Document:

Exhibit
10.24

 

BROADSTONE PLAZA
II

 

 

SHOPPING CENTER
LEASE

 

BETWEEN

 

OPUS WEST
CORPORATION,

a Minnesota
corporation

(“LANDLORD”)

AND

WESTERN SIERRA
NATIONAL BANK,

a national banking
association

(“TENANT”)

 

WESTERN SIERRA
NATIONAL BANK

(TENANT’S TRADE
NAME)

 

 

TABLE OF CONTENTS

 

	
  BASIC LEASE PROVISIONS

  
	
   

  
	
  ARTICLE
  1

  	
  RENT

  
	
   

  	
  1.1

  	
  Annual Minimum Rent

  
	
   

  	
  1.2

  	
  Payment of Annual Minimum
  Rent

  
	
   

  	
  1.3

  	
  Additional Rent

  
	
   

  	
  1.4

  	
  Place of Payment

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  2

  	
  [INTENTIONALLY DELETED]

  
	
   

  	
   

  
	
  ARTICLE
  3

  	
  LEASE YEAR

  
	
   

  	
   

  
	
  ARTICLE
  4

  	
  TAXES AND
  OTHER FORMS OF ADDITIONAL RENT

  
	
   

  	
  4.1

  	
  Definition of Taxes

  
	
   

  	
  4.2

  	
  Tenant’s Pro Rata Share of
  Taxes

  
	
   

  	
  4.3

  	
  Protest of Taxes

  
	
   

  	
  4.4

  	
  Taxes and Assessments on Rent

  
	
   

  	
  4.5

  	
  Miscellaneous Taxes

  
	
   

  	
  4.6

  	
  Changes to Taxes

  
	
   

  	
  4.7

  	
  Recalculation of
  Tenant’s Pro Rata Share

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  5

  	
  COMMON AREA AND
  OPERATING EXPENSES

  
	
   

  	
  5.1

  	
  Common Area

  
	
   

  	
   

  	
  5.1.1

  	
  Maintenance and Use of Common Area

  
	
   

  	
   

  	
  5.1.2

  	
  Control of and Changes to
  Common Area

  
	
   

  	
   

  	
  5.1.3

  	
  Employee Parking

  
	
   

  	
   

  	
  5.1.4

  	
  Declarations

  
	
   

  	
  5.2

  	
  Operating Expenses

  
	
   

  	
   

  	
  5.2.1

  	
  Definition of Operating
  Expenses

  
	
   

  	
   

  	
  5.2.2

  	
  Payment of Operating Expenses

  
	
   

  	
   

  	
  5.2.3

  	
  Recalculation of Tenant’s
  Pro Rata Share

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  6

  	
  TENANT’S CONDUCT OF
  BUSINESS

  
	
   

  	
  6.1

  	
  Permitted Use

  
	
   

  	
  6.2

  	
  Exclusive Use

  
	
   

  	
  6.3

  	
  Trade
  Name

  
	
   

  	
  6.4

  	
  Operating Covenants

  
	
   

  	
  6.5

  	
  Hours of Business

  
	
   

  	
  6.6

  	
  Compliance With
  Exclusive Use Provisions

  
	
   

  	
  6.7

  	
  Increase in Insurance

  
	
   

  	
  6.8

  	
  Hazardous Materials

  
	
   

  	
   

  	
  6.8.1

  	
  Definition of Hazardous
  Materials

  
	
   

  	
   

  	
  6.8.2

  	
  Assignment and Subletting

  
	
   

  	
  6.9

  	
  Compliance with Laws and
  Other Requirements

  
	
   

  	
  6.10

  	
  Prohibited Uses

  
	
   

  	
  6.11

  	
  Advertising

  
	
   

  	
  6.12

  	
  Shopping Center Name

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  7

  	
  UTILITY SERVICES

  
	
   

  	
  7.1

  	
  Gas, Electricity and Water

  
	
   

  	
  7.2

  	
  Heating and Air
  Conditioning

  
	
   

  	
  7.3

  	
  Payment Terms for Landlord Supplied
  Utilities

  
	
   

  	
  7.4

  	
  Tenant Supplied Utilities

  
	
   

  	
  7.5

  	
  Waiver of Liability

  
	
   

  	
  7.6

  	
  Sewer Impact Fee Credit

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  8

  	
  POSSESSION OF THE PREMISES

  
	
   

  	
  8.1

  	
  Delivery of Possession

  
	
   

  	
  8.2

  	
  Substantial Completion

  
	
   

  	
  8.3

  	
  Acceptance of Premises

  
	
   

  	
  8.4

  	
  Opening Date

  
	
   

  	
  8.5

  	
  Certificates

  
	
   

  	
  8.6

  	
  Tenant’s Work and Signage

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  9

  	
  OVERDUE AMOUNTS -
  SECURITY DEPOSIT

  
	
   

  	
  9.1

  	
  Interest on Past Due Obligations

  
	
   

  	
  9.2

  	
  Late Charge

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

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

  
	
   

  	
  10.1

  	
  Tenant’s Maintenance
  Obligations

  
	
   

  	
  10.2

  	
  Landlord’s
  Maintenance Obligations

  
	
   

  	
  10.3

  	
  Storefront Modifications

  
					

 

i

 

	
   

  	
  10.4

  	
  Signage

  
	
   

  	
  10.5

  	
  Tenant’s Repair Obligations

  
	
   

  	
  10.6

  	
  Landlord’s Rights to Exterior of
  Premises

  
	
   

  	
  10.7

  	
  Roof Satellite Dish

  
	
   

  	
  10.8

  	
  Landlord’s Right of Entry

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  11

  	
  INSURANCE

  
	
   

  	
  11.1

  	
  Landlord’s Property
  Insurance Obligations

  
	
   

  	
  11.2

  	
  Tenant’s Property
  Insurance Obligations

  
	
   

  	
  11.3

  	
  Landlord’s Liability
  Insurance Obligations

  
	
   

  	
  11.4

  	
  Tenant’s Liability
  Insurance Obligations

  
	
   

  	
  11.5

  	
  Additional Insurance
  Obligations of Tenant

  
	
   

  	
  11.6

  	
  Indemnification

  
	
   

  	
  11.7

  	
  Waiver

  
	
   

  	
  11.8

  	
  Tenant’s Waiver

  
	
   

  	
  11.9

  	
  Deductible

  
	
   

  	
  11.10

  	
  Tenant’s Property

  
	
   

  	
  11.11

  	
  Blanket Insurance Policy

  
	
   

  	
  11.12

  	
  Commencement of Insurance
  Obligations

  
	
   

  	
  11.13

  	
  Increased Premiums Due to Use
  of Premises

  
	
   

  	
  11.14

  	
  Failure to Provide Evidence of
  Insurance

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12

  	
  CERTAIN RIGHTS
  RESERVED BY LANDLORD

  
	
   

  	
  12.1

  	
  Regulate Heavy Equipment

  
	
   

  	
  12.2

  	
  Exclusive Businesses

  
	
   

  	
  12.3

  	
  Emergency Entry

  
	
   

  	
  12.4

  	
  Exhibition of Premises

  
	
   

  	
  12.5

  	
  Right of Landlord to Perform

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13

  	
  ALTERATIONS AND
  IMPROVEMENTS

  
	
   

  	
  13.1

  	
  Procedure For Tenant’s Improvements

  
	
   

  	
  13.2

  	
  Bond Requirements

  
	
   

  	
  13.3

  	
  Written Notification Required

  
	
   

  	
  13.4

  	
  Freedom From Liens

  
	
   

  	
  13.5

  	
  Alterations Part of Premises

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14

  	
  ASSIGNMENT AND SUBLETTING

  
	
   

  	
  14.1

  	
  Restriction

  
	
   

  	
  14.2

  	
  Notice
  to Landlord

  
	
   

  	
  14.3

  	
  Landlord’s Recapture Rights

  
	
   

  	
  14.4

  	
  Landlord’s Consent; Standards

  
	
   

  	
  14.5

  	
  Additional Rent

  
	
   

  	
  14.6

  	
  Landlord’s Costs

  
	
   

  	
  14.7

  	
  Continuing Liability of Tenant

  
	
   

  	
  14.8

  	
  Non-Waiver

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15

  	
  DAMAGE BY FIRE OR
  OTHER CASUALTY

  
	
   

  	
  15.1

  	
  Tenantable Within 180 Days

  
	
   

  	
  15.2

  	
  Not Tenantable Within 180 Days

  
	
   

  	
  15.3

  	
  Shopping Center
  Substantially Damaged

  
	
   

  	
  15.4

  	
  Landlord’s Repair Obligations

  
	
   

  	
  15.5

  	
  Rent Apportionment

  
	
   

  	
  15.6

  	
  Waivers of California Statutes

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16

  	
  EMINENT DOMAIN

  
	
   

  	
  16.1

  	
  Tenant’s Termination

  
	
   

  	
  16.2

  	
  Tenant’s
  Participation in Condemnation Award and Partial Condemnations

  
	
   

  	
   

  	
   

  
	
  ARTICLE 17

  	
  SURRENDER OF PREMISES

  
	
   

  	
  17.1

  	
  Surrender of Possession

  
	
   

  	
  17.2

  	
  Tenant Retaining Possession

  
	
   

  	
   

  	
   

  
	
  ARTICLE 18

  	
  DEFAULT - REMEDIES

  
	
   

  	
  18.1

  	
  Covenants and Conditions

  
	
   

  	
  18.2

  	
  Events
  of Default

  
	
   

  	
   

  	
  18.2.1

  	
  Failure to Pay

  
	
   

  	
   

  	
  18.2.2

  	
  Vacation or Abandonment

  
	
   

  	
   

  	
  18.2.3

  	
  Failure to Pay on Three Occasions

  
	
   

  	
   

  	
  18.2.4

  	
  Failure to Perform

  
	
   

  	
   

  	
  18.2.5

  	
  Prohibited Transfer

  
	
   

  	
   

  	
  18.2.6

  	
  Failure to Comply
  with Environmental Laws

  
	
   

  	
   

  	
  18.2.7

  	
  Other Defaults

  
	
   

  	
  18.3

  	
  Landlord’s Remedies

  
	
   

  	
   

  	
  18.3.1

  	
  Termination of Possession

  
					

 

ii

 

	
   

  	
   

  	
  18.3.2

  	
  Re-Entry and Removal

  
	
   

  	
   

  	
  18.3.3

  	
  No Termination; Recovery of Rent

  
	
   

  	
   

  	
  18.3.4

  	
  Reletting the Premises

  
	
   

  	
   

  	
  18.3.5

  	
  Written Notice of Termination
  Required

  
	
   

  	
   

  	
  18.3.6

  	
  Remedies Cumulative; No Waiver

  
	
   

  	
  18.4

  	
  Legal
  Costs

  
	
   

  	
  18.5

  	
  Landlord’s Consent

  
	
   

  	
  18.6

  	
  Waiver of Damages for Re-entry

  
	
   

  	
  18.7

  	
  Default By Landlord

  
	
   

  	
   

  	
   

  
	
  ARTICLE 19

  	
  SUBORDINATION

  
	
   

  	
  19.1

  	
  Lease Subordinate

  
	
   

  	
  19.2

  	
  Attornment

  
	
   

  	
  19.3

  	
  Tenant’s
  Notice of Default

  
	
   

  	
  19.4

  	
  Declarations

  
	
   

  	
   

  	
   

  
	
  ARTICLE 20

  	
  BANKRUPTCY OR INSOLVENCY

  
	
   

  	
  20.1

  	
  Bankruptcy

  
	
   

  	
  20.2

  	
  Covenants Upon Bankruptcy
  Filing

  
	
   

  	
  20.3

  	
  No
  Waiver of Default

  
	
   

  	
  20.4

  	
  Lease Under Bankruptcy Code

  
	
   

  	
  20.5

  	
  Conditions

  
	
   

  	
   

  	
   

  
	
  ARTICLE 21

  	
  RADIUS RESTRICTION

  
	
   

  	
   

  
	
  ARTICLE 22

  	
  OTHER PROVISIONS

  
	
   

  	
   

  
	
  ARTICLE 23

  	
  AMERICANS WITH
  DISABILITIES ACT

  
	
   

  	
   

  
	
  ARTICLE 24

  	
  CONSTRUCTION OF
  LEASEHOLD IMPROVEMENTS

  
	
   

  	
  24.1

  	
  Leasehold Improvements

  
	
   

  	
  24.2

  	
  Landlord’s Construction
  Obligations

  
	
   

  	
  24.3

  	
  Final Plans and Specifications

  
	
   

  	
  24.4

  	
  Tenant’s Obligations

  
	
   

  	
  24.5

  	
  Change Requests

  
	
   

  	
  24.6

  	
  Tenant’s Representative

  
	
   

  	
   

  	
   

  
	
  ARTICLE 25

  	
  MISCELLANEOUS

  
	
   

  	
  25.1

  	
  Time
  is of the Essence

  
	
   

  	
  25.2

  	
  Memorandum of Lease

  
	
   

  	
  25.3

  	
  Joint and Several Liability

  
	
   

  	
  25.4

  	
  Broker

  
	
   

  	
  25.5

  	
  Estoppel Certificates

  
	
   

  	
  25.6

  	
  Notices

  
	
   

  	
  25.7

  	
  Landlord’s Agent

  
	
   

  	
  25.8

  	
  Quiet Possession

  
	
   

  	
  25.9

  	
  Successors

  
	
   

  	
  25.10

  	
  Severability

  
	
   

  	
  25.11

  	
  Landlord’s Liability

  
	
   

  	
  25.12

  	
  Transfers by Landlord

  
	
   

  	
  25.13

  	
  Headings

  
	
   

  	
  25.14

  	
  Entire Agreement

  
	
   

  	
  25.15

  	
  Modifications or Amendments

  
	
   

  	
  25.16

  	
  Landlord Control

  
	
   

  	
  25.17

  	
  Utility Easement

  
	
   

  	
  25.18

  	
  Not Binding Until Properly Executed

  
	
   

  	
  25.19

  	
  Building Rules and Regulations

  
	
   

  	
  25.20

  	
  Tenant’s Compliance

  
	
   

  	
  25.21

  	
  Force
  Majeure

  
	
   

  	
  25.22

  	
  Tenant Obligations Survive
  Termination

  
	
   

  	
  25.23

  	
  No Implication of Exclusive Use

  
	
   

  	
  25.24

  	
  Tenant’s Waiver

  
	
   

  	
  25.25

  	
  Tenant Authorization

  
	
   

  	
  25.26

  	
  Laws
  of California to Govern

  
	
   

  	
  25.27

  	
  Rights Cumulative

  
	
   

  	
  25.28

  	
  No Partnership or Joint
  Venture

  
	
   

  	
  25.29

  	
  Attorneys’ Fees

  
	
   

  	
  25.30

  	
  Tenant’s Financial
  Statements

  
	
   

  	
  25.31

  	
  Shopping Center Expansion

  
	
   

  	
  25.32

  	
  No Representation

  
	
   

  	
  25.33

  	
  Option
  to Renew

  
	
   

  	
  25.34

  	
  Permit Contingency

  
	
   

  	
  25.35

  	
  ATM

  
	
   

  	
  25.36

  	
  Counterparts

  
					

 

iii

 

 

	
  EXHIBIT
  “A” – Site Plan

  
	
  EXHIBIT “A-1” – Premises Location

  
	
  EXHIBIT “B” – Rules and Regulations

  
	
  EXHIBIT “C” – [Intentionally Deleted]

  
	
  EXHIBIT “D” – Shopping Center Use Restrictions and
  Existing Exclusives

  
	
  EXHIBIT “E” – Sign Criteria

  
	
  EXHIBIT “F” – Outline Specifications

  
	
  EXHIBIT “G” – Commencement Date Memorandum

  
	
  EXHIBIT “H” –
  Non-Disturbance, Attornment, Estoppel and Subordination Agreement

  

 

iv

 

SHOPPING CENTER LEASE

FOR BROADSTONE PLAZA

 

BASIC LEASE PROVISIONS

 

	
  1.

  	
   

  	
  LANDLORD:

  	
   

  	
  Opus West Corporation,
  a Minnesota corporation.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  TENANT:

  	
   

  	
  Western Sierra National
  Bank, a national banking association

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  TENANT’S TRADE NAME:

  	
   

  	
  Western Sierra National
  Bank

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  SHOPPING CENTER:

  	
   

  	
  Broadstone Plaza Phase
  II (“Shopping Center”): 
  Location:  City of Folsom, County
  of Sacramento, State of California as more fully described on Exhibit
  “A”.  Tenant acknowledges
  that the Shopping Center shall initially consist of that portion of the
  Broadstone Plaza identified on Exhibit “A” as “Shopping Center”.  Landlord reserves the right, from time to
  time during the term of this Lease, to cause the Shopping Center to be
  combined with the adjacent real property identified on the site plan as
  “Phase I” and/or any adjacent pad parcel(s), in which case the “Shopping
  Center” for purposes of this Lease shall thereafter refer to both of the
  “Shopping Center” as initially defined together with Phase I and/or such
  adjacent pad parcel(s).  Nothing
  herein shall require Landlord to cause such combination to occur.  The term “ Shopping Center” shall exclude,
  after the sale thereof by Landlord, any pad parcels.  The Shopping Center, along with all
  improvements located thereon, is hereinafter referred to as the “Shopping
  Center Tract.”

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  PREMISES:

  	
   

  	
  Address:  2779 East Bidwell Street, Folsom,
  California, as depicted on Exhibit “A-1”.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  RENTABLE AREA:

  	
   

  	
  Approximately 7,175
  square feet.  The exact square footage
  of the Premises shall be calculated and certified by Landlord’s architect
  upon completion of the Leasehold Improvements (as herein defined).  In the event the actual square footage as
  calculated by Landlord’s architect is more or less than 7,175 square feet of
  floor area, appropriate adjustments shall be made to Annual Minimum Rent and
  Tenant’s proportionate share (for purposes of allocating Operating Expenses
  and Taxes (as defined below) and other purposes in this Lease) to reflect the
  actual square footage and such adjustment shall be set forth in the
  Commencement Date Memorandum (as herein defined).  The aforesaid space leased to Tenant is hereinafter referred to
  as the “Premises.”

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  LEASE TERM:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Basic Term:

  	
   

  	
  Ten (10) years,
  computed from the first day of the first calendar month on or after the Rent
  Commencement Date (the “Term” or “Lease Term”).

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Renewal Options:

  	
   

  	
  Tenant shall have two (2) five (5) year renewal options exercisable
  pursuant to the terms of this Lease.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  KEY DATES:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Opening Date:

  	
   

  	
  Ninety (90) days after
  Substantial Completion (defined below) of the Premises (“Opening Date”).

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Rent Commencement Date:

  	
   

  	
  The earlier of (a) the
  date Tenant initially opens for business or (b) ninety (90) days after
  Substantial Completion of the Premises (“Rent Commencement Date” or
  “Commencement Date”).

  

 

 

	
   

  	
   

  	
  Delivery of Premises:

  	
   

  	
  Upon delivery of
  written notice to Tenant of Substantial Completion of the Premises (“Delivery
  Date”).

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  ANNUAL MINIMUM RENT:

  	
   

  	
   

  

 

	
   

  	
   

  	
  Years

  	
   

  	
  ***Annual
  Rent

  	
   

  	
  ***Monthly
  Rent

  	
   

  	
  Price
  P.S.F./Mo.

  	
   

  
	
  Basic Term:

  	
   

  	
  1-5

  	
   

  	
  $

  	
  258,300.00

  	
   

  	
  $

  	
  21,525.00

  	
   

  	
  $

  	
  3.00

  	
   

  
	
   

  	
   

  	
  6-10

  	
   

  	
  $

  	
  297,045.00

  	
   

  	
  $

  	
  24,753.75

  	
   

  	
  $

  	
  3.45

  	
   

  

 

	
   

  	
   

  	
  Years

  	
   

  	
  ***Annual
  Rent

  	
   

  	
  ***Monthly
  Rent

  	
   

  	
  Price
  P.S.F./Mo.

  	
   

  
	
  Renewal Terms

  	
   

  	
  11-15

  	
   

  	
  $

  	
  341,817.00

  	
   

  	
  $

  	
  28,484.75

  	
   

  	
  $

  	
  3.97

  	
   

  
	
   

  	
   

  	
  16-20

  	
   

  	
  $

  	
  392,616.00

  	
   

  	
  $

  	
  32,718.00

  	
   

  	
  $

  	
  4.56

  	
   

  

 

*** Based upon a Premises
consisting of 7,175 rentable square feet

 

	
  10.

  	
   

  	
  USE OF PREMISES:

  	
   

  	
  The Premises shall be
  occupied and used by Tenant for any lawful use, including the operation of an
  ATM in accordance with Section 25.35; provided, however, that any such use
  shall not in any way violate any of the provisions set forth on Exhibit
  “D” hereto or any provision of this lease hereafter deemed to be
  an additional provision of Exhibit “D.”

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  LATE CHARGE:

  	
   

  	
  Five percent (5%) of
  amount due.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  BROKER(S):

  	
   

  	
  CB Richard Ellis, Inc.
  Potter Taylor and Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  ADDRESSES FOR NOTICES:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LANDLORD:

  	
   

  	
  Opus West Corporation

  
	
   

  	
   

  	
   

  	
   

  	
  6160 Stoneridge Mall
  Road, Suite 360

  
	
   

  	
   

  	
   

  	
   

  	
  Pleasanton,
  California  94588

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:  Director, Real Estate Development

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Broadstone Plaza

  
	
   

  	
   

  	
   

  	
   

  	
  Fax No.:  (925) 463-9368

  
	
   

  	
   

  	
   

  	
   

  	
  Telephone No.:  (925) 463-9254

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With a copy to:

  	
   

  	
  Opus Corporation

  
	
   

  	
   

  	
   

  	
   

  	
  2415 East Camelback Road, Suite 800

  
	
   

  	
   

  	
   

  	
   

  	
  Phoenix, Arizona 
  85016-4201

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:  Legal
  Department

  
	
   

  	
   

  	
   

  	
   

  	
  Fax No.: 
  (602) 468-7045

  
	
   

  	
   

  	
   

  	
   

  	
  Telephone No.: 
  (602) 468-7000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Opus West Management Corporation

  
	
   

  	
   

  	
   

  	
   

  	
  6160 Stoneridge Mall Road, Suite 360

  
	
   

  	
   

  	
   

  	
   

  	
  Pleasanton, California  94588

  
	
   

  	
   

  	
   

  	
   

  	
  Attn: 
  Property Manager

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Broadstone Plaza

  
	
   

  	
   

  	
   

  	
   

  	
  Fax No.: 
  (925) 463-9368

  
	
   

  	
   

  	
   

  	
   

  	
  Telephone No.: 
  (925) 463-9254

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Gallagher & Kennedy, P.A.

  
	
   

  	
   

  	
   

  	
   

  	
  2575 East Camelback Road

  
	
   

  	
   

  	
   

  	
   

  	
  Phoenix, Arizona 
  85016

  
	
   

  	
   

  	
   

  	
   

  	
  Attn: 
  Gregory L. Mast

  
	
   

  	
   

  	
   

  	
   

  	
  Fax No.: 
  (602) 530-8500

  
	
   

  	
   

  	
   

  	
   

  	
  Telephone No.: 
  (602) 530-8000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TENANT:

  	
   

  	
  Western Sierra National Bank c/o

  
	
   

  	
   

  	
   

  	
   

  	
  Western Sierra Bancorp

  
	
   

  	
   

  	
   

  	
   

  	
  4080 Plaza Goldorado Circle

  
	
   

  	
   

  	
   

  	
   

  	
  Cameron Park, California  95682

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:  Kirk
  N. Dowdell

  
	
   

  	
   

  	
   

  	
   

  	
  Fax No.: 
  (530) 676-2817

  
	
   

  	
   

  	
   

  	
   

  	
  Telephone No.: 
  (530) 677-5600

  

 

 

6

 

 

	
   

  	
   

  	
  With a copy to:

  	
   

  	
  Goldsberry, Freeman & Swanson

  
	
   

  	
   

  	
   

  	
   

  	
  777 – 12th Street, Suite 250

  
	
   

  	
   

  	
   

  	
   

  	
  Sacramento, California  95814

  
	
   

  	
   

  	
   

  	
   

  	
  Attn: 
  Forrest Plant, Jr.

  
	
   

  	
   

  	
   

  	
   

  	
  Fax No.: 
  (916) 448-8628

  
	
   

  	
   

  	
   

  	
   

  	
  Telephone No.: 
  (916) 448-0448

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  ADDRESS
  FOR RENT  PAYMENTS:

  	
   

  	
  Opus West Management Corporation

  
	
   

  	
   

  	
   

  	
   

  	
  2415 East Camelback Road, Suite 840

  
	
   

  	
   

  	
   

  	
   

  	
  Phoenix, Arizona 
  85016-4201

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:

  	
  Property Manager

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Broadstone Plaza

  
	
   

  	
   

  	
   

  	
   

  	
  Fax No.: 
  (602) 912-8880

  
	
   

  	
   

  	
   

  	
   

  	
  Telephone No.: 
  (602) 912-8881

  

 

The foregoing
provisions (“Basic Lease Provisions”) are intended to supplement and/or
summarize the provisions set forth in the balance of this Lease.  If there is any conflict between any of the
Basic Lease Provisions and the balance of this Lease, the balance of this Lease
shall control.

 

 

7

 

 

SHOPPING
CENTER LEASE

FOR BROADSTONE PLAZA

 

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

 

ARTICLE 1

 

RENT

 

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

 

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

 

1.3                                 Additional Rent.  In addition to the Annual Minimum Rent
payable by Tenant under the provisions of this Article 1, Tenant shall pay, as
additional rent (“Additional Rent”), all other charges, sums or amounts
permitted to be imposed against it under any other Article of this Lease.  Payments of Additional Rent shall be made
concurrently with the next succeeding installment of Annual Minimum Rent
following notice of the same, unless a different time for such payment is
specified in this Lease.  If any such
amounts or charges are not paid at the time provided in the Lease, they shall
nevertheless be collectible as Additional Rent with the next installment of
Annual Minimum Rent falling due; however, nothing herein contained shall be
deemed to suspend or delay the payment of any amount of money or charge at the
time the same becomes due and payable hereunder, or limit any other remedy of
Landlord.  Annual Minimum Rent and
Additional Rent are collectively referred to as “Rent”.  Rent shall be payable, without deduction,
offset, prior notice or demand, in lawful money of the United States.  All payments received by Landlord from
Tenant shall be applied to the oldest payment obligation owed by Tenant to
Landlord.  No designation by Tenant,
either in a separate writing or in a check or money order, shall modify this
clause or have any force or effect.

 

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

 

ARTICLE 2

 

[INTENTIONALLY
DELETED]

 

ARTICLE 3

 

LEASE YEAR

 

The term “Lease
Year” shall mean, each consecutive twelve (12) month period during the Term,
commencing on the Commencement Date, except that if the Commencement Date is
not the first day of a calendar month then the first Lease Year shall be a
period beginning on the Commencement Date and ending on the last day of the
calendar month in which the Commencement Date occurs plus the following twelve
(12) calendar months.

 

ARTICLE 4

 

TAXES AND OTHER FORMS OF ADDITIONAL RENT

 

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

 

 

8

 

United States of America
or the state in which the Shopping Center Tract is located or any city,
municipality or political subdivision thereof, against Landlord or all or any
part of the Shopping Center Tract excluding however any net income tax, estate
tax, transfer tax or inheritance tax of Landlord.  The term “Taxes” shall also include (a) all charges, fees,
license fees, business license fees, commercial rent taxes, levies, penalties
and assessments which are levied by any authority having the direct or indirect
power to tax, including any city, county, state, or federal government, or any
school, agriculture, lighting, drainage, or other improvement district thereof
with respect to the Shopping Center Tract and any improvements, fixtures,
equipment, and property of Landlord, real or personal, located in or on the
Shopping Center Tract or used in connection with the operation of the Shopping
Center Tract, (b) any tax, surcharge, assessment, or service or other fee which
shall be levied or collected in addition to or in lieu of real estate or
personal property taxes, other than taxes levied directly on Tenant for
Tenant’s personal property, (c) any excise, sales, transaction, privilege, or
other tax or levy, however denominated, imposed upon or measured by the Rent
reserved under this Lease, Landlord’s business of operating the Shopping Center
Tract, or revenues derived therefrom or on the parking spaces in the Shopping
Center Tract, (d) any tax or charge for fire protection, streets, sidewalks,
road maintenance, refuse or other services provided to the Premises by any
governmental entities, (e) any tax imposed upon the transaction or based upon a
reassessment of the Premises due to a change in ownership or transfer of all or
part of Landlord’s interest in the Premises, (f) any charge, fee, levy or tax
replacing any tax previously included within the definition of Taxes, it being
acknowledged by Landlord and Tenant that Proposition 13 was adopted by the
voters of the State of California in the June 1978 election and that
assessments, taxes, fees, levies and charges may be imposed by governmental
agencies for such services as fire protection, street sidewalk and road
maintenance, refuse removal and for other governmental services formerly
provided without charge to property owners or occupants and (g) any and all
costs (including, without limitation, the fees of experts, tax consultants and
attorneys) incurred by Landlord should Landlord elect to negotiate or contest
the amount of any Taxes in formal or informal proceedings before the taxing
governmental agency.  The Taxes to be
paid by Tenant under this Lease shall be the Taxes assessed for a particular
year notwithstanding that such Taxes may be payable in a subsequent year.  Taxes for any partial calendar year during
the Term shall be prorated based upon the portion of such calendar year which
is within the Term.  For the calendar
years in which this Lease commences and terminates, the provisions of this
Article shall apply, and Tenant’s liability for its share of the Taxes for such
years shall be subject to a pro rata adjustment based on the number of days of
said calendar year during which the Term of this Lease is in effect.  In no event shall Taxes include any interest
charges or penalties imposed for Landlord’s failure to make payments on account
of Taxes in a timely manner unless such failure is due to Tenant’s failure to
pay its share of Taxes in the manner provided in this Article 4.

 

4.2                                 Tenant’s Pro Rata Share of Taxes.  Subject to Section 4.7, Tenant’s share of
Taxes shall be equal to the product obtained by multiplying the Taxes by a
fraction, the numerator of which shall be the number of square feet of the
floor area of the Premises and the denominator of which shall be the number of
rentable square feet of floor area of all buildings in the Shopping Center
Tract owned by Landlord, as the same may vary from time to time (hereinafter
“Total Floor Area”).  Tenant’s share of
the Taxes shall be paid in monthly installments on or before the first day of each
calendar month, in advance, in an amount estimated by Landlord; provided, that
in the event Landlord is required under any mortgage covering the Shopping
Center Tract to escrow Taxes, Landlord may, but shall not be obligated to, use
the amount required to be so escrowed as a basis for its estimate of the
monthly installments due from Tenant hereunder.  Upon receipt of all tax bills and assessment bills attributable
to any calendar year during the Term hereof, Landlord shall furnish Tenant with
a written statement of the actual amount of Tenant’s share of the Taxes for
such calendar year.  In the event the
total amount of monthly installments paid by Tenant pursuant to this Article
does not equal the sum due from Tenant as shown on such statement, then Tenant
shall pay to Landlord the deficiency within thirty (30) days of receipt of such
statement, or Landlord shall issue to Tenant at the time the statement is
furnished, a credit invoice for such excess, as the case may be.  A copy of a tax bill or assessment bill
submitted by Landlord to Tenant shall at all times be sufficient evidence of
the amount of Taxes against the property to which such bill relates.  Prior to or at the commencement of the Term
of this Lease and from time to time thereafter throughout the Term hereof,
Landlord shall notify Tenant in writing of Landlord’s estimate of Tenant’s
monthly installments due hereunder. 
Landlord’s and Tenant’s obligations under this Article shall survive the
expiration of this Lease.

 

4.3                                 Protest of Taxes. 
Landlord shall also have the right, but not the obligation, to contest
the amount or validity, in whole or in part, of any Taxes by appropriate
proceedings conducted in the name of Landlord or in the name of Landlord and
Tenant.  Notwithstanding anything in
this Article to the contrary, all costs and expenses incurred by Landlord
during negotiations for or contests of the amount of Taxes shall be included
within the term “Taxes”.  In the event a
refund is obtained, Landlord shall issue a credit invoice for same, such
portion to be based upon the percentage of the original Taxes paid by Tenant
from which the refund was derived. 
Tenant hereby waives any right it may have by statute or otherwise to
protest Taxes.

 

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

 

9

 

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

 

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

 

4.7                                 Recalculation of Tenant’s Pro Rata Share.  Notwithstanding anything to the contrary in
this Lease, Landlord may elect, from time to time, to have Taxes for any
portion of the Shopping Center Tract calculated and paid separately from the
remainder of the Shopping Center Tract. 
Upon such election by Landlord, Tenant’s share of Taxes shall be calculated
without reference to any excluded portion of the Shopping Center Tract
(notwithstanding that Tenant’s share for other purposes hereunder may then be
calculated on a basis which includes such excluded portion), so that (i) Taxes
shall be reduced to exclude the taxes from the excluded portion of the Shopping
Center Tract and (ii) the denominator of the fraction determining Tenant’s
share of taxes shall include only the number of rentable square feet of floor
area of all buildings in the non-excluded portion of the Shopping Center
Tract.  It is agreed that, as pad or
building sites in the Shopping Center Tract are sold to third parties, Landlord
shall have the option to require that Taxes shall not include real property
taxes and assessments relating thereto, nor shall the denominator of the
fraction determining Tenant’s share of Taxes include any floor area of any
building constructed thereon.

 

ARTICLE 5

 

COMMON AREA AND OPERATING EXPENSES

 

5.1                                 Common Area.  The
term “Common Area” means the entire area designated from time to time by
Landlord for the common use or benefit of the occupants of the Shopping Center
and other persons entitled to use the same, including, without limitation,
parking lots (permanent and temporary), landscaped and vacant areas, passages
for trucks and automobiles, area-ways, roads, walks, roof, curbs, corridors,
courts and arcades, together with facilities such as washrooms, comfort rooms,
lounges, drinking fountains, toilets, stairs, ramps, shelters, community rooms,
porches and bus stations, with facilities appurtenant to each, and common
utility facilities, water filtration and treatment facilities (including, but
not limited to, treatment plants and settling ponds), whether located within or
outside of the Shopping Center (provided, however, the costs and expenses of
such facilities included within Section 5.2 below shall include only those
related to the operation, maintenance, repair or replacement of the Shopping
Center).

 

5.1.1                        Maintenance and Use of Common Area.  The Common Area shall be maintained in
accordance with the requirements set forth in the Declarations (defined
below).  The use and occupancy by Tenant
of the Premises shall include the non-exclusive use of the Common Area (except
areas used in the maintenance or operation of the Shopping Center) in common
with Landlord and other Tenants of the Shopping Center and their customers and
invitees to the extent provided in the Declarations.  Any such use shall be subject to the Declarations and those
provisions contained in the rules and regulations set forth in Exhibit “B”
concerning the use of the Common Area, established by Landlord from time to
time.  Landlord shall operate and
maintain the Common Area or shall cause the same to be operated and maintained
in a manner deemed by Landlord reasonable or appropriate for the Shopping
Center.  Subject to the Declarations and
the rules and regulations and subject to the rights of other tenants, licensees
and concessionaires already or to be granted therein, the Common Area is hereby
made available to Tenant and its employees, agents, customers and invitees for
their reasonable nonexclusive use in common with others, including other
tenants and their employees, agents, customers, invitees, and Landlord for the
purposes for which constructed.

 

5.1.2                        Control of and Changes to Common
Area.  Landlord shall have
sole and exclusive control of the Common Area, as well as the right to make
changes to the Common Area.

 

10

 

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

 

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

 

5.1.4                        Declarations.  The term “Declarations” means any “declaration of covenants,
conditions and restrictions and grant of easements”, any “restrictive easement
agreement”, any “parking lot maintenance agreement” or any similar document
affecting all or any part of the Shopping Center, whether recorded as of the
date of execution of this Lease, or recorded thereafter, including, without
limitation, the Restriction Agreement and Grant of Easements for Folsom Power
Center, recorded July 10, 1998, Series No. 199807100988, Official Records of
Sacramento County, California (the “Senior Declaration”), as amended by that
certain instrument entitled First Amendment to Restriction Agreement and Grant
of Easements for Folsom Power Center, recorded September 3, 1999, Series No.
199909031081, Official Records of Sacramento County, California, that certain
instrument entitled Assignment of Rights, recorded November 12, 1999, Series
No. 199911121519, Official Records of Sacramento County, California and that
certain instrument entitled Second Amendment to Restriction Agreement and Grant
of Easements for Folsom Power Center, September 18, 2001, in Book 20010918,
Page 1177, Official Records of Sacramento County, California (collectively, the
“Amended Senior Declaration”), and any supplemental declarations that are
recorded (the “Supplemental Declaration”), the Junior Declaration of Covenants,
Conditions and Grant of Easements for Folsom Power Center, recorded September
3, 1999, Series No. 199909031082, Official Records of Sacramento County,
California (the “Junior Declaration”), as amended by that certain First
Supplemental to the Junior Declaration of Covenants, Conditions and
Restrictions and Grant of Easements for Folsom Power Center, recorded July 18,
2000, Book 20000718, Point 0878, Official Records of Sacramento County,
California, that certain Second Supplemental to the Junior Declaration of
Covenants, Conditions and Restrictions and Grant of Easements for Folsom Power
Center, recorded August 8, 2000, Book 20000808, Page 0909, Official Records of
Sacramento County, California, that certain Third Supplemental to the Junior
Declaration of Covenants, Conditions and Restrictions and Grant of Easements
for Folsom Power Center, recorded October 31, 2000, Book 200001031, Page 1810,
Official Records of Sacramento County, California, that certain Fourth
Supplemental to the Junior Declaration of Covenants, Conditions and
Restrictions and Grant of Easements for Folsom Power Center, recorded December
21, 2000, Book 200001221, Page 1221, Official Records of Sacramento County,
California, and that certain Amendment to Junior Declaration of Covenants,
Conditions and Restrictions and Grant of Easements for Folsom Power Center,
recorded September 18, 2001, Book 20010918, Page 1176, Official Records of
Sacramento County, California (collectively, the “Amended Junior Declaration”),
and any supplemental declarations that are recorded (the “Supplemental Junior
Declaration”).

 

5.2                                 Operating Expenses.  Tenant shall pay, as Additional Rent, to
Landlord during the Term its proportionate share of the costs and expenses of
operating, maintaining, repairing and replacing the Common Area (“Operating
Expenses”).  Subject to Section 5.2.3,
Tenant’s proportionate share of Operating Expenses shall be equal to the
product obtained by multiplying the total of such Operating Expenses by a
fraction, the numerator of which shall be the number of square feet of the
floor area of the Premises and the denominator of which shall be the Total
Floor Area.

 

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

 

11

 

management, maintenance,
repair, replacement or restoration of the Common Area, all sums expended in
connection with the Common Area for operating, maintaining, repairing,
lighting, cleaning, sealing, striping, heating, air conditioning, ventilating,
inspecting, painting (including painting of the exterior of buildings of the Shopping
Center), and insuring (including liability insurance for personal injury,
death, and property damage and contractual liability, fidelity bonds for
personnel, insurance against fire, theft or other casualties, rent loss,
workmen’s compensation and employer’s liability, and including any “deductible”
cost incurred in connection with any covered loss, all costs and expenses of
service and maintenance contracts, including but not limited to, HVAC, windows
and general cleaning, removing of snow, ice, debris and surface water, security
police, electronic intrusion and fire control and telephone alert system,
machinery and equipment depreciation, all costs and expenses for inspecting,
repairing and maintaining machinery and equipment used in the operation of the
Common Area, all costs and expenses of inspecting, maintaining, repairing and
replacing storm and sanitary drainage systems, sprinklers and other fire
protection systems, and electrical, gas, water, telephone and irrigation
systems, all costs and expenses for operating, maintaining, repairing and
replacing off-site improvements (including costs of operating, maintaining,
repairing and replacing off-site detention areas and utility costs for traffic
signals), all costs and expenses of traffic regulation, directional signs and
traffic consultants, fees for permits, program services, and loudspeaker
systems, all costs and expenses of planting and replacing flowers, shrubbery
and planters, all costs and expenses (other than those of a capital nature) of
replacement of, and repairing, paving, curbs, sidewalks, walkways, roadways,
loading docks, roof, parking surfaces, landscaping, drainage, utilities,
lighting facilities, and signage, costs and assessments of any property owners
association covering the Shopping Center, all costs of uniforms, supplies and
materials used in connection with the operation and maintenance of the Shopping
Center, all salaries and other compensation and benefits of all persons engaged
in the operation, maintenance or security of the Common Area, together with
other fringe benefits including employer’s social security taxes, unemployment
taxes, insurance and other compensation, benefits and payments and any other
expense imposed on Landlord, its contractors or subcontractors, pursuant to law
or pursuant to any collective bargaining agreement covering employees engaged
in the management of the Shopping Center or the operation, maintenance, repair
or replacement of the Common Area, and administrative and overhead costs equal
to 12% of the foregoing Common Area costs and expenses, any fees, charges and
other costs including management fees (or amounts in lieu of such fees),
consulting fees, legal fees and accounting fees of all persons engaged by
Landlord or otherwise reasonably incurred by Landlord in connection with the
operation, maintenance, management and repair of the Shopping Center and Common
Area.  The Operating Expenses shall not
include any capital improvement to the Shopping Center, except as described
below, nor shall it include repairs, restoration or other work occasioned by
fire, windstorm or other insured casualty, expenses incurred in leasing or
procuring tenants, leasing commissions, advertising expenses, expenses for
renovating space for new tenants, legal expenses incident to enforcement by
Landlord of the terms of any lease, interest or principal payments on any
mortgage or other indebtedness of Landlord, nor shall it include expenses for
constructing or renovating the exterior of the buildings in the Shopping
Center.  Notwithstanding the foregoing,
in the event Landlord installs equipment in or makes improvements or
alterations to the Shopping Center that would be considered capital
expenditures and that are for the purpose of reducing energy costs, maintenance
costs or other Operating Expenses or are replacements for existing improvements
or are required under any governmental laws, regulations, or ordinances
(including any accessibility statute) which were not required at the date
permits for construction of the Shopping Center were obtained, Landlord may
include in Common Area expenses the cost of such equipment and such
improvements and alterations, including reasonable charges for interest on such
investment and reasonable charges for depreciation on the same so as to amortize
such investment over the reasonable life of such equipment, improvement or
alteration as reasonably determined by Landlord.

 

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

 

5.2.3                        Recalculation of Tenant’s Pro Rata
Share.  Notwithstanding
anything to the contrary in this Lease, Landlord may elect, from time to time,
to have other tenants or owners of a portion of the Shopping Center operate and
maintain the Common Area located on such other tenant’s or owner’s leased or
owned portion of the Shopping Center, in which event such other tenants or
owners (and not Landlord) shall be responsible for the operation and
maintenance of such portion of the Common Area.  In such event, Tenant’s proportionate share of Operating Expenses
shall be calculated by (i) excluding from all the Operating Expenses the costs
and expenses all costs and expenses incurred by the tenants and owners
performing or maintaining their own portion of the Common Area, and (ii)
including in the denominator of the fraction determining Tenant’s share thereof
only the number of rentable square feet of floor area of all buildings owned or
leased by parties other than the tenants or owners performing or maintaining
their own portion of the Common Area.

 

12

 

ARTICLE 6

 

TENANT’S
CONDUCT OF BUSINESS

 

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

 

6.2                                 Exclusive Use.  Subsequent to the date of this Lease, so
long as Tenant is not in default hereunder, Landlord agrees, during the time
that Tenant constitutes the “Tenant” under this Lease, that all new leases for
space in the Shopping Center will contain a provision (herein called a
“Restrictive Use Clause”) which shall prohibit the Tenant thereunder from
conducting as its primary business at the Shopping Center (i) a state or
national bank, (ii) a state or federal savings and loan, (iii) a trust company
or (iv) subject to the remaining provisions of this Section, a state or federal
credit union.  If Tenant discontinues
the operation of a bank as its primary business at the Premises, then
Landlord’s obligations under this Section shall automatically terminate and all
Restrictive Use Clauses shall be deemed null and void.  This agreement of Landlord shall operate
only to the extent Landlord’s covenants and agreements contained in this
Section are not contrary to public policy or contrary to law and, in the event
such covenants and agreements are deemed contrary to law, such covenants and
agreements shall become automatically and immediately null and void and shall
be deemed revoked.  Anything herein to
the contrary notwithstanding, Tenant agrees to indemnify, defend and hold
Landlord harmless from any claim, cost, loss or damage (including reasonable
attorneys’ fees) incurred or alleged against Landlord by any person, firm or
corporation whatsoever by reason of Landlord’s compliance, or attempted
compliance, with the terms and conditions of this Section (provided, however,
that Landlord shall have no obligation to enforce such Restrictive Use
Clauses), and in the event Landlord or its successors or assigns are made
subject to any action, proceeding or penalty with respect to the provisions of
this Section, Tenant agrees to indemnify, defend and hold Landlord harmless
from any cost, loss, claim or expense in respect thereto.  This Section shall not apply to any leases
entered into by Landlord prior to the date of this Lease (including, without
limitation, that certain Shopping Center Lease between Landlord and Heritage
Community Credit Union, a California corporation, dated December 14, 2001) nor
to any amendments nor renewals of such leases. 
In the event of any violation of a Restrictive Use Clause by another
tenant of the Shopping Center, Landlord shall not be in breach of this Lease,
and Tenant’s sole and exclusive remedy with respect to such violation shall be
to attempt to cause such tenant to cease violating the Restrictive Use Clause
contained in its Lease.

 

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

 

6.4                                 Operating Covenants.  Tenant agrees to open the Premises to the
public on or before the Commencement Date. 
Tenant shall not at any time abandon the Premises, but shall in good
faith continuously throughout the term of this Lease conduct and carry on in
the entire Premises the Permitted Use. 
Tenant shall:  (a) comply with
the Rules and Regulations of Landlord as such may be amended from time to time;
(b) secure and maintain a business license and all other applicable
governmental approvals; (c) operate continuously and uninterruptedly in the
entire Premises the business which it is permitted to operate under the
provisions of this Lease; (d) employ its best judgment, efforts and abilities
to operate the business conducted by it on the Premises in a manner calculated
to produce the maximum profitable and practical volume of sales and
transactions obtainable and to enhance the reputation and attractiveness of the
Premises; (e) at all times, keep and maintain within the Premises an adequate
stock of merchandise and trade fixtures to service and supply the usual and ordinary
requirements of its customers; (f) keep the Premises and interior and exterior
portions of windows, doors and all other glass or plate glass fixtures in a
neat, clean, sanitary and safe condition; (g) warehouse, store or stock only
such merchandise as Tenant intends to offer for sale at retail; (h) use for
office space or other non-selling purposes only such space as is reasonably
required for Tenant’s business; (i) keep sidewalks adjacent to the Premises
clean from visible trash, papers, oil, gum and other debris and (j) operate its
business with a stock of merchandise comparable in style and type to those
offered at its other stores engaged in the Permitted Use, or any portion of
such use, in the metropolitan area in which the Shopping Center is located, in
a high class and reputable manner to maximize sales from the Premises.

 

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

 

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

 

13

 

any of the provisions set
forth on Exhibit
“D” hereto or any provision hereafter deemed to be an additional
provision of Exhibit “D” pursuant to this Section 6.6.  Tenant agrees that neither it nor any
successor, assign, concessionaire, subtenant or assignee shall use the
Premises, or any part thereof, in any way that would violate any of the
prohibited uses listed on Exhibit “D” or hereafter deemed to be an
additional provision thereof, and notwithstanding the Provisions of Article 19,
Tenant shall be in immediate default under this Lease if Tenant violates the
provisions of this Section 6.6.  Tenant
acknowledges that Landlord may hereafter grant other exclusive uses to other
tenants or occupants of the Shopping Center or other prohibited uses for the
benefit of such other tenant or occupant, and Tenant agrees that neither it nor
any successor, assign, concessionaire, subtenant or assignee shall use the
Premises, or any part thereof, in any way that would violate any such exclusive
or prohibited use hereafter granted of which Tenant has received written
notice, so long as such exclusive or prohibited use does not prohibit the use
of the Premises for the Permitted Use. 
Upon receipt by Tenant of written notice of any such exclusive or
prohibited use hereafter granted, such exclusive or prohibited use shall
automatically be deemed to be an additional provision of Exhibit “D” hereto, so long
as such exclusive or prohibited use does not prohibit the use of the Premises
for the Permitted Use.  Tenant covenants
and agrees that it will not withhold or delay its written acknowledgment of the
addition of any such additional exclusive or prohibited use to Exhibit “D”
if such acknowledgment is requested in writing by Landlord, and in the event
Tenant fails to furnish such written acknowledgment of such addition within
fifteen (15) days after Tenant’s receipt of Landlord’s written request
therefor, Tenant shall be deemed to have given such written acknowledgment as
of the expiration of such 15-day period.

 

6.7                                 Increase in Insurance.  Tenant shall not do or permit anything to be
done in or about the Premises nor bring or keep anything therein which will, in
any way, increase the existing rate of, invalidate, or affect in any other way
any fire or other insurance carried on the Premises and/or the Shopping Center
Tract or any of its contents, or cause a cancellation of any insurance policy
covering the Shopping Center Tract or any part thereof or any of its
contents.  Notwithstanding anything to
the contrary contained herein, Tenant shall promptly, upon demand, reimburse
Landlord for the full amount of any additional premium charged for such policy
by reason of Tenant’s failure to comply with the provisions of this Section
6.7, it being understood that such demand for reimbursement shall not be
Landlord’s exclusive remedy.

 

6.8                                 Hazardous Materials.  Tenant shall not cause or permit any
Hazardous Materials (defined below) to be brought upon, kept or used in or
about the Premises or Shopping Center by Tenant, its agents, employees,
contractors or invitees, and shall not conduct or authorize the use,
generation, transportation, storage, treatment or disposal at the Premises or the
Shopping Center of any Hazardous Materials other than those expressly
permitted, in writing, by Landlord.  If
Tenant breaches the obligation stated above, or if the presence of Hazardous
Materials on the Premises, or Shopping Center caused or permitted by Tenant
(including Hazardous Materials specifically permitted and identified below)
results in contamination to the Premises, or Shopping Center, or any portion of
the real property surrounding the Project (the “Adjacent Property”), or if
contamination of the Premises, or Shopping Center, or Adjacent Property by
Hazardous Materials otherwise occurs for which Tenant is legally liable to
Landlord for damages resulting therefrom, then Tenant shall be liable and
responsible for, without limitation, (i) removal from the Premises, or Shopping
Center, or Adjacent Property of any Hazardous Materials and the cost of such
removal; (ii) damages to persons or property in or on the Premises, or Shopping
Center, or Adjacent Property; (iii) claims resulting therefrom; (iv) fines
imposed by any governmental agency; and (v) any other liability as provided by
law.  In addition to the foregoing,
Tenant shall indemnify, protect, defend and hold Landlord, its agents and
contractors harmless from any and all claims, judgments, damages, penalties,
fines, costs, liabilities and losses (including, without limitation, diminution
in value of the Premises, or Shopping Center, or Adjacent Property), damages
for the loss or restriction on use of rentable or usable space or of any amenity
of the Premises, or Shopping Center, or Adjacent Property, damages arising from
any adverse impact on marketing of space in the Shopping Center or the Adjacent
Property, and sums paid in settlement of claims, attorneys’ fees, consultant
fees and expert fees, which arise during or after the Lease Term as a result of
such contamination.  This
indemnification of Landlord by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions or any
cleanup, remedial, removal or restoration work required by any federal, state
or local governmental agency or political subdivision because of Hazardous
Materials present in the soil or ground water on or under the Shopping Center
and arising out of breach of Tenant’s obligation under this Section 6.8.  Without limiting the foregoing, if the
presence of any Hazardous Materials within the Shopping Center caused or
permitted by Tenant results in any contamination of the Premises, or Shopping
Center, Tenant shall promptly take all actions, at its sole expense, as are
necessary to return the Premises, or Shopping Center to the condition existing
prior to the introduction of any such Hazardous Material, provided that
Landlord’s approval of such action shall first be obtained, which approval
shall not be unreasonably withheld so long as such actions would not
potentially have any material adverse long term or short term effect on the
Shopping Center or the Adjacent Property and are permitted by any lender of
Landlord having a first priority lien on the Shopping Center.

 

6.8.1                        Definition of Hazardous Materials.  As used herein, the term “Hazardous
Materials” or “Hazardous Material” means any hazardous or toxic substance,
material or waste which is or becomes regulated by any local governmental
authority, the State of California or the United States Government.  Hazardous Materials include, without
limitation, any material or substance which is or becomes (i) defined as a
“hazardous waste,” “extremely hazardous waste” or “restricted hazardous waste”
under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of
the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous
Waste Control Law), (ii) defined as a “hazardous substance” under Section 25316
of the California Health and Safety Code, Division 20, Chapter 6.8
(Carpenter-Presly-Tanner Hazardous Substance Account Act), (iii) defined as a
“hazardous

 

14

 

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

 

6.8.2                        Assignment and Subletting.  If (i) any anticipated use of the Premises
by any proposed assignee or subtenant involves the generation, storage, use,
treatment or disposal of Hazardous Materials, or (ii) the proposed assignee or
subtenant has been required by any prior landlord, lender or governmental
authority to take remedial action in connection with Hazardous Materials
contaminating a property and the contamination resulted from such party’s
action or use of the property in question, it shall not be unreasonable for
Landlord to withhold its consent to an assignment or subletting to such
proposed assignee or subtenant. 
Landlord may require that the proposed assignee or subtenant provide
information and/or a certification executed by an authorized corporate officer
with respect to the foregoing matters.

 

6.9                                 Compliance with Laws and Other
Requirements.  Tenant shall
cause the Premises to comply in all material respects with all laws,
ordinances, regulations and directives of any governmental authority having
jurisdiction including, without limitation, any certificate of occupancy and
any law, ordinance, regulation, covenant, condition or restriction affecting
the building or Shopping Center which is applicable to the Premises
(collectively “Applicable Laws”). 
Tenant shall not use the Premises or permit the Premises to be used in
any manner which (i) violates any Applicable Laws, (ii) causes or is reasonably
likely to cause damage to the Premises or Shopping Center, (iii) violates a
requirement or condition of any fire and extended insurance policy covering the
Premises and/or Shopping Center or increases the cost of such policy, (iv)
constitutes or is reasonably likely to constitute a nuisance, annoyance or
inconvenience to other tenants or occupants of the Shopping Center or its
equipment, facilities or systems, (v) interferes with, or is reasonably likely
to interfere with, the transmission or reception of microwave, television,
radio, telephone or other communications signals by antenna or other facilities
located in the Shopping Center; or (vi) violates any of the Rules and
Regulations for the Shopping Center. 
Tenant shall also comply with all laws, ordinances and regulations
regarding the disclosure of the presence or danger of Hazardous Materials.

 

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

 

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

 

15

 

devices on any vehicle
parked in the Common Area.  Tenant shall
not distribute any handbills or other advertising matter in the Shopping
Center.

 

6.12                           Shopping Center Name.  Tenant shall use the name of the Shopping
Center in its advertising as the address reference for the Premises only and
not for any other purpose.  Landlord
reserves the right, in its sole discretion, to change the name and logo of the
Shopping Center at any time.

 

ARTICLE 7

 

UTILITY
SERVICES

 

7.1                                 Gas, Electricity and Water.  Landlord agrees to cause to be provided as
part of the Leasehold Improvements mains, conduits and other facilities which
are capable of supplying electricity, gas, water and sewer service to the
Premises in substantial accordance with the specifications attached hereto as Exhibit “F”.  Tenant hereby acknowledges the limits of the
design standard of the electrical service to be furnished to the Premises as
reflected on the specifications attached hereto as Exhibit “F” and, if
additional capacity or wiring is required by Tenant, Tenant, after obtaining
Landlord’s approval with respect to the same, shall install such additional
capacity or wiring at Tenant’s own expense, provided it is permitted under
State and local code.  Tenant shall pay
for all electricity, water and sewer service provided to the Premises and all
such utilities shall be separately metered to the Premises.

 

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

 

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

 

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

 

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

 

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

 

16

 

that Tenant will be
performing construction of the Tenant’s improvements in the Premises.  In the event that at the time Tenant obtains
a building permit for construction of such Tenant improvements, the City
applies a portion of the Credit against the fees otherwise payable by Tenant in
connection with obtaining Tenant’s permit, then in that event Tenant hereby
agrees to pay to Landlord, within thirty (30) days following issuance of
Tenant’s permit for the construction of Tenant’s improvements in the Premises,
a sum equal to the portion of the Credit applied by the City in connection with
the issuance of Tenant’s permit. 
Tenant’s payment to Landlord shall be accompanied by a copy of Tenant’s
permit together with a schedule of the fees paid by Tenant in connection
therewith.  Any portion of the Credit
applied in connection with the issuance of Tenant’s permit shall be paid by
Tenant to Landlord within said thirty (30) day period.

 

ARTICLE 8

 

POSSESSION
OF THE PREMISES

 

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

 

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

 

8.3                                 Acceptance of Premises.  Subject to the preceding paragraph, the
acceptance of possession by Tenant shall be deemed conclusively to establish
that the Premises and all other improvements of the Shopping Center required to
be constructed by Landlord for use thereof by Tenant hereunder have been
completed unless Tenant notifies Landlord in writing within thirty (30) days
after the Commencement Date.  Tenant
waives any claim as to matters not listed in said notice.

 

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

 

8.5                                 Certificates.  Within ten (10) days after Landlord’s request therefor, but in no
event earlier than the Opening Date, Tenant shall deliver to Landlord (a) an
executed copy of the Commencement Date Memorandum (in the form attached hereto
as Exhibit
“G”), and (b) the Certificate of Occupancy for the Premises issued
by the appropriate governmental agency.

 

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

 

ARTICLE 9

 

OVERDUE
AMOUNTS - SECURITY DEPOSIT

 

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

 

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

 

17

 

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

 

ARTICLE 10

 

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

 

10.1                           Tenant’s Maintenance Obligations.  Tenant will (a) keep the inside and outside
of all glass in the doors and windows of the Premises clean; (b) keep all
exterior store front surfaces of the Premises clean; replace promptly, at its
expense, any broken door closers and any cracked or broken glass of the
Premises with glass of like kind and quality; (c) maintain the Premises and the
loading dock contiguous thereto, if any, at its expense in a clean, orderly and
sanitary condition and free of insects, rodents, vermin and other pests; (d)
keep any garbage, trash, rubbish or refuse removed at its expense on a regular
basis and temporarily stored in the Premises in accordance with local codes or,
if in Landlord’s sole judgment it provides trash removal service for all
tenants, Tenant shall participate in and pay Landlord for such service; if
Landlord shall install compactors within the Shopping Center in lieu of
providing trash pick-up, Tenant shall use said compactor service as designated
by Landlord in such times and in such manner as Landlord shall direct, and for
the use of said compactor service, Tenant agrees to pay as Additional Rent, a
reasonable monthly charge as determined by Landlord, which may be adjusted by
Landlord as of the first day of each Lease Year to reflect any increase or
decrease in the rates for said service; (e) keep all mechanical apparatus free
of vibration and noise which may be transmitted beyond the Premises; (f) comply
with all laws, ordinances, rules and regulations of governmental authorities,
including without limitation, the Act (as herein defined), and all
recommendations of the insurance services office and/or Landlord’s insurance
carrier now or hereafter in effect relative to the use and occupancy of the
Premises and the transaction of the business of Tenant in the Premises; and (g)
light the show windows of the Premises and exterior signs until one-half hour
after the closing of the Shopping Center and replace promptly all light bulbs
and tubes when no longer serviceable. 
Tenant will not, without the written consent of Landlord, place or
maintain any merchandise or other articles outside of the Premises; use or
permit the use of any loudspeakers, phonographs, public address systems,
flashing, moving and/or rotating lights, sound amplifiers, radio or broadcasts
within the Premises which are in any manner audible or visible outside the
Premises; cause or permit odors to emanate or be dispelled from the Premises;
solicit business or distribute advertising material within the Shopping Center
except within the Premises; or permit the parking of delivery vehicles so as to
unreasonably interfere with the use of any driveway, walk, parking area, mall
or other portion of the Common Area in the Shopping Center.  Except as otherwise provided in this
Article, the Premises shall at all times be kept in good order, condition and
repair, reasonable wear and tear excepted, of equal quality with the original
work by Landlord and Tenant at Tenant’s own cost and expense and in accordance
with the Declarations, the Rules and Regulations of the Shopping Center, all
laws, directions, rules and regulations of regulatory bodies or officials
having jurisdiction in that regard.  If
Tenant refuses or neglects to commence repairs within ten (10) days after
receipt of written demand, or if Tenant fails to complete such repairs within a
reasonable time thereafter, Landlord may make the repairs without liability to
Tenant for any loss or damage that may accrue to Tenant’s stock or business by
reason thereof, and if Landlord makes such repair, Tenant shall pay to Landlord
the costs thereof with interest at the Interest Rate from the date of
completion of such repairs and delivery of an invoice therefor until repayment.

 

10.2                           Landlord’s Maintenance Obligations.  Subject to including the costs thereof in
Operating Expenses pursuant to Article 6 hereof, Landlord shall keep or cause
to be kept the foundations, the four outer walls, roof, downspouts and gutters
of the building of which the Premises are a part and, to the extent Tenant or
other tenants are not obligated to maintain the same, all utility systems,
lines, conduits and appurtenances thereto located within the Shopping Center
Tract in good repair, ordinary wear and tear excepted; provided however, if the
need for such repair is attributable to or result from the business activity
being conducted within the Premises, or if any repairs or replacements are
necessitated by the negligence, gross negligence, or willful misconduct of
Tenant or anyone claiming under Tenant or by reason of Tenant’s failure to
observe or perform any conditions or agreements contained in this Lease or
caused by alterations, additions or improvements made by Tenant, or anyone
claiming under Tenant, then, in such case, the cost thereof shall be the sole
responsibility of Tenant and Tenant agrees to reimburse Landlord for any costs
and expenses incurred by Landlord with respect to such repair.  Subject to the foregoing, it is agreed and
understood that Tenant shall only be responsible for keeping in good repair the
utility systems, lines, conduits and appurtenances thereto located within the
Premises and solely and exclusively serving the Premises.  Landlord shall commence repairs it is
required to do hereunder as soon as reasonably practicable after receiving
written notice from Tenant of the necessity of such repairs, but in no event
shall Landlord be required to make any other repairs, subject to the provisions
of Article 15 and Article 16 herein and Landlord shall have no liability for
any damage or injury arising out of any condition or occurrence causing a need
for such repairs.  Tenant waives the
provisions of Sections 1941 and 1942 of the Civil Code of the State of
California, or any superseding statute, and of any other law permitting Tenant
to make repairs at Landlord’s expense.

 

18

 

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

 

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

 

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

 

10.6                           Landlord’s Rights to Exterior of
Premises.  Subject to Tenant’s
rights under Section 10.7, Landlord shall have the exclusive right to use all
or any part of the roof of the Premises for any purpose; to erect additional
stories or other structures over all or any part of the Premises; to erect
temporary scaffolds and other aids to construction on the exterior of the
Premises, provided that access to the Premises shall not be denied; and to
install, maintain, use, repair and replace within the Premises pipes, ducts,
conduits, wires and all other mechanical equipment serving other parts of the
Shopping Center Tract.  Landlord may
make any use it desires of the side or rear walls of the Premises, provided
that such use shall not encroach on the interior of the Premises.

 

10.7                           Roof Satellite Dish.  Subject to the provisions of this Section
10.7, Tenant may use a portion of the roof to install, operate and maintain, at
Tenant’s sole cost and expense, a microwave dish or similar antenna for
telecommunications solely for Tenant’s personal use within the Premises (“Telecommunications
Equipment”).  Tenant will
install the Telecommunications Equipment only in a location determined by
Landlord in Landlord’s sole and absolute discretion.  Tenant’s installation, maintenance, replacement and removal of
any Telecommunications Equipment must comply with the requirements of any
Building roof warranties, all provisions of Article 13 governing alterations,
and the other terms and conditions of this Lease.  Tenant’s installation, operation and maintenance is subject to
Tenant receiving and maintaining all governmental approvals required for the
Telecommunications Equipment and otherwise complying with the Declarations and
all governmental laws, rules, regulations and ordinances relating thereto.  The Telecommunications Equipment must not interfere
with any existing Shopping Center equipment or other tenants’ equipment.  Upon prior notice to Landlord, Tenant will
be allowed reasonable access to the Telecommunications Equipment area for the
purpose of maintaining and servicing such equipment.  All Telecommunications Equipment (i) will remain the personal
property of Tenant, (ii) will be located and maintained at Tenant’s sole cost
and risk, (iii) must be properly removed by Tenant at the end of the Term
pursuant to the provisions of Article 13 and (iv) is subject to acceptable
screening of same at Tenant’s sole cost and expense, such screening to be
reasonably pre-approved by Landlord and, in all events, such screening to
comply with the Declarations and all governmental laws, rules, regulations and
ordinances relating thereto . 
Notwithstanding anything to the contrary in this Lease, in the event
that Landlord’s insurance obligations under this Lease increase as a result of
Tenant’s installation, operation or maintenance of the Telecommunications
Equipment, any such increase shall be borne solely by Tenant and not by
Landlord or any other tenants leasing space in the Shopping Center.

 

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

 

19

 

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

 

ARTICLE 11

 

INSURANCE

 

11.1                           Landlord’s Property Insurance Obligations.  Landlord shall maintain a policy of
insurance equivalent to ISO special form coverage insuring the Shopping Center
Tract for the benefit of Landlord in an amount equal to the full replacement
cost thereof without coinsurance (excluding foundation, grading and excavation
costs) against:

 

(a)                                  Loss
or damage by fire; and

 

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

 

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

 

11.2                           Tenant’s Property Insurance Obligations.  Tenant shall maintain at its sole expense a
policy of insurance equivalent to ISO special form coverage insuring all of its
machinery, equipment, furniture, fixtures, all leasehold improvements and
alterations, personal property (including also property under the care,
custody, or control of Tenant, except the Landlord’s property) and business
interests that may be located in, upon or about the Premises insured for the
benefit of Tenant in an amount equal to the full replacement cost thereof
without coinsurance against:

 

(a)                                  Loss
or damage by fire; and

 

(b)                                 Such
other risk or risks of a similar or dissimilar nature as are now, or may in the
future be, customarily covered with respect to a tenant’s machinery, equipment,
furniture, fixtures, all leasehold improvements and alterations, personal
property and business located in a building similar in connection, general
location, use, occupancy and design to the Shopping Center Tract, including,
but without limiting the generality of the foregoing, windstorms, hail, explosions,
vandalism, theft, malicious mischief, civil commotion, water damage of any
type, including sprinkler leakage, bursting of pipes, or explosion in an amount
not less than the replacement cost thereof and such other coverage as Tenant or
Landlord may deem appropriate or necessary.

 

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

 

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

 

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

 

20

 

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

 

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

 

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

 

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

 

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

 

21

 

aforesaid, or shall be caused by or result from other circumstances of
a similar or dissimilar nature.  The
foregoing waiver shall not apply to damage that is covered by Landlord’s
insurance required to be carried under this Article 11.

 

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

 

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

 

11.11                     Blanket Insurance Policy.  Anything herein to the contrary
notwithstanding, Tenant shall not be precluded from taking out insurance of the
kind and in the amount provided for in this Article under a blanket insurance
policy or policies (certificates thereof reasonably satisfactory to Landlord
shall be delivered to Landlord) which may cover other properties owned or
operated by Tenant as well as the Premises; provided, however, that such
policies of blanket insurance shall, as respects the Premises, contain the
various provisions required of such an insurance policy by the foregoing
provisions of this Article and, for liability insurance, must be made specifically
applicable to the Premises and this Lease on a “per location” basis and, for
property insurance, must include “agreed amount, no coinsurance” provisions.

 

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

 

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

 

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

 

ARTICLE 12

 

CERTAIN RIGHTS RESERVED BY LANDLORD

 

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

 

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

 

12.2                           Exclusive Businesses.  Subject to Section 6.2 of this Lease, to
grant to anyone the exclusive right to conduct any particular business or
undertaking in the Shopping Center.

 

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

 

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

 

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

 

ARTICLE 13

 

ALTERATIONS
AND IMPROVEMENTS

 

13.1                           Procedure For Tenant’s Improvements.  Tenant shall not make any modifications, improvements,
alterations, additions or installations in or to the Premises (hereinafter
referred to as the “Work”) without Landlord’s prior written consent, which
consent shall not be unreasonably withheld. 
Along with any request for Landlord’s consent and before commencement of
the Work or delivery of any materials to be used in the Work to the Premises or
into the Shopping Center, Tenant shall furnish Landlord with plans and
specifications, names and addresses of contractors, copies of contracts, necessary
permits and licenses, insurance certificates, evidence of safety programs, an
indemnification in such form and amount as may be reasonably satisfactory to
Landlord, a performance and payment bond executed by a commercial surety
reasonably satisfactory to Landlord and in an amount equal to the cost of the
Work and the payment of all liens for labor and material arising therefrom, and
such other information concerning the Work as Landlord may request.  Tenant agrees to defend and hold Landlord
forever harmless from any and all claims and liabilities of any kind and
description which may arise out of or be connected in any way with said
modifications, improvements, alterations, additions or installations.  All Work shall be done only by contractors
or mechanics reasonably approved by Landlord and at such time and in such
manner as Landlord may from time to time reasonably designate.  All Work done by Tenant, its agents,
employees, or contractors shall be done in such a manner as to avoid labor
disputes.  Tenant shall pay the cost of
all such modifications, improvements, alterations, additions or installations
(including a reasonable charge for Landlord’s services and for Landlord’s
inspection and engineering time), and also the cost of painting, restoring, or repairing
the Premises and the Shopping Center occasioned by such modifications,
improvements, alterations, additions or installations.  Upon completion of the Work, Tenant shall
furnish Landlord with contractor’s affidavits or unconditional lien releases and
full and final waivers of liens, and receipted bills covering all labor and
materials expended and used.  The Work
shall comply with all insurance requirements and all laws, ordinances, rules
and regulations of all governmental authorities including without limitation
the Act (as herein defined) and shall be constructed in a good and workmanlike
manner.  Tenant shall permit Landlord to
inspect construction operations in connection with the Work at any time.  Landlord shall have the right to immediately
cease construction operations if Tenant fails to meet the requirements of this
Article.  Tenant shall not be allowed to
make any alterations, modifications, improvements, additions, or installations
if such action results or would result in a labor dispute or otherwise would
materially interfere with Landlord’s operation of the Shopping Center.  Landlord, by written notice to Tenant given
at or prior to termination of this Lease, may require Tenant to remove any improvements,
additions or installations installed by Tenant in the Premises at Tenant’s sole
cost and expense, and repair or restore any damage caused by the installation
and removal of such improvements, additions, or installations; provided,
however, the only improvements, additions or installations which Tenant shall
remove shall be those specified in such notice.  Notwithstanding anything to the contrary contained herein, Tenant
shall be permitted to perform Work not affecting the structural, electrical or
mechanical systems of the Premises or the Shopping Center which does not in the
aggregate cost more than $25,000.00 in any twelve (12) month period (but
subject to all the other terms of this Article other than (i) the requirements
set forth in the second sentence of this Article and (ii) furnishing Landlord
with contractors’ affidavits and lien waivers if requested by Landlord),
provided Tenant notifies Landlord at least ten (10) days prior to the
commencement of such Work and delivers to Landlord a copy of the plans for such
work, if Tenant has arranged to have plans prepared therefor.

 

23

 

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

 

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

 

13.4                           Freedom From Liens. 
Tenant shall keep the Premises, all other property therein and the Shopping
Center free from any liens arising out of any Work performed, material
furnished or obligations incurred by Tenant, and Tenant shall indemnify,
protect, defend and hold Landlord harmless from any liens and encumbrances
arising out of any Work performed or material furnished by or at the direction
of Tenant.  In the event that Tenant
shall not, within ten (10) days following the imposition of any such lien,
cause such lien to be released of record by payment or posting of a proper
bond, Landlord shall have, in addition to all other remedies provided herein
and by law, the right, but not the obligation, to cause the same to be released
by such means as it shall deem proper, including payment of and/or defense
against the claim giving rise to such lien. 
All such sums paid by Landlord and all expenses incurred by it in
connection therewith, including attorneys’ fees and costs, shall be payable as
Additional Rent to Landlord by Tenant on demand with interest at the rate
specified in Article 9 accruing from the date paid or incurred by Landlord
until reimbursed to Landlord by Tenant.

 

13.5                           Alterations Part of Premises.  Any additions to, or alterations of, the
Premises, except as specified in Tenant’s notice to Landlord, shall become at
once a part of the Premises and belong to Landlord without compensation to
Tenant provided, however, that notwithstanding the foregoing, Landlord shall
have the right within thirty (30) days after the expiration or sooner
termination of this Lease to require Tenant to remove, at Tenant’s sole cost
and expense any alterations installed by Tenant and Tenant shall promptly
complete such removal, repairing any damage caused thereby to the reasonable
satisfaction of Landlord.

 

ARTICLE 14

 

ASSIGNMENT
AND SUBLETTING

 

14.1                           Restriction.  Except
for any Permitted Transfer (as defined below), without the prior written
consent of Landlord, Tenant shall not, either voluntarily or by operation of
law, assign, encumber, or otherwise transfer this Lease or any interest herein,
or sublet the Premises or any part thereof, or permit the Premises to be
occupied by anyone other than Tenant or Tenant’s employees (any such
assignment, encumbrance, subletting, occupation or transfer is hereinafter
referred to as a “Transfer”).  For
purposes of this Lease, the term “Transfer” shall also include (a) if Tenant is
a partnership, the withdrawal or change voluntarily, involuntarily or by
operation of law, of a majority of the partners, or a transfer of a majority of
partnership interests, within a twelve month period, or the dissolution of the
partnership, and (b) if Tenant is a closely held corporation (i.e., whose stock
is not publicly held and not traded through an exchange or over the counter) or
a limited liability company, the dissolution, merger, consolidation, division,
liquidation or other reorganization of Tenant, or within a twelve month period:
(i) the sale or other transfer of more than an aggregate of 50% of the voting
securities of Tenant (other than to immediate family members by reason of gift
or death) or (ii) the sale, mortgage, hypothecation or pledge of more than an
aggregate of 50% of Tenant’s net assets. 
A Transfer in violation of the foregoing shall be void and, at
Landlord’s option, shall constitute a material breach of this Lease.  For purposes of this Article 14, a
“Permitted Transfer” means Tenant’s assignment of all of its rights under this
Lease to any corporation, partnership or other business entity which either (a)
controls, is controlled by, or is under common control with Tenant, (b) results
from a merger or consolidation of or with Tenant, or (c) acquires substantially
all the assets of Tenant; provided that in each case all of the following
conditions are met: (i) such assignee has a net worth at least equal to the
greater of (1) the net worth of Tenant as of the Effective Date or (2) the net
worth of Tenant as of the date of such assignment, as evidenced by financial
statements prepared by an unbiased third party accountant in accordance with
generally accepted accounting principles provided to Landlord at least ten (10)
business days prior to the date of the proposed Permitted Transfer; (ii) the
business and operations of the assignee qualify as the Permitted Use; (iii) no
Event of Default by Tenant exists under this Lease at the time of the proposed
Permitted Transfer; (iv) Tenant gives Landlord not less than ten (10) business
days’ prior written notice of such assignment; and (v) Landlord receives a
written instrument reasonably acceptable to Landlord whereby the assignee assumes
Tenant’s obligations under this Lease within five (5) business days after the
effective date of the assignment.  For
purposes of the preceding sentence, the term “control” means not less than a
fifty percent (50%) equity interest in the applicable corporation, partnership
or other business entity.

 

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

 

24

 

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

 

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

 

14.3                           Landlord’s Recapture Rights.  Except for any Approved Sublease (as defined
below) or Permitted Transfer, at any time within twenty (20) business days
after Landlord’s receipt of all (but not less than all) of the information and
documents described in Section 14.2 above, Landlord may, at its option by
written notice to Tenant, elect to: (a) sublease the Premises or the portion
thereof proposed to be sublet by Tenant upon the same terms as those offered to
the proposed subtenant; (b) take an assignment of the Lease upon the same terms
as those offered to the proposed assignee; or (c) terminate the Lease in its
entirety or as to the portion of the Premises proposed to be assigned or
sublet, with a proportionate adjustment in the Rent payable hereunder if the
Lease is terminated as to less than all of the Premises.  If Landlord does not exercise any of the
options described in the preceding sentence, then, during the above-described
twenty (20) business day period, Landlord shall either consent or deny its
consent to the proposed assignment or subletting.

 

14.4                           Landlord’s Consent; Standards.  In determining whether to grant its consent
to the Tenant’s sublet or assignment request (excluding any Permitted
Transfer), Landlord may consider any reasonable factor.  Landlord and Tenant agree that failure to
satisfy any one of the following factors, or any other reasonable factor, will
be reasonable grounds for denying Tenant’s request:

 

(a)                                  financial
strength of the proposed subtenant/assignee, as evidenced by audited financial
statements certified by an independent public accountant, must be at least
equal to that of the existing Tenant as of the date hereof and as of the date
of assignment;

 

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

 

(c)                                  use
of the Premises by the proposed subtenant/assignee (i) will not violate or
create any potential violation of any laws and will be for only the Permitted
Use; (ii) will not violate any other agreements affecting the Premises,
Landlord or other tenants at the Shopping Center including but not limited to
exclusive agreements entered into between Landlord and other tenants or owners
at the Shopping Center and the Declaration; (iii) will complement Landlord’s
tenant mix at the Shopping Center; and (iv) will not constitute a nuisance or
would disturb or endanger other tenants of the Shopping Center or interfere
with their use of their respective premises, or which would tend to injure the
reputation of the Shopping Center;

 

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

 

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

 

(f)                                    Tenant
agrees that its personal business skills and philosophy were an important
inducement to Landlord for entering into this Lease and that Landlord may
reasonably object to the transfer of the Premises to another tenant whose
proposed use, while permitted by this Lease, would involve a different quality,
manner or type of business skill than that of Tenant.

 

Notwithstanding
anything to the contrary contained within this Section, Landlord shall consent
to a sublet request by Tenant in the event that (i) such request is made after
the earlier to occur of (1) October 1, 2002 or (2) the date on which all
leasable space in the Shopping Center is leased to third party tenants and all
such tenants have taken occupancy of their respective premises and commenced
the operations of their respective businesses within same, (ii) the subtenant
thereunder shall not be permitted to occupy any portion of the Premises until
after December 31, 2002, (iii) at no time shall such subtenant be permitted to
use any portion of the subleased premises for any food related use, and (iv) at
all times during the term of such sublease, the annual minimum rent (exclusive
of “additional rent”, as such term is defined in this Lease) that such
subtenant shall be required to pay shall be equal to or greater than $2.75 per
square foot of the subleased premises (the “Approved Sublease”).

 

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

 

25

 

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

 

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

 

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

 

ARTICLE 15

 

DAMAGE BY
FIRE OR OTHER CASUALTY

 

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

 

15.2                           Not Tenantable Within 180 Days.  If fire or other casualty shall render the
whole or any material part of the Premises untenantable and the Premises cannot
reasonably be expected to be made tenantable within one hundred eighty (180)
days from the date of such event or Landlord does not receive or expect to
receive insurance proceeds adequate to make the repair, then Landlord shall
have the option to elect whether to repair or not repair, by providing written
notice of such election to Tenant within ninety (90) days from the date of such
damage or destruction.  If Landlord
elects to repair, then this Lease shall remain in full force and effect with
Rent prorated as provided in Section 15.1 above and if Landlord elects to
terminate, then the Lease shall be terminated on the date set forth in
Landlord’s notice to Tenant which shall be not more than thirty (30) days after
the date of the notice.

 

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

 

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

 

15.5                           Rent Apportionment.  In the event of a termination of this Lease
pursuant to this Article, Rent and other charges shall be apportioned on a per
diem basis and paid to the date of the fire or other casualty.

 

15.6                           Waivers of California Statutes.  Tenant acknowledges and agrees that the
provisions of this Article 15 shall govern the rights and obligations of
Landlord and Tenant in the event of damage to or destruction of the premises.  Tenant waives the protection of any statute,
code or judicial decision which grants a Tenant the right to terminate a lease
in the event of damage or destruction of the Premises, including, but not
limited to, the provisions of Sections 1932(2) and 1933(4) of the Civil Code or
any successor statute or law.  Tenant
agrees that the provisions of this Article shall govern the rights and
obligations of Landlord and Tenant in the event of any damage or destruction of
the Premises.

 

26

 

ARTICLE 16

 

EMINENT
DOMAIN

 

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

 

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

 

ARTICLE 17

 

SURRENDER OF
PREMISES

 

17.1                           Surrender of Possession.  On the last day of the Term of this Lease, or on the sooner
termination thereof, Tenant shall peaceably surrender the Premises in good
condition and repair consistent with Tenant’s duty to make repairs as herein
provided.  On or before the last day of
the Term or the date of sooner termination thereof, Tenant and Landlord shall
arrange for a joint inspection of the Premises.  On or before the last day of the Term of this Lease, or the date
of sooner termination thereof, Tenant shall, at its sole cost and expense,
remove all of its merchandise and trade fixtures and equipment from the
Premises, and all property not removed shall be deemed abandoned.  Tenant hereby appoints Landlord its agent to
remove all property of Tenant from the Premises upon termination of this Lease
and to cause its transportation and storage for Tenant’s benefit, all at the
sole cost and risk of Tenant, and Landlord shall not be liable for damage,
theft, misappropriation or loss thereof and Landlord shall not be liable in any
manner in respect thereto.  Tenant shall
pay all costs and expenses of such removal, transportation and storage.  Tenant shall reimburse Landlord upon demand
for any expenses incurred by Landlord with respect to removal, transportation,
or storage of abandoned property and with respect to restoring said Premises to
good order, condition and repair.  All
modifications, improvements, alterations, additions and fixtures, other than
Tenant’s trade fixtures and equipment, which have been made or installed by either
Landlord or Tenant upon the Premises shall remain the property of Landlord and,
unless required to be removed by Tenant pursuant to Section 13.1, shall be
surrendered with the Premises as a part thereof.  If the Premises are not surrendered at the end of the Term or
sooner termination thereof, Tenant shall indemnify Landlord against loss or
liability resulting from delay by Tenant in so surrendering the Premises,
including, without limitation, claims made by any succeeding tenants founded on
such delay and any attorneys’ fees resulting therefrom.  Tenant shall promptly surrender all keys for
the Premises to Landlord at the place then fixed for the payment of Rent and
shall inform Landlord of combinations on any vaults, locks and safes left on
the Premises.

 

27

 

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

 

ARTICLE 18

 

DEFAULT -
REMEDIES

 

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

 

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

 

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

 

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

 

18.2.3                  Failure to Pay on Three Occasions.  If Tenant on three (3) separate occasions in
any one calendar year, when on such occasions Rent or any other charge required
to be paid by Tenant becomes due, fails to pay such Rent or such charge as and
when due, where such failure continues for five (5) days after written notice
thereof by Landlord to Tenant whether or not such Rent or other charge is
eventually paid;

 

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

 

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

 

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

 

18.2.7                  Other Defaults.  (i) If Tenant makes a general assignment or
general arrangement for the benefit of creditors; (ii) a petition for
adjudication of bankruptcy or for reorganization or rearrangement is filed by
or against Tenant and is not dismissed within thirty (30) days; (iii) if a
trustee or receiver is appointed to take possession of substantially all of
Tenant’s assets located at the Premises or of Tenant’s interest in this Lease
and possession is not restored to Tenant within thirty (30) days; or (iv) if
substantially all of Tenant’s assets located at the Premises or of Tenant’s
interest in this Lease is subjected to attachment, execution or other judicial
or nonjudicial seizure which is not discharged within thirty (30) days.  If a court of competent jurisdiction
determines that any of the acts described in this subsection does not
constitute an Event of Default and a trustee is appointed to take possession
(or if Tenant remains a debtor in possession) and such trustee or Tenant
transfers Tenant’s interest hereunder, then Landlord shall receive, as
Additional Rent, the difference between the Rent (or any other consideration)
paid in connection with such assignment or sublease and the Rent payable by
Tenant hereunder.  As used in this subsection,
the term “Tenant” shall also mean any guarantor of Tenant’s Obligations under
this Lease.  If any such Event of
Default shall occur, Landlord, at any time during the

 

28

 

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

 

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

 

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

 

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

 

(b)                                 The
worth at the time of award of the amount by which the unpaid Rent, which would
have been earned after termination until the time of award, exceeds that
portion of such Rent loss which Tenant proves could have been reasonably
avoided; plus

 

(c)                                  The
worth at the time of award of the amount by which the unpaid Rent for the
balance of the Term after the time of award exceeds the amount of such Rent
loss which Tenant proves could have been reasonably avoided; plus

 

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

 

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

 

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

 

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

 

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

 

18.3.4                  Reletting the Premises.  In the event that Landlord should elect to
terminate this Lease and to relet the Premises, it may execute any new lease in
its own name.  Tenant hereunder shall
have no right or authority whatsoever to collect any Rent from such
Tenant.  The proceeds of any such
reletting shall be applied as follows:

 

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

 

29

 

(b)                                 Second,
to the payment of the costs and expenses of reletting the Premises, including
alterations and repairs which Landlord, in its sole discretion, deems
reasonably necessary and advisable and reasonable attorneys’ fees incurred by
Landlord in connection with the retaking of the said Premises and such
reletting;

 

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

 

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

 

18.3.5                  Written Notice of Termination Required.  Landlord shall not be deemed to have
terminated this Lease and the Tenant’s right to possession of the leasehold or
the liability of Tenant to pay Rent thereafter to accrue or its liability for
damages under any of the provisions hereof, unless Landlord shall have notified
Tenant in writing that it has so elected to terminate this Lease.  Tenant covenants that the service by
Landlord of any notice pursuant to the unlawful detainer statutes of the State
of California and the Tenant’s surrender of possession pursuant to such notice
shall not (unless Landlord elects to the contrary at the time of, or at any
time subsequent to the service of, such notice, and such election be evidenced
by a written notice to Tenant) be deemed to be a termination of this Lease or
of Tenant’s right to possession thereof.

 

18.3.6                  Remedies Cumulative; No Waiver.  All rights, options and remedies of Landlord
contained in this Lease shall be construed and held to be cumulative, and no
one of them shall be exclusive of the other, and Landlord shall have the right
to pursue any one or all of such remedies or any other remedy or relief which
may be provided by law whether or not stated in this Lease.  No waiver by Landlord of a breach of any of
the terms, covenants or conditions of this Lease by Tenant shall be construed
or held to be a waiver of any succeeding or preceding breach of the same or any
other term, covenant or condition therein contained.  No waiver of any default of Tenant hereunder shall be implied
from any omission by Landlord to take any action on account of such default if
such default persists or is repeated, and no express waiver shall affect
default other than as specified in said waiver.  The consent or approval by Landlord to or of any act by Tenant
requiring Landlord’s consent or approval shall not be deemed to waive or render
unnecessary Landlord’s consent to or approval of any subsequent similar acts by
Tenant.

 

18.4                           Legal Costs. 
Tenant shall reimburse Landlord, upon demand, for any costs or expenses
incurred by Landlord in connection with any breach or default of Tenant under
this Lease, whether or not suit is commenced or judgment entered.  Such costs shall include, but not be limited
to:  legal fees and costs incurred for
the negotiation of a settlement, enforcement of rights or otherwise.  Tenant shall also indemnify, defend and hold
Landlord harmless from all costs, expenses, demands and liability incurred by
Landlord if Landlord becomes or is made a party to any claim or action (a)
instituted by Tenant, or by any third party against Tenant, or by or against
any person holding any interest under or using the Premises by license of or
agreement with Tenant; (b) for foreclosure of any lien for labor or material
furnished to or for Tenant or such other person; (c) otherwise arising out of
or resulting from any act or transaction of Tenant or such other person; or (d)
necessary to protect Landlord’s interest under this Lease in a bankruptcy
proceeding, or other proceeding under Title 11 of the United States Code, as
amended.  Tenant shall defend Landlord
against any such claim or action at Tenant’s expense with counsel reasonably
acceptable to Landlord or, at Landlord’s election, Tenant shall reimburse
Landlord for any legal fees or costs incurred by Landlord in any such claim or
action.

 

18.5                           Landlord’s Consent.  Tenant shall pay Landlord’s reasonable
attorneys’ fees incurred in connection with Tenant’s request for Landlord’s
consent in connection with any act which Tenant proposes to do and which
requires Landlord’s consent.

 

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

 

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

 

30

 

ARTICLE 19

 

SUBORDINATION

 

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

 

19.2                           Attornment.  The
above subordination shall be effective without the necessity of the execution
and delivery of any further instruments on the part of Tenant to effectuate
such subordination.  Notwithstanding
anything hereinabove contained in this Article 19, in the event the holder of
any mortgage, deed of trust or ground lease shall at any time elect to have
this Lease constitute a prior and superior lien to its mortgage, deed of trust
or ground lease, then, and in such event, upon any such holder or Landlord
notifying Tenant to that effect in writing, this Lease shall be deemed prior
and superior in lien to such mortgage, deed of trust, ground lease, whether
this Lease is dated prior to or subsequent to the date of such mortgage, deed of
trust, ground lease and Tenant shall execute such attornment agreement or other
document as may be reasonably requested by said holder.

 

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

 

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

 

ARTICLE 20

 

BANKRUPTCY
OR INSOLVENCY

 

20.1                           Bankruptcy.  Tenant
or Tenant’s guarantor, if any, shall not cause or give cause for the
appointment of a trustee or a receiver of the assets of Tenant or Tenant’s
guarantor, if any, and shall not make any assignment for the benefit of
creditors, or be adjudicated insolvent. 
The allowance of any petition under any insolvency law except under the
Bankruptcy Code or the appointment of a trustee or receiver of Tenant or Tenant’s
guarantor, if any, or of the assets of either of them, shall be conclusive
evidence of the petition unless the appointment of a trustee or receiver is
vacated within thirty days after such an allowance or appointment.  Landlord does, in addition, reserve any and
all other remedies provided in this Lease or in the law.

 

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

 

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

 

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

 

31

 

20.5                           Conditions. 
Included within and in addition to any other conditions or obligations
imposed upon Tenant or its successor in the event of assumption and/or
assignment are the following:  (i) the
cure of any monetary defaults and the reimbursement of pecuniary loss within
not more than thirty (30) days of assumption and/or assignment; (ii) the
deposit of an additional sum equal to three (3) months’ Rent to be held as
security or such lesser additional security as a United States Bankruptcy Court
may deem appropriate, (iii) the use of the Premises as set forth in Article 6
of this Lease with the quality, quantity and/or lines of merchandise of any
goods or services required to be offered for sale unchanged; (iv) the
reorganized debtor or assignee of such debtor in possession or Tenant’s trustee
demonstrates in writing that it has retailing experience in shopping centers of
comparable size and financial ability to operate a retail establishment out of
the Premises in the manner contemplated in this Lease and meets all other
reasonable criteria of Landlord as did Tenant upon execution of this Lease; (v)
the prior written consent of any mortgagee to which this Lease has been
assigned as collateral security; and (vi) the Premises, at all times, remains a
single store and no physical changes of any kind may be made to the Premises
unless in compliance with the applicable provisions of this Lease.

 

ARTICLE 21

 

RADIUS
RESTRICTION

 

[Intentionally Deleted.]

 

ARTICLE 22

 

OTHER
PROVISIONS

 

The following are
made a part hereof, with the same force and effect as if specifically set forth
herein:

 

(a)                                  Site
Plan - Exhibit
“A”.

(b)                                 Premises
Location - Exhibit “A-1”.

(c)                                  Rules
and Regulations - Exhibit “B”.

(d)                                 [Intentionally
Deleted] - Exhibit “C”.

(e)                                  Shopping
Center Use Restrictions - Exhibit “D”.

(f)                                    Sign
Criteria - Exhibit “E”.

(g)                                 Outline
Specifications - Exhibit “F”.

(h)                                 Commencement
Date Memorandum - Exhibit “G”.

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

 

ARTICLE 23

 

AMERICANS
WITH DISABILITIES ACT

 

In the event that
any alteration or repair to the Premises is undertaken by Tenant with or
without Landlord’s consent, or is undertaken by Landlord at Tenant’s request
during the term of this Lease or any extended term, such alteration or repair
shall (i) be designed and constructed in full compliance with the American’s
With Disabilities Act, as amended from time to time (the “Act”) if such
alteration is undertaken by Tenant, and (ii) shall be designed by Tenant in
full compliance with the Act if such alteration or repair is undertaken by
Landlord at Tenant’s request, and the cost of any such design, alteration or
repair to the Premises or the Shopping Center shall he borne by Tenant,
including without limitation (a) the cost of any such design, alteration or repair
required as a result of (i) Tenant or an assignee or subtenant being deemed a
“Public Accommodation” or the Premises being deemed a “Place of Public
Accommodation” or (ii) such alteration or repair being deemed to affect an
“Area of Primary Function” (as such terms are defined in the Act); and (b) the
cost of the installation or implementation of any “Auxiliary Aid” required
under the Act as a result of the operation of Tenant’s (or any assignee’s or
subtenant’s) business within the Premises. 
In addition, Tenant shall be responsible for all costs and expenses
incurred in order to cause the Premises and the operation of Tenant’s business
within the Premises to comply with the Act, and, if Tenant fails to keep and
maintain the Premises in compliance with the Act Landlord shall have the right
but not the obligation, at Tenant’s sole cost and expense, to enter the
Premises and cause the Premises to be put into compliance with the Act; and
Tenant shall indemnify, defend and hold Landlord harmless from and against any
and all costs, claims and liabilities, including but not limited to the fees of
counsel, arising out of or resulting from Tenant’s failure to maintain and keep
the Premises in compliance with the Act.

 

ARTICLE 24

 

CONSTRUCTION OF LEASEHOLD IMPROVEMENTS

 

24.1                           Leasehold Improvements.  Landlord shall construct and install
interior improvements in the Premises (hereinafter referred to as “Leasehold
Improvements”) for the use and benefit of Tenant, subject to the following
terms and conditions:

 

24.2                           Landlord’s Construction Obligations.  Landlord agrees to construct the Leasehold
Improvements in substantial accordance with the construction outline
specifications attached hereto and

 

32

 

made a part hereof as Exhibit “F” (“Outline
Specifications”).  Landlord shall have
no obligation to construct or install any interior improvements in the Premises
other than as described in the Outline Specifications.

 

24.3                           Final Plans and Specifications.  Landlord agrees to cause final plans and
specifications for the Leasehold improvements to be prepared substantially in
accordance with the Outline Specifications and the applicable building code as
it is presently interpreted and enforced by the governmental bodies having
jurisdiction thereof.  When Landlord
requests Tenant to specify details or layouts, Tenant shall specify same within
five (5) days of Landlord’s request, subject to the provisions of the Outline
Specifications, so as not to delay completion of the Leasehold
Improvements.  Tenant shall pay to
Landlord all increased costs or damages incurred by Landlord attributable to
delays caused by Tenant, and Tenant shall be responsible for lost rent arising
out of delay in completion of the Leasehold Improvements caused by Tenant.

 

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

 

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

 

24.6                           Tenant’s Representative.  Tenant designates Kirk N. Dowdell as the
representative of Tenant having authority to bind Tenant by signing such
documents and all other notices and directions to Landlord regarding the
Leasehold Improvements and Tenant’s improvements.  Tenant may change its representative from time to time upon
written notice to Landlord.

 

ARTICLE 25

 

MISCELLANEOUS

 

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

 

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

 

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

 

25.4                           Broker.  Except as
may be specifically set forth in the Basic Lease Provisions, Tenant represents
and warrants that it has not had any dealings with any realtors, brokers or
agents in connection with the negotiation of this Lease and agrees to
indemnify, protect, defend (with legal counsel acceptable to Landlord) and hold
Landlord harmless from the failure to pay any realtors, brokers or agents and
from any cost, expense or liability for any compensation, commission or changes
claimed by any other realtors, brokers or agents claiming by, through or on
behalf of it with respect to this Lease and/or the negotiation hereof.  Landlord and Tenant agree that no broker shall
be entitled to any commission in connection with any Renewal Term, as such term
is hereinafter defined, or any expansion of the Premises.

 

25.5                           Estoppel Certificates.  Tenant agrees from time to time, upon not
less than ten (10) days prior written request by Landlord to deliver to
Landlord a statement in writing certifying (i) this Lease is unmodified and in
full force and effect (or it there have been modifications, that the Lease as
modified is in full force and effect and stating the modifications); (ii) the
dates to which the Rent and other charges have been paid; (iii) Landlord is not
in default in any provision of this Lease or, if in default, the nature thereof
specified in detail; (iv) the amount of monthly Rent currently payable by
Tenant; (v) the amount of any prepaid Rent, and (vi) such other matters as may
be reasonably requested by Landlord or any mortgagee or prospective purchaser
of the Shopping Center Tract.

 

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

 

33

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

25.12                     Transfers by Landlord. 
The term “Landlord” as used in this Lease so far as covenants or
obligations on the part of Landlord are concerned, shall be limited to mean and
include only the owner or owners of the Shopping Center Tract at the time in
question, and in the event of any transfer or conveyance, the then grantor
shall be automatically freed and released from all personal liability accruing
from and after the date of such transfer or conveyance as respects the
performance of any covenant or obligation on the part of Landlord contained in
this Lease to be performed, it being intended hereby that the covenants and
obligations contained in this Lease on the part of Landlord shall be binding on
the Landlord, it successors and assigns, only during and in respect to their
respective successive periods of ownership.

 

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

 

25.13                     Headings.  The
marginal or topical headings used in this Lease are for convenience only and do
not define, limit or construe the contents of said Articles.

 

34

 

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

 

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

 

25.16                     Landlord Control.  Landlord shall have the right to close any
portion of the building area or land area to the extent as may, in Landlord’s
reasonable opinion, be necessary to prevent a dedication thereof or the accrual
of any rights to any person or the public therein.  Landlord shall at all times have full control, management and
direction of the Shopping Center Tract, subject to the rights of Tenant in the
Premises, and Landlord reserves the right at any time and from time to time to
reduce, increase, enclose or otherwise change the size, number and location of
buildings, layout and nature of the Shopping Center, the Shopping Center Tract
and the other tenancies, premises and buildings included in the Shopping Center
Tract, to construct additional buildings and additions to any building, to
lease to any parties acceptable to Landlord, and to create additional rentable
areas through use, withdrawal of, and/or enclosure of the Common Area, or otherwise,
to place signs on the Shopping Center Tract, to increase the land size of the
Shopping Center Tract, and to change the name, address, number or designation
by which the Shopping Center is commonly known.  No implied easements are granted by this Lease.  Landlord shall in no event be liable for any
lack of security in respect to the Shopping Center.

 

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

 

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

 

25.19                     Building Rules and Regulations.  Tenant shall perform, observe and comply
with the Rules and Regulations of the Shopping Center Tract as set forth in Exhibit “B”
attached hereto and incorporated herein by reference and as modified from time
to time by Landlord, with respect to the safety, care and cleanliness of the
Premises and the Shopping Center, and the preservation of good order thereon,
and, upon written notice thereof to Tenant, Tenant shall perform, observe, and
comply with any changes, amendments or additions thereto as from time to time
shall be established and deemed advisable by Landlord for tenants of the
Shopping Center Tract.  Landlord shall
not be liable to Tenant for any failure of any other tenant or tenants of the
Shopping Center Tract to comply with such Building Rules and Regulations.

 

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

 

25.21                     Force Majeure. 
Landlord shall incur no liability to Tenant with respect to, and shall
not be responsible for any failure to perform any of Landlord’s obligations
hereunder if such failure is caused by any reason beyond the control of
Landlord including, but not limited to, strike, labor trouble, obtaining of
permits or approvals, governmental rule, regulations, ordinances, statutes or
interpretation, or by fire, earthquake, civil commotion, or failure or
disruption of utility services.  The
amount of time for Landlord to perform any of Landlord’s obligations shall be
extended by the amount of time Landlord is delayed in

 

35

 

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

 

25.22                     Tenant Obligations Survive Termination.  All obligations of Tenant hereunder not
fully performed as of the expiration or earlier termination of the Term of this
Lease shall, survive the expiration or earlier termination of the Term hereof,
including, without limitation, all payment obligations with respect to
Operating Expenses and Taxes all indemnity obligations, and all obligations
concerning the condition of the Premises.

 

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

 

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

 

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

 

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

 

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

 

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

 

25.29                     Attorneys’ Fees.  In the event of any action or proceeding
between Landlord and Tenant arising from or relating to the interpretation or
enforcement of this lease or any default hereunder, the prevailing party in
such action or proceeding shall be entitled to recover from the other party all
of its attorneys’ fees and costs incurred therein, including, without
limitation, any attorneys’ fees and costs incurred on any appeal from the
action or proceeding.

 

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

 

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

 

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

 

36

 

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

 

25.33                     Option to Renew. 
Tenant is hereby granted the option to extend the term of this Lease for
the Renewal Terms described in the Basic Lease Provisions by giving notice of
exercise of the option (“Option Notice”) to Landlord at least two hundred ten
(210) days, but not more than one (1) year, before the expiration of the Basic
Term, or the then current Renewal Term, as the case may be; provided, however,
that if Tenant is in default on the date of giving any such Option Notice or if
Tenant has assigned or sublet the Premises, the Option Notice shall be totally
ineffective, and provided further, that if Tenant is in default on the date
that the Renewal Term would otherwise commence, such Renewal Term at the
election of Landlord shall not commence and this Lease shall expire at the end
of the Basic Term, or at the end of the then current Renewal Term, as the case
may be.  Tenant shall have no other
right to extend the term beyond the specific number of Renewal Terms described
in the Basic Lease Provisions.  During
the Renewal Term(s), all of the terms and provisions contained herein shall
apply.

 

25.34                     Permit Contingency.  Notwithstanding anything to the contrary
contained in this Lease, this Lease and the duties and obligations contained
herein are contingent upon Landlord obtaining all necessary permits to proceed
with the construction of the building in which the Premises is to be located in
accordance with Exhibit “A-1”.  In the
event that Landlord does not obtain such permits on or before December 31,
2002, then this Lease shall terminate and neither party shall have any further
obligations hereunder unless otherwise agreed to in writing by Landlord and
Tenant.

 

25.35                     ATM.  Subject to the terms and conditions
hereinafter provided, Tenant has the right to install, operate and maintain, at
Tenant’s sole cost, expense and risk, one (1) automated teller machine (“ATM”)
and reasonable additions, substitutes and technological successors therefor, at
the exterior Premises location reasonably approved in advance by Landlord;
provided, however,  that Tenant shall
obtain all necessary governmental and other approvals required therefor prior
to any such installation, operation and maintenance.  The ATM will be deemed part of the Premises for all purposes of
this Lease.  Notwithstanding anything to
the contrary contained in this Lease, Tenant will be permitted to install and
maintain, at Tenant’s sole cost and expense, and subject to Tenant obtaining
all necessary governmental and other approvals required therefor, reasonable
illuminated signage as part of Tenant’s ATM, which signage shall (i) be
installed in accordance with good engineering practice, (ii) comply with the
Sign Criteria for the Shopping Center, attached hereto as Exhibit “E” and (iii) be
subject to Landlord’s reasonable approval, including the manner of installation
thereof.  Upon termination of this
Lease, Tenant shall, at Tenant’s sole cost and expense, remove the ATM and
restore the exterior of the Premises to the condition that existed immediately
prior to Tenant’s installation of such ATM.

 

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

 

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

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OPUS WEST CORPORATION, a Minnesota

  corporation

  	
   

  	
  WESTERN SIERRA NATIONAL BANK, a national

  banking association

  
	
   

  	
   

  	
   

  
	
   

  
	
  By

  	
  /s/ Thomas W. Roberts

  	
   

  	
  By

  	
  /s/ Kirk N.
  Dowdell

  	 

	
  Name:

  	
  Thomas W. Roberts

  	
   

  	
  Name:

  	
  Kirk N. Dowdell

  
	
  Title:

  	
  President

  	
   

  	
  Title:

  	
  President/CEO

  	 

												

 

37

 

08/05/02

 

FIRST AMENDMENT TO SHOPPING CENTER LEASE

 

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

 

WITNESSETH:

 

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

 

WHEREAS, the
parties desire to modify the Lease as hereinafter set forth in this First
Amendment.

 

NOW, THEREFORE, in
consideration of the premises herein contained and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:

 

1.               The terms and
provisions of this First Amendment shall be effective on the date of this First
Amendment.  All capitalized terms used
in this First Amendment, unless otherwise defined herein, shall have the same
meanings given to them in the Lease.

 

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

 

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

 

4.               Except as otherwise
expressly modified in this First Amendment, the terms and conditions of the
Lease are and shall remain in full force and effect.  In the event of any conflict or inconsistency between the terms
and provisions of the Lease and the terms and provisions of this First
Amendment, the terms and provisions of this First Amendment shall govern and
control.

 

5.               This First
Amendment may be executed in any number of counterparts, all of which together
shall be deemed to constitute one instrument, and each of which shall be deemed
an original.

 

IN WITNESS
WHEREOF, the parties have executed this First Amendment to Shopping Center
Lease as of the day and year first above written.

 

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OPUS WEST CORPORATION, a Minnesota

  corporation

  	
   

  	
  WESTERN SIERRA NATIONAL BANK, a national

  banking association

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
  /s/ Kirk N.
  Dowdell

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
  Kirk N. Dowdell

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
  President/CEO

  
											

 

38

 

EXHIBIT “A-1”

 

PREMISES
LOCATION AND

BUILDING
ELEVATIONS

 

[SEE ATTACHED PAGES.]

 

A-1-1

 

EXHIBIT “F”

 

OUTLINE
SPECIFICATIONS

 

Outline Specifications For Broadstone
Plaza

Retail Shops Pad 9 Lease
Exhibit

Prepared
by Opus West Construction Corporation

April
16, 2002

 

1. Shell Building Structure

 

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

 

1.2               Enclosure: Exterior
building skin to be E.I.F.S.  All
exterior glazing shall be tempered as required by code. Storefront aluminum to
match remaining center.

 

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

 

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

 

1.5
          Interior
Partitions: None provided.

 

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

 

1.7
          Roof Access: Roof access ladder and roof hatch will be
provided in electrical room. Access to electrical room to be coordinated with
Landlord’s property manager.

 

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

 

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

 

2. Interior Improvements

 

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

 

2.2             Ceilings: None
included. Acoustical ceiling tile and grid shall be Tenant’s responsibility.

 

2.3
          Lighting:
No interior lighting will be provided.

 

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

 

3. Sanitary Facilities

 

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

 

H-1

 

4. Utilities

 

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

 

4.2             Fire Sprinkler/Fire
Alarm: A complete shell building fire sprinkler system, designed and installed
in accordance with the local jurisdiction, shall be provided by Landlord.
Monitoring of the shell building fire sprinkler system only shall be provided
by the Landlord. Additional fire protection, fire sprinkler monitoring, and/or
smoke alarm systems required for Tenant’s build-out shall be the sole
responsibility of the Tenant.

 

Duct smoke
detectors to be provided by Tenant.

 

4.3             Electrical: Landlord
shall provide a 120/208 volt, 3 phase 4 wire electric service. Landlord will
provide five (5) 225 amp sub-panels with circuit breaker(s) for shell building
HVAC unit(s) only. Panels shall be located in accordance with Landlord’s shell
building plans. All additional circuit breakers & panels to be provided by
Tenant. Electric service shall be separately metered. The metering costs and
meter installations shall be the Tenant’s responsibility. Landlord shall
provide five (5) junction boxes at exterior signage locations with an empty
conduit & pull string stubbed to plenum area at front of premises for
future sign installations by Tenant. No additional electrical distribution is
included.

 

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

 

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

 

5. Fees & Permits

 

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

 

5.2             Permits &
Licenses: Landlord shall provide all shell building permits & licenses
required by the local jurisdiction for the construction of the shell building
improvements. Tenant shall be responsible for the permitting of all tenant
improvements beyond the Landlord provided shell improvements including, but not
limited to, tenant improvement permit, health department permit, business
license, or additional permits or licenses associated with the Tenant’s
intended use of the premises.

 

 

6. Other

 

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

 

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

 

End of Outline Specification

 

H-2Exhibit
10.26

 

CREDIT AGREEMENT

 

THIS AGREEMENT is entered into as of April 10, 2003,
by and between WESTERN SIERRA BANCORP, a California corporation (“Borrower”),
and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”).

 

RECITALS

 

Borrower has requested that Bank extend or continue
credit to Borrower as described below, and Bank has agreed to provide such
credit to Borrower on the terms and conditions contained herein.

 

NOW, THEREFORE, for valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Bank and Borrower
hereby agree as follows:

 

ARTICLE I

CREDIT TERMS

 

SECTION 1.1.        LINE
OF CREDIT.

 

(a)           Line
of Credit.  Subject to the terms and
conditions of this Agreement, Bank hereby agrees to make advances to Borrower
from time to time up to and including April 7, 2004, not to exceed at any time
the aggregate principal amount of Seven Million Dollars ($7,000,000.00) (“Line
of Credit”), the proceeds of which shall be used for Borrower’s working capital
purposes.  Borrower’s obligation to repay
advances under the Line of Credit shall be evidenced by a promissory note
substantially in the form of Exhibit A attached hereto (“Line of Credit Note”),
all terms of which are incorporated herein by this reference.

 

(b)           Borrowing
and Repayment.  Borrower may from
time to time during the term of the Line of Credit borrow, partially or wholly
repay its outstanding borrowings, and reborrow, subject to all of the
limitations, terms and conditions contained herein or in the Line of Credit
Note; provided however, that the total outstanding borrowings under the Line of
Credit shall not at any time exceed the maximum principal amount available
thereunder, as set forth above.

 

SECTION 1.2.        INTEREST/FEES.

 

(a)           Interest.  The outstanding principal balance of the Line
of Credit shall bear interest at the rate of interest set forth in the Line of
Credit Note.

 

(b)           Computation
and Payment.  Interest shall be
computed on the basis of a 360-day year, actual days elapsed.  Interest shall be payable at the times and
place set forth in each promissory note or other instrument or document
required hereby.

 

(c)           Commitment
Fee.  Borrower shall pay to Bank a
non-refundable commitment fee for the Line of Credit equal to $17,500.00, which
fee shall be due and payable in full upon the execution of this agreement.

 

	
  I:T1/Corr Bkg. –West/CA /#5171/cbsc/Western Sierra

  Bancorp.C-202CS_CA.DOC (Rev. 08/02) (Mod. – MG)

  OBGR #83 0940 5464      AU #5171

  	
  

  

 

1

 

 

(d)           Unused
Commitment Fee.  Borrower shall pay
to Bank a fee equal to five hundredths of one percent (0.05%) per annum
(computed on the basis of a 360-day year, actual days elapsed) on the average
daily unused amount of the Line of Credit, which fee shall be calculated on a
quarterly basis by Bank and shall be due and payable by Borrower in arrears
within ten (10) days after each billing is sent by Bank.

 

ARTICLE II

REPRESENTATIONS AND
WARRANTIES

 

Borrower makes the following representations and
warranties to Bank, which representations and warranties shall survive the
execution of this Agreement and shall continue in full force and effect until
the full and final payment, and satisfaction and discharge, of all obligations
of Borrower to Bank subject to this Agreement.

 

SECTION 2.1.        LEGAL
STATUS.  Borrower is a corporation, duly
organized and existing and in good standing under the laws of the State of
California, and is qualified or licensed to do business (and is in good
standing as a foreign corporation, if applicable) in all jurisdictions in which
such qualification or licensing is required or in which the failure to so
qualify or to be so licensed could have a material adverse effect on Borrower.

 

SECTION 2.2.        AUTHORIZATION
AND VALIDITY.  This Agreement and each
promissory note, contract, instrument and other document required hereby or at
any time hereafter delivered to Bank in connection herewith (collectively, the
“Loan Documents”) have been duly authorized, and upon their execution and
delivery in accordance with the provisions hereof will constitute legal, valid
and binding agreements and obligations of Borrower or the party which executes
the same, enforceable in accordance with their respective terms.

 

SECTION 2.3.        NO
VIOLATION.  The execution, delivery and
performance by Borrower of each of the Loan Documents do not violate any
provision of any law or regulation, or contravene any provision of the Articles
of Incorporation or By-Laws of Borrower, or result in any breach of or default
under any contract, obligation, indenture or other instrument to which Borrower
is a party or by which Borrower may be bound.

 

SECTION 2.4.        LITIGATION.  There are no pending, or to the best of
Borrower’s knowledge threatened, actions, claims, investigations, suits or
proceedings by or before any governmental authority, arbitrator, court or
administrative agency which could have a material adverse effect on the
financial condition or operation of Borrower other than those disclosed by
Borrower to Bank in writing prior to the date hereof.

 

SECTION 2.5.        CORRECTNESS
OF FINANCIAL STATEMENT.  The financial
statement of Borrower dated September 30, 2002, a true copy of which has been
delivered by Borrower to Bank prior to the date hereof, (a) is complete and
correct and presents fairly the financial condition of Borrower, (b) discloses
all liabilities of Borrower that are required to be reflected or reserved
against under generally accepted accounting principles, whether liquidated or
unliquidated, fixed or contingent, and (c) has been prepared in accordance with
generally accepted accounting principles consistently applied.  Since the date of such financial statement
there has been no material adverse change in the financial condition of
Borrower, nor has Borrower mortgaged, pledged, granted a security interest in
or otherwise encumbered any of its assets or properties except in favor of Bank
or as otherwise permitted by Bank in writing.

 

 

2

 

SECTION 2.6.        INCOME
TAX RETURNS.  Borrower has no knowledge
of any pending assessments or adjustments of its income tax payable with
respect to any year.

 

SECTION 2.7.        NO
SUBORDINATION.  There is no agreement,
indenture, contract or instrument to which Borrower is a party or by which
Borrower may be bound that requires the subordination in right of payment of
any of Borrower’s obligations subject to this Agreement to any other obligation
of Borrower.

 

SECTION 2.8.        PERMITS,
FRANCHISES.  Borrower possesses, and
will hereafter possess, all permits, consents, approvals, franchises and
licenses required and rights to all trademarks, trade names, patents, and
fictitious names, if any, necessary to enable it to conduct the business in
which it is now engaged in compliance with applicable law.

 

SECTION 2.9.        ERISA.  Borrower is in compliance in all material
respects with all applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended or recodified from time to time (“ERISA”);
Borrower has not violated any provision of any defined employee pension benefit
plan (as defined in ERISA) maintained or contributed to by Borrower (each, a
“Plan”); no Reportable Event as defined in ERISA has occurred and is continuing
with respect to any Plan initiated by Borrower; Borrower has met its minimum
funding requirements under ERISA with respect to each Plan; and each Plan will
be able to fulfill its benefit obligations as they come due in accordance with
the Plan documents and under generally accepted accounting principles.

 

SECTION 2.10.      OTHER
OBLIGATIONS.  Borrower is not in default
on any obligation for borrowed money, any purchase money obligation or any
other material lease, commitment, contract, instrument or obligation.

 

ARTICLE III

CONDITIONS

 

SECTION 3.1.        CONDITIONS
OF INITIAL EXTENSION OF CREDIT.  The
obligation of Bank to extend any credit contemplated by this Agreement is
subject to the fulfillment to Bank’s satisfaction of all of the following
conditions:

 

(a)           Approval
of Bank Counsel.  All legal matters
incidental to the extension of credit by Bank shall be satisfactory to Bank’s
counsel.

 

(b)           Documentation.  Bank shall have received, in form and
substance satisfactory to Bank, each of the following, duly executed:

 

(i)        This Agreement and each promissory note
or other instrument or document required hereby.

(ii)       Corporate Resolution Borrowing.

(iii)      Certificate of Incumbency.

(iv)      Such other documents as Bank may require
under any other Section of this Agreement.

 

(c)           Financial
Condition.  There shall have been no
material adverse change, as determined by Bank, in the financial condition or
business of Borrower, nor any material decline,

 

 

3

 

as determined by Bank, in the market value of any collateral required
hereunder or a substantial or material portion of the assets of Borrower.

 

SECTION 3.2.        CONDITIONS
OF EACH EXTENSION OF CREDIT.  The
obligation of Bank to make each extension of credit requested by Borrower
hereunder shall be subject to the fulfillment to Bank’s satisfaction of each of
the following conditions:

 

(a)           Compliance.  The representations and warranties contained
herein and in each of the other Loan Documents shall be true on and as of the
date of the signing of this Agreement and on the date of each extension of
credit by Bank pursuant hereto, with the same effect as though such
representations and warranties had been made on and as of each such date, and
on each such date, no Event of Default as defined herein, and no condition,
event or act which with the giving of notice or the passage of time or both would
constitute such an Event of Default, shall have occurred and be continuing or
shall exist.

 

(b)           Documentation.  Bank shall have received all additional
documents which may be required in connection with such extension of credit.

 

ARTICLE IV

AFFIRMATIVE COVENANTS

 

Borrower covenants that so long as Bank remains
committed to extend credit to Borrower pursuant hereto, or any liabilities
(whether direct or contingent, liquidated or unliquidated) of Borrower to Bank
under any of the Loan Documents remain outstanding, and until payment in full
of all obligations of Borrower subject hereto, Borrower shall, unless Bank
otherwise consents in writing:

 

SECTION 4.1.        PUNCTUAL
PAYMENTS.  Punctually pay all principal,
interest, fees or other liabilities due under any of the Loan Documents at the
times and place and in the manner specified therein.

 

SECTION 4.2.        ACCOUNTING
RECORDS.  Maintain adequate books and
records in accordance with generally accepted accounting principles
consistently applied, and permit any representative of Bank, at any reasonable
time, to inspect, audit and examine such books and records, to make copies of
the same, and to inspect the properties of Borrower.

 

SECTION 4.3.        FINANCIAL
STATEMENTS.  Provide to Bank all of the
following, in form and detail satisfactory to Bank:

 

(a)           not
later than 90 days after and as of the end of each fiscal year, an audited
consolidated financial statement of Borrower, prepared by a certified public
accountant, to include balance sheet, income statement and statement of cash
flow;

 

(b)           not
later than 45 days after and as of the end of each calendar quarter, a
consolidated financial statement of Borrower and each Bank Subsidiary, with a
separate unconsolidated financial statement of Borrower alone, prepared by
Borrower, to include balance sheet, income statement and statement of cash
flow;

 

(c)           contemporaneously
with each annual and quarterly financial statement of Borrower required hereby,
a compliance certificate of the president or chief financial officer of

 

 

4

 

Borrower that said financial statements are accurate, that there exists
no Event of Default nor any condition, act or event which with the giving of
notice or the passage of time or both would constitute an Event of Default, and
demonstrating compliance with the financial covenants contained in this
Agreement;

 

(d)           as
soon as available, and in any event within 45 days after the end of each
calendar quarter, the complete Call Report prepared by each Bank Subsidiary at
the end of such calendar quarter in compliance with the requirements of any
federal or state regulatory agency which has authority to examine Borrower, all
prepared in accordance with the requirements imposed by the applicable
regulatory authorities and applied on a basis consistent with the accounting
practices reflected in any previous Call Report(s) and similar statements
delivered to Bank prior to the date of this Agreement;

 

(e)           as
soon as available, and in any event no later than 45 days after the end of each
fiscal quarter, the complete Parent Company Only Financial Statements for Bank
Holding Companies (FRY-9LP) required to be filed by Borrower quarterly with the
Federal Reserve Bank in the applicable Federal Reserve District;

 

(f)            as
soon as available (but without duplication of any other requirements set forth
in this Section 4.3) a copy of all reports which are required by law to be
furnished to any regulatory authority having jurisdiction over Borrower or any
Bank Subsidiary (including without limitation Call Reports, but excluding any
report which applicable law or regulation prohibits Borrower or a Bank
Subsidiary from furnishing to Bank);

 

(g)           from
time to time such other information as Bank may reasonably request.

 

SECTION 4.4.        COMPLIANCE.  Preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; and comply with the provisions of all documents
pursuant to which Borrower is organized and/or which govern Borrower’s
continued existence and with the requirements of all laws, rules, regulations
and orders of any governmental authority applicable to Borrower and/or its
business.

 

SECTION 4.5.        INSURANCE.  Maintain and keep in force insurance of the
types and in amounts customarily carried in lines of business similar to that
of Borrower, including but not limited to fire, extended coverage, public
liability, flood, property damage and workers’ compensation, with all such
insurance carried with companies and in amounts satisfactory to Bank, and
deliver to Bank from time to time at Bank’s request schedules setting forth all
insurance then in effect.

 

SECTION 4.6.        FACILITIES.  Keep all properties useful or necessary to
Borrower’s business in good repair and condition, and from time to time make
necessary repairs, renewals and replacements thereto so that such properties
shall be fully and efficiently preserved and maintained.

 

SECTION 4.7.        TAXES
AND OTHER LIABILITIES.  Pay and
discharge when due any and all indebtedness, obligations, assessments and
taxes, both real or personal, including without limitation federal and state
income taxes and state and local property taxes and assessments, except such
(a) as Borrower may in good faith contest or as to which a bona fide dispute
may arise, and (b) for which Borrower has made provision, to Bank’s
satisfaction, for eventual payment thereof in the event Borrower is obligated
to make such payment.

 

 

5

 

SECTION 4.8.        LITIGATION.  Promptly give notice in writing to Bank of
any litigation pending or threatened against Borrower.

 

SECTION 4.9.        BORROWER’S
FINANCIAL CONDITION.  Maintain
Borrower’s consolidated financial condition as follows using generally accepted
accounting principles consistently applied and used consistently with prior
practices:

 

(a)           Consolidated
Tangible Net Worth not at any time less than $41,000,000.00, determined as of
each fiscal quarter end, with “Tangible Net Worth” defined as the aggregate of
total stockholders’ equity plus subordinated debt less any intangible assets.

 

(b)           The
ratio of investment in Bank Subsidiaries to Consolidated Equity less goodwill
for the Borrower not greater than 1.35 to 1.0, determined as of each fiscal
quarter end, with “Investment in Bank Subsidiaries” and “Consolidated Equity”
as reported in the then most recent Parent Company Only Financial Statements
for Bank Holding Companies (FRY-9LP).

 

SECTION 4.10       BANK
SUBSIDIARY FINANCIAL CONDITION.  Cause
Western Sierra National Bank (“WSNB”) to maintain its financial condition as
follows using generally accepted accounting principles consistently applied and
used consistently with prior practices (except to the extent modified by the
definitions herein):

 

(a)           ROA
not less than 1% on a rolling four quarter basis, determined as of each fiscal
quarter end, with “ROA” defined as the percentage arrived at by dividing net
income by Total Assets, as reported in the most recent Call Report.

 

SECTION 4.11       BORROWER
AND BANK SUBSIDIARIES FINANCIAL CONDITION. 
Cause the Borrower and the Bank Subsidiaries, (except as to
sub-paragraphs (b) and (c) below whereby it applies to Borrower and WSNB), as
more specifically set forth below, to maintain their consolidated financial
condition as follows using generally accepted accounting principles
consistently applied and used consistently with prior practices (except to the
extent modified by the definitions herein):

 

(a)           Leverage
Ratio:  Ratio of Tier 1 Capital to Total
Adjusted Assets for the Borrower and the Bank Subsidiaries on a consolidated
basis, of not less than (i) 6%, determined as of each fiscal quarter end or
(ii) the minimum ratio required by any regulatory agency having authority over
the applicable Bank Subsidiary, whichever is greater, with “Tier 1 Capital”
defined as set forth in Section 38 of the Federal Deposit insurance Act and in
12 C.F.R. Part 325, Subparts A and B, and with “Total Adjusted Assets” to be
construed in conformity with the Federal Reserve Board’s definition of
‘adjusted total assets’ referred to by that agency as ‘average total
consolidated assets which provides for the elimination of goodwill and other
disallowed intangible assets’.

 

(b)           Allowance
for loan and lease losses for the Borrower on a consolidated basis, and WSNB on
an individual basis, not less than 100% of the total amount of Non-Performing
Assets, determined as of each fiscal quarter end, with “Non-Performing Assets”
defined as the sum of: (i) all loans classified as past due 90 days or more and
still accruing interest; (ii) all loans classified as ‘non-accrual’ and no
longer accruing interest; (iii) all loans classified as ‘restructured loans and
leases’; and (iv) all other ‘non-performing assets’, including those classified
as ‘other real estate owned’ and ‘repossessed property’, as reported in the
then most recent Call Report.

 

 

6

 

(c)           Non-Performing
Assets not greater than 10% of Primary Equity Capital, for the Borrower on a
consolidated basis, and WSNB on an individual basis, determined as of each
fiscal quarter end, with “Non-Performing Assets” as defined above, and with
“Primary Equity Capital” defined as the aggregate of allowance for loan and
lease losses, as reported in the then most recent Call Report, plus Equity
Capital defined as the aggregate of perpetual preferred stock (and related
surplus), common stock, surplus (excluding all surplus related to perpetual
preferred stock), undivided profits and capital reserves, plus the net
unrealized holding gains (or less the net realized holding losses) on
available-for-sale securities, less goodwill and other disallowed intangible
assets).

 

(d)           Borrower
on a consolidated basis, and for each Bank Subsidiary on an individual basis,
must maintain its categorization as Well Capitalized as defined by regulatory
agencies having jurisdiction, which, pursuant to Section 38 of the Federal
Deposit Insurance Act (created by Section 131 of the Federal Deposit Insurance
Corporation Improvement Act (FDICIA) of 1991) (entitled “Prompt Corrective
Action”) (herein, “Section 38”), considers an institution “Well Capitalized”,
among other things, if its Total Risk-Based Capital Ratio equals or exceeds
10%, its Tier 1 Risk-Based Capital equals or exceeds 6% and its Leverage equals
or exceeds 5%, except of Borrower on a consolidated basis, when its Leverage
equals or exceeds 6%.  As used herein,
“Total Risk-Based Capital Ratio”, “Tier 1 Risk-Based Capital” and “Leverage”
shall be defined and calculated in conformity with Section 38.

 

SECTION 4.12. 
NOTICE TO BANK.  Promptly (but in
no event more than five (5) days after the occurrence of each such event or
matter) give written notice to Bank in reasonable detail of:  (a) the occurrence of any Event of Default,
or any condition, event or act which with the giving of notice or the passage
of time or both would constitute an Event of Default; (b) any change in the
name or the organizational structure of Borrower; (c) the occurrence and nature
of any Reportable Event or Prohibited Transaction, each as defined in ERISA, or
any funding deficiency with respect to any Plan; (d) any termination or
cancellation of any insurance policy which Borrower is required to maintain, or
any uninsured or partially uninsured loss through liability or property damage,
or through fire, theft or any other cause affecting Borrower’s property in
excess of an aggregate of $1,000,000.00; (e) any change in Executive Management
of Borrower or of any Bank Subsidiary with “Executive Management” defined as
the President/Chief Executive Officer, or Executive Vice President/Chief
Operating Officer, or Executive Vice President/Chief Financial Officer; or (f)
any negotiations to sell any capital stock of Borrower and/or any Bank
Subsidiary, together with copies of any proposed buy/sell agreements; provided
however, that this clause shall not be deemed approval by Bank of any such
negotiation and shall not apply to information which under applicable law or
regulation is prohibited from disclosure to Bank.

 

ARTICLE V

NEGATIVE COVENANTS

 

Borrower further covenants that so long as Bank
remains committed to extend credit to Borrower pursuant hereto, or any
liabilities (whether direct or contingent, liquidated or unliquidated) of
Borrower to Bank under any of the Loan Documents remain outstanding, and until
payment in full of all obligations of Borrower subject hereto, Borrower will
not without Bank’s prior written consent:

 

SECTION 5.1.        USE
OF FUNDS.  Use any of the proceeds of
any credit extended hereunder except for the purposes stated in Article I
hereof.

 

 

7

 

SECTION 5.2.        OTHER
INDEBTEDNESS.  Create, incur, assume or
permit to exist any indebtedness or liabilities resulting from borrowings,
loans or advances, whether secured or unsecured, matured or unmatured,
liquidated or unliquidated, joint or several, except (a) the liabilities of
Borrower to Bank, and (b) any other liabilities of Borrower existing as of, and
disclosed to Bank prior to, the date hereof.

 

SECTION 5.3.        MERGER,
CONSOLIDATION, TRANSFER OF ASSETS. 
Merge into or consolidate with any other entity without Bank’s written
consent, not to be unreasonably withheld; make any substantial change in the
nature of Borrower’s business as conducted as of the date hereof; acquire all
or substantially all of the assets of any other entity; nor sell, lease,
transfer or otherwise dispose of all or a substantial or material portion of
Borrower’s assets except in the ordinary course of its business.

 

SECTION 5.4.        GUARANTIES.  Guarantee or become liable in any way as
surety, endorser (other than as endorser of negotiable instruments for deposit
or collection in the ordinary course of business), accommodation endorser or
otherwise for, nor pledge or hypothecate any assets of Borrower as security for,
any liabilities or obligations of any other person or entity, except any of the
foregoing in favor of Bank.

 

SECTION 5.5.        LOANS,
ADVANCES, INVESTMENTS.  Make any loans
or advances to or investments in any person or entity, except (i) any of the
foregoing existing as of, and disclosed to Bank prior to, the date hereof, and
(ii) investments consisting of (x) acquisitions of a bank, saving and loan
association or any other depositary institution (a “Financial Entity”) if the
value of the total consolidated assets of such Financial Entity does not exceed
35% of the value of the total consolidated assets of the Borrower prior to
giving effect to such acquisition, (y) acquisitions of an entity other than a
Financial Entity if the value of the total consolidated assets of such entity
does not exceed 10% of the value of the total consolidated assets of the
Borrower prior to giving effect to such acquisition, and (z) investments in a
subsidiary which is established to effect an acquisition permitted by clauses
(x) or (y) above, provided, that, at the time of, and after giving effect to,
such investment, no Event of Default exists.

 

SECTION 5.6.        PLEDGE
OF ASSETS.  Mortgage, pledge, grant or
permit to exist a security interest in, or lien upon, all or any portion of Borrower’s
assets now owned or hereafter acquired, except any of the foregoing in favor of
Bank or which is existing as of, and disclosed to Bank in writing prior to, the
date hereof.

 

Bank shall reply to Borrower’s written request for
consents to mergers, under Section 5.3 or investments under Section 5.5 within
five (5) business days after Bank’s receipt. Thereby failing which, consent
will be deemed to have been given to the requested merger or acquisition.
Borrower shall be the surviving entity of any merger to which Bank’s consent is
given or deemed given.

 

ARTICLE VI

EVENTS OF DEFAULT

 

SECTION 6.1.        The
occurrence of any of the following shall constitute an “Event of Default” under
this Agreement:

 

 

8

 

(a)                                  Borrower
shall fail to pay when due any principal, interest, fees or other amounts
payable under any of the Loan Documents.

 

(b)                                 Any
financial statement or certificate furnished to Bank in connection with, or any
representation or warranty made by Borrower or any other party under this
Agreement or any other Loan Document shall prove to be incorrect, false or
misleading in any material respect when furnished or made.

 

(c)                                  Any
default in the performance of or compliance with any obligation, agreement or
other provision contained herein or in any other Loan Document (other than
those referred to in subsections (a) and (b) above), and with respect to any
such default which by its nature can be cured, such default shall continue for
a period of twenty (20) days from its occurrence.

 

(d)                                 Any
default in the payment or performance of any obligation, or any defined event
of default, under the terms of any contract or instrument (other than any of
the Loan Documents) pursuant to which Borrower or any Bank Subsidiary has
incurred any debt or other liability to any person or entity, including Bank,
with respect to each of the foregoing, the amount in dispute exceeds
$750,000.00.

 

(e)                                  The
filing of a notice of judgment lien against Borrower or any Bank Subsidiary; or
the recording of any abstract of judgment against Borrower or any Bank
Subsidiary in any county in which Borrower or such Bank Subsidiary has an
interest in real property; or the service of a notice of levy and/or of a writ
of attachment or execution, or other like process, against the assets of
Borrower or any Bank Subsidiary; or the entry of a judgment against Borrower or
any Bank Subsidiary, with respect to each of the foregoing, the amount in
dispute exceeds $750,000.00.

 

(f)                                    Borrower
or any Bank Subsidiary shall become insolvent, or shall suffer or consent to or
apply for the appointment of a receiver, trustee, custodian or liquidator of
itself or any of its property, or shall generally fail to pay its debts as they
become due, or shall make a general assignment for the benefit of creditors;
Borrower or any Bank Subsidiary shall file a voluntary petition in bankruptcy,
or seeking reorganization, in order to effect a plan or other arrangement with
creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the
United States Code, as amended or recodified from time to time (“Bankruptcy
Code”), or under any state or federal law granting relief to debtors, whether
now or hereafter in effect; or any involuntary petition or proceeding pursuant
to the Bankruptcy Code or any other applicable state or federal law relating to
bankruptcy, reorganization or other relief for debtors is filed or commenced
against Borrower or any Bank Subsidiary, or Borrower or any Bank Subsidiary
shall file an answer admitting the jurisdiction of the court and the material
allegations of any involuntary petition; or Borrower or any Bank Subsidiary
shall be adjudicated a bankrupt, or an order for relief shall be entered
against Borrower or any Bank Subsidiary by any court of competent jurisdiction
under the Bankruptcy Code or any other applicable state or federal law relating
to bankruptcy, reorganization or other relief for debtors.

 

(g)                                 There
shall exist or occur any event or condition which Bank in good faith believes
impairs, or is substantially likely to impair, the prospect of payment or
performance by Borrower of its obligations under any of the Loan Documents.

 

(h)                                 The
dissolution or liquidation of Borrower or any Bank Subsidiary; or Borrower or
any Bank Subsidiary, or any of their directors, stockholders or members, shall
take action seeking to effect the dissolution or liquidation of Borrower or
such Bank Subsidiary.

 

9

 

(i)                                     The
issuance or proposed issuance against Borrower, or any affiliate of Borrower
(including without limitation, any Bank Subsidiary) of any material informal or
formal administrative action, temporary or permanent, by any federal or state
regulatory agency having jurisdiction or control over Borrower or such
affiliate, such action taking the form of, but not limited to: (A) any informal
or formal directive citing conditions or activities deemed to be unsafe or
unsound or breaches of fiduciary duty or law or regulation; (B) a memorandum of
understanding; (C) a cease and desist order; (D) the termination of insurance
coverage of customer deposits by the Federal Deposit Insurance Corporation; (E)
the suspension or removal of an officer or director, or the prohibition of
participation by any others in the business affairs of Borrower or such
affiliate; (F) any capital maintenance agreement; or (G) any other regulatory
action, agreement or understanding with respect to Borrower or such affiliate.

 

(j)                                     Any
change in ownership during the term of this Agreement of an aggregate of
twenty-five percent (25%) or more of the common stock of Borrower.

 

SECTION 6.2.                       REMEDIES.  Upon the occurrence of any Event of
Default:  (a) all indebtedness of
Borrower under each of the Loan Documents, any term thereof to the contrary notwithstanding,
shall at Bank’s option and without notice become immediately due and payable
without presentment, demand, protest or notice of dishonor, all of which are
hereby expressly waived by each Borrower; (b) the obligation, if any, of
Bank to extend any further credit under any of the Loan Documents shall
immediately cease and terminate; and (c) Bank shall have all rights,
powers and remedies available under each of the Loan Documents, or accorded by
law, including without limitation the right to resort to any or all security
for any credit subject hereto and to exercise any or all of the rights of a
beneficiary or secured party pursuant to applicable law.  All rights, powers and remedies of Bank may
be exercised at any time by Bank and from time to time after the occurrence of
an Event of Default, are cumulative and not exclusive, and shall be in addition
to any other rights, powers or remedies provided by law or equity.

 

ARTICLE VII

MISCELLANEOUS

 

SECTION 7.1.                     NO
WAIVER.  No delay, failure or discontinuance
of Bank in exercising any right, power or remedy under any of the Loan
Documents shall affect or operate as a waiver of such right, power or remedy;
nor shall any single or partial exercise of any such right, power or remedy
preclude, waive or otherwise affect any other or further exercise thereof or
the exercise of any other right, power or remedy.  Any waiver, permit, consent or approval of any kind by Bank of
any breach of or default under any of the Loan Documents must be in writing and
shall be effective only to the extent set forth in such writing.

 

SECTION 7.2.                       NOTICES.  All notices, requests and demands which any
party is required or may desire to give to any other party under any provision
of this Agreement must be in writing delivered to each party at the following
address:

 

	
  BORROWER:

  	
   

  	
  WESTERN SIERRA
  BANCORP

  
	
   

  	
   

  	
  4080 Plaza
  Goldorado Circle

  
	
   

  	
   

  	
  Cameron Park, CA
  95682

  
	
   

  	
   

  	
   

  

10

 

BANK:                                                                WELLS
FARGO BANK, NATIONAL ASSOCIATION

Correspondent Banking Office

707 Wilshire Boulevard, 21st Floor

Los Angeles, CA 90017

 

or to such other address as any party may designate by
written notice to all other parties. 
Each such notice, request and demand shall be deemed given or made as
follows:  (a) if sent by hand delivery,
upon delivery; (b) if sent by mail, upon the earlier of the date of
receipt or three (3) days after deposit in the U.S. mail, first class and
postage prepaid; and (c) if sent by telecopy, upon receipt.

 

SECTION 7.3.                       COSTS,
EXPENSES AND ATTORNEYS’ FEES.  Borrower
shall pay to Bank immediately upon demand the full amount of all payments,
advances, charges, costs and expenses, including reasonable attorneys’ fees (to
include outside counsel fees and all allocated costs of Bank’s in-house
counsel), expended or incurred by Bank in connection with (a) the
negotiation and preparation of this Agreement and the other Loan Documents,
Bank’s continued administration hereof and thereof, and the preparation of any
amendments and waivers hereto and thereto, (b) the enforcement of Bank’s
rights and/or the collection of any amounts which become due to Bank under any
of the Loan Documents, and (c) the prosecution or defense of any action in
any way related to any of the Loan Documents, including without limitation, any
action for declaratory relief, whether incurred at the trial or appellate
level, in an arbitration proceeding or otherwise, and including any of the
foregoing incurred in connection with any bankruptcy proceeding (including
without limitation, any adversary proceeding, contested matter or motion
brought by Bank or any other person) relating to any Borrower or any other
person or entity.

 

SECTION 7.4.                       SUCCESSORS,
ASSIGNMENT.  This Agreement shall be
binding upon and inure to the benefit of the heirs, executors, administrators,
legal representatives, successors and assigns of the parties; provided however,
that Borrower may not assign or transfer its interest hereunder without Bank’s
prior written consent.  Bank reserves
the right to sell, assign, transfer, negotiate or grant participations in all
or any part of, or any interest in, Bank’s rights and benefits under each of
the Loan Documents.  In connection
therewith, Bank may disclose all documents and information which Bank now has
or may hereafter acquire relating to any credit subject hereto, Borrower, any
Bank Subsidiary, or any collateral required hereunder.

 

SECTION 7.5.                       ENTIRE
AGREEMENT; AMENDMENT.  This Agreement
and the other Loan Documents constitute the entire agreement between Borrower
and Bank with respect to each credit subject hereto and supersede all prior
negotiations, communications, discussions and correspondence concerning the
subject matter hereof.  This Agreement
may be amended or modified only in writing signed by each party hereto.

 

SECTION 7.6.                       NO THIRD
PARTY BENEFICIARIES.  This Agreement is
made and entered into for the sole protection and benefit of the parties hereto
and their respective permitted successors and assigns, and no other person or
entity shall be a third party beneficiary of, or have any direct or indirect
cause of action or claim in connection with, this Agreement or any other of the
Loan Documents to which it is not a party.

 

SECTION 7.7.                       TIME.  Time is of the essence of each and every
provision of this Agreement and each other of the Loan Documents.

 

11

 

SECTION 7.8.                       SEVERABILITY
OF PROVISIONS.  If any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or any
remaining provisions of this Agreement.

 

SECTION 7.9.                       COUNTERPARTS.  This Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be deemed to
be an original, and all of which when taken together shall constitute one and
the same Agreement.

 

SECTION 7.10.                 GOVERNING
LAW.  This Agreement shall be governed
by and construed in accordance with the laws of the State of California.

 

SECTION 7.11.                 ARBITRATION.

 

(a)                                  Arbitration.  The parties hereto agree, upon demand by any
party, to submit to binding arbitration all claims, disputes and controversies
between or among them (and their respective employees, officers, directors,
attorneys, and other agents), whether in tort, contract or otherwise arising
out of or relating to in any way (i) the loan and related Loan Documents which
are the subject of this Agreement and its negotiation, execution, collateralization,
administration, repayment, modification, extension, substitution, formation,
inducement, enforcement, default or termination; or (ii) requests for
additional credit.

 

(b)                                 Governing
Rules.  Any arbitration proceeding
will (i) proceed in a location in California selected by the American
Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration
Act (Title 9 of the United States Code), notwithstanding any conflicting choice
of law provision in any of the documents between the parties; and (iii) be
conducted by the AAA, or such other administrator as the parties shall mutually
agree upon, in accordance with the AAA’s commercial dispute resolution
procedures, unless the claim or counterclaim is at least $1,000,000.00
exclusive of claimed interest, arbitration fees and costs in which case the
arbitration shall be conducted in accordance with the AAA’s optional procedures
for large, complex commercial disputes (the commercial dispute resolution
procedures or the optional procedures for large, complex commercial disputes to
be referred to, as applicable, as the “Rules”).  If there is any inconsistency between the terms hereof and the
Rules, the terms and procedures set forth herein shall control.  Any party who fails or refuses to submit to
arbitration following a demand by any other party shall bear all costs and
expenses incurred by such other party in compelling arbitration of any
dispute.  Nothing contained herein shall
be deemed to be a waiver by any party that is a bank of the protections afforded
to it under 12 U.S.C. §91 or any similar applicable state law.

 

(c)                                  No
Waiver of Provisional Remedies, Self-Help and Foreclosure.  The arbitration requirement does not limit
the right of any party to (i) foreclose against real or personal property collateral;
(ii) exercise self-help remedies relating to collateral or proceeds of
collateral such as setoff or repossession; or (iii) obtain provisional or
ancillary remedies such as replevin, injunctive relief, attachment or the
appointment of a receiver, before during or after the pendency of any
arbitration proceeding.  This exclusion
does not constitute a waiver of the right or obligation of any party to submit
any dispute to arbitration or reference hereunder, including those arising from
the exercise of the actions detailed in sections (i), (ii) and (iii) of this
paragraph.

 

(d)                                 Arbitrator
Qualifications and Powers.  Any
arbitration proceeding in which the amount in controversy is $5,000,000.00 or
less will be decided by a single arbitrator selected

 

12

 

according to the Rules, and who shall not render an
award of greater than $5,000,000.00. 
Any dispute in which the amount in controversy exceeds $5,000,000.00
shall be decided by majority vote of a panel of three arbitrators; provided
however, that all three arbitrators must actively participate in all hearings
and deliberations.  The arbitrator will
be a neutral attorney licensed in the State of California or a neutral retired
judge of the state or federal judiciary of California, in either case with a
minimum of ten years experience in the substantive law applicable to the
subject matter of the dispute to be arbitrated.  The arbitrator will determine whether or not an issue is
arbitratable and will give effect to the statutes of limitation in determining
any claim.  In any arbitration
proceeding the arbitrator will decide (by documents only or with a hearing at
the arbitrator’s discretion) any pre-hearing motions which are similar to
motions to dismiss for failure to state a claim or motions for summary
adjudication.  The arbitrator shall
resolve all disputes in accordance with the substantive law of California and
may grant any remedy or relief that a court of such state could order or grant
within the scope hereof and such ancillary relief as is necessary to make
effective any award.  The arbitrator
shall also have the power to award recovery of all costs and fees, to impose
sanctions and to take such other action as the arbitrator deems necessary to
the same extent a judge could pursuant to the Federal Rules of Civil Procedure,
the California Rules of Civil Procedure or other applicable law.  Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction.  The institution and maintenance of an action
for judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.

 

(e)                                  Discovery.  In any arbitration proceeding discovery will
be permitted in accordance with the Rules. 
All discovery shall be expressly limited to matters directly relevant to
the dispute being arbitrated and must be completed no later than 20 days before
the hearing date and within 180 days of the filing of the dispute with the
AAA.  Any requests for an extension of
the discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery
is essential for the party’s presentation and that no alternative means for
obtaining information is available.

 

(f)                                    Class
Proceedings and Consolidations.  The
resolution of any dispute arising pursuant to the terms of this Agreement shall
be determined by a separate arbitration proceeding and such dispute shall not
be consolidated with other disputes or included in any class proceeding.

 

(g)                                 Payment
Of Arbitration Costs And Fees. 
The arbitrator shall award all costs and expenses of the arbitration
proceeding.

 

(h)                                 Miscellaneous.  To the maximum extent practicable, the AAA,
the arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA.  No arbitrator or other party to an
arbitration proceeding may disclose the existence, content or results thereof,
except for disclosures of information by a party required in the ordinary course
of its business or by applicable law or regulation.  If more than one agreement for arbitration by or between the
parties potentially applies to a dispute, the arbitration provision most
directly related to the Loan Documents or the subject matter of the dispute
shall control.  This arbitration
provision shall survive termination, amendment or expiration of any of the Loan
Documents or any relationship between the parties.

 

13

 

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

 

	
  WESTERN SIERRA BANCORP

  	
  WELLS FARGO
  BANK,

  NATIONAL ASSOCIATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/ Gary D. Gall

  	
   

  	
  By: 

  	
  /s/ Azim Rajan

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Azim Rajan

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Vice President

  	
   

  	
   

  
	
  Title: 

  	
  Presidnent/CEO

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
								

 

14

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