other than Tenantshall not be deemed a waiver of any of Landlord’s rights under this Article 14,an acceptance of assignee or subtenant as Tenant, or a release of Tenant fromthe performance of Tenant’s obligations under this Lease.  If Tenant shall default under this Lease andfail to cure within the time permitted, Landlord is irrevocably authorized, as Tenant’sagent and attorney-in-fact, to direct any transferee to make all payments underor in connection with the Transfer directly to Landlord (which Landlord shallapply towards Tenant’s obligations under this Lease) until such default iscured.

 

**ARTICLE 15**

 

**DAMAGE BYFIRE OR OTHER CASUALTY**

 

15.1                           **Tenantable Within****180 Days**.  If fire or other casualty shall render thewhole or any material portion of the Premises untenantable, and the Premisescan reasonably be expected to be made tenantable within one hundred eighty(180) days from the date of such event, and Landlord receives insuranceproceeds adequate to make the repair then Landlord shall repair and restore thePremises and the Shopping Center Tract to as near their condition prior to thefire or other casualty as is reasonably possible within such one hundred eighty(180) day period (subject to delays or causes beyond Landlord’s reasonablecontrol) and notify Tenant that it will be doing so, such notice to be mailedwithin ninety (90) days from the date of such damage or destruction, and thisLease shall remain in full force and effect, but the Rent for the period duringwhich the Premises are untenantable shall be abated pro rata (based upon theportion of the Premises which is untenantable).

 

15.2                           **Not Tenantable Within****180 Days**.  If fire or other casualty shall render thewhole or any material part of the Premises untenantable and the Premises cannotreasonably be expected to be made tenantable within one hundred eighty (180)days from the date of such event or Landlord does not receive or expect toreceive insurance proceeds adequate to make the repair, then Landlord shallhave the option to elect whether to repair or not repair, by providing writtennotice of such election to Tenant within ninety (90) days from the date of suchdamage or destruction.  If Landlordelects to repair, then this Lease shall remain in full force and effect withRent prorated as provided in Section 15.1 above and if Landlord elects toterminate, then the Lease shall be terminated on the date set forth inLandlord’s notice to Tenant which shall be not more than thirty (30) days afterthe date of the notice.

 

15.3                           **Shopping Center Substantially****Damaged**.  In the event that more than fifty percent(50%) of the value of the Shopping Center Tract, or fifteen percent (15%) ofthe value of the Premises, is damaged or destroyed by fire or other casualtyand irrespective of whether such damage or destruction can be made tenantablewithin one hundred eighty (180) days thereafter, then at Landlord’s option, bywritten notice to Tenant, mailed within ninety (90) days from the date of suchdamage or destruction, Landlord may terminate this Lease effective upon a datewithin ninety (90) days from the date of such notice to Tenant.

 

15.4                           **Landlord’s Repair****Obligations**.  If Landlord is required to or elects torepair as provided in this Article 15, then Landlord shall repair and restorethe Premises and the Shopping Center with all due diligence and speed (subjectto delays for causes beyond Landlord’s reasonable control) and the Rent for theperiod during which the Premises are untenantable shall be abated pro rata(based upon the portion of the Premises which is untenantable).  In no event shall Landlord be obligated torepair or restore any special equipment or improvements installed by Tenant atTenant’s expense.

 

15.5                           **Rent Apportionment**.  In the event of a termination of this Leasepursuant to this Article, Rent and other charges shall be apportioned on a perdiem basis and paid to the date of the fire or other casualty.

 

15.6                           **Waivers of California****Statutes**.  Tenant acknowledges and agrees that theprovisions of this Article 15 shall govern the rights and obligations ofLandlord and Tenant in the event of damage to or destruction of the premises.  Tenant waives the protection of any statute,code or judicial decision which grants a Tenant the right to terminate a leasein the event of damage or destruction of the Premises, including, but notlimited to, the provisions of Sections 1932(2) and 1933(4) of the Civil Code orany successor statute or law.  Tenantagrees that the provisions of this Article shall govern the rights andobligations of Landlord and Tenant in the event of any damage or destruction ofthe Premises.

 

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**ARTICLE 16**

 

**EMINENTDOMAIN**

 

16.1                           **Tenant’s Termination**.  If the whole of or any substantial part ofthe Premises is taken by any public authority under the power of eminentdomain, or taken in any manner for any public or quasi-public use, so as torender (in Tenant’s reasonable judgment) the remaining portion of the Premisesunsuitable for the purposes intended hereunder, the Term shall cease as of theday possession shall be taken by such public authority and Landlord shall makea pro rata refund of any prepaid Rent. All damages awarded for such taking under the power of eminent domain orany like proceedings shall belong to and be the property of Landlord, Tenanthereby assigning to Landlord its interest, if any, in said award.  In the event that twenty-five percent (25%)or more of the building area of the Shopping Center Tract or twenty-fivepercent (25%) or more of the value of the Shopping Center Tract or twenty-fivepercent (25%) of the Common Area is taken by public authority under the powerof eminent domain, then, at Landlord’s option, by written notice to Tenant,mailed within sixty (60) days from the date possession shall be taken by suchpublic authority, Landlord may terminate this Lease effective upon a datewithin ninety (90) days from the date of such notice to Tenant.  Tenant shall not have the right to terminatethis Lease pursuant to the first sentence hereof unless (i) the business ofTenant conducted in the portion of the Premises taken cannot in Tenant’sreasonable judgment be carried on with substantially the same utility andefficiency in the remainder of the Premises (or any substitute space securableby Tenant pursuant to clause (ii) hereof); and (ii) Tenant cannot securesubstantially similar (in Tenant’s reasonable judgment) alternate space uponthe same terms and conditions as set forth in this Lease (including Rent fromLandlord in the Shopping Center Tract). Any notice of termination shall specify a date no more than sixty (60)days after the giving of such notice as the date for such termination.

 

16.2                           **Tenant’s Participation in Condemnation****Award andPartial Condemnations**. Anything in this Article 16 to the contrary notwithstanding, Tenantshall have the right to prove in any condemnation proceedings and to receiveany separate award which may be made for damages to or condemnation of Tenant’sgoodwill, movable trade fixtures, equipment, moving expenses and any otherinterest that would not reduce the award or payment to Landlord; provided,however, Tenant shall in no event have any right to receive any award for itsinterest in this Lease or for loss of leasehold.  Anything in this Article 16 to the contrary notwithstanding, inthe event of a partial condemnation of the Shopping Center Tract or the Premisesand this Lease is not terminated, Landlord shall, at its sole cost and expense,restore the Premises and Shopping Center Tract to a complete architectural unit(but Landlord shall not be required to restore or improve the Premises withimprovements in excess of the Leasehold Improvements (as herein defined), andthe Annual Minimum Rent and all other charges provided for herein during theperiod from and after the date of delivery of possession pursuant to suchproceedings to the termination of this Lease shall be reduced to a sum equal tothe product of the Annual Minimum Rent and all other charges provided forherein multiplied by a fraction, the numerator of which is the fair market rentof the Premises after such taking and after the same has been restored to acomplete architectural unit, and the denominator of which is the fair marketrent of the Premises prior to such taking. Tenant waives the protection of any statute, code or judicial decisionwhich grants to Tenant a right to any other compensation, in the event of ataking, including, but not limited to California Code of Civil ProcedureSections 1265.130, 1265.150 or any successor statutes or laws.

 

**ARTICLE 17**

 

**SURRENDER OFPREMISES**

 

17.1                           **Surrender of****Possession**.  On the last day of the Term of this Lease, or on the soonertermination thereof, Tenant shall peaceably surrender the Premises in goodcondition and repair consistent with Tenant’s duty to make repairs as hereinprovided.  On or before the last day ofthe Term or the date of sooner termination thereof, Tenant and Landlord shallarrange for a joint inspection of the Premises.  On or before the last day of the Term of this Lease, or the dateof sooner termination thereof, Tenant shall, at its sole cost and expense,remove all of its merchandise and trade fixtures and equipment from thePremises, and all property not removed shall be deemed abandoned.  Tenant hereby appoints Landlord its agent toremove all property of Tenant from the Premises upon termination of this Leaseand to cause its transportation and storage for Tenant’s benefit, all at thesole cost and risk of Tenant, and Landlord shall not be liable for damage,theft, misappropriation or loss thereof and Landlord shall not be liable in anymanner in respect thereto.  Tenant shallpay all costs and expenses of such removal, transportation and storage.  Tenant shall reimburse Landlord upon demandfor any expenses incurred by Landlord with respect to removal, transportation,or storage of abandoned property and with respect to restoring said Premises togood order, condition and repair.  Allmodifications, improvements, alterations, additions and fixtures, other thanTenant’s trade fixtures and equipment, which have been made or installed by eitherLandlord or Tenant upon the Premises shall remain the property of Landlord and,unless required to be removed by Tenant pursuant to Section 13.1, shall besurrendered with the Premises as a part thereof.  If the Premises are not surrendered at the end of the Term orsooner termination thereof, Tenant shall indemnify Landlord against loss orliability resulting from delay by Tenant in so surrendering the Premises,including, without limitation, claims made by any succeeding tenants founded onsuch delay and any attorneys’ fees resulting therefrom.  Tenant shall promptly surrender all keys forthe Premises to Landlord at the place then fixed for the payment of Rent andshall inform Landlord of combinations on any vaults, locks and safes left onthe Premises.

 

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17.2                           **Tenant Retaining Possession**.  In the event Tenant remains in possession ofthe Premises after expiration of this Lease, and without the execution of a newlease, but with Landlord’s written consent, Tenant shall be deemed to be occupyingthe Premises as a tenant from month-to-month, subject to all the provisions,conditions and obligations of this Lease insofar as the same can be applicableto a month-to-month tenancy, except that the Annual Minimum Rent and AdditionalRent shall be escalated to the greater of (i) one hundred fifty percent (150%)of the Annual Minimum Rent and Additional Rent payable by Tenant immediatelyprior to the expiration of this Lease, or (ii) Landlord’s then current Rent forthe Premises according to Landlord’s then current Rent rate schedule forprospective tenants.  In the eventTenant remains in possession after expiration of this Lease and without theexecution of a new Lease and without Landlord’s written consent, Tenant shallbe deemed to be occupying the Premises without claim of right, and Tenant shallpay Landlord for all costs arising out of loss or liability resulting fromdelay by Tenant in so surrendering the Premises as above provided and shall paya charge for each day of occupancy in an amount equal to the greater of (i)double the Annual Minimum Rent and Additional Rent (on a daily basis) thencurrently being charged by Landlord on new leases in the Shopping Center forspace similar to the Premises or (ii) double the Annual Minimum Rent and AdditionalRent (on a daily basis) payable by Tenant under this Lease immediately prior tothe expiration of this Lease.

 

**ARTICLE 18**

 

**DEFAULT -REMEDIES**

 

18.1                           **Covenants and Conditions**.  Tenant’s performance of each of Tenant’sobligations under this Lease is a condition as well as a covenant.  Tenant’s right to continue in possession ofthe Premises is conditioned upon such performance.  Time is of the essence in the performance of all covenants andconditions.

 

18.2                           **Events of****Default**. The occurrence of any one or more of the following events (in thisArticle sometimes called “Event of Default”) shall constitute a default andbreach of this Lease by Tenant:

 

18.2.1                  **Failure to****Pay**. If Tenant fails to pay any Annual Minimum Rent, or Additional Rentpayable under this Lease or fails to pay any obligation required to be paid byTenant when and as the same shall become due and payable and such defaultcontinues for a period of five (5) days after written notice from Landlordindicating such amount is due (which notice shall be deemed in lieu of and tosatisfy the provisions of California Code of Civil Procedure Section 1161 orany successor statute);

 

18.2.2                  **Vacation or Abandonment**.  If Tenant abandons or vacates the Premises;

 

18.2.3                  **Failure to Pay on****Three Occasions**.  If Tenant on three (3) separate occasions inany one calendar year, when on such occasions Rent or any other charge requiredto be paid by Tenant becomes due, fails to pay such Rent or such charge as andwhen due, where such failure continues for five (5) days after written noticethereof by Landlord to Tenant whether or not such Rent or other charge iseventually paid;

 

18.2.4                  **Failure to Perform**.  If Tenant fails to perform any of Tenant’snonmonetary obligations under this Lease for a period of thirty (30) days afterwritten notice from Landlord; provided that if more time is required tocomplete such performance, Tenant shall not be in default if Tenant commencessuch performance within the thirty (30)-day period and thereafter diligentlypursues its completion.  However,Landlord shall not be required to give such notice if Tenant’s failure toperform constitutes a non-curable breach of this Lease.  The notice required by this subsection isintended to satisfy any and all notice requirements imposed by law on Landlordand is not in addition to any such requirement; or

 

18.2.5                  **Prohibited Transfer**.  If Tenant, by operation of law or otherwise,violates the provisions of Article 14 hereof relating to assignment, sublease,mortgage or other transfer of Tenant’s interest in this Lease or in thePremises or in the income arising therefrom.

 

18.2.6                  **Failure to Comply with Environmental****Laws**.  Tenant, by operation of law or otherwise,violates the provisions of Section 6.8 relating to compliance withenvironmental laws.

 

18.2.7                  **Other Defaults**.  (i) If Tenant makes a general assignment orgeneral arrangement for the benefit of creditors; (ii) a petition foradjudication of bankruptcy or for reorganization or rearrangement is filed byor against Tenant and is not dismissed within thirty (30) days; (iii) if atrustee or receiver is appointed to take possession of substantially all ofTenant’s assets located at the Premises or of Tenant’s interest in this Leaseand possession is not restored to Tenant within thirty (30) days; or (iv) ifsubstantially all of Tenant’s assets located at the Premises or of Tenant’sinterest in this Lease is subjected to attachment, execution or other judicialor nonjudicial seizure which is not discharged within thirty (30) days.  If a court of competent jurisdictiondetermines that any of the acts described in this subsection does notconstitute an Event of Default and a trustee is appointed to take possession(or if Tenant remains a debtor in possession) and such trustee or Tenanttransfers Tenant’s interest hereunder, then Landlord shall receive, asAdditional Rent, the difference between the Rent (or any other consideration)paid in connection with such assignment or sublease and the Rent payable byTenant hereunder.  As used in this subsection,the term “Tenant” shall also mean any guarantor of Tenant’s Obligations underthis Lease.  If any such Event ofDefault shall occur, Landlord, at any time during the

 

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Continuance of any such Event of Default, may give written notice toTenant stating that this Lease shall expire and terminate on the date specifiedin such notice, and upon the date specified in such notice this Lease, and allrights of Tenant under this Lease, including all rights of renewal whetherexercised or not, shall expire and terminate, or in the alternative or inaddition to the foregoing remedy, Landlord may assert and have the benefit ofany other remedy allowed herein, at law, or in equity.

 

18.3                           **Landlord’s Remedies**.  On the occurrence of an Event of Default byTenant, and at any time thereafter, with or without notice or demand andwithout limiting Landlord in the exercise of any right or remedy which Landlordmay have, hereunder or under applicable law Landlord shall be entitled to thefollowing rights and remedies set forth below.

 

18.3.1                  **Termination of****Possession**.  Terminate Tenant’s right to possession ofthe Premises by any lawful means, in which case this Lease shall terminate andTenant shall immediately surrender possession of the Premises to Landlord.  In such event Landlord shall have theimmediate right to re-enter and remove all persons and property, and suchproperty may be removed and stored in a public warehouse or elsewhere at thecost of, and for the account of Tenant, all without service of notice or resortto legal process and without being deemed guilty of trespass, or becomingliable for any loss or damage which may be occasioned thereby.  In the event that Landlord shall elect to soterminate this Lease, then Landlord shall be entitled to recover from Tenantall damages incurred by Landlord by reason of Tenant’s default, including:

 

(a)                                  Theworth at the time of award of any unpaid Rent which had been earned at the timeof such termination; plus

 

(b)                                 Theworth at the time of award of the amount by which the unpaid Rent, which wouldhave been earned after termination until the time of award, exceeds thatportion of such Rent loss which Tenant proves could have been reasonablyavoided; plus

 

(c)                                  Theworth at the time of award of the amount by which the unpaid Rent for thebalance of the Term after the time of award exceeds the amount of such Rentloss which Tenant proves could have been reasonably avoided; plus

 

(d)                                 Anyother amount necessary to compensate Landlord for all the detriment proximatelycaused by Tenant’s failure to perform its obligation under this Lease or whichin the ordinary course of things would be likely to result therefrom,including, but not limited to, (i) the cost of restoring the Premises to thecondition required for the Opening Date, (ii) retaking possession of thePremises, including reasonable attorneys’ fees therefor, (iii) maintaining orpreserving the Premises after any default, (iv) preparing the Premises forreletting to a new Tenant, including repairs or alterations to the Premises,(v) any leasing commission, or (vi) any other costs necessary or appropriate torelet the Premises; plus

 

(e)                                  AtLandlord’s election, such other amounts in addition to or in lieu of theforegoing as may be permitted from time to time by applicable law.

 

As used inSubsections (a) and (b) above, “worth at the time of award” shall be computedby allowing interest at the Interest Rate, as specified in Article 9.  As used in Subsection (c) above, the “worthat the time of award” shall be computed by discounting such amount at thediscount rate of the Federal Reserve Bank of San Francisco at the time of awardplus one percentage point.  For purposesof this Article 18, “award” shall only mean an award made by a court of law orequity.

 

18.3.2                  **Re-Entry and****Removal**. In the event of any such default by Tenant, Landlord shall also have theright, with or without terminating this Lease, to re-enter the Premises toremove all persons and property from the Premises.  Such property may be removed and stored in a public warehouse orelsewhere at the cost of and for the account of Tenant.  If Landlord shall elect to re-enter thePremises, Landlord shall not be liable for damages by reason of such re-entry.

 

18.3.3                  **No Termination;****Recovery of Rent**.  If Landlord does not elect to terminate thisLease as provided in this Article then Landlord may, from time to time, recoverall Rent as it becomes due under this Lease. Because Tenant has the right to sublet or assign subject only to thereasonable limitations set forth in Article 14, Landlord has the remedydescribed in California Civil Code Section 1951.4 (Landlord may continue Leasein effect after Tenant’s breach and abandonment and recover Rent as it becomesdue).  At any time thereafter, Landlordmay elect to terminate this Lease and to recover damages to which Landlord isentitled.

 

18.3.4                  **Reletting the Premises**.  In the event that Landlord should elect toterminate this Lease and to relet the Premises, it may execute any new lease inits own name.  Tenant hereunder shallhave no right or authority whatsoever to collect any Rent from suchTenant.  The proceeds of any suchreletting shall be applied as follows:

 

(a)                                  First,to the payment of any indebtedness other than Rent due hereunder from Tenant toLandlord, including but not limited to storage charges or brokerage commissionsowing from Tenant to Landlord as the result of such reletting;

 

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(b)                                 Second,to the payment of the costs and expenses of reletting the Premises, includingalterations and repairs which Landlord, in its sole discretion, deemsreasonably necessary and advisable and reasonable attorneys’ fees incurred byLandlord in connection with the retaking of the said Premises and suchreletting;

 

(c)                                  Third,to the payment of Rent and other charges due and unpaid hereunder; and

 

(d)                                 Fourth,to the payment of future Rent and other damages payable by Tenant under thisLease.

 

18.3.5                  **Written Notice of****Termination Required**.  Landlord shall not be deemed to haveterminated this Lease and the Tenant’s right to possession of the leasehold orthe liability of Tenant to pay Rent thereafter to accrue or its liability fordamages under any of the provisions hereof, unless Landlord shall have notifiedTenant in writing that it has so elected to terminate this Lease.  Tenant covenants that the service byLandlord of any notice pursuant to the unlawful detainer statutes of the Stateof California and the Tenant’s surrender of possession pursuant to such noticeshall not (unless Landlord elects to the contrary at the time of, or at anytime subsequent to the service of, such notice, and such election be evidencedby a written notice to Tenant) be deemed to be a termination of this Lease orof Tenant’s right to possession thereof.

 

18.3.6                  **Remedies Cumulative;****No Waiver**.  All rights, options and remedies of Landlordcontained in this Lease shall be construed and held to be cumulative, and noone of them shall be exclusive of the other, and Landlord shall have the rightto pursue any one or all of such remedies or any other remedy or relief whichmay be provided by law whether or not stated in this Lease.  No waiver by Landlord of a breach of any ofthe terms, covenants or conditions of this Lease by Tenant shall be construedor held to be a waiver of any succeeding or preceding breach of the same or anyother term, covenant or condition therein contained.  No waiver of any default of Tenant hereunder shall be impliedfrom any omission by Landlord to take any action on account of such default ifsuch default persists or is repeated, and no express waiver shall affectdefault other than as specified in said waiver.  The consent or approval by Landlord to or of any act by Tenantrequiring Landlord’s consent or approval shall not be deemed to waive or renderunnecessary Landlord’s consent to or approval of any subsequent similar acts byTenant.

 

18.4                           **Legal****Costs**. Tenant shall reimburse Landlord, upon demand, for any costs or expensesincurred by Landlord in connection with any breach or default of Tenant underthis Lease, whether or not suit is commenced or judgment entered.  Such costs shall include, but not be limitedto:  legal fees and costs incurred forthe negotiation of a settlement, enforcement of rights or otherwise.  Tenant shall also indemnify, defend and holdLandlord harmless from all costs, expenses, demands and liability incurred byLandlord if Landlord becomes or is made a party to any claim or action (a)instituted by Tenant, or by any third party against Tenant, or by or againstany person holding any interest under or using the Premises by license of oragreement with Tenant; (b) for foreclosure of any lien for labor or materialfurnished to or for Tenant or such other person; (c) otherwise arising out ofor resulting from any act or transaction of Tenant or such other person; or (d)necessary to protect Landlord’s interest under this Lease in a bankruptcyproceeding, or other proceeding under Title 11 of the United States Code, asamended.  Tenant shall defend Landlordagainst any such claim or action at Tenant’s expense with counsel reasonablyacceptable to Landlord or, at Landlord’s election, Tenant shall reimburseLandlord for any legal fees or costs incurred by Landlord in any such claim oraction.

 

18.5                           **Landlord’s Consent**.  Tenant shall pay Landlord’s reasonableattorneys’ fees incurred in connection with Tenant’s request for Landlord’sconsent in connection with any act which Tenant proposes to do and whichrequires Landlord’s consent.

 

18.6                           **Waiver of Damages****for Re-entry**.  Tenant hereby waives all claims byLandlord’s re-entering and taking possession of the Premises or removing andstoring the property of Tenant as permitted under this Lease and will saveLandlord harmless from all losses, costs or damages occasioned Landlordthereby.  No such re-entry shall beconsidered or construed to be a forcible entry by Landlord.

 

18.7                           **Default By****Landlord**. Landlord’s failure to perform or observe any of its obligations under thisLease shall constitute a default by Landlord under this Lease only if suchfailure shall continue for a period of thirty (30) days (or the additionaltime, if any, that is reasonably necessary to promptly and diligently cure thefailure) after Landlord receives written notice from Tenant specifying thedefault.  The notice shall give inreasonable detail the nature and extent of the failure and shall identify theLease provisions containing the obligation or obligations.  If Landlord shall default in the performanceof any of its obligations under this Lease (after notice and an opportunity tocure as provided herein), Tenant may pursue any remedies available to it underlaw or this Lease, except that in no event shall Landlord be liable forpunitive damages, lost profits, business interruption, speculative,consequential or other indirect damages. In recognition of the fact that Landlord must receive timely payments ofRent and operate the Shopping Center, Tenant shall have no right of self-helpto perform repairs or any other obligation of Landlord, and shall have no rightto withhold, setoff or abate Rent.

 

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**ARTICLE 19**

 

**SUBORDINATION**

 

19.1                           **Lease Subordinate**.  This Lease shall be subject and subordinateto any mortgage, deed of trust or ground lease now or hereafter placed upon thePremises, the Shopping Center Tract, the Property, or any portion thereof byLandlord, its successors or assigns, and to amendments, replacements, renewalsand extensions thereof.  Tenant agreesto execute and deliver to Landlord a subordination, non-disturbance andattornment agreement in substantially the same form as **Exhibit “H”** attached hereto(“SNDA Agreement”).  Thereafter,Landlord will execute and deliver to the mortgage holder the SNDA Agreement andwill use commercially reasonable efforts to cause the mortgage holder toexecute the SNDA Agreement.  Landlordwill promptly provide Tenant with a fully executed copy of the SNDA Agreementonce it is received from the mortgage holder.

 

19.2                           **Attornment**.  Theabove subordination shall be effective without the necessity of the executionand delivery of any further instruments on the part of Tenant to effectuatesuch subordination.  Notwithstandinganything hereinabove contained in this Article 19, in the event the holder ofany mortgage, deed of trust or ground lease shall at any time elect to havethis Lease constitute a prior and superior lien to its mortgage, deed of trustor ground lease, then, and in such event, upon any such holder or Landlordnotifying Tenant to that effect in writing, this Lease shall be deemed priorand superior in lien to such mortgage, deed of trust, ground lease, whetherthis Lease is dated prior to or subsequent to the date of such mortgage, deed oftrust, ground lease and Tenant shall execute such attornment agreement or otherdocument as may be reasonably requested by said holder.

 

19.3                           **Tenant’s****Notice of Default**.  Tenant agrees to give any mortgagees, groundLandlords and/or trust deed holders (“Mortgagee”), by registered or certifiedmail, a copy of any notice of default served upon Landlord simultaneously withthe delivery of notice to Landlord, provided that prior to such notice Tenanthas been notified, in writing of the address of such Mortgagees.  Tenant further agrees that if Landlord shallhave failed to cure said default within the time period prescribed in thisLease, then such Mortgagee shall have an additional twenty (20) day period tocure such default or if such default cannot be cured within that time, thensuch additional time as may be necessary if within said 20-day period suchMortgagee has commenced and is diligently pursuing remedies to cure suchdefault (including but not limited to commencement of foreclosure proceedings,if necessary to effect such cure), in which event this Lease shall not beterminated while such remedies are being so diligently pursued.

 

19.4                           **Declarations**.  Tenant agrees that:  (a)as to its leasehold estate Tenant, and all persons in possession or holding underTenant, will conform to and will not violate the terms of the Declaration; and(b) this Lease is and shall be subordinate to the Declarations and anyamendments or modifications thereto now existing or, subject to Tenant’sapproval which shall not be unreasonably withheld, delayed or deferred.

 

**ARTICLE 20**

 

**BANKRUPTCYOR INSOLVENCY**

 

20.1                           **Bankruptcy**.  Tenantor Tenant’s guarantor, if any, shall not cause or give cause for theappointment of a trustee or a receiver of the assets of Tenant or Tenant’sguarantor, if any, and shall not make any assignment for the benefit ofcreditors, or be adjudicated insolvent. The allowance of any petition under any insolvency law except under theBankruptcy Code or the appointment of a trustee or receiver of Tenant or Tenant’sguarantor, if any, or of the assets of either of them, shall be conclusiveevidence of the petition unless the appointment of a trustee or receiver isvacated within thirty days after such an allowance or appointment.  Landlord does, in addition, reserve any andall other remedies provided in this Lease or in the law.

 

20.2                           **Covenants Upon Bankruptcy****Filing**.  Upon the filing of a petition by or againstTenant under the Bankruptcy Code, Tenant, as debtor and as debtor inpossession, and any trustee who may be appointed, agree as follows:  (i) to perform each and every obligation ofTenant under this Lease, including, but not limited to, the manner of“operations” as provided in Article 6 of this Lease until such time as thisLease is either rejected or assumed by order of the United States BankruptcyCourt; (ii) to pay monthly in advance on the first day of each month asreasonable compensation for use and occupancy of the Premises an amount equalto all Annual Minimum Rent and other charges otherwise due pursuant to thisLease; (iii) to reject or assume this Lease with in sixty (60) days of thefiling of such petition under Chapter 7 of the Bankruptcy Code or within onehundred twenty (120) days (or such shorter term as Landlord, in its solediscretion, may deem reasonable so long as notice of such period is given) ofthe filing of a petition under any other Chapter; (iv) to give Landlord atleast forty-five (45) days prior written notice of any proceeding relating toany assumption of this Lease; (v) to give at least thirty (30) days priorwritten notice of any abandonment of the Premises; any such abandonment to bedeemed a rejection of this Lease; (vi) to do all other things of benefit toLandlord otherwise required under the Bankruptcy Code; (vii) to be deemed tohave rejected this Lease in the event of the failure to comply with any of theabove; and (viii) to have consented to the entry of an order by an appropriateUnited States Bankruptcy Court providing all of the above, waiving notice andhearing of the entry of same.

 

20.3                           **No Waiver****of Default**.  No default of this Lease by Tenant, either prior to or subsequentto the filing of such a petition, shall be deemed to have been waived unlessexpressly done so in writing by Landlord.

 

20.4                           **Lease Under Bankruptcy****Code**.  It is understood and agreed that this is alease of real property in a shopping center as such a lease is described inSection 365(b)(3) of the Bankruptcy Code.

 

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20.5                           **Conditions**. Included within and in addition to any other conditions or obligationsimposed upon Tenant or its successor in the event of assumption and/orassignment are the following:  (i) thecure of any monetary defaults and the reimbursement of pecuniary loss withinnot more than thirty (30) days of assumption and/or assignment; (ii) thedeposit of an additional sum equal to three (3) months’ Rent to be held assecurity or such lesser additional security as a United States Bankruptcy Courtmay deem appropriate, (iii) the use of the Premises as set forth in Article 6of this Lease with the quality, quantity and/or lines of merchandise of anygoods or services required to be offered for sale unchanged; (iv) thereorganized debtor or assignee of such debtor in possession or Tenant’s trusteedemonstrates in writing that it has retailing experience in shopping centers ofcomparable size and financial ability to operate a retail establishment out ofthe Premises in the manner contemplated in this Lease and meets all otherreasonable criteria of Landlord as did Tenant upon execution of this Lease; (v)the prior written consent of any mortgagee to which this Lease has beenassigned as collateral security; and (vi) the Premises, at all times, remains asingle store and no physical changes of any kind may be made to the Premisesunless in compliance with the applicable provisions of this Lease.

 

**ARTICLE 21**

 

**RADIUSRESTRICTION**

 

[Intentionally Deleted.]

 

**ARTICLE 22**

 

**OTHERPROVISIONS**

 

The following aremade a part hereof, with the same force and effect as if specifically set forthherein:

 

(a)                                  SitePlan - **Exhibit“A”**.

(b)                                 PremisesLocation - **Exhibit “A-1”**.

(c)                                  Rulesand Regulations - **Exhibit “B”**.

(d)                                 [IntentionallyDeleted] - **Exhibit “C”**.

(e)                                  ShoppingCenter Use Restrictions - **Exhibit “D”**.

(f)                                    SignCriteria - **Exhibit “E”**.

(g)                                 OutlineSpecifications - **Exhibit “F”**.

(h)                                 CommencementDate Memorandum - **Exhibit “G”**.

(i)                                     Non-Disturbance,Attornment, Estoppel and Subordination Agreement – **Exhibit ”H”**.

 

**ARTICLE 23**

 

**AMERICANSWITH DISABILITIES ACT**

 

In the event thatany alteration or repair to the Premises is undertaken by Tenant with orwithout Landlord’s consent, or is undertaken by Landlord at Tenant’s requestduring the term of this Lease or any extended term, such alteration or repairshall (i) be designed and constructed in full compliance with the American’sWith Disabilities Act, as amended from time to time (the “Act”) if suchalteration is undertaken by Tenant, and (ii) shall be designed by Tenant infull compliance with the Act if such alteration or repair is undertaken byLandlord at Tenant’s request, and the cost of any such design, alteration orrepair to the Premises or the Shopping Center shall he borne by Tenant,including without limitation (a) the cost of any such design, alteration or repairrequired as a result of (i) Tenant or an assignee or subtenant being deemed a“Public Accommodation” or the Premises being deemed a “Place of PublicAccommodation” or (ii) such alteration or repair being deemed to affect an“Area of Primary Function” (as such terms are defined in the Act); and (b) thecost of the installation or implementation of any “Auxiliary Aid” requiredunder the Act as a result of the operation of Tenant’s (or any assignee’s orsubtenant’s) business within the Premises. In addition, Tenant shall be responsible for all costs and expensesincurred in order to cause the Premises and the operation of Tenant’s businesswithin the Premises to comply with the Act, and, if Tenant fails to keep andmaintain the Premises in compliance with the Act Landlord shall have the rightbut not the obligation, at Tenant’s sole cost and expense, to enter thePremises and cause the Premises to be put into compliance with the Act; andTenant shall indemnify, defend and hold Landlord harmless from and against anyand all costs, claims and liabilities, including but not limited to the fees ofcounsel, arising out of or resulting from Tenant’s failure to maintain and keepthe Premises in compliance with the Act.

 

**ARTICLE 24**

 

**CONSTRUCTION OF LEASEHOLD IMPROVEMENTS**

 

24.1                           **Leasehold Improvements**.  Landlord shall construct and installinterior improvements in the Premises (hereinafter referred to as “LeaseholdImprovements”) for the use and benefit of Tenant, subject to the followingterms and conditions:

 

24.2                           **Landlord’s Construction****Obligations**.  Landlord agrees to construct the LeaseholdImprovements in substantial accordance with the construction outlinespecifications attached hereto and

 

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made a part hereof as **Exhibit “F”** (“OutlineSpecifications”).  Landlord shall haveno obligation to construct or install any interior improvements in the Premisesother than as described in the Outline Specifications.

 

24.3                           **Final Plans and****Specifications**.  Landlord agrees to cause final plans andspecifications for the Leasehold improvements to be prepared substantially inaccordance with the Outline Specifications and the applicable building code asit is presently interpreted and enforced by the governmental bodies havingjurisdiction thereof.  When Landlordrequests Tenant to specify details or layouts, Tenant shall specify same withinfive (5) days of Landlord’s request, subject to the provisions of the OutlineSpecifications, so as not to delay completion of the LeaseholdImprovements.  Tenant shall pay toLandlord all increased costs or damages incurred by Landlord attributable todelays caused by Tenant, and Tenant shall be responsible for lost rent arisingout of delay in completion of the Leasehold Improvements caused by Tenant.

 

24.4                           **Tenant’s Obligations**.  Tenant agrees to cause final plans andspecifications for Tenant’s improvements to the Premises to be prepared inaccordance with the applicable building code as it is presently interpreted andenforced by the governmental bodies having jurisdiction thereof, and Tenantshall submit the same to Landlord for its approval.  Landlord shall have ten (10) days from the date of receipt ofTenant’s proposed final plans and specifications to approve the same.  Landlord agrees that it will not withholdits approval except for just and reasonable cause and will not act in anarbitrary or capricious manner with respect to the approval of the final plansand specifications.  The final plans andspecifications shall be approved by Landlord and Tenant by affixing thereon thesignature or initials of an authorized officer or employee.

 

24.5                           **Change Requests**.  If Tenant requests changes to the LeaseholdImprovements (or the Outline Specifications) that increase the cost ofconstructing the Leasehold Improvements, such excess price shall be paid byTenant to Landlord in Cash within thirty (30) days from the date the LeaseholdImprovements are substantially completed and Landlord has submitted a writtenstatement to Tenant requesting such payment.

 

24.6                           **Tenant’s Representative**.  Tenant designates Kirk N. Dowdell as therepresentative of Tenant having authority to bind Tenant by signing suchdocuments and all other notices and directions to Landlord regarding theLeasehold Improvements and Tenant’s improvements.  Tenant may change its representative from time to time uponwritten notice to Landlord.

 

**ARTICLE 25**

 

**MISCELLANEOUS**

 

25.1                           **Time is****of the Essence**.  Time is of the essence with respect to the performance of everyprovision of this Lease in which time of performance is a factor.

 

25.2                           **Memorandum of****Lease**.  Neither this Lease nor any Memorandum ofthis Lease may be recorded by Tenant without the prior written consent ofLandlord.

 

25.3                           **Joint and Several****Liability**.  All parties signing this Lease as Tenantshall be jointly and severally liable for all obligations of Tenant.

 

25.4                           **Broker**.  Except asmay be specifically set forth in the Basic Lease Provisions, Tenant representsand warrants that it has not had any dealings with any realtors, brokers oragents in connection with the negotiation of this Lease and agrees toindemnify, protect, defend (with legal counsel acceptable to Landlord) and holdLandlord harmless from the failure to pay any realtors, brokers or agents andfrom any cost, expense or liability for any compensation, commission or changesclaimed by any other realtors, brokers or agents claiming by, through or onbehalf of it with respect to this Lease and/or the negotiation hereof.  Landlord and Tenant agree that no broker shallbe entitled to any commission in connection with any Renewal Term, as such termis hereinafter defined, or any expansion of the Premises.

 

25.5                           **Estoppel Certificates**.  Tenant agrees from time to time, upon notless than ten (10) days prior written request by Landlord to deliver toLandlord a statement in writing certifying (i) this Lease is unmodified and infull force and effect (or it there have been modifications, that the Lease asmodified is in full force and effect and stating the modifications); (ii) thedates to which the Rent and other charges have been paid; (iii) Landlord is notin default in any provision of this Lease or, if in default, the nature thereofspecified in detail; (iv) the amount of monthly Rent currently payable byTenant; (v) the amount of any prepaid Rent, and (vi) such other matters as maybe reasonably requested by Landlord or any mortgagee or prospective purchaserof the Shopping Center Tract.

 

If Tenant fails todeliver such statement to Landlord within such ten (10) day period, Landlordand any prospective purchaser or encumbrancer of the Premises or the ShoppingCenter may conclusively presume and rely upon the following facts: (i) theterms and provisions of this Lease have not been changed except as otherwiserepresented by Landlord; (ii) this Lease has not been canceled or terminatedand is in full force and effect, except as otherwise represented by Landlord;(iii) the current amounts of the Annual Minimum

 

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Rent and Additional Rentare as represented by Landlord; (iv) there have been no subleases orassignments of the Lease; (v) not more than one month’s Annual Minimum Rent orAdditional Rent or other charges have been paid in advance; and (vi) Landlordis not in default under the Lease.  Insuch event, Landlord is entitled to sign a statement of such facts and Tenantshall be estopped from denying the truth of such facts.

 

25.6                           **Notices**.  Except asotherwise required by law, any notice, information, request or reply (“Notice”)required or permitted to be given under the provisions of this Lease shall bein writing and shall be given or served either personally or by mail.  If given or served by mail, such Noticeshall be deemed sufficiently given if (a) deposited in the United States mail,certified mail, return receipt requested, postage prepaid, or (b) sent byexpress mail, or other similar overnight service, provided proof of service isavailable, addressed to the addresses of the parties specified in the BasicLease Provisions, provided that a copy of any notice sent to Landlord shallalso be sent to the address set forth in the Basic Lease Provisions for thepayment of Rent and to any mortgagee(s) designated by Landlord.  Any Notice given or served by certified orovernight mail shall be deemed given or served as of the date of deposit.  Either party may, by written notice to theother in the manner specified herein, specify an address within the UnitedStates for Notices in lieu of the address specified in the Basic LeaseProvisions.

 

25.7                           **Landlord’s****Agent**. All rights and remedies of Landlord under this Lease or that may beprovided by law may be executed by Landlord in its own name, individually, orin the name of its agent, and all legal proceedings for the enforcement of anysuch rights or remedies, including those set forth in Article 18, may becommenced and prosecuted to final judgment and execution by Landlord in its ownname or in the name of its agent.

 

25.8                           **Quiet Possession**.  Landlord covenants and agrees that Tenant,upon paying the Annual Minimum Rent, Additional Rent and other charges hereinprovided for and observing and keeping the covenants, agreements and conditionsof this Lease on its part to be kept and performed, shall lawfully and quietlyhold, occupy and enjoy the Premises during the Term in accordance with andsubject to the terms of this Lease.

 

25.9                           **Successors**. Subject to the restrictions on assignment and subletting containedherein, all rights and obligations of Landlord and Tenant under this Leaseshall extend to and bind the respective heirs, executors, administrators, andthe permitted concessionaires, successors, subtenants and assignees of theparties.  If there is more than one (1)Tenant or if Tenant is a partnership or other entity and the members of whichare subject to personal liability, each shall be bound jointly and severally bythe terms, covenants and agreements contained in this Lease.

 

25.10                     **Severability**.  If any term or provision of this Lease shall to any extent beheld invalid or unenforceable, the remaining terms and provisions of this Leaseshall not be affected thereby, but each term and provision of this Lease shallbe valid and enforced to the fullest extent permitted by law.  This Lease shall be construed and enforced inaccordance with the laws of the state in which the Premises are located.

 

25.11                     **Landlord’s Liability**.  Notwithstanding anything to the contrarycontained in this Lease, it is expressly understood and agreed by and betweenthe parties hereto that:  (i) therecourse of Tenant or its successors or assigns against Landlord with respectto any alleged breach by or on the part of Landlord of any representation,warranty, covenant, undertaking or agreement contained in the Lease orotherwise arising out of Tenant’s use of the Premises or Shopping Center(collectively “Landlord’s Lease Undertakings”) shall extend only to Landlord’sinterest in the real estate of which the Premises demised under the Lease are apart (“Landlord’s Real Estate”) and not to any other assets of Landlord or itsbeneficiaries; and (ii) except to the extent of Landlord’s interest inLandlord’s Real Estate, no personal liability or personal responsibility of anysort with respect to any of Landlord’s Lease Undertakings or any alleged breachthereof is assumed by, or shall be asserted or enforceable against Landlord orany of Landlord’s directors, officers, employees, agents, partners,beneficiaries, trustees or representatives.

 

25.12                     **Transfers by****Landlord**. The term “Landlord” as used in this Lease so far as covenants orobligations on the part of Landlord are concerned, shall be limited to mean andinclude only the owner or owners of the Shopping Center Tract at the time inquestion, and in the event of any transfer or conveyance, the then grantorshall be automatically freed and released from all personal liability accruingfrom and after the date of such transfer or conveyance as respects theperformance of any covenant or obligation on the part of Landlord contained inthis Lease to be performed, it being intended hereby that the covenants andobligations contained in this Lease on the part of Landlord shall be binding onthe Landlord, it successors and assigns, only during and in respect to theirrespective successive periods of ownership.

 

In the event of asale or conveyance by Landlord of the Shopping Center Tract or any part of theShopping Center Tract, the same shall operate to release Landlord from anyfuture liability upon any of the covenants or conditions herein contained andin such event Tenant agrees to look solely to the responsibility of thesuccessor in interest of Landlord in and to this Lease.  This Lease shall not be affected by any suchsale or conveyance, and Tenant agrees to attorn to the purchaser or grantee,which shall be personally obligated on this Lease only so long as it is theowner of Landlord’s interest in and to this Lease.

 

25.13                     **Headings**.  Themarginal or topical headings used in this Lease are for convenience only and donot define, limit or construe the contents of said Articles.

 

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25.14                     **Entire Agreement**.  This Lease contains all the agreements andunderstandings relating to the leasing of the Premises and the obligations ofLandlord and Tenant in connection with such leasing.  Landlord has not made and Tenant is not relying upon anywarranties, representations, promises or statements by Landlord or any agent ofLandlord except as expressly set forth in this Lease.  This Lease supersedes any and all prior agreements andunderstandings between Landlord and Tenant and alone expresses the agreement ofthe parties.

 

25.15                     **Modifications or****Amendments**.  This Lease can only be modified or amendedby an agreement in writing signed by the parties hereto.  No receipt of money by Landlord from Tenantor any other person after termination of this Lease or after the service of anynotice or after the commencement of any suit, or after final judgment forpossession of the Premises shall reinstate, continue or extend the Term of thisLease or affect any such notice, demand or suit, or imply consent for anyaction for which Landlord’s consent is required, unless specifically agreed toin writing by Landlord.  Any amountsreceived by Landlord may be allocated to any specific amounts due from Tenantto Landlord as Landlord determines.

 

25.16                     **Landlord Control**.  Landlord shall have the right to close anyportion of the building area or land area to the extent as may, in Landlord’sreasonable opinion, be necessary to prevent a dedication thereof or the accrualof any rights to any person or the public therein.  Landlord shall at all times have full control, management anddirection of the Shopping Center Tract, subject to the rights of Tenant in thePremises, and Landlord reserves the right at any time and from time to time toreduce, increase, enclose or otherwise change the size, number and location ofbuildings, layout and nature of the Shopping Center, the Shopping Center Tractand the other tenancies, premises and buildings included in the Shopping CenterTract, to construct additional buildings and additions to any building, tolease to any parties acceptable to Landlord, and to create additional rentableareas through use, withdrawal of, and/or enclosure of the Common Area, or otherwise,to place signs on the Shopping Center Tract, to increase the land size of theShopping Center Tract, and to change the name, address, number or designationby which the Shopping Center is commonly known.  No implied easements are granted by this Lease.  Landlord shall in no event be liable for anylack of security in respect to the Shopping Center.

 

25.17                     **Utility Easement**.  Tenant shall permit Landlord (or itsdesignees) to erect, use, maintain, replace and repair pipes, cables, conduits,plumbing, vents, and telephone, electric and other wires or other items, in, toand through the Premises, as and to the extent that Landlord may now orhereafter deem necessary or appropriate for the proper operation andmaintenance of the Shopping Center.

 

25.18                     **Not Binding Until****Properly Executed**.  Employees or agents of Landlord have noauthority to make or agree to make a lease or other agreement or undertaking inconnection herewith.  The submission ofthis document for examination does not constitute an offer to lease, or areservation of, or option for, the Premises. This document until executed is not binding on either Landlord or Tenantand becomes effective and binding only upon the execution and delivery hereof bythe proper officers of Landlord and by Tenant. Tenant confirms that Landlord and its agents have made norepresentations or promises with respect to the Premises or the making or forentry into this Lease except as in this Lease expressly set forth, and agreesthat no claim or liability shall be asserted by Tenant against Landlord for,and Landlord shall not be liable by reason of, breach of any representations orpromises not expressly stated in this Lease. This Lease, except for the Building Rules and Regulations of theShopping Center Tract, in respect to which Section 25.19 shall prevail, can bemodified or altered only by agreement in writing between Landlord and Tenant,and no act or omission of any employee or agent of Landlord shall alter, changeor modify any of the provisions hereof.

 

25.19                     **Building Rules and****Regulations**.  Tenant shall perform, observe and complywith the Rules and Regulations of the Shopping Center Tract as set forth in **Exhibit “B”**attached hereto and incorporated herein by reference and as modified from timeto time by Landlord, with respect to the safety, care and cleanliness of thePremises and the Shopping Center, and the preservation of good order thereon,and, upon written notice thereof to Tenant, Tenant shall perform, observe, andcomply with any changes, amendments or additions thereto as from time to timeshall be established and deemed advisable by Landlord for tenants of theShopping Center Tract.  Landlord shallnot be liable to Tenant for any failure of any other tenant or tenants of theShopping Center Tract to comply with such Building Rules and Regulations.

 

25.20                     **Tenant’s Compliance**.  All rights and occupancy of Tenant hereinshall be subject to all governmental laws, ordinances and regulations, andTenant shall comply with the same, including without limitation compliance withthe Act, and shall comply with the requirements of any fire insuranceunderwriters or other similar body now or hereafter constituted relating to oraffecting the condition, use or occupancy of the Premises.  Tenant shall use the Premises and complywith any recorded covenants, conditions, and restrictions affecting thePremises in the Shopping Center Tract as of the commencement of the Lease orwhich are recorded during the Term.

 

25.21                     **Force****Majeure**. Landlord shall incur no liability to Tenant with respect to, and shallnot be responsible for any failure to perform any of Landlord’s obligationshereunder if such failure is caused by any reason beyond the control ofLandlord including, but not limited to, strike, labor trouble, obtaining ofpermits or approvals, governmental rule, regulations, ordinances, statutes orinterpretation, or by fire, earthquake, civil commotion, or failure ordisruption of utility services.  Theamount of time for Landlord to perform any of Landlord’s obligations shall beextended by the amount of time Landlord is delayed in

 

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performing such obligation by reason or any force majeure occurrencewhether similar to or different from any of the foregoing types of occurrences.

 

25.22                     **Tenant Obligations Survive****Termination**.  All obligations of Tenant hereunder notfully performed as of the expiration or earlier termination of the Term of thisLease shall, survive the expiration or earlier termination of the Term hereof,including, without limitation, all payment obligations with respect toOperating Expenses and Taxes all indemnity obligations, and all obligationsconcerning the condition of the Premises.

 

25.23                     **No Implication of****Exclusive Use**.  Nothing contained in this Lease shall bedeemed to give Tenant an express or implied exclusive right to operate anyparticular type of business in the Shopping Center.

 

25.24                     **Tenant’s Waiver**.  Any claim which Tenant may have againstLandlord for default in performance of any of the obligations herein containedto be kept and performed by Landlord shall be deemed waived unless such claimis asserted by written notice thereof to Landlord within ten (10) days ofcommencement of the alleged default or of accrual of the cause of action andunless suit be brought thereon within six (6) months subsequent to the accrualof such cause of action.

 

25.25                     **Tenant Authorization**.  If Tenant is a corporation or partnership,each individual executing this Lease on behalf of the corporation orpartnership represents and warrants that he or she is duly authorized toexecute and deliver this Lease on behalf of the corporation or partnership, andthat this Lease is binding upon the corporation or partnership.  If Tenant is a corporation, the personexecuting this Lease on behalf of Tenant hereby covenants and warrants that (a)Tenant is a duly qualified corporation and all steps have been taken prior tothe date hereof to qualify Tenant to do business in the State where theShopping Center is situated, (b) all franchise and corporate taxes have beenpaid to date, and (c) all future forms, reports, fees and other documentsnecessary to comply with applicable laws will be filed when due.  Tenant shall furnish to Landlord promptlyupon demand, a corporate resolution, proof of due authorization of partners, orother appropriate documentation reasonably requested by Landlord evidencing thedue authorization of Tenant to enter into this Lease.

 

25.26                     **Laws of****California to Govern**.  This Lease shall be governed by andconstrued in accordance with the internal laws of the State of California.

 

25.27                     **Rights Cumulative**.  Except as provided herein to the contrary,the rights and remedies of Landlord specified in this Lease shall be cumulativeand in addition to any other rights and/or remedies otherwise available,whether or not specified in this Lease.

 

25.28                     **No Partnership or Joint****Venture**.  This Lease shall not be deemed or construedto create or establish relationship or partnership or joint venture or similarrelationship or arrangement between Landlord and Tenant hereunder.

 

25.29                     **Attorneys’ Fees**.  In the event of any action or proceedingbetween Landlord and Tenant arising from or relating to the interpretation orenforcement of this lease or any default hereunder, the prevailing party insuch action or proceeding shall be entitled to recover from the other party allof its attorneys’ fees and costs incurred therein, including, withoutlimitation, any attorneys’ fees and costs incurred on any appeal from theaction or proceeding.

 

25.30                     **Tenant’s Financial Statements**.  Within 15 days after request therefor,Tenant shall deliver to Landlord a copy of Tenant’s audited financialstatements (including, but not limited to, an audited balance sheet, and anincome statement) prepared in accordance with generally accepted accountingprinciples consistently applied (“GAAP”) for the prior fiscal year certified byan executive officer of Tenant, together with the annual shareholders’ reportof any then parent of Tenant, along with, if available, audited consolidatedfinancial statements of the parent and its subsidiaries prepared in accordancewith GAAP.

 

25.31                     **Shopping Center****Expansion**.  At any time during the Lease Term, and fromtime to time, Landlord may expand, in any manner, the existing Shopping Center,which expansion may include the addition of shops and/or the addition of newbuildings to the Shopping Center (collectively, the “Expanded Center”).  If Landlord deems it necessary forconstruction personnel to enter the Premises in order to construct the ExpandedCenter, Landlord shall give Tenant no less than fifteen (15) days prior notice,and Tenant shall allow such entry. Landlord shall use reasonable efforts to complete the work affecting thePremises in an efficient manner so as not to interfere unreasonably withTenants’ business.  Tenant shall not beentitled to any damages or to reduction in Annual Minimum Rent or AdditionalRent for any interference or interruption of Tenant’s business upon thePremises or for any inconvenience caused by such construction work.  Landlord shall have the right to use aportion of the Premises to accommodate any structures required for the ExpandedCenter.  If, as a result of Landlordutilizing a portion of Premises for such purpose, there is a permanent increaseor decrease in the Rentable Area of the Premises of one percent (1%) or more,there shall be a proportionate adjustment of Annual Minimum Rent and all othercharges based on Rentable Area.  Duringthe course of construction, Tenant shall continue to pay Annual Minimum Rentand Additional Rent.

 

25.32                     **No Representation**.  Landlord reserves the absolute right toeffect such other tenancies in the Shopping Center as Landlord, in the exerciseof its sole business judgment, shall determine to best

 

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promote the interests of the Shopping Center.  Tenant does not rely on the fact, nor does Landlord represent,that any specific tenant or number of tenants shall, during the Term of thisLease, occupy any space in the Shopping Center.

 

25.33                     **Option to****Renew**. Tenant is hereby granted the option to extend the term of this Lease forthe Renewal Terms described in the Basic Lease Provisions by giving notice ofexercise of the option (“Option Notice”) to Landlord at least two hundred ten(210) days, but not more than one (1) year, before the expiration of the BasicTerm, or the then current Renewal Term, as the case may be; provided, however,that if Tenant is in default on the date of giving any such Option Notice or ifTenant has assigned or sublet the Premises, the Option Notice shall be totallyineffective, and provided further, that if Tenant is in default on the datethat the Renewal Term would otherwise commence, such Renewal Term at theelection of Landlord shall not commence and this Lease shall expire at the endof the Basic Term, or at the end of the then current Renewal Term, as the casemay be.  Tenant shall have no otherright to extend the term beyond the specific number of Renewal Terms describedin the Basic Lease Provisions.  Duringthe Renewal Term(s), all of the terms and provisions contained herein shallapply.

 

25.34                     **Permit Contingency**.  Notwithstanding anything to the contrarycontained in this Lease, this Lease and the duties and obligations containedherein are contingent upon Landlord obtaining all necessary permits to proceedwith the construction of the building in which the Premises is to be located inaccordance with **Exhibit “A-1”**.  In theevent that Landlord does not obtain such permits on or before December 31,2002, then this Lease shall terminate and neither party shall have any furtherobligations hereunder unless otherwise agreed to in writing by Landlord andTenant.

 

25.35                     **ATM**.  Subject to the terms and conditionshereinafter provided, Tenant has the right to install, operate and maintain, atTenant’s sole cost, expense and risk, one (1) automated teller machine (“ATM”)and reasonable additions, substitutes and technological successors therefor, atthe exterior Premises location reasonably approved in advance by Landlord;provided, however,  that Tenant shallobtain all necessary governmental and other approvals required therefor priorto any such installation, operation and maintenance.  The ATM will be deemed part of the Premises for all purposes ofthis Lease.  Notwithstanding anything tothe contrary contained in this Lease, Tenant will be permitted to install andmaintain, at Tenant’s sole cost and expense, and subject to Tenant obtainingall necessary governmental and other approvals required therefor, reasonableilluminated signage as part of Tenant’s ATM, which signage shall (i) beinstalled in accordance with good engineering practice, (ii) comply with theSign Criteria for the Shopping Center, attached hereto as **Exhibit “E”** and (iii) besubject to Landlord’s reasonable approval, including the manner of installationthereof.  Upon termination of thisLease, Tenant shall, at Tenant’s sole cost and expense, remove the ATM andrestore the exterior of the Premises to the condition that existed immediatelyprior to Tenant’s installation of such ATM.

 

25.36                     **Counterparts**.  This Lease may be executed in counterparts, all of which, whentaken together, shall constitute a fully executed original.

 

IN WITNESS WHEREOF,the parties have executed this Lease as of the day and year first abovewritten.

 
| LANDLORD:                                       |                  | TENANT:                                                       |
|-------------------------------------------------|-----------------------|---------------------------------------------------------------|
|                                            |                  |                                                          |   |   |
| OPUS WEST CORPORATION, a Minnesota  corporation |                  | WESTERN SIERRA NATIONAL BANK, a national  banking association |
|                                            |                  |                                                          |
|                                            |
| By                                              | /s/ Thomas W. Roberts |                                                          | By | /s/ Kirk N.  Dowdell |   |
| Name:                                           | Thomas W. Roberts     |                                                          | Name: | Kirk N. Dowdell |
| Title:                                          | President             |                                                          | Title: | President/CEO |   |
|                                                 |                       |                                                               |  |  |  |  |  |  |  |  |  |

 

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08/05/02

 

FIRST AMENDMENT TO SHOPPING CENTER LEASE

 

**THISFIRST AMENDMENT TO SHOPPING CENTER LEASE (the “First Amendment”) is made andentered into as of the        day of                            ,2002, by and between OPUS WEST CORPORATION, a Minnesota corporation, as“Landlord”, and WESTERN SIERRA NATIONAL BANK, a national banking association,as “Tenant”.**

 

**WITNESSETH:**

 

WHEREAS, Landlordand Tenant entered into that certain Shopping Center Lease dated as of May 24,2002 (the “Lease”), for the lease of certain premises located in the shoppingcenter commonly known as Broadstone Plaza II in Folsom, California; and

 

WHEREAS, theparties desire to modify the Lease as hereinafter set forth in this FirstAmendment.

 

NOW, THEREFORE, inconsideration of the premises herein contained and other good and valuableconsideration, the receipt and adequacy of which are hereby acknowledged, theparties hereto agree as follows:

 

1.               The terms andprovisions of this First Amendment shall be effective on the date of this FirstAmendment.  All capitalized terms usedin this First Amendment, unless otherwise defined herein, shall have the samemeanings given to them in the Lease.

 

2.               **Exhibit“A-1”** to the Lease is hereby deleted in its entirety and **Exhibit“A-1”** attached hereto and incorporated herein is hereby substitutedin its place.

 

3.               **Exhibit “F”**to the Lease is hereby deleted in its entirety and **Exhibit “F”** attached heretoand incorporated herein is hereby substituted in its place.

 

4.               Except as otherwiseexpressly modified in this First Amendment, the terms and conditions of theLease are and shall remain in full force and effect.  In the event of any conflict or inconsistency between the termsand provisions of the Lease and the terms and provisions of this FirstAmendment, the terms and provisions of this First Amendment shall govern andcontrol.

 

5.               This FirstAmendment may be executed in any number of counterparts, all of which togethershall be deemed to constitute one instrument, and each of which shall be deemedan original.

 

IN WITNESSWHEREOF, the parties have executed this First Amendment to Shopping CenterLease as of the day and year first above written.

 

 
| LANDLORD:                                       |   | TENANT:                                                       |
|-------------------------------------------------|--------|---------------------------------------------------------------|
|                                            |   |                                                          |   |   |
| OPUS WEST CORPORATION, a Minnesota  corporation |   | WESTERN SIERRA NATIONAL BANK, a national  banking association |
|                                            |   |                                                          |   |   |
|                                            |   |                                                          |   |   |
| By:                                             |   |                                                          | By: | /s/ Kirk N.  Dowdell |
| Name:                                           |   |                                                          | Name: | Kirk N. Dowdell |
| Title:                                          |   |                                                          | Title: | President/CEO |
|                                                 |        |                                                               |  |  |  |  |  |  |  |  |

 

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**EXHIBIT “A-1”**

 

**PREMISESLOCATION AND**

**BUILDINGELEVATIONS**

 

[SEE ATTACHED PAGES.]

 

A-1-1

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**EXHIBIT “F”**

 

**OUTLINESPECIFICATIONS**

 

## **Outline Specifications For BroadstonePlaza**

## **Retail Shops Pad 9 LeaseExhibit**

**Preparedby Opus West Construction Corporation**

**April16, 2002**

 

# **1. Shell Building Structure**

 

1.1               Frame: The shellbuilding shall be wood & steel frame construction.

 

1.2               Enclosure: Exteriorbuilding skin to be E.I.F.S.  Allexterior glazing shall be tempered as required by code. Storefront aluminum tomatch remaining center.

 

1.3             Roof: Roof structureto be a panelized wood roof system. Roof membrane to be a minimum 3-plybuilt-up roofing system with a 10 year N.D.L. manufacturer’s warranty. R19 battinsulation will be provided at interior side of roof deck.

 

1.4             Interior Clearance:Interior clear height to bottom of structure to be minimum 12 foot.  Minimum clear height below mechanicalsystems to be 10 foot above finished floor.

 

**1.5****          InteriorPartitions: None provided.**

 

1.6             Exterior Doors:Storefront to include six (6) 3’0”x 7’0” single & one (1) 6’0”x 7’0” pairof glass & aluminum storefront doors, each with a cylinder lock set, panichardware as required per code, and an exterior pull. Four (4) 4’0”X 7’0” hollowmetal receiving doors, each with a cylinder lock set and panic hardware asrequired by code, will be provided at rear of space.  Construction cylinder cores will be provided for removal andre-keying by Tenant’s Locksmith.  Shellbuilding shall also include two (2) pairs of glass & aluminum doors at theelectrical room. Tenant shall provide interior doors & hardware andhardware revisions resulting from Tenant’s build-out.

 

**1.7**          **Roof Access: Roof access ladder and roof hatch will beprovided in electrical room. Access to electrical room to be coordinated withLandlord’s property manager.**

 

1.8             Signage: Landlordshall provide shell building address numbers and signage per the requirementsof the local jurisdiction. All other signage shall be provided by Tenant.

 

1.9             Exterior Lighting:Exterior lighting shall be provided to match the existing center and meet therequirements of the local jurisdiction.

 

# **2. Interior Improvements**

 

2.1             Floors: All floors withinthe interior premises shall be a minimum four (4) inch thick reinforcedconcrete slab. No floor finishes are included. Floors to be left broom clean.Final interior clean up by Tenant.

 

2.2             Ceilings: Noneincluded. Acoustical ceiling tile and grid shall be Tenant’s responsibility.

 

**2.3****          Lighting:No interior lighting will be provided.**

 

2.4             Wall Finish: Allexterior walls shall be furred out and insulated to R-11.  All gypsum drywall joints to be fire tapedto meet code. No texture, paint or wall finish is included.

 

# **3. Sanitary Facilities**

 

3.1     Restroom: Landlord shall provide one (1)1.5 inch domestic water stub and one (1) 4 inch sanitary sewer floor stub forfuture restrooms at locations shown on Landlord’s shell building plans.Restroom wall & ceiling framing, additional piping, bathroom fixtures,lighting, HVAC, and floor, ceiling and wall finishes are to be provided byTenant. Grease trap is excluded. Relocation of utility stubs due to Tenant build-out to be by Tenant.

 

H-1

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# **4. Utilities**

 

4.1               Water and Sewer:Landlord to furnish water and sewer as outlined in sanitary facilities sectionabove. Water service shall be separately metered (private meters) at rear ofpremises.

 

4.2             Fire Sprinkler/FireAlarm: A complete shell building fire sprinkler system, designed and installedin accordance with the local jurisdiction, shall be provided by Landlord.Monitoring of the shell building fire sprinkler system only shall be providedby the Landlord. Additional fire protection, fire sprinkler monitoring, and/orsmoke alarm systems required for Tenant’s build-out shall be the soleresponsibility of the Tenant.

 

Duct smokedetectors to be provided by Tenant.

 

4.3             Electrical: Landlordshall provide a 120/208 volt, 3 phase 4 wire electric service. Landlord willprovide five (5) 225 amp sub-panels with circuit breaker(s) for shell buildingHVAC unit(s) only. Panels shall be located in accordance with Landlord’s shellbuilding plans. All additional circuit breakers & panels to be provided byTenant. Electric service shall be separately metered. The metering costs andmeter installations shall be the Tenant’s responsibility. Landlord shallprovide five (5) junction boxes at exterior signage locations with an emptyconduit & pull string stubbed to plenum area at front of premises forfuture sign installations by Tenant. No additional electrical distribution isincluded.

 

4.4               Telephone: Landlordshall provide one (1) 1 inch conduit from exterior telephone board location toall five (5) Tenant spaces.  Landlordshall coordinate telephone service entry with Telephone Company and shallprovide infrastructure from existing phone service location to telephone boardlocation in electrical room. Tenant shall arrange for telephone service anddistribution to each suite.

 

4.5               HVAC: Landlordshall provide rooftop HVAC units to provide a minimum of one (1) ton of coolingfor every three hundred square feet (300 s.f.) of floor area.  Landlord’s HVAC work shall include roofcurb, plumbing & electrical for a complete rooftop unit installation andshall meet the code requirements of the local jurisdiction.  Duct distribution and ductwork shall be byTenant. Landlord shall supply standard factory thermostats for installation byTenant. Landlord excludes low voltage wiring, thermostat installation, smokedetectors & wiring of.

 

# **5. Fees & Permits**

 

5.1               Fees: All impactfees and assessments including all water, sewer, traffic, school and othercity/county fees required for the permitting and construction of the shellbuilding shall be the responsibility of the Landlord. All additional impactfees, assessments or other costs associated with the tenant improvements shallbe the sole responsibility of the Tenant including all impact fees, assessmentsand costs not a requirement of the retail shell building improvements.

 

5.2             Permits &Licenses: Landlord shall provide all shell building permits & licensesrequired by the local jurisdiction for the construction of the shell buildingimprovements. Tenant shall be responsible for the permitting of all tenantimprovements beyond the Landlord provided shell improvements including, but notlimited to, tenant improvement permit, health department permit, businesslicense, or additional permits or licenses associated with the Tenant’sintended use of the premises.

 

 

# **6. Other**

 

6.1                               Trash:Landlord shall provide a trash enclosure located on the premises for the shareduse of all building tenants.

 

6.2                               Allother work not expressly provided to be done by landlord above shall beprovided by Tenant at Tenant’s sole cost and expense.

 

### **End of Outline Specification**

 

H-2

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