Document:

Exhibit 10.21

 

SUB-LEASE

 

BY
THIS AGREEMENT MADE this 26th day of February 2001 at Incline Village,
Nevada

 

Between
(Sub-Lessee): Nevada Security Bank (“Bank”), P.O. Box 6720, Incline Village, NV
89450 and (Sub-Lessor): Pine Castle Entertainment Inc. (“PCE”), a Nevada
Corporation of P.O. Box 3369, Incline Village, Nevada 89450.

 

Sub-Lessee
hereby offer to lease from Sub-Lessor the premises situates in the City of
Incline Village County of Washoe, State of Nevada, described as:

 

Approximately
4,159 square feet located at Northeast end of building located at 910 Tahoe
Boulevard in the Incline / Raleys Shopping Center. (“the “Premises”) Upon the
following term and conditions:

 

1)
TERMS & RENT: Sub-Lessor
demises the above Premises for a term of (5) Five Years, to commence on this
26th day of February 2001, and terminating on June 30, 2005 or sooner
as provided herein at the monthly rental of ($6,238.50) Six Thousand Two
Hundred and Thirty-eight Dollars and 50 cents, payable in equal installments in
advance on the first day of each month for that month’s rental, during the term
of this Agreement. All rental payments shall be made to Sub-Lessor, at the
address specified above. Security Deposit of $7,500.00 required with first
month’s rent at lease signing. 5% late fee if rent not received by Sub-Lessor
by the 10th of each month.

 

2)
USE: Sub-Lessee shall use and occupy the Premises for Commercial Banking. The
Premises shall be used for no other purpose. Sub-Lessor represents that the
Premises may lawfully be used for such purpose.

 

3)
CARE & MAINTENANCE OF PREMISES: Sub-Lessee
acknowledges that the Premises are in good order and repair, unless otherwise
indicated herein. Sub-Lessee shall, at his own expense and at all times,
maintain the Premises in good and safe condition, including plate glass,
electrical wiring, plumbing and heating installations and any other system or
equipment upon the Premises and shall surrender the same, at termination
hereof, in as good condition as received, normal wear and tear expected. Actual
common area maintenance costs, including but not limited to property taxes,
utilities, parking lot, building exterior, roofing, snow removal from parking
lot, exterior lighting, etc., shall be shared monthly based on a Pro Rata share
(41.6% of square footage). Sub-Lessee shall also maintain in good condition
adjacent to the Premises, such as sidewalks, driveways, lawns, and shrubbery,
which would otherwise be required to be maintained by Sub-Lessor. The “Bank”
will be responsible to add heating and air conditioning systems to their leased
portion of the building and to install the appropriate metering systems per
building codes.

 

 

4)
CONDITION OF PREMISES: The
Premises are being Sub-Leased to Nevada Security Bank, and Nevada Security Bank
accepts the Premises in “AS IS, WHERE IS” CONDITION, “WITH ALL FAULTS”,
INCLUDING, BUT NOT LIMITED TO, BOTH LATENT AND PATENT DEFECTS, AND NEVADA
SECURITY BANK SHALL RELY UPON ITS OWN EXAMINATION THEREOF. NO WARRANTIES,
EXPRESS OR IMPLIED, ARE MADE BY PINE CASTLE ENTERTAINMENT CONCERNING THIS
AGREEMENT, THE MASTER SUBLEASE, OR THE LAND, BUILDING, FIXTURES OR OTHER
IMPROVEMENTS SUBJECT TO THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO,
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY.

 

5)
ALTERATIONS: Sub-Lessee shall not,
without first obtaining the written consent of Sub-Lessor and Raley’s make any
alterations, additions, or improvements, in, to or about the Premises. See
Exhibit “A” (Floor Plan layout for construction purposes) for definition of
planned improvements hereby approved by the signing of this Agreement.

 

6)
BANK IMPROVEMENTS: Nevada Security
Bank shall pay for and engage its own contractor to build-out any Nevada
Security Bank improvements. In the event Sub-Lessor or Raley’s refuses to
approve of the necessary physical improvements to the Premises, in order to
operate and function as a Commercial Bank, this Agreement is cancelable by
Sub-Lessee.

 

7)
ORDINANCES & STATUTES: Sub-Lessee
shall comply with all statutes, ordinances and requirements of all municipal,
state and federal authorities now in force, or which may hereafter be in force,
pertaining to the Premises, occasioned by or affecting the use thereof by
Sub-Lessee.

 

8)
ASSIGNMENT & SUBLETTING: Sub-Lessee
shall not assign this Agreement or sublet any portion of the Premises without
written approval from “PCE” and “Raleys”, which consent will not be
unrealistically withheld.

 

9)
MASTER SUB-LEASE: PCE is the
sublessee under a written sublease dated 6/30/1995, wherein Raley’s, a
California Corporation (“Raley’s”) subleased to Total Entertainment LLC, a
California limited liability company which subsequently assigned their interest
to “PCE”, the real property located in Incline Village, Nevada, at 910 Tahoe
Blvd. (“Master Premises”). Said sublease has been amended by the following
amendments: “Amendment to Sublease” dated 6/30/95 between Total Entertainment
LLC and Raley’s; said sublease and amendment are herein collectively called the
“Master Sublease” and are attached hereto as Exhibit “B”.

 

This
Agreement is subject to the provisions of the Master Sublease and all
applicable terms and conditions of the Master Sublease are incorporated into
and made a part of this Agreement as if Sub-Lessor were the lessor thereunder,
Sub-Lessee the lessee thereunder, and the Premises the Master Premises.
Sub-Lessee assumes all the obligations of Sub-Lessor under the Master Sublease
for the Premises.

 

2

 

10)
WARRANTY BY “PCE”: “PCE” warrants
and represents to the “Bank” that “PCE” is not in default or breach of the
provisions of the Master Sublease and that “PCE” has no knowledge of any claim
by Raley’s that “PCE” is in default or breach of the Master Sublease
provisions.

 

11)
OPTIONS: “PCE” has the right and
option to extend the Master Sublease for two consecutive extended terms of five
years each. Provided the “Bank” is not in default under this Agreement, the
“Bank” shall have the right to extend the term of this Agreement for two
consecutive five year periods by giving “PCE” written notice at least 210 days
prior to the expiration of the initial term and each extension thereof,
provided “PCE” is not in default under the Master Sub-Lease and gives Raley’s
written notice to extend pursuant to the conditions under the Master Sub-Lease.
The “Bank” reserves the right to cure any and all defaults of “PCE” regarding
the terms of the Master Sub-Lease. In the event, “PCE” decides not to exercise
either of its two five year options, the “Bank” reserves the right to exercise
“PCE’s” option(s) to extend the Master Sub-Lease pursuant to its terms and
conditions with “PCE”.

 

12)
UTILITIES: All applications and
connections for necessary utility services on the demised Premises shall be
made in the name of the Sub-Lessee only, and Sub-Lessee shall be solely liable
for utility charges as they become due, including those for sewer, water, gas,
electricity, and telephone services.

 

13)
ENTRY & INSPECTION: Sub-Lessee
shall permit Sub-Lessor or Sub-Lessor’s agents, to enter upon the Premises at
reasonable times and upon reasonable notice, for the purpose of inspecting the
same, and will permit Sub-Lessor at any time within one hundred twenty (120)
days prior to the expiration of this Agreement, to place upon the Premises any
usual “To Let” or “For Lease” signs, and permit persons desiring to lease the
same to inspect the Premises thereafter, during normal business hours.

 

14)
POSSESSION: If Sub-Lessor is
unable to deliver possession of the Premises at the commencement hereof,
Sub-Lessor shall not be liable for any damage caused thereby, nor shall this
Agreement be void or voidable, but Sub-Lessee shall not be liable for any rent
until possession is delivered.

 

15)
INDEMNIFICATION OF SUB-LESSOR: Sub-Lessor
shall not be liable for any damage or injury to Sub-Lessee, or any other person
or to any property, occurring on the demised Premises or any part thereof, and
Sub-Lessee agrees to hold Sub-Lessor harmless from any claims for damages, no
matter how caused.

 

16) CANCELLATION/DAMAGES: If Sub-Lessee does not receive FDIC, State of
Nevada and County of Washoe approvals for operation, Sub-Lessee may cancel this
Agreement in writing to Sub-Lessor with the following damages due and payable
immediately to Sub-Lessor:

 

A)          Forfeiture of $7,500.00 Deposit (Paid at
Agreement Signing).

B)            Forfeiture of First Month Rent (Paid at
agreement Signing).

 

3

 

C)            Payment of an additional 2 months rent for
consequential damages to Sub-Lessor due to cancellation by Sub-Lessee.

D)           Restoration of Premises to original condition
if construction is underway or complete; subject to Sub-Lessor’s approval.
Restoration must be completed immediately upon notification of cancellation
with as little business interruption as possible.

 

17)
BANKRUPTCY/INSOLVENCY: Notwithstanding anything to the contrary in
this Agreement, in the event (a) Sub-Lessee or its successors or assignees
shall become insolvent or bankrupt, or it or their interests under this
Agreement shall be levied upon or sold under execution or other legal process,
or (b) the depository institution then operating on the Premises is closed, or
is taken over by any depository institution regulatory authority (“Regulatory
Authority”), Sub-Lessor may, in either such event, terminate this Agreement
only with the concurrence of any Receiver or Liquidator appointed by such
Regulatory Authority, provided that, in the event this Agreement is terminated
by the Receiver or Liquidator, the maximum claim of Sub-Lessor for rent,
damages or indemnity for injury resulting from the termination, rejection or
abandonment of the unexpired Agreement shall in no event be in an amount
greater than all accrued and unpaid rent to the date of termination.

 

18)
INSURANCE: Sub-Lessee, at its expense, shall maintain
plate glass and public liability insurance including bodily injury and property
damage insuring Sub-Lessee and Sub-Lessor with minimum coverage as follows:
$2,000,000 Liability naming Pine Castle Entertainment Inc., John and Donna
Bevel and Raley’s as additionally insured or co-insured. Sub-Lessee shall
provide Sub-Lessor and Raley’s with a Certificate of Insurance showing
Sub-Lessor and Raley’s as additional insured. The Certificate shall provide for
a ten-day written notice to Sub-Lessor and Raley’s in the event of cancellation
or material change of coverage. To the maximum extent permitted by insurance
policies which may be owned by Sub-Lessor or Sub-Lessee, Sub-Lessee and
Sub-Lessor, for the benefit of each other, waive any and all rights of
subrogation which might otherwise exist.

 

19)
ATTORNEY’S FEES: If “PCE” or the “Bank” shall commence any
legal action against the other in connection with this Agreement, the
prevailing party shall be entitled to recover its costs of suit and reasonable
attorney’s fees.

 

20)
OTHER AGREEMENTS

 

A)          Rent shall be adjusted annually based on the
October CPI of San Francisco.

B)            Sub-Lessee shall be responsible for all
plans, permits, construction and related costs to convert existing space into
banking requirements. All costs incurred by Sub-Lessor to accommodate said
changes are the responsibility of Sub-Lessee, including, but not limited to:
lighting, counters, signage, electrical, movie merchandising, etc.

C)            “PCE” extends free rent to “Bank” - 1st month
due at signing, next payment due 5/1/01.

 

21)
FDIC AND OTHER APPROVALS: This Agreement shall be effective upon
receipt of final approvals from the Federal Deposit Insurance Corporation
(FDIC), the State of Nevada and

 

4

 

the
County of Washoe by Nevada Security Bank for the operation of a lending
institution at the subject Premises under this Agreement. Sub-Lessee shall
provide Sub-Lessor with a copy(s) of any and all approvals defined above within
five (5) working days of Sub-Lessee’s receipt thereof.

 

22)
NOTICES: All notices and demands
shall be in writing and shall be sent by U.S. Mail, postage prepaid, to the
“Bank” or to “PCE” at the addressee set forth above.

 

23)
CONFLICTS: As between “PCE” and
the “Bank”, to the extent of any conflict or inconsistency between the terms
and provisions of this Agreement and the Master Sublease, the terms of this
Agreement shall supersede and control.

 

	
  PINE
  CASTLE ENTERTAINMENT INC., A NEVADA CORPORATION:

  
	
   

  
	
  By:

  	
  /s/
  John Bevel

  	
   

  
	
  Title:  President

  
	
  Date:  7-31-01

  
	
   

  
	
  NEVADA
  SECURITY BANK, A NEVADA CORPORATION:

  
	
   

  
	
  By:

  	
  /s/
  Joe Bourdeau.

  	
   

  
	
  Title:  E.V.P.

  
	
  Date:  8-16-01

  

 

5

 

LEASE ADDENDUM

 

Reference: Commercial Sub-Lease Dated January 19, 2001, between Nevada
Citizens Bank and Pine Castle Entertainment Inc. (“PCE”)

 

Change in Name: “Nevada Citizens Bank” is now “Nevada Security Bank”.

 

Amended Footage: Leased square footage is increased to 5,079.

 

Amended Monthlv Rent: New amount is $7,618.50 beginning May 1,
2001.

 

Amended CAM Fees: New amount is 50.8% of actual expenses.

 

New Lavout: Included is Exhibit “A” or copy of Floor Plan dated 3/21/01.

 

Master Sub-Lease: Pine Castle is the sublessee under a written sublease dated 6/30/1995.
wherein Raley’s, a California Corporation (“Sublessor”) subleased to Total
Entertainment LLC, a California limited liability company which subsequently
assigned their interest to “PCE”, the real property located in Incline Village,
Nevada, at 910 Tahoe Blvd. (“Master Premises’’). Said sublease has been amended
by the following amendments: “Amendment to Sublease” dated 6/30/95 between
Total Entertainment LLC and Raley’s; said sublease and amendment are herein
collectively called the “Master Sublease” and are attached hereto as Exhibit
“B”.

 

Pine Castle hereby leases to Nevada Security
Bank (“Bank”) on the terms and conditions set forth in this lease the “Master
Premises” which includes 5,079 square feet and all access and parking
easements, rights and appurtenances therewith.

 

Warrantv Bv “PCE”: “PCE” warrants and represents to the “Bank” that “PCE” is not in
default or breach of the provisions of the Master Sublease and that “PCE” has
no knowledge of any claim by Raley’s that “PCE” is in default or breach of the
Master Sublease provisions.

 

Options: “PCE”has the right and option to extend the Master Sublease for two
consecutive extended terms of five years each, Provided the “Bank” is not in
default under this lease, the “Bank” shall have the right to extend the term of
this lease for two consecutive five year periods by giving “PCE” written notice
at least 210 days prior to the expiration of the initial term and each
extension thereof.

 

Other Lease Provisions: This lease is subject to the provisions of the Master Sublease and are
incorporated into this lease where applicable. Nevada Security Bank assumes the
obligations of “PCE” under the Master Sublease for the square footage leased in
the event “PCE” is in default of payment to Raley’s.

 

 

 

Attornev’s Fees: If “PCE” or the “Bank” shall commence any legal action against the
other in connection with this lease, the prevailing party shall be entitled to
recover its costs of suit and reasonable attorney’s fees.

 

Notices: All notices and demands shall be in writing and shall be sent by U.S.
Mail, postage prepaid, to the “Bank” at the Master Premises and/or to “PCE” at
the Master Premises. Post Office Boxes for both parties are identified on the
original lease form.

 

Conflicts: As between “PCE” and the “Bank”, to the extent of any conflict or
inconsistency between the terms and provisions of this lease and the Master
Sublease, the terms of this lease shall supersede and control.

 

Condition of Premises: The Premises are being Leased to Nevada Security Bank, and Nevada
Security Bank accepts the Premises in “AS IS, WHERE IS” CONDITION, “WITH ALL
FAULTS”, INCLUDING, BUT NOT LIMITED TO, BOTH LATENT AND PATENT DEFECTS, AND
NEVADA SECURITY BANK SHALL RELY UPON ITS OWN EXAMINATION THEREOF. NO
WARRANTIES, EXPRESS OR IMPLIED, ARE MADE BY PINE CASTLE ENTERTAINMENT
CONCERNING THE LEASE, THE MASTER SUBLEASE, OR THE LAND, BUILDING, FIXTURES OR
OTHER IMPROVEMENTS SUBJECT TO THE LEASE, INCLUDING. BUT NOT LIMITED TO,
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR QUALITY.

 

Bank Improvements: Nevada Security Bank shall pay for and engage its own contractor to
build-out any Nevada Security Bank improvements.

 

	
  Pine Castle Entertainment Inc.. a Nevada Corporation:

  
	
   

  
	
  By:

  	
  /s/
  John Bevel

  	
   

  
	
  Title:

  	
  PRESIDENT

  	
   

  
	
  Date:

  	
  3/27/01

  	
   

  
	
   

  
	
  Nevada
  Securitv Bank, a Nevada Corporation:

  
	
   

  
	
  By:

  
	
  Title:

  
	
  Date:

  
	
   

  
	
  Ralev’s,
  a California Corporation

  
	
   

  
	
  By:

  
	
  Title:

  
	
  Date:

  
					

 

2

 

EXHIBIT “B”

 

AMENDMENT TO SUBLEASE

 

Between

RALEY’S,

a
California corporation,

as
Sublessor,

and

TO
T AL ENTERTAINMENT LLC,

a
Nevada Limited Liability Company,

as
Sublessee

 

1.                                       The Sublease between the parties is hereby
incorporated by reference, in haec verba, as though fully set forth herein.

 

2.
Notwithstanding anything contained in the Sublease to the contrary, and
specifically referencing paragraph 3. Minimum Rent. Tenant shall be
entitled to an additional maximum of sixty (60) days wherein Tenant shall not
be obligated to pay any minimum rent, far the purpose of obtaining TRPA
Provisional Approval.”

 

IN
WITNESS WHEREOF, the parties hereto have executed this Amendment to Sublease
effective as of June 30 1995.

 

RALEY’S
, a California Corporation

 

	
  By:

  	
  /s/
  [ILLEGIBLE]

  	
   

  
	
   

  
	
  Title:

  	
  Pres/CEO

  	
   

  
	
   

  
	
  TOTAL
  ENTERTAINMENT LLC, a

  
	
  Nevada
  Limited Liability Company

  
	
   

  
	
  By:

  	
  /s/
  Michael Petragallo

  	
   

  
	
   

  	
  Michael
  Petragallo

  
					

 

 

	
   

  	
  SUBLEASE

  
	
   

  	
   

  
	
   

  	
  Between

  
	
   

  	
   

  
	
   

  	
  RALEY’S,

  
	
   

  	
  a California corporation,

  
	
   

  	
  as Sublessor,

  
	
   

  	
   

  
	
   

  	
  and

  
	
   

  	
   

  
	
   

  	
  TOTAL ENTERTAINMENT LLC,

  
	
   

  	
  a California
  limited liability company,

  as Sublessee

  

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  Premises

  	
   

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Use

  	
   

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Minimum Rent

  	
   

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Tenant Improvements

  	
   

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Term

  	
   

  
	
   

  	
  5.1 Initial Term

  	
   

  
	
   

  	
  5.2 Option Period

  	
   

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Security Deposit

  	
   

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Adjustments

  	
   

  
	
   

  	
  7.1 Calculation of
  Adjustments

  	
   

  
	
   

  	
  7.2 Payment of Adjustments

  	
   

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Uses Prohibited

  	
   

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Compliance with Law

  	
   

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Alterations and Additions

  	
   

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Repairs

  	
   

  
	
   

  	
  11.1   Tenant’s

  	
   

  
	
   

  	
  11.2   Landlord’s
  Repairs

  	
   

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Liens

  	
   

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Assignment and Subletting

  	
   

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Hold Harmless

  	
   

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Subrogation

  	
   

  
	
   

  	
   

  	
   

  
	
  16.

  	
  Liability Insurance

  	
   

  
	
   

  	
   

  	
   

  
	
  17.

  	
  Utilities

  	
   

  
	
   

  	
   

  	
   

  
	
  18.

  	
  Personal Property Taxes

  	
   

  
	
   

  	
   

  	
   

  
	
  19.

  	
  Rules and Regulations

  	
   

  
	
   

  	
   

  	
   

  
	
  20.

  	
  Holding over

  	
   

  
	
   

  	
   

  	
   

  
	
  21.

  	
  Entry By Landlord

  	
   

  
	
   

  	
   

  	
   

  
	
  22.

  	
  Tenant’s Default

  	
   

  

 

i

 

	
  23.

  	
  Remedies in Default

  	
   

  
	
   

  	
   

  	
   

  
	
  24.

  	
  Default by Landlord

  	
   

  
	
   

  	
   

  	
   

  
	
  25.

  	
  Reconstruction

  	
   

  
	
   

  	
   

  	
   

  
	
  26.

  	
  Eminent Domain

  	
   

  
	
   

  	
   

  	
   

  
	
  27.

  	
  Parking and Common Areas

  	
   

  
	
   

  	
   

  	
   

  
	
  28.

  	
  Displays and Signage

  	
   

  
	
   

  	
   

  	
   

  
	
  29.

  	
  Auctions

  	
   

  
	
   

  	
   

  	
   

  
	
  30.

  	
  Hours of Business

  	
   

  
	
   

  	
   

  	
   

  
	
  31.

  	
  Brokers

  	
   

  
	
   

  	
   

  	
   

  
	
  32.

  	
  Hazardous Substances

  	
   

  
	
   

  	
  32.1  Hazardous
  Substances

  	
   

  
	
   

  	
  32.2  Tenant’s
  Restrictions

  	
   

  
	
   

  	
  32.3  Environmental
  Clean-up

  	
   

  
	
   

  	
  32.4  Tenant’s Indemnity

  	
   

  
	
   

  	
   

  	
   

  
	
  33.

  	
  General Provisions

  	
   

  
	
   

  	
  33.1    Plats and Riders

  	
   

  
	
   

  	
  33.2   
  Waiver

  	
   

  
	
   

  	
  33.3    Joint Obligation

  	
   

  
	
   

  	
  33.4    Marginal Headings

  	
   

  
	
   

  	
  33.5    Time

  	
   

  
	
   

  	
  33.6    Successors and Assigns

  	
   

  
	
   

  	
  33.7   
  Recordation

  	
   

  
	
   

  	
  33.8    Quiet Possession

  	
   

  
	
   

  	
  33.9   
  Late Charges

  	
   

  
	
   

  	
  33.10  Prior Agreements

  	
   

  
	
   

  	
  33.11  Inability to Perform

  	
   

  
	
   

  	
  33.12  Partial Invalidity

  	
   

  
	
   

  	
  33.23  Cumulative Remedies

  	
   

  
	
   

  	
  33.14 
  Choice of Law

  	
   

  
	
   

  	
  33.15 
  Attorney Fees

  	
   

  
	
   

  	
  33.16  Subordination. Attornment

  	
   

  
	
   

  	
  33.17 
  Notices

  	
   

  
	
   

  	
  33.18  Tenant’s Statement

  	
   

  
	
   

  	
  33.19 
  Authority

  	
   

  
	
   

  	
  33.20  Negotiated Transaction

  	
   

  
	
   

  	
  33.21  Broker Commission

  	
   

  
	
   

  	
  EXHIBIT A - Legal Description of
  Center

  	
   

  
	
   

  	
  EXHIBIT B - Map of Center Delineating
  Premises

  	
   

  

 

i

 

SUBLEASE

 

RALEY’S,
a California corporation (hereinafter referred to as “Landlord”), and TOTAL
ENTERTAINMENT LLC, a California limited liability company (hereinafter referred
to as “Tenant”), hereby agree as follows:

 

RECITALS

 

A.                                   Landlord
desires to lease to Tenant and Tenant desires to hire from Landlord a portion
of that certain real property (“Center”) described on Exhibit A attached
hereto, including that portion of the building (“Building”) located thereon
pursuant to the following terms and conditions.

 

B.                                     Tenant
acknowledges that pursuant to that certain lease (“Master Lease”) Landlord
leases the Center from Joyce Teel, as Trustee of the Thomas P. Raley Trust
dated March 3, 1987 and that this Lease is subject to the terms and
conditions of the Master Lease, and all other documents of record affecting the
Center.

 

SUBLEASE

 

1.                                       Premises. Subject
to the reservation set forth below in this Section 1, Landlord does hereby
sublease to Tenant and Tenant hereby subleases from Landlord that certain space
(herein called the “Premises”) consisting of approximately ten thousand
(10,000) square feet of floor area in the Building. The location of the
Premises are delineated on Exhibit B attached hereto and incorporated by  reference herein. The Building is
generally known as 910 Tahoe Boulevard, Incline Village, County

 

 

of Washoe, State of Nevada. Tenant has inspected the Premises and is
taking same subject to this Sublease “as is.”

 

This
Sublease is subject to the terms, covenants and conditions herein set forth and
the Tenant covenants as a material part of the consideration for this Sublease
to keep and perform each and all of said terms, covenants and conditions by it
to be kept and performed.

 

Landlord
hereby reserves the right, during the normal business hours of Tenant, to allow
the disabled employees, customers, agents and invitees of the other occupant of
the Building to use the restroom located on the Premises, and the right to
allow Landlord’s employees and agents to enter onto the Premises and have
access to the equipment room (shown on Exhibit B hereto) for inspection,
maintenance, alteration and repair during Tenant’s regular business hours, and
any other time consented to by Tenant, and during any emergency situation after
reasonable attempt has been made to inform Tenant, to the extent practicable
given the emergency situation.

 

2.                                       Use. Tenant
shall use the Premises solely for the purpose of conducting a sales and rental
of video tapes, video games and recorded music business including incidental
sales of prepared food and snacks for on-Premises consumption (from no more
than two thousand five hundred (2,500) square feet of floor area on the
Premises) and related merchandise, and shall not use or permit the Premises to
be used for any other purpose. Landlord makes no representation or warranty
that Tenant is permitted to use the Premises as set forth above. Tenant has

 

2

 

made its own determination that  such
use is or will be legally permissible on the Premises  prior to executing this Sublease and shall have no right to
terminate this Sublease if such determination is not correct, except, Tenant
may terminate this Sublease if Tenant delivers written notice to Landlord on or
prior to sixty (60) days after the effective date of this Sublease stating that
Tenant has failed to obtain the necessary permits and approvals to operate its
business on the Premises from the Tahoe Regional Planning Agency (“TRPA”) and
that it is terminating this Sublease, provided Tenant has diligently pursued
seeking such permits and approvals from TRPA from the effective date of this
Sublease.

 

3.                                       Minimum
Rent. Tenant
agrees to pay to Landlord as, minimum rent, without notice or demand, the
monthly sums identified below, in advance, on or before the first day of each
and every successive month during the term hereof. The rental shall commence
upon the effective date of this Sublease. Rent for any period which is less
than one month shall be a prorated portion of the monthly installment herein
based upon a thirty (30) day month. Said rental shall be paid to Landlord
without deduction or offset, in lawful money of the United States of America
and at such place as Landlord may from time to time designate in writing.

 

3

 

Monthlv Rental Schedule

 

	
  Months

  	
   

  	
  Monthly Rental

  	
   

  
	
  Any first partial month and 1–36* 

  	
   

  	
  $8,000.00

  	
   

  
	
  37–72

  	
   

  	
  $

  	
  10,500.00

  	
   

  
	
  73–96

  	
   

  	
  $

  	
  12,000.00

  	
   

  
	
  37–120

  	
   

  	
  $

  	
  13,500.00

  	
   

  
	
  If options Valid and Exercised

  	
   

  	
   

  	
   

  
	
  121–180

  	
   

  	
  $

  	
  15,525.00

  	
   

  
	
  181–240

  	
   

  	
  $

  	
  17,853.75

  	
   

  

 

*                      Tenant
shall not be obligated to pay any minimum rent for the first one hundred twenty
(120) days of the  initial term of this
Sublease, unless Tenant defaults ij, under this Sublease, in which case the
minimum rent due for such 120-day period shall be due and payable upon such
default.

 

4.                                       Tenant Improvements. Landlord shall provide to Tenant an improvement allowance not
to exceed Two Hundred Fifty Thousand Dollars ($250,000.00) to be applied
towards the cost and expenses of making improvements to the Building and
installing Tenant trade fixtures and equipment in the Premises. Once Tenant
obtains all necessary permits and approvals from TRPA to operate its business
from the Premises and provides Landlord satisfactory evidence of same, Landlord
shall make payment to Tenant of such allowance from time-to-time, but no more
frequently than monthly and only in amounts equal to the amounts identified in
the lien releases provided to Landlord by Tenant from Tenant’s contractors
undertaking such work on the Premises.

 

If
Tenant defaults under this Sublease during the initial 120-month term, then  Tenant shall be obligated to repay

 

4

 

to
Landlord all amounts of the  allowance
paid by Landlord to Tenant hereunder upon such default. If Tenant does not
exercise the first option period to extend the term of this Sublease sixty (60)
months, or during such 60-month period Tenant defaults under this Sublease,
then Tenant shall be obligated to repay to Landlord up to One Hundred Fifty
Thousand Dollars ($150,000.00) of the allowance paid by Landlord to Tenant
hereunder upon the end of the initial term or upon such default, respectively.
If Tenant does not exercise the second option period to extend the term of this
Sublease an additional sixty (60) months, or during such additional 60-month
period Tenant defaults under this Sublease, then Tenant shall. be obligated to
repay to Landlord up to Twenty-Five Thousand Dollars ($25,000.00) of the
allowance paid by Landlord to Tenant hereunder upon the end of the first
60-month option period or upon such default, respectively.

 

5.                                       Term.

 

5.1                                 Initial
Term. The
initial term of this Sublease shall be one hundred twenty (120) full calendar
months, plus any partial month, from the date of this Sublease, unless
otherwise terminated as set forth herein.

 

5.2                                 Option Period. Tenant
is hereby granted the option to extend the term of this Sublease for two
(2)additional periods of sixty (60) months each, unless otherwise terminated hereunder,
pursuant to the terms and conditions of this Sublease. To effectuate the
above-noted option Tenant must not be in default under this Sublease and have
not been in default for the last thirty (30) months of the then current term

 

5

 

of this
Sublease, and deliver written
notice to Landlord of its desire to exercise this option no sooner than twelve
(12) months, and no later than six (6) months, prior to the additional period
to be exercised, otherwise said option shall terminate and this Sublease shall
expire at the end of the then current term.

 

6.                                       Security
Deposit.
Concurrently with Tenant’s execution of this Sublease, Tenant has deposited
with Landlord a sum of Ten Thousand Dollars ($10,000.00). Said sum shall be
held by Landlord as security for the faithful performance by Tenant of all the
terms, covenants and conditions of this Sublease, to be kept and performed by
Tenant during the term hereof. If Tenant defaults with respect to any provision
of this Sublease, including without limitation the provisions relating to the
payment of rent, Landlord may, (but shall not be required to) (use, apply or
retain all or any part of this security deposit for the payment of any rent or
any other sum in default, or for the payment of any amount (including attorney
fees) which Landlord may spend or become obligated to spend by reason of
Tenant’s default, or to compensate Landlord for any other loss or damage which
Landlord may suffer by reason of Tenant’s default. If any portion of said
deposit is so used or applied Tenant shall, within five (5) days after written
demand therefor, deposit cash with Landlord in an amount sufficient to restore
the security deposit to its original amount and Tenant’s failure to do so shall
be a default under this Sublease. Landlord shall not be required to keep this
security deposit separate from its general funds and  Tenant shall not be entitled to interest on such

 

6

 

deposit. If Tenant shall fully and
faithfully perform every provision of this Sublease to be performed by
it, the security deposit or any balance thereof shall be returned to Tenant (or
at Landlord’s option, to the last assignee of Tenant’s interest hereunder)
within ten (10) days following expiration of the Sublease term.

 

7.                                       Adjustments.

 

7.1                                 Calculation
of Adjustments. In
addition to the minimum rent provided in Section 3 hereinabove, and commencing
at  the same
time as any rental commences under this Sublease, Tenant shall pay to Landlord
46.3% of the total cost of the following items (based on Tenant’s total floor
area as it bears to the total leasable area of the Building as a percentage),
herein called Adjustments:

(i)                                     All real
estate taxes and insurance premiums on the Center, including
land, building,
and improvements thereon. Said real estate taxes shall include all real estate
taxes and assessments that are levied upon and/or assessed against the Center,
including any taxes which may be levied on rents. Said insurance shall include
all insurance premiums for fire, extended coverage, liability; and any other
insurance that Landlord deems necessary on the Center.

 

(ii)                                  All costs
to maintain, repair, and replace common areas, parking lots,
sidewalks, driveways, utilities, exterior walls, roof and other areas used in
common by the tenants and subtenants of the Center.

 

7

 

(iii)                               All costs
to supervise and administer said common areas, parking lots, sidewalks,
driveways, utilities (common and Tenant’s pursuant to Section 17 below),
and other areas used in common by the tenants or occupants of the Center. Said
costs shall include such fees as  may be
paid to a third party in connection with same and shall in any event include a fee
to Landlord to supervise and  administer
same in an amount equal to five (5%) percent of the total costs of (ii)
above.

 

(iv)                              Any
parking charges, utilities surcharges, or any other costs levied, assessed or
imposed by, or at the direction of, or resulting from statutes or regulations,
or interpretations thereof, promulgated by any governmental authority in
connection with the use or occupancy of the Center or the parking facilities
serving the Center. 

 

A11
insurance referred to in this Section 7.1 shall be for the benefit of
Landlord.

 

7.2                                                          Payment of Adjustments. Tenant acknowledges that currently, the other occupant of the
Building, Village Hardware, Inc., is acting as the Center Manager and may bill
Tenant on a monthly basis for those Adjustments it causes to be done on the
Center, and that Tenant shall pay such billing within five (5) days after its
receipt thereof. Tenant shall pay Landlord all other Adjustments not billed by
such Center Manager, within five (5) days after Tenant’s receipt of a bill therefor
from Landlord. If Tenant does not challenge the accuracy of any Adjustment
within eighteen (18) months after Tenant’s receipt of

 

8

 

the billing or statement establishing the
Adjustment, then Tenant shall thereafter be estopped from making any claim or
complaint against or challenge to such Adjustment.

 

8.                                       Uses Prohibited.
Tenant shall not do or permit anything to be done in or about the Premises nor
bring or keep anything therein which is not within the permitted use of the
Premises, which will in any way increase the existing rate of or affect any
fire or other insurance upon the Center or any of its contents, or cause a
cancellation of any insurance policy covering the Center or any part thereof or
any of its contents. Tenant shall not do or permit anything to be done in or
about the Premises which will in any way obstruct or interfere with the rights
of other tenants or occupants of the Center or injure or annoy them or use or
allow the Premises to be used for any improper, immoral, unlawful or
objectionable purpose; nor shall Tenant cause, maintain or permit any nuisance
in, on or about the Premises. Tenant shall not commit or allow to be committed
any waste in or upon the Premises.

 

9.                                       Compliance with Law. Tenant shall not use the Premises, or permit anything to be done
in or about the Premises, which will in any way conflict with any law, statute,
ordinance or governmental rule or regulation now in force or which may
hereafter be enacted or promulgated including without limitation those laws
relating to hazardous waste. Tenant shall, at its sole cost and expense,
promptly comply with all laws, statutes, ordinances and governmental rules,
regulations or requirements now in force or which may hereafter be in force and
with the

 

9

 

requirements of any board of
fire underwriters or other similar bodies now or hereafter constituted relating
to or affecting the condition, use or occupancy of the Premises, excluding
structural changes not related to or affected by Tenant’s improvements or acts.
The judgment of any court of competent jurisdiction or the admission of Tenant
in any action against Tenant, whether Landlord be a party thereto or not, that
Tenant has violated any law, statute, ordinance or governmental rule,
regulation or requirement, shall be conclusive of that fact as between the
Landlord and Tenant.

 

10.                                 Alterations and
Additions. Tenant shall not make or allow to be made any alterations,
additions or improvements to or of the Premises or any part thereof without
first obtaining the written consent of Landlord and any alterations, additions
or improvements to or of said Premises, including, but not limited to, wall
covering, paneling and built-in cabinet work, but excepting movable furniture
and trade fixtures, shall at once become a part of the realty and belong to the
Landlord and shall be surrendered with the Premises. In the event Landlord
consents to the making of any alterations, additions or improvements to the
Premises by Tenant, the same shall be made by Tenant at Tenant’s sole cost and
expense in a good workmanlike manner and Tenant shall be responsible to obtain
at Tenant’s expense, all necessary government permits and approvals for same. Upon
the expiration or sooner termination of the term hereof, Tenant shall, upon
written demand  by Landlord, given
at least thirty (30) days prior to the end of the term, at Tenant’s sole

 

10

 

cost and expense, forthwith and
with all due diligence, remove any alterations, additions, or improvements made
by  Tenant, designated by Landlord to be removed, and Tenant shall,
forthwith and with all due diligence, at its sole cost and expense, repair any
damage to the Premises caused by such removal.

 

11.                                 Repairs.

 

11.1                           Tenant’s Repairs. By entry hereunder, Tenant
shall be deemed to have accepted the Premises as being in good, sanitary order,
condition and repair. Tenant shall, at Tenant’s sole cost and expense, keep the
Premises and every part  thereof in good condition and repair (except as hereinafter
provided with respect to Landlord’s obligations) including without limitation,
the maintenance, replacement and repair of any storefront, doors, window
casements, glazing, plumbing, pipes, electrical wiring and conduits, heating
and air conditioning system (when there is an air conditioning system). Tenant
shall, upon the expiration or sooner termination of this Sublease hereof,
surrender the Premises to the Landlord in good condition, broom clean, ordinary
wear and tear excepted. Any damage to adjacent premises caused by Tenant’s use
of the Premises shall be repaired at the sole cost and expense of Tenant.

 

11.2                           Landlord’s Repairs. Notwithstanding the
provisions of Section 11.1 hereinabove, Landlord shall repair and maintain
the structural portions of the Center (however, Tenant shall be responsible for
its  pro rata share of the
maintenance and repair of the exterior walls and the roof as provided in

 

11

 

Section 7.1(ii) above),
unless such maintenance and repairs are caused in part or in whole by the act,
neglect, fault or omission of any duty by the Tenant, its agents, servants,
employees, invitees, or any damage caused by breaking and entering, in which
case Tenant shall pay to Landlord the actual cost of such maintenance and
repairs. Landlord shall not be liable for any failure to make such repairs or
to perform any maintenance unless such failure shall persist for any unreasonable
time after written notice of the need of such repairs or maintenance is given
to Landlord by Tenant. Except as provided in Section 25 hereof, there
shall be no abatement of rent and no liability of Landlord by reason of any
injury to or interference with Tenant’s business arising from the making of any
repairs, alterations or improvements in or to any portion of the Center or the
Premises or in or to fixtures, appurtenances and equipment therein. Tenant
waives the right to make repairs at Landlord’s expense under any law, statute
or ordinance now or hereafter in effect.

 

12.                                 Liens. Tenant shall keep the Premises and the property in which the
Premises are situated free from any liens arising cut of any work performed,
materials furnished or obligations incurred by or on behalf of Tenant. Landlord
may require, at Landlord’s sole option, that Tenant shall provide to Landlord,
at Tenant’s sole cost and expense, a lien and completion bond, by a bonding
company acceptable to Landlord, in an amount equal to one and one-half (1- 1/2)
times the estimated cost of any improvements, additions, or alterations in the
Premises which the Tenant desires to make, to insure Landlord against

 

12

 

any liability for mechanics’
and materialmen’s liens and to insure completion of the work.

 

13.                                 Assignment and
Subletting. Tenant shall not either voluntarily, or by operation of law,
assign, transfer, mortgage, pledge, hypothecate or encumber this sublease or
any interest therein, and shall not sublet the said Premises or any part
thereof, or any right or privilege appurtenant thereto, or allow any other
person (the employees, agents, servants and invitees of Tenant excepted) to
occupy or use the said Premises, or any portion thereof, without first
obtaining the written consent of Landlord, which consent may be withheld at
Landlord’s sole discretion; however, Landlord shall not unreasonably withhold
its consent to any sublease by Tenant to a food vendor to operate a food and
snack business for on-sites consumption, provided the subleased area does not
exceed two thousand five hundred (2,500) square feet of the Premises and there
is no separate entrance into such subleased area from outside the Building that
does not allow access to the rest of the Premises and such food vendor operates
its business only while Tenant’s business is open to the public. A consent to
one assignment, subletting, occupation or use by any other person shall not be
deemed to be a consent to any subsequent assignment, subletting, occupation or
use by another person. Consent to any such assignment or subletting shall in no
way relieve Tenant of any liability under this Sublease. Any such assignment or
subletting without such consent shall be void, and shall, at the option of

 

13

 

the Landlord, constitute  a default under the terms of this
Sublease.

 

In the event that
Landlord shall consent to a sublease or assignment hereunder, Tenant shall pay
Landlord reasonable costs and attorney fees, incurred in connection with the
processing of documents necessary to give such consent.

 

14.                                 Hold Harmless. Tenant shall indemnify and hold harmless Landlord against and
from any and all claims, actions, proceedings, costs (including attorney fees)
and damages arising from Tenant’s use and enjoyment of the Premises, from the
conduct of its business or from any activity, work, or other things done,
permitted or suffered by the Tenant in or about the Premises, and shall further
indemnify and hold harmless Landlord against and from any and all claims,
proceedings, actions, costs (including attorney fees) and damages arising from
any breach or default in the performance of any obligation or, Tenant’s part to
be performed under the terms of this Sublease, or arising from any act or
negligence of the Tenant, or any officer, agent, employee, guest, or invitee of
Tenant, and from all costs, attorney fees, and liabilities incurred in or about
the defense of any such claim or any action or proceeding brought thereon and
in case any action or proceeding be brought against Landlord by reason of such
claim, Tenant upon notice from Landlord shall defend the same at Tenant’s
expense by counsel reasonably satisfactory to Landlord. Tenant, as a material
part of the consideration to Landlord, hereby assumes all risk of damage to
property or injury to person in, upon or about the Premises, from any cause
other

 

14

 

than Landlord’s negligence; and
Tenant hereby waives all claims in respect thereof against Landlord. Tenant
shall give prompt notice to Landlord in case of casualty or accidents in, on or
about the Premises or Center.

 

Landlord or its agents
shall not be liable for any loss or damage to persons or property resulting
from fire, explosion, falling plaster, steam, gas, electricity, water or rain
which may leak from any part of the Center or from the pipes, appliances or
plumbing works therein or from the roof, street or subsurface or from any other
place resulting from dampness or any other cause whatsoever, unless caused by
or due to the negligence of Landlord, its agents, servants or employees.
Landlord or its, agents shall not be liable for interference with the light,
air, or for any latent defect in the Premises.

 

15.                                 Subrogation. As long as its insurer so permits, Tenant hereby mutually waives
its rights-of recovery against Landlord for any loss insured by fire, extended
coverage and other property insurance policies existing for the benefit of Tenant;
up to the extent of the covered amount of such policies. Tenant shall apply to
its insurers to obtain said waivers. Tenant shall obtain any special
endorsements, if required by its insurer to evidence compliance with the
aforementioned waiver.

 

16.                                 Liability Insurance.
Tenant shall, at Tenant’s expense, obtain and keep in. force during the term of
this Sublease a policy  of
comprehensive public liability insurance insuring Landlord and Tenant against
any liability arising out of the ownership, use, occupancy or maintenance of
the Premises and

 

15

 

all areas appurtenant thereto.
Such insurance shall be in the amount of not less than $2,000,000.00 combined
single limit for all bodily injury and property damage claims, which amount may
be increased from time to time by Landlord to reflect industry standards, and
which insurance shall name Landlord, and any lender requested by Landlord, as
an additional insured. The limit of any such insurance shall not, however,
limit the liability of the Tenant hereunder. Tenant may provide this insurance
under a blanket policy, provided that said insurance shall have a Landlord’s
protective liability endorsement attached thereto. If Tenant shall fail to
procure and maintain said insurance, Landlord may, but shall not be required
to, procure and maintain same, but at the expense of Tenant. Insurance required
hereunder shall be in companies licensed to do business in the state of Nevada
and reasonably acceptable to Landlord. Tenant shall also maintain workers
compensation insurance as required by state and federal law. Tenant shall
deliver to Landlord, prior to right of entry, copies of policies of liability
insurance required herein or certificates evidencing the existence and amounts
of such insurance with loss payable clauses satisfactory to Landlord. No policy
shall be cancelable, terminate or be subject to reduction of coverage without
at least thirty (30) days written notice to Landlord. All such policies shall
be written as primary policies not contributing with and not in excess of
coverage which Landlord may carry. Prior to the delivery of the Premises by
Landlord to Tenant, Tenant shall provide to Landlord certificates evidencing
the insurance

 

16

 

provided for under this
Section 16 and, thereafter, within five (5) days after request by
Landlord, copies of such policies.

 

17.                                 Utilities.Tenant shall pay for all water,
gas, heat, light, power, sewer charges, sanitation, telephone service and all
other services and utilities supplied to the Premises, together with any taxes
thereon. If any such services are not separately metered or billed to Tenant,
Tenant shall pay a reasonable proportion to be determined by Landlord of all charges
jointly metered or billed with other premises of the Center which charges
Landlord shall add to the Adjustments described in Section 7.1(ii).

 

18.                                 Personal Property Taxes.
Tenant shall pay, or cause to be paid, before delinquency any and all, taxes
levied or assessed and which become  payable
during the term hereof upon all Tenant’s leasehold improvements, equipment,
furniture, fixtures, and any other personal property located in the Premises.
In the event any or all of the Tenant’s leasehold improvements, equipment,
furniture, fixtures and other personal property shall be assessed and taxed
with the real property. Tenant shall pay to Landlord its share of such taxes
within ten (10) days after delivery to Tenant by Landlord of a statement in
writing setting forth the amount of such taxes applicable to Tenant’s property.

 

19.                                 Rules and Regulations.
Tenant shall faithfully observe and comply with the rules and regulations that
Landlord may from time to time promulgate and/or modify for the mutual benefit
of all tenants and occupants of the Center. The rules and regulations shall be
binding upon the Tenant upon delivery of

 

17

 

a copy  of them to Tenant. Landlord shall not be
responsible to Tenant for the nonperformance of any said rules and regulations
by other tenants or occupants.

 

20.                                 Holding Over. If Tenant remains in possession of the Premises or any part
thereof after the expiration of the term hereof with the express written
consent of Landlord, such occupancy shall be a tenancy from month to month at a
rental in the amount of two hundred percent (200%) of the last monthly minimum
rent, plus all other charges payable hereunder, and upon all the terms hereof
applicable to a month to month tenancy.

 

21.                                 Entry By Landlord.
Landlord reserves, and shall at any and all times have, the right to enter the
Premises to inspect the same, to submit said Premises to prospective purchasers
or tenants, to post notice of non-responsibility, to repair, maintain or remediate
the Premises and any portion of the Building of which the Premises are a part
that Landlord may deem necessary or desirable, without abatement of rent, and
may for that purpose erect scaffolding and other necessary structures where
reasonably required by the character of the work to be performed, always
providing that the entrance to the Premises shall not be unreasonably blocked
thereby, and further providing that the business of the Tenant shall not be
interfered with unreasonably. Tenant hereby waives any claim for damages or for
any injury or inconvenience to or interference with Tenant’s business, any loss
of occupancy or quiet enjoyment of the Premises, and any other loss occasioned
thereby. For each of the aforesaid purposes,  Landlord
shall at all times have and retain a

 

18

 

key with which to unlock all of
the doors in, upon and about the Premises, excluding Tenant’s vaults, safes and
files, and Landlord shall have the right to use any and all means which
Landlord may deem proper to open said doors in an emergency, in order to obtain
entry to the Premises without liability to Tenant except for any failure to
exercise due care for Tenant’s property and any entry to the Premises obtained
by Landlord by any of said means, or otherwise, shall not under any
circumstances be construed or deemed to be a forcible or unlawful entry into,
or a detainer of, the Premises, or an eviction of Tenant from the Premises or
any portion thereof.

 

22.                                 Tenant’s Default.
The occurrence of any one or more of the following events shall constitute a
default and breach of this Sublease by Tenant:

 

A.                                   The
vacating or abandonment of the Premises by Tenant.

 

B.                                     The
failure by Tenant to make any payment of rent or any other payment required to
be made by Tenant hereunder, as and when due, where such failure shall continue
for a period of three (3) days after written notice thereof by Landlord to
Tenant.

 

C.                                     The
failure by Tenant to observe or perform any of the covenants, conditions or
provisions of this Sublease to be observed or performed by the Tenant, other
than described in Section 22.B, above, where such failure shall continue
for a period of thirty (30) days after written notice thereof by Landlord to
Tenant.

 

19

 

D.                                    The
making by Tenant of any general assignment or general arrangement for the
benefit of creditors; or the filing by or against Tenant of a petition to have
Tenant adjudged a bankrupt, or a petition or reorganization or arrangement
under any law relating to bankruptcy (unless, in the case of a petition filed
against Tenant, the same is dismissed within sixty (60) days); or the
appointment of a trustee or a receiver to take possession of substantially all
of Tenant’s assets located at the Premises or of Tenant’s interest in this
Sublease, where possession is not restored to Tenant within thirty (30) days;
or the attachment, execution or other judicial seizure of substantially all of
Tenant’s assets located at the Premises or of Tenant’s interest in this
Sublease, where such seizure is not discharged within thirty (30) days.

 

23.                                 Remedies in Default.
In the event of any such default or breach by Tenant, Landlord may at any time
thereafter, in its sole discretion, with or without notice or demand and
without limiting Landlord in the exercise of a right or remedy which Landlord
may have by reason of such default or breach:

 

A.                                   Terminate
Tenant’s right to possession of the Premises by any lawful means, in which case
this Sublease shall terminate and Tenant shall immediately surrender possession
of the Premises to Landlord. In such event Landlord shall be entitled to
recover from Tenant all damages incurred by Landlord by reason of Tenant’s  default including, but not limited to, the
cost of recovering possession of the Premises; expenses of reletting, including
necessary  renovation and
alteration of the

 

20

 

Premises; reasonable attorney
fees; the worth of the time of award by the court having  jurisdiction thereof of the amount by
which the unpaid rent and other charges and Adjustments called for herein for
the balance of the term after the time of such award exceeds the amount of such
loss for the same period that Tenant proves could be reasonably avoided; and
that portion of any leasing commission paid by Landlord and applicable to the
unexpired term of this Sublease. Unpaid installments of rent or other sums
shall bear interest from the date due at the maximum legal rate; or

 

B.                                     Maintain
Tenant’s right to possession, in which case this Sublease shall continue in
effect whether or not Tenant shall have abandoned the Premises. In such event
Landlord shall be entitled to enforce all of Landlord’s rights and remedies
under this Sublease, including the right to recover the rent and any other
charges and Adjustments as may become due hereunder; or

 

C.                                     Pursue
any other remedy now or hereafter available to Landlord under the laws or
judicial decisions of the State of Nevada.

 

24.                                 Default by Landlord.
Landlord shall not be in default unless Landlord fails to perform obligations
required of Landlord within a reasonable time, but in no event later than
thirty (30) days after written notice by Tenant to Landlord and to the holder
of any mortgage or deed of trust covering the Premises whose name and address
shall have theretofore been furnished to Tenant in writing, specifying wherein
Landlord has

 

21

 

failed to perform such
obligation; provided, however, that if the nature of Landlord’s obligation is
such that more than thirty (30) days are required for performance then Landlord
shall not be in default if Landlord commences performance within such thirty
(30) day period and thereafter diligently prosecutes the same to completion. In
no event shall Tenant have the right to terminate this Sublease as a result of
Landlord’s default and Tenant’s remedies shall be limited to damages and/or an
injunction.

 

25.                                 Reconstruction. Notwithstanding the degree of damage to the Premises, if the
Center is destroyed by fire, earthquake, or other accident or action of the
elements, or is partially destroyed so as to render the Center wholly unfit for
occupancy, or if the Center is so badly injured or damaged that it cannot be
repaired within ninety (90) days after the happening of the damage, then this
Sublease shall, at the written option of the Landlord, cease and become null
and void from the date of such damage and destruction, and upon notice by the
Landlord the Tenant shall at once surrender the Premises and all interest
therein to the Landlord and shall not be liable for any further payments or
rental on account of this Sublease for any period after the date of such damage
or destruction; and in case of partial destruction of the Premises, the
Landlord may, at its option, reenter and repossess such portion of the Premises
as may be required to make the necessary repairs, and repair the Premises, and
this Sublease shall continue in full force and effect but a proper allowance
upon the rent of the Premises shall be

 

22

 

made for the time consumed in
making such repairs; but it is expressly understood and agreed that the Tenant
shall in no case be entitled to compensation or damage on account of any
inconvenience or annoyance or loss of business occasioned to anyone in making
such repairs, or on account of such destruction on account of fire, earthquake,
or other accident or action of the elements, and that no allowance or deduction
from the rent herein provided for shall be made for any partial destruction of
the Premises which does not prevent the Tenant from carrying on business as
usual.

 

26.                                 Eminent Domain. If the Premises or a
substantial part thereof are condemned or taken by purchase in lieu thereof,
then this Sublease shall terminate as of the time possession is taken. If no
substantial part of the Premises should be condemned, this Sublease shall
continue as to the portion not taken, in which event Tenant shall be entitled
to a reduction in rental in the proportion that the part taken bears to the
total area of the Premises. Tenant shall have no interest in and to the
condemnation award or compensation, provided, however, that Landlord shall not
be entitled to any portion, of the award made to Tenant for loss of business,
depreciation to and cost of removal of stock and fixtures. In the event this
Sublease should be terminated for any of the reasons contained and set forth in
this Section 26, Landlord shall refund to Tenant any unused advance rental
which Tenant may have paid as of the date of any such termination of this
Sublease.

 

23

 

27.                                 Parking and Common Areas. Landlord covenants that
the common  and parking areas as
shown on the attached Exhibit “B” shall be at all times available for the
non-exclusive use of Tenant during the full term of this Sublease or any
extension of the term hereof; however, Landlord shall reserve the right to
build any improvements upon such areas for its exclusive use. In addition,
Landlord reserves the right to change the entrances, exits, traffic lanes and
the boundaries and locations of such parking area or areas.

 

28.                                 Displays and Signage. The Tenant may not display or sell merchandise or allow grocery
carts or other similar devices within the control of Tenant to be stored or to
remain outside the defined exterior walls and permanent doorways of the
premises. Tenant further agrees not to install any exterior lighting,
amplifiers or similar devices or use in or about the Premises any advertising
medium which may be heard or seen outside the Premises, such as flashing
lights, searchlights, loudspeakers, phonographs or radio broadcasts without the
written consent of Landlord which may be unreasonably withheld.

 

Tenant, at its sole cost
and expense, may display signs on the front of the Building (but not the roof)
adjacent to the Premises, and on any standard constructed in the parking area
of the Center, provided (a) Tenant obtains all the necessary governmental
approvals, (b) such signage only identifies the business being operated on the
Premises, and (c) Tenant obtains Landlords prior written consent, which consent
shall not be unreasonably withheld. In addition, Tenant may display in the

 

24

 

windows of the Premises can
lighted, framed movie posters, provided Tenant obtains any necessary
governmental permits and approvals for same and such posters are not unlawful,
immoral, lewd, obscene or contain “fighting words,” obscenities, grisly or
gruesome displays or highly inflammatory slogans likely to provoke a
disturbance.

 

29.                                 Auctions. Tenant shall not conduct or permit to be conducted any sale by
auction in, upon or from the Premises whether said auction be voluntary,
involuntary, pursuant to any assignment for the payment of creditors or
pursuant to any bankruptcy or other insolvency proceeding.

 

30.                                 Hours of Business.
Subject to the provisions of Section 25 hereof, Tenant shall continuously
during the entire term hereof conduct and carry on Tenant’s business in the
Premises and shall keep the Premises open for business and cause Tenant’s
business to be conducted therein during the usual business hours of each and
every business day as is customary for businesses of like character in the
local area of the Premises to be open for business; provided, however, that
this provision shall not apply if the Premises should be closed and the
business of Tenant temporarily discontinued therein on account of strikes,
lockouts or similar causes beyond the reasonable control of Tenant. Tenant
shall keep the Premises adequately stocked with merchandise, and with
sufficient sales personnel to care for the patronage, and to conduct said
business in accordance with sound business practices.

 

25

 

31.                                 Brokers.  Tenant warrants
that it has had no dealings with any real estate broker or agents in connection
with the negotiation of this Sublease and it knows of no real estate broker or
agent who is entitled to a commission or fee in connection with this Sublease
and hereby agrees to indemnify, defend and hold Landlord harmless from and
against any action, proceeding, claim, cost (including attorney fees) or damage
arising from any broker or agent not having an agreement with Landlord claiming
any said commission or fee.

 

32.                                 Hazardous Substances.

 

32.1                           Hazardous Substances.
The term “Hazardous Substances,
as used in this Lease, shall include, without limitation, flammable, explosives,
radioactive materials, asbestos, polychlorinated biphenyls (“PCPs”), chemicals
known to cause cancer or reproductive toxicity, pollutants, contaminants,
hazardous wastes, toxic substances or related materials, petroleum and
petroleum products, and substances declared to be hazardous or toxic under nay
law or regulation now or hereafter enacted or promulgated by any governmental
authority.

 

Landlord,
to the best of its actual knowledge knows of no Hazardous Substances located
in, on or under the Premises.

 

32.2                           Tenant’s Restrictions. Tenant shall not cause
or permit to occur:

 

(a)                                  Any
violation of any federal, state, or local law, ordinance, or regulation now or
hereafter enacted, related to environmental conditions on, under or about the
Premises, or arising  from Tenant’s
use or occupancy of the

 

26

 

Premises, including, but  not limited to, soil and groundwater
conditions; or

 

(b)                                 The
use, generation, release, manufacture, refining, production, processing,
storage, or disposal of any Hazardous Substance on, under or about the
Premises, or the transportation to or from the Premises of any Hazardous
Substance, except for those Hazardous Substances that may be generally found in
the equipment, fixtures, supplies, machinery or furniture incident to the
operations of the business identified in Section 2 above, in quantities
generally associated with such business.

 

32.3                           Environmental Clean-up. Tenant shall, at Tenant’s own expense, comply with all laws regulating
the use, generation, storage, transportation, or disposal of Hazardous
Substances (“Laws”).

 

Tenant
shall, at Tenant’s own expense, make all submissions to, provide all
information required by, and comply with all requirements of all governmental authorities
(the “Authorities”) under the Laws.

 

Should
any Authority or any third party demand that a cleanup plan be prepared and
that a clean-up be undertaken because of any deposit, spill, discharge or other release of
Hazardous Substances that occurs during the term of this Sublease, at or from
the Premises, or which arises at any time from Tenant’s use or occupancy of the
Premises, then Tenant shall, at Tenant’s own expense, prepare and submit the
required

 

27

 

plans and all related bonds and
other financial assurances; and Tenant shall carry out all such cleanup plans.

 

Tenant
shall immediately notify Landlord of the presence of any hazardous Substance on
or about the Premises known to Tenant (except those excluded in
Section 32.2(b) above) and of any spills, discharge or other releases of
such Hazardous Substances which are in violation of any Federal, State or local
law. Tenant shall promptly submit to Landlord copies of all correspondence,
plans, notices and other documents relating to the cleanup and remediation of
Hazardous Substances on the Premises.

 

Tenant
shall promptly provide all information regarding the use, generation, storage,
transportation, or disposal of Hazardous Substances that is requested by
Landlord. If Tenant fails to fulfill any duty imposed under this
Section 32 within a reasonable time, Landlord may do so; and in such case,
Tenant shall cooperate with Landlord in order to prepare all documents Landlord
deems necessary or appropriate to determine the applicability of the Laws to
the Premises and Tenant’s use thereof and for compliance therewith, and Tenant
shall execute all documents promptly upon Landlord’s request. No such action by
Landlord and no attempt made by Landlord to mitigate damages under any Law
shall constitute a waiver of any of Tenant’s obligations under this
section 32.3.

 

Tenant’s
obligations  and liabilities under
this Section 32.3 shall survive the expiration of this Lease.

 

28

 

32.4                           Tenant’s Indemnity. Tenant
shall indemnify, defend, and hold harmless Landlord, the manager of the
property, and their respective officers, directors, beneficiaries,
shareholders, partners, agents and employees from all fines, suits, procedures,
claims, and actions of every kind, and all costs associated therewith
(including attorney fees, consultant fees and administrative procedural costs)
arising out of or in any way connected with (i) any deposit, spill, discharge,
or other release of Hazardous Substances that occurs during the term of this
Lease, at or from the Premises, or which arises at any time from Tenant’s use
or occupancy of the Premises, or from Tenant’s failure to provide all
information, make all submissions, and take all steps required by all
Authorities under the Laws and all other environmental laws or (ii) the cost of
any required or necessary investigation, remediation, removal, repair, cleanup
or-detoxification and the preparation of required plans as a result of the presence
or use, generation, storage, release, threatened release or disposal of
Hazardous Substances by Tenant during the term of this Lease at or from the
Premises or which arises at any time from Tenant’s use or occupancy of the
Premises, including costs by a federal, state or local government agency
related to a facility or site to which materials attributable to or connected
with the Premises are removed to, disposed of, treated or stored.

 

Tenant’s
obligations and liabilities under this Section 32.3 shall survive the
expiration of this Lease.

 

29

 

33.                                 General Provisions.

 

33.1                           Plats and Riders. Clauses, plats, riders and addendums, if any, affixed to this
Sublease are a part hereof.

 

33.2                           Waiver. The waiver by Landlord of any term, covenant or condition herein
contained shall not be deemed to be a waiver of such term, covenant or
condition or any subsequent breach of the same or any other term, covenant or
condition herein contained. The subsequent acceptance of rent hereunder by
Landlord shall not be deemed to be a waiver of any preceding default by Tenant
of any term, covenant or condition of this Sublease, other than the failure of
the Tenant to pay the particular rental so accepted, regardless of Landlord’s
knowledge of such preceding default at the time of the acceptance of such rent.

 

33.3                           Joint Obligation. If there be more than one
Tenant the obligations hereunder imposed shall be joint and several.

 

33.4                           Marginal Headings. The marginal headings
and section titles to the articles of this Sublease are not a part of the
Sublease and shall have no effect upon the construction or interpretation of
any part hereof.

 

33.5                           Time. Time is of the essence of this Sublease and each and all of its
provisions in which performance is a factor.

 

33.6                           Successors and Assigns.
The covenants and conditions herein contained, subject to the provisions as to
the

 

30

 

assignment, apply to and bind
the heirs, successors, executors, administrators and assigns of the parties
hereto.

 

33.7                           Recordation. Neither Landlord nor Tenant shall record this Sublease, but a
short form memorandum hereof may be recorded at the request of Landlord.

 

33.8                           Quiet Possession. Upon Tenant paying the rent
reserved hereunder and observing and performing all of the covenants,
conditions and provisions on Tenant’s part to be observed and performed
hereunder, Tenant shall have quiet possession of the Premises for the entire
term hereof, subject to all the provisions of this Sublease.

 

33.9                           Late Charges. Tenant hereby
acknowledges that late payment by Tenant to Landlord of rent or other sums due
hereunder will cause Landlord to incur costs not contemplated by this Sublease,
the exact amount of which will be extremely difficult to ascertain. Such costs
include, but are not limited to, processing and accounting charges, and late
charges which may be imposed upon Landlord by terms of any mortgage or trust
deed covering the Premises. Accordingly, if any installment of rent or any sum
due from Tenant shall not be received by Landlord or Landlord’s designee within
three (3) days after written notice that said amount is past due, then Tenant
shall pay to Landlord a late charge equal to the maximum amount permitted by law
(and in the absence of any governing law, ten percent of such overdue amount),
plus any attorney fees incurred  by
Landlord by reason of Tenant’s failure to payrent and/or other charges when due hereunder.  The parties hereby agree that such late
charges

 

31

 

represent
a fair and reasonable estimate of the cost that Landlord will incur by reason
of the late payment by Tenant. Acceptance of such late charges by the Landlord
shall in no event constitute a waiver of Tenant’s default with respect to such
overdue amount, nor prevent Landlord from exercising any of the other rights
and remedies granted hereunder.

 

33.10                     Prior Agreements. This Sublease contains all of the agreements of the parties
hereto with respect to any matter covered or mentioned in this Sublease, and no
prior agreements or understanding pertaining to any such matters shall be
effective for any purpose. No provision of this Sublease may be amended or
added to except by an agreement in writing signed by the parties hereto or
their respective successors in interest. This Sublease shall not be effective
or binding on any party until fully executed by both parties hereto.

 

33.11                     Inability to Perform. This Sublease and the
obligations of the Tenant hereunder shall not be affected or impaired because
the Landlord is unable to fulfill any of its obligations hereunder or is
delayed in doing so, if such inability or delay is caused by reason of strike,
labor troubles, acts of God, or any other cause beyond the reasonable control
of the Landlord.

 

33.12                     Partial Invalidity. Any provision of this Sublease which shall prove to be invalid,
void, or illegal shall in no way affect, impair or invalidate any other
provision hereof and such other provision shall  remain in full force and effect.

 

32

 

33.13                   Cumulative Remedies.
No remedy or election hereunder shall be deemed exclusive but shall, whenever
possible, be cumulative with all other remedies at law or in equity.

 

33.14                     Choice of Law.  This Lease shall be
governed by the laws of the State of Nevada.

 

33.15                     Attorney Fees.
In the event of any action or proceeding brought by either party against the
other under this Sublease the prevailing party shall be entitled to recover for
the fees of its attorneys in such action or proceeding, including costs of
appeal, if any, in such amount as the court may adjudge reasonable as attorney
fees. In addition., should it be necessary for Landlord to employ legal counsel
to enforce any of the provisions herein contained, Tenant agrees to pay all
attorney fees and court costs reasonably incurred including any such fees or
costs incurred in executing on any judgment.

 

33.16                     Subordination.
Attornment. Upon request of the Landlord, Tenant will in writing subordinate
its rights hereunder to the lien of any mortgage or deed of trust, to any bank,
insurance company or other lending institution, now or hereafter in force
against the Premises, and to all advances made or hereafter to be made upon the
security thereof.

 

In the event any
proceedings are brought for foreclosure, or in the event of the exercise of the
power of sale under any mortgage or deed  of
trust covering the Premises, the Tenant shall attorn to the purchase upon any
such foreclosure or sale and recognize such purchaser as the Landlord under
this Sublease.

 

33

 

33.17                     Notices. All notices and demands
which may or are to be required or permitted to be given by either party on the
other hereunder shall be in writing. All notices and demands by the Landlord to
the Tenant shall be sent by United States Mail, postage prepaid, addressed to
the Tenant at the Premises, and to the address hereinbelow, or to such other
place as Tenant may from time to time designate in a notice to the Landlord.
A11 notices and demands by the Tenant to the Landlord shall be sent by United
States Mail, postage prepaid, addressed to the Landlord at the address set
forth herein, and to such other person or place as the Landlord may from time
to time designate in a notice to the Tenant.

 

If to
Landlord:                                             500 West Capitol Avenue

West
Sacramento, CA 95605-2696

 

If to
Tenant:                                                       1027 Emerald Bay Road

South
Lake Tahoe, CA 96150

 

33.18                     Tenant’s Statement. Tenant shall at any
time and from time to time, upon not less than three (3) days prior written
notice from Landlord, execute, acknowledge and deliver to Landlord a statement
in writing (a) certifying that this Sublease is unmodified and in full force
and effect (or, if modified, stating the nature of such modification and
certifying that this Sublease as so modified is in full force and effect), and
the date to which the rental and other charges are paid in advance, if any, (b)
acknowledging that there are not, to Tenant’s knowledge, any uncured defaults
on the part of the Landlord hereunder, or specifying such defaults if any are

 

34

 

claimed, (c) setting forth the
date of commencement of rents and expiration of the term hereof, and (d)
certifying any other matter reasonably requested by Landlord. Any such
statement may be relied upon by the prospective purchaser or encumbrancer of
all or any portion of the real property of which the Premises are a part.

 

33.19                     Authority. If a party is an entity, each individual executing this Sublease
on behalf of said entity represents and warrants that he or she is duly
authorized to execute and deliver this Sublease on behalf of said entity, in
accordance with the governing documents of said entity, and that this Sublease
is binding upon said entity. The signatories on this Sublease represent and
warrant that they are all the members of Tenant and that any consent, approval
or other action to be taken by Tenant under this Sublease may be done by one
individual (“Designatee”) who shall initially be Michael Petrogallo, and the
acts by the Designatee shall be binding upon Tenant until Landlord receives a
written notice from Tenant executed by a majority of the members controlling
Tenant that the individual acting as Designatee may no longer act on behalf of
Tenant under this Sublease, that identifies one or more individuals as a new
Designatee(s) that may act on behalf of Tenant (but if more than one individual
is identified, Landlord may rely on the action of anyone such Designatee and no
more than one Designatee’s actions will be necessary to bind Tenant under the
terms of this Sublease) and that they represent and warrant that they have the
authority to  so replace the
Designatee on behalf of Tenant.

 

35

 

33.20                     Negotiated Transaction.
The parties mutually acknowledge that this Sublease has been negotiated at
arm’s length. The provisions of this Sublease shall be deemed drafted by both
parties and this Sublease shall not be interpreted or construed against any
party solely by the virtue of the fact that such party or its counsel is
responsible for its preparation.

 

33.21                     Broker Commission. Landlord shall pay a
broker’s commission pursuant to a separate agreement with Tom Watson of Truckee
River Associates, Inc., a California licensed real estate broker, who
represented Landlord in connection with this transaction. Tenant has been
represented by Rod Campbell. Except as provided in this Section, Seller and
Buyer each represent and warrant to the other that no broker, agent or finder,
licensed or otherwise, has been engaged by it, respectively, in connection with
the transaction contemplated by this Agreement and that all negotiations
relative to these instructions and this transaction have been carried out by
such party directly with the other party without the intervention of any person
in such a manner as to give rise to any valid claim against either of the
parties for a broker’s commission, finder’s fee or other like payment. Each of
the parties shall indemnify and defend the other party and hold it harmless
from any and all loss, damage, liability or expense, including cots and
reasonable attorney  fees, which
the other party may incur or sustain by reason of or in connection with any
misrepresentation or breach

 

36

 

of warranty by the indemnifying
party with respect to the foregoing.

 

IN
WITNESS WHEREOF, the parties hereto have executed this Sublease effective as Of
June 30, 1995.

 

	
  LANDLORD:

  	
  TENANT:

  
	
  RALEY’S, a California

  	
  TOTAL ENTERTAINMENT LLC, a

  
	
  corporation

  	
  California limited liability

  
	
   

  	
  company

  
	
   

  	
   

  
	
  By:

  	
  /s/

  	
   

  	
  By :

  	
  /s/ Michael Petrogallo

  	
   

  
	
  Title:

  	
  Pres/CEO

  	
   

  	
  Michael Petrogallo

  
	
   

  	
   

  
	
   

  	
  By :

  	
  /s/ Ricardo Brockman

  	
   

  
	
   

  	
  Ricardo
  Brockman

  
	
   

  	
   

  
	
   

  	
  By :

  	
  /s/ Diego Cespedes

  	
   

  
	
   

  	
  Diego Cespedes

  
	
   

  	
   

  
	
   

  	
  By :

  	
  /s/ Enrique Martinez De
  Velasco

  	
   

  
	
   

  	
  Enrique Martinez De
  Velasco

  
	
   

  	
   

  
	
   

  	
  By :

  	
  /s/ Carlos Uhthoff

  	
   

  
	
   

  	
  Carlos Uhthoff

  
	
   

  	
   

  
	
   

  	
  By :

  	
  /s/ Pablo Girault

  	
   

  
	
   

  	
  Pablo Girault

  
	
   

  	
   

  
	
   

  	
  By :

  	
  /s/ Enrique
  Hurtado

  	
   

  
	
   

  	
  Enrique Hurtado

  
	
   

  	
   

  
	
   

  	
  By :

  	
  /s/ Gustavo Serrano

  	
   

  
	
   

  	
  Gustavo Serrano

  
	
   

  	
   

  
	
   

  	
  By :

  	
  /s/ Susana Mariscal

  	
   

  
	
   

  	
  Susana Mariscal

  
													

 

 

LECGAL DESCRTPTION

 

Parcel One

 

All that certain. real property
being  a portion of
Section 15, Township 16 North, Range 18 East, M.D.B. & M. situate in
the County of Washoe, State of Nevada, more particularly described as follows:

 

Commencing at the most
Southerly terminus of that certain curve designated A-170 on the Easterly
boundary of Village Blvd. as said curve (A-170) and Blvd. are shown on the map
of Fairway Estates No.  2, Washoe County, Nevada filed in the Office of the Countv
Recorder of Washoe County, State of Nevada on August 28, 1963; thence S
19° 26’ 35” W 202.90 feet; thence Southwesterly along the arc of a tangent
curve to the left having a radius of 1551.36 feet, a central angle of 2° 52’
45” and an arc distance of 77.95 feet to the true point of beginning of this
description; thence S 83° 23’ 57” E, 308.35 feet; thence S 4° 47’ 23” W, 547.4 feet to a
point on the Northerly boundary of Tahoe Blvd.; thence N 85° 55’ 41” W, 140.00
feet; thence leaving said Northerly boundary of Tahoe Blvd. N 4° 47’ 23” E,
200.90 feet; thence N 85` 55’ 41” W, 200.90 feet to a point on the Easterly
boundary of Village Blvd.;  thence N 4° 47’ 23” E, 43.21 feet; thence Northeasterly along the
arc of a tangent curve to the right having a radius of 1560.00 feet, a central
angle of 5° 12’ 01”, a tangent of 70.84 feet, an arc length of 141.59’ and a
long chord bearing N 7° 23’ 23.5” E, 141.54 feet; thence Northeasterly along
the arc of a curve to the right having  a
radius of 1551.36 feet, a central angle of 6° 34’ 26”, the tangent to which bears N 9° 59’ 24” E, 89.10 feet,
an arc length of 178.00 feet and a long chord bearing N 13° 16’ 37” 177.90 feet
to the true point of beginning of this description; containing 3.335 acres,
more or less.

 

Parcel Two

 

Together with a non-exclusive
easement for roadways, walkways, ingress and egress, and vehicular parking as
set forth in that certain Grant of Easement with Covenants and Restrictions
affecting Land recorded May 3, 1974 in Book 813, Page 735, File No.
325614. Official Records, and Amendments thereto, recorded November 30,
1976, in Book 1028, page 679, File No. 437149, Official Records, and Amendments
thereto, recorded January 20, 1978, in Book 1185, page 631, File No.
509942, Official Records.

 

EXHIBIT
“A”

 

 

Exhibit B

 

[Floor
Plan]

 

1.               Mechanical
Room

2.               Handicapped
Restrooms

 

The total area of the building
(center) is 22,920 square feet.

 

Village Ace Hardware leases
12,320 square feet which includes half of the square footage of the handicapped
restrooms and a portion of the mechanical room.

 

 

[Site
Plan]

 

 

EXHIBIT
B-1

 

 

GUARANTY

 

This Guaranty (the
“Guaranty”) is attached to and made part of that certain Sublease (the “Lease”)
dated June      , 1995, between RALEY’S, a
California corporation, as Landlord, and TOTAL ENTERTAINMENT LLC, a California
limited liability company, as Tenant, covering the Premises described therein
and located at 910 Lake Tahoe Boulevard, Incline Village, Nevada. In order to
induce Landlord to enter into the Lease with Tenant, Michael Petrogallo,
Ricardo Brockmann, Diego Cespedes, Enrique Martinez De Velasco, Carlos Uhthoff,
Pablo Girault, Enrique Hurtado, Gustavo Serrano and Susana Mariscal
(“Guarantors”), have agreed to execute and deliver this Guaranty to Landlord.
Each Guarantor acknowledges that Landlord would not enter into the Lease if
each Guarantor did not execute and deliver this Guaranty to Landlord.

 

1.                                       Guaranty. In
consideration of the execution of the Lease by Landlord and as a material
inducement to Landlord to execute the Lease, each Guarantor hereby irrevocably,
unconditionally, jointly and severally guarantees the full, timely and complete
payment, as such may become due under Section 4 of the Lease, of any
repayment owing to Landlord by Tenant of the “allowance” pursuant to
Section 4 of the Lease. The payment of those amounts shall be conducted in
accordance with all terms, covenants and conditions set forth in the Lease,
without deduction, offset or excuse of any nature and without regard to the
enforceability or validity of the Lease, or any part thereof, or any disability
of Tenant.

 

2.                                       Landlord’s Rights. Landlord may perform any of the following. acts at any time
during the Lease Term, without notice to or assent of any Guarantor and without
in any way releasing, affecting or impairing any of Guarantor’s obligations or
liabilities under this Guaranty: (a) alter, modify or amend the Lease by agreement
or course of conduct, (b) grant extensions or renewals of the Lease, (c) assign
or otherwise transfer its interest in the Lease, the Premises, or this
Guaranty, (d) consent to any transfer or assignment of Tenant’s or any future
lessee’s interest under the Lease, (e) release one or more Guarantor, or amend
or modify this Guaranty with respect to any Guarantor, without releasing or
discharging any other Guarantor from any of such Guarantor’s obligations or
liabilities under this Guaranty, (f) take and hold security for the payment of
this Guaranty and exchange, enforce, waive and release any such security, (g)
apply such security and direct the order or manner of sale thereof as Landlord,
in its sole discretion, deems appropriate, and (h) foreclose upon any such
security by  judicial or nonjudicial
sale, without affecting or impairing in any way the liability of Guarantor
under this Guaranty, except to the extent the indebtedness has  been paid.

 

 

3.                                       Tenant’s Default. This Guaranty is a guaranty of payment, and not of collection.
Upon any breach or default by Tenant under the Lease, Landlord may proceed
immediately against Tenant and/or any Guarantor to enforce any of Landlord’s
rights or remedies against Tenant or any Guarantor pursuant to this Guaranty, the
Lease, or at law or in equity without notice to or demand upon either Tenant or
any Guarantor. This Guaranty shall not be released, modified or affected by any
failure or delay by Landlord to enforce any of its rights or remedies under the
Lease or this Guaranty, or at law or in equity.

 

4.                                       Guarantor Waivers. Each Guarantor hereby waives (a)
presentment, demand for payment and protest of nonperformance under the Lease,
(b) notice of any kind including, without limitation, notice of acceptance of
this Guaranty, protest, presentment, demand for payment, default, nonpayment,
or the creation or incurring of new or additional obligations of Tenant to
Landlord, (c) any right to require Landlord to enforce its rights or remedies
against Tenant under the Lease, or otherwise, or against any other Guarantor,
(d) any right to require Landlord to proceed against any security held from
Tenant or any other party, (e) any right of subrogation and (f) any defense
arising out of the absence, impairment or loss of any right of reimbursement or
subrogation or other right or remedy of Guarantors against Landlord or any such
security., whether resulting from an election by Landlord, or otherwise. Any
part payment by Tenant or other circumstance which operates to toll any statute
of limitations as to Tenant shall operate to toll the statute of limitations as
to the Guarantors.

 

5.                                       Separate and Distinct Obligations. Each Guarantor acknowledges and agrees that such Guarantor’s
obligations to Landlord under this Guaranty are separate and distinct from
Tenant’s obligations to Landlord under the Lease. The occurrence of any of the
following events shall not have any effect whatsoever on any Guarantor’s
obligations to Landlord hereunder, each of which obligations shall continue in
full force or effect as though such event had not occurred: (a) the
commencement by Tenant of a voluntary case under the federal bankruptcy laws,
as now constituted or hereafter amended or replaced, or any other applicable
federal or state bankruptcy, insolvency or other similar law (collectively, the
“Bankruptcy Laws”), (b) the consent by Tenant to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or similar official of Tenant or for any substantial party of its
property, (c) any assignment  by
Tenant for the benefit of creditors, (d) the failure  of Tenant generally to pay its debts as such debts become
due, (e) the taking of corporate action by Tenant in the furtherance of any of
the foregoing; or (f) the entry of a decree or order for relief by a court
having jurisdiction in respect of Tenant in any involuntary case under the
Bankruptcy Laws, or appointing a receiver, liquidator,

 

2

 

assignee,
custodian, trustee, sequestrator (or similar official) of Tenant or for any
substantial part of its-property, or ordering the winding-up or liquidation of
any of its affairs and the continuance of any such decree or order unstayed and
in effect for a period of sixty (60) consecutive days. The liability of
Guarantors under this Guaranty is not and shall not be affected or impaired by
any payment made to Landlord under or related to the Lease for which Landlord
is required to reimburse Tenant pursuant to any court order or in settlement of
any dispute, controversy or litigation in any bankruptcy, reorganization,
arrangement, moratorium or other federal or state debtor relief proceedings.
If, during any such proceedings, the Lease is assumed by Tenant or any trustee,
or thereafter assigned by Tenant or any trustee to a third party, this Guaranty
shall remain in full force and effect with respect to the full performance of
Tenant, any such trustee or any such third party’s obligations under the Lease.
If the Lease is terminated or rejected during any such proceeding, or if any of
the events described in Subparagraphs (a) through (f) of this Paragraph 5
occur, as between Landlord and each Guarantor, Landlord shall have the right to
accelerate all of Tenant’s obligations under the Lease with respect to any
repayment of the allowance under Section 4 thereof, and each Guarantor’s
obligations under this Guaranty. In such event, all such obligations shall
become immediately due and payable by Guarantors to Landlord. Guarantors waive
any defense arising by reason of any disability or other defense of Tenant or
by reason of the cessation from any cause whatsoever of the liability of
Tenant.

 

6.                                       Subordination. All existing and future advances by Guarantors to Tenant, and all
existing and future debts of Tenant to any Guarantor, shall be subordinated to
all obligations owed to Landlord under the Lease and this Guaranty.

 

7.                                       Successors and Assigns. This Guaranty binds each Guarantor’s personal representatives,
successors and assigns.

 

8.                                       Encumbrances. If Landlord’s interest in the Premises or the Lease, or the rents,
issues or profits therefrom, are subject to any deed of trust, mortgage or
assignment for security, any Guarantor’s acquisition of Landlord’s interest in
the Premises or Lease shall not affect any of Guarantor’s obligations under
this Guaranty. In such event, this Guaranty shall nevertheless continue in full
force and effect for the benefit of any mortgagee, beneficiary, trustee or
assignee or any purchaser at any sale by judicial foreclosure or under any
private power of sale, and their successors and assign.

 

9.                                       Guarantor Duty. Guarantors assume the responsibility to remain informed of the
financial condition of Tenant and of all other circumstances bearing upon the
risk of Tenant’s default, which reasonable inquiry would reveal, and

 

3

 

agree that Landlord shall have
no duty to advise Guarantors of information known to it regarding such
condition or any such circumstance.

 

10.                                 Landlord’s Reliance.
Landlord shall not be required to inquire into the powers of Tenant or the
officers, managers, employees, partners or agents acting or purporting to act
on its behalf, and any indebtedness made or created in reliance upon the
professed exercise of such powers shall be guaranteed under this Guaranty.

 

11.                                 Incorporation of Certain Provisions. Each Guarantor hereby represents and warrants to Landlord that
such Guarantor has received a copy of the Lease, has read or had the
opportunity to read the Lease, and understands the terms of the Lease. The
provisions in the Lease relating to the execution of additional documents,
legal proceedings by Landlord against Tenant, severability of the provisions of
the Lease, interpretation of the Lease, notices, waivers, the applicable laws
which govern the interpretation of the Lease and the authority of the Tenant to
execute the Lease are incorporated herein in their entirety by this reference
and made a part hereof. Any reference in those provisions to “Tenant” shall
mean each Guarantor and any reference in those provisions to the “Lease” shall
mean this Guaranty, except that (a) any notice which any Guarantor desires or
is required to provide to Landlord shall be effective only if signed by all
Guarantors and (b) any notice which Landlord desires or is required to provide
to any Guarantor shall be sent to such Guarantor at such Guarantor’s address
indicated below, or if no address is indicated below, at the address for
notices to be sent to Tenant under the Lease.

 

	
   

  	
  /s/ Michael Petrogallo

  	
   

  
	
   

  	
   MICHAEL PETROGALLO

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  1027 Emerald Bay Road

  
	
   

  	
   

  	
  So. Lake Tahoe, CA 96150

  
	
   

  
	
   

  	
  /s/ Ricardo Brockmann

  	
   

  
	
   

  	
   RICARDO BROCKMANN

  
	
   

  
	
   

  	
  Address:

  	
  Amberes 45

  
	
   

  	
   

  	
  Mexico DF 06600

  
					

 

 

	
   

  	
  /s/ Diego Cespedes

  	
   

  
	
   

  	
  DIEGO CESPEDED

  
	
   

  
	
   

  	
  Address:

  	
  Bosque De Anteguera

  
	
   

  	
   

  	
  128 Herradura Edo De Mex
  53920

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Enrique Martinez De
  Velasco

  	
   

  
	
   

  	
  ENRIQUE MARTINEZ  DE VELASCO

  
	
   

  
	
   

  	
  Address:

  	
  Blvd Interlomas No 5 SN.

  
	
   

  	
   

  	
  FDO La Herradura

  
	
   

  	
   

  	
  Edo De Mer

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Carlos Uhthoff

  	
   

  
	
   

  	
  CARLOS UHTHOFF

  
	
   

  
	
   

  	
  Address:

  	
  Hamburgo 260

  
	
   

  	
   

  	
  Mexico
  DF   06600

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Pablo Girault

  	
   

  
	
   

  	
  PABLO GIRAULT

  
	
   

  
	
   

  	
  Address:

  	
  115 East 54 Street

  
	
   

  	
   

  	
  1st Floor

  
	
   

  	
   

  	
  New York, NY 10022

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Enrique Hurtado

  	
   

  
	
   

  	
  ENRIQUE HURTADO

  
	
   

  
	
   

  	
  Address:

  	
  161 West 61, Apt., 17E

  
	
   

  	
   

  	
  New York, NY

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Gustavo Serrano

  	
   

  
	
   

  	
  GUSTAVO SERRANO

  
	
   

  
	
   

  	
  Address:

  	
  1027 Emerald Bay Road

  
	
   

  	
   

  	
  So. Lake Tahoe, CA 96150

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Susana Mariscal

  	
   

  
	
   

  	
  SUSANA MARISCAL

  
	
   

  
	
   

  	
  Address:

  	
  1027 Emerald Bay Road

  
	
   

  	
   

  	
  So. Lake Tahoe, CA 96150Exhibit 10.22

 

LEASE AGREEMENT

 

THIS LEASE AGREEMENT, made and entered into this 2nd
day of October 2001, 2001, by and between RENO 26, LLC, a Nevada
Limited Liability Company (hereinafter “Lessor”), and NEVADA SECURITY BANK, a
Nevada Bank, its subsidiaries and affiliates, with its principal offices at 595
Double Eagle Court, #2100, Reno, Nevada 89511 (hereinafter “Lessee”).

 

WITNESSETH

 

1.             PREMISES.

 

In consideration of the mutual covenants and agreements set forth
herein, Lessor leases to Lessee and Lessee leases from Lessor, for the rental
and on the terms and conditions hereinafter set forth, certain real property
situated in the City of Reno, County of Washoe, State of Nevada, located at the
Northeast corner of Double R and South Meadows Boulevards, and described as
approximately 9,300 square feet, including twelve (12) designated parking
stalls at the front building entrance and adequate public parking, to be used
for a commercial bank, including drive-thru, ATM, night drop, etc., and all
other related uses.  Said real property,
including the land and all easements, tenant improvements and appurtenances
therein, is hereinafter referred to as the “Premises.”

 

The Premises are located within a parcel designed for the occupancy of
more than one lessee.  Lessee
acknowledges that the site contains area intended for the use in common by all
occupants of the site.  As long as
Lessee occupies the Premises, Lessee and its employees, agents, and invitees
shall have the right to use, in common with Lessor, its successors, assigns and
other lessees, all of the common areas, except for the areas reserved for the
exclusive use of Lessor or other lessees or occupants on site.

 

2.             TERM.

 

The term of this Lease shall commence on Substantial Completion of the
Tenant Improvements (“Commencement Date”) and shall end ten (10) years from the
date (“Termination Date”) unless terminated earlier by either party under the
terms of this Lease.  For purposes of
this paragraph, Substantial Completion of Tenant Improvements shall occur when
a Certificate of Occupancy is issued for the Premises.

 

If the Premises are not available for occupancy by July 15, 2002,
Lessee shall have the right to terminate this lease without any further
obligation or liability whatsoever.

 

3.             USE.

 

Lessee shall not occupy or use or permit any portion of the Premises to
be occupied or used, for any business or purpose other than the use or uses as
set out in Paragraph 1.  Lessee shall
not create any nuisance, commit waste, or interfere with, annoy or disturb any
other lessees or occupants of the site. 
If a special use permit is required for Lessee’s intended use, Lessee
shall be responsible for the

 

1

 

acquisition and payment of any such permit from the appropriate
agencies.

 

4.                                       RENT.

 

Except as
provided herein, Lessee’s obligation to pay rent shall commence upon  its occupancy of the Premises as defined in
Paragraph 3 above, payable in advance on the 1st day of the month
during the term at the following address of Lessor:  Reno 26, LLC, 5370 Kietzke Lane, #207, Reno, NV 89511, or such
other address s may be designated by Lessor. 
Lessee shall be granted a five (5) business day grace period before the
rent is considered to be late.  A $100
late fee may be assessed by Lessor if the rent is paid after the 5th
business day of the month but on or before the 15th day of the month
(calendar day), except if the 15th is not a business day, then the
next business day shall be considered the 15th day of the month for
purposes of this lease.  Lessor may
impose a 3% late fee penalty if the rent is paid after the 15th day
of the month, but prior to the end of the month, and shall pay a 7% late
penalty if the rent is paid after the end of the month.  Late payments under this provision shall not
be cumulative.  For example, if the rent
I spaid after the end of the month, only the 7% late penalty may be
assessed.  Lessee hereby agrees to pay
Lessor, or assigns, the total sum per useable square foot per month, modified
trip net (NNN) as shown in the table below for the first four (4) years of the
lease.  The rents per month are for
approximately +/-7,5000 useable square feet of finished space and approximately
+/-1,800 square feet of unfinished space, the exact amount of useable space to
be determined by the floor plan attached hereto as Exhibit “A.”  In addition, Nevada Security Ban will p ay
its pro rata share of the common area space per BOMA standards, as determined
and certified by the project architect.

 

	
   

  	
   

  	
  Year 1

  	
   

  	
  Year 2

  	
   

  	
  Year 3

  	
   

  	
  Year 4

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Finished Space

  	
   

  	
  $

  	
  1.08

  	
   

  	
  $

  	
  1.35

  	
   

  	
  $

  	
  1.64

  	
   

  	
  $

  	
  1.94

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Unfinished Space

  	
   

  	
  $

  	
  0.90

  	
   

  	
  $

  	
  0.92

  	
   

  	
  $

  	
  0.95

  	
   

  	
  $

  	
  0.97

  	
   

  

 

Rent shall be increased annually, beginning in Year 5, on the
anniversary of the commencement date at the rate of 2.5%.  No other CPI increases shall be
charged.  Lessee has the right to finish
the Unfinished Space at its own expense for its own banking related use or
uses, or for other professional or retail use with the written permission of
the Lessor, which permission shall not be unreasonably withheld or delayed.

 

Rent shall be prorated for the fraction of a month, when applicable,
based on the number of days within the fractional month.  Lessor shall be responsible for payment of
all utility bills for utilities provided to the Premises and Lessor shall be
responsible for payment of all base year property taxes on the land and
finished building with the Lessee being responsible for its proportionate share
of future increases in the property taxes. 
For purposes of this paragraph, base year property taxes shall include
all real property taxes, assessments or obligations assessed against the
property one (1) year after the Commencement date.

 

2

 

Lessee shall also pay as additional rent its proportionate share of CAM
charges, upkeep and maintenance based on Lessor’s actual costs.  For purposes of this provision,
proportionate share shall be calculated by dividing the Premises by the total
square footage of all of the buildings which share in the CAM, the resulting
fraction shall be Lessee’s assigned percentage.  Lessor guarantees that CAM charges will not be more than $0.18
per square foot per month and will not increase more than $0.01 per square foot
per month per year (i.e., $0.18 first year, no more than $0.19 the second year,
etc.).  Lessee shall have the right to
review the actual CAM expenses paid by the Lessor.  Lessor shall have the obligation to Lessee to insure that the CAM
expenses incurred are reasonable and customary in the area for the services
performed.  Lessor shall obtain written
consent of the Lessee for CAM which are not reasonable or customary.

 

5.             QUIET ENJOYMENT.

 

Lessor hereby warrants that Lessor has the right to lease the Premises
to Lessee and that the individuals executing this lease are fully authorized to
and legally capable of executing this lease on behalf of Lessor.  Lessor covenants that Lessee shall, while
Lessee is not in default on the terms of this lease, peaceably and quietly hold
and enjoy the Premises for the lease term, without interference or hindrance
from Lessor or persons claiming by or through Lessor.

 

Lessor and Lessee agree, at the request of either party, concurrently
with the execution of this lease, they shall execute a memorandum of this lease
suitable for recording, which at the option of either party may be recorded.

 

6.             LESSOR’S ACCESS
TO THE PREMISES.

 

Provided that the exercise of such rights does not unreasonably
interfere with Lessee’s use or occupancy of the Premises, Lessor shall have the
right to enter the Premises at reasonable times during normal business hours
and upon reason advance notice to Lessee (except in the case of emergency) for
the purpose of making alterations, repairs or improvements to the property, or
to show the Premises to prospective lessees, and for other reasonably related
lawful purposes.

 

7.             COMPLIANCE WITH
LAWS.

 

At the time of Commencement, Lessor will be in compliance with any and
all applicable laws, ordinances, rules, regulations, orders and covenants,
whether promulgated by state, federal, municipal or any other agency or body
having jurisdiction over the Premises, and Lessor shall perform, or cause to be
performed, any alterations, repairs, improvements or replacements related to
the use, condition or occupancy of the Premises, including but not limited to
laws relating to design, construction, energy conservation, environmental,
fire, health and safety laws.

 

Should Lessor fail to comply with any such laws, rules or regulations,
Lessee may, at its option, make any such repairs, alterations, or replacements
and reduce the rental due hereunder in the amount of the cost incurred by
Lessee.

 

3

 

8.             ALTERATIONS AND
FIXTURES.

 

Lessee shall not, except with Lessor’s prior written consent, which
shall not be unreasonably withheld or delayed, make or cause to be made any
major alterations, decorations, additions or improvements to the Premises.  It is further understood and agreed by and
between the parties hereto that if Lessee installs furniture, fixtures or other
equipment with the written consent of Lessor, the furniture, fixtures or other
equipment may be detached and removed by Lessee at the expiration of this
lease, by the lapse of time or otherwise, provided the rent or other charges
upon Lessee are fully paid.  Any
alterations or repairs in excess of $15,000.00 will require written Landlord
approval.

 

9.             END OF TERM
HOLDOVER.

 

If Lessee remains in possession of the Premises at the expiration of
the term, or any renewal thereof, Lessee shall be deemed to be occupying the
Premises as a Lessee from month to month, at 150% of the monthly rental that
applied during the last month of the term or any renewal term.  In the event f a holdover, Lessee’s
occupancy of the Premises shall be subject to all other provisions of this
lease, but only as they are applicable to a month-to-month tenancy.

 

10.           SERVICES.

 

Lessor’s Obligations.  Lessor shall, at Lessor’s sole cost and
expense, provide approximately +/-7,500 usable square feet (as set forth in
Exhibit “A”) of office space with a $15.00 per usable square foot Tenant
Improvement Allowance.  Lessor has
provided Lessee certain specifications detailing what the Lessor will provide
to Lessee as a shell building, which specifications are attached to this lease
as Exhibit “B” and incorporated herein by reference as though set forth more
fully.  The Tenant Improvement Allowance
shall not include any improvements to be provided by Lessor as specified in Exhibit  “B.”

 

In the event Lessor is prevented or delayed in furnishing any service
or utility system set forth in this Lease for any reason, Lessee shall be
entitled to an abatement or reduction in rent, to the extent the failure to
provide services or utility systems or the delay in furnishing services or
utility systems substantially interferers with the conduct of Lessee’s
business.  Lessor reserves the right to
stop any service or utility system when necessary by reason of accident or
emergency, or until necessary repairs have been completed, provided, however,
that in each instance of stoppage, Lessor shall exercise reasonable diligence
to eliminate the cause thereof.  Except
in the case of emergency repairs, Lessor will give Lessee reasonable advance notice
of any contemplated stoppage and will use reasonable efforts to avoid
unnecessary inconvenience to Lessee.

 

4

 

11.           MAINTENANCE AND
REPAIRS.

 

Lessor’s Obligations.  Lessor warrants that the Premises and all of
its related areas and systems affecting the Premises are in compliance with all
applicable building codes and regulations. 
Lessor also warrants that for a period of twelve (12) months from the
Commencement Date ll mechanical, electrical, engineering, HVAC systems shall be
in good condition and working order and the roof to be in watertight
condition.  Lessee shall incur no
expenses relating to such systems by way of CAM charges or otherwise during the
twelve (12) month warranty period.

 

Lessee’s Obligations.  Subject to the foregoing provisions, Lessor
and Lessee agree tat the Lessor, by reason of the CAM charges and this
agreement, shall be responsible for the roof, structure, foundation,
electrical, mechanical, HVAC systems, exterior and all common areas of the
building in which the Premises are located. 
Lessee agrees to be responsible for interior maintenance of its leased
Premises and all glass, interior electrical, and plumbing (after a one year
warranty period).

 

12.           ASSIGNMENTS AND
SUBLEASES.

 

Lessee agrees not to assign or sublet all or any part of the Premises
without Lessor’s prior written consent, which shall not be unreasonably
withheld or delayed.

 

13.           INDEMNIFICATION
AND HOLD HARMLESS.

 

Lessor and Lessee shall indemnify and save each other harmless from and
against any and all liabilities, claims, and costs (including reasonable
attorney’s fees, penalties and fines) for death, injury, or damages to persons,
or properties during the term of this lease, arising from (a) any default by each
in the performance of its obligations under this lease, (b) the manner of each
party’s use and occupancy of the Premises, or (c) any acts, omissions, or
negligence of each party or its agents, employees, contractors or invitees.  If any action or proceeding is brought
against the other based upon any such claim, the party at fault shall cause
such action to be defended, at its expense, by counsel reasonably satisfactory
to the other party.  This hold harmless
and indemnity shall survive termination of this lease.

 

14.           FORCE MAJEURE.

 

In the event Lessor or Lessee is delayed, hindered or prevented from
performing any act or thing require hereunder by reason of strikes, lockouts,
labor troubles, casualties, failure or lace of utilities, governmental laws or regulations,
riots, insurrection, war, acts of God, or other causes beyond the reasonable
control of Lessor or Lessee , nether party shall be liable for the delay, and
the period for the performance by either party shall be inapplicable to the
payment of rent by Lessee and to the delivery of the Premises by Lessor.

 

5

 

15.           HAZARDOUS
MATERIAL.

 

Lessor/Lessee warrants that neither Lessor/Lessee, nor to
Lessor’s/Lessee’s knowledge, has any third party used, generated, managed,
treated or disposed of any regulated or environmentally hazardous substance on,
under or about the Premises or transported any regulated or environmentally
hazardous substance to or from the Premises. 
Lessor further warrants that it has no knowledge of the presence of any
regulated or environmentally hazardous substances in, on or within reasonable
proximity to the Premises, nor of any existing violations of any laws, rules,
regulations, or ordinances, including without limitation, any environmental
laws against or upon the Premises. 
Should Lessor or Lessee, during the term of this lease, or any
extensions thereof, become aware of the existence of any regulated or
environmentally hazardous substance being present on the Premises, Lessor/Lessee
shall promptly remove the source of said substance.  If Lessor/Lessee is unable, for any reason, to promptly cure said
condition, then Lessee/Lessor may terminate this lease at Lessee’s/Lessor’s
option.  Lessor/Lessee further warrants
that it will indemnify and hold Lessee/Lessor harmless from any and all losses,
claims, injuries, or causes of action (including reasonable attorneys’ fees)
arising out of or caused by the existence of any such hazardous or regulated
substances, not created by or brought on the Premises by Lessee/Lessor, during
the term and any renewals of this lease. 
This indemnification and hold harmless provision shall survive
termination of this lease.

 

16.           DESTRUCTION OF
THE PREMISES.

 

If the during the term of this lease, the Premises are destroyed or
damaged in whole or in part by fire or other casualty (even if only part of the
building other than the Premises is damaged), Lessor shall promptly and
diligently repair the Premises unless the lease is terminated as hereinafter
provided.  Rent shall abate until such
repairs and restoration are made, or until the lease is terminated as
hereinafter provided; further provided, however, that if such fire or other
casualty is caused by fault or negligence of Lessee, its employees or agents, Lessee
shall not be entitled to any such abatement.

 

Within thirty (30) days of the date of such damage, Lessor shall notify
Lessee whether Lessor will restore the Premises, and provide Lessee with
Lessor’s anticipated time frame for the restoration or that the restoration
cannot be completed within a three (3) month period.  If the damage, whether to the Premises alone, another part of the
building, or both, renders the Premises unrentable for Lessee’s intended purposes
in whole or in part, and is so extensive that Lessor cannot restore or repair
the Premises to pre-casualty condition within a period of three (3) months from
the date of such fire or other casualty, either party shall have the right to
terminate this lease by notice to the other party.  In the event the damage, in Lessor’s reasonable opinion, can be
restored to pre-casualty condition within a period of three (3) months from the
date of such fire or other casualty, Lessor shall undertake to restore the
Premises and the building in a prompt and diligent manner.

 

17.           EMINENT DOMAIN.

 

In any part of the Premises shall be taken or condemned by eminent
domain and renders the Premises unsuitable for the business of Lessee, the term
of this lease shall cease and terminate as of the

 

6

 

date of title to the Premises vests in the condemning authority.  All compensation awarded for any taking
under the power of eminent domain, whether for the whole or a part of the
Premises, shall be the property of the Lessor, whether awarded compensation for
diminution on the value of the leasehold or to the fee of the Premises or
otherwise, and Lessee hereby assigns to Lessor all of the Lessee’s right, title
and interest in and to any and all such compensation; provided, however, that
Lessor shall not be entitled to any award properly belonging to Lessee,
including, but not limited to, the taking of Lessee’s trade fixtures,
furniture, or for any award for moving expenses.

 

18.           OPTION TO RENEW.

 

In the event Lessee is not then in default in any of its obligations
under this lease, Lessor hereby grants to Lessee an option to extend this lease
for four (4), five (5) year periods, each at 95% of the then “ market”
rent.  To exercise these options, Lessee
shall give Lessor 120 days prior written notice of Lessee’s exercise of its
option to extend this lease.  “Market”
rent for purposes of this provision shall be defined as rents received on new
leases for similar commercial properties under similar terms and
conditions.  If the parties cannot agree
on such rent, the parties shall agree to hire a mutually acceptable appraiser
(and each party shall pay 50% of the appraisal fee) and agree to abide by the
rental recommendation made by the appraiser.

 

19.           DEFAULT.

 

Lessor:     If Lessor defaults in the performance of
any term, covenant, or condition required to be performed by it under this
lease, Lessee may elect either one of the following:

 

(a)     After not less than
thirty (30) days written notice to Lessor, Lessee may remedy such default by
any necessary action , and in connection with such remedy may pay expenses and
employ counsel; all sums expended  or
obligations incurred by Lessee in connection therewith shall be paid by Lessor
to Lessee on demand, and on failure of such reimbursement, Lessee may, in
addition to any other right or remedy that Lessee may have, deduct the cost and
expenses thereof form rent due hereunder; or

 

(b)     Elect to terminate this
lease on giving at least forty-five (45) days’ notice to Lessor, thereby terminating
this lease on the date designated in such notice, unless Lessor shall have
cured such default prior to expiration of the forty-five (45) day period.

 

Lessee:     If Lessee does not pay the entire amount
of rent due within 30 days of its due date, and after 15 days written notice
that such rent is 30 days late, then Lessor may declare this lease at an end
and recover possession of the Premises as if the same were held by forcible
detainer, and Lessee does hereby waive notice of such election, or of any
demand for the possession of the Premises. 
In exercising any of its remedies hereunder, Lessor shall be obligated
at all times to mitigate its damages and act toward Lessee in a manner that is
consistent with its obligations under the covenant of good faith and fair
dealing implied in this lease.

 

7

 

Insolvency/Bankruptcy:     Notwithstanding anything to the contrary
in this lease agreement, in the event (a) Lessee or its successors or assignees
shall become insolvent or bankrupt, or it or their interests under this lease
shall be levied upon or sold under execution or other legal process, or (b) the
depository institution then operating on the Premises is closed, or is taken
over by any depository institutions regulatory authority (“Regulatory
Authority”), Lessor may, in either such event, terminate this Agreement only
with the concurrence of any Receiver or Liquidator appointed by such Regulatory
Authority, provided that, in the event this Lease is terminated by the Receiver
or Liquidator, the maximum claim of Lessor for rent, damages or indemnity for
injury resulting from the termination, rejection or abandonment of the
unexpired lease shall by law in no event be an in amount greater than all
accrued and unpaid rent, triple-net charges and prorations to the date of
termination.

 

20.           PROMINENT SIGNS
ON BUILDING.

 

Lessee shall be permitted maximum signage rights as per the CC&Rs
and applicable municipal codes.  Lessee
shall also be entitled to lighted sings on three (3) sides of the building as
large as is permissible under local regulations.  Lessee shall also be entitled to building signage on the shopping
cent sign at no additional cost.

 

21.           COMMISSIONS.

 

It is understood that Lessor is responsible for the payment of any and
all leasing commissions.

 

22.           AMERICANS WITH
DISABILITIES ACT.

 

Lessor agrees to be in compliance at the Commencement date with all
requirements of the American with Disabilities Act (Public Law 101-336,
July 26, 1990)(the “Act”); applicable to the Premises and applicable to
the building and project to accommodate Lessee’s employees, invitees and
customers.  Lessor acknowledges that is
shall be wholly responsible for any accommodations or alterations which need to
be made to the Premises to accommodate Lessee’s employees, customers and
invitees and for making any additional accommodations or alterations which need
to made to the building or the project to accommodate Lessee’s employees,
invitees and customers.  Lessor agrees
to indemnify and hold Lessee harmless from any and all expenses, liabilities,
costs or damages suffered by Lessee’s employees, invitees and customers as a
result of Lessor’s failure to fulfill its aforesaid responsibilities regarding
making such accommodations and alterations referenced in this paragraph.  No provision in the lease should be
construed in any manner as permitting, consenting to or authorizing Lessor to
violate requirements under such Act and any provision of the lease which could
arguably be construed as authorizing a violation of the Act shall be
interpreted in a manner which permits compliance with such Act and is hereby
amended to permit such compliance. 
Lessee shall cooperate fully with Lessor to enable Lessor to timely
comply with the provisions of the Act.

 

8

 

23.           NO JOINT VENTURE.

 

Nothing contained herein nor the acts of the parties shall be deemed or
construed to create the relationship of principal and agent, partnership, joint
venture, or similar relationship or arrangement, it being understood that the
relationship between the parties is solely that of Lessor and Lessee.

 

24.           INSURANCE AND
WAIVER OF SUBROGATION.

 

Lessee, at its own expense, shall maintain during the term of this
lease, Commercial General Liability Insurance in a combined single limit of
$1,000,000 bodily injury (including loss of life), and property damage arising
in any one occurrence.

 

Lessor and Lessee hereby mutually waive their respective rights of
recovery against each other for any loss insured by fire, extended coverage or
all risk property insurance policy.

 

25.           ATTORNEY’S FEES.

 

If either party herein brings an action to enforce the terms of this
lease, the prevailing party in such action shall be entitled to reasonable
attorneys’ fees to be paid by the non-prevailing party.

 

26.           SUCCESSORS AND
ASSIGNS.

 

Each of the provisions of this lease shall extend to and shall, as the
case may require, bind or inure to the benefit of Lessor and Lessee, and their
respective subsidiaries, affiliates, heirs, legal representatives, successors
and assigns.  In the event the Lessor
should sell the property, including the Premises, the sale shall include full
assignment of the terms and conditions of this lease.

 

27.           HEADINGS.

 

The titles and headings of this lease are for convenience of reference
only and shall not in any way be deemed a part of this lease for the purposes
of construing or interpreting the meaning thereof, or for any other purpose.

 

28.           GOVERNING LAW.

 

This lease shall be governed by and construed in accordance with the
laws of the State of Nevada.

 

29.           RIGHT OF FIRST
OFFER.

 

If, during the period of this lease or any subsequent renewals, Lessor
desires to transfer, assign or otherwise convey to any third party (with the exception
of related parties for estate planning

 

9

 

purposes) title to the building in which the premises are located (the
“Building”),Lessee shall first be offered the Building for sale at Lessor’s
sale price. Lessee shall then have forty-five (45) days to accept or reject the
offer to purchase the Building.  If
Lessee rejects Lessor’s offer and Lessor later chooses to reduce the asking
prices by more than five percent (5%) or chooses to accept an offer from a
third party of less than five percent (5%) of the orignalk asking price, Lessor
must first offer this reduced price and terms to Lessee.  Lessee shall then have twenty (20) days to
accept or reject the terms of the new ofdfer.

 

30.           LESSEE AS
SUB-LESSOR.

 

At such time as the second floor of the Premises is available for
occupancy, Lessor shall offer occupancy or the ability to sublet said premises
to Lessee, at which time Lessee shall have ten (10) days in which to accept the
premises or decline its rights pursuant to this provision.

 

31.           ARBITRATION.

 

Mandatory Binding Arbitration.

 

A.            General:     Any dispute arising between the parties,
or their successors-in-interest concerning the meaning or interpretation of
this lease or any dispute arising under this lease, or the rights, duties or
obligations of the parties, including their successor-in-interest, shall, with
reasonable promptness, be submitted to and determined by arbitration in Reno,
Nevada, by the arbitration rules then in force and effect, and judgment upon
any award rendered may be entered in any court having jurisdiction thereof, and
any such party may, if he so elects, institute proceedings in any court having
jurisdiction for the specific performance by any party of any such awarded.  The arbitration proceedings shall be
governed by Nevada Revised Statutes Chapter 38, Uniform Arbitration Act.  Any would otherwise be applicable in a
judicial action brought by a party shall be applicable in any arbitration
proceeding hereunder.

 

B.            Selection of
Arbitrators:  A request for
arbitration shall be made by delivery by the party seeking arbitration to the
other party, a written notice of intent to arbitrate. Within thirty (30) days
after written notice of submission to arbitration, the disputing parties shall
each select an arbitrator who is experienced, impartial, disinterested and of
recognized competence and notify the other party in writing of its
selection.  Within twenty (20) days
after the selection of the two arbitrators, the two arbitrators shall select a
third arbitrator.  The three arbitrators
shall hear and decide such dispute.

 

32.           ENTIRE AGREEMENT.

 

This lease contains the entire agreement and understanding between
Lessor and Lessee relating to the leasing of the Premises and obligations of
Lessor and Lessee.  This lease
supersedes any and all prior or contemporaneous agreements and understandings
between Lessor and Lessee, and shall not be modified or amended unless both
Lessor and Lessee agree in writing.

 

10

 

33.           CONTINGENCIES.

 

This agreement is contingent upon the
approval or non-disapproval of any and all regulatory banking agencies.
Further, this agreement is contingent upon the delivery of adequate
descriptions per Schedule ”A” and “B”, as well as appropriate supporting
documentation concerning the building plans, elevations and condition of the
building shell, upon its delivery to the Lessee.

 

34.           NOTICES.

 

The parties can be notified by certified or registered mail or
overnight delivery services with verification of delivery as follows:

 

	
  Lessor:

  	
   

  	
  Reno 26, LLC

  
	
   

  	
   

  	
  5370 Kietzke Lane, #207

  
	
   

  	
   

  	
  Reno, NV 89511

  
	
   

  	
   

  	
  Attn:  Douglas Clemetson

  
	
   

  	
   

  	
   

  
	
  Lessee:

  	
   

  	
  Nevada Security Bank

  
	
   

  	
   

  	
  595 Double Eagle Court, #2100

  
	
   

  	
   

  	
  Reno, NV 890511

  
	
   

  	
   

  	
  Attn:  Jack Buchold

  
	
   

  	
   

  	
   

  
	
  With copy to:

  	
   

  	
  John K. Gallagher, Esq.

  
	
   

  	
   

  	
  Guild, Russell, Gallagher & Fuller, Ltd.

  
	
   

  	
   

  	
  P.O. Box 2838

  
	
   

  	
   

  	
  Reno, NV  89505

  

 

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

 

	
  LESSOR:

  	
  LESSEE:

  
	
   

  	
   

  
	
  Reno 26, LLC

  	
  NEVADA SECURITY BANK

  
	
   

  	
   

  
	
  By:

  	
  /s/ Douglas Clemetson

  	
   

  	
  By:

  	
  /s/ Hal Giomi

  	
   

  
	
  Title:

  	
   Member

  	
   

  	
  Title:

  	
  President & CEO

  	
   

  
								

 

11

 

AMENDMENT “A”

To the Office Lease dated October 2,
2001

Between Reno 26, LLC (Landlord) and

The Nevada Security Bank (Tenant)

 

As of this date, the above referenced Lease is to be revised to reflect
the following:

 

1.        Paragraph 3 shall include the
following:  “Lessee is responsible for
any permits, fees and associated usage charges based upon their specific use.”

2.        Paragraph
4:

a.         Modified Triple Net (NNN) shall include
Lessee’s responsibility for interior maintenance of leased premises (excluding
the one-year basic interior warranty), interior janitorial services including
restrooms within the space and an appropriate portion of Liability Insurance.

b.        As per BOMA standards, attached and
incorporated as Exhibit “B” to the Lease, the total leaseable area is 9,202
square feet.  Using the formula for the
finished space of 80.65% of the Leaseable area, then the finished space would
be 7,421.41 square feet.  The 7,421.41
would then be multiplied by  the Lease
Rates as outlined in Paragraph 4 for the appropriate years.  Accepting the Finished Space at 7,421.41
square feet, the unfinished space would then be 1,780.59 square feet, which
would then be multiplied by the Lease Rates outlined in Paragraph 4 for the
appropriate years.

3.        Paragraph
10:

a.         Total Tenant Improvement Allowance
shall be $111,321.20 based upon the Finished Space calculation in Paragraph 4.

b.                         The
Lessor shall pay the difference for extending the roofline from the  standard drip line to accommodate the
drive-thru.  Also, Lessor shall pay  for any and all costs directly associated
with the construction of the drive-thru.

4.        Paragraph
11:

a.                          Shall be
revised to read “... Lessee agrees to be responsible for interior maintenance of
its leased Premises and all glass, interior electrical, and plumbing (after one
year standard warranty period)., and liability and personal property insurance
for Lessee’s leased space.

b.        CAM charges shall also include a prorata
change for property insurance including replacement costs fore Lessee’s real
property improvements.

 

	
  In witness whereof, the parties hereto have executed this Amendment
  to this Lease:

  	
   

  
	
   

  	
   

  
	
  Landlord:

  	
  Tenant:

  
	
  /s/ Douglas Clemetson

  	
  /s/ Hal Giomi

  
	
  Douglas Clemetson, Member

  	
  Nevada Security Bank

  
	
  4-24-02

  	
  4-22-02

  
	
  Date

  	
  Date

  
			

 

12

 

[SOUTH MEADOW: Area Calculations chart]

 

13

 

[GROUND FLOOR TENANT AREAS MAP]

 

14

 

ASSIGNMENT
OF LEASE

 

For good and valuable consideration, receipt of which is hereby
acknowledged, NEVADA SECURITY BANK , as Tenant, RENO 26, LLC as Landlord, and
RR BOULEVARD INVESTMENTS, LLC as Assignee, hereby agree to the following
assignment of Lease:

 

Landlord hereby assigns, transfers and conveys to Assignee all his
rights and interests under a certain Lease dated October 2, 2001 (“Lease”)
by and between the Tenant and Landlord for the premises described within
Paragraph 1 of aforementioned Lease.

 

This assignment shall remain in full force and effect from
September 1, 2002 for all of the remainder of the lease term, subject to
all conditions, including payment of rents, all covenants, conditions and terms
of the Lease.

 

The Tenant’s assent to the assignment of said Lease shall not discharge
Landlord of its obligations under the Lease in the event of breach by the
Assignee.

 

The mailing address for RR Boulevard Investments, LLC is as follows:

 

5310 Kietzke Lane

Suite 204

Reno, NV 89511

 

This agreement shall inure to be benefit of and be binding on the
parties hereto, their heirs, successors and assigns.

 

	
  Dated:  

  	
  5/15/02

  	
   

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
   Jack Buchold, CFO

  	
   

  
	
  Nevada Security Bank, Tenant

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Douglas C. Clemetson

  	
   

  
	
  RR Boulevard Investments, LLC, Assignee

  
	
   

  
	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Douglas C. Clemetson

  	
   

  
	
  Reno 26, LLC, Landlord

  
					

 

15

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