**Exhibit 10(i) D(3)**

 

**TABLE OF CONTENTS**

 
| 1.     | DEFINITIONS:                                                                            |   |
|--------|-----------------------------------------------------------------------------------------|--------|
|   | Lease Year:                                                                             |   |
|   | Common Area (if any):                                                                   |   |
|   | Open Parking Area (if any):                                                             |   |
|   | Controlled Parking Area (if any):                                                       |   |
|   | Floor Area:                                                                             |   |
|   | MRWPCA:                                                                                 |   |
|   | Center:                                                                                 |   |
| 2.     | PREMISES:                                                                               |   |
| 3.     | TERM OF LEASE:                                                                          |   |
| 4.     | RENTAL:                                                                                 |   |
| 5.     | CHRONIC  DELINQUENCY:                                                                   |   |
| 6.     | ADJUSTMENT OF FIXED  RENT:                                                              |   |
| 7.     | SECURITY DEPOSIT:                                                                       |   |
| 8.     | GOVERNMENTAL  INTERVENTION:                                                             |   |
| 9.     | DESIGNATION,  MAINTENANCE, REPAIR AND COST REIMBURSEMENT OF COMMON AREAS AND MANAGEMENT |   |
| 10.    | PARKING IN OPEN  PARKING AREA:                                                          |   |
| 11.    | PURPOSE:                                                                                |   |
| 12.    | COMPLIANCE WITH LAW:                                                                    |   |
| 13.    | USE AND CLEANLINESS:                                                                    |   |
| 14.    | ASSIGNMENTS  AND SUBLETTING:                                                            |   |
| 15.    | ACCEPTANCE  OF PREMISES:                                                                |   |
| 16.    | LIENS:                                                                                  |   |
| 17.    | ACCESSION:                                                                              |   |
| 18.    | WASTE:                                                                                  |   |
| 19.    | HOLD-OVER TENANCY:                                                                      |   |
| 20.    | REAL PROPERTY, GLASS  AND OTHER INSURANCE:                                              |   |
| 21.    | LIABILITY  AND WORKERS’ COMPENSATION INSURANCE:                                    |   |
| 22.    | PERSONAL  PROPERTY TAXES AND REIMBURSEMENT FOR REAL PROPERTY TAXES:                     |   |
| 23.    | DAMAGE OR  DESTRUCTION OF DEMISED PREMISES:                                             |   |
| 24.    | PROHIBITED  ACTS:                                                                       |   |
| 25.    | INSPECTION:                                                                             |   |
| 26.    | BANKRUPTCY OR INSOLVENCY:                                                               |   |
| 27.    | DEFAULT AND REENTRY:                                                                    |   |
| 28.    | LESSOR-LESSEE  LIABILITY:                                                               |   |
| 20.    | INTEREST OR  DELINQUENCIES:                                                             |   |
| 30.    | ATTORNEY’S  FEES:                                                                  |   |
| 31     | NON-WAIVER  OF BREACH:                                                                  |   |
| 32.    | CONDEMNATION:                                                                           |   |
| 33.    | UTILITIES:                                                                              |   |
| 34.    | HEIRS AND ASSIGNS:                                                                      |   |
| 35.    | NOTICES:                                                                                |   |
| 36.    | CONSTRUCTION:                                                                           |   |
| 37.    | LAYOUT OF THE  DEMISED PREMISES AND SURROUNDING AREA OWNED BY LESSOR:                   |   |
| 38.    | NUMBER AND  GENDER:                                                                     |   |
| 39.    | MARGINAL  TITLES:                                                                       |   |
| 40.    | MODIFICATION:                                                                           |   |
| 41.    | TIME OF  ESSENCE:                                                                       |   |
| 42.    | PAYMENTS NOT  IN SUBSTITUTION:                                                          |   |
| 43.    | CONVEYANCE BY  LESSOR:                                                                  |   |
| 44.    | SIGNS AND  ADVERTISING:                                                                 |   |
| 45.    | STATEMENT  OF LESSEE:                                                                   |   |
| 46.    | JANITORIAL  SERVICE:                                                                    |   |
| 47.    | SUBORDINATION:                                                                          |   |
| 48.    | COMPETITION:                                                                            |   |

 

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| 49. | GOVERNMENT  FEES:                                             |   |
|-----|---------------------------------------------------------------|--------|
| 50. | LESSEE’S  IMPROVEMENTS:                                  |   |
| 51. | GARBAGE, REFUSE,  TRASH, COLLECTION & REIMBURSEMENT: |   |
| 52. | SPRINKLER  SYSTEM:                                            |   |
| 53. | MERCHANT’S  ASSOCIATION:                                 |   |
| 54. | RIGHT OF FIRST REFUSAL:                                       |   |
| 55. | TRANSFER FEE:                                                 |   |
| 56. | NO PARTNERSHIP:                                               |   |
| 57. | HAZARDOUS  MATERIALS:                                         |   |
| 58. | WATER USE/SHORTAGE  DISCLOSURE/FINES, ASSESSMENTS AND FINES:  |   |
| 59. | QUITCLAIM  DEED:                                              |   |
| 60. | RECORDING:                                                    |   |
| 61. | SURRENDER OF  PREMISES:                                       |   |
| 62. | LIMIT OF  LESSOR’S PERSONAL LIABILITY:                   |   |
| 63. | ALTERATION &  IMPROVEMENTS:                          |   |
| 64. | AMERICANS  WITH DISABILITIES ACT (ADA):                       |   |
| 65. | NOTICE OF  SURRENDER:                                         |   |
| 66. | REAL ESTATE  BROKERAGE FEE:                                   |   |
| 67. | LESSOR LOAN  OR SALE                                          |   |
| 68. | ATTORNMENT:                                                   |   |
| 69. | MUTUAL WAIVER OF  RIGHT OF SUBROGATION:                       |   |
| 70. | MISCELLANEOUS  PROVISIONS:                                    |   |

 

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**LEASE**

 

ThisLease, made and entered into on the date appearing in the signature blockhereof, by and between **John A. Crivello Family****Partnership, L.P**. ,hereinafter referredto as Lessor),  and**  Monterey County Bank**, jointly andseverally, (hereinafter referred to as Lessee), without regard to number orgender.

 

**WITNESSETH:**

 

**1.  DEFINITIO****NS:**

 

Lease Year:For the purpose of this Lease, a “lease year” is a period during the lease termcommencing on the first day of the lease term (except that if the lease termcommences on a day other than the first day of a calendar month, then the “leaseyear’ shall commence on the first day of the next succeeding calendar month)and ending at midnight twelve (12) full calendar months thereafter; provided,however, that the last lease year shall end at the end of the lease term,except that if such period includes less than the whole of a calendar month,that portion of the calendar month, included within the period is a “month.”

 

Common Area(if any): As used in this Lease, the term “common area” shall include all areasand facilities in, upon or about the Center and the adjoining parking areas (ifany, excluding any Controlled Parking Areas) owned by Lessor for the non-exclusiveuse of Lessee in common with other authorized users. It is understood andagreed that the common area is not a portion of the premises demised to Lesseehereunder.

 

Open Parking Area(if any): The term “open parking area” shall include vehicle parking spaces,driveways, access ways, ingress and egress, streets and any other areas ownedby Lessor and adjacent to the demised premises and improved in order thatautomobiles and other vehicles can be driven and parked thereon, but excluding “ControlledParking Areas”. Parking areas may be designed for co-exclusive use of theLessee and Lessor or for common use of Lessee and others as provided forherein.

 

Controlled ParkingArea (if any): The term “Controlled Parking Area” shall mean an area forparking automobiles that is separate from the open parking area defined aboveby and including, but not limited to, gates, signs, barriers, exhibits tolease, markings upon the land or pavement, or as otherwise indicated by Lessoror his agent from time to time, and is not part of the common area or the openparking areas.

 

It is agreed that Lessee shall have the exclusive useof six (6) parking spaces as has been agreed o by Lessor and Lessee.Lessee shall be solely responsible for marking the designated parking spacesand for enforcement of the exclusive right to such spaces. Such exclusiveparking spaces are marked by “x’s” on the parking plan attached as Exhibit” D”.

 

Floor Area:The term “floor area” means that actual number of square feet of floor spacewithin the exterior faces of the exterior walls (except party and interiorwalls, in which case the center thereof instead of exterior faces shall beused) of the buildings, including vacant space therein. However, the term “floorarea” shall not include any basement space or subterranean areas, parkingfacility, or employer’s parking area. The term “floor area” refers to grossleasable floor area, and no deductions shall be made from the “floor area” byreason of columns, stairs, hallways, escalators, elevators, conveyers, or otherinterior construction or equipment. The total “floor area” of the demisedpremises and the total “floor area” of the buildings, including the “floor area”of the demised premises is hereby defined, fixed, determined and agreed byLessee and Lessor as set forth above and on Exhibit ”A,” attached hereto,and shall be conclusive upon the parties hereto,

 

MRWPCA:  The term “MRWPCA” shall mean MontereyRegional Water Pollution Control Agency.

 

Center:The term “Center” is defined as: shopping center, professional office building,mixed-use properties, single and multi-tenant properties, industrial, retail,warehouse, and other general commercial properties, all of which may beimproved or unimproved, owned by Lessor.

 

Lessor:The term “Lessor’ shall mean and include Owner, Landlord and Lessor.

 

Lessee:The term “Lessee” shall mean and include Tenant and Lessee.

 

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**2.  PREMISES****:**In consideration of the terms, covenants, conditions andobligations herein contained, to be kept, performed and complied with byLessee, and upon the condition that Lessee keeps, performs and complies withsaid terms, covenants, conditions and obligations, Lessor does hereby demisecertain premises described in Exhibit ”B”, attached hereto, (hereinafterdemised premises), located at, as specified in Exhibit ”A,” “DemisedPremises.”

 

Squarefootage is an approximate figure and may not be the sole basis for the monthlyvalue.  Lessee should measure thepremises to verify square footage prior to signing the Lease, and mustcommunicate any discrepancy to the****Lessor orLessor’s****Agent****priorto****signing the Lease. If Lessee electsnot to measure the premises and or not to communicate any discrepancy to Lessoror Lessor’s Agent and signs the Lease, Lessee will have no recourse if duringthe term of this Lease, or later, a discovery of inaccurate square footage ismade to the Lessor or Lessor’s Agent. The Lessee hereby acknowledges that theyphysically visited and viewed the premises and acknowledges that regardless ofsquare footage, they are accepting and renting the premises as viewed. Uponmutual execution of this Lease Agreement by Lessor and Lessee, Lessee will notthereafter challenge the square footage and or the determination of the squarefootage as contained in this Lease Agreement.

 

**3.  TERM****OF LEASE:**The term of this Lease shall be for theapproximate number of years appearing as the Term on Exhibit ”A,” attachedhereto, and shall commence on the Date of Commencement of Lease as it appearsin said Exhibit ”A.” If Lessor, for any reason whatsoever, cannot deliverpossession of said premises to Lessee at the commencement of the term hereof,this Lease shall not be void or voidable, nor shall Lessor be liable to Lesseefor any loss or damage resulting there from, but in that event there shall be aproportionate reduction of rent covering the period between the commencement ofthe said term and the time when Lessor can deliver possession.

 

**4.  RENTA****L:**Lessee hereby covenants to pay to Lessor, at the time andplace and computed in the manner hereinafter set forlh, as rental for thedemised premises for each month, as hereinafter defined during the term of thisLease, no less than the Initial Fixed Rent appearing in Exhibit ”A” asadjusted from time to time in accordance with the provisions of Paragraph 5,below.   Initial Fixed Rent as soadjusted shall be called the Then Fixed Rent and shall be paid monthly inadvance on the first day of each month during the lease term. Rental paymentsreceived after the fifth day of the month shall be subject to a late fee equalto 5% of the amount then due and shall be paid along with the rent. Lesseefurther agrees to pay $25.00 for each dishonored bank check. Rental paymentsshall not be reduced by any claims, demands, or offsets against Lessor of anykind whatsoever. Notwithstanding anything in this Lease to the contrary, allamounts payable by Lessee to or on behalf of Lessor under this Lease, whetheror not expressly denominated as rent, shall constitute rent for the purposes ofthe Bankruptcy Code, 11 U.S,C. Section 502(b)(6). No payment by Lessee orreceipt by Lessor of a lesser amount than the rental shall be deemed to beother than on account of the rental, nor shall any endorsement or statement onany check or any letter accompanying any check payment as rent be deemed anaccord and satisfaction, and Lessor may accept such check or payment withoutprejudice to Lessor’s right to recover the balance of the rental or pursue anyother remedy provided for in this lease.

 

**5.  CHRONIC****DELINQUENCY:**Chronic delinquency by Lessee in the paymentof rent or any other monthly amounts required to be paid by Lessee under thisLease shall constitute a material breach of this Lease. “Chronic delinquency”shall mean the occurrence of any of the following for any three (3) months(consecutive or nonconsecutive) during any twelve (12) month period: (a) failureby Lessee to pay or submit within five (5) days of the due date its BaseMonthly Rent and/or other monthly charges, or (b) payment of anyreconciliation of operating expenses or payment to vendors when due. ThisParagraph shall not limit in anyway, nor be construed as a waiver of the rightsand remedies of Lessor provided hereunder or by law in the event of even one instanceof delinquency. In the event of chronic delinquency, at Lessor’s option, Lessorshall have the right, in addition to all other rights under this Lease and atlaw, to require that all rent be paid by Lessee quarterly, in advance.

 

**ADJUSTME****NTS OF FIXED RENT:**Notwithstanding the provisions ofparagraph 4, the initial fixed rent shall be adjusted on the first day of thesecond lease year and thereafter at twelve-month intervals for so long as thisLease or any extension there of shall be in effect, unless otherwise agreed inwriting by Lessor and Lessee, as follows: on the first day of the second leaseyear and on the first day of each lease year thereafter (the adjustment dates),the Then Fixed Rent shall become the product of multiplying the Then Fixed Rentby the annual percentage increase as reflected in the Consumer Price Index forAll Urban Consumers in the San Francisco-Oakland-San Jose area as published bythe Bureau of Labor Statistics, United States Department of Labor or anysuccessor index, for the calendar month preceding the adjustment dates or onehundred four percent (104%) of the Then Fixed Rent, whichever is greater, butin no event shall the increase in the Fixed Rent be greater than one hundredseven percent (107%) of the Then Fixed Rent.  Excepting, however, that the (104%) increase shall not be applicable toadjustments during a period of less than twelve (12) months (a lease year).Lessor delay in notifying Lessee of the adjustment shall not be a waiver ofLessor’s rights to enforce the adjustment hereunder. If the Index is changed so

 

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thatthe base year differs from that in effect when the term commences, the Indexshall be converted in accordance with the conversion factor published by theUnited States Department of Labor, Bureau of Labor Statistics. If the Index isdiscontinued or revised during the term such other governmental index orcomputation with which it is replaced shall be used in order to obtainsubstantially the same as would be obtained if the Index had not beendiscontinued or revised.

 

**7.  SECURIT****Y DEPOSIT:**On or before the date of execution of this Lease,Lessee has delivered to Lessor, receipt of which is hereby acknowledged byLessor, the Initial Payment as such payment appears in Exhibit ”A,”attached hereto. That portion of the Initial Payment that equals the InitialFixed Rent plus all monthly charges (including, but not limited to common areacharges, MRWPCA charge, property taxes, assessments, and insurance) shallrepresent advance payment of the monthly rent and charges for the first monthof the term of this Lease and the balance thereof shall represent a securitydeposit for the full and faithful performance by Lessee of all of the terms,covenants, conditions and obligations of this Lease to be performed and kept byLessee. If Lessee shall have fully and faithfully complied with all of theterms, covenants, conditions and obligations of this Lease, the securitydeposit shall be returned to Lessee within twenty-one (21) days after Lesseehas vacated the demised premises. If Lessee defaults in respect to any of theterms, covenants, conditions and obligations of this Lease including, but notlimited to, nonpayment of rent, Lessor may use, apply or retain the whole orany part of the security deposit for the payment of any rent in default or forreimbursement of Lessor for any sums which Lessor may spend or be required tospend by reason of Lessee’s default. The application by Lessor of all or anypart of said security deposit shall not preclude Lessor from thereafterexercising each and all of Lessor’s other rights and remedies upon such defaultof Lessee. Should Lessor resort to the security deposit was had and necessaryto restore the security deposit to the original sum required hereunder withinten (10) days after written demand for some by Lessor. Lessee will beentitled to no interest on any portion of the security deposit. Lessor’sobligations with respect to the deposit are those of a debtor and not of a trustee,and Lessor can commingle the security deposit with Lessor’s general funds.Lessor shall not be required to pay Lessee interest on the deposit. Lessorshall be entitled to immediately endorse and cash Lessee’s payment.

 

**8.  GOVERNMEN****TAL INTERVENTION:**In the event that Lessee’s occupancy ofthe demised premises shall be prohibited, restricted, modified or interferedwith in any respect by or as a result of any action of any governmentalauthority or agency then, and in that event, Lessee shall comply with any andall lawful orders made by any such governmental agency having jurisdiction inthe premises, and in the event that Lessee’s occupancy shall be prohibited byreason of the intervention of such governmental agency and in that event,Lessee’s sole remedy hereunder shall be an option to cancel this Lease andfrom, and after the giving of sixty (60) days advance written notice of theexercise of such option to cancel this Lease, neither party hereto shallthereafter have any further obligations whatsoever by reason of this Lease.Lessee shall obtain any and all governmental approvals, authorizations, andpermits necessary or desirable to enable Lessee to operate Lessee’s business inthe premises and shall comply with any and all conditions and requirementsimposed thereon, all at Lessee’s sole cost and expense. Lessor shall have noobligation whatsoever for obtaining any such approvals, authorizations orpermits nor shall Lessor have any obligations or responsibility whatsoever byreason of any governmental intervention, prohibition, condition orqualification with respect to Lessee’s occupancy of the demised premises orLessee’s business conducted therein regardless of whether any such governmentalaction be based upon action or inaction of Lessor or action or inaction ofLessee. Lessor makes no warranties or representations whatsoever with respectto the status or need for any governmental approvals, authorizations or permitsby either Lessor or Lessee, and Lessee assumes full and complete responsibilityfor determining what permits, approvals and authorizations, if any, arerequired, necessary or desirable.

 

**9.  DESIGNATIO****N, MAINTENANCE, REPAIR AND COST REIMBURSEMENT OF THE CENTER AND COMMONAREAS AND MANAGEMENT OF THE CENTER, (IF ANY):**Within and about theCenter, Lessor will from time to time provide and designate for the general useand convenience (among others) of Lessee and other Lessees of all or any partof the Center, and their respective employees, patients, clients, customers,and invitees, certain common areas. These shall include, but are not limitedto, driveways, entrances, exits, exterior lighting fixtures, water fountains,exterior stairways, restrooms not located within Lessee’s space, arcades,interior halls, patios, electrical, plumbing, other building systems, andsimilar improvements, loading and delivery areas, refuse disposal areas,elevators, if any, and other areas and facilities that may be provided anddesignated by Lessor from time to time for the general use and convenience ofLessee and other Lessees of the Center. Lessor may (if parking is beingprovided), from time to time, provide certain hard-surfaced, marked and lightedparking areas within or in the immediate vicinity of the Center. Lessorreserves the right from time to time to make

 

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changes in the shape,size, location, number and extent of improvements, buildings, accommodationareas, loading and delivery areas, driveways, entrances, exits, traffic flowand any other improvements from time to time constituting common area toeliminate or add any improvements or buildings to any portion of the Center andsurrounding land owned by Lessor. During the term of this Lease, Lessor shalloperate, manage and maintain, all of the above and other. The manner in whichsuch areas and facilities shall be maintained and protected by guards orotherwise and the expenditures for maintenance and security by guards orotherwise, shall be at the sole discretion of Lessor, and the use of such areasand facilities shall be subject to reasonable regulations and changes as Lessorshall make from time to time, including, without limitation, the right toclose, if necessary, all or any portion of such areas, roads, or facilities, tosuch extent as may be legally sufficient in the opinion of the Lessor’scounsel, to prevent a dedication thereof or the accrual of rights of any personor of the public therein, or to dose temporarily for safety, maintenance,construction or other purpose, all or any portion of such areas of facilities.

 

9.1  Lessee agrees****toreimburse Lessor for increased cost in excess of the initial lease year, Lessee’sshare (as defined below and specified in Exhibit ”A”) of all of the costsincurred by Lessor in keeping the common area clean and clear, and inmaintaining and operating the same in good condition and repair. The initialyear shall be defined in Exhibit ”A”, Common Areas and Management BaseYear. The initial cost shall be the amount shown in Exhibit ”A”, CommonAreas and Management Base Cost. Such costs include, but are not limited to,real property taxes and assessments and other taxes, against the common areas,all sums expended by Lessor for the maintenance and/or operation of the commonareas, professional management of the Center, or a reasonable allowance toLessor for Lessor’s management and supervision of the Center. Costs formaintenance and operation of the common areas shall include without limitation:cost of repainting, including exterior of building, signage and stripping,cleaning, sweeping and other janitorial services, and maintenance of refusereceptacles, planting and relandscaping, directional or other signs and othermarkers, lighting and other utilities, premiums on public liability andproperty damage insurance, all maintenance and construction work as required topreserve and maintain such common areas in the condition originally installedand all other costs necessary in Lessor’s judgment for the maintenance andoperation of the common areas. Lessee’s share of all of the above-described andother common area costs shall bear approximately the same proportionaterelationship to such total costs as does the area demised to Lessee bear to thetotal leasable space of the Center and shall be expressed as a percent of thetotal common area costs. Lessor shall fumish to Lessee, request, a statementshowing the total common area costs, Lessee’s share of common area costs forthe period, and the payments required by Lessee. Lessor shall keep as separateaccount covering the common area costs and said account of Lessor shall beretained and preserved for twelve months after the expiration of the accountingperiod to which it applies and shall be made available to Lessee for reasonableinspection during said period.

 

Notwithstanding anythingin the above to the contrary Lessor agrees that in no event shall it chargemore than 5% of gross income of the center for professiional managemen.

 

If Lessee defaults inmaking any payments required by this subparagraph 3) Lessor may, in addition toall other remedies under this Lease or provided by law, deny Lessee and itsemployees, patients, clients, subtenants, licensees, agents, service suppliers,customers and patrons, the right to use any part of the common area, and maywithhold all privileges herein granted so long as Lessee remains in suchdefault.

 

**9.2** In addition to the other rights hereinreserved, Lessor shall have the right, in its sole discretion:

 

a.To establish and at any time change, alter, amendand to enforce against Lessee and other users of the common area suchreasonable rules and regulations, of which Lessor shall give Lesseewritten notice, as may be deemed necessary and advisable for the proper andefficient operation and maintenance of the common area and the Center. Lesseeagrees to conform and abide by all such rules and regulations in its useof the common area.

 

**10.**  **PARKIN****G IN OPEN PARKING AREA (if any):**Lessee and Lessor agreethat the Open Parking Area, if any, shall be used solely for the purpose of thedaily parking of passenger automobiles owned, leased, controlled or authorizedby Lessee, Lessor or other tenants. Lessee agrees to use such parking areasolely for said purpose and in accordance with the provisions of this agreementand releases Lessor of any and all obligation or responsibility to prevent theuse of said area by persons and vehicles not conforming to such purpose, notlicensed by Lessor or not authorized by Lessee or other tenants. Lessee furtherreleases and indemnifies Lessor against any claims for loss or damage tovehicles, their occupants or contents that are parked in the Open Parking Areaby Lessee or in connection with the business or practice of Lessee. If there isno parking, Lessee acknowledges that Lessor has made no

 

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provisionfor parking on the Premises and Lessee shall be responsible for all parkingassociated with the use of the Premises for their employees and patrons.

 

**11.**  **BUSINESS****PURPOSE:**Lessee covenants that during Lessee’s occupancy ofthe demised premises, Lessee will use the demised premises solely for thepurpose of operating the practice or business appearing as Business Purpose,and for the number of days per week and for the hours of operation as set forthin Exhibit ”A”, attached hereto. Lessee further covenants that Lessee willnot at any time during Lessee’s occupancy, use the premises for any otherpurpose or purposes without the written consent of Lessor first had andobtained.

 

12.  **COMPLIANCE****WITH LAW:**Lessee covenants that during Lessee’s occupancy of****thedemised****premises, Lessee

 

shall at Lessee’s owncost and expense, promptly and properly observe, comply with****and execute, all present and future orders, regulations,directions, rules, laws, ordinances and requirements of governmentalauthorities, including, but not limited to, state, municipal, county andfederal governments and their departments, bureaus, boards and officials andthe Board of Fire Underwriters and any other board of organization exercisingsimilar functions arising from the use or occupancy of, or applicable****in any manner to the****demisedpremises or privileges appurtenant to or connected with the enjoyment of thedemised premises, including Lessee’s share of a sprinkler system, if anyrequired or recommended. Lessee’s share shall be the same percentage as setforth for the common area for the cost of said sprinkler system, prorated overremaining term of the Lease, plus option.

 

**13.  USE AND CLEA****NLINESS:**Not withstanding article #11 “BUSINESS PURPOSE”,Lessee covenants that during Lessee’s occupancy of the demised premises, Lesseewill not permit said premises to be used for any improper, illegal or immoralpurposes or permit Lessee’s business to be carried on in such a manner as to benoisy or offensive to others in the vicinity of the demised premises. Lesseefurther covenant to keep all windows therein clean at all times and free fromdust, dirt or other unsightly substances. Lessee shall not use the Premises inany manner that will constitute a nuisance or unreasonable annoyance to othertenants in the building in which the Premises are located, including, withoutlimitation, the use of loudspeakers, or sound or light apparatus that can beheard or seen outside the Premises, or the living or sleeping in, washingcloths, cooking, or the preparation, manufacture or mixing of anything thatmight emit any odor or objectionable noises, lights or vibrations.  No machinery, apparatus or other applianceshall be used or operated in or on the Premises that will in any manner injure,overload, vibrate or shake building in which the Premises are located. Lessormay from time to time promulgate rules and regulations for the use of thereal properly and Tenant agrees to abide by such rules and regulations.Lessee shall not do anything on the premises, which will overload any existingparking, utility service, and refuse or other areas to the Premises. Petsand/or animals of any type shall not be kept on the Premises. Tenant will notperform any act or carry on any practice that may injure the Premises or theCenter, or that may be a nuisance or menace to any other tenant in the Center.No auctions are permitted.

 

Lesseeacknowledges that neither Lessor nor any agent of Lessor has made any representationor warranty with respect to the Premises, concerning the zoning or usespermissible or with respect to the suitability of the Premises for the conductof Lessee’s business, nor has Lessor agreed to undertake any modification,alternation or improvement to the Premises, except as provided in writing inthe Lease. If sound insulation is required to muffle noise produced by Lesseeon the Premises, Lessee at its own cost shall provide all necessary insulation.

 

**14.  ASSIGNMENT****AND SUBLETTING:**Lessee shall not sell, transfer, assign,mortgage or hypothecate this Lease or any interest in this Lease nor permit theuse of the demised premises by any person or persons other than Lessee, norsublet the premises or any part thereof without the written consent of Lessorfirst had and obtained, which said written consent shall not be withheldunreasonably. However, Lessor shall have the option  to terminate  the Lease rather  than approving an assignment or sublease ofall of the Premises to a third party. Consent to any of the aforementioned actsshall not operate as a waiver of the necessity of first obtaining the writtenconsent of Lessor to any such subsequent act and the terms of any such consentshall be binding upon any person holding by, under or through any such writtenconsent. Lessee agrees that the consent of Lessor shall not be deemed orconsidered withheld by reason of the fact that in the event of the sale of thebusiness operated by Lessee on the demised premises, Lessor requires as acondition of the assignment of the Lease that the terms and conditions of thisLease be modified, including but not limited to those terms and conditionsconcerning the security deposit, but Lessor shall not have the right torequire  the rental under this Lease bechanged as a condition  to approval ofany such Assignment or Subletting.. In any event, if Lessor shall consent toany sublease, sale, transfer, assignment, mortgage or hypothecation of thisLease or any interest in this Lease, or if the Lessee shall without such consent have subleased, sold, transferred,assigned, mortgaged or hypothecated this Lease or any or all of Lessee’sinterest therein then, and in that event, without otherwise limiting any otherremedies Lessor may have by law or under the

 

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provisionsof this Lease, Lessor shall be entitled to receive and Lessee shall assign to and promptly pay to Lessor, anyand all consideration (including, but not limited  to, all rent received by Lessee from anysublessee that exceeds the amount of then Fixed Rent owed or paid by Lessee to Lessor and all transfer feesand the like) to be received by Lessee for or in connection with any suchsublease, sale, transfer, assignment, mortgage or hypothecation of this Leaseor any interest in this Lease. Lessee shall pay Lessor a fee not in excess of$2,000 for each instance, and shall also pay Lessors costs ,including attorneyfees (but such attorney’s fees shall not be in excess of $2,000 for each suchinstance ) in connection with this Article

 

**14.1  **If this Lease is assigned toany****person or entity pursuant to theprovisions of the Bankruptcy Code, 11 U.S.C.   Section 101 et seq.,****any and allmonies or other considerations payable or otherwise to be delivered in connectionwith such assignment shall be paid or delivered to Lessor, shall be and remainthe exclusive property of Lessor and shall not constitute property of  Lessee or of the estate of Lessee within themeaning of said Bankruptcy Code. Any and all monies and/or other considerationsconstituting Lessor’s property under the preceding sentence not paid ordelivered to Lessor shall be held in trust for the benefit of Lessor and bepromptly paid or delivered to Lessor.

 

**14.2 **Any person or entity towhich this Lease is assigned pursuant to the provisions of the Bankruptcy Code,11 U.S.C.  Section 101 et seq.,shall be deemed without further act or deed to have assumed all of theobligations arising under this Lease on and after the date of such assignment.Any such assignee shall, upon demand, execute and deliver to Lessor aninstrument confirming such assumption.

 

**15.  ACCEPTANCE****OF PREMISES/ “AS IS” CONDITION:**The demised premisesincluding any fixtures and any personal property, is being Leased in  its “AS IS” condition without any expressedor implied warranties. Any and all representations and warranties of Lessor setforth elsewhere in this Lease are hereby deleted. Lessee hereby represents  that Lessee or Lessee’s agents have inspectedthe subject property to the full extent deemed appropriate and that Lessee issatisfied with its condition. Lessee acknowledges that as of the date of thisLease, the subject property and the Premises and improvements are in goodorder, repair and condition. Lessor shall not be liable to Lessee or any personfor any latent or existing defect in the subject property, or for any injury ordamage that may result to any person or property, including without limitation,the person or property of Lessee, by or from any cause whatsoever arising outof the present actual or latent conditions of the subject property. Lessee hasnot relied on any acts, including any written or oral statements, by Lessor, orany person acting on behalf of Lessor, in entering into this Lease, but ratherhas relied on his, her or its own independent investigation of the subjectproperty. The entry by Lessee upon the demised premises shall be conclusiveevidence against Lessee as an admission that every part of the demisedpremises, (interior and exterior), is accepted “AS IS”. Lessee hereby agreesthat Lessor has no responsibility whatsoever for any maintenance, replacementsor repair of any part of said demised premises, including, but not limited to,telephone, security systems, computer wiring, cable, skylights,heating/ventilation, fire sprinklers, electrical, plumbing, other buildingsystems, sewer blockages, all fixtures, air conditioning (if any), ceilings,walls, floors, awnings, doors and windows and any contents situated therein,however that Lessor shall maintain the roof and exterior walls, excluding doorsand windows. Lessor said obligation shall not include however, any damage orrepairs necessitated by the acts or omission of the Lessees, Lessees agents,employees and/or customers or invitees. Lessor to engage a licensed HVACcompany to service the air conditioning system on the Lessee’s premises (ifany) and Lessee will pay  to Lessor theactual cost of such servicing contract, either directly  to Lessor or to  the servicing company

 

If the use of the premises includes the preparationand or consumption of food or beverage in, about, or away from the premises,Lessee will be responsible for maintenance, repairs and replacement of sewerlines, including sewer lines buried in the earth or concrete, except for sewerlines lying outside the property line which shall be Lessor’s responsibility,except where defects are caused or contributed to by Lessee’s use and oroccupancy of the premises. Lessee agrees to periodically have sewers flushedand cleaned at Lessee’s expense and to provide Lessor with copies of invoiceconfirming the cleaning.

 

If  the use ofthe premises includes the preparation and or consumption of food or beveragein, about, or away from the premises, Lessee will be responsible for maintenance,repairs and replacement of sewer lines, including sewer lines buried in theearth or concrete, except for sewer lines lying outside the property line whichshall be Lessor’s responsibility, except where defects are caused orcontributed to by Lessee’s use and or occupancy of the premises. Lessee agreesto periodically have sewers flushed and cleaned at Lessee’s expense and toprovide Lessor with copies of invoice confirming the cleaning. Lessee, inaccordance with local and state governmental fire and health agencies andregulations, shall install automatic fire suppression systems over commercialcooking equipment and shall install non-combustible metal plates between deepfat fryers and open flame units, all at Lessee’s expense and prior to the openingof business. Additionally, Lessee shall:

 

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a)         Service and wash said equipment on aregular basis including the washing or exchanging of filters in the hoodsystems and flues are to be cleaned on a quarterly basis by a licensed flue-cleaningcontractor and provide Lessor with copies of invoice or contract confirming thecleaning

 

b)       Lessee shall also provide adequate fireextinguishers as required by law

 

c)         Priorto opening for business****and throughoutthe duration of this Lease, Lessee shall provide Lessor****acopy of a contract for pest control abatement for demised premises and theCenter (if needed) with a local, reliable and licensed pest control firmproviding a weekly or monthly pest abatement as may be needed.

 

Lessor shall have no responsibility in any respect fordamages to property of Lessee caused by water, flooding, waves or fluids of anynature or origin whatsoever. As part of the consideration for the rental,Lessee agrees to fully maintain the demised premises in a first class order andcondition and repair at all times during the term hereof, without cost toLessor and further covenants that said premises shall not be altered, improved,or changed in any respect without the written consent of Lessor first had andobtained. Lessor has not made a survey of the premises with regard to thepresence of hazardous materials and Lessor has no knowledge of the presence ofany hazardous materials. Lessee upon entry of the demised premises assumes allrisk with regard to same. Lessee hereby covenants to save and hold Lessor, hisagent or managers, harmless from and to defend and indemnify Lessor against anysuit or claim or demand for damage or injury to any person or propertysustained in, on, or about the demised premises caused by any hazardousmaterials for which Lessee is responsible, or which Lessee has introduced tothe demised premises.  Lessee herebywaives any and all benefits and rights which Lessee might become entitled to byreasons of Sections 1941 and 1942 of the Civil Code of California and any andall other provisions of any law that permit a Lessee to make repairs at theexpense of a Lessor or to terminate a Lease by reason of the condition of thepremises.

 

**16.  LIENS****:**Lessee covenants to keep the demised premises and anyalterations, improvements and changes thereof, free and clear of liens of everykind and character whatsoever during Lessee’s occupancy thereof, no matter whatthe source thereof, or the reason thereof, which may arise from the use ofoccupancy of said premises by Lessee, or from any work, labor or materialsfurnished to or performed upon said premises. Lessee further covenants toindemnify and hold Lessor free and harmless of and from any and all loss ordamage howsoever arising by virtue of any such liens or claims of lienincluding any expense reasonably incurred by Lessor in defense against suchclaims. Lessor shall have the right to post and maintain on the dernisedpremises such notices of non-responsibility or non-liability as Lessor may deemappropriate to avoid any liability for liens.

 

**17.  ACCESSION****:**All alterations, improvements, additions or fixtures,other than trade fixtures not permanently affixed to realty, that may be made,constructed or installed upon the demised premises by either Lessee or Lessorand that in any manner are attached to the floors, wells, ceilings, or roofshall become and be the property of Lessor without cost and, at the terminationof this Lease, shall remain upon and be surrendered with the premises as a partthereof without disturbance, molestation or damage thereto. Any floor coveringthat may be cemented, nailed, tacked or otherwise affixed to the floor of thedernised premises shall become and be the property of the Lessor. Any lightfixture that may be installed by Lessee in, upon or about the dernised premisesshall become and be the property of Lessor whether such fixture be affixed byscrews, bolts, nails or otherwise. All water, sewer, utility, and othergovernmental use allocations, and all governmental permits shall remain withLessor, without cost to Lessor at the termination of this Lease.

 

**18.  WASTE****:**Lessee shall not commit nor suffer to be committed anywaste, legal, equitable, or otherwise, to or upon the demised premises or anypart thereof and covenants that at the expiration of the term hereof or anysooner termination thereof, Lessee will quit and surrender up said premises toLessor peaceably and quietly and in as clean and good condition as saidpremises now are or may be put into, reasonable use and wear excepted.

 

**19.  HOLD****-OVER TENANCY:**Lessor and Lessee agree that there shall beno renewal of this Lease, except upon execution of a written agreement, andthat the fact that the Lessee may continue in possession of the premiseswithout the written consent of Lessor shall not operate to renew this Lease. IfLessee should continue to occupy the demised premises after the expiration ofthe term hereof without the written consent of Lessor, such hold-over shall bedeemed a month to month tenancy only, at 150% of the monthly rent in effect atthe expiration of the term, per month, payable on the first date of each andevery month thereafter until the tenancy is terminated by a 30 day notice in amanner provided by law. Lessee shall hereby explicitly agrees to continue to bebound, at Lessor’s discretion, by the terms and conditions of this Lease,except that the monthly rent during said hold-over period will be 150% theamount of the last month’s rent. The provision for holdover tenancy is not tobe construed as limiting the rights or

 

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remediesotherwise available to Lessor to remove Lessee, or, to limit the rights ofLessor or Lessee to resolve any dispute.

 

**20.  REAL****PROPERTY, GLASS AND OTHER INSURANCE:** During the term hereof,Lessee shall maintain in full force and effect upon all of Lessee’s tradefixtures, “tenant’s” betterment’s and improvements, equipment; inventory andstock in trade in the demised premises a policy or policies of fire insuranceissued by an approved California insurance company rated A+ XIV with all riskcoverage endorsement to the extent of at least ninety percent (90%) replacementcost of such items. As long as this Lease is in effect, the proceeds of anysuch policy shall be used for the repair or replacement of the fixtures, “tenant’s”betterment and improvements and equipment so insured. Lessor shall have nointerest in the insurance upon Lessee’s fixtures and equipment and Lessor willcooperate with Lessee in the settlement of any claim or loss by Lessee,provided that Lessee gives to Lessor satisfactory assurance that the proceedsof such insurance will be used in compliance with the requirement hereinabovecontained respecting repair or replacement of said fixtures and equipment.During the term hereof Lessee shall also maintain in full force and effect atLessee’s expense a policy or policies of glass insurance, insuring Lessor andLessee’s interests, as they may appear, covering exterior and interior glass ofthe demised premises. Business Interruption Insurance, insuring that the rentwill be paid to Lessor for a period of not less than 1 year, if the premises bedestroyed or rendered inaccessible. Lessee shall also maintain at Lessee’s costfire legal liability equal to the value of the space rented by Lessee on areplacement cost basis. Lessee shall also maintain at Lessee’s cost, sprinklerleakage insurance upon Lessee’s property and the premises at all times if asprinkler system exists or is installed during the term of this Lease or anyextension hereof.

 

Lessoris to be named as its interest may appear as regards Lessee’s “tenant’sbetterment’s” and improvements on the fire insurance policy for the Lessee, andLessee is to provide sufficient amount of coverage to at least ninety percent(90%) of co-insurance with a replacement value, cost endorsement and inflationguard endorsement of not less than a ten percent (10%) annual increase or cost-of-constructionaverage increase as published by F.W. Dodge Systems, McGraw Hill, in the DailyPacific Builder, or other index agreed upon by the Lessor and Lessee, whicheveris higher.

 

Lesseecovenants, during the term of this Lease to reimburse Lessor for increasesbeyond the initial year for Lessee’s share of any and all insurance premiumspaid by Lessor for coverage of the real property and liability for the Center.The initial year shall be defined in Exhibit ”A”, Real Property andLiability and Glass Insurance Base Year. The initial cost shall be the amountshown in Exhibit ”A”, Real Property and Liability and Glass Insurance BaseCost. Lessee’s share shall be the percent appearing in Exhibit ”A”, RealProperty and Liability and Glass Insurance. Upon the anniversary of theinsurance policy year, Lessor shall notify Lessee of the new monthly amount tobe paid. It is understood that the insurance policy year may be different fromthe lease year.

 

**21.  LIABILITY****INSURANCE AND WORKERS’ COMPENSATION:**Lessee shall procure,at Lessee’s own expense, on or before the date of the commencement of the termof this Lease and shall maintain continuously during the entire term hereofWorkers’ Compensation as required by law and Public Liability insurance in theamount of one million dollars ($1,000,000.00) for the injury or death of anyone person and two million dollars ($2,000,000.00) for the injury or death ofany number of persons in any one accident and property damage liabilityinsurance in the amount of one million dollars ($1,000,000,00). All of saidpolicies of insurance shall provide that among the additional insuredthereunder shall be included Lessor, Lessor’s agents herein, Lessor’s PropertyManager, and all other persons whom Lessor may elect to keep insured,including, but not limited to, those named in Exhibit ”A”, “Named Insured”.All of said policies of insurance shall be obtained from companies satisfactoryto Lessor and shall contain an endorsement that such insurance shall not becanceled except after thirty-(30) days written notification to Lessor. Lesseeshall deliver to Lessor certificates evidencing the insurance coverage hereinprovided for, Lessee shall pay the insurance premiums on all insurance coverageherein provided for when due. If Lessee shall fail to pay the premiums on anypolicy required to be kept and maintained by Lessee, Lessor may, but need not,advance and pay said premiums, and the amount of any such advance or advances,together with interest thereon at the rate of ten percent (10%) per annum,shall become additional rent hereunder and one-sixth (1/6) of any total advanceshall be payable by Lessee to Lessor with each monthly installment of rent tobecome due thereafter until such advance is paid in full.

 

Lessorshall procure and shall continuously maintain during the entire  term herefo, Public Liability insurance inthe amount of One Million dollars ($1,000,000) for the death or lindury of anyone person, and two Million dollars ($2,000,000) for the injury or death of anynumber of persons in any one accident, and

 

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propertydamage liability insurance in the amount of one Million dollars($1,000,000).  At Lessee’s request,Lessor shall request that Lessee be included in Lessor’s policy as anadditional insured, and Lessor shall provide a certificate of such insurance toLessee.

 

Lessorshall also procure and shall continuously maintain during the enture termhereof, a policy of insurance covering the building containing the demisedpremsies against the ristks of fire and extended coverage (but not includingearthquake or flood) with a replacement cost endorsement, in an amount whichwould enable Lessor to rebuild  thedemised premises in the event of an insured casualty.

 

**22.  PERSONAL****PROPERTY TAXES AND REIMBURSEMENT FOR INCREASED REAL PROPERTY TAXES:**Lesseeshall pay before delinquency any and all taxes, assessment, license fees andpublic charges levied, assessed, or imposed upon Lessee’s fixtures, or aboutthe demised premises, or personal property located in, upon, or about thedemised premises, or on account of or by reason of any business or otheractivity conducted by Lessee in, upon or about the demised premises. Lesseefurther covenants during the term of this Lease to pay, with the monthly rent,Lessee’s share of any and all increases beyond the initial lease tax year ofreal property taxes and assessments levied upon the land and improvements ofthe Center, which such share shall be the percentage appearing in Exhibit ”A”,Property Taxes, all those taxes and assessments which may from time to time belevied upon the Center by the County of Monterey, City of Monterey or by anyother competent government body. The initial year shall be defined in Exhibit ”A”,Real Property Taxes Base Year. The initial cost shall be the amount shown in Exhibit ”A”,Real Property Taxes Base Cost.  All suchtaxes and assessments which are payable by Lessee shall be paid by Lessee toLessor. Lessee’s said share shall be as set forth in Exhibit ”A”.  All such taxes****and****assesments which are payable by Lessee shall be paid byLessee to Lessor monthly along with****the rent. Eachtax year the Lessor shall set forth the amount of such taxes monthly. The term “realproperty taxes” shall also include all expenses reasonably incurred by Lessorin seeking reduction by the taxing authorities of real property taxesapplicable to the Premises or in contesting said real property taxes.

 

Lesseeshall not be required to pay any municipal, county, state or federal income orfranchise taxes of Lessor, or any municipal, county, state or federal estate,succession, inheritance or transfer taxes of Lessor.  If at any time during the term the lawsconcerning the methods of real****propertytaxation prevailing at the commencement of the term are changed so that a taxor excise on rents, Lessee’s share of any tax or excise on rent shall besubstantially the same as, and a substitute for, the payment of such realproperty taxes as provided in this Lease,

 

**23.  DAMAGE****OR DESTRUCTION OF DEMISED PREMISES:**If the demised premisesor the building in which they are situated are totally destroyed or damagedmore than thirty percent (30%) in value by fire or the elements during the termof this Lease, Lessor shall thereupon have an election to terminate this Lease.In the event that a government agency by ordinance, regulation, interference orrefusal to permit the restoration of the premises and/or the building tosubstantially the same condition prior to such loss, or restrict the extent ofthe reconstruction so as to make the property not economically feasible, in thesole discretion of the Lessor, then the Lessor shall thereupon have the optionto terminate this Lease, and in the event that Lessor should exercise suchelection to terminate this Lease, all rights and obligations herein shall ceaseand terminate, except for rent and other sums accrued and unpaid to date ofsuch destruction or damage. Written notice terminating this Lease pursuant toLessor’s election aforesaid shall be given to Lessee not later than ninety (90)days after such damage or destruction. If the dernised premises or the buildingin which they are situated are so damaged by fire, or the elements, and Lessordoes not exercise Lessors election to terminate said Lease as hereinaboveprovided, and Lessor restores said demised premises at its own expense then,and in that event, this Lease shall remain in full force and effect. In theevent that repairs are to be made pursuant to this paragraph, Lessor shall beentitled to and shall have possession of the necessary parts of said premisesfor such purpose, and if there is any substantial interference with Lessee’sbusiness on account of such repairs, Lessee shall be entitled to aproportionate reduction of rent during the time that said repairs are beingmade.

 

IfLessor should elect to repair or rebuild because of any damage or destruction,as hereinabove provided, Lessor’s obligation shall be limited to restoration ofthe demised premises or the building in which they are situated similar to thecondition that Lessor provided at the commencement of the term hereof, or anyreasonable substitute therefore so long as such substitute meets applicablecode requirements, and Lessee shall fully repair or replace all exterior signs,trade fixtures, equipment, display cases, and other installations originallyinstalled by Lessee at its own expense, including, but not limited to, all ofLessee’s betterment’s and leasehold improvements.

 

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**24.  PROHIBITED****ACTS:**Lessee covenants not to do and not permit to be done,anything in, on or about the premises, and not to bring, nor keep anythingtherein which will in any way affect fire or other insurance upon the entireproperty, building, or any of its contents other than as shall be specificallyallowed elsewhere in the Lease, nor which will violate any law or regulationwhich now may be or which may hereafter be enacted or promulgated by any publicauthority, or which in any way may obstruct or interfere with the rights ofothers, or injure, or annoy them. Lessee further covenant that should there bean increase in fire or other insurance rates on any insurance held by Lessor onthe demised premises which increase is caused by or is attributable to theequipment, installations, alterations, or the business conducted, or us ofoccupancy by Lessee, the monthly rental to be paid by Lessee shall be raisedcorrespondingly to cover the full increase in such insurance rates.

 

**25.****  INSPECTION:**Lessorand Lessor’s agents shall have the right to enter into and upon  the demised premises during Lessee’s normaland customary business hours, and in emergencies at all times, for the purposesof inspecting the same, protecting Lessor’s reversion, making repairs,additions, or alterations to the premises or to any property owned orcontrolled by Lessor, or, for any lawful purposes. At any time within ninety(90) days prior to the expiration of the term hereof, Lessor shall have accessto the premises during Lessee’s normal and customary business hours for  the purpose of exhibiting  them to prospective  tenants for their inspection and for posting “forlease” or “for rent” signs upon the premises.

 

**26.  ****BANKRUPTCY OR INSOLVENCY:** If Lessee should execute avoluntary assignment hereof without the written consent of Lessor first had andobtained, or, if there should occur any assignment hereof by operation of lawon account of any act of Lessee, or, if Lessee, or any member of Lessee ifLessee be a partnership of joint venture, should file any petition in bankruptcyor any petition for extension or composition of creditors, or become insolvent,or make any assignment of any of Lessee’s property for the benefit of Lessee’screditors, or, if any involuntary bankruptcy proceedings should be initiatedagainst Lessee (and Lessee fails to obtain the dismissal of such proceedingswithin ninety (90) days after same arefiled) or, if any receiver be appointedof the business or of the asstss****of****Lessee, this Lease, at****the electionof Lessor, shall thereupon immediately terminate, and said Lease or anyinterest in said leasehold, shall not be assignable by any process of law, ortreated as an asset of Lessee thereafter, nor shall it pass under the controlof any trustee or assignee of Lessee by virtue of any control of any such proceedingor act of Lessee. If any such act or proceeding shall occur, Lessor mayterminate this Lease by the mailing of written notice to the Lessee’s AddressFor Notice as shown in Exhibit ”A”, attached hereto, stating Lessor’selection to so terminate, and all rights of Lessee hereunder shall thereuponterminate, and Lessor may promptly reenter upon said premises.

 

**27.****  DEFAULT AND REENTRY:**If Lesseedefaults in the payment of any rent as required hereby to be paid or, if Lesseedefaults in the performance of any term, covenant, condition, or obligationrequired hereby to be performed by Lessee and such default continues for aperiod of ten (10) days after written notice is mailed to Lessee of suchdefault, then, in addition to any other remedy Lessor may have by operation oflaw, Lessor shall have the right, without any other or further notice ordemand, to enter upon the premises, and eject all persons from the premises andremove all properly therefrom, using such lawful force as may be necessary to sodo, in which case Lessor shall not be responsible for the care or safety ofpersons or property so removed and Lessee hereby waives any and all claims forloss or damage to property or persons so removed from the demised premises byLessor pursuant hereto, and Lessor, in the case of any such default by Lesseein the payment of rent or in the performance of any one of the terms,covenants, conditions or obligations herein contained, may declare this Leaseterminated, take possession as above provided, and retain all prepaid rentalsand other prepaid expenses or deposits as Lessor’s damages or Lessor may,without terminating this Lease or declaring a forfeiture of Lessee’s rightshereunder, retain all prepaid rentals and other prepaid expenses or deposits,re-let the premises or any part thereof, as the agent and for the account ofLessee upon such terms and conditions as Lessor may deem advisable, either withor without equipment or fixtures left remaining in the demised premises byLessee, in which event the rents received on such re-letting and retainedprepayments or deposits shall be applied first to the expenses of such re-lettingand collection of rent, including any necessary renovation and alteration ofthe premises, and reasonable attorney’s fees, and any actual real estatecommissions paid, and thereafter the balance of any such rents, retainedprepayments or deposits shall be applied to the payment of all sums due or tobecome due to Lessor hereunder and, if a sufficient sum shall not be thus realizedto pay such sums and other charges, Lessee shall pay to Lessor any deficiencymonthly, notwithstanding, Lessor may have received rental in excess of therental stipulated in this Lease in previous or subsequent months, and Lessormay bring an action therefore as such monthly deficiency shall arise, in whichevent Lessor shall be entitled to recover reasonable attorney’s fees forcommencing and prosecuting such suit. Lessor shall be entitled to each and allof Lessor’s remedies, and the election to proceed with one may not be construedas excluding

 

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the subsequent use of anyother. The remedies herein granted to Lessor shall not be construed to be anylimitation of any rights, or remedies otherwise available to Lessor, but shallbe construed to be in addition thereto. Lessee shall allow any reentry byLessor as aforesaid without hindrance and Lessor shall not be liable in damagesfor any such reentry, or be guilty of trespass or forcible entry.

 

**28.  LESSOR****-LESSEE LIABILITY:**Lessor shall not be liable for any lossor damage that may result to any property belonging to Lessee, located in, on,or about said demised premises from any cause whatsoever, nor shall Lessor beliable for any damage or injury or personal injury to any person or propertyoccurring or arising in, on, or about the demised premises from any causewhatsoever. Lessee hereby covenants to save and hold Lessor, his agent andmanager harmless from and to defend and indemnify Lessor against any suit orclaim or demand for damage or injury to any person or property sustained in,on, or about the demised premises from any cause whatsoever during the term.

 

**29.  INTEREST****ON DELINQUENCIES:**Lessor shall be entitled to interest onany amounts owing from time to time from Lessee to Lessor at the maximum ratepermitted by law.

 

Theforegoing shall apply to any and all payments that Lessor may from time to timebe entitled to receive from Lessee including, but not limited to, rents, realproperty taxes and assessments, fire insurance premiums, common areamaintenance and repair costs, common area capital improvement costs, and anyand all other amounts that Lessor may from time to time be entitled to receivefrom Lessee.

 

**30.  ATTORNEYS****FEES:**If either party hereto should bring any suit againstthe other party hereto for the breach of any term, covenant, condition orobligation herein contained to be kept, by such other party, for the recoveryof any sum due hereunder, or to recover possession of the premises, or for anysummary action for forfeiture of this Lease, or to prevent further violationsof any of the terms, covenants, conditions or obligations, or, for any otherrelief then, and in that event, the prevailing party in such suit for summaryaction shall be entitled to a reasonable attorney’s fee to be fixed by thecourt.

 

**31.  NON-WAIVE****R OF BREACH:**Lessors failure to take advantage of anydefault or breach of covenant

 

on thepart of Lessee shall not****be construedto be a waiver thereof; nor shall any custom or practice which may grow upbetween the parties hereto in the course of administering this Lease beconstrued to waive or to lessen the right of Lessor to insist upon theperformance of any and all terms, covenants, conditions, and obligations hereof,or to exercise any right given Lessor on account of any default.   A waiver of a particular breach or defaultshall not be deemed to be waiver of the same or any other subsequent breach ofdefault. Lessor’s consent to or the approval of any act by Lessee requiringLessor’s consent or approval shall not be deemed to waive or render unnecessaryLessor’s consent to or approval of any subsequent or similar act by Lessee.

 

**32.  CONDE****MNATION:**If title to all of the premises is taken for anypublic or quasipublic use under any statute, or by right of eminent domain, orby private purchase in lieu of eminent domain, or if title to so much of thepremises is so taken that, in the sole opinion of Lessor, a reasonable amountof reconstruction of the premises will not result in the premises being apractical improvement, or reasonably suitable for Lessee’s continued occupancyfor the uses and purposes for which the premises are leased, then, in eitherevent, this Lease shall terminate on the date that possession of the premises,or part of the premises, is taken, unless Lessor elects that said Leasecontinue.

 

**32.1 **If this Lease continuesunder provisions of Paragraph 1, above, the Then Fixed Rent shall be reduced inthe same proportion that the floor area of the portion of the premises so taken(less any additions to the premises by reconstruction) bears to the originalfloor area of the premises. Lessor shall, at Lessor’s own cost and expense,make all necessary repairs or alterations to the building in which the premisesare located so as to constitute the portion of the building not taken a useableunit. There shall be an equitable abatement of rent during such restorationperiod.

 

**32.2 **All compensation awarded orpaid upon a total or partial taking of the fee title of the premises shallbelong to Lessor, whether such compensation be awarded or paid as compensationfor diminution in value of the leasehold or of the fee provided, however, thatLessor shall not be entitled to any award made to Lessee for depreciation ordamage to, or cost of removal of stock and fixtures, if any.

 

**32.3 **Each party agrees toexecute and deliver to the other all instruments that may be required toeffectuate the provisions of this paragraph, and Lessee shall assign to Lessorand appoint Lessor to act for Lessee in all matters of condemnation except forLessee’s specific rights to damages as set forth in Paragraph 3, above.

 

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**33.  UTILITIES****AND ANCILLARY SERVICES:**Lessee will, during the term of thisLease, pay for all charges for utilities and ancillary services furnished,delivered to or performed upon the demised premises including, but not limitedto, electricity, gas, telephone, telecommunication systems, water, sewer(including MRWPCA charges), city, county, district, state or federal surchargesand or user fees, storm drain fees, taxes or assessments, cable, garbage/refusecollection and recycling, insect and rodent control, neighborhood improvementand traffic impact assessments, fees and taxes and all other ancillary usercost, including interest, late fees and fines, resulting from the occupancy ofthe premised by the Lessee. Lessee shall, if feasible, pay for the aboveservices directly to the public utility or other suppliers. In the case ofMRWPCA and other charges, which are attributable to the demised premises butare billed to Lessor, Lessee agrees to reimburse Lessor as provided for herein,monthly along with the rent. Lessor or his agent makes no representation orwarranty whatsoever as to the availability of water, gas, electricity, or anyother utility and ancillary services for Lessee’s intended use and Lesseeacknowledges that Lessee has made Lessee’s own investigation with respect tothe availability of any and all utility and ancillary services required byLessee and that Lessee is satisfied with respect to such availability, and thatLessor has no obligation whatsoever with respect thereto. Lessee shall obtain,install, and pay for, an individual meter for each of the utility servicesrequired by Lessee upon Lessee’s dernised premises; except that Lessor shallprovide a gas meter and an electric meter for the premises.

 

If,for any reason, Lessee cannot obtain an individual or separate meter or billingfor Lessee’s demised premises then, and in that event, Lessor shall utilizeLessor’s best efforts to make any such required utility services available toLessee through Lessor’s existing common meters and Lessor shall bill to Lesseeand the Lessee shall pay to Lessor within ten (10) days of the statementtherefore such amount as Lessor shall determine to be Lessee’s fair andequitable share of any such utilities and Lessor’s determination in this regardshall be final, binding and conclusive upon Lessee. All such statements forutility services shall be presented to Lessee on a regular basis and within areasonable period of time after receipt of Lessor’s statement from theapplicable utility. Lessor shall not be liable in damages or otherwise for anyfailure or interruption of any utility service being furnished the Premises andno such failure or interruption shall entitle Lessee to terminate or modifythis Lease in any way.

 

Notwithstanding anything to the contrary contained herein, Lessee agrees thatLessor may arrange for professional direct billing to Lessee for the commonlyprovided metered utilities and ancillary services provided to Lessee though orby the Lessor, and Lessee agrees to pay for such direct billing and costseparate from the rent payment owed to Lessor, according to this Lease and thatthe costs and direct billings for utilities and ancillary services shall not beconsidered a reduction or offset in the rental payment due Lessor but shall bein addition to the rent. It is understood and agreed between Lessor and Lesseethat in the event such direct billing payments are not made when due, it shallbe considered a substantial default under the Lease and Lessee agrees thatLessor may bring summary proceedings for payment and or eviction as if the rentwere not paid.

 

**34.  HEI****RS ANDASSIGNS:**Except as herein otherwise provided, all terms, conditions,covenants and obligations contained in this Lease shall be binding upon theinure to the benefit of the heirs, successors, legal representatives andassigns of the parties hereto.

 

**35.  NOTICES****:**All notices, statements, demands, requests, approvals,authorizations, offers, agreements, appointments or designations under thisLease by either party to the other shall be in writing and shall be servedpersonally upon the other party or deposited in the United States mail,certified mail, return receipt requested, postage prepaid, and addressed toLessee at Lessee’s Address For Notice as it appears on Exhibit ”A”,attached hereto, or to such other address as Lessee may from time to timedesignate to Lessor in writing, and addressed to Lessor as it appears on Exhibit ”A”,or at such other address as Lessor or his agent may from time to timedesignate, to Lessee in writing.

 

**36.  CONSTR****UCTION:**Each term, covenant, condition and obligation ofthis Lease to be performed by Lessee shall be construed to be both a covenantand condition.

 

**37  LAYOUT****OF THE DEMISED PREMISES AND SURROUNDING AREA OWNED BY LESSOR:**Lessordoes not guarantee a continuance of the passage of light and air over thedemised premises or over any of the real property adjoining the demisedpremises and Lessor expressly reserves all air space over the demised premises.Any reference in this Lease with respect to the location of reference in thisLease with respect to the location of buildings, parking areas, if any, andother improvements shall not be deemed to be a warranty or representation.Lessor hereby reserves the right at any time to make any

 

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alterationsor additions to or to build additional stories on any presently existingbuilding owned by Lessor. Lessor also reserves the right to construct otherbuildings or improvements upon the surrounding real property, which may beowned by Lessor from time to time, and to make alterations or additions theretoand to build additional stories on any such buildings and to modify andreallocate space within the Center. Lessor further reserves rights-of-ways andeasements in, over, under, and through Lessee’s demised premises for sprinklerand fire detection system purposes, power and telephone lines, plumbing lines,air conditioning, heating and ventilation systems, and conduits for allutilities, together with the right to locate, relocate, and maintain the sameat any and all times and from time to time in, upon, over, or under Lessee’sdernised premises without any rebate of rent or liability for any interruptionor disturbance caused by Lessor, its agents, servants or employees, or by anyutility company employee or representative; provided, however, that Lessorshall use reasonable discretion in exercising its rights pursuant to thissentence,

 

**38.  NUMBER****AND GENDER:**Whenever the singular number is used in thisLease and when required by the context, the same shall include the plural, andthe masculine gender shall include the feminine and neuter genders, and theword “person” shall include corporation, firm, partnership, or association. Ifthere be more than one Lessee, the obligations imposed herein upon Lessee shallbe joint and several.

 

**39.  MARGINAL****TITLES:**The marginal headings or titles to the paragraphs ofthis Lease are not a part of this Lease and shall have no effect upon theconstruction and interpretation of any part of this Lease,

 

**40.  MODIFICAT****ION AND VOIDANCE OF PRIOR AGREEMENTS:**This instrumentcontains all the agreements and conditions made between the parties to thisLease and may not be modified orally or in any other manner than by anagreement in writing signed by all of the parties to this Lease or otherrespective successor or successors in interest. This Lease supersedes any andall prior written and oral agreements between Lessor and Lessee, which suchagreements, if any, are void and of no further effect.

 

**41.  TIME OF ES****SENCE:**Time is of the essence of each term, covenant,condition and obligation of this Lease.

 

**42.  PAYMENTS****NOT IN SUBSTITUTION:**Except as otherwise expressly stated,each payment requiredto be  made byLessee shall be in addition to and not in substitution for other payments to bemade by Lessee.

 

**43.  CONVEYAN****CE BY LESSOR:**If, during the term of this Lease, Lessorshall sell Lessor’s interest in the demised premises, then from and after theeffective date of such sale, Lessor shall be released and discharged from anyand all obligations and responsibilities under this Lease, except those alreadyaccrued; provided, however, that any such purchaser shall assume all of Lessor’sobligations to be performed hereunder, including the obligation to refund thesecurity deposit at the expiration of this term.

 

**44.  SIGNS****AND ADVERTISING:**No sign, advertisement, or notice shall beinscribed, painted or otherwise displayed, or screens, awnings, shades,decorations, symbols, fixtures or any other thing affixed on any part of theoutside of the demised premises (or inside of the demised premises where suchmay be seen through windows or otherwise by passersby) except of such color,size, or style, and in such place on or in said premises as shall first befixed, designated and approved by Lessor in writing. Lessor may at his optionprovide one directory at a location and of a design to be determined by Lessor.Such directory shall display Lessee’s practice or business name as agreed byLessee and Lessor. Lessee agrees to pay for the cost of such directoryidentification.

 

Lessorfurther acknowledges and agrees as a condition of this lease, to comply withall Lessor’s existing building signage criteria, and or to any new signagecriteria that the Lessor, any governmental agency or business or tradeassociation may require from time to time. Lessee covenants to Lessor andagrees to install all initial signage within 45 days from taking possession ofthe premises, and for new signage within 60 days from written notice fromLessor that a new sign is required, all of which is subject to the terms andconditions of this article.

 

**45.  STATEMENT****OF LESSEE:**Lessee shall at any time and from time to timeupon not less than ten (10) days prior written request by Lessor, execute,acknowledge and deliver to Lessor a statement in writing certifying that thisLease is unmodified and in full force and effect if such is the fact (or ifthere has been any modification thereof that the same is in full force andeffect as modified and stating the modifications) and the dates to whichrentals and other charges have been paid in advance, if any. It is expresslyunderstood and agreed that any such statement delivered pursuant to thisparagraph may be relied upon by any prospective purchaser of the complex orestate of Lessor or by

 

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themortgagee or assignee of any mortgages of any mortgage or the trustee orbeneficiary of any deed of trust constituting a lien upon the leased premisesor upon property including the lease premises or any part thereof.

 

**46.  JANITORIAL****SERVICE:**Lessor shall have no responsibility whatsoever forthe furnishing of any janitorial service to the demised premises. Janitorialservice within the dernised premises shall be the sole responsibility and atthe sole cost of Lessee. Lessee covenants and agrees to obtain sufficientjanitorial service to maintain the demised premises in a clean and orderlycondition at all times. Lessee further agrees to deposit Lessee’s refuse andgarbage only in those areas designated in writing by Lessor from time to time.

 

**47.  SUBORDINAT****ION:**This Lease is and shall be subordinate to anyencumbrance now of record or recorded after the date of this Lease affectingthe building, other improvement, and land of which the premises are a part.Such subordination is effective without any further act of Lessee. Lessee shallfrom time to time upon request from Lessor execute and deliver any documents orinstruments that may be required by a lender to effect any subordination. IfLessee fails to execute and deliver any such documents or instruments, withinten (10) days, Lessee irrevocably constitutes and appoints Lessor asLessee’s special attorney in fact to execute and deliver any such documents orinstruments.

 

**48.  COMPETITION****:**Lessee agrees that during the term of this Lease, it willnot operate, or be directly or indirectly connected with or interest in, anyother business or enterprise similar to or in competition with or interest in,any other business or enterprise similar to or in competition with the oneconducted by Lessee on the demised premises within a radius of one (1) airmile of the clemised premises.

 

**49.  GOVERNMENT****FEES:**All governmental fees, charges, district assessmentfees or charges, including but limited to, fire, police, sanitary service,water, utilities, parking, parking adjustments or parking assessments for theLessee’s use or occupancy of the premises shall be the responsibility of theLessee, and payable to Lessor along with the rent or paid direct to theappropriate agency as required. Lessee further covenants and agrees toencourage all Lessee’s employees to utilize long-term public parking lots andgarages (instead of public street parking), and agrees to purchase monthlyparking permits for said employees from the appropriate governmental agency.

 

**50.  LESSEE’S****IMPROVEMENTS:**Insofar as the space demised to Lessee within,said building is concerned, Lessee’s obligation shall be to complete thoseitems necessary for Lessee’s intended use of the demised premises, all of whichmust be installed in conformity with the latest applicable local and staterules, regulations, ordinances, and building codes, and in conformity with theplans and specifications, to be prepared by Lessee’s architect and submitted toLessor for Lessors approval, in writing, prior to commencement of Lessee’swork, which said approval by Lessor shall not be unreasonably withheld.Construction shall be diligently prosecuted to completion by Lessee, provided,however, that any prevention, delay or stoppage due to strikes, lock-outs,labor disputes, Acts of God, inability to obtain labor or materials orreasonable substitutes therefore, governmental restrictions, governmentalregulations, governmental controls, enemy or hostile governmental action, civilcommotion, fire or other casualty, and other causes beyond the reasonablecontrol of the party obligated to perform shall excuse performance by suchparty for the period equal to any such prevention, delay or stoppage. Theacceptance of said premises for the purpose of performing Lessee’s work in thepremises, as hereinabove defined, shall constitute an acknowledgment by Lesseethat the premises are in the condition called for by this Lease and that Lessorhas performed all its work with respect to the premises.

 

All ofLessee’s work shall be done on a lien-free basis and shall be completed freeand clear of all liens recorded or recordable pursuant to the provisions of theCivil Code of the State of California relating to mechanic’s liens (Section 3109et. seq.).

 

**51.  GARBAGE****, REFUSE, TRASH, COLLECTION & REIMBURSEMENT:**Lesseeacknowledges that it is Lessor’s concern that all portions of the premises andthe building and adjoining lands within and upon which the premises are locatedare at all  times clean and saniitary,and Lessee therefore agrees to abide by Lessor’s judgment as to whether Lessee’sgarbage, refuse and  trash  removal services are adequate. In  the event that Lessor deems that more frequent or more effective service isdesirable, Lessee agrees to follow the directions of Lessor with respect toimprovements of said services under penalty of default and further agrees toreimburse Lessor for all costs and expenses incurred by Lessor in removingLessee’s garbage, refuse and trash should Lessor, in his sole judgment,determine that said action is desirable. Lessee further agrees to abide byLessor’s noticed rules and regulations relating to use of refusecontainers and storerooms that from time to time may be available to tenantsand to deposit Lessee refuse only within Lessee’s demised premises or in thoseareas designated by Lessor in writing from time to time. Lessor may arrange forthe collection and removal of Lessee’s and other Lessee’s garbage and refusewhich is

 

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sodeposited, and shall advance on behalf of Lessee and other Lessee’s for theirrespective prorata shares of such costs. Lessee agrees to reimburse Lessor forsuch advances within five (5) days of receipt of said bill.

 

**52.  SPRINKLER****SYSTEM (IF ANY):**Lessee acknowledges that if the premisesare currently provided with an automatic sprinkler system it is ISO rated.Should Lessee’s occupancy, use, improvements or remodeling within, upon orabout the demised premises cause any reduction in the rating of said systemanywhere in the building, at any time, in which the premises are located, orresult in the requirement by insurance carrier or a governmental agency that asprinkler system be installed, Lessee shall immediately undertake all suchautomatic sprinkler work, all at Lessee’s sole cost and expense. Furthermore,Lessee shall at all times be responsible for and shall pay for any and allmodifications as are necessary to maintain the ISO rating on said system withinthe demised premises. Lessee shall, during the term of this Lease and anyextension thereof, at Lessee’s sole cost and expense, maintain and service saidsprinkler system, detection and monitoring system, keeping it in good workingorder, including but not limited to, periodic service and inspection charges,periodic testing, water users fees, assessments and assessment districtcharges, and all other governmental fees and charges thereto.

 

**53.  MERCHANT’S****ASSOCIATION:**Lessee shall join at all times during the termof this Lease maintain membership in any businessmen’s merchant associationthat may exist for substantially all retail businesses located in the Centerarea. Lessee shall abide by the rules and regulations of any suchorganization and shall make such contribution to such joint advertising programsponsored by such organization and shall make such contribution to such jointadvertising program as shall be determined in accordance with the bylaws orother regulations of such association.

 

**54.  R****IGHT OFFIRST REFUSAL:  This section hasbeen removed.**

 

**55.  T****RANSFER FEE:This section has been removed.**

 

**56.  N****OPARTNERSHIP:**Lessor does not, in any way or for any purpose becomepartners of Lessee in the conduct of its business, or otherwise, or jointadventurer or a member of a joint enterprise with Lessee. The provisions ofthis Lease relating to the percentage rent payable hereunder are includedsolely for the purpose of providing a method whereby the rent is to be measuredand ascertained.

 

**57.  HAZARDOUS****MATERIALS:**Lessee shall not at any time during the term ofthis Lease use, or any extension, generate, store or dispose of, on, under, orabout the Premises any hazardous substance, hazardous material, hazardouswaste, toxic substance, pollutants, contaminants, or related materials (“HazardousMaterials”), except, those, if any, listed in Exhibit ”A,”, attachedhereto and made a part hereof. For the purposes of this covenant, HazardousMaterials shall include, but shall not be limited to, substances defined as “hazardoussubstances” or “pollutants or contaminants” in the Comprehensive EnvironmentalResponse, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601at seq., those substances defined as “hazardous waste” by the ResourceConservation and Recovery Act, as amended, 42 U.S.C. Section 6901 at seq.,and by Section 25316 of the California Health and Safety Code, and thosesubstances defined as “hazardous substances” in Section 25316 of theCalifornia Health and Safety Code, and the regulations adopted and publicationspromulgated pursuant to said laws. Lessee shall indemnify, defend, and holdLessor harmless from and against all liability, including all foreseeable andunforeseeable consequential damages, directly or indirectly arising out of theuse, generation, storage or disposal of Hazardous Materials, including, withoutlimitation, the cost of any required or necessary repair, clean-up, ordetoxification and preparation of any closure or other required plans, to thefull extent that such action is attributable, directly or indirectly, to theuse, generation, storage or disposal of Hazardous Materials on the Premises atany time. Lessee shall provide written notice to the Lessor of any present orfuture hazardous substance release that Lessee knows or has reasonable cause tobelieve is or will be present on or under the Premises, within a reasonableperiod of time after such release is discovered or believed by the Lessee to bepresent. (See Health and Safety Code Section 25359.71).

 

**57.1  HAZARDOUS****MATERIALS REPORT:**Lesseeagrees that if Lessee is unable for any reason to complete the certificationprovided for in Paragraph 57.2 below, Lessee shall obtain and deliver to Lessorwithin thirty (30) days before or after the termination of this Lease ahazardous substance report concerning the Premises (“Hazardous Materials Report”),the purpose of which Hazardous Materials Report shall be to affirm that Lesseeshall be in compliance with all applicable laws, ordinances, rules andregulations of any governmental agency having jurisdiction concerning the use,storage and/or disposition of hazardous materials on the Premises at thetermination of this Lease or any extension thereof. Lessee shall obtain theHazardous Material Report at its sole cost and expense. For the purposes ofthis report, a “Hazardous Material” is defined as any substance the existenceor effect

 

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of which is subject toany Federal, State or local regulation, investigation, correction or removal aspotentially injurious to public health or welfare. Lessor and Lesseeacknowledge that extensive local, State and Federal legislation establishesbroad liability upon owners and/or user of real property for the investigationand correction of such hazardous material conditions. The Hazardous MateriasReport shall be in writing, and shall be prepared by a licensed contractor orengineer competent to perform such investigation on behalf of Lessee. If theHazardous Materials Report shall indicate a condition requiring correction orposing a potential liability to Lessor, Lessee shall forthwith cure thecondition(s) specified in the Hazardous Materials Report at Lessee’s sole costand expense, prior to the termination of this Lease.

 

**57.2  HAZARDOUS MATERIALS CERTIFICATION BY LESSEE:**Lesseewill execute an indemnification agreement and notarized certification underpenalty or perjury substantially as follows:

 

a.               Thatno hazardous materials other than those, if any, listed in Exhibit ”A” hasbeen introduced to the Premises.

 

b.              Thatthere has been no spillage of hazardous materials listed in Exhibit ”A”and that such materials have been properly stored in closed containers inaccordance with the law and disposed of in accordance with the law.

 

c.               ThatLessee agrees to pay the cost of cleaning up any contamination resulting fromLessee’s use or occupancy of the Premises and hold harmless and indemnifyLessor and Lessor’s agents for any claims that result therefrom. Lessee shall deliversuch certification to Lessor within five days before or after the terminationfor any reason of Lessee’s occupancy of the Premises. If Lessee fails to sodeliver such certification within the time required, Lessee shall comply withthe provisions of Paragraph 57.1above.

 

**57.3  EMISSION, STORAGE, USE AND DISPOSAL OF WASTE:**

 

**a.****                                       Emissions.**Lessee shall not:

 

1)              Permitany vehicle on the premises to emit exhaust, which is in violation of anygovemmental law, rule, regulation or requirement;

 

2)              Discharge,emit or permit to be discharged or emitted, any liquid, solid or gaseousmatter, or any combination thereof, into the atmosphere, the ground or any bodyof water which matter, as reasonably determined by Lessor or any governmentalentity, does, or may, pollute or contaminate the same, or is, or may become,radioactive or does, or may, adversely affect the (a) health or safety ofpersons, wherever located, whether on the Premises or anywhere else, (b) condition,use or enjoyment of the Premises or any other real or personal property,whether on the Premises or anywhere else, or (c) Premises or any of theimprovements thereto or thereon including buildings, foundation, pipes, utilitylines, landscaping or parking area;

 

3)              Produce,or permit to be produced, any intense glare, light or heat except within anenclosed or screened area and then only in such manner that the glare, light orheat shall not be discernable from outside the Premises;

 

4)              Create,or permit to be created, any sound pressure level which will interfere with thequiet  enjoyment of any real propertyoutside the Premises, or which will create a nuisance or violate anygovernmental law, rule, regulation or requirement.

 

5)              Create,or permit to be created, any ground vibration that is discernable outside thePremises.

 

6)              Transmit,receive or permit to be transmitted or received, any electromagnetic, microwaveor other radiation which is harmful or hazardous to any person or property in,or about the Premises, or anywhere else.

 

**b.****                                       Storageand Use**

 

1)              Storage.Subject to the uses permitted and prohibited to Lessee under the lease. Lesseeshall store in appropriate leak proof containers all solid, liquid or gaseousmatter, or any combination thereof, which matter, if discharged or emitted intothe atmosphere, the ground or any body of water, does or may (a) polluteor contaminate the same, or (b) adversely affect the (i) health orsafety of person, whether on the

 

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Premisesor anywhere else, (ii) condition, use to enjoyment of the Premises or anyreal or personal property, whether on the Premises or anywhere else, or (iii) Premisesor any of the improvements thereto or thereon.

 

2)              Use.In addition, without Lessor’s prior consent, Lessee shall not use, store orpermit****to remain on the Premises any solid,liquid or gaseous matter, which is, or may become radioactive. If Lessor doesgive its consent, Lessee shall store the materials in such a matter that noradioactivity will be detectable outside a designated storage area and Lesseeshall use the materials in such a manner that (a) no real or personalproperty outside the designated storage area shall become contaminated therebyor (b) there are and shall be no adverse effects on the (i) health orsafety of person, whether on the Premises or anywhere else, (ii) condition,use or enjoyment of the Premises or any real personal property thereon ortherein, or (iii) Premises to any of the improvements thereto or thereon.

 

**c.****                                       Disposalof Waste**

 

1)              RefuseDisposal.   Lessee shall not keep anytrash, garbage, waste or other refuse on the Premises except in sanitarycontainers and, except for normal trash removal by Lessee, shall regularly andfrequently remove extraordinary trash from the Premises. Lessee shall keep allincinerators, containers or other equipment used for storage or disposal ofsuch materials in a clean and sanitary condition.

 

2)              SewageDlsposal. Lessee shall properly dispose of all sanitary sewage and shall notuse the sewage disposal system (a) for the disposal of anything exceptsanitary sewage or (b) excess of the lesser amount (i) reasonablycontemplated by the uses permitted under this Lease or (ii) permitted byany governmental entity.Tenant shall keep the sewage disposal system free of allobstructions and in good operating condition.

 

3)              Dlsposalof Other Waste.  Lessee shall properlydispose of all of the waste or other matter delivered to, stored upon, locatedupon or within, used on, or removed from, the Premises in such a manner that itdoes not, and will not, adversely affect the (a) health or safety ofperson, wherever located, whether on the Premises or elsewhere (b) condition,use or enjoyment of the Premises or any other real or personal property,wherever located, whether on the Premises or anywhere else, or (c) Premisesor any of the improvements thereto or thereon including buildings, foundation,pipes, utility lines, landscaping or parking areas.

 

**d.****                                       Information:**Lessee shall provide Lessor with any and all information regardinghazardous or toxic materials, in the Premises, including copies of all filingsand reports to governmental entities at the time they are originated and anyinformation requested by Lessor. In the event of any accident, spill of otherincident involving hazardous or toxic matter of which Lessee has actualknowledge, Lessee shall immediately report the same to Lessor and supply Lessorwith all information and reports with respect to the same. All informationdescribed herein shall be provided to Lessor regardless of any claim by Lesseethat it is confidential or privileged.

 

**e.****                                      Compliancewith Law:**Notwithstanding any other provision in this Lease to thecontrary, Lessee shall comply with all laws, statues, ordinances, regulations, rules andother governmental requirements in complying with its obligations under thislease, and in particular, relating to the storage, use and disposal ofhazardous or toxic matter.

 

**58.  WAT****ER USE I SHORTAGE DISCLOSURE I ASSESSMENTS AND FINES:**Allparties to this lease acknowledge the following: In Monterey County water is ascarce resource, due to recent drought years, limitations on water use andconsumption have been implemented to water users in the past and will continueinto the future. These limitations include, but are not limited to: waterrationing; limitation/restriction of new fixtures; limitation/restriction tobusinesses due to potential increase in water use; implementation of fines foroverages of water use; implementation of fees resulting from new fixtures or waterhookups or increased water use. Lessee hereby agrees to comply and abide by allrules, regulations and policies adopted by the Monterey Peninsula WaterManagement District or its successors, including but not limited to the paymentof fines, fees and assessments, as a result of the occupancy and use of thepremises by Lessee. Lessee shall pay said amounts of pro-rata, or 100% ifsolely resulting from Lessee’s use of premise promptly so as to**a**void a**lien beingplaced upon Lessor’s property by the district. Lessee may appeal the decisionof the district, provided Lessee~s action does not create a lien upon Lessor’sproperty. Lessee is hereby informed that if for any reason assessments, fees orfines are imposed upon the property, Lessor may pay such assessments, fees orfines and deduct them**from theprepaid rents and/or the security

 

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deposit and Lessee shallwithin ten (10) days from notice, restore the prepaid rents and/or thesecurity deposit, as provided for in this lease. In the event Lessee’s actionsor lack of actions results in a lien being placed upon Lessors property, Lessormay, in his sole discretion, declare Lessee in default and terminate this leaseupon ten (10) days advance written notice. Lessor further acknowledgesthat Lessor, aand/or its agents and representatives have made no representationabout the Lessee’s right to water use, increased use or installation ofadditional water fixtures. Lessee agrees to hold harmless and indemnify Lessor,and/or its agents or representatives from any liability and costs relating tothis issue, including but not limited to assessments, fines, fees, reasonableattorney fees and court costs.

 

Notwithstanding  the foregoing, Lessor shall not charge Lesseefor any fines, fees, charges or expenses, including reasonable attorney’s fees,when Lessor can reasonably determine that such fines, fees or charges have beensolely caused by some other  tenantin  the center.

 

**59.  QUITCLAIM****DEED: This section has been eliminated.**

 

**60.****RECORDING****:**Lessee willnot record  this lease.

 

**61.  SURRENDER****OF PREMISES:**Upon expiration or termination of this Lease,Lessee shall surrender possession of the premises in the condition required bythis Lease, and Lessee shall, at Lessee’s expense, a) remove all signage fromthe exterior and interior of the premises and or building and or common areas,and (b) remove all Lessees trade fixtures and personal property and thoseclaiming under Lessee from the premises and the property, subject to thelimitation, of this Lease agreement, and (c) clean the premises including,but not limited to windows, carpets, floors, walls, ceilings, (d) paintthe interior of the premises a color acceptable to Lessor, and (e) quitand deliver up the premises peaceable and quietly and in as good order andconditions as the same were in on the date the term of this Lease commenced,ordinary wear and tear excepted. Additionally, all Lessee alterations of thepremises, at the election of the Lessor, will be removed and the premises willbe returned to the conditions as at the time of the commencement of this Lease,at the expense of the Lessee, (e) surrender all keys, any key cards, andany parking stickers or cards, to Landlord, and advise Landlord as to the combinationof any locks or vaults then remaining in the Premises.

 

**62.  LIMITATION****TO LESSOR’S PERSONAL LIABILITY:**Lessee shall look solely toLessor’s interest in the building and the land of which the premises form apart for the recovery of any claims, damages or judgment against Lessor, and ifLessor is (i) a partnership, its partners whether general or limited, or (ii) acorporation, its directors, officers or shareholders, or (iii) a limitedliability company, its members or (iv) a trust its beneficiaries, shallnever be personally liable for any such claims, damages or judgment.

 

**63.  ALTERATIONS****/IMPROVEMENTS:**Lessee shall not make any improvements on theproperty without Lessor’s consent. In making any alterations that Lessee has aright to make, Lessee shall comply with the following:

 

**a.**                                      Lessee shall submit reasonably detailedplans and specifications of the proposed alterations before the commencement ofsuch Lessor approved alterations.

 

**b.**                                      Thealterations shall not commence until five (5) days after Lessor hasreceived notice from Lessee stating the date the construction is to commence sothat Lessor can post and record an appropriate notice of non-responsibility.

 

**c.**                                      Theproposed improvements shall be approved by all the appropriate government agencies,and all applicable permits and authorizations shall be obtained beforecommencement of the alterations. All approved improvements shall be completedin the standard workmanship quality.

 

**d.**                                      Allthe appropriate government agencies and all applicable laws shall approve theproposed improvements.

 

**e.**                                      Beforecommencing the alterations and at all times during construction, Lessee shallmaintain insurance as provided for in paragraphs 18 and 19. In addition,contractor shall be licensed and insured and a Certificate of Insurance withliability insurance in the amount of $1,000,000.00 and Worker’s CompensationInsurance shall be provided by Lessee’s contractor to Lessor within 10 daysprior to commencement of any work and said certificate shall name Lessor as additionallyinsured.

 

**f.**                                        Lesseeshall pay all costs for construction done by it or caused to be done by it onthe premises as permitted by this Lease. Lessee shall keep the improvements andland free and clear of all mechanics’ liens resulting from construction done byor for Lessee.

 

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**64.  AMERICANS****WITH DISABILITIES ACT:**On July 26, 1990 the AmericansWith Disabilities Act of 1990 (ADA) was signed into law. This federal Civilrights legislation prohibits discrimination against individuals withdisabilities. The ADA affects almost all commercial facilities and publicaccommodations. Residential properties are not typically covered by the ADA butmay be governed by its provisions if used for certain purposes. The ADA canrequire, among other things, buildings to be made readily accessible to thedisabled. Different requirements apply to new construction, alterations toexisting buildings, and removal of barriers in existing buildings. Compliancewith the ADA may require significant costs. Monetary and injunctive remediesmay be incurred if the property is not in compliance. Neither Lessor nor a realestate broker does have the technical expertise to either determine whether abuilding is in compliance with ADA requirements or to advise a Lessee on therequirements of the ADA. Any Lessee who is a party to the above referencedagreement is advised to contact an attorney, contractor, architect, engineer orother qualified professional of his/her own choosing to determine to whatdegree, if at all, the ADA impacts upon that principal or this transaction. Itwill be the Lessee’s responsibilities to comply with this act, at no cost toLessor.

 

**65.  NOTICE OF S****URRENDER:**Lessee shall, at least thirty (30) days before thedate of expiration of this lease, give Lessor a written notice of intention tosurrender the leased premises on that date. If such notice is not given, theLessee shall be liable for rent of one additional month.

 

**66.  REAL ESTAT****E BROKERAGE FEE:**Lessee warrants to Lessor that there are noReal Estate brokerage fees offered or required in conjunction with this leasewhich may arise as a result of the execution of this lease and agrees to paysaid fees, and hold harmless and indemnify Lessor from any claims for brokeragefees for failure to pay said fee.

 

**67.  LESSOR LOA****N OR SALE:**Lessee agrees within ten (10) business daysof receipt of written request by Lessor, to execute and deliver to Lessor anyreasonably necessary documents, including estoppel certificates, in a formreasonably acceptable to Lessee, presented to Lessee by Lessor. Lessee’sfailure to deliver an estoppel certificate within five (5) days followingsuch request shall constitute a default under this Lease and shall beconclusive upon Lessee that this Lease is in full force and effect and has notbeen modified except as may be represented by Lessor and that there are nouncured defaults in Lessor’s performance. In addition, if requested by Lessor,Lessee shall deliver to Lessor, on a reasonable basis but nor more frequentthan annually, or to any prospective lender or purchaser of the Property,financial statements of Lessee covering the two (2) fiscal yearsimmediately preceding the request,

 

**68.  ATTORNME****NT:**If Lessor conveys in a Sale all of its rights and dutiesin and to the Lease and/or Premises and the realty underlying the Premises, orif an interest in Lessor or Lessor’s equity of redemption or other interest inthe Lease and the Premises under a mortgage, deed of trust, pledge or securityagreement is foreclosed judicially or non-judicially, upon the request ofLessor’s lawful successor, Lessee shall aftorn to said successor, provided saidsuccessor accepts the Premises subject to this Lease. The foregoingnotwithstanding, in accepting the Premises subject to this Lease, saidsuccessor shall not be bound by (i) any prepayment of more than one month’srental (except for payments under Article 7, “Security Deposit”) or (ii) anymaterial amendment of this Lease made after the later of the Effective Date orsuch date as the successor’s lien or interest first arose, unless saidsuccessor shall have consented to such amendment.

 

**69.  MUTUAL****WAIVER OF RIGHT OF SUBROGATION:**Except as may be providedherein, Lessor and Lessee each hereby waives any and all rights of recoveryagainst the other and their respective authorized representatives for damage toany person or to the Premises, and the Building and other improvements in whichthe Premises are located, and to fixtures, personal property, Lessee’simprovements, and alternation of either Lessor or Lessee in or On the Premisesand the Building and other improvements in which the Premises are located,arising from any cause insured against under any insurance policies carried bythe parties and in force at the time of any such damage. Each party shall causeinsurance policy obtained by it to provide that the insurance company waivesall right to recover by way of subrogation against either party in connectionwith damage covered by any policy.

 

**70**.**  MISCELLANEOUS****PROVISIONS:**

 

**70.1)****                    Timeof Essence.**Time is of the essence of each provision of this Lease.

 

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**70.2)****                    Landlord’sConsent**Except as may otherwise be expressly stated in their Lease, anyconsent required by Landlord under this Lease must be granted in writing andmust be withheld or conditioned by Lessor in its reasonable discretion.

 

**70.3)****                    Severability.**It is agreed that, if any provision of this Lease shall be determined to bevoid by any court of competent jurisdiction, then such determination shall notaffect any other provision of the Lease and all such other provisions shallremain in full force and effect. It is the intention of the parties heretothat, if any provisions of this Lease is capable of two (2) constructions,one of which would render the provision void and the other of which wouldrender the provision valid, then the provision shall have the meaning whichrenders it valid.

 

**70.4)****                    Warrantyof Authority.**If Lessee is a corporation, the person or persons executingthis Lease on behalf of Lessee hereby covenant and warrant as of the EffectiveDate that: (a) Lessee is a duly constituted corporation, qualified to dobusiness in the state where the Center is located; (b) Lessee has paid allapplicable franchise and corporate taxes, and (c) Lessee will file whendue all future forms, reports, fees and other documents necessary to complywith applicable laws.

 

**70.5)****                    Rightto Lease.**Lessor reserves the absolute right to effect such other tenanciesin the Center as Landlord, in the exercise of its sole business judgment, shalldetermine to best promote the interest of the Center. Lessee does not rely onthe fact, nor does Lessor represent, that there shall be any specific occupantsor number of occupants of space in the Center after the Effective Date.

 

**70.6)****                    Waiverof Rights of Redemption.**Lessee hereby expressly waives any and all rightsof redemption granted by or under any present or future laws in the eventLessee is evicted or dispossessed for any cause or in the event Lessor obtainspossession of the Premises by reason of the violation by Lessee of any of theterms, covenants and conditions of this Lease or otherwise. The rights given toLessor herein are in addition to any rights that may be given to Lessor by anystatute or otherwise.

 

**70.7)****                    Flood/FloodDisaster Disclosure.**Lessee is hereby advised that the subject property maybe located with a Flood Area and that the Lessor or possible previous Lessormay have received Federal Flood Assistance in the past. Lessee hereby agrees toinvestigate the matter, including the availability of Flood Insurance andagrees to accept the premises with this understanding. Additionally, Lesseeagrees to hold harmless and free from any liability, and to indemnify theLessor, Lessor agent and Lessor property manager from any loss or liabilityresulting therefrom.

 

**70.8)****                    Earthquakeand Seismic Hazard Area.**Lessee is hereby advised that the subject propertyis located within an Earthquake and Seismic Hazard Area and that Lessor doesnot maintain Earthquake Insurance on the building. Lessee accepts the premiseswith this knowledge and understands that it is the Lessee responsibility toinvestigate this matter, and to obtain insurance coverage on Lessee’s personalproperty. Lessee holds harmless and free of any liability, and will indemnify,the Lessor, Lessor agents and property manager, for any loss or liabilityresulting therefrom.

 

**70.9)****                    AgencyDisclosure.** Lessor advises Lessee that Lessor has retained professionaladvice in connection with this Lease. Lessor recommends that Lessee obtain professional advise and to engagelegal counsel for Lessee’s own representation.

 

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EXHIBITS,SUPPLEMENTS AND ADDENDUMS

 

Theattached Exhibits and Addendum’s are incorporated herein:

 
| LEASE EXHIBIT’A’ |   | LEASE EXHIBIT”B” |   | LEASE EXHIBIT “C” |   | LEASE EXHIBIT “D” |
|----------------------------|--------|----------------------------|--------|----------------------------------|--------|----------------------------------|

 

 

PERSONALGUARANTEE                 None                    

 

ADDENDUM          1                               PERCENTAGERENTAL AGREEMENT           None

 

INWITNESS WHEREOF, the above-named parties hereto have: A) set their hands thedate first hereinabove written, B) acknowledge receipt of a copy hereof, and C)have read, understand and agree to all of the above.

 

 
| LESSOR:                                         | LESSEE:                                |
|-------------------------------------------------|----------------------------------------|
|                                            |                                   |
| **John A.  Crivello Family Partnership, L. P.** | **Monterey  County Bank**              |
| ** **                                      | ** **                             |
|                                            |                                   |
| **By:**                                         |   /s/John A. Crivello             |   | **By:** |   /s/Charles T. Chrietzberg, Jr. |   |
|  John A. Crivello, General Partner         | Charles Chrietzberg, C. E. O.          |
|                                            |                                   |
| Dated:   July 12,  2004          | Dated:   July 12,  2004 |
|                                                 |                                        |  |  |  |  |

 

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**Lease Exhibit “A”**

** **
| Lessor:                 | John A. Crivello  Family Partners, L.P.                    |            |
|-------------------------|------------------------------------------------------------|-----------------|
|                    |                                                       |            |
| Lessee:                 | Monterey County  Bank                                      |            |
|                    |                                                       |            |
| Demised  Premises:      | Suite 301  Webster Street, Monterey, California       |            |
|                    |                                                       |            |
| Floor Area:             | Approximately  1500 rentable square feet                   |            |
|                    |                                                       |            |
| Share of CAM and  other |                                                       |            |
| Expenses:               | 32% (included in  fixed CAM through 8/31/2006)             |            |
|                    |                                                       |            |
| Term of Lease:          | Two years, two  months                                     |            |
|                    |                                                       |            |
| Date of  Commencement:  | July 1,  2004                                         |            |
|                    |                                                       |            |
| Date of  Expiration:    | August 31, 2006                                       |            |
|                    |                                                       |
| Rental:                 | Fixed Rent as of  July 1, 2004:                       | $3,000.00       |
|                    | CAM fixed  charge:                                         | $ 450.00   |
|                    | Estimated:  MRWPCA                                         | $ included |
|                    | Estimated  Utility                                         |            |
|                    | Reimbursement:                                             | $ included |
|                    | Total Due per  month as of                                 |            |
|                    | July1, 2004 (subject to                                    |            |
|                    | adjustment as per Lease:                                   | $3,450.00       |
|                    |                                                       |            |
| Security  Deposit:      | Total of  $3,000.00                                        |
|                    |                                                       |            |
| Property Taxes:         | 32% (Included in  Fixed CAM through 8/31/2006)             |            |
|                    |                                                       |            |
| Insurance:              | 32% (Included in  Fixed CAM through 8/31/2006)             |            |
|                    |                                                       |            |
| CAM/Mgt                 | 32% (Included in  Fixed CAM through 8/31/2006)             |            |
|                    |                                                       |            |
| Purpose:                | Office Space                                               |            |
|                    |                                                       |            |
| Additional  Insured:    | John A. Crivello  Family Partners, L.P.                    |            |
|                    |                                                       |            |
| Address for  Notices:   | Lessor at: Post  Office Box 3311, Monterey, CA. 93942      |            |
|                    |                                                       |            |
|                    | Lessee at: 301  Webster Street, Monterey, California 93940 |            |
|                    | With copy to: 601 Munras Avenue,                           |            |
|                    | Monterey, CA. 93940                                        |            |
|                         |                                                            |                 |  |  |

 
| **Lessor:**John A. Crivello Family Partners, L.P. |                                    |
|---------------------------------------------------|-----------------------------------------|
|                                              |
|                                              | By**:**                                 |  /s/John A. Crivello |   |
|                                              | John A. Crivello, General Partner       |
|                                              |
| Lessee: **Monterey County Bank**                  |                                    |
|                                              |                                    |
|                                              |
|                                              | By:                                     |  /s/Charles T. Chrietzberg, Jr. |   |
|                                              | Charles Chrietzberg, Jr., C. E. O. |
|                                              |                                    |
| July , 2004                                  |                                    |
|                                                   |                                         |  |  |  |  |  |  |

 

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LEASEEXHlBIT “B”

 

TheDemised Premises consist of that portion of the center marked on he attached Exhibit ”C”as Suite 301.  The Demised Premisesare a portion of the following described property in the city of Monterey,County of Monterey, State of California:

 

Beginningat the Southwesterly corner of Lot 2 in Block D, said corner being the intersection ofthe easterly line of Houston Street with the Northerly line of Webster Street,as said Lot and Block and said streets are shown on page 28 of the MapBook entitled :”Block Book of the City of Monterey, Monterey County, Californiacompiled by H. D. Severance, 1913”:, a copy of which Block Book was filed inthe Office of the County Recorder of the County of Monterey on October 22,1915, thence Easterly along said Northerly line of Webster Street

 

1.               N.74 degrees, 18’1”; 110 feet (at 70 feet the Southwesterly corner of said Lot 1)to a 1⁄2” iron pipe at the Southerly edge of a concrete wall; thence Northerlyleaving said line of Webster Street

 

2.               N.13 degrees 50” W, 117.65 feet (at 6.01 feet a 2”x2” stake, at 44.39 , a crossin brick walk, at 80.39 feeet a cross in brick wall) to a 2”x2” stake), thenceWesterly running parallel with the Northerly line of Lots 5 and 6 in said BlockD

 

3.               S.76 degrees 09” W, 104.19 feet ( at 74.42 feet a 1”x2” stake, at 102.99 feet a 2”x 2” stake) to a lead plug in concrete wall footing, marking a point on saidEasterly line of Houston Street, said line here being the Westerly line of Lot3 in said Block D; hence Southerly along said line of Houston Street.

 

4.               S.11 degrees 07” E, 121.35 feet ( at 51.35 feet the mutual corner of said lots 3and 1) to the point of beginning, and comprising portions of Lots 1, 2, 3, and4 in said Block D.

 

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**Exhibit C**

 

26

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**Exhibit D**

 

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**ADDENDUM 1**

** **

**CONDITIONAL**

**OPTION TO EXTEND TERM**

 

**First Option**

 

IfLessee is not in default in the performance of any of Lessee’s obligationshereunder, Lessor hereby grants to Lessee an option to extend the term of thisLease, subject to (a), the terms and conditions hereof, specifically includingbut not limited to, the provisions of Article 6 hereof “Adjustments toFixed Rent”, and (b), provided that Lessor shall have no obligation to make anyimprovements to the premises, for an additional period of five (5) yearscommencing on September 1, 2006 and expiring on August 31, 2011.

 

Toexercise Lessee’s option, Lessee shall give to Lessor notice in writing byregistered or certified mail, postage prepaid with return receipt requested,addressed to Lessor at Lessor’s address for notices provided herein, not soonerthan six (6) months prior to the expiration of the original or extendedterm hereof, and not later than four (4) months prior to the expiration ofthe original or extended term hereof.

 

Uponreceipt of the notice of Lessee’s exercise of said option, Lessor and Lesseeshall endeavor to reach an agreement upon the Fixed Rent for such optionperiod.  If such agreement cannot beaccomplished sixty (60) days prior to the date on which the term of said optionperiod commences, the option right is hereby terminated unless prior theretoeither party shall deliver a notice advising that the parties have reached animpasse with respect to the determination of the Fixed Rent for such optionperiod.

 

Insuch an event, within five (5) business days of the delivery of suchnotice, the party who shall have received the notice shall deliver a list ofthree independent licensed real estate agents or brokers who shall have notless than ten (10) years recent experience in the leasing of commercialproperties and space similar to the demised premises. The other party withinfive (5) business days of receipt, shall select one of the three agents orbrokers in such list, or if none of the three is acceptable, shall propose upto three agents or brokers acceptable to that party.  If no agreement can be reached on the agentor broker within ten (10) business days of such notice, then either partymay request that the Superior Court of the State of California, or some othercourt of the State of California, determine an acceptable agent or broker.

 

.Such agent or broker shall have the authority only to determine the Fair MarketRental for the Demised Premises taking into account all of the other terms ofthe Lease, specifically including, but not limited to, the provisions of thisAddendum 1.  Such agent or broker shallhave no authority to modify, amend or change any of the terms of the Lease.Such agent or broker must agree to, and shall render his or her opinion as to FairMarket Value of the Demised Premises in writing to each of the parties withintwenty (20) days of his or her appointment. Each party shall be entitled to make presentations, provide data orotherwise set forth its position as to the appropriate Fixed Rent for theoption period.

 

Lesseeagrees to permit a “For Lease” sign in the window of the premises, if agreementis not reached, as provide above.

 

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Notwithstandingthe above:

 

a.               The limitation on CAM charges provided for inthe Lease shall not be applicable in the extension period, and Lessee shall befully responsible for its share of all CAM charges as provided in the Leasesuch that the lease shall be “triple net”, and

 

b.              In no event shall the Fixed Rent to be paidupon the commencement of the term of the extention period be less than theamount of Fixed Rent payable by Lessee for the month prior to the effectivedate of such extension.

 

# SecondOption

#  

Providedthat the first extension option has been properly exercised by Lessee, subjectagain to all of the provisions of the Lease, and of this Conditional Option toExtend Term, Lessee shall have a further option to extend the term of thislease for an additional five (5) years commencing September 1, 2011and expiring August 31, 2016. All of the terms of the Lease and of theConditional Option to Extend Term, including but not limited to the noticeprovisions and the provisions of Article 6 “Adjustment of Fixed Rent”shall be fully applicable in the second extension period.  The Fixed Rent to be paid during this secondextension period shall not be less than the Fixed Rent payable by Lessee duringthe last month of the first extension period, and Lessee shall be fullyresponsible for its share of CAM charges, such that the Lease shall be “triplenet”.

 

Lesseeshall have no further rights to extend the Lease unless and until an additionaladdendum to lease so providing has been executed by Lessor and Lessee.

 
| Lessor:                                   | Lessee:                                |
|-------------------------------------------|----------------------------------------|
|                                      |                                   |
| John A. Crivello Family Partnership, L.P. | Monterey County Bank                   |
|                                      |                                   |
|                                      |                                   |
| By:                                       |   /s/John A. Crivello             |   | By: |   /s/Charles T. Chrietzberg, Jr. |   |
| John A. Crivello, General  Partner        | Charles Chrietzberg, Jr.,  C.E.O. |
|                                      |                                   |
| July 12, 2004                        | July 12, 2004                     |
|                                           |                                        |  |  |  |  |

 

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