Document:

Exhibit 10.1

 

SUMMARY
OF MATERIAL MODIFICATION

for the

 

COAST
NATIONAL BANK 401 (K) PROFIT SHARING PLAN

 

DECEMBER 30, 2004

 

(1)                                  General. This is a Summary of
Material Modification regarding the COAST NATIONAL BANK 401 (K) PROFIT
SHARING PLAN (“Plan”). This Summary of Material Modification supplements
the Summary Plan Description (“SPD”) dated December 17, 2002. You should
retain this document with your copy of the SPD.

 

(2)                                  Identification of Employer. The
legal name, address and Federal employer identification number of the Employer
are:

 

	
   

  	
  Coast National Bank

  
	
   

  	
  500 Marsh Street

  
	
   

  	
  San Luis Obispo, CA
  93401

  
	
   

  	
   

  
	
   

  	
  EIN:

  	
  77-0440178

  	
   

  

 

(3)                                  Summary Description of Modification.
The Employer has amended the Plan in the following respect:

 

The Employer has
amended the definition of compensation to exclude Fringe Benefits, Bonuses and
Commissions.

 

(4)                                  Effect on SPD. This Summary amends
and updates the SPD.Exhibit 10.2

 

LEASE
AGREEMENT

 

BY THIS LEASE dated October
15, 2004, HAMON FAMILY TRUST, herein called “Lessor,” leases, to COAST NATIONAL
BANK, herein called “Lessee”, that certain real property, herein called “the
Premises,” in the County of San Luis Obispo, State of California, commonly
known as 2138 SPRING STREET, SUITE A PASO ROBLES, California.  The Premises are a part of the property
described in Exhibit A, attached hereto, consisting of approximately 1446 square
feet.

 

ARTICLE
1.  TERM OF LEASE

 

Original Term

 

Section 1.01.  The Original Term of this lease shall be for
a period of FIVE (5) years, commencing on the Commencement Date.  The “Commencement Date” shall be as
follows:  (a)  The day following the Completion Date of
Vanilla Shell “ as specified in Section 5.03 below, evidenced by a “notice of
completion”.

 

If Lessor fails to deliver
possession of a completed or substantially completed suite by October 1, 2004,
Lessee shall have the right to terminate said lease.  Should Lessee elect to terminate the lease,
Lessor shall discharge Lessee from all obligations contained herein.

 

Extended Term

 

Section 1.02.  Should Lessee perform all the terms and
conditions of this lease during the original term, Lessee may extend this lease
for one (1) additional term of FIVE (5) years, commencing on expiration of the
original term, by giving Lessor written notice of Lessee’s desire to extend the
term hereof not less than one hundred twenty (120) days but not more than one
hundred eighty (180) days, prior to expiration of the original term.

 

Hold Over

 

Section 1.03.  Should Lessee hold over and continue in
possession of the Premises after expiration of the term of this lease or any
extension thereof, Lessee’s continued occupancy of the Premises shall be
considered a month-to-month tenancy subject to all the terms and conditions of
this lease, except that the base rent, which shall be payable as provided
below, shall be one hundred fifteen percent (115%) of the base rent as of the
date of expiration.  If Lessee fails to
surrender the Premises upon the expiration of this Lease, Lessee shall
indemnify and hold Lessor harmless from all loss or liability, including
without limitation, any claims made by any succeeding tenant founded on or
resulting from such failure to surrender.

 

ARTICLE
2.  RENT

 

Base Rent

 

Section 2.01.  For the initial year of the FIVE (5) year
term hereof, Lessee agrees to pay to Lessor a fixed rental for the use and
occupancy of the Premises of One Dollar Sixty Five Cents ($ 1.65) per square
foot.  It is hereby stipulated, and
agreed that the Premises contains approximately 1446 square feet. The initial
rent of TWO THOUSAND THREE HUNDRED EIGHTYFIVE DOLLARS and NINETY CENTS
$2,385.90 shall be due and payable on the first day of each and every month commencing
on or before the Commencement Date, payable to HAMON FAMILY TRUST at P.O. Box
1085, Paso Robles, California, 93447, or at such other place or places as
Lessor may from time to time designate by written notice delivered to Lessee.  Such rent shall be pro-rated for any partial
month at both the Commencement Date and the termination date.

 

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Rent
Adjustment

 

The minimum monthly rent
shall be subject to adjustment at the commencement of the Second year of the
original term, and each year thereafter including any extended term of this
lease, on the anniversary (“the adjustment date”) of the commencement of the
initial term as follows:

 

The base for computing the
first adjustment is the consumer price index (all Items) for the Los
Angeles-Long Beach Metropolitan Area, published by the United States Department
of Labor Bureau of Labor Statistics, and referred to herein as (“The Index”),
which is last published prior to the date of the commencement of the term (“Beginning
Index”). If the index published nearest, and prior to, the adjustment date (“Extension
Index”) has increased over the Beginning Index, the monthly rent set forth in
paragraph 2.01 by a fraction, the numerator of which is the Extension Index and
the denominator of which is the Beginning Index.  In subsequent adjustments, including
adjustments during any extended term, the minimum monthly rent for the
following year (and until the next rent adjustment) shall be set by multiplying
the minimum monthly rent set forth in paragraph 2.01, as adjusted on the prior
adjustment date, by a fraction, the numerator of which is the Extension Index
and the denominator of which is the Index which is published for the date
nearest the date of the preceding adjustment date.

 

Within 90 days after the
adjustment date, the lessor shall prepare a statement stating the new minimum
monthly rent is adjusted and deliver it to the Lessee.  The Lessee shall pay the difference between
the rent paid from the adjustment date and the new minimum monthly rent to the
lessor within 15 days of receipt of the statement.

 

Base rent for
the first year of the extension term, if any, shall be the fair market rent for
comparable property in the Paso Robles area.

 

“Fair market
rent” as used herein shall mean the fair market rent per square foot for
comparable property in the Paso Robles area as agreed upon by the parties to
this lease.  If the parties are unable to
agree on the fair market rent for the Premises for any extension term of this lease,
the parties shall agree on one (1) qualified appraiser with not less than five
(5) years experience in determining the rental value of commercial real
property in the Paso Robles area.  The
fees and expenses shall be paid equally by the Lessor, and Lessee.

 

Lessee’s
Share of Common Expenses

 

Section 2.04  Lessee shall pay to Lessor, as additional
rent, Lessee’s share of common expenses (as defined in this paragraph), on the
1st day of each month following the month the term commences and continuing during
the term hereof. Lessee’s proportionate share of common expenses shall be
THIRTY ONE percent (31%)  of the total
common expenses, which is approximately the ratio that the total number of
square feet in the Premises bears to the total number of leaseable square feet
on the property on which the Premises are located.  Common expenses that cover a period not
within the term of this Lease shall be prorated.  Lessor can adjust the monthly common expenses
charge at the end of each accounting period on the basis of Lessor’s reasonably
anticipated costs for the following accounting period.  An accounting period is a calendar year,
except that the first accounting period shall commence on the date the term
commences, and the last accounting period shall end on the date the term
expires or terminates.

 

“Common expenses” shall mean
and include the cost of all commonly metered utilities such as water, trash
removal, common electricity, management fees, and all maintenance and other
costs and expenses incurred by Lessor in maintaining, repairing and/or
replacing any portion of the commonly used areas, including but not limited to
any landscaping and parking areas.

 

Within thirty (30) days
after the end of each accounting period, Lessor shall furnish to Lessee a statement
showing the total actual common expenses for the accounting period, Lessee’s
share of the total actual common expenses for the accounting period, and the
payments made by Lessee with respect

 

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to such accounting
period.  If Lessee’s share of the total
actual common expenses for the accounting period exceed the payments made by
Lessee for such period, Lessee shall pay Lessor the deficiency within ten (10)
days after receipt of the statement.  If
Lessee’s payments made during the accounting period exceed Lessee’s share of
the total actual common expenses, Lessor shall pay Lessee the excess at the
time Lessor furnishes the statement to Lessee.

 

Personal Property Taxes

 

Section 2.05.  Lessee shall pay before delinquency all
taxes, assessments, license fees, and other charges (taxes) that are levied and
assessed against Lessee’s personal property and tenant improvements installed
or located in or on the Premises, and that become payable during the term.  On demand by Lessor, Lessee shall furnish
Lessor with satisfactory evidence of these payments.  If any taxes on Lessee’s personal property
are levied against Lessor or Lessor’s property, or if the assessed value of the
Premises, or building and other improvements in which the Premises are located,
is increased by the inclusion of a value placed on Lessee’s personal property,
and if Lessor pays the taxes on any of these items or the taxes based on the
increased assessment of these items, Lessee, on demand, shall immediately
reimburse Lessor for the sum of the taxes levied against Lessor, or the
proportion of the taxes resulting from the increase in Lessor’s assessment.
Lessor shall have the right to pay these taxes regardless of the validity of
the levy.

 

Real
Property Taxes

 

Section 2.06.  Lessor shall pay all real property taxes and
general and special assessments (“real property taxes”) that may be levied or
assessed against the land, buildings and improvements of which the Premises are
a part.

 

Security Deposit

 

Section 2.07.  (a)  
Lessee shall, prior to taking possession of the Premises, deposit with
Lessor, upon execution hereof, a security deposit in the amount of ($2,500.)
Twenty Five Hundred Dollars as security for the full and faithful performance
by Lessee of the terms, conditions and covenants of this lease.  Lessee shall not use any portion of the
security deposit for the last month’s rent without the prior written consent of
Lessor.

 

(a)   If at any time during the term of this lease
Lessee defaults in the payment of rent, or any portion or the rent, including
any additional rent herein described, Lessor may appropriate and apply any
portion of the security deposit reasonably necessary to remedy any such
default.

 

(b)   If at any time during the term of this lease
Lessee, Lessee’s agents, patrons or employees damage the Premises or any part
of the property on which the Premises is located through want of ordinary care
or any greater degree of culpability, then Lessor may appropriate and apply any
portion of the security deposit reasonably necessary to fund the necessary
repair.

 

(c)   If on termination of this tenancy, Lessee
fails to surrender and deliver the Premises to Lessor in as good condition as
they are on at the date of possession, reasonable wear and tear excepted,
Lessor may appropriate and apply any portion of the security deposit reasonably
necessary to put the Premises to a clean and sanitary condition.

 

(d)   Lessor’s obligations with regard to the
security deposit are those of a debtor and not a trustee.  Lessor may maintain the security deposit
separate and apart from Lessor’s general funds or may commingle the security
deposit with Lessor’s general funds or other funds.  Lessee shall not be entitled to any interest
on any portion of the security deposit.

 

(e)   If Lessor transfers Lessor’s interest in the
Premises in any manner, Lessor or Lessor’s agent shall do one of the following
acts, either of which shall relieve Lessor of further liability with respect to
the deposit.

 

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(i)  Transfer
the portion of the security deposit remaining after any deductions authorized
by this section or otherwise authorized by law, if any, to Lessor’s successor
in interest, and thereafter notify Lessee by certified mail, return receipt
requested, of that transfer and of the transferee’s name and mailing address.
Upon receipt of the security deposit by Lessor’s successor in interest, the
successor in interest shall have all of the rights and obligations of Lessor
with respect to the security deposit.

 

(ii)  Return
the remaining portion of the security deposit, if any, after any deductions
authorized by this lease or otherwise authorized by law, to Lessee.

 

(f)   Lessor shall return to Lessee the portion of
the security deposit remaining after deductions authorized by this section or
by law, if any, in the following manner:

 

(i)            If
a deduction has been made only for the nonpayment of rent, the remaining
portion, if any, shall be returned not later than two (2) weeks and the date
Lessor receives possession of the Premises.

 

(ii)           If
a deduction has been made for any other reason, the remaining portion, if any,
shall be returned not later than thirty (30) days after the date Lessee returns
possession of the Premises to Lessor, unless Lessor needs more time to
determine the cost of curing Lessee’s defaults under this lease, in which case
Lessor shall return the remaining portion of the security deposit, if any,
within two (2) weeks after completion of the work necessary to cure Lessee’s
defaults.

 

(g)   If during the term of this lease, Lessor
applies all or any portion of the security deposit for a purpose authorized by
this section or otherwise authorized by law, Lessee agrees to restore the
amount of the security deposit so applied, plus such additional amount
requested by Lessor (not exceeding twice the amount of the Initial security
deposit), with the next payment of rent due under this lease.  Lessee’s failure to restore said security
deposit, plus any additional sum required by Lessor, shall be a material breach
of this lease.

 

Late Charges

 

Section 2.04  If any installment of rent or other payment
required to be paid by Lessee to Lessor is not paid within five (5) days of the
date on which it is due, a late charge equal to six percent (6%) of the late
payment shall be due from Lessee to Lessor to compensate Lessor for the
additional administrative work caused by such default and to compensate Lessor
for the loss of use of such defaulted payment. 
The late charge herein shall be in addition to any other remedy which
Lessor may have hereunder for such default.

 

Interest on Late Payments

 

Section 2.05  If any payment required to be paid by Lessee
to Lessor is not paid within five (5) days of the date on which it is due, such
payment shall bear interest at the maximum rate permitted by law from the date
it became due until it is paid by Lessee to Lessor.

 

ARTICLE
3.  USE OF PREMISES

 

Permitted Use

 

Section 3.01.  The Premises, during the term of this lease
and any extensions thereof shall be used for Financial Services which may
include a full service branch bank facility with automated teller and night
drop services, and for other related activities and for no other purpose
without the prior written consent of Lessor, which consent shall not be
unreasonably withheld or delayed.

 

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Lessor’s Control of
Non-leased Areas

 

Section 3.03.  Lessor will retain exclusive management and
control of all common areas, including landscaping and parking areas, exterior
surfaces, partitions, and areas of the exterior perimeter surrounding the
Premises.

 

Insurance Hazards

 

Section 3.04.  Lessee shall not commit or permit the
commission of any acts on the Premises nor use or permit the use of the
Premises in any manner that will increase the existing rates for or cause the
cancellation of any fire, liability, or other insurance policy insuring the
Premises or the improvements on the Premises.

 

Waste or Nuisance

 

Section 3.05.  Lessee shall not commit or permit the
commission by others of any waste on the Premises; Lessee shall not maintain,
commit, or permit the maintenance or commission of any nuisance as defined in
Section 3479 of the California Civil Code on the Premises; and Lessee shall not
use or permit the use of the Premises for any unlawful purpose.

 

Hazardous Materials

 

Section 3.06.  Lessee warrants and represents that during
the term hereof, and any extensions thereof, Lessee shall not use the Premises
in any manner that would be in violation of any federal, state or local law,
ordinance or regulation relating to environmental conditions on, under or about
the Property, including but not limited to soil and groundwater
conditions.  Lessee shall not use,
generate, manufacture, produce, store or dispose of on, under or about the
Premises any hazardous materials, including without limitation, flammable
materials, explosives, asbestos, radioactive materials, hazardous wastes, toxic
substances or related injurious materials, whether injurious by themselves or
in combination with other materials, other than such materials as may be
necessary for Lessee’s normal operations on the Premises. Lessee shall not
dispose of or permit the disposal of any hazardous materials into the sewer
system serving the Premises.

 

Lessee agrees to indemnify,
defend and hold Lessor, its officers, directors, principals, employees and
agents, and any successors to Lessor, their directors, officers, principals,
employees and agents, harmless from and against any and all liability,
including without limitation (1) all foreseeable and unforeseeable
consequential damages, directly or indirectly arising from the use, generation,
storage or disposal of hazardous materials by Lessee, its agents, contractors,
patrons, subtenants or assignees on the Premises; and (2) the cost of any
required or necessary repair, cleanup or detoxification or remediation and the
preparation of any closure or other required plans, whether such action is
required or necessary before or after the termination of the term hereof, to
the full extent that such liability is attributable, directly or indirectly, to
the presence or use, generation, storage, release, threatened release or
disposal of hazardous materials by Lessee, its agents, contractors, patrons,
subtenants or assignees on the Premises during the term hereof. This indemnity
shall survive the termination of the term hereof.

 

Compliance With Law

 

Section 3.07.  Lessee shall at Lessee’s own cost and expense
comply with all statutes, ordinances, regulations, existing use permits and
requirements of all governmental entities, both federal and state and county or
municipal, relating to Lessee’s use and occupancy of the Premises whether such
statutes, ordinances, regulations, and requirements be now in force or
hereinafter enacted.  The judgment of any
court of competent jurisdiction, or the admission by Lessee in a proceeding
brought against Lessee by any government entity, that Lessee has violated any
such statute, ordinance, regulation, or requirement shall be conclusive as
between Lessor and Lessee and shall be grounds for termination of this lease by
Lessor.  Lessor agrees that any
requirements of the Municipal, State, or

 

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Federal authorities which require
alteration of Lessor’s building shall not be the responsibility of Lessee,
unless required because of an act of Lessee or a use of the Premises by Lessee.

 

ARTICLE 4.
PARKING EASEMENT

 

Parking Easement

 

Section 4.01.  Lessor hereby grants to Lessee for the term
of this lease, including any extensions thereof, a nonexclusive easement
appurtenant to the Premises, and/or off-site parking facilities, the right to
use in common with other tenants of the property of which all are a part of the
parking areas.  Said easement and the use
of said easement by Lessee, shall be subject to the following terms and
conditions:

 

(1)           All parking areas shall be used only for
vehicular parking and for vehicular and pedestrian ingress and egress to the
Premises by Lessee’ suppliers, customers, and invitees.

 

(2)           The use of the parking areas shall be subject
to such reasonable rules and regulations as may now exist or hereafter be
adopted by Lessor from time to time, in Lessor’s sole discretion.

 

(3)           Lessor grants the non-exclusive use of the
entire parking lot, AND Exclusive use of the first Three parking spaces
directly in front of lessee’s suite. 
Lessee shall be responsible for the cost of marking these three spaces
as exclusive to Lessee.  Markings shall
be limited to painted designations on asphalt within the parking bay or on the
curb directly in front of parking bay. 
No other signage shall be permitted for this purpose.

 

(4)           Lessee shall not store any vehicles in the
parking easement area.  No vehicle shall
remain in the parking easement area for more than forty-eight (48) hours.

 

(5)           All parking areas shall be maintained by
Lessor and the costs of such maintenance shall be shared as a common expense as
provided in Section 2.04 above.

 

(6)           Lessor shall have the sole discretion and
right to make changes in said easement and the Common provided ingress to and
egress from said Premises is not substantially impaired by such changes.

 

ARTICLE
5.  MAINTENANCE, ALTERATIONS AND REPAIRS

 

Maintenance

 

Section 5.01.  (a) LESSOR:  Lessor shall, at Lessor’s sole cost and
expense, maintain in good condition and repair the exterior roof, exterior
walls, structural supports, and the foundations of the Premises. Lessor shall
also, at Lessor’s sole cost and expense, maintain in good condition and repair
the driveways, parking areas, and landscaping. The costs of maintenance and
repair of the driveways, parking areas, landscaping serving the Premises shall
be a common expense as provided in Section 2.04 above.  Lessor shall not be liable for any damages to
Lessee or the property of Lessee resulting from Lessor’s failure to make any
repairs required by this section unless written notice of the need for such
repairs has been given to Lessor by Lessee and Lessor has failed for a
reasonable period, not exceeding 30 days after receipt of the notice, unless
prevented by causes not the fault of the Lessor, to make the needed repairs;
provided, further, that Lessor shall promptly be reimbursed by Lessee for the
full cost of any repairs made pursuant to this section required because of the
negligence or other fault, other than normal and proper use by Lessee or his
guests, agents or sublessees, if any. 
Lessee shall notify Lessor by personal delivery or certified mail of any
unsafe conditions in or about the said premises.

 

6

 

Lessor shall not be liable
to Lessee for any liability relating to any unsafe conditions on the premises
of which Lessee is aware or reasonably should have been aware and for which notice
was not given to Lessor by Lessee.

 

(b) LESSEE:  Except as expressly provided in Section 5.01
above, Lessee shall at his own cost and expense keep and maintain all other
portions of the Premises as well as all improvements on the Premises and all
facilities appurtenant to the Premises, including but not limited to
electrical, plumbing, heating and air conditioning in good order and repair and
in as safe and clean a condition as they were when received by Lessee from
Lessor, reasonable wear and tear excepted.

 

Should Lessee fail to
maintain the Premises as set forth above, Lessor may, at Lessor’s option,
perform or contract for the performance of such maintenance for and on behalf
of Lessee.  In such event, Lessee shall
promptly on written demand of Lessor reimburse Lessor for all cost and expense
incurred by Lessor in performing Lessee’s obligations hereunder plus interest
at the maximum rate permitted by law from the date expended by Lessor to the
date of repayment by Lessee.

 

Alterations and Liens

 

Section 5.02.  Other than permitted Tenant Improvements,
Lessee shall not make or permit any other person to make any alterations to the
Premises or to any improvement thereon or facility appurtenant thereto without
the written consent of Lessor first had and obtained, which consent shall not
be unreasonably withheld. Lessee shall submit detailed plans and specifications
for any proposed alterations or improvements to the Premises for Lessor’s
review.  Any and all approved alterations
or improvements to the Premises shall be at Lessee’s sole cost and
expense.  Lessee shall keep the Premises
free and clear from any and all liens, claims, and demands for work performed,
materials furnished, or operations conducted on the Premises at the instance or
request of Lessee. Lessee shall give Lessor not less than ten (10) days prior
written notice of the commencement of construction of any alterations or
improvement exceeding $3,000.00 so that Lessor may post and maintain on the
Premises, and to record as required by law, any notice or notices of
nonresponsiblity provided for under the mechanics lien laws of the State of
California.  Furthermore, any and all
alterations, additions, improvements, and fixtures, except furniture and trade
fixtures, made or placed in or on the Premises by Lessee or any other person
shall on expiration or sooner termination of this lease become the property of
Lessor and remain on the Premises; provided, however, that Lessor shall have
the option on expiration or sooner termination of this lease of requiring
Lessee, at Lessee’s sole cost and expense, to remove any or all such
alterations, additions, improvements, or fixtures from the Premises.

 

Tenant Improvements

 

Section 5.03. Lessor shall
provide a vanilla shell drywalled, textured and painted, floor covering, drop
ceilings and (1) bathroom, finished utility services, lighting, and heating and
air conditioning, wiring for phone and cable to outer walls.

 

Inspection by Lessor

 

Section 5.04.  Lessee shall permit Lessor or his agents to
enter into and upon the Premises during business hours for the purpose of
inspecting the same, or for the purpose of posting notices of
non-responsibility for alterations, additions or repairs or for the purpose of
placing upon the property in which the Premises are located any usual or
ordinary “for sale” signs, without any rebate of rent and without any liability
to Lessee for any loss of occupation or quiet enjoyment of the Premises thereby
occasioned. Lessee shall permit Lessor, at any time within one hundred twenty
(120) days prior to the expiration of this lease, to place upon the Premises
any usual or ordinary “to let” or “to lease” signs, provided that such entries
made by Lessor hereunder shall not unreasonably interfere with the conduct of
Lessee’s business.

 

7

 

Surrender of Premises

 

Section 5.05.  On expiration or sooner termination of this
lease, or any extensions or renewals of this lease, Lessee shall promptly
surrender and deliver the Premises to Lessor in as good condition as they are
on at the date of possession, reasonable wear and tear excepted.

 

ARTICLE 6.
SIGNS AND TRADE FIXTURES

 

Signs

 

Section 6.01. Lessee shall
provide signs at lessee’s expense. 
Signage shall be limited to Monument sign, Building sign, Directory
sign, and suite Entrance, provided Lessee agrees to the following:

 

(1)           Comply with the signage ordinances and laws
of the city of Paso Robles:

 

(2)           Upon initial placement of signage, Lessee
shall at lessee’s sole expense maintain signage.

 

(3)           Changes and/or modifications of signage shall
be done by Lessee at Lessee’s sole expense only after Lessor’s written approval
and consent has first been obtained, which consent shall not be unreasonably
withheld or detained;

 

(4)           No signs are attached to, painted upon or
placed in any fashion on the awnings or roof of the building, and

 

(5)           Lessee does not place any decoration,
lettering, or advertising matter on the glass of any exterior show window of
the Premises.

 

Installation and Removal of
Trade Fixtures

 

Section 6.02. Lessee shall
have the right at any time and from time to time during the term of this lease
and any renewal or extension of such term, at Lessee’s sole cost and expense,
to install and affix in, to, or on the Premises such items, herein called “trade
fixtures”, for use in Lessee’s trade or business as Lessee may, in its sole
discretion, deem advisable. Any and all such trade fixtures that can be removed
without structural damage to the Premises or any building or improvement on the
Premises shall remain the property of the Lessee and may be removed by Lessee
at any time or times prior to the expiration or sooner termination of this
lease.

 

Unremoved Trade Fixtures

 

Section 6.03. Any trade
fixtures described in this Article that are not removed from the Premises by
Lessee within ten (10) days after the expiration or sooner termination of this
lease, regardless of cause, shall be deemed abandoned by Lessee and shall
automatically become the property of Lessor as owner of the real property to
which they are affixed, unless Lessor notifies Lessee, in writing, of Lessor’s
election to have Lessee remove such trade fixtures and to repair any damage
caused thereby. Upon such election by Lessor to require Lessee to remove such
trade fixtures, Lessee shall have fifteen (15) days from the date of such
notice in which to remove such trade fixtures and repair any damage caused by
such removal. If Lessee fails to remove such trade fixtures and repair any such
damage, Lessor may do so at Lessee’s sole cost and expense, including any costs
of storing such property.  Such costs and
expenses, if incurred by Lessor for Lessee’s benefit, shall be promptly, upon
written demand thereof, be reimbursed to Lessor by Lessee, together with
interest at the maximum rate permitted by law from the date expended by Lessor
to the date of reimbursement by Lessee.

 

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ARTICLE
7.  INDEMNITY AND INSURANCE

 

Hold-Harmless Clause

 

Section 7.01.  Lessee agrees to indemnify and hold Lessor
and the property of Lessor, including the Premises, free and harmless from any
and all claims, liability, loss, damage, or expenses resulting from Lessee’s
occupation and use of the Premises, specifically including, without limitation,
any claim, liability, loss, or damage arising by reason of:

 

(a)           The death or injury of any person or persons,
including Lessee or any person who is an employee or agent of Lessee, or by
reason of the damage to or destruction of any property, including property
owned by Lessee or any person who is an employee or agent of Lessee, and caused
or allegedly caused by either the condition of the Premises, or some act or
omission of Lessee or of some agent, contractor, employee, servant, sublessee,
or concessionaire of Lessee on the Premises;

 

(b)           Any work performed on the Premises or
materials furnished to the Premises at the instance or request of Lessee or any
agent or employee of Lessee;

 

(c)           Lessee’s failure to perform any provision of
this lease or to comply with any requirement imposed on Lessee or the leased
Premises by any duly authorized governmental agency or political subdivision.

 

Liability Insurance

 

Section 7.02.  Lessee shall, prior to the date Lessee takes
possession of the Premises and at its own cost and expense,, obtain and
maintain during the entire term of this lease and any renewals or extensions
thereof, a broad form comprehensive coverage policy of public liability
insurance issued by an insurance company acceptable to Lessor and authorized to
conduct insurance business in the State of California and insuring Lessee and
Lessor against loss or liability caused by or connected with Lessee’s
occupation and use of the Premises under this lease in amounts not less than:

 

(a)           $1,000,000.00 combined single limit for
injury to or death as a result of any accident or incident.

 

(b)           $500,000.00 for damage to or destruction of
any property of others.

 

Such public liability
insurance, and property damage insurance shall insure performance by Lessee of
the indemnity provisions of Section 7.01 above. 
Both parties shall be named as co-insured, and the policy shall contain
cross liability endorsements, if available.

 

Every three (3) years,
Lessor may increase the amount of public liability and property damage
insurance coverage required hereunder, if at that time the existing coverage is
not adequate in the opinion of Lessor’s insurance broker or lender(s).

 

Fire and Casualty Insurance

 

Section 7.03.  Lessor shall, at Lessor’s sole cost and
expense, at all times during the term hereof, and any extensions thereof, keep
all buildings, improvements and other structures on the Premises insured for
their full replacement cost against loss or destruction by fire and the perils,
including vandalism and malicious mischief, commonly covered under standard
extended coverage endorsements in San Luis Obispo County, California.  Any loss payable under such policy(s) shall
be paid by the insurance company issuing to Lessor and shall be used to fund the
repair or replacement of the damaged building or improvements.

 

9

 

“Full replacement cost” as
used herein shall mean the actual cost of replacement for the buildings and
other improvements on the Premises, as determined from time to time by Lessor.

 

Business Interruption
Insurance

 

Section 7.04.  Lessee shall, at all times during the term of
this lease and any extensions thereof, maintain at Lessee’s sole cost and
expense a policy of business interruption insurance, ensuring the rent provided
for in this lease will be paid to Lessor for a period not less than one (1)
year in the event the Premises are destroyed or damaged so as to render
operation of Lessee’s business impossible or impractical by any casualty
insured against by standard fire and extended coverage insurance.

 

Lessee’s Personal Property

 

Section 7.05.  Lessee shall, at all times during the term of
this lease and any extensions thereof, maintain at Lessee’s sole cost and
expense an insurance policy issued by a company acceptable to Lessor insuring
for their full insurable value all furniture, fixtures, equipment and
alterations or improvements made to the Premises by Lessee against loss or
destruction by fire and the perils commonly covered under the standard extended
coverage endorsement to fire insurance policies in San Luis Obispo County.  Any loss payable under such insurance shall
be payable to Lessor and Lessee and shall be used to repair or replace such
furniture, fixtures, equipment and alterations and improvements.

 

Cancellation Clause

 

Section 7.06.  Any policy of insurance required to be
obtained and maintained by Lessee under this Article shall be written by
insurance companies authorized to do business in the State of California.  Each such policy of insurance shall expressly
provide that it cannot be cancelled for any reason or altered in any manner
unless at least thirty (30) days prior written notice has been given to Lessor
by the insurance company.

 

Deposit of Insurance with
Lessor

 

Section 7.07.  Lessee shall, prior to taking possession of
the Premises and promptly thereafter when any such policy is replaced,
rewritten, or renewed, deliver to Lessor a true and correct copy of each
insurance policy required by this Article of this lease or a certificate
executed by the insurance company or companies or their authorized agent
evidencing such policy or policies.

 

Lessor’s Right to Procure
Insurance

 

Section 7.08. If at any time
Lessee fails to procure or maintain the insurance required by this Article,
Lessor may obtain that insurance and pay the premiums on it for the benefit of
Lessee. Any amounts paid by Lessor to procure or maintain insurance pursuant to
this section shall be immediately due and repayable to Lessor by Lessee with
the next then due installment of rent under this lease. Failure to repay at
that time any amount expended by Lessor shall be considered the same as a
failure to pay rent and a default by Lessee under this lease.

 

ARTICLE
8.  DAMAGE, DESTRUCTION OR CONDEMNATION

 

Duty to Repair or Restore

 

Section 8.01.  If any improvements, including the buildings
and other structures, located on the Premises are damaged or destroyed during
the term of this lease or any extension thereof, the damage shall be repaired
as follows:

 

10

 

(a)  If the damage or destruction is caused by a
peril against which fire and extended coverage insurance is required to be
carried under this lease, Lessor shall repair that damage as soon as reasonably
possible and restore the Premises and improvements to substantially the same
condition as existed before the damage or destruction, regardless of whether
the insurance proceeds are sufficient to cover the actual cost of repair or
restoration.

 

(b)  If the damage or destruction is caused by a
peril against which insurance is not required to be carried by this lease,
Lessor, subject to Lessor’s right to terminate this lease described in Section
8.02, shall repair that damage as soon as reasonably possible and restore the
Premises to substantially the same condition as existed before the damage or
destruction.

 

(c) Whether the damage of
destruction is caused either by a peril against which fire and extended
coverage insurance is required by this lease to be carried or by a peril
against which insurance is not required to be carried by this lease, Lessee
expressly waives any right under Civil Code Sections 1931-1933 to terminate
this lease for damage or destruction to the Premises.

 

Termination of Lease for
Certain Losses

 

Section 8.02.  (a) 
Notwithstanding any other provision of this lease, if any improvements
located on the Premises are damaged or destroyed to such extent it will cost
more than $100,000.00 to repair or replace them, and the damage or destruction
is caused by a peril against which insurance is not required to be carried by
this lease, Lessor may terminate this lease by giving Lessee written notice of
the termination. The notice must be given within sixty (60) days after the
occurrence of the damage or destruction.

 

(b)  Lessee or Lessor shall have the right to
terminate this lease under either of the following circumstances:

 

(i) If the Premises are
damaged or destroyed from any cause whatsoever, insured or uninsured, and the
laws then in effect do not permit the repair or restoration of the Premises
provided for in this Article; or

 

(ii) If the Premises are
damaged or destroyed from any cause whatsoever, insured or uninsured, during
the last year of the term of this lease or any extension thereof (provided
Lessee has not elected before the date of damage or destruction to extend the
term of this lease in accordance with Section 1.02).

 

(c)  Either party may terminate this lease by
giving written notice of termination to the other party not later than fourteen
(14) days after the occurrence of the event giving rise to the right to
terminate under subsection (b) above, and such termination shall be effective
as of the date of the notice of termination. 
In the event of a termination under subsection (b), Lessee shall not be
entitled to collect any insurance proceeds attributable to insurance policies
covering the Premises or improvements except those proceeds attributable to
Lessee’s personal property and trade fixtures.

 

(d)  If this lease is terminated pursuant to
either subsection (a) or (b) above, the rent and other sums payable by Lessee
to Lessor under this lease shall be prorated as of the termination date. If any
such sums have been paid in advance by Lessee, Lessor shall refund them to
Lessee for the unexpired period for which the payment has been made.

 

Time for Construction of
Repairs

 

Section 8.03.  Any and all repairs and restorations of
improvements required by this Article shall be commenced by Lessor or Lessee,
as the case may be, within a reasonable time after the occurrence of the damage
or destruction requiring the repairs or restoration; shall be diligently
pursued after being commenced; and shall be completed within a reasonable time
after the loss. If Lessor is required under

 

11

 

this lease to perform the
repairs and restoration, Lessor shall cause the repairs and restoration to be
completed within 180 days after the occurrence of the event causing destruction
or Lessee shall have the right to terminate this lease, unless the delays are
caused by events outside the control of Lessor.

 

Total Condemnation

 

Section 8.04.  Should, during the term of this lease or any
renewal or extension thereof, title and possession of all of the Premises be
taken under the power of eminent domain by any public or quasi-public agency or
entity, this lease shall terminate as of 12:01 A.M. on the date actual physical
possession of the Premises is taken by the agency or entity exercising the
power of eminent domain and both Lessor and Lessee shall thereafter be released
from all obligations, except those specified in Section 8.08 of this lease,
under this lease.

 

Termination Option for
Partial Condemnation

 

Section 8.05.  Should, during the term of this lease or any
extension thereof, title and possession of only a portion of the Premises be
taken under the power of eminent domain by any public or quasi-public agency or
entity, Lessee may, at Lessee’s option, terminate this lease if more than 35
percent of the floor space or more than 55 percent in value of the Premises is
taken under the power of eminent domain. 
Lessee shall exercise its option by giving written notice to Lessor
within 30 days after actual physical possession of the portion subject to the eminent
domain power is taken by the agency or entity exercising that power. This lease
shall terminate as of 12:01 A.M. on the date the notice is deemed given to
Lessor but the rent specified in Article 2 of this lease shall be reduced in
the manner specified in Section 8.06 below from the date of taking to the date
of termination of the lease.

 

Partial Condemnation Without
Termination

 

Section 8.06.  Should Lessee fail to exercise the option
described in Section 7.06 of this lease or should the portion of the Premises
taken under the power of eminent domain be insufficient to give rise to the
option described in Section 8.05 of this lease, then, in that event:

 

(a)           This lease shall terminate as to the portion
of the Premises taken by eminent domain as of 12:01 A.M. on the day, herein
called the “date of taking,” actual physical possession of that portion of the
Premises is taken by the agency or entity exercising the power of eminent
domain;

 

(b)           The rent specified in Article 2 of this lease
shall, after the date of taking, be reduced by an amount that bears the same
ratio to the rent specified in Article 2 of this lease as the square footage
floor space of the portion of said premise taken under the power of eminent
domain bears to the total square footage floor space of the Premises as of the
date of this lease; and

 

(c)           Lessor, at Lessor’s own cost and expense,
will remodel and reconstruct the building remaining on the portion of the
Premises not taken by eminent domain into a single efficient architectural unit
as soon after the date of taking, or before, as can be reasonably done;
provided, however, that the rent specified in this lease shall not be abated or
reduced, except as provided in subparagraph (b) of this section, during such
remodeling and reconstruction.

 

Condemnation Award

 

Section 8.07.  Should, during the term of this lease or any
renewal or extension thereof, title and possession of all or any portion of the
Premises to taken under the power of eminent domain by any public or
quasi-public agency or entity, the portion of the compensation or damages for
the taking awarded to each of the parties to this lease, Lessor and Lessee,
shall belong to and be the sole property of the party Lessor or Lessee, to whom
it is awarded.  Lessee shall be entitled
to that portion of the compensation or damages awarded for the eminent domain
taking that represents (1) reasonable value of Lessee’s rights under this lease
for the unexpired term of this lease and (2) the cost or loss sustained

 

12

 

by Lessee because of the
removal of Lessee’s trade fixtures, equipment and furnishings from the portion
of the Premises taken by eminent domain.

 

Arbitration of Condemnation
Award

 

Section 8.08.  Should separate awards not be made to Lessor
and Lessee for the taking by eminent domain of all or any portion of the
Premises, and should Lessor and Lessee be unable to agree on the manner the
total award is to be divided between them pursuant to Section 7.08 of this
lease, the proper division of the award between Lessor and Lessee shall be
settled by arbitration.  Each party shall
appoint an arbitrator and the two arbitrators so appointed shall, within a
month after both have been appointed, select a third arbitrator.  The decision of any two of the three
arbitrators in writing shall be binding on both Lessor and Lessee.  Should no two arbitrators be able to agree
within one month after appointment of the third arbitrator, the report of the
arbitrator most favorable to Lessor and the report of the arbitrator most
favorable to Lessee shall both be disregarded and the report of the remaining
arbitrator shall be binding on both Lessor and Lessee.  Should either Lessor or Lessee fail to
appoint an arbitrator within 15 days after receiving written notice from the
other to do so, the arbitrator selected by the other party shall act for both
and his decision in writing shall be binding on both Lessor and Lessee.

 

ARTICLE
9.  DEFAULT, ASSIGNMENT, AND TERMINATION

 

Subleasing or Assigning as
Breach

 

Section 9.01.  Lessee shall not encumber, assign, or
otherwise transfer this lease, any right or interest in this lease, or any
right or interest in the Premises or any of the improvements that may now or
hereafter be constructed or installed on the Premises without the express
written consent of Lessor first had and obtained.  Neither shall Lessee sublet the Premises or
any part thereof or allow any other person, other than Lessee’s patrons,
agents, servants, and employees, to occupy the Premises or any part thereof
without the prior written consent of Lessor. 
A consent by Lessor to one assignment, one subletting, or one occupation
of the Premises by another person shall not be deemed to be a consent to any
subsequent assignment, subletting, or occupation of the Premises by another
person.  Any encumbrance, assignment,
transfer, or subletting without the prior written consent of Lessor, whether it
be voluntary or involuntary, by operation of law or otherwise, is void and
shall, at the option of Lessor, terminate this lease.  The consent of Lessor to any assignment of
Lessee’s interest in this lease or the subletting by Lessee of the Premises or
parts of the Premises shall not be unreasonably withheld.  Any such permitted assignment shall not
relieve Lessee or any person who has personally guaranteed Lessee’s performance
of this lease from any liability under this lease or any such guarantee.

 

Abandonment by Lessee

 

Section 9.02.  Should Lessee breach this lease and abandon
the Premises prior to the natural expiration of the term of this lease, Lessor
may:

 

(a)           Continue this lease in effect by not
terminating Lessee’s right to possession of the Premises, in which event Lessor
shall be entitled to enforce all his rights and remedies under this lease,
including the right to recover the rent specified in this lease as it becomes
due under this lease; or

 

(b)           Terminate this lease and recover from Lessee:

 

(i)            The worth at the time of award of the unpaid
rent which had been earned at the time of termination of the lease;

 

(ii)           The worth at the time of award of the amount
by which the unpaid rent which would have been earned after termination of the
lease until the time of award exceeds the amount of rental loss that Lessee
proves could have been reasonable avoided;

 

13

 

(iii)          The worth at the time of award of the amount
by which the unpaid rent for the balance of the term of this lease after the
time of award exceeds the amount of rental loss that Lessee proves could be
reasonably avoided; and

 

(iv)          Any other amount necessary to compensate
Lessor for all detriment proximately caused by Lessee’s failure to perform
Lessee’s obligations under this lease.

 

The term “rent” as used in
this section shall mean the base rent, as adjusted to the date of default,
additional rent as defined above and any other sums required to be paid by
Lessee pursuant to the terms of this lease. 
As used in subsection (i) and (ii) above, the “worth at the time of the
award” shall be computed by allowing interest at the rate of ten percent (10%)
per annum.  As used in subsection (iii)
above, the “worth at the time of the award” shall be computed by discounting
that amount at the discount rate of the Federal Reserve Bank of San Francisco
at the time of the award plus one percent (1%).

 

Default
by Lessee

 

Section 9.03.  Should Lessee default in the payment of any
rent, additional rent or other sum to be paid by Lessee hereunder, and if such
default shall continue for a period of five (5) days after written notice thereof
from Lessor to Lessee, or if Lessee shall default in the performance or
observance of any other term, covenant, obligation, or agreement to be
performed or observed by Lessee, and if such default shall continue for a
period of ten (10) days after written notice thereof from Lessor to Lessee, or
if more than two (2) of any of the foregoing defaults, or any combination
thereof shall occur in any single twelve (12) month period during the term
hereof, whether or not the same shall be cured, Lessor shall have, in addition
to any other remedies provided for herein or by law, the option to terminate
this lease, re-enter the Premises by process of law and shall have the right to
recover from Lessee all of the sums described in Section 8.02(b) above.

 

Insolvency of Lessee

 

Section 9.04.  The insolvency of Lessee as evidenced by a
receiver being appointed to take possession of all or substantially all of the
property of Lessee, or the making of a general assignment for the benefit of
creditors by Lessee or the filing by or against Lessee of a petition in
bankruptcy, shall terminate this lease and entitle Lessor to reenter and regain
possession of the Premises.

 

Right of Entry on Default

 

Section 9.05.  Without limitation of Lessor’s rights
contained elsewhere in this lease or at law, in the event of Lessee’s default,
all of Lessee’s fixtures and personal property shall remain on the Premises
and, continuing during the length of said default, Lessor shall have the right
to take exclusive possession of same and shall be entitled to obtain a writ of
attachment of same, with or without notice to Lessee.  Alternatively, Lessor may remove all or any
portion thereof and to place such property in storage for the account of Lessee
and at the expense of Lessee.  Lessor
shall have no duty to pay rent or other costs of storage and shall have no
liability to Lessee if the property is sold at auction or otherwise.  Upon such entry, Lessor may, at Lessor’s
option, relet the Premises or any part thereof to a third party or third
parties for any term, at any rental, and on any other terms and conditions that
Lessor, in its sole discretion may deem advisable, and shall have the right to
make alterations and repairs to the Premises. Lessee shall be liable for all of
Lessor’s costs of reletting, including but not limited to remodeling costs
required for the reletting.  In the event
Lessor relets the Premises, Lessee shall pay all rent due under this lease at
the times specified herein, less any amount or amounts actually received by
Lessor from the reletting.

 

Cumulative Remedies

 

Section 9.06.  The remedies given to Lessor in this Article
shall not be exclusive but shall be cumulative and in addition to all remedies
now or hereafter allowed by law or elsewhere provided in this lease.

 

14

 

Waiver of Breach

 

Section 9.07.  The waiver by Lessor of any breach by Lessee
of any of the provisions of this lease shall not constitute a continuing waiver
or a waiver of any subsequent breach by Lessee whether of the same or another
provision of this lease.

 

ARTICLE
10  MISCELLANEOUS

 

Force Majeure - Unavoidable
Delays

 

Section 10.01.  Should the performance of any act required by
this lease to be performed by either Lessor or Lessee be prevented or delayed
by reason of an act of God, strike, lockout, labor troubles, inability to
secure materials, restrictive governmental laws or regulations, or any other
cause except financial inability, not the fault of the party required to
perform the act, the time for performance of the act will be extended for a
period equivalent to the period of delay and performance of the act during the
period of delay will be excused; provided, however, that nothing contained in
this section shall excuse the prompt payment of rent or other sums by Lessee as
required by this lease or the performance of any act rendered difficult solely
because of the financial condition of the party, Lessor or Lessee, required to
perform the act.

 

Attorney’s Fees

 

Section 10.03.  (a)  
Should any litigation be commenced between the parties to this lease
concerning the Premises, this lease, or the rights and duties of either in
relation thereto, the party, Lessor or Lessee, prevailing in such litigation
shall be entitled, in addition to such other relief as may be granted in the
litigation, to a reasonable sum as and for his attorney’s fees in such
litigation which shall be determined by the court in such litigation or in a
separate action brought for that purpose.

 

(b)           If Lessor is made a party defendant to any
litigation concerning this lease or the leased Premises or the occupancy
thereof by Lessee, then Lessee shall hold Lessor harmless from all liability by
reason of said litigation, including reasonable attorney’s fees and expenses
incurred by Lessor in any such litigation, whether or not any such litigation
is prosecuted to judgment, provided however, it is agreed between Lessor and
Lessee that if the litigation referred to in said Paragraph arises out of no act,
fault, or negligence of the Lessee, there shall be no obligation on the part of
Lessee to hold harmless the Lessor from said litigation.

 

(c)           If Lessee breaches any term of this lease,
Lessor may employ an attorney or attorneys to protect Lessor’s rights
hereunder, and in the event of such employment following any breach by Lessee,
Lessee shall pay Lessor reasonable attorney’s fees and expenses incurred by
Lessor, whether or not an action is actually commenced against Lessee by reason
of said breach.

 

Notices

 

Section 10.04.  All notices to be given to Lessee shall be
given in writing personally or by depositing the same in the United States
mail, postage prepaid, and addressed to Lessee at the Premises, whether or not
Lessee has departed from, abandoned or vacated the Premises.  All notices to be given to Lessor shall be
given in writing personally or by depositing the same in the United States
mail, postage prepaid, and addressed to Lessor’s agent, Turn-Key Property
Management at P.O. Box 1715, Paso Robles, California, 93447, or at such other
place or places as Lessor may from time to time designate by written notice
delivered to Lessee.

 

15

 

No Merger

 

Section 10.05.  The voluntary or other surrender of this
lease by Lessee, or a mutual cancellation thereof, shall not work a merger, and
shall, at the option of Lessor, terminate any existing subleases or
subtenancies or may, at the option of Lessor, operate as an assignment to it of
any of such subleases or subtenancies.

 

Binding on Heirs and
Successors

 

Section 10.06.  This lease shall be binding on and shall
inure to the benefit of the heirs, executors, administrators, successors, and
assigns of the parties hereto, Lessor and Lessee, but nothing in this section
contained shall be construed as a consent by Lessor to any assignment of this
lease or any interest therein by Lessee except as provided in Article 8 of this
lease.

 

Partial Invalidity

 

Section 10.07.  Should any provision of this lease be held by
a court of competent jurisdiction to be either invalid, void, or unenforceable,
the remaining provisions of this lease shall remain in full force and effect
unimpaired by the holding.

 

Sole and Only Agreement

 

Section 10.08.  This instrument constitutes the sole and only
agreement between Lessor and Lessee respecting the Premises, the leasing of the
Premises to Lessee, or the lease term herein specified, and correctly sets for
the obligations of Lessor and Lessee to each other as of its date.  Any agreements or representations respecting
the Premises or their leasing by Lessor to Lessee not expressly set forth in
this instrument are null and void.

 

Waiver

 

Section 10.09.  The waiver by Lessor of any breach of any
term, covenant or condition herein contained shall not be deemed to be a waiver
of such term, covenant or condition or any subsequent breach of the same or any
other term, covenant or condition herein contained.

 

Subordination and
Non-Disturbance

 

Section 10.10.  (a) 
This lease is subject and subordinate to all mortgages and deeds of
trust which may hereafter be placed and recorded on the property of which the
Premises are a part. and to all renewals, modifications, replacements, and
extensions thereof.

 

(b)           The subordination provided for above is
conditioned on and subject to the following:

 

(i)            For each mortgage or deed of trust, Lessor
shall obtain from the mortgagee or beneficiary a non-disturbance agreement in
writing that, in the event of foreclosure, or any sale thereunder, this lease
shall not be terminated and Lessee’s right to possession under this lease shall
not be disturbed, provided Lessee is not then in default under this lease;

 

(ii)           In consideration of the mortgagee’s or
beneficiary’s agreement not to disturb Lessee’s possession as above provided,
Lessee hereby agrees to attorn to the purchaser at any foreclosure, sale or
other action or proceeding.

 

(iii)          The subordination described in this section
shall be effective without the necessity of having any further instruments
executed by Lessee, but Lessee agrees to execute on demand any such further
instruments evidencing

 

16

 

subordination that Lessor or
any mortgagee or beneficiary may reasonably request.

 

Time of Essence

 

Section 10.11.  Time is expressly declared to be the essence
of this lease.

 

Accord and Satisfaction

 

Section 10.12.  No payment by Lessee or receipt by Lessor of
a lesser amount than the monthly rent stipulated herein or any other sum due
hereunder from Lessee to Lessor shall be deemed to be anything other than a payment
on account of the earliest sum then due and owing to Lessor.  No endorsement or statement on any check of
any letter accompanying any check or payment or payment of any sum(s) due from
Lessee to Lessor hereunder shall be deemed to be an accord and satisfaction,
and Lessor may accept and negotiate any such payment without prejudice to
Lessor’s right to recover the balance of such rent or other sum or to pursue
any other remedy provided for in this lease or by law.

 

Signature Authority

 

Section 10.13.  Each individual executing this Agreement on
behalf of a corporation, partnership or other entity represents or warrants
that he/she is duly authorized to execute and deliver this Agreement on behalf
of said entity, and that this Agreement is binding upon said entity in accordance
with its terms and in no way stands in contravention of any prior agreement to
which said entity is a party.  On
request, each party shall furnish the other with evidence of authority.

 

Executed on the day and date
first above written at Paso Robles, California.

 

 

	
  LESSEE:

  
	
   

  
	
  COAST NATIONAL BANK

  
	
   

  
	
   

  
	
  by: 

  	
  /s/ Ricky
  Fleischer

  	
   

  
	
   

  	
  RICKY FLEISCHER

  
	
   

  	
  SENIOR VICE PRESIDENT,
  CREDIT ADMINISTRATION

  
	
   

  
	
   

  
	
  LESSOR:

  
	
   

  
	
   

  
	
  HAMON FAMILY TRUST

  
	
   

  
	
   

  
	
  by: 

  	
  /s/ John
  Hamon

  	
   

  
	
   

  	
  JOHN HAMON, TRUSTEE

  	
   

  

 

17

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