Document:

Unassociated Document

    Exhibit
      10.4

    

    EMPLOYMENT
      AGREEMENT

    

    This
      EMPLOYMENT
      AGREEMENT
      (“Agreement”)
      is
      entered into as of ___, 2007 by and between Raymond Romano with his residence
      at
      __________ (“Employee”)
      and
      Affinity Media International Corp. (the “Company”).
      

    

    WHEREAS,
      Employee has heretofore served as an executive officer of Hotels at Home, Inc.,
      a privately held Delaware company (“Hotels”);
      

    

    WHEREAS,
      the
      Company is acquiring Hotels pursuant to that certain Agreement and Plan of
      Merger between the Company, Affinity Acquisition Subsidiary Corp. and Hotels
      dated as of July 24, 2007 (the “Merger
      Agreement”)
      which
      will result, in among other things, Hotels becoming a wholly-owned subsidiary
      of
      the Company (the “Acquisition”);

    

    WHEREAS,
      it is a
      condition to the Merger Agreement that Employee agree to be retained as an
      executive officer of Hotels and the Company upon consummation of the
      Acquisition; and

    

    WHEREAS,
      the
      Company and Employee are willing to enter into this employment relationship
      on
      the terms, conditions and covenants set forth in this Agreement.

    

    NOW,
      THEREFORE,
      in
      consideration of the foregoing, the mutual covenants contained herein and other
      good and valuable consideration, receipt of which Employee and the Company
      hereby acknowledge, Employee and the Company agree as follows: 

    

    1. Scope
      of Employment

    

    (a) Position.
      Employee shall serve in the position of Chief Financial Officer of Hotels and
      Chief Financial Officer of the Company. Employee agrees to perform the job
      duties and to carry out the responsibilities of his position, and in that
      capacity Employee shall have such authority and responsibilities as are
      consistent with such position and which may be set forth in this Agreement,
      in
      the Bylaws of Hotels the Company or assigned by the Board of Directors of the
      Company (“Board
      of Directors”)
      from
      time to time (the “Services”).
      At the
      request and in the discretion of the Company, Employee shall serve as an officer
      or director of any subsidiary or affiliate of the Company, and shall perform
      services for any such subsidiary or affiliate as are appropriate to and
      consistent with the Services being performed by Employee for the Company/Hotels.
      Employee shall report to the Board of Directors of Hotel and the Company.

    

    (b) Employee’s
      Effort.
      Employee shall devote substantially all of Employee's regular business time,
      energy and skill (except for vacation, holidays, other permitted time off,
      or as
      otherwise approved by the Board of Directors) to performing her obligations
      hereunder, and shall perform her obligations hereunder diligently, faithfully
      and to the best of Employee's abilities and to
      the
      business and interests of the Company, Hotels and its affiliates.
      Notwithstanding the foregoing, the Company acknowledges that Employee owns
      and
      operates certain other business, including Essential Amenities Inc., that have
      previously been disclosed to the Company and the Company acknowledges that
      Employee’s participation in the ownership or operation of those businesses shall
      not violate the terms of this Agreement or Employee’s obligations hereunder to
      the extent that they do not materially interfere with the performance of
      services under this Agreement. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c) Place
      of Performance.
      During
      the Term ( as defined in Section 3 below) of his/her employment hereunder,
      Employee shall be based at the offices of the Company in New Jersey except
      for
      reasonably required travel on business of the Company.

    

    (d) Compliance
      with Company Policies.
      Subject
      to the terms of this Agreement, during the Term, Employee shall comply in all
      material respects with all policies and procedures applicable to similarly
      situated employees of the Company and its affiliated entities generally and
      to
      Employee specifically.

    

    2. Base
      Salary; Bonus; Benefits.
      

    

    (a) Base
      Salary. Employee
      shall be paid a base salary (the "Base
      Salary")
      during
      the term at the rate of One Hundred Seventy Five Thousand Dollars ($175,000.00).
      Employee's base salary for year two and any subsequent terms shall be determined
      by a Compensation Committee designated by the Board of Directors of the Company.
      Employee's salary may increase, but it shall not decrease during the Term.
      The
      Base Salary and all other payments made pursuant to Section 2 shall be (a)
      payable according to the customary payroll practices of the Company or pursuant
      to such other schedule that the Company may implement from time to time for
      such
      payments, and (b) subject to any withholdings and deductions required by
      applicable law.

     

    (b) Expense
      Reimbursement.
      The
      Company shall pay or reimburse Employee for all reasonable business expenses
      incurred or paid by Employee in the course of performing his duties hereunder
      and in accordance with Company policy. As a condition to such payment or
      reimbursement, however, Employee shall provide to the Company, upon the
      Company's request, reasonable documentation and receipts for such expenses.
      Employee shall also be entitled to reimbursement for reasonable expenditures
      and
      fees related to parking, association fees, membership dues in trade groups,
      subscriptions for industry related publications and any conference fees and
      charges.

     

    (c) Annual
      Bonus.
      Employee
      shall be entitled to receive bonus awards in such form and amounts as may be
      determined by the Compensation Committee designated by the Board of Directors
      (or the full Board of Directors) at its sole discretion. Employee shall be
      eligible to receive an annual performance bonus of up to 100% of the Base Salary
      for each year of the term of this Agreeement. The Compensation Committee (or
      the
      full Board of Directors of the Company) shall establish standards related to
      the
      revenue and income and other performance related standards for the determination
      of bonuses no later than March 31 of the calendar year for which a bonus may
      be
      awarded and the bonus shall be payable on or before April 15th
      of the
      following calendar year on which the bonus standards are based. 

     

    
      
        
        

      

      
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    (d) Discretionary
      Bonus.
      In
      addition to the foregoing, Employee shall be eligible for and may receive
      discretionary bonuses, the grant and amount of which shall be determined by
      the
      Board of Directors of the Company (or a Compensation Committee thereof) in
      its
      sole discretion.

     

    (e) 
      Stock
      Option and Stock Award Programs. Employee
      shall be eligible to participate in any incentive stock option or stock award
      plans, as may be established by the Company from time to time. Any awards under
      such plans shall be at the discretion of the Compensation Committee designated
      by the Board of Directors (or the full Board of Directors) and in compliance
      with the terms of such plans, including, without limitation, the form of
      Affinity 2007 Stock Incentive Plan as described in the Company’s Proxy Statement
      for its special meeting of stockholders held on _____, 2007. 

     

    (f) Other
      Compensation and Benefits.
      Employee shall receive such additional compensation or other benefits as are
      provided to Company senior executives including, without limitation the
      following:

     

    i. during
      the Term, Employee shall be entitled to participate in such of the Company's
      retirement, supplemental retirement, life, health, disability and other
      insurance programs, as well as other employee benefit programs, which are
      generally available to other similarly situated employees of the Company,
      subject to the Company's policies with respect to all such benefits or insurance
      programs or plans. The Company shall not, by virtue of this provision, be under
      any obligation to Employee to continue to maintain any particular plan or
      program or any particular benefit level under any plan or program.

     

    ii. Employee
      shall be entitled to 4 weeks of paid vacation per calender year during the
      Term,
      to be taken from time to time. Unused vacation shall be carried over from one
      year to the next or Employee may elect to receive cash in lieu of any unused
      vacation time.

     

    iii.
       Employee
      shall be entitled to a vehicle allowance of $1,000 per month.

     

    (g) Warrants.
      The
      Company shall issue to Employee 300,000 warrants to purchase a like number
      of
      shares of common stock of the Company with any exercise price of $6.26. The
      warrants shall have a five (5) year term and shall provide for cashless
      exercise. 150,000 warrants shall be exercisable upon the one year anniversary
      of
      the date hereof and 150,000 shall be exercisable upon the two year anniversary
      of the date hereof. 

     

    3. Term;
      Termination.
      This
      Agreement shall be effective on the date hereof (“Effective Date”) and terminate
      on the second anniversary hereof (the “Initial Term”), subject to automatic
      consecutive one-year extension(s) (each a “Renewal Term”) unless either the
      Company or Employee provides written notice of termination to the other not
      later than ninety (90) days prior to the scheduled expiration of the Term as
      then in effect. The Initial Term and any Renewal Terms shall be referred to
      collectively as the “Term”.
      

     

    
      
        
        

      

      
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    (a) Termination
      Upon Death or Disability.
      This
      Agreement shall automatically terminate upon the death or Incapacity of Employee
      and, thereafter all of her or his rights hereunder, including the rights to
      receive compensation and benefits, except as otherwise required by law or set
      forth herein, shall terminate. As used herein, the term “Incapacity”
means
      a
      serious
      mental or physical condition, whereby Employee is unable to or has been
      prevented from substantially performing the duties of his or her position for
      a
      period of either (i) 120 continuous days during any 12 month period during
      Employee’s term of employment, or (ii) 180 days during any 12 month period
      during Employee’s term of employment, regardless of whether they are continuous.
      Upon termination for death or Incapacity, the Company shall pay to Employee
      (or
      his/her estate) (i) the Base
      Salary and any other compensation earned up to the date of termination,
      including any pro-rata bonus, as well as any unreimbursed expenses and accrued
      but unused vacation days; and (ii) the
      Base
      Salary at the annualized rate in effect on the date of termination for a period
      of 12 months in the event of termination because of Employee’s death or
      Incapacity.

     

    (b) Termination
      Without Cause or Without Good Reason.
      The
      Company may terminate this Agreement without Cause and Employee may terminate
      without Good Reason, in each case upon thirty (30) days prior written notice
      to
      the other party. In case of termination by Employee without Good Reason, the
      Company shall have no further obligations after the termination date other
      than
      the payment to Employee of the Base Salary accrued and unpaid through the
      termination date and payment of any unreimbursed expenses and any accrued but
      unused vacation days. In case of termination by the Company without Cause or
      in
      the case of Non-Renewal of this Agreement by the Company, the Company shall
      pay
      Employee the Base Salary and any other compensation earned up to the date of
      termination, including any pro-rata bonus, as well as any unreimbursed expenses
      and accrued but unused vacation days, and (ii) the Base Salary and anticipated
      bonuses and the continuation of Company-sponsored medical and health benefits
      previously made available to Employee to the greatest extent permitted by law
      for the greater of the remaining Term of this Agreement or the 18-month period
      immediately following the termination date (the “Salary
      Continuation Period”).
      Any
      payments due hereunder shall be made in accordance with the regularly scheduled
      payment of salary and bonus in effect prior to such termination. 

     

    (c) Termination
      for Cause.
      As used
      herein for “Cause” shall
      mean any one or
      more
      of
      the following
      as determined in good faith by Board of Directors of the Company:

     

    (1) an
      act of
      fraud, embezzlement or theft by Employee in connection with his or her duties
      or
      in the course of employment with the Company or its affiliated
      entities;

    

    (2) Employee’s
      material breach of any material provision of this Agreement, provided that
      in
      those instances in which Employee’s material breach is capable of being cured,
      Employee has failed to cure within a 30 day period after receiving from the
      Board of Directors written notice of the breach providing reasonable detail
      as
      to the specifics of such breach and the manner in which such breach can be
      cured;

    

    (3) Employee’s
      material act or omission, which is (x) willful or grossly negligent, (y)
      contrary to established policies or practices of the Company and its affiliated
      entities, and (z) materially harmful to the business or reputation of the
      Company or its affiliated entities, or to the business of the customers or
      suppliers of the Company or Hotels as such relate to the Company or Hotels;
      

     

    
      
        
        

      

      
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    (4) Employee’s
      plea of nolo
      contendere
      to, or
      conviction for, a felony involving moral turpitude; or

    

    (5) Employee’s
      material breach of any policy established by the Board of Directors related
      to
      trading of the Company’s securities, any violation of federal or state insider
      trading laws or regulations or employee’s refusal or failure to cooperate with
      an inquiry or investigation of the Board of Directors, any special committee
      or
      a governmental agency, after receiving written instructrion from the Board
      of
      Direcotrs of the Company to cooperate.

     

    The
      Company may immediately terminate this Agreement for Cause upon
      written
      notice to Employee.
      In the
      event of a termination by the Company for Cause, the
      Company will
      pay
      Employee
      the Base
      Salary accrued
      and unpaid through the termination date and payment of any unreimbursed expenses
      and any accrued but unused vacation days. Any unvested stock awards or options
      shall be forfeited. After payment of the foregoing, the Company sall have no
      further responsibility for other payments to Employee. In the event of a
      Termination under clause (c) (1) above, the Company shall not be required to
      indemnify Employee for any costs or expenses associated with such offense and
      may seek, at its option, to collect all costs, expenses and damages from
      Employee.

    

    (d) Termination
      for Good Reason.
      Upon 30
      days written notice to the Company, Employee may immediately terminate her
      or
      his employment under this Agreement for “Good Reason” as defined below. The
      Company shall have the right to cure any Good Reason which is capable of cure
      within such 30 day period. In case of termination hereof by the Employee for
      Good Reason, the Company shall pay Employee (i) the Base Salary and any other
      compensation, including bonuses, earned up to the date of termination, including
      any pro-rata bonus, as well as any unreimbursed expenses and accrued but unused
      vacation days and (ii) for the greater of the remaining Term of this Agreement
      or the 18-month period immediately following the termination date, (A)
      Employee’s Base Salary and anticipated bonuses and the continuation of
      Company-sponsored medical and health benefits previously made available to
      Employee to the greatest extent permitted by law for the greater of the
      remaining Term of this Agreement for the Salary Continuation Period (B) the
      continuation of Company-sponsored medical and health benefits previously made
      available to Employee to the greatest extent permitted by law for the
      Salary Continuation
      Period. 

     

    For
      purposes of this Agreement, the term “Good
      Reason”
means,
      in each case without the consent or agreement of Employee but shall not include
      any termination for Cuase by the Company: 

    
       

      
        
          
          

        

        
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    (1) any
      reduction by the Company in Employee’s Base Salary or adverse change in the
      manner of computing Employee’s bonus, as in effect from time to time, on an
      annual basis;

     

    (2) the
      failure by the Company to renew Employee’s employment agreement or to pay or
      provide to Employee any amounts of Base Salary or bonus or any benefits which
      are due, owing and payable to Employee pursuant to the terms of this Agreement;
      

    

    (3) except
      on
      a temporary basis as a result of Incapacity as described above, a material
      adverse change in Employee’s responsibilities, position, reporting
      relationships, authority or duties;

    

    (4) the
      relocation of the office in which Employee primarily conducts business to a
      location more than 10 miles from the office in which Employee primarily conducts
      business at the date of the commencement of each Term of this Employment
      Agreement, unless such relocation is recommended or approved by Employee;

    

    (5) without
      limiting the generality or effect of the foregoing, any material breach of
      this
      Agreement by the Company; or

    

    (6) the
      failure by the Company to continue to provide Employee with benefits
      substantially similar in the aggregate to the Company’s life insurance, medical,
      dental, health, accident or disability plans in which the Employee is
      participating at the date of the commencement of this Employment
      Agreement.

    

    (e) Termination
      Upon a Change of Control.
      In the
      event that during the period beginning 3 months before the occurrence of a
      “Change in Control” and ending 1 year after a Change in Control Employee’s
      employment is terminated: (i) by Employee for Good Reason, (ii) by the Company
      (or its successor or acquirer) without Cause, or (iii) by expiration of this
      Agreement due to Employee refusing to renew this Agreement for Good Reason,
      the
      Company shall pay Employee (i) the Base Salary and any other compensation earned
      up to the date of termination, including any pro-rata bonus, as well as any
      unreimbursed expenses and accrued but unused vacation days and (ii) for
      the
      Salary Continuation
      Period, the Base Salary and the continuation of Company-sponsored medical and
      health benefits previously made available to Employee, but only to the extent
      permitted by such policies or plans, or as otherwise required by law. In
      addition to the benefits provided for above, any and all of the Employee’s
      outstanding options granted pursuant to the equity award plan as well as any
      other equity award to Employee shall become immediately vested and exercisable,
      and any provision of such options which provides for termination of the option
      upon, or within a stated time after termination of employment, shall become
      void
      and such option shall become a nonqualified stock option for tax purposes (to
      the extent it was not already a nonqualified option). All of these options
      shall
      remain exercisable for a period of 1 year from the termination date, and shall
      be exercisable on a cashless basis for a period of 90 days following the
      effective termination date (or the effective date of any Change of Control
      event
      if Employee’s employment was terminated at any time during the three month
      period prior to the Change of Control).

     

    
      
        
        

      

      
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    For
      purposes of this Agreement, the term “Change
      of Control”
means
      the occurrence of any one or more of the following events (except as otherwise
      consented or agreed to by Employee prior to such event): 

     

    (i) any
      Person as that term is used in Section 13(d)(3) or Section 14(d)(2) of the
      Securities Exchange Act of 1934 (the “Exchange
      Act”)
      (other
      than the Company or a corporation owned directly or indirectly by the
      shareholders of the Company in substantially the same proportions as their
      ownership of stock of the Company) becomes the Beneficial Owner, as that term
      is
      defined in Rule 13d-3 of the General Rules and Regulations under the Exchange
      Act, directly or indirectly, of securities of the Company, representing more
      than 40% of the combined voting power of the Company’s then outstanding
      securities;

    

    (ii) during
      any period of 24 consecutive months beginning on or after the Effective Date,
      individuals who at the beginning of the period constituted the Board of
      Directors cease for any reason (other than death, disability or voluntary
      retirement) to constitute a majority of the Board of Directors. For this
      purpose, any new director whose election by the Board of Directors, or
      nomination for election by the Company’s shareholders, was approved by a vote of
      at least two-thirds of the directors then still in office, and who either were
      directors at the beginning of the period or whose election or nomination for
      election was so approved, will be deemed to have been a director at the
      beginning of any 24 month period under consideration; or

    

    (iii) the
      shareholders of the Company approve: (A) a plan of complete liquidation or
      dissolution of the Company; or (B) an agreement for the sale or disposition
      of
      all or substantially all the Company’s assets; or (C) a merger, consolidation or
      reorganization of the Company with or involving any other corporation, other
      than a merger, consolidation or reorganization that would result in the voting
      securities of the Company outstanding immediately prior thereto continuing
      to
      represent (either by remaining outstanding or by being converted into voting
      securities of the surviving entity) at least eighty percent of the combined
      voting power of the voting securities of the Company (or such surviving entity)
      outstanding immediately after such merger, consolidation, or
      reorganization.

    

    4. Confidentiality.
      

     

    (a) Employee
      shall keep confidential, except as the Company may otherwise consent in writing,
      and not disclose or make any use of except for the benefit of the Company,
      at
      any time during the term of this Agreement and for a period of two (2) years
      thereafter, any trade secrets, knowledge, data or other confidential, secret
      or
      proprietary information of the Company relating to employees, suppliers,
      inventions, products, processes, knowledge, know how, technical or other data,
      designs, formulas, test data, customer lists, business plans, marketing plans
      and strategies, and product pricing strategies, financial condition or other
      subject matter pertaining to any business of the Company and itd its affiliated
      entities, or any of its clients, customers, consultants, licensees,
      subsidiairies or affiliates which Employee may produce, obtain or otherwise
      learn of during the course of Employee’s performance of services and after its
      termination (collectively “Confidential
      Information”),
      provided that the term “Confidential Information” shall not include information,
      technical data or know-how that is or becomes part of the public domain not
      as a
      result of any inaction or action of Employee. Employee shall not deliver,
      reproduce, or in any way allow any such Confidential Information to be delivered
      to or used by any third parties without the specific direction or consent of
      a
      duly authorized representative of the Company. The terms of this paragraph
      shall
      survive termination of this Agreement. 

     

    
      
        
        

      

      
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    (b) Return
      of Confidential Material.
      Upon
      the completion or other termination of Employee’s services for the Company,
      Employee shall promptly surrender and deliver to the Company all records,
      materials, equipment, drawings, documents, notes and books and data of any
      nature (electronic or otherwise) describing, including or pertaining to any
      Confidential Information, and Employee will not take with him or her any
      description containing or pertaining to any Confidential Information which
      Employee may produce or obtain during the course of his or her services. The
      terms of this paragraph shall survive termination of this
      Agreement.

    

    5.
       Intellectual
      Property 

    

    (a) During
      the term of this Agreement and thereafter, Employee will execute, acknowledge
      and deliver to the Company or its nominee upon request and at its expense all
      such documents, including applications for patents and copyrights and
      assignments of inventions, patents and copyrights to be issued therefore, as
      the
      Company may reasonably determine necessary or desirable to apply for and obtain
      letters, patents, and copyrights on inventions in any and all countries and/or
      to protect the interest of the Company or its nominee in inventions, patents
      and
      copyrights and to vest title thereto in the Company or its nominee. The terms
      of
      this paragraph shall survive termination of this Agreement.

    

    (b) Maintenance
      of Records.
      Employee will keep and maintain adequate and current written records of all
      inventions and other intellectual property made or conceived by Employee (in
      the
      form of notes, sketches, drawings and as may be specified by the Company)
      related to the Company’s business, and shall deliver such records promptly to
      the Company at the Company’s request, whether made solely by Employee or jointly
      with others, which records shall be available to and remain the sole property
      of
      the Company at all times.

    
       

      
        
          
          

        

        
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    6. Competition.
      Employee shall agree that, during the employment term and if applicable, the
      Salary Continuation Period, Employee will not (i) directly or indirectly, own,
      manage, operate, control or otherwise be connected with, or have any financial
      interest in, or aid or assist anyone else in the conduct of, any entity or
      business which competes with the business conducted by Hotels in each and every
      area where such business is being conducted during the employment term, other
      than owning less than 5% of a publicly traded company, or (ii) enter into,
      effect or accept, directly or indirectly, for or on behalf of herself, himself
      or any other person, any business relating to the services of the type provided
      by, or orders for business or services of the type provided by, Hotels or any
      of
      its subsidiaries, affiliates or divisions from any person, company, firm or
      other entity who is, or has at any time within one year prior to the date of
      such action been, a customer or supplier (or a prospective customer or supplier)
      of Hotels or any of its subsidiaries, affiliates or divisions. Employee shall
      also agree that, for a period of 24 months
      from the date of termination of Employee’s employment for whatsoever reason,
      Employee will not, either personally or by her or his agent or by letters,
      circulars or advertisements, and whether for herself, himself or on behalf
      of
      any other person, (i) seek to persuade any employee of the Company or any of
      its
      subsidiaries or divisions to discontinue his or her status or employment
      therewith or to become employed in a business or activities likely to be
      competitive with the business of the Company, or (ii) solicit or employ any
      such
      person at any time within 24 months following the date of cessation of
      employment of such person with the Company or any of its subsidiaries or
      divisions in each and every area where the Company conducts its business,
provided
      that the
      foregoing shall not apply to any communications with or the solicitation of
      the
      spouse of any executive. Furthermore, the Company acknowledges that nothing
      herein shall preclude Employee from placing a general solicitation in a
      periodical of general solicitation. Notwithstanding any of the foregoing, the
      Company acknowledges that it is aware of Employee’s ownership and operation of
      certain other businsses, inclusing Essential Amenities Inc., and the Company
      agrees that Employee’s ownership and operation of these businesses shall not
      constitute a violation of this provision.

    

    7. Other
      Obligations.
      Employee acknowledges that all of Employee’s obligations under this Agreement
      (but not including the restrictive covenants contained herein) shall be subject
      to any applicable agreements with, and policies issued by the Company to which
      Employee and all other similarly-situated employees are subject.

    

    8. Trade
      Secrets of Others.
      Employee represents that his or her performance of all the terms of this
      Agreement as employee to the Company does not and will not breach any agreement
      to keep in confidence proprietary information, knowledge or data acquired by
      Employee in confidence or in trust, and Employee will not, except in compliance
      with the performance of his/her duties, disclose to the Company, or allow the
      Company to use, any confidential or proprietary information or material
      belonging to any other person or entity. Employee will not enter into any
      agreement, either written or oral, which is in conflict with this
      Agreement.

    

    9. Injunctive
      Relief.
      Employee acknowledges that any breach or attempted breach by Employee of
      Sections 5 and 7 of this Agreement shall cause the Company irreparable harm
      for
      which any adequate monetary remedy does not exist. Accordingly, in the event
      of
      any such breach or threatened breach, the Company shall be entitled to obtain
      injunctive relief, without the necessity of posting a bond or other surety,
      restraining such breach or threatened breach.

    

    10. Reasonable
      Terms.
      Employee acknowledges and agrees that the restrictive covenants contained in
      this Agreement have been reviewed by Employee with the benefit of counsel and
      that such covenants are reasonable in all of the circumstances for the
      protection of the legitimate interests of the Company and its affiliated
      entities.

    

    11. Modification.
      This
      Agreement may not be changed, modified, released, discharged, abandoned, or
      otherwise amended, in whole or in part, except by an instrument in writing,
      signed by Employee and by the Company. Any subsequent change or changes in
      Employee’s relationship with the Company or Employee’s compensation shall not
      affect the validity or scope of this Agreement.

     

    
      
        
        

      

      
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    12. Entire
      Agreement.
      Employee acknowledges receipt of this Agreement, and agrees that with respect
      to
      the subject matter thereof, it is Employee’s entire agreement with the Company,
      superseding any previous oral or written communications, representations,
      understandings with the Company or any office or representative thereof. Each
      party to the Agreement acknowledges that, in executing this Agreement, such
      party has had the opportunity to seek the advice of independent legal counsel,
      and has read and understood all of the terms and provisions of the
      Agreement.

    

    13. Severability.
      In the
      event that any paragraph or provision of this Agreement shall be held to be
      illegal or unenforceable, the entire Agreement shall not fail on account
      thereof. It is further agreed that if any one or more of such paragraphs or
      provisions shall be judged to be void as going beyond what is reasonable in
      all
      of the circumstances for the protection of the interests of the Company, but
      would be valid if part of the wording thereof were deleted or the period thereof
      reduced or the range of activities covered thereby reduced in scope, the said
      reduction shall be deemed to apply with such modifications as may be necessary
      to make them valid and effective and any such modification shall not thereby
      affect the validity of any other paragraph or provisions contained in this
      Agreement.

    

    14. Successors
      and Assigns.
      This
      Agreement shall be binding upon Employee’s heirs, executors, administrators or
      other legal representatives and is for the benefit of the Company, its
      successors and assigns.

    

    15. Governing
      Law.
      This
      Agreement shall be governed by the laws of the State of Delaware except for
      any
      conflicts of law rules thereof that might direct the application of the
      substantive law of another state.

    

    16. Counterparts.
      This
      Agreement may be signed in counterparts and delivered by facsimile transmission,
      and each such counterpart shall be deemed an original and all of which shall
      together constitute one agreement.

    

    17. No
      Waiver.
      No
      waiver by one party to this Agreement of any breach of this Agreement by the
      other party shall constitute a waiver of any subsequent breach. All waivers
      shall be in writing and signed by the party to be charged
      therewith.

    

    18. Notice.
      Any
      notice hereby required or permitted to be given shall be sufficiently given
      if
      in writing and upon mailing by registered or certified mail, postage prepaid,
      to
      either party at the address of such party or such othis address as shall have
      been designated by written notice by such party to the other party.

    

    19. Taxes.
      The
      Company may withhold from any payments made under this Agreement (including
      severance payments) all applicable taxes, including but not limited to
      income,
      employment and social insurance taxes, as shall be required by law. 
Employee acknowledges and represents that the Company has not provided any
      tax
      advice to him or her in connection with this Agreement and that he or she has
      been advised by the Company to seek tax advice from his or her own tax advisors
      regarding this Agreement and payments that may be made to him or her pursuant
      to
      this Agreement, including specifically, the application of the provisions of
      Section
      409A of
      the Code to such payments.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    20. Section
      409A Safe Harbor.
      Notwithstanding anything in this Agreement to the contrary, in no event shall
      the Company commence payment or distribution to the Employee of any amount
      that
      constitutes “nonqualified deferred compensation” within the meaning of
      Section 409A of the Code, earlier than the earliest permissible date under
      Section 409A of the Code that such amount could be paid or distributed
      without additional taxes or interest being imposed upon the Employee under
      Section 409A of the Code. If any payments or distributions are delayed
      pursuant to the immediately preceding sentence, the Company will accrue such
      amounts without interest during such period as the payment or distribution
      may
      be required to be deferred under Section 409A of the Code (which is anticipated
      to be a six-month period following Employee’s separation from service within the
      meaning of Section 409A of the Code) and will become payable in a lump sum
      payment on the first business day that such amount could be paid or distributed
      without additional taxes or interest being imposed upon the Employee under
      Section 409A of the Code. The Company and the Employee agree that they will
      execute any and all amendments to this Agreement as they mutually agree in
      good
      faith may be necessary to ensure compliance with the distribution provisions
      of
      Section 409A of the Code or as otherwise needed to ensure that this
      Agreement complies with Section 409A. 

     

    [SIGNATURES
      TO FOLLOW]

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
      first forth above.

    

    
      	 	 	 
	 	AFFINITY
              MEDIA
              INTERNATIONAL CORP.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
	 	Title: 
	 	 
	 	EMPLOYEE
	 	
            

    

     

    [Signature
      Page to Employment Agreement]AGREEMENT

     

    This
      Agreement is made and is effective as of {date}
      by and
      between Heritage Oaks Bank (“Company”) and {name}
      (“Executive”).

    

    WHEREAS,
      Executive is currently employed by the Company and its parent company Heritage
      Oaks Bancorp, a California corporation (“Bancorp”) in the capacities of
      Executive Vice-President and {insert
      functional title}
      of each
      of Company and Bancorp, and Executive’s background, expertise and efforts have
      contributed to the success and financial strength of the Company;
      and

    

    WHEREAS,
      the Company wishes to assure itself of the continued opportunity to benefit
      from
      Executive’s services and Executive wishes to serve in the employ of the Company
      for such purposes;

    

    WHEREAS,
      the Board of Directors of the Company (“Board”) has determined that the best
      interests of the Company would be served by setting forth the benefits which
      the
      Company will provide to Executive if the Executive remains employed by the
      Company up to and including the consummation of a Change in Control of the
      Company; and 

    

    WHEREAS,
      the Company wishes to provide a specific incentive to Executive to remain in
      the
      employ of the Company through and including the consummation of any Change
      in
      Control of the Company, as defined herein.

    

    NOW,
      THEREFORE, in order to effect the foregoing, the parties hereto wish to enter
      into an agreement on the terms and conditions set forth below. This agreement
      (“Agreement”) therefore sets forth those benefits which the Company will provide
      to Executive in the event of a “Change in Control of the Company” (as defined in
      paragraph 2) under the circumstances described below or in contemplation of
      a
      Change in Control as discussed in Paragraph 1 below. Accordingly, in
      consideration of the premises and the respective covenants and agreements of
      or
      in contemplation of a Change in Control as discussed in Paragraph 1 below herein
      contained, and intending to be legally bound hereby, the parties hereto agree
      as
      follows:

    

    1.
      TERM.
      If a
      Change in Control of the Company should occur while Executive is still an
      employee of the Company, then this Agreement shall continue in effect from
      the
      date of such Change in Control of the Company for so long as Executive remains
      an employee of the Company, but in no event for more than two years following
      the consummation of a Change in Control of the Company; provided, however,
      that
      the expiration of the term of this Agreement shall not adversely affect
      Executive’s rights under this Agreement which have accrued prior to such
      expiration. If no Change in Control of the Company occurs before Executive’s
      status as an employee of the Company is terminated, this Agreement shall expire
      on such date. Prior to a Change in Control of the Company, Executive’s
      employment may be terminated by the Company with or without Cause (as defined
      in
      paragraph 3(iii)), and/or this Agreement may be terminated by the Company at
      any
      time upon written notice to Executive and, in either or both such events,
      Executive shall not be entitled to any of the benefits provided hereunder;
      provided, however, a termination of Executive, or this Agreement, in
      contemplation of but prior to a Change in Control shall be presumed to be a
      termination following a Change in Control if such termination is reasonably
      proximate in time to the public announcement of said Change in
      Control.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    2.
      CHANGE
      IN CONTROL.
      For
      purposes of this Agreement, a “Change in Control of the Company” shall be deemed
      to have occurred if (A) there shall be consummated (1) any consolidation or
      merger of the Company or Bancorp in which the Company or Bancorp, as the case
      may be, is not the continuing or surviving corporation (unless the shareholders
      of Company or Bancorp, as the case may be, immediately before such merger own
      immediately after such merger more than a majority of the voting securities
      of
      the surviving entity), or pursuant to which shares of the Company’s or Bancorp’s
      common stock would be converted in whole or in part into cash, securities or
      other property, or (2) any sale, lease, exchange or transfer (in one transaction
      or a series of related transactions) of all or substantially all the assets
      of
      the Company or Bancorp, or (B) the shareholders of the Company or Bancorp shall
      approve any plan or proposal for the liquidation or dissolution of the Company
      or Bancorp, or (C) any “person” (as such term is used in Sections 13(d)(3) and
      14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”)), other than the Company or Bancorp, or a subsidiary thereof, or any
      employee benefit plan sponsored by the Company or Bancorp, or a subsidiary
      thereof, or a corporation owned, directly or indirectly, by the shareholders
      of
      the Company or Bancorp in substantially the same proportions as their ownership
      of stock of the Company or Bancorp, shall become the beneficial owner (within
      the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company
      or Bancorp representing 20% or more of the combined voting power of the
      Company’s or Bancorp’s then outstanding securities ordinarily (and apart from
      rights accruing in special circumstances) having the right to vote in the
      election of directors as a result of a tender or exchange offer, open market
      purchases, privately negotiated purchases or otherwise.

    

    3.
      TERMINATION
      FOLLOWING CHANGE IN CONTROL.
      If a
      Change in Control of the Company shall have occurred while Executive is still
      an
      employee of the Company, Executive shall be entitled to the payments and
      benefits provided in paragraph 4 hereof upon the subsequent termination of
      Executive’s employment, within two years following the consummation of a Change
      in Control of the Company, by Executive or by the Company unless such
      termination is (a) because of death, “Disability” or “Retirement” (as defined
      below), (b) by the Company for “Cause” (as defined below), or (c) by Executive
      other than for “Good Reason” (as defined below), in any of which events
      Executive shall not be entitled to receive benefits under this
      Agreement.

    

    (i)
      Disability.
      If, as a
      result of Executive’s incapacity due to physical or mental illness, Executive
      shall have been absent from her duties with the Company on a full-time basis
      for
      90 days, the Company may terminate this Agreement for “Disability.”

    

    (ii)
      Retirement.
      Retirement shall mean the voluntary termination by Executive of her employment
      for other than “Good Reason” (as defined below) which termination qualifies as
      retirement in accordance with any pension plan adopted by the Company, pursuant
      to the Company’s normal retirement policies, or in accordance with any
      retirement arrangement established with Executive’s consent with respect to
      Executive; provided, however, that no mandatory retirement, whether under any
      pension plan or in accordance with any such other retirement arrangement, shall
      constitute Retirement for purposes of this Agreement, unless Executive has
      previously consented thereto in writing.

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

       

    

    (iii)
      Cause.
      Executive’s employment shall cease following a Change in Control upon a good
      faith finding of Cause by the Board. “Cause” hereunder means the
      following:

    

    (A)
      Executive’s personal dishonesty, incompetence or willful misconduct, including
      but not limited to a breach of the Company’s or Bancorp’s code of ethics or code
      of conduct;

    

    (B)
      Executive’s breach of fiduciary duty involving personal profit;

     

    (C)
      Executive’s intentional failure to perform Executive’s duties for the Company
      after a written demand for performance is given to Executive by the Board which
      demand specifically identifies the manner in which the Board believes that
      Executive has not performed her duties; 

    

    (D)
      Executive’s willful violation of any law, rule, regulation or final cease and
      desist order (other than traffic violations or similar minor offenses) to the
      extent detrimental to the Company’s business or reputation; or 

    

    (E)
      the
      willful engaging by Executive in gross misconduct materially and demonstrably
      injurious to the Company.

    

    Notwithstanding
      any of the foregoing, Executive remains an “at will” employee of the Company and
      the Company can without cause terminate Executive’s employment prior to any
      Change in Control in the discretion of the Board of Directors of the
      Company.

    

    (iv)
      Resignation
      for Good Reason.
      Following a Change in Control during the Term hereof, Executive may, under
      the
      following circumstances, regard Executive's employment as being constructively
      terminated by the Company (and in such case Executive's employment shall
      terminate) and may, therefore, Resign for Good Reason within 90 days of
      Executive's discovery of the occurrence of one or more of the following events,
      any of which shall constitute "Good Reason" for such Resignation for Good
      Reason:

    

    (A) Without
      Executive's express written consent, the assignment to Executive of any duties
      materially inconsistent with Executive's position, duties, responsibilities
      and
      status with the Company immediately prior to the Change in Control, or any
      subsequent removal of Executive from or any failure to re-elect her to any
      such
      position;

     

    (C) A
      material reduction (ten percent or greater) by the Company of Executive's total
      compensation (base salary and any bonus compensation applicable to her) as
      in
      effect immediately prior to the Change in Control;

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

       

    

    (D) A
      material reduction (ten percent or greater) by the Company to the Executive’s
      total benefits and perks as in effect immediately prior to the Change in
      Control; or the taking of any action by the Company which would materially
      affect Executive's participation in or reduce Executive's benefits under any
      such benefits or ‘perks' plans, programs or policies, or deprive Executive of
      any material fringe benefits enjoyed by her immediately prior to the Change
      in
      Control;

    

    (E) The
      Company requiring Executive to be based anywhere other than San Luis Obispo
      County where the Company’s headquarters is currently situated, except for
      required travel on the Company’s behalf to an extent substantially consistent
      with Executive's present business travel obligations; or

    

    (F) The
      failure of the Company to obtain the assumption of this Agreement by any
      successor.

    

    (v)
      Notice
      of Termination.
      Any
      termination by the Company pursuant to subparagraphs (i), (ii) or (iii) above
      or
      by Executive pursuant to subparagraph (iv) above shall be communicated by
      written Notice of Termination to the other party hereto. For purposes of this
      Agreement, a “Notice of Termination” shall mean a notice which shall indicate
      the specific termination provision in this Agreement relied upon and shall
      set
      forth in reasonable detail the facts and circumstances claimed to provide a
      basis for termination of Executive’s employment under the provision so
      indicated.

    

    (vi)
      Date
      of Termination.
“Date
      of Termination” shall mean

    

    (A)
      if
      this Agreement is terminated for Disability, thirty days after Notice of
      Termination is given,

    

    (B)
      if
      Executive’s employment is terminated pursuant to subparagraph (iv) above, the
      date specified in the Notice of Termination,

    

    (C)
      if
      Executive’s employment is terminated for any other reason, the date on which a
      Notice of Termination is given (or, if a Notice of Termination is not given,
      the
      date of such termination), and

    

    (D)
      if
      Executive is entitled to compensation pursuant to paragraph 4, the date
      determined pursuant to such paragraph.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    4.
      COMPENSATION
      DURING DISABILITY OR UPON TERMINATION.
      

    

    (i)
      If,
      after a Change in Control of the Company, Executive shall fail to perform her
      duties because of a Disability, Executive shall continue to receive his/her
      full
      base salary monthly at the rate then in effect until her employment is
      terminated pursuant to paragraph 3(i) hereof.

    

    (ii)
      If,
      after a Change in Control of the Company, Executive’s employment shall be
      terminated for Cause, the Company shall pay Executive his/her full base salary
      through the Date of Termination at the rate in effect at the time Notice of
      Termination is given and the Company shall have no further obligations to
      Executive under this Agreement.

    

    (iii)
      If,
      after a Change in Control of the Company, the Company shall terminate
      Executive’s employment (other than pursuant to paragraph 3(i) or 3(iii) hereof
      or by reason of death or Retirement as provided in Paragraph 3(ii)) or Executive
      shall terminate her employment for Good Reason, Executive shall be entitled
      to
      payments pursuant to this paragraph 4:

    

    The
      Company shall pay to Executive as severance pay (and without regard to the
      provisions of any benefit plan) in a lump sum on the fifth day following the
      Date of Termination, the following amounts:

    

    (x)
      Executive’s full base salary through the Date of Termination at the rate in
      effect at the time Notice of Termination is given plus any benefits or awards
      (including both the cash and stock components) which pursuant to the terms
      of
      any Plans have been earned or become payable, but which have not yet been paid
      to Executive (including amounts which previously had been deferred at
      Executive’s request); and

    

    (y)
      an
      amount equal to Executive’s total accrued compensation from the Company
      (including bonus) during the previous twelve (12) months. 

     

    (iv)
      Executive shall not be required to mitigate the amount of any payment provided
      for in this Agreement by seeking other employment or otherwise, nor shall the
      amount of any payment provided for in this paragraph 4 be reduced by any
      compensation earned by Executive as the result of employment by another employer
      after the Date of Termination, or otherwise.

    

    (v)
      The
      provisions of this Agreement, and any payment provided for hereunder, shall
      not
      reduce any amounts otherwise payable, or in any way diminish Executive’s
      existing rights, or rights which would accrue solely as a result of the passage
      of time, under any employee benefit plan of the Company, any employment
      agreement or other contract, plan or arrangement of the Company, except to
      the
      extent necessary to prevent double payment under any severance plan or program
      of the Company in effect at the Date of Termination.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    5.
      SUCCESSOR’S
      BINDING AGREEMENT 

     

    (i)
      The
      Company will require any successor (whether direct or indirect, by purchase,
      merger, consolidation or otherwise) to all or substantially all of the business
      and/or assets of the Company, by agreement in form and substance satisfactory
      to
      Executive expressly to assume and agree to perform this Agreement in the same
      manner and to the same extent that the Company would be required to perform
      if
      no such succession had taken place. 

    

    (ii)
      This
      Agreement shall inure to the benefit of, and be enforceable by, Executive’s
      personal or legal representatives, executors, administrators, successors, heirs,
      distributes, devises and legatees. If Executive should die while any amounts
      would still be payable to Executive hereunder if Executive had continued to
      live, all such amounts, unless otherwise provided herein, shall be paid in
      accordance with the terms of this Agreement to Executive’s devisee, legatee or
      other designee or, if there be no such designee, to Executive’s
      estate.

    

    6.
      NO
      EMPLOYMENT AGREEMENT.
      In
      consideration of the foregoing obligations of the Company, Executive agrees
      to
      be bound by the terms and conditions of this Agreement and to remain in the
      employ of the Company during any period following any public announcement by
      any
      person of any proposed transaction or transactions which, if effected, would
      result in a Change in Control of the Company until a Change in Control of the
      Company has taken place or, in the opinion of the Board, such person has
      abandoned or terminated its efforts to effect a Change in Control of the
      Company. Subject to the foregoing including but not limited to the provisions
      contained in Paragraph 1 that a termination in contemplation of a Change in
      Control entitles Executive to the amounts provided in Section 4, nothing
      contained in this Agreement shall impair or interfere in any way with
      Executive’s right to terminate her employment or the right of the Company to
      terminate Executive’s employment with or without cause prior to a Change in
      Control of the Company. Nothing contained in this Agreement shall be construed
      as a contract of employment between the Company and Executive or as a right
      for
      Executive to continue in the employ of the Company, or as a limitation of the
      right of the Company to discharge Executive with or without cause prior to
      a
      Change in Control of the Company.

    

    7.
      NOTICE.
      For the
      purpose of this Agreement, notices and all other communications provided for
      in
      this Agreement shall be in writing and shall be deemed to have been duly given
      when delivered or mailed by United States registered mail, return receipt
      requested, postage prepaid, addressed to the respective addresses set forth
      on
      the last page of this Agreement, provided that all notices to the Company should
      be directed to the attention of the Chairman of the Company’s Compensation
      Committee, or to such other address as either party may have furnished to the
      other in writing in accordance herewith, except that notices of change of
      address shall be effective only upon receipt.

    

    8.
      FURTHER
      ASSURANCES.
      Each
      party hereto agrees to furnish and execute such additional forms and documents,
      and to take such further action, as shall be reasonable and customarily required
      in connection with the performance of this Agreement or the payment of benefits
      hereunder.

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

       

    

    9.
      MISCELLANEOUS.
      No
      provision of this Agreement may be modified, waived or discharged unless such
      waiver, modification or discharge is agreed to in writing signed by Executive
      and such officer as may be specifically designated by the Board of Directors
      of
      the Company. No waiver by either party hereto at any time of any breach by
      the
      other party hereto of, or compliance with, any condition or provision of this
      Agreement to be performed by such other party shall be deemed a waiver of
      similar or dissimilar provisions or conditions at the same or at any prior
      or
      subsequent time. No agreements or representations, oral or otherwise, express
      or
      implied, with respect to the subject matter hereof have been made by either
      party which are not set forth expressly in this Agreement. This Agreement
      contains the entire agreement among the parties and supersedes and replaces
      any
      prior agreement between the parties concerning the subject matter hereof. The
      validity, interpretation, construction and performance of this Agreement shall
      be governed by the laws of the State of California.

    

    10.
      VALIDITY.
      The
      invalidity or unenforceability of any provision of this Agreement shall not
      affect the validity or enforceability of any other provision of this Agreement,
      which shall remain in full force and effect.

    

    11.
      COUNTERPARTS.
      This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed to be an original but all of which together will constitute one and
      the
      same instrument.

    

    12.
      ARBITRATION.
      Any
      dispute or controversy arising or in connection with this Agreement shall,
      upon
      written request of one party to the other, be submitted to and settled
      exclusively by arbitration pursuant to the rules of the American Arbitration
      Association. Judgment may be entered on the arbitrator's award in any court
      of
      competent jurisdiction. The cost of such arbitration, including reasonable
      attorney’s fees, shall be borne by the losing party or in such proportions as
      the arbitrator(s) shall decide. Arbitration shall be the exclusive remedy of
      Executive and the Company and the award of the arbitrator(s) shall be final
      and
      binding upon the parties. All reasonable costs, including reasonable attorney’s
      fees, incurred in enforcing an arbitration award in court, or of seeking a
      court
      order to compel arbitration, shall be borne by the losing party in such
      proceedings.

    

    13.
      ADVICE
      OF COUNSEL.
      Executive acknowledges that she has been encouraged to consult with legal
      counsel of her choosing concerning the terms of this Agreement prior to
      executing this Agreement. Any failure by Executive to consult with competent
      counsel prior to executing this Agreement shall not be a basis for rescinding
      or
      otherwise avoiding the binding effect of this Agreement. The parties acknowledge
      that they are entering into this Agreement freely and voluntarily, with full
      understanding of the terms of this Agreement. Interpretation of the terms and
      provisions of this Agreement shall not be construed for or against either party
      on the basis of the identity of the party who drafted the terms or provisions
      in
      question.

    

    14.
      REDUCTION
      OF PAYMENT.
      Notwithstanding anything in the foregoing to the contrary, if the severance
      payment or any of the other payments provided for in this Agreement, together
      with any other payments which Executive has the right to receive from the
      Company would constitute a "parachute payment" (as defined in Section 280G(b)(2)
      of the Internal Revenue Code of 1986, as amended, or such similar set of laws
      (the “Code”)), the payments pursuant to this Agreement shall be reduced
      (reducing first the payments under Section 3 to the largest amount as will
      result in no portion of such payments being subject to the excise tax imposed
      by
      Section 4999 of the Code, provided, however, that the determination as to
      whether any reduction in the payments under this Agreement pursuant to this
      proviso is necessary shall be made in good faith by the Company’s then current
      tax services provider / advisor, and such determination shall be conclusive
      and
      binding on the Company and Executive with respect to the treatment of the
      payment for tax reporting purposes.

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      day
      and year first above written.

    

    HERITAGE
      OAKS BANK

    
      	 	
              545

            	
              12TH
                Street

              Paso
                Robles, California 93446

            

    

    

    

    By:
      _____________________

    Its:
      President
      & CEO

    Print
      name: Lawrence
      P.Ward

    

    

    THE
      EXECUTIVE

    545
      12TH
      Street

    Paso
      Robles, California 93446

    

     

     

    _______________________________

    {Executive’s
      name}

    

    

    
      
         

      

      
        8

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