Document:

Exhibit 10.2

 

STANDARD RETAIL LEASE

 

BETWEEN

 

Pacific Solana Beach Holdings, LP

 

AS LANDLORD

 

AND

 

Landmark National Bank

(a proposed national bank)

 

AS TENANT

 

 

	
   

  	
   

  	
  o

  	
  Landlord’s
  Original

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  x

  	
  Tenant’s
  Original

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  o

  	
  Landlord’s
  file copy

  

 

 

TABLE OF CONTENTS

 

	
  1.

  	
   

  	
  Agreement
  to Let

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Principal
  Lease Provisions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Term

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Delivery
  of Possession

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Use
  of Premises and Common Areas

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
  5.1.

  	
  Permitted
  Use of Premises

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
  5.2.

  	
  Compliance
  With Laws

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
  5.3.

  	
  Continuous
  Use

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
  5.4.

  	
  Use
  Of Common Areas

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
  5.5.

  	
  General
  Covenants and Limitations on Use

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Security
  Deposit

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Rent

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Lease
  Expenses

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
  8.1.

  	
  Definition
  of Lease Expenses

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
  8.2.

  	
  Payment
  of Lease Expenses

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Utilities
  and Services

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Maintenance

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
  10.1.

  	
  Tenant’s
  Duties

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
  10.2.

  	
  Landlord’s
  Duties

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Net
  Lease

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Parking

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Signs

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  Rules,
  Regulations, and Covenants

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  Early
  Access Insurance

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  Plate-Glass
  Insurance

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17.

  	
   

  	
  Public
  Liability and Property Damage Insurance

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  18.

  	
   

  	
  Fire
  and Extended Coverage Insurance

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  19.

  	
   

  	
  Business
  Interruption Insurance

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  20.

  	
   

  	
  Insurance
  Generally

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  21.

  	
   

  	
  Waiver
  of Subrogation

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  22.

  	
   

  	
  Landlord’s
  Insurance

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  23.

  	
   

  	
  Taxes

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  23.1.

  	
  Personal
  Property Taxes

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
  23.2.

  	
  Real
  Property Taxes

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  24.

  	
   

  	
  Alterations

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  25.

  	
   

  	
  Surrender
  of Premises and Holding Over

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  26.

  	
   

  	
  Default

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  27.

  	
   

  	
  Landlord’s
  Remedies

  	
   

  	
  11

  
											

 

	
   

  	
  Landlord

  	
  /s/ [ILLEGIBLE]

  	
   

  	
  Tenant

  	
  /s/ [ILLEGIBLE]

  	
   

  

 

i

 

STANDARD RETAIL LEASE

 

Lomas Santa Fe Plaza

 

This
Standard Retail Lease (“Lease”) is made, for reference purposes only, this 16th day of August, 2001, between Pacific
Solana Beach Holdings, LP, a California limited partnership (“Landlord”),
and Landmark National Bank (a proposed national bank) (“Tenant”), who
agree as follows:

 

1.  Agreement to Let. Landlord hereby
leases to Tenant, and Tenant hereby leases from Landlord, upon all the terms,
provisions, and conditions contained in this Agreement, those certain premises
described in Paragraph 2.2, below (the “Premises”), consisting of a portion of
that certain building described in paragraph 2.1.1 below (the “Building”),
which is a part of the Project (as defined in Paragraph 2.1, below), along with
the non-exclusive right to use, in common with Landlord, Landlord’s invitees
and licensees, and the other users of space within the Project, those portions
of the Project intended for use by the tenants of the Project in common
including, without limitation, the landscaped areas, passageways, walkways,
hallways, parking areas, and driveways (the “Common Areas”). This Lease confers
no rights, however, to the roof, exterior walls, or utility raceways of the
Building nor rights to any other building (if any) in the Project, nor with
regard to either the subsurface of the land below the ground level of the
Project, or with regard to the air space above the ceiling of the Premises;
provided, however, that Tenant shall have the limited right to access systems
and equipment exclusively serving the Premises (for which Tenant has
maintenance and repair responsibilities pursuant to Paragraph 10.1 below) that
may be located on the roof, in exterior or demising walls, in utility raceways,
airspaces or in any other portion of the Building or Project for the sole
purpose of maintaining, repairing and replacing the same.

 

2.  Principal Lease Provisions. The
following are the Principal Lease Provisions of this Lease. Other portions of
this Lease explain and define the Principal Lease Provisions in more detail and
should be read in conjunction with this Paragraph. In the event of any conflict
between the Principal Lease Provisions and the other portions of this Lease,
the Principal Lease Provisions shall control. (Terms shown in quotations are
defined terms used elsewhere in this Lease)

 

2.1.  “Project”:
905-993 Lomas Santa Fe Plaza, Solana Beach, CA 92075 (see Exhibit “A”)

 

2.1.1.  “Building”: 905, 909
& 937 Lomas Santa Fe Drive, Solana Beach, CA 92075 (see Exhibit “A”)

 

2.2.  “Premises”: 937 Lomas
Santa Fe Drive, Suites A, B and C, Solana Beach, CA 92075 (see Exhibit “B”)

 

2.3.  Leasable Area of the
Premises: Approximately 5,543 square feet (subject to adjustment based
upon field verification of the Premises following occupancy by Tenant).

 

2.4.  “Initial Lease Term”: Ten
(10) Years and Zero (0) Months

 

2.4.1.  “Lease Commencement Date”:
September 1, 2001

 

2.4.2.  “Initial Expiration Date”:
August 31, 2011 (or such other date as determined pursuant to Addendum
No.1, Paragraph 5)

 

2.4.3.  Extension Rights: Yes x  No o
(subject to the terms and conditions of the attached Addendum No.1)

 

2.5.  “Anchor Tenants” in the
Project: Vons, Ross Store, We-R-Fabrics and Blockbuster Videos are
designated as Anchor Tenants in the Project as of the Lease Commencement Date
of this Lease, along with such other tenants in the Project as may be so
designated by Landlord from time to time.

 

2.6.  “Basic Monthly Rent”: Upon
the Rent Commencement Date, the Basic Monthly Rent, shall be $14,688.95
(subject to adjustment as provided in attached Addendum No. 1). Basic Monthly
Rent, as it is adjusted from time to time, shall always be due on or before the
first day of each month on and after the Rent Commencement Date.

 

2.6.1.  “Rent Commencement Date”:
September 1, 2001.

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

1

 

2.7.  “Security Deposit”: $14,688.95.
Tenant’s Security Deposit does not constitute last month’s rent. Last month’s
rent must be separately paid by Tenant on or before the first day of the last
month of the Lease Term. Notwithstanding the above, the Security Deposit shall
be applied to the rent owing for the thirty-seventh month after the Rent
Commencement Date provided Tenant is not then in default under this Lease and
Tenant’s Net Worth has not, at any time during the Lease Term, declined below
the level of eighty percent (80%) of its Net Worth at the Lease Commencement
Date.

 

2.8.  “Percentage Rent”: Yes o  No x; if
Yes, “Sales Percentage”

(If
yes, see Addendum No.1)

 

2.9.  Guarantor: None
(subject to the terms and conditions of the attached Addendum No. 2, if so
provided).

 

	
  2.10.

  	
   

  	
  Address
  for Landlord:

  	
   

  	
  Pacific
  Solana Beach Holdings, LP

  
	
   

  	
   

  	
   

  	
   

  	
  c/o
  American Assets, Inc,

  
	
   

  	
   

  	
   

  	
   

  	
  11455
  EI Camino Real, Suite 200

  
	
   

  	
   

  	
   

  	
   

  	
  San
  Diego, CA 92130

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.11.

  	
   

  	
  Addresses
  for Tenant:

  	
   

  	
  Legal
  Notice Address (following occupancy) 

  
	
   

  	
   

  	
   

  	
   

  	
  Landmark
  National Bank 

  
	
   

  	
   

  	
   

  	
   

  	
  937
  Lomas Santa Fe Drive, Suites A, B and C 

  
	
   

  	
   

  	
   

  	
   

  	
  Solana
  Beach CA 92075 

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  James J. Schmid

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  cc:
  Chelsea Investment Corporation 

  
	
   

  	
   

  	
   

  	
   

  	
  215
  So. Highway 101, Suite 200

  
	
   

  	
   

  	
   

  	
   

  	
  Solana
  Beach, CA 92075

  
	
   

  	
   

  	
   

  	
   

  	
  (858)
  259-2624

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  cc:
  James K. Sterrett, Esq.

  
	
   

  	
   

  	
   

  	
   

  	
  3525
  Del Mar Heights Road, Suite 291

  
	
   

  	
   

  	
   

  	
   

  	
  San
  Diego, CA 92130

  
	
   

  	
   

  	
   

  	
   

  	
  (858)
  350-8092

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Legal
  Notice Address (prior to occupancy)

  
	
   

  	
   

  	
   

  	
   

  	
  Landmark
  National Bank 

  
	
   

  	
   

  	
   

  	
   

  	
  Corporate
  Offices 

  
	
   

  	
   

  	
   

  	
   

  	
  140
  Marine View Avenue, Suite 202 

  
	
   

  	
   

  	
   

  	
   

  	
  Solana
  Beach, CA 92075 

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:
  Ron Bird 

  
	
   

  	
   

  	
   

  	
   

  	
  (858)
  509-2700

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  cc:
  James K. Sterrett, Esq. 

  
	
   

  	
   

  	
   

  	
   

  	
  3525
  Del Mar Heights Road, Suite 291

  
	
   

  	
   

  	
   

  	
   

  	
  San
  Diego, CA 92130 

  
	
   

  	
   

  	
   

  	
   

  	
  (858)
  350-8092

  

 

2.12.  Permitted Uses By Tenant: The
Premises shall be used and occupied only as the retail branch office of a
financial institution (including, subsidiaries or corporate affiliates subject
to exclusive uses granted to other tenants in the Project), including any other
purpose legally authorized for a financial institution of the size and legal
qualifications of Tenant, including headquarter offices of the financial
institution not to exceed 2,500 leasable square feet), which shall be open to
the public. Tenant shall have the right to install and operate an ATM and a “Night
Depository” for the facility at the storefront of the Premises, and for no
other use or purpose. (“Permitted Use”)

 

2.13.  Exclusive
Uses By Tenant: Yes o  No
x (If yes, see Addendum No. 1.)

 

2.14.  Required
Operating Hours and Days: The Operating Hours shall be what are customary
for a business of this nature in San Diego county.

 

2.15.  Permitted
Trade Name: Landmark National Bank or Landmark Bancshares

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

2

 

2.16.  Participating
Brokers: Flocke & Avoyer Commercial Real Estate representing the
Landlord and Buraham Real Estate Services, Inc. representing the Tenant.

 

2.17.  Amounts
Payable upon Execution: $29,377,90 representing first months Basic
Monthly Rent and Security Deposit.

 

3.  Term.  The term of this Lease (“Term”) shall
commence on the “Lease Commencement Date”, as defined in Paragraph 2.4.1,
above, and shall expire on the “Initial Expiration Date”, as defined in Paragraph
2.4.2, above, subject to (i) any modifications to such dates described in
Exhibit “C” to this Lease, (ii) any extension rights described in the Addendum
to this Lease, and (iii) earlier termination, as provided in this Lease. The
term “Expiration Date”, as used in this Lease shall mean the Initial Expiration
Date, any earlier date upon which this Lease is terminated by Landlord, as
provided below, or if the Term is extended, then any extended Term expiration
date.

 

4.  Delivery of Possession.  On or before the Lease Commencement Date,
Landlord, at its cost, shall have substantially completed the work, if any,
required to be completed by Landlord prior to the delivery of the Premises to
Tenant, as described in Exhibit “C” to this Lease (the “Landlord's Work”). For
purposes of this Paragraph, the term “substantially complete” shall mean
completed to such an extent that Tenant can commence its work, if any, to be
undertaken by Tenant, as described in Exhibit “C” to this Lease (the “Tenant’s Work”),
without material delay or interference due to the completion of Landlord’s Work,
or if no such Tenant’s Work is to be undertaken, then such term shall mean
completed to such an extent that the Landlord’s Work can be finally completed
within thirty (30) days and without material interference to Tenant’s occupancy
and use of the Premises. If possession of the Premises (including, without
limitation, substantial completion of the Landlord’s Work, if any) is not
delivered to Tenant on or before the Lease Commencement Date stated in
Paragraph 2.4.1, above, then Landlord shall not be liable for any damage caused
by such delay, and such delay shall neither affect the validity of this Lease,
affect Tenant’s obligations under this Lease, nor extend the Term. Tenant’s acceptance
of possession of the Premises shall constitute Tenant’s acknowledgement that it
has inspected the Premises, that Tenant accepts the Premises in its then “as is”
condition, that to the best of Tenant’s knowledge the Premises comply with all
applicable laws and ordinances, and that the Premises are in first-class
condition and repair. Except, for any items set forth on a “punch list” of
excepted items delivered to Landlord upon the Lease Commencement Date, Tenant
shall be deemed to have (i) acknowledged that Landlord’s Work has been
substantially completed and (ii) accepted the Premises in its then as-is
condition with no right to require Landlord to perform any additional work
therein, except as set forth on the punch list.

 

5.  Use of Premises and Common Areas.

 

5.1.  Permitted Use of Premises.  Tenant may use the Premises for the Permitted
Use specified in Paragraph 2.12 and for no other use. Any change in the
Permitted Use (or any change in Tenant’s trade name from the Permitted Trade
Name identified in Paragraph 2.15, above) shall require Landlord’s prior
written consent, which consent may be granted or withheld in Landlord’s
reasonable discretion.

 

5.2.  Compliance With Laws.
 Tenant shall comply with all laws
concerning the Premises and/or Tenant’s use of the Premises, including without
limitation the obligation at Tenant’s sole cost to alter, maintain, or restore
the Premises in compliance with all applicable laws, even if such laws are
enacted after the date of this Lease, even if compliance entails costs to
Tenant of a substantial nature and even if compliance requires structural
alterations. Notwithstanding the foregoing, during the last two months of the
Lease term, Tenant’s costs to comply with all applicable laws, excluding any
costs of compliance with Paragraph 38 of the Lease, shall not exceed two months
of Rent. Such obligation to comply with laws shall include without limitation
compliance with Title III of the Americans With Disabilities Act of 1990 (42
U.S.C 12181 et seq.) (the “ADA”). If Tenant’s use of
the Premises results in the need for modifications or alterations to any
portion of the Common Area or the Project in order to comply with the ADA, then
Tenant shall additionally be responsible for the cost of such modifications and
alterations.

 

5.3.   Continuous Use. The parties understand
that Tenant’s business is an integral and important part of this Center and,
therefore, Tenant shall continuously use and occupy the Premises for the
Permitted Use specified in Paragraph 2.12 of this Lease and shall continuously
keep the Premises open for business for such days and hours as are customary
for financial institutions of the same legal category and size as Tenant.

 

5.4.  Use of Common Area. Tenant’s
use of the Common Area shall at all times comply with the provisions of all
rules and regulations regarding such use as Landlord may from time to time
adopt. In no event shall the rights granted to Tenant to use the Common Area
include the right to store any property in the Common Area, whether temporarily
or permanently. Any property stored in the Common Area may be removed by
Landlord and disposed of, and the cost of such removal and disposal shall be
payable by Tenant upon demand. Additionally, and except for armored vehicles,
in no event shall Tenant use any portion of the Common Area for loading,
unloading, or parking, except in those areas specifically designated by
Landlord for such purposes, nor for any sidewalk sale of similar commercial
purpose.

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

3

 

5.5.  General Covenants and
Limitations on Use.  Tenant shall not
do, bring, or keep anything in or about the Premises that will cause a
cancellation of any insurance covering the Premises. If the rate of any
insurance carried by Landlord is increased as a result of Tenant’s use, Tenant
shall pay to Landlord, within ten (10) days after Landlord delivers to Tenant a
notice of such increase, the amount of such increase. Furthermore, Tenant
covenants and agrees that no noxious or offensive activity shall be carried on,
in or upon the Premises nor shall anything be done or kept in the Premises which
may be or become a public nuisance or which may cause embarrassment,
disturbance, or annoyance to others in the Building, on the Project, or on
adjacent or nearby property. To that end, Tenant additionally covenants and
agrees that no light shall be emitted from the Premises which is unreasonably
bright or causes unreasonable glare; no sounds shall be emitted from the Premises
which are unreasonably loud or annoying; and no odor shall be emitted from the
Premises which is or might be noxious or offensive to others in the Building,
on the Project, or on adjacent or near-by property. Tenant shall not conduct or
permit any “fire sale”, public auction, sidewalk sale, going out of business
sale, or other such event in or about the Premises. In addition, Tenant
covenants and agrees that no unsightliness shall be permitted in the Premises.
Without limiting the generality of the foregoing, all unsightly equipment,
objects, and conditions shall be kept enclosed within the Premises and screened
from view; no refuse, scraps, debris, garbage, trash, bulk materials, or waste
shall be kept, stored, or allowed to accumulate except as may be properly
enclosed within the Premises; the Premises shall not be used for sleeping or
washing clothes, nor shall the Premises be used for cooking (unless the
Permitted Use is as a restaurant) or the preparation, manufacture, or mixing of
anything that might emit any odor or objectionable noises or lights onto the
Project or nearby properties; and all pipes, wires, polls, antennas, and other
facilities for utilities or the transmission or reception of audio or visual
signals shall be kept and maintained enclosed within the Premises. Tenant shall
be solely responsible for the timely removal of all refuse, scraps, debris,
garbage, trash, bulk materials, or waste from the Premises and the deposit
thereof in the trash containers or dumpsters located adjacent to the Building.
Further, Tenant shall not keep or permit to be kept any bicycle, motorcycle, or
other vehicle, nor any animal (excluding seeing-eye dogs), bird, reptile, or
other exotic creature in the Premises unless Tenant operates a bona fide pet
store, pet grooming facility, or other veterinary medicine clinic, hospital,
and /or related animal care facility under direct operation and supervision of
a State Licensed Veterinarian, and such use has been specifically approved in
writing by Landlord, which consent may be withheld in Landlord’s sole
discretion. Neither Tenant nor Tenant’s Invitees shall do anything that will
cause damage or waste to the Project. Neither the floor nor any other portion
of the Premises shall be overloaded. No machinery, apparatus, or other
appliance shall be used or operated in or on the Premises that will in any
manner injure, vibrate, or shake all or any part of the Project. In the event
of any breach of this Paragraph 5 by Tenant or Tenant’s Invitees, Landlord, at
its election, may pay the cost of correcting such breach and Tenant shall
immediately, upon demand, pay the cost thereof, plus a supervisory fee in the
amount of ten percent (10%) of such cost as additional rent.

 

6.  Security Deposit.  Upon the date of Lease Commencement, Tenant
shall deposit with Landlord cash in the amount of the Security Deposit set
forth in Paragraph 2.7, above (the “Security Deposit”), to secure the
performance by Tenant of its obligations under this Lease, including without
limitation Tenant’s obligations (i) to pay Basic Monthly Rent, Additional Rent,
and (if applicable) Percentage Rent, (ii) to repair damages to the Premises
and/or the Project caused by Tenant or Tenant’s agents, employees, contractors,
licensees, and invitees (collectively, “Tenant’s Invitees”),  (iii) to surrender the Premises in the
condition required by Paragraph 25, and (iv) to remedy any other defaults by
Tenant in the performance of any of its obligations under this Lease. If Tenant
commits any default under this Lease, Landlord may, at its election, use the
Security Deposit to cure such defaults, and to compensate Landlord for all
damage suffered by Landlord from such defaults, including, without limitation,
attorneys’ fees and costs incurred by Landlord. Upon demand by Landlord, Tenant
shall promptly pay to Landlord a sum equal to any portion of the Security
Deposit so used by Landlord, in order to maintain the Security Deposit in the
amount set forth in Paragraph 2.7, above (subject to increase as set forth
below). Following the Expiration Date or earlier termination of this Lease, and
within the time frame required by applicable law, Landlord shall deliver to
Tenant, at Tenant’s last known address, any portion of the Security Deposit not
used by Landlord, as provided in this or any other Paragraph. Landlord may
commingle the Security Deposit with Landlord’s other funds and Landlord shall
not pay interest on such Security Deposit to Tenant.

 

7.  Rent.  Tenant shall pay to Landlord as minimum
monthly rent, without deduction, setoff, prior notice, or demand, the Basic
Monthly Rent described in Paragraph 2.6, above (subject to adjustments as
provided in the attached Addendum), in advance, on or before the first day of
each calendar month, beginning on the Rent Commencement Date and thereafter
throughout the Term. If the Rent Commencement Date is other than the first day
of a calendar month, then the Basic Monthly Rent payable by Tenant for the
first month of the Term following the Rent Commencement Date (which first month
shall be payable upon execution of this Lease) shall be prorated on the basis
of the actual number of days during the Term occurring during the relevant
month. Notwithstanding the foregoing, if Landlord is delayed in completion of
Landlord’s Work due to any act or omission by Tenant or its agents, employees,
contractors, or representatives, then in addition to the Basic Monthly Rent
payable for the first month of the Term following the Rent Commencement Date,
additional rent (at the rate of one-thirtieth of the Basic Monthly Rent per
day) for the number of days of such delay. All “Rental” (which includes Basic
Monthly Rent, Percentage Rent, if any, and any items designated as “Additional
Rent” or referred to as additional rent hereunder) shall be paid to Landlord at
the same address as notices are to be delivered to Landlord pursuant to
Paragraph 2.10, above.

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

4

 

8.  Lease Expenses.

 

8.1.  Definition of Lease
Expenses.  As used in this Lease, the
term “Lease Expenses” shall mean and refer to all costs and expenses, of any
kind or nature, which are paid or incurred by Landlord relative to the
operation, repair, restoration, replacement, maintenance, and/or for management
of the Project including, without limitation, all costs and expenses relating
to: (i) all personnel involved in the operation, repair, replacement,
maintenance, and management of the Project (other than Landlord’s senior
corporate administrative personnel) including wages, fringe benefits, and other
labor payments (and including a pro rata share of such expenses for employees
of Landlord who do not work exclusively at the Project), (ii) water, sewage
disposal, drainage, refuse collection and disposal, gas, electricity, and other
utility services, and the maintenance of all components, systems, and apparatus
by which such utilities and services are provided (iii) general maintenance and
repair of the Project, including, without limitation, and among other things,
the driveways, asphalt, and concrete surfaces, the structural components of the
improvements located within the Project, including the portions of the roof to
be maintained pursuant to Paragraph 10.2, below, repainting of, improvements,
and sweeping, janitorial, and security services (if any, to be provided at
Landlord’s sole discretion), the cost of maintenance of all heating,
ventilating and air conditioning (HVAC) systems relating to individual premises
and/or the common areas, (iv) maintenance of landscaping (including irrigation
and sprinkler systems) and, where and when necessary, replanting, (v) keeping
the parking area in good condition and free from litter, dirt, debris, and
other obstructions, and keeping all lighting and signage serving the Project in
good condition and fully operating, (vi) any expenses payable by Landlord
pursuant to the provisions of any recorded Covenants, Conditions, and
Restrictions or similar recorded instruments affecting the Project and dated as
of the Lease Commencement Date, (vii) all real property or real estate taxes,
assessments, and other impositions, whether general, special, ordinary, or
extraordinary, and of every kind and nature, which may be levied, assessed,
imposed upon or with respect to the Project, or any portion thereof, by any
local, state, or federal entity ( expect late payment fees, charges, penalties
and interest and to the extent of taxes payable by Tenant pursuant to Paragraph
23.2, below (viii) any personal property taxes, assessments, or other
impositions levied, assessed, or imposed upon any personal property of Landlord
used in connection with the Project, (ix) all Insurance Expenses including,
without limitation, the cost of all casualty, liability, and other insurance
obtained by Landlord relative to the Project, including all premiums therefore
and any deductibles payable with respect to any loss insured thereby, (x)
management fees (based upon a percentage of gross income received, or such
other method as deemed reasonable by Landlord ), administrative fees, and
legal, accounting, inspection, and consultation fees, (xi) the cost of holiday
decorations, (xii) capital improvements or structural modifications required by
any change in laws, ordinances, rules, or regulations governing the Project, or
other capital improvements or structural modifications deemed reasonably
necessary or desirable by Landlord, including, without limitation, capital
improvements or structural modifications which reduce Lease Expenses; provided,
however, any costs of such capital improvements or structural modifications
shall be amortized (including an interest factor) over the useful life of such
capital improvements or structural modifications.

 

8.2.  Payment of Lease Expenses.  Landlord intends to deliver to Tenant, prior
to the Rent Commencement Date and prior to the commencement of each calendar
year during the Term, a written statement (“Estimated Statement”) setting forth
Landlord’s estimate of the Lease Expenses allocable to the calendar year during
which the Rent Commencement Date occurs or such ensuing calendar year,
whichever is applicable, and “Tenant’s Pro Rata Share” of such Lease Expenses.
Landlord may, at its option, during any calendar year, deliver to Tenant a
revised Estimated Statement in accordance with Landlord’s most current
estimate. Tenant shall pay to Landlord, on the Rent Commencement Date and on
the first day of each month during the Term, as Additional Rent, an amount (“Tenant’s
Monthly Payment”) equal to one-twelfth (or, if the Lease shall commence on a
day other than the first day of a calendar month, then Tenant’s monetary
payment shall be pro rated on the basis of the actual number of days of
occupancy during that month) of Tenant’s Pro Rata Share of the Lease Expenses,
as estimated by Landlord in the most recently delivered Estimated Statement.
Within approximately 90 days after the end of each calendar year during the
Term, Landlord will deliver to Tenant a written statement (“Actual Statement”)
setting forth the actual Lease Expenses allocable to the preceding calendar
year. Tenant’s failure to object to Landlord regarding the contents of an
Actual Statement, in writing, within forty-five (45) days after delivery to
Tenant of such Actual Statement, shall constitute Tenant’s absolute and final
acceptance and approval of the Actual Statement. If the sum of Tenant’s Monthly
Payments actually paid by Tenant during any calendar year exceeds Tenant’s Pro
Rata Share of the actual Lease Expenses allocable to such calendar year, then
such excess will be credited against future Tenant’s Monthly Payments, unless
such calendar year was the calendar year during which the Expiration Date or
earlier termination of this Lease occurs (the “Last Calendar Year”), in which
event either (i) such excess shall be credited against any monetary default of
Tenant under this Lease, or (ii) if Tenant is not in default under this Lease,
then Landlord shall pay to Tenant such excess. If the sum of Tenant’s Monthly
Payments actually paid by Tenant during any calendar year is less than Tenant’s
Pro Rata Share of the actual Lease Expenses allocable to such calendar year,
then Tenant shall, within thirty (30) days of delivery of the Actual Statement,
pay to Landlord the amount of such deficiency. Landlord’s delay in delivering
any Estimated Statement or Actual Statement will not release Tenant of its
obligation to pay any Tenant’s Monthly Payment or any such excess upon receipt
of the Estimated Statement or the Actual Statement, as the case may be. For
purposes of this Lease, the term “Tenant’s Pro Rata Share” will mean and refer
to the portion of the Lease Expenses payable by Tenant. Tenant’s Pro Rata Share
will be originally calculated as of the Rent Commencement Date and will be re-calculated
as of each January 1 during the Term as the fractional portion of the total
Lease Expenses (excluding therefrom the portion of the Lease Expenses actually
paid by the Anchor Tenants in the Project) determined by multiplying such Lease
Expenses by a fraction, the numerator of which is the leasable square footage
of the Premises, and the denominator of which is the total aggregate leasable
square footage of the Project, excluding the portions of the Project occupied
by the Anchor Tenants (who are designated as Anchor Tenants by Landlord as of
the date calculation is being made). In the event the leasable square footage
in the Project changes from time to time due to the addition or removal of
buildings, such change will

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

5

 

not
result in a recalculation of Tenant’s Pro Rata Share until the January 1 next
following such occurrence, as if such change had not taken place until such
following January 1. The references in this Paragraph to the actual Lease
Expenses allocable to a calendar year, shall include (i) if such calendar year
is the calendar year during which the Rent Commencement Date occurs, the actual
annualized Lease Expenses allocable to the portion of such calendar year
following the Rent Commencement Date, and (ii) if such calendar year is the
Last Calendar Year, the actual annualized Lease Expenses allocable to the
portion of the Last Calendar Year prior to the Expiration Date or earlier
termination of this Lease.

 

9.  Utilities and Services.
 Except as otherwise provided in the
Addendum to this Lease, Landlord shall supply water to the Premises and to the
common areas for ordinary and customary uses, the cost of which shall be
included as a part of Lease Expenses. In the event the Premises are separately
metered for water use as of the Commencement Date of this Lease, or shall
become separately metered for water use at any time during the term of this
Lease, Tenant shall contract directly with the water utility provider and pay
for the cost(s) of water services and consumption attributable to the Premises
meter, including associated sewer fees and other related billings. In such
event, building water costs shall be excluded from Tenant’s Lease Expenses, but
Tenant shall continue to pay its pro-rata share of Common Area water costs. If
Tenant does not pay directly for its separately metered water, and Tenant’s use
of water (or any other utilities or services supplied by Landlord) exceeds
ordinary and customary usage levels, then Tenant shall pay the cost of such
excess (determined in Landlord’s reasonable discretion) as additional rent.
Except for Landlord’s obligations as set forth above, Tenant shall make all
arrangements for and pay the cost of all utilities and services (including
without limitation their connection charges and taxes thereon) furnished to the
Premises or used by Tenant, including without limitation electricity, water (to
the extent not supplied by Landlord), heating, ventilating, air-conditioning,
oil, steam for heating, sewer, gas, telephone, communication services, trash
collection from within the Premises and refuse bin removal services in the
event Landlord does not provide said refuse bin removal services as a part of
the common area services, janitorial, cleaning, and window washing.
Installation of all types of conduit and wiring exclusively serving the
Premises, including but not limited to communications wiring, shall be subject
to the requirements of Paragraph 24, below, and the Landlord’s approval of the
location, manner of installation, and the installing contractor. All such
conduit and wiring shall, at Landlord’s option, and to the extent it does not
remain the property of the service or utility that utilizes such conduit or
wiring, become Landlord’s property once installed. Upon termination of this
Lease, Landlord may elect to require Tenant to remove such conduit and wiring
at Tenant’s expense and return the Premises and the Common Areas of the Project
to their pre-existing condition. Landlord may, at its election, furnish to the
Premises any of the utilities and services set forth above, in which event
Tenant shall reimburse Landlord for Landlord’s cost of furnishing such
utilities and services as additional rent. Landlord shall not be liable for
failure to furnish any utilities or services to the Premises when such failure
results from causes beyond Landlord’s reasonable control. If Landlord
constructs new or additional utility facilities, including without limitation
wiring, plumbing, conduits, and/or mains, resulting from Tenant’s changed or
increased utility requirements, Tenant shall on demand promptly pay to Landlord
the total cost of such items as additional rent. The discontinuance of any
utilities or services, including, without limitation, Landlord’s discontinuance
or failure to provide any of the utilities or services furnished by Landlord to
the Premises, shall neither be deemed an actual or constructive eviction, nor
release Tenant from its obligations under this Lease including, without
limitation, Tenant’s obligation to pay Rental. If any governmental authority
having jurisdiction over the Project imposes mandatory controls, or suggests
voluntary guidelines applicable to the Project, relating to the use or
conservation of water, gas, electricity, power, or the reduction of automobile
emissions, Landlord, at its sole discretion, may comply with such mandatory
controls or voluntary guidelines and, accordingly, require Tenant to so comply.
Landlord shall not be liable for damages to persons or property for any such
reduction, nor shall such reduction in any way be construed as a partial
eviction of Tenant, cause an abatement of rent, or operate to release Tenant from
any of Tenant’s obligations under this Lease.

 

10.  Maintenance.

 

10.1.  Tenant’s Duties.  Tenant shall at its sole cost (i) maintain,
repair, replace, and repaint, all in first class condition, all portions of the
Premises (except those portions of the Premises to be maintained by Landlord as
expressly set forth below), (ii) arrange for the removal of trash from the
Premises, (iii) furnish reasonable janitorial services within the Premises,
(iv) maintain and repair any plate-glass windows appurtenant to the
Premises and all interior and exterior doors, including roll-up doors, (v)
maintain, repair, and replace the heating, air-conditioning, and ventilation
system (“HVAC”) exclusively serving the Premises including establishment of a
maintenance contract for the periodic inspection, maintenance, and replacement,
as necessary, of the HVAC system exclusively serving the Premises, and Tenant
shall provide Landlord with a copy of said contract within ten (10) days after
Tenant’s opening of the Premises for business, as well as a copy of any
additional or supplemental contracts within ten (10) days of their execution.
Notwithstanding the foregoing, Landlord, at Landlord’s option and upon written
notification to Tenant, may elect to maintain a HVAC service contract on Tenant’s
behalf, the cost of which shall be billed to Tenant in conjunction with the
Lease Expenses. Regardless of Landlord’s or Tenant’s obligations for the
establishment of a HVAC service contract, Tenant shall be responsible for
making all the arrangements for, and direct payment of the costs of, all
repairs and replacements to the HVAC system, (vi) maintain a pest and termite
control service agreement with respect to the Premises, reasonably acceptable
to Landlord, (vii) maintain and repair all telephone lines and wiring
exclusively serving the Premises whether in the Premises or not and utilizing
such contractors as approved by Landlord, and all electrical fixtures, panels,
wiring, transformers, conduits, lighting fixtures, lamps, and tubes exclusively
serving the Premises (whether located within or outside of the Premises), and
(viii) maintain, repair, and/or replace any water heating systems, sewer lines,
plumbing lines, and any grease traps exclusively serving the Premises, using a
professional cleaning company for grease trap service on a schedule

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

6

 

acceptable
to Landlord. Tenant shall provide Landlord with current copies of such cleaning
contracts throughout the Term. Tenant is additionally liable for any damage to
the Project resulting from the acts or omissions of Tenant or Tenant’s Invitees,
including, without limitation, any damage to the roof or damage relating to a
roof penetration caused by Tenant or Tenant’s Invitees and any actual or
consequential damage to the Premises, Building, or Project arising from Tenant’s
use of the Premises, Tenant’s personal property, or systems or equipment
serving the Premises that are the responsibility of Tenant to maintain, repair
and replace. If Tenant fails to maintain, repair, replace, or repaint any
portion of the Premises as provided above, or if Tenant or Tenant’s Invitees
damage any portion of the Project, then Landlord may, at its election,
maintain, repair, replace, or repaint any such portion of the Premises or the
Project and Tenant shall promptly reimburse Landlord for Landlord’s actual cost
thereof, plus a supervisory fee in the amount of ten percent (10%) of such
actual cost as additional rent. Landlord, at Landlord’s sole discretion, may
require Tenant to use specific contractors or construction/repair techniques
for the purpose of maintaining warranties or the integrity of the Premises or
the Project.

 

10.2.  Landlord’s Duties.
Landlord shall repair and maintain the Common Areas, subject to Tenant’s
obligation to pay its Pro Rata Share of the Lease Expenses, as provided in
Paragraph 8. Landlord shall maintain the structural parts of the buildings
within the Project, which are only the foundations, exterior walls (excluding
glass and doors), and the structural and waterproofing membrane portions of the
roof (excluding skylights), but Tenant shall pay the (a) the full costs of such
maintenance, or an equitable share determined by Landlord if the Premises are
part of a multi-tenant building, (b) the full amount of any maintenance and
repairs necessitated by any act, omission, conduct or activity of, or breach of
this Lease by, Tenant or any of Tenant’s Invitees (plus ten percent (10%) of
the cost thereof to reimburse Landlord for overhead), or (c) any maintenance
and repairs necessitated by breaking and entering of the Premises. Tenant shall
pay its share of such maintenance and repair costs incurred by Landlord, to the
extent such obligation exceeds any amount thereof impounded under Paragraph
8.2, within thirty (30) days after receipt of a statement from Landlord.
Landlord shall use its reasonable efforts to repair and maintain the Common
Areas and the structural parts of the Project so as not to interfere with
Tenant’s business operations. 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
to any portion of the Premises or the Project. Except as provided in Paragraph
30 (Destruction) and Paragraph 31 (Condemnation), Landlord shall have absolutely
no other responsibility to repair, maintain or replace any portion of the
Premises at any time. Tenant waives the right to make repairs at Landlord’s
expense under California Civil Code Section 1942, or under any other law,
statute or ordinance now or hereafter in effect. Landlord’s obligations under
this Paragraph are not intended to alter or modify in any way the provisions of
Paragraph 37.

 

11.  Net Lease. This Lease is intended to
be a completely “net lease” and, except as otherwise expressly provided in this
Lease, Tenant shall have sole responsibility for the care, maintenance, and
repair of the Premises, including all costs thereof, as though Tenant were the
owner of the Premises. Tenant shall be liable for and bear all costs relating
to the Premises, except as expressly provided to the contrary in this Lease.

 

12.  Parking. Subject to the remaining
provisions of this Paragraph, as long as Tenant is not in default under this
Lease, Landlord grants to Tenant (for the benefit of Tenant and Tenant’s Invitees)
the right to the non-exclusive use of the parking area within the boundaries of
and serving the Project (the “Parking Area”). Tenant’s use of the Parking Area
shall be subject to such rules as Landlord may, in its sole discretion, adopt
from time to time with respect of the Parking Area, including without
limitation (i) rules limiting tenants of the Project (including, without
limitation, Tenant) to the use of, or excluding the use of, certain parking
spaces or certain portions of the Parking Area, in order to maintain the
availability of accessible parking spaces for clients, guests, and invitees of
tenants of the Project, and (ii) rules limiting tenants of the Project
(including without limitation Tenant) to the use of a restricted number of parking
spaces or a restricted area. Notwithstanding anything to the contrary in this
Paragraph, Landlord may, at its election, construct improvements upon or
otherwise alter in any manner the Parking Area provided that Landlord makes
reasonable amounts of parking available (or reasonable amounts of parking will
remain available) to Tenant elsewhere on the Project, or within a reasonable
distance from the Project. Landlord reserves the right to grant certain tenants
in the Project the exclusive right to park in specified areas of the Parking
Area, to the exclusion of all other tenants. Tenant acknowledges that the
exercise of the rights reserved to Landlord under this Paragraph may result in
a decrease in the number of parking spaces available to Tenant and Tenant’s
Invitees, and no such decrease shall affect Tenant’s obligations under this
Paragraph, constitute a constructive eviction, or entitle Tenant to any
abatement of Rental. Notwithstanding the above, within ten (10) business days
after the Lease Commencement Date, Landlord will mark ten (10) nonexclusive
parking spaces immediately in front of Tenant’s Premises for thirty (30) minute
parking (available to all tenants and their invitees and guests in the Center).
Landlord will cooperate, to the best of Landlord’s ability, with Tenant (at
absolutely no cost to Landlord) to comply with California Finance Code section
13,000 et. seq.(as amended from time to time).

 

13.  Signs. Tenant may not place,
construct, or maintain any sign, advertisement, awning, banner, or other
exterior decoration (collectively, “sign”) in the Premises which is visible
from the exterior of the Premises, or on the Building without Landlord’s prior
written consent. Any sign that Tenant is permitted by Landlord to place,
construct, or maintain in the Premises or on the Building shall comply with
Landlord’s sign criteria applicable to the Project, including, without
limitation, criteria relating to size, color, shape, graphics, and location
(collectively, the

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

7

 

“Sign
Criteria”), and shall comply with all applicable laws, ordinances, rules, or
regulations, and Tenant shall obtain any approval required by such laws,
ordinances, rules, and regulations. Landlord makes no representation with
respect to Tenant’s ability to obtain any such approval. Tenant shall, at
Tenant’s sole cost, make any changes to any sign, in the Premises or on the
Building as required by any new or revised applicable laws, ordinances, rules,
or regulations, or any changes in the Sign Criteria. Tenant shall,
additionally, maintain, repair, and replace all of Tenant’s signs in first
class condition (excluding any multi-tenant sign within the Project maintained
by the Landlord). Unless expressly waived in writing by Landlord to Tenant,
Tenant shall, at Tenant’s sole cost and expense, and in accordance with
Paragraph 25, below, install its primary. Tenant identification sign in
accordance with the sign criteria for the Project within thirty (30) days from
the opening of Tenant’s business, subject to unavoidable delays due to
governmental authorities. Landlord shall have the right from time to time to
revise the sign criteria and within sixty (60) days after Tenant’s receipt of
written notice of any new sign criteria, Tenant shall, at Tenant’s sole
expense, remove any existing signs and replace the same with new signs
conforming to the new sign criteria.

 

14.  Rules, Regulations, and Covenants.  Tenant shall (and shall cause Tenant’s Invitees
to) observe faithfully and comply strictly with any reasonable rules and
regulations which Landlord may from time to time adopt for the Project as well
as any recorded covenants, conditions, or restrictions affecting the Premises
or the Project, whether now existing or hereafter adopted or amended from time
to time (all of the foregoing, collectively, “rules”). Landlord has no duty or
obligation to enforce any rule against any other tenant, and Landlord will not
be liable to Tenant for violation of any rule by any other tenant, or any other
tenant’s agents, employees, officers, independent contractors, customers,
invitees, visitors, or licensees. Tenant acknowledges that Landlord reserves
the right, from time to time, to enter into leases or other agreements by which
Landlord agrees to restrict the use of all or any portion of the Project
(including the Premises) from certain uses. All such leases and other
agreements, whether now existing or entered into in the future, shall be
binding upon Tenant and is no event shall Tenant utilize the Premises for any
use so prohibited.

 

15.  Early Access Insurance.  At any time prior to the Lease Commencement
Date that Tenant is making any Alterations (as defined below) to the Premises
or performing any of the Tenant’s work, (i) Tenant shall, at Tenant’s sole
cost, maintain (a) “Builder’s Risk” insurance with respect to the Premises,
reasonably satisfactory to Landlord, and (b) all of the insurance to be
maintained by Tenant during the Term, including without limitation public
liability and property damage insurance, fire and extended coverage insurance
and special form insurance, and workers compensation insurance, (ii) the provisions
of the Paragraph in this Lease entitled “Indemnity and Exemption of Landlord
from Liability” shall be operative, and (iii) the provisions of the Paragraph
in this Lease entitled “Utilities and Services” shall be operative. Any Alterations
pursuant to this Paragraph shall be subject to all the provisions of the
Paragraph in this Lease entitled “Alterations”. Nothing in this Paragraph shall
be construed as granting permission to Tenant to enter the Premises, or to make
any Alterations, prior to the Lease Commencement Date and no such right shall
exist unless specified in Exhibit “C”.

 

16.  Plate-Glass Insurance.  Tenant shall at its sole cost maintain full
coverage plate-glass insurance on the Premises, under which Landlord and any lender
holding a security interest in the Project (“Lender”) shall be named as
additional insureds.

 

17.  Public Liability and Property Damage
Insurance.  Tenant shall, at Tenant’s
sole cost, maintain public liability and property damage insurance (i) with a
combined single limit liability of not less than $2,000,000.00, (ii) insuring
(a) against all liability of Tenant and Tenant’s Invitees arising out of or in
connection with Tenant’s use or occupancy of the Premises, including, without
limitation, Tenant’s use, maintenance, repair and replacement of systems and
equipment either contained within the Premises or in air spaces, walls, roof
areas, or other portions of the Building or Project and exclusively serving the
Premises, and (b) performance by Tenant of the indemnity provisions set forth
in this Lease, (iii) naming Landlord, its agent, and any Lender as additional
insureds, (iv) containing cross-liability endorsements, and (v) which includes
products liability insurance (if Tenant is to sell merchandise or other
products derived, assembled, or produced from the Premises). Additionally, if
Tenant sells or serves alcoholic beverages from the Premises, Tenant shall
obtain and maintain “dram shop” coverage and such other insurance coverage as
Landlord may designate from time to time and in such amounts as Landlord deems
reasonably appropriate.

 

18.  Fire and Extended Coverage Insurance.  Tenant shall, at Tenant’s sole cost, maintain
on Tenant’s Alterations and Tenant’s Personal Property (as defined below) a
policy of standard fire and extended coverage and special form insurance, with
vandalism and malicious mischief endorsements, coverage with respect to
increased costs due to building ordinances, demolition coverage, boiler and
machinery insurance, and sprinkler leakage coverage, in each case to the extent
of at least ninety percent (90%) of full replacement value, and issued in the
name of Tenant with Landlord, Landlord’s lender and Landlord’s designated agent
as additional insureds.

 

19.  “Extra Expense” Insurance.  Tenant shall obtain “Extra Expense” insurance
in amounts sufficient to reimburse Tenant for direct or indirect loss of
earnings attributable to all perils commonly insured against by prudent tenants
or attributable to prevention of access to the Premises or to the Project as a
result of such perils.

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

8

 

20.  Insurance Generally.  If Tenant fails during the Term to maintain
any insurance required to be maintained by Tenant under this Lease, then
Landlord may, at its election, arrange for any such insurance, and Tenant shall
reimburse Landlord for any premiums for any such insurance within five (5) days
after Tenant receives a copy of the premium notice. If any such premiums are
allocable to a period, a portion of which occurs during the Term and the
remainder of which occurs before or after the Term, then such premiums shall be
apportioned between Landlord and Tenant based upon the number of days during
such period that occur during the Term and the number of days that occur before
or after the Term, such that Tenant pays for the premiums that are allocable to
the period during the Term. Insurance required to be maintained by Tenant under
this Lease (i) shall be issued as a primary policy by insurance companies
authorized to do business in the state in which the Premises are located with a
Best’s Rating of at least “A” and a Best’s Financial Size Category rating of at
least “VIII,” as set forth in the most current edition of “Best’s Insurance
Reports” (unless otherwise approved by Landlord), or such higher rating as may
be required by any Lender, (ii) shall name Landlord, its agents, and any Lender
as additional named insureds, (iii) shall consist of “occurrence” based
coverage, without provision for subsequent conversion to “claims” based
coverage, (iv) shall not be cancelable or subject to reduction of coverage or
other modification except after thirty (30) day’s prior written notice to
Landlord and any Lender, and (v) shall not provide for a deductible or
co-insurance provision in excess of $10,000.00. Additionally, Tenant shall carry
and maintain Workers Compensation Insurance of the type and coverage as
required by law. Tenant shall, at least thirty (30) days prior to the
expiration of each such policy, furnish Landlord with a renewal of or “binder”
extending such policy. Tenant shall promptly, upon request, deliver to Landlord
copies of such policy or policies or certificates evidencing the existence and
amounts of such insurance together with evidence of payment of premiums.

 

21.  Waiver of Subrogation.  Tenant releases Landlord and Landlord’s
guests, invitees, customers and licensees (collectively, “Landlord’s Invitees”)
from all claims For damage, loss, or injury to Tenant’s Personal Property and
to the systems, equipment, fixtures and Alterations of Tenant in or on the
Premises and Project to the extent and such damage, loss or injury is covered
by any insurance policies carried by Tenant and in force at the time of such
damage. Tenant shall cause all insurance policies obtained by it pursuant to
this Lease to provide (if such provision is generally commercially available)
that the insurance company waives all right of recovery by way of subrogation
against Landlord in connection with any damage, loss, or injury covered by such
policy.

 

22.  Landlord’s Insurance.  Landlord may, at its election, maintain any of
the following insurance, in such amounts and with such limits as Landlord shall
determine in its reasonable discretion: (i) Public liability and property
damage insurance, and products liability insurance; (ii) Fire and extended
coverage and special form insurance, coverage with respect to increased costs
due to building ordinances, demolition coverage, and sprinkler leakage
coverage; (iii) boiler and machinery insurance; (iv) fidelity insurance; (v)
Plate-glass insurance; and (vi) rental interruption insurance. The premiums,
costs, expenses, and deductibles (or similar costs or charges) of and/or with
respect to any such insurance (all of the preceding, collectively, “Insurance
Expenses”) shall constitute Lease Expenses. Tenant shall not keep, use,
manufacture, assemble, sell or offer for sale in or upon the Premises any
article that may be prohibited by, or that might invalidate, in whole or in
part, the coverage afforded by, a standard form of fire or all risk insurance
policy. Tenant shall pay the entire amount of any increase in premiums that may
be charged during the Lease Term for the insurance that may be maintained by
Landlord on the Premises or the Project resulting from the type of materials or
products stored, manufactured, assembled or sold by Tenant in the Premises,
whether or not Landlord has consented to the same. In determining whether
increased premiums are the result of Tenant’s use of the Premises, a schedule
issued by the entity making the insurance rate on the Premises showing the
various components of such rate shall be conclusive evidence of the items and
charges that make up the fire or all risk insurance rate on the Premise.

 

23.  Taxes.

 

23.1.  Personal Property Taxes.
 Tenant shall pay before delinquency all
taxes, assessments, license fees, and other charges that are levied or assessed
against, or based upon the value of, Tenant’s personal property installed or
located in or on the Premises including without limitation trade fixtures,
furnishings, equipment, and inventory (collectively, “Tenant’s Personal
Property”). On demand by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of such payments. If any such taxes, assessments, license
fees, and/or other charges are levied against Landlord or Landlord’s property,
or if the assessed value of the Premises is increased by the inclusion of a
value placed on Tenant’s Personal Property, and if Landlord pays such taxes,
assessments, license fees, and/or other charges or any taxes based on the
increased caused by Tenant’s Personal Property, then Tenant, on demand, shall
immediately reimburse Landlord for the sum of such taxes, assessments, license
fees, and/or other charges so levied against Landlord, or the proportion of
taxes resulting from such increase in Landlord’s assessment. Landlord may, at
its election, pay such taxes, assessments, license fees, and/or other charges
or such proportion, and receive such reimbursement.

 

23.2.  Real Property Taxes
Imposed Upon the Premises.  Tenant
shall pay, at least ten (10) days before delinquency, all real property or real
estate taxes, assessments, license fees, and other impositions, whether
general, special, ordinary, or extraordinary, and of every kind and nature,
which may be separately levied, assessed or imposed upon or with respect to the
Premises. On demand by Landlord, Tenant shall furnish Landlord with

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

9

 

satisfactory
evidence of such payments. Landlord may, at its election, pay such taxes,
assessments, license fees, and/or other charges and Landlord shall receive
immediate reimbursement of the amounts so paid. Notwithstanding the provisions
of Paragraph 8 (Lease Expenses), if at any time during the Lease Term and any
Extension thereafter, there is a change of ownership of the Project or
respective tax parcel related to the Building, which results in an increase in
the assessed valuation of the Project or Building, then Tenant shall not be
liable for any taxes attributable to any change of ownership assessment; and
for purposes of computing Tenant’s prorata share of real property taxes, as
described herein, commencing with the tax year in which the change of ownership
assessment is first reflected in the taxing authorities notice of assessment
and continuing for all subsequent tax years, the taxes attributable to such
change of ownership shall be subtracted from taxes. Notwithstanding for
foregoing, Tenant shall be obligated to pay their prorata share of any change
of ownership taxes resulting from the first and second change of ownership
assessments that occur subsequent to the execution of the Lease.

 

24.  Alterations.  Tenant shall not make any alterations,
improvements, additions, installations, or changes of any nature in or to the
Premises (any of the preceding, “Alterations”) unless (i) Tenant first obtains
Landlord’s written consent, (ii) Tenant complies with all conditions which may
be imposed by Landlord, including but not limited to Landlord’s selection of
specific contractors or construction techniques and the requirements of the
attached Exhibit “C”, and (iii) Tenant pays to Landlord the reasonable costs
and expenses of Landlord for architectural, engineering, or other consultants
which reasonably may be incurred by Landlord in determining whether to approve
any such Alterations. At least thirty (30) days prior to making any Alterations,
Tenant shall submit to Landlord, in written form, proposed detailed plans of
such Alterations. Tenant shall, prior to the commencement of any Alterations,
at Tenant’s sole cost, (i) acquire (and deliver to Landlord a copy of) a permit
from appropriate governmental agencies to make such Alterations (any conditions
of which permit Tenant shall comply with, at Tenant’s sole cost, in a prompt
and expeditious manner), (ii) provide Landlord with ten (10) days’ prior
written notice of the date the installation of the Alterations is to commence,
so that Landlord can post and record an appropriate notice of
non-responsibility, and (iii) obtain (and deliver to Landlord proof of)
reasonably adequate workers compensation insurance with respect to any of
Tenant’s employees installing or involved with such Alterations (which
insurance Tenant shall maintain to force until completion of the Alterations).
All Alterations shall upon installation become the property of Landlord and
shall remain on and be surrendered with the Premises on the Expiration Date or
earlier termination of this Lease, except that Landlord may, at its election,
require Tenant to remove any or all of the Alterations, by so notifying Tenant
in writing on or about the Expiration Date or earlier termination of this Lease,
in which event, Tenant shall, at its sole cost, on or before the Expiration
Date or earlier termination of this Lease, repair and restore the Premises to
the condition of the Premises prior to the installation of the Alterations
which are to be removed. Tenant shall pay all costs for Alterations and other
construction done or caused to be done by Tenant and Tenant shall keep the
Premises free and clear of all mechanic’s and materialmen’s liens resulting
from or relating to any Alterations or other construction. Tenant may, at its
election, contest the correctness or validity of any such lien provided that
(a) immediately on demand by Landlord, Tenant procures and records a lien
release bond, issued by a corporation satisfactory to Landlord and authorized
to issue surety bonds in the state in which the Premises are located, in an
amount equal to one hundred fifty percent (150%) of the amount of the claim of
lien, which bond meets the requirements of California Civil Code Section 3143
or any successor statute, and (b)Landlord may, at its election, require Tenant
to pay Landlord’s attorneys’ fees and costs incurred in participating in such
an action. If Tenant fails to cause any such lien to be released within fifteen
(15) days after imposition, by payment or posting of a proper bond, Landlord
shall have the right (but not the obligation) to cause such release by such
means as Landlord deems proper. Tenant shall reimburse Landlord upon demand for
all costs incurred by Landlord in connection therewith (including attorneys’
fees and costs), with interest at the rate specified in Paragraph 28 from the
date of payment by Landlord to the date of payment by Tenant.

 

25.  Surrender of Premises and Holding Over.
 On the Expiration Date or earlier
termination of this Lease, (i) Tenant shall surrender to Landlord the Premises
and all Alterations (except for Alterations that Tenant is obligated to remove
as expressly set forth above) in a first class and clean condition, free of trash
and debris including cleaning of all flooring; patching and painting of all
walls; removal of all signage installed by Tenant on any portion of the
Building or Project including restoration of the signage mounting surfaces to
their pre-existing condition; all sign circuits, electrical circuits and
lighting fixtures in good operating condition; all HVAC units serving the Premises
in a well maintained and operable condition; all roof penetrations arising from
Tenant’s occupancy of the Premises in a watertight condition; and all doors,
windows, roll-up doors, locks, and hardware in operable condition upon the
termination of this Lease, (ii) Tenant shall remove all of Tenant’s Personal
Property and perform all repairs and restoration required by the removal of any
Alterations or Tenants Personal Property and (iii) Tenant shall surrender to
Landlord all keys to the Premises (including without limitation any keys to any
exterior or interior doors). Landlord may elect to retain or dispose of in any
manner any Alterations or Tenant’s Personal Property that Tenant does not
remove from the Premises on the Expiration Date or earlier termination of this
Lease as required by this Lease by giving written notice to Tenant. Any such
Alterations or Tenant’s Personal Property that Landlord elects to retain or dispose
of shall immediately upon notice to Tenant vest in Landlord. Tenant waives all
claims against Landlord for any damage to Tenant resulting from Landlord’s
retention or disposition of any such Alterations or Tenant’s Personal Property.
All Alterations and fixtures (other than trade fixtures, safety deposit boxes
(and their contents), Vault, ATM, Night Depository and signs), shall become
Landlord’s property and shall be surrendered to Landlord with the Premises,
regardless of who paid for the same and without limiting the foregoing, Tenant
shall not remove any of the following materials or equipment without Landlord’s
written consent, regardless of who paid for the same and regardless of whether
the same are permanently attached to the Premises or not, power wiring and
power panels; any piping for gasses or liquids; sinks, cabinet and

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

10

 

casework;
fume hoods or specialized air-handling evacuation systems; any drains or other
equipment for the handling of grease and/or waste water, computer, telephone,
telecommunication wiring, panels and equipment; lighting and lighting fixtures;
wall coverings; drapes, blinds and other window coverings; carpets and floor
coverings; heaters, air conditioners and other heating or air conditioning
equipment; security systems; and other building equipment and decorations.
Tenant shall be liable to Landlord for Landlord’s costs for storing, removing
or disposing of any such Alterations or Tenant’s Personal Property. If Tenant
fails to surrender the premises to Landlord on the Expiration Date or earlier
termination of this Lease in the condition required by this Paragraph. Tenant
shall indemnify Landlord against all liabilities, damages, losses, costs,
expenses, attorneys’ fees and claims resulting from such failure, including
without limitation any claim for damages made by a succeeding tenant. If
Tenant, with Landlord’s consent, remains in possession of the Premises after
the Expiration Date or earlier termination of this Lease, such possession by
Tenant shall be deemed to be a month-to-month tenancy terminable on thirty (30)
days’ written notice given at any time by Landlord or Tenant. During any such
month-to-month tenancy, Tenant shall pay, as Basic Monthly Rent, one hundred
twenty-five percent (125%) of the Basic Monthly Rent in effect immediately
prior to the Expiration Date or earlier termination of this Lease, as the case
may be. All provisions of this Lease except for those pertaining to Term shall
apply to such month- to-month tenancy.

 

26.  Default. The occurrence of any of the
following shall constitute a material default and breach of this Lease by
Tenant:

 

26.1.  The vacating or abandoning
of the Premises by Tenant.

 

26.2.  Tenant’s failure to make
any payment of Rental or late charges or any other monetary sums required
hereunder as and when due. No grace period prior to the imposition of a late
charge pursuant to paragraph 28 below, shall extend the date when such Rental
is due and payable, and Tenant; shall be in default under this Lease if such
payment is not timely made. In the case of Basic Monthly Rent, payments must be
received on or before the tenth day of each calendar month, and Tenant shall be
in default if such Rental is not paid such date.

 

26.3.  Tenant’s failure to
observe or perform any of the provisions of this Lease to be observed or
performed by Tenant, other than described in the preceding two paragraphs,
where such failure shall continue for a period of ten (10) days after written
notice of such failure from Landlord to Tenant; provided, however, that any
such notice shall be in lieu of, and not in addition to, any notice required
under applicable unlawful detainer statutes: and provided further, however,
that if the nature of Tenant’s default is such that more than ten (10) days are
required for its cure, then Tenant shall not be deemed to be in default if
Tenant commenced such cure within such ten-day period and thereafter diligently
prosecutes such cure to completion within sixty (60) days after Landlord’s
written notice.

 

26.4.  Tenant’s failure to
deliver to Landlord, within ten (10) days after Landlord’s written request, any
financial statement, of Tenant (including without limitation a current annual
balance sheet and profit/loss statement of Tenant) reasonably requested by
Landlord, or if any financial statement given to Landlord by Tenant, or by any
assignee, subtenant, or guarantor of Tenant, is materially false or evidences
that Tenant’s net worth is negative, and Tenant fails to furnish to Landlord,
within ten (10) days after written notice from Landlord to Tenant, with cash as
an additional security deposit in an amount equal to the aggregate Rental
payable under this Lease for the six full calendar months immediately following
such notice.

 

26.5.  The making by Tenant of
any general arrangement or assignment for the benefit of creditors: Tenant’s
becoming bankrupt, insolvent or a “debtor” as defined in 11 U.S.C. Section 101,
or any successor statute (unless, in the case of a petition filed against
Tenant, such petition is dismissed within thirty (30) days after its original
filing); the institution of proceedings under the bankruptey or similar laws in
which Tenant is the debtor or bankrupt; the appointing of a trustee or receiver
to take possession of substantially all of Tenant’s assets located at the
Premises or of Tenant’s interest in this Lease (unless possession is restored
to Tenant within thirty (30) days after such taking); the attachment,
execution, or judicial seizure of substantially all of Tenant’s assets located
at the Premises or Tenant’s interest in this Lease (unless such attachment,
execution, or judicial seizure is discharged within thirty(30) days after such
attachment, execution, or judicial seizure); or, if Tenant is a partnership or
consists of more than one person or entity, any partners of the partnership or
any such other person or entity becoming bankrupt or insolvent or making a
general arrangement or assignment for the benefit of creditors.

 

27.  Landlord’s Remedies. Landlord shall
have the following remedies if Tenant commits a default and/or breach under
this Lease; these remedies are not exclusive, but are cumulative and in
addition to any remedies provided elsewhere in this Lease, or now or later
allowed by law.

 

27.1.  Continuation of Lease.
 No Act by Landlord (including without
limitation the acts set forth in the succeeding sentence) shall terminate
Tenant’s right to possession unless Landlord notifies Tenant in writing that
Landlord elects to terminate Tenant’s right to possession. As long as Landlord
does not terminate Tenant’s right to possession, Landlord may (i) continue this
Lease in effect, (ii) continue to collect Rental when due and enforce all the
other provisions of this Lease, and (iii) enter the Premises and relet them, or
any part of them, to third parties for

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

11

 

Tenant’s
account, for a period shorter or longer than the remaining term of this Lease.
Tenant shall immediately pay to Landlord all costs Landlord incurs in such
reletting, including, without limitation, brokers commissions, attorneys’ fees,
advertising costs, and expenses of remodeling the Premises for such reletting

 

27.2.  Rent from Reletting.
 If Landlord elects to relet all or any
portion of the Premises as permitted above, rent that Landlord receives from
such reletting shall be applied to the payment of, in the following order and
priority, (i) any indebtedness from Tenant to Landlord other than Basic Monthly
Rent due from Tenant, (ii) all costs incurred by Landlord in such reletting,
and (iii) Basic Monthly Rent due and unpaid under this Lease. After applying
such payments as referred to above, any sum remaining from the Rent Landlord
receives from such reletting shall be held by Landlord and applied in payment
of future Basic Monthly Rent as it becomes due under this Lease. In no event
shall Tenant be entitled to any excess rent received by Landlord unless and
until all obligations of Tenant under this Lease, including all future
obligations, are satisfied in full.

 

27.3.  Termination of Tenant’s
Right to Possession.  Landlord may
terminate Tenant’s right to possession of the Premises at any time, by
notifying Tenant in writing that Landlord elects to terminate Tenant’s right to
possession. On termination of this Lease, Landlord has the right to recover
from Tenant (i) the worth at the time of the award of the unpaid Basic Monthly
Rent which had been earned at the time of such termination, (ii) the worth at
the time of the award of the amount by which the unpaid Basic Monthly Rent
which would have been earned after such termination until the time of award
exceeds the amount of such loss of Basic Monthly Rent that Tenant proves could
have been reasonably avoided, (iii) the worth at the time of the award of the
amount by which the unpaid Basic Monthly Rent for the balance of the Term after
the time of award (had there been no such termination) exceeds the amount of
such loss of Basic Monthly Rent that Tenant proves could be reasonably avoided,
and (iv) any other amount necessary to compensate Landlord for all detriment
proximately caused by Tenant’s failure to perform Tenant’s obligations under
this Lease or in the ordinary course of things would be likely to result
therefrom including, but not limited to (a) expenses for cleaning, repairing or
restoring the Premises, (b) expenses for altering, remodeling or otherwise
improving the Premises for the purpose of reletting, (c) brokers’ fees and
commissions, advertising costs and other expenses of reletting the Premises,
(d) costs of carrying the Premises such as taxes, insurance premiums,
utilities and security precautions, (e) expenses in retaking possession of the
Premises, (f) attorneys’ fees and costs, (g) any unearned brokerage
commissions paid in connection with this Lease and (h) reimbursement of
any previously waived or abated Rental and/or Additional Rent, and (v) such
other amounts in addition to or in lien of the foregoing as may be permitted
from time to time under applicable California law. The “worth at the time of
the award” of the amounts referred to in Clauses (i) and (ii) above is to be
computed by allowing interest at the Default Rate, as set forth below, or if
Default Rate is set forth, then at the maximum rate permitted by applicable
law. The “worth at the time of the award” of the amount referred to in Clause
(iii) above is to be computed by discounting such amount at the discount rate
of the Federal Reserve Bank of San Francisco at the time of award plus one
percent.

 

27.4.  Landlord’s Right to
Cure Default.  Landlord, at any time
after Tenant commits a default or breach under this Lease, may cure such
default or breach at Tenant’s sole cost. If Landlord at any time, by reason of
Tenant’s default or breach, pays any sum or does any act that requires the
payment of any sum, such sum shall be due immediately from Tenant to Landlord
at the time such sum is paid, and shall be deemed Additional Rent under this
Lease. If Tenant fails to timely pay any amount due under this Paragraph, then
(without curing such default) interest at the Default Rate shall accrue (and be
immediately payable) on such overdue amount until it is paid

 

27.5.  Enforcement Costs.  All costs and expenses incurred by Landlord in
connection with collecting any amounts and damages owing by Tenant pursuant to
the provisions of this Lease, or to enforce any provision of this Lease,
including but not limited to costs for reasonable attorneys’ fees and costs paid
to third parties for the service of legal notices, whether or not any action is
commenced by Landlord, shall be paid by Tenant to Landlord upon demand. If
Tenant fails to timely pay any amount due under this Paragraph, then (without
curing such default) interest at the Default Rate shall accrue (and be
immediately payable) on such overdue amounts until it is paid.

 

28.  Interest and Late Charges.  Late payment by Tenant to Landlord of Rental
will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which would be impracticable or extremely difficult to fix. Such
costs include, without limitation, processing, collection and accounting
charges, and late charges that may be imposed on Landlord by the terms of any
deed of trust covering the premises. Therefore, if any Rental is not received
by Landlord within ten (10) days of its due date, then, without any requirement
for notice to Tenant, Tenant shall pay to Landlord an additional sum of ten
percent (10%) of such overdue amount as a late charge as additional rent. Such
late charge represents a fair and reasonable estimate of the costs that
Landlord will incur by reason of any late payment by Tenant, and therefore this
Paragraph is reasonable under the circumstances existing at the time this Lease
is made. Acceptance of such late charge by Landlord shall not 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 available to
Landlord under this Lease. In addition to the late charge payable by Tenant, as
provided above, if any such Rental is not paid within thirty (30) days of the
date such Rental was due, then Tenant shall pay to Landlord interest on such
overdue Rental at the rate of three percent (3%) above the “reference rate”
announced from time to time by Bank of America, NT&SA (the “Default Rate”).
Such interest shall additionally accrue and be payable by Tenant relative to
any other amounts payable by Tenant to Landlord under the provisions of this
Lease which are not paid when due (if such reference rate ceases to be
announced, then a comparable “prime rate” shall be utilized,

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

12

 

selected
by Landlord).

 

29.  Payment of Rent by Cashier’s Check. If
a late charge is payable under this Lease, whether or not collected, for two installments
of Basic Monthly Rent or other Rental due under this Lease during any one
calendar year during the Term, or if any payment made by Tenant in the form of
a personal or business check is returned by the bank it was drawn upon for
whatever reason, including but not limited to insufficient funds, then
Landlord, at Landlord’s option, may require Tenant to submit future payments to
Landlord in the form of a certified cashier’s check or money order. Tenant’s
obligation to provide payment in the aforementioned manner shall continue in
full force and effect until Landlord, in its sale discretion, determines
otherwise. Tenant further agrees to reimburse Landlord, as additional Rental,
Landlord’s actual costs imposed by Landlord’s bank or financial institution
arising from Tenant’s returned check(s). These costs shall be in addition to
any late charges payable by Tenant pursuant to Paragraph 28 of this Lease.

 

30.  Destruction. If the Project is totally
or partially destroyed during the Term, rendering the Premises totally or
partially inaccessible or unusable, then, subject to the remainder of this
Paragraph, (i) Landlord shall restore the Project to substantially the same
condition as it was in immediately before such destruction, (ii) Landlord shall
not be required to restore Tenant’s Alterations or Tenant’s Personal Property,
unless they are an integral part of the Premises and specifically covered by
insurance proceeds received by Landlord, such excluded items being the sole
responsibility of Tenant to restore, (iii) such destruction shall not terminate
this Lease, and (iv) all obligations of Tenant under this Lease shall remain in
effect, except that the Basic Monthly Rent shall be abated or reduced, between
the date of such destruction and the date of completion of restoration, by the
ratio of (a) the area of the Premises rendered unusable or inaccessible by the
destruction to (b) the area of the Premises prior to such destruction.
Notwithstanding anything to the contrary in this Lease, Landlord may, at its
election, terminate this Lease by so notifying Tenant in writing on or before
the later of one hundred twenty (120) days after such destruction or sixty (60)
days after Landlord’s receipt of the proceeds from insurance maintained by
Landlord, if (A) then-existing laws do not permit such restoration, (B) such
destruction occurs during the last year of the Term (provided, however, that
Landlord shall restore the Premises as set forth above if such destruction
occurs while Tenant has the right to exercise the Option and Tenant has
exercised the Option), (C) such destruction exceeds fifty percent(50%) of the
then-replacement value of the Premises, the Building, or the Project or (D)
Landlord determines that the cost of such restoration exceeds the amount of insurance
proceeds relating to such destruction actually received by Landlord from
insurance maintained by Landlord. If Landlord so terminates this Lease, then
(1) Landlord shall have no obligation to restore the Project, (2) Landlord
shall retain all insurance proceeds relating to such destruction, and (3) this
Lease shall terminate as of thirty (30) days after such notice of termination
from Landlord to Tenant. If Landlord restores the Premises as provided above,
then Tenant waives the provisions of California Civil Code Sections 1932(2) and
1933(4) or any successor statute with respect to any destruction of the
Premises. In the event Landlord restores the Premises following any such
destruction, Tenant shall immediately refixturize, re-equip, and restock the
Premises and shall re-open the Premises for business as soon thereafter as is
reasonably practicable.

 

31.  Condemnation. If during the Term, or
during the period of time between the execution of this Lease and the Lease
Commencement Date, there is any taking of all or any part of the Premises or
any interest in this Lease by the exercise of any governmental power, whether
by legal proceedings or otherwise, by any public or quasi-public authority, or
private corporation or individual, having the power of condemnation (any of the
preceding a “Condemnor”), or a voluntary sale or transfer by Landlord to any
Condemnor, either under threat of condemnation or while legal proceedings for
condemnation are pending (any of the preceding, a “Condemnation”), the rights
and obligations of Landlord and Tenant shall be determined pursuant to this
Paragraph. If such Condemnation is of the entire Premises, then this Lease
shall terminate on the date the Condemnor takes possession of the Premises (the
“Date of Condemnation”). A temporary Condemnation of the Premises, or any part
of the Premises, for less than one hundred eighty (180) days, shall not
constitute a Condemnation under this Paragraph; but the Basic Monthly Rent
shall abate as to the portion of the Premises affected during such temporary
Condemnation. If such Condemnation is of any portion, but not all, of the
Premises, then this Lease shall remain in effect, except that, if the remaining
portion of the Premises is rendered unsuitable for Tenant’s continued use of the
Premises, then Tenant may elect to terminate this Lease, by so notifying
Landlord in writing (the “Termination Notice”) within thirty (30) days after
the date that the nature and extent of the Condemnation have been determined.
Such termination shall be effective on the earlier of (i) the date that is
thirty (30) days after the giving of the Termination Notice, or (ii) the Date
of Condemnation. If Tenant does not give to Landlord the Termination Notice
within such thirty (30) day period, then all obligations of Tenant under this
Lease shall remain in effect, except that (unless the Premises or restored as
set forth bellow) Basis Monthly Rent shall be reduced by the ratio of (a) the
area of the Premises taken to (b) the area of the Premises immediately prior to
the Date of Condemnation. Notwithstanding anything to the contrary in this
Paragraph, if, within twenty (20) days after Landlord’s receipt of the
Termination Notice, Landlord notifies Tenant that Landlord at its cost will add
to the remaining Premises (or substitute for the Premises other comparable
space in the Project) so that the area of the Premises will be substantially
the same after the Condemnation as they were before the Condemnation, and
Landlord commences the restoration promptly and completes it within one hundred
fifty (150) days after Landlord so notifies Tenant, then all obligations of
Tenant under this Lease shall remain in effect, except that Basic Monthly Rent
shall be abated or reduced during the period from the Date of Condemnation until
the completion of such restoration by the ratio of (A) the area of the Premises
taken to (B) the area of the Premises immediately prior to the Date of
Condemnation. Unless Landlord restores the Premises pursuant to the preceding
sentence, or unless Tenant gives to Landlord the Termination Notice within the
relevant thirty (30) day period, Tenant at its sole cost shall accomplish any
restoration required by Tenant to use the

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

13

 

Premises.
All compensation, sums, or anything of value awarded, paid, or received on a
total or partial Condemnation (the “Award”) shall belong to and be paid to
Landlord. Tenant shall have no right to any part of the Award, and Tenant
hereby assigns to Landlord all of Tenant’s right, title, and interest in and to
any part of the Award, except that Tenant shall receive from the Award any sum
paid expressly to Tenant from the Condemnor for Tenant’s reasonable loss of
goodwill and any amounts equal to the monies paid by Tenant from time-to-time
for each of its tenant improvements (said tenant improvements as approved in
advance and in writing by Landlord) made to or in the Premises, multiplied in
each case by a fraction (the numerator of which is the number of months
remaining on the Lease Term at the time of the Condemnation, and, the
denominator of which is the number of months remaining on the Lease Term at the
time Tenant paid such monies). Landlord and Tenant waive the provisions of any
statute (including without limitation California Code of Civil Procedure
Section 1265.130 or any successor statute) that allows Landlord or Tenant to
petition the superior court (or any other local court) to terminate this Lease
in the event of a partial taking (less than 25%) of the Premises.

 

32.  Assignment and Other Transfers.  Without Landlord’s prior written consent,
which shall not be unreasonably withheld, none of the following shall occur
(nor be permitted by Tenant to occur), voluntarily, involuntarily, by operation
of law, or otherwise (any of the following, a “Transfer”) unless the Transferee
is a federally or state chartered financial institution with a Net Worth of at
least $10,000,000.00 or is a holding company of Tenant: (i) any assignment,
sublease, disposition, sale, concession, license, license agreement for the use
of any portion of the Premises, mortgage, encumbrance, hypothecation, pledge,
collateral assignment, or other transfer, by Tenant of this Lease, any interest
in this Lease, or all or any portion of the Premises; or (ii) any assignment,
disposition, sale, transfer, acquisition, or issuance of equitable interests (whether
stock, partnership or otherwise) in Tenant, to or by any person, entity, or
group of related persons or affiliated entities, whether in a single
transaction or in a series of related or unrelated transactions, which results
in such person, entity, or group holding (or assigning, transferring, disposing
of, or selling) fifty percent (50%) or more of the aggregate issued and
outstanding equitable interests in Tenant. Landlord shall not be liable in
damages to Tenant or to any proposed subtenant, assignee or other transferee
(any of the preceding a “Proposed Transferee”) if such consent is adjudicated
to have been unreasonably withheld, and, in such event, Tenant’s sole remedy
shall be to have the proposed Transfer declared as valid as if Landlord’s consent
had been given, although Tenant shall be entitled to reasonable attorney’s fees
if Tenant is the prevailing party in such litigation. At least thirty (30) days
prior to entering into any proposed Transfer, Tenant shall submit to Landlord
the sum of $400.00 (as payment toward Landlord’s and Landlord’s attorneys’ cost
of reviewing, consenting to, rejecting and/or consummating any proposed
Transfer), and a written notice (“Tenant’s Notice”) which includes or sets
forth in reasonable detail (a) the form of the proposed Transfer, including
without limitation all related agreements, documents, instruments, exhibits,
and escrow instructions, (b) the name and address of the Proposed Transferee,
(c) the terms and conditions of the proposed Transfer, including without
limitation the commencement or effective date of the proposed Transfer, which
shall be at least thirty (30) days after Tenant’s Notice is given, and (d) the
nature, character, and current banking, financial, and other credit information
and references with respect to the Proposed Transferee and the business of the
Proposed Transferee (including without limitation tax returns for the three
most-recent years, a business plan with cash-flow projections and financial
projections with assumptions and competitive market analysis), in reasonably
sufficient detail to enable Landlord to determine the Proposed Transferee’s
financial responsibility. Within thirty (30) days after Landlord’s receipt from
Tenant of such sum and Tenant’s Notice, and all documentation requested of
Tenant by Landlord, Landlord shall notify Tenant whether Landlord has consented
to the proposed Transfer. Any consent by Landlord to any proposed Transfer
shall not constitute a consent with respect to any other Transfer. If Landlord
consents to any proposed Transfer, and Tenant fails to consummate such Transfer
on or before the commencement or effective date of the proposed Transfer (as
set forth in Tenant’s Notice), then such consent shall be deemed withdrawn and
Tenant shall be required again to comply with this paragraph before making a
Transfer. Landlord shall not have unreasonably withheld its consent with
respect to any Transfer if Landlord shall not have received such sum or Tenant’s
Notice, if the nature or character of the Proposed Transferee, or the proposed
occupancy of the Premises by the Proposed Transferee, if the Proposed
Transferee’s proposed use is different than the Permitted Use is not in keeping
with the dignity and character of the Building and the surrounding area, if the
proposed Transfer will result in the diminution of the value or marketability of
the Premises or the Project, if Landlord is not satisfied that the Proposed
Transferee is creditworthy, or if the proposed Transfer will conflict with or
result in a breach of any of the provisions of, or constitute a default under,
any agreement, instrument, or document to which Landlord is a party or by which
the project may be bound. No Transfer shall release or discharge Tenant from
any liability, whether past, present, or future, under this Lease and Tenant
shall continue to remain primarily liable under this Lease. Unless otherwise
agreed to by all parties, the Tenant’s security deposit, if any, shall be
retained by Landlord and returned to the lawful tenant in possession at the
time of the Lease termination, subject to the terms and conditions of Paragraph
6 of this Lease. Any Transfer must contain the following provisions, which
provisions whether contained in such Transfer or not, shall apply to such
Transfer: (A) Such Transfer shall be subject and subordinate to all provisions
of this Lease; (B) No Proposal Transferee shall be permitted to enter into any
Transfer without Landlord’s prior written consent; and (C) At Landlord’s
option, in the event of cancellation or termination of this Lease for any
reason or the surrender of this Lease, whether voluntarily, involuntarily, by
operation of law or otherwise, prior to the expiration of such Transfer, the
Proposed Transferee shall make full and complete attornment to Landlord for the
balance of the term of such Transfer. Such attornment shall be evidenced by an
agreement in form and substance satisfactory to Landlord which the Proposed
Transferee shall execute and deliver to Landlord within five days after request
by Landlord. Tenant shall promptly reimburse Landlord for Landlord’s reasonable
cost (less any payment made by Tenant with Landlord as set forth above) of
reviewing consenting to, rejecting and/or consummating any proposed Transfer,
including without limitation reasonable attorneys’ fees. Tenant shall promptly
pay to Landlord seventy five percent (75%) of all rents and other
consideration, of whatever nature, payable by the Proposed Transferee (or
receivable by Tenant) pursuant to any Transfer, which exceed (1) if a sublease
of a portion of the Premises, the portion of the Basic Monthly Rent that is
allocable to the portion of the

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

14

 

Premises
subleased (such allocation based on the area of the portion subleased), or (2)
if any other Transfer, the Basic Monthly Rent. Landlord additionally has the
right, at its election, by giving written notice (the “Recapture Notice”) to
Tenant within fifteen (15) days after receipt of Tenant’s Notice, to recapture
the Premises and terminate this Lease. If Landlord elects to exercise such
right and delivers a Recapture Notice to Tenant, this Lease shall automatically
be deemed terminated as of the commencement or effective date stated in Tenant’s
Notice for the proposed Transfer, and Tenant shall surrender possession of the
Premises as of such date (and any failure to do so shall constitute a default
hereunder). Landlord’s giving of a Recapture Notice shall not constitute
Landlord’s consent to Tenant’s proposed Transfer.

 

33.  Common Areas. Landlord may, at its
election, (i) close any of the Common Areas to the extent required in the opinion
of Landlord’s legal counsel to prevent a dedication of any of the Common Areas
or the accrual of any rights to any person or to the public in and to any
portion of the Common Areas, (ii) close, temporarily, any of the Common Areas
for maintenance purposes, (iii) designate other property outside the boundaries
of the Project to become part of the Common Areas, (iv) close off or otherwise
utilize portions of the Common Area while constructing improvements or making
repairs or alterations to any portion of the Project, and/or (v) make any
changes to the Common Areas, or any part of the Project, including without
limitation changes to buildings or other improvements, the addition of new
buildings or other improvements, and/or changes in the location of driveways,
entrances, exits, vehicular parking spaces, or the direction of the flow of
traffic provided, however, that Landlord shall use its reasonable efforts to
avoid interfering with Tenant’s business operations. Tenant shall not place,
install, or otherwise allow any vending machines, newspaper racks, amusement
rides, lottery paraphernalia, merchandise, payphones, or other equipment in any
portion of the Common Areas, including but not limited to the sidewalks or
driveways adjacent to the Premises, without Landlord’s express written consent,
which consent may be withheld in Landlord’s sole discretion, and which consent
may be revoked at any time.

 

34.  Relocation. Intentionally omitted.

 

35.  Access by Landlord. Subject to laws,
rules and regulations applicable to financial institutions and accompanied by
an officer or authorized agent of Tenant, Landlord and any of Landlord’s
Invitees shall have the right to enter the Premises at all reasonable times,
during normal business hours if feasible under the circumstances, and upon
reasonable notice, if feasible under the circumstances, (i) to determine
whether the Premises are in good condition and whether Tenant is complying with
its obligations under this Lease, (ii) to do any necessary maintenance or make any
restoration to the Premises that Landlord has the right or obligation to
perform, (iii) to serve, post, or keep posted any notices required or allowed
under this Lease, (v) to post “for sale” or “for rent” or “for lease” signs,
(vi) to show the Premises to brokers, agents, prospective buyers, prospective
tenants, or other persons interested in a listing of, financing, purchasing, or
occupying the Project, the Premises or any portion of the Project or the
Premises, and (vii) to shore the foundations, footings, and walls of the
Project, and to erect scaffolding and protective barricades around and about
the Premises, but not so as to prevent entry to the Premises, and to do any
other act or thing necessary for the safety or preservation of the Premises if any
excavation or other construction is undertaken or is about to be undertaken on
any adjacent property or nearby street. In the event of an emergency Landlord
shall have the right to enter the Premises at any time, without prior notice to
Tenant. Landlord’s rights under this Paragraph extend, with Landlord’s consent,
to the owner of adjacent property on which excavation or construction is to
take place and the adjacent property owner’s agents, employees, officers, and
contractors. Landlord shall not be liable for any inconvenience, disturbance,
loss of business, nuisance, or other damage arising out of any entry on the
Premises as provided in this Paragraph except damage resulting directly from
the grossly negligent acts of Landlord or Landlord’s Invitees. Tenant shall not
be entitled to any abatement or reduction of Basic Monthly Rent or other Rental
because of the exercise by Landlord of any rights under this Paragraph.

 

36.
Landlord’s Reserved Rights. Landlord, as owner of the Project, in
addition to Landlord’s other rights hereunder, reserves the right from time to
time: (i) to change the name of the Project; (ii) to temporarily utilize
portions of the Common Areas for, among other things, entertainment, outdoor
shows, displays, automobile and other product shows, the leasing of kiosks, or
such other uses which, in Landlord’s judgment, tend to attract the public; and
(iii) to utilize the lighting standards and other areas or improvements in the
Common Areas for advertising purposes.

 

37.  Indemnity and Exemption of Landlord from
Liability.

 

37.1.  Tenant hereby agrees to indemnify, protect,
and hold harmless Landlord and its shareholders, officers, directors, agents,
property managers, employees, contractors, and the partners comprising Landlord
(if any) from and against all Claims (as defined below) and all costs,
expenses, and attorneys’ fees incurred in the defense or handling of any such
Claims or any action or proceeding brought on any of such Claims. For purposes
of this Lease, the term “Claims” shall mean all liabilities, damages, losses,
costs, expenses, attorneys’ fees, and claims (except to the extent they result
from Landlord’s grossly negligent acts or willful misconduct) arising from or
which seek to impose liability under or because of (i) Tenant’s or Tenant’s
Invitees’ use of the Premises, (ii) the conduct of Tenant’s business, (iii) any
activity, work, or things done, permitted, or suffered by Tenant or any of
Tenant’s Invitees in or about the Premises or elsewhere, (iv) any breach or
default in the performance of any obligation to be performed by Tenant under
this Lease, and/or (v) any negligence of Tenant or any of Tenant’s Invitees. If
any action or

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

15

 

proceeding
is brought against Landlord or its shareholders, officers, directors, agents,
property managers, employees, contractors, or the partners comprising Landlord
(if any) by reason of any such Claims, Tenant upon notice from Landlord shall
defend such action or proceeding at Tenant’s sole cost. Except to the extent
caused by Landlord’s grossly negligent acts or willful misconduct, Tenant
assumes all risk of, Tenant waives all claims against Landlord in respect of,
and Landlord shall not be liable for, any of the matters set forth above in
this Paragraph or any of the following: injury to Tenant’s business, loss of
income from such business, or damage or injury to the goods, wares,
merchandise, or other property or the person of Tenant, Tenant’s Invitees, or
any other persons in, upon, or about the Premises, whether such damage, loss,
or injury is caused by or results from criminal acts, fire, steam, electricity,
gas, water, rain, the breakage, leakage, obstruction or other defects of pipes,
sewer lines, sprinklers, wires, appliances, plumbing, air-conditioning or
lighting fixtures, or any other cause, conditions arising upon the Premises, or
other sources or places, and regardless of whether the cause of such damage,
loss, or injury or the means of repairing such damage, loss, or injury is
inaccessible to Tenant. This Lease shall not be affected or impaired by any
change to any part of the Project or any sidewalks, streets or improvements
nearby the Project Landlord may, at its election, at any time and without
liability to Tenant, change the name of the Project.

 

37.2.  (a) Neither Landlord nor Landlord’s agents
make any warranty or representation with respect to the suitability or fitness
of the space for the conduct of Tenant’s business, or for any other purpose.

 

(b)
Neither Landlord nor Landlord’s agents make any warranty or representation with
respect to any other tenants or users that may or may not construct
improvements, occupy space or conduct business within the Project, and Tenant
hereby acknowledges and agrees that it is not relying on any warranty or
representation relating thereto in entering into this Lease.

 

(c)
Landlord specifically disavows any oral representations made by or on behalf of
its employees, agents and independent contractors, and Tenant hereby
acknowledges and agrees that it is not relying and has not relied on any oral
representations in entering into this Lease.

 

(d)
Landlord has not made any promises or representations, expressed or implied,
that it will renew, extend or modify this Lease in favor of Tenant or any
permitted transferee of Tenant, except as may be specifically set forth herein
or in a written instrument signed by both parties amending this Lease in the
future.

 

38.  Hazardous Substances.  Landlord hereby notifies Tenant, and Tenant
hereby acknowledges that, prior to the leasing of the Premises pursuant to this
Lease, Tenant has been notified, pursuant to California Health and Safety Code
Section 25359.7 (or any successor statue), that Landlord knows, or has
reasonable cause to believe, that certain hazardous substances (as such term is
used in such Section 25359.7), such as common cleaning supplies, office
supplies, spillage of petroleum products from motor vehicles, and other
consumer products, may have come to be located on or beneath the Premises
and/or the Project, Tenant hereby agrees to indemnify Landlord against all
actions, liabilities, damages, losses, costs, expenses, attorneys’ fees, and
claims (except to the extent they arise as a result of Landlord’s grossly
negligent acts or willful misconduct), arising from or relating to: (i) any
discharges, releases, or threatened releases of noise, pollutants,
contaminants, herbicides, pesticides, insecticides, or hazardous or toxic
wastes, substances, or materials (any of the preceding a “Hazardous Material”)
into ambient air, water, or land by Tenant or Tenant’s Invitee’s, or otherwise
from, on, under, or above the Premises, (ii) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or hazardous or toxic wastes, substances, or
materials by Tenant or Tenant’s Invitees, or otherwise from, on, or under, the
Premises, or (iii) a violation of any environmental law on, under, or above the
Premises (for purposes hereof, “environmental laws” shall mean any Federal,
State, or local law, statute, regulation, ordinance, guideline, or common law
principle relating to public health or safety or the use or control of the
environment, including without limitation the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Carpenter-Presley-Tanner Hazardous Substance Account Act, the California
Hazardous Waste Control Law, the Federal Clean Air Act, the California Air
Resources Act, the Federal Clean Water Act, the California Porter-Cologne Water
Quality Control Act, the Federal Resource Conservation and Recovery Act, the
California Nejedly-Z’berg-Dills Solid Waste Management and Recovery Act, and
California Health and Safety Code Section 25359.7). Tenant agrees to promptly
reimburse Landlord for all of Landlord’s costs arising from periodic monitoring
of Tenant’s use, handling, or storage of Hazardous Substances at or surrounding
the Premises. Neither Tenant nor any of Tenant’s Invitees shall use,
manufacture, store, or dispose of any Hazardous Materials anywhere within the
Premises or the Project which are or could (a) be detrimental to the Project,
human health, or the environment, except in accordance with all applicable
laws, or (b) adversely affect the value of the Premises or the Project. If the
Premises are contaminated (or, due to the acts or omissions of Tenant or
Tenant’s Invitees, the Project is contaminated) by any Hazardous Material
during the Term, then (1) Tenant shall promptly notify Landlord in writing of
such contamination, and (2) Landlord may elect to either (A) demand that Tenant
perform all remediation required by Landlord (to Landlord’s satisfaction and at
Tenant’s sole cost, necessary to return the Premises (and/or the Project) to at
least as good a condition as the Premises (or the Project) are in as of the
date of this Lease, which Tenant shall immediately do upon receipt of notice
from Landlord, or (B) proceed to cause such investigation, clean-up, and
remediation work which Landlord deems necessary or desirable to be undertaken,
whereupon the entire cost thereof (plus a supervisory fee equal to ten percent
(10%) of such cost) will be payable by Tenant to Landlord upon demand as
Additional Rent. If Tenant does not promptly commence and diligently pursue
such remediation, then Landlord may, at Landlord’s election, perform or cause
to be performed such remediation and Tenant shall immediately, upon demand, pay
the cost thereof, plus a supervisory fee in the amount of ten percent (10%) of
such cost. Tenant’s obligations and liability under this Paragraph shall
survive the termination of Tenant’s tenancy and the Term of this Lease, except
that nothing contained in this Paragraph shall be deemed to impose liability on
Tenant for any problem arising after the Term of this Lease provided neither
Tenant nor Tenant’s Invitees contributed to such problem during the Term of the
Lease.

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

16

 

39.
 Prohibition Against
Asbestos-Containing Materials.  Tenant shall not allow or permit any materials
which contain asbestos in any form or concentration (“Asbestos-Containing
Materials”) to be used or stored in the Premises or used in the construction of
any improvements or alterations to the Premises, including, without limitation,
building or construction materials and supplies. Such prohibition against
Asbestos-Containing Materials shall apply regardless of whether the
Asbestos-Containing Materials may be considered safe or approved for use by a
manufacturer, supplier, or governmental authority, or by common use or
practice. Landlord shall have the right, upon reasonable notice, to enter upon
and conduct inspections of the Premises to determine Tenant’s compliance with
this paragraph. If Tenant allows or permits Asbestos-Containing Materials to be
used or stored in the Premises or used in the construction of any improvements
or alterations to the Premises, (a) Tenant shall, upon notice from Landlord,
immediately remove such Asbestos-Containing Materials at Tenant’s sole cost,
(b) such removal shall comply with all applicable laws, regulations, and
requirements concerning asbestos and the removal and disposal of
Asbestos-Containing Materials, (c) Tenant shall reimburse Landlord for all
expenses incurred in connection with any inspection of the Premises conducted
by Landlord, and (d) unless Tenant completes such removal within thirty (30)
days after notice from Landlord, Landlord may, at its election, do either or
both of the following: (i) declare Tenant in breach of this Lease and terminate
this Lease upon ten (10) days prior written notice to Tenant, and (ii) remove
and dispose of the Asbestos-Containing Materials and obtain reimbursement from
Tenant for the cost of such removal and disposal, including a supervisory fee
payable to Landlord in the amount of ten percent (10%) of said removal and
disposal. Tenant shall indemnify Landlord and Landlord’s directors, officers,
employees, and agents against all costs, liability, expenses, penalties, and
claims for damages, including, without limitation, litigation costs and
attorneys’ fees, arising from (A) the presence of Asbestos-Containing Materials
upon the Premises, to the extent that such Asbestos-Containing Materials are
used or stored in the Premises or used in the construction of any improvements
or alterations in the Project, Building, or to the Premises by Tenant or
Tenant’s agents, employees, representatives, or independent contractors, (b)
any lawsuit, settlement, governmental order, or decree relating to the
presence, handling, removal, or disposal of Asbestos-Containing Materials upon
or from the Premises, to the extent that such Asbestos-Containing Materials are
used or stored in the Premises or used in the construction of any improvements
or alternations to the Premises by Tenant or Tenant’s agents, employees,
representatives or independent contractors, or (C) Tenant’s failure to perform
its obligations to remove such Asbestos-Containing Materials under this
paragraph.

 

40.  Security Measures.  Tenant acknowledges (i) that the Basic Monthly
Rent does not include the cost of any security measures for any portion of the
Project (ii) that Landlord shall have no obligation to provide any such
security measures, (iii) that Landlord has made no representation to Tenant
regarding the safety or security of the Project, and (vi) that Tenant will be
solely responsible for providing any security it deems necessary to protect
itself, its property, and Tenant’s Invitees in, on, or about the Project. If
Landlord provides any security measures at any time, then the cost thereof
shall be included as part of the Lease Expenses, but Landlord will not be
obligated to continue providing such security measures for any period to time,
Landlord may discontinue such service without notice and without liability to
Tenant, and Landlord will not be obligated to provide such security measures
with any particular standard of care. Tenant assumes all responsibility for the
security and safety of Tenant, Tenant’s property, and Tenant’s Invitees. Tenant
releases Landlord from all claims for damage, loss, or injury to Tenant,
Tenant’s Invitees, and/or to the personal property of Tenant and/or of Tenant’s
Invitees, even if such damage, loss, or injury is caused by or results from the
criminal or negligent acts of third parties. Landlord shall have no duty to
warn Tenant of any criminal acts or dangerous conduct that has occurred in or
near the Project, regardless of Landlord’s knowledge of such crimes or conduct.

 

41.  Subordination, Attornment and Quiet
Enjoyment.  This Lease and Tenant’s
rights under this Lease are subject and subordinate to any mortgage, deed of
trust, ground lease, or underlying lease (and to all renewals, modifications,
consolidations, replacements, or extensions thereof), now or hereafter
affecting the Premises. The provisions of this Paragraph shall be
self-operative, and no further instrument of subordination shall be required.
In confirmation of such subordination, however, Tenant shall promptly execute
and deliver any instruments that Landlord, any Leader, or the lessor under any
ground or underlying lease, may request to evidence such subordination.
Notwithstanding the preceding provisions of this Paragraph, if any ground
lessor or Lender elects to have this Lease prior to the lien of its ground
lease, deed of trust, or mortgage, and gives written notice thereof to Tenant
that this Lease shall be deemed prior to such ground lease, deed of truse, or
mortgage, whether this Lease is dated prior or subsequent to the date of such
ground lease, deed of trust, or mortgage, then this Lease shall be deemed to be
prior to the lien of such ground lease or mortgage and such ground lease, deed
of trust, or mortgage shall be deemed to be subordinate to this Lease. If any
Lender, or the lessor of any ground or underlying lease affecting the Premises,
shall hereafter succeed to the rights of Landlord under this Lease, whether by
foreclosure, deed in lieu of foreclosure or otherwise, then (i) such successor
landlord shall not be subject to any offsets or defenses which Tenant might
have against Landlord. (ii) such successor landlord shall not be bound by any
prepayment by Tenant of more than one month’s installment of Basic Monthly Rent
or any other Rental, (iii) such successor landlord shall not be subject to any
liability or obligation of Landlord except those arising after such succession,
(iv) Tenant shall attorn to and recognize such successor landlord as Tenant’s
landlord under this Lease,(v) Tenant shall promptly execute and deliver any
instruments that may be necessary to evidence such attornment, and (vi) upon
such attornment, (and provided Tenant is not then in default) Tenant shall be
entitled to quiet enjoyment and this Lease shall continue in effect as a direct
lease between such successor landlord and Tenant upon and subject to all of the
provisions of this Lease. If any Lender requests reasonable amendment(s) to
this Lease at any time during the Term, then Tenant shall not unreasonably
withhold or delay its written consent to such

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

17

 

amendment(s).

 

42.  Estoppel Certificates.  Within ten (10) days after written request
from Landlord, Tenant shall execute and deliver to Landlord, in recordable
form, a certificate stating (i) that this Lease is unmodified and in full force
and effect, or in full force and effect as modified, and stating all
modifications, (ii) the then-current Basic Monthly Rent, (iii) the dates to
which Basic Monthly Rent has been paid in advance, (iv) the amount of any
security deposit, prepaid rent or other payment constituting Rental which has
been paid, (v) whether or not Tenant or Landlord is in default under this Lease
and whether there currently exist any defenses or rights of offset under the
Lease, (vi) all Landlord’s Work required by this Lease is complete and (vii)
such other matters as Landlord shall reasonably request. Tenant’s failure to
deliver such certificate within such ten (10) day period shall be conclusive
upon Tenant for the benefit of Landlord, and any successor in interest to
Landlord, any lender or proposed lender, and any purchaser of the Project that,
except as may be represented by Landlord, this Lease is unmodified and in full
force and effect, no Rental has been paid more than thirty (30) days in
advance, and neither Tenant nor Landlord is in default under this Lease.

 

43.  Merchants’ Association /Marketing Fund.
 If, during the Term, a non-profit
merchant’s association (the “Association”) or Marketing Fund (the “Fund”)
consisting of merchants in the project is formed or if an Association or Fund
exists prior to the commencement of the Term, then Tenant may join, and
maintain membership in good standing in the Association or Fund throughout the
Term. Membership may include, without limitation. Tenant’s obligation to pay
dues and assessments as determined by the Association or Fund to cover the
expense of all advertising and other activities engaged in by the Association
of Fund for the mutual benefit of its members including, without limitation,
the compensation of an executive secretary employed by the Association or Fund
for the purpose of directing public relations and promotions. Landlord, at
Landlord’s discretion, may elect to become an executive (voting but non-dues
paying) number of the Association or Fund. Failure by Tenant to make any
payment as and when due for dues and/or assessments to the Association or Fund
shall constitute a material default pursuant to this Lease.

 

44.  Waiver.  No delay or omission in the exercise of any
right or remedy of Landlord in the event of any default by Tenant shall impair
such right or remedy or be construed as a waiver. The receipt and acceptance by
Landlord of delinquent Rental shall not constitute a waiver of any default
other than the particular Rental payment accepted. Landlord’s receipt and
acceptance from Tenant, on any date (the “Receipt Date”), of an amount less
than Rental due on such Receipt Date, or to become due at a later date but
applicable to a period prior to such Receipt Date, shall not release Tenant of
its obligation (i) to pay the full amount of such Rental due on such Receipt
Date or (ii) to pay when due the full amount of such Rental to become due at a
later date but applicable to a period prior to such Receipt Date. No act or
conduct of Landlord, including without limitation, the acceptance of the keys
to the Premises, shall constitute an acceptance by Landlord of the surrender of
the Premises by Tenant before the Expiration Date. Only a written notice from
Landlord to Tenant stating Landlord’s election to terminate Tenant’s right to
possession of the Premises shall constitute acceptance of the surrender of the
Premises and accomplish a termination of this Lease. Landlord’s consent to or
approval of any act by Tenant requiring Landlord’s consent or approval shall
not be deemed to waive or render unnecessary Landlord’s consent to or approval
of any other of subsequent act by Tenant. Any waiver by Landlord of any default
must be in writing and shall not be a waiver of any other default concerning
the same or any other provision of this Lease. Tenant hereby waives any rights
granted to Tenant under California Code of Civil Procedure Section 1179,
California Civil Code Section 3275, and/or any successor statute(s). Tenant
represents and warrants that if Tenant breaches this Lease and, as a result,
this Lease is terminated, Tenant will not suffer any undue hardship as a result
of such termination and, during the Term, will make such alternative or other
contingency plans to provide for its vacation of the Premises and relocation in
the event of such termination. Tenant acknowledges that Tenant’s waivers set
forth in this Paragraph are a material part of the consideration for Landlord’s
entering into this Leases and that Landlord would not have entered into this
Lease in the absence of such waivers.

 

45.  Brokers.  Tenant represents that, except as disclosed in
writing to Landlord prior to the execution of this Lease, no real estate
broker, agent, finder, or other person is responsible for bringing about or
negotiating this Lease and Tenant has not deal with any real estate broker,
agent, finder, or other person, relative to this Lease in any manner. Tenant
hereby indemnifies Landlord against all liabilities,  damages, losses, costs, expenses, attorneys’
fees and claims arising from any claims that may be made against Landlord by
any real estate broker, agent, finder, or other person (other than as set forth
above), alleging to have acted on behalf of or to have dealt with Tenant.

 

46.  Easements.  Landlord may, at its election, from time to
time, grant such easements, rights and dedications, and cause the recordation
of parcel maps, easement and operating agreements, and restrictions affecting
the Premises and the Project provided, that any such action does not materially
interfere with Tenant’s business or access thereto. Tenant shall promptly sign
any documents or instruments to accomplish the foregoing upon request by
Landlord. Tenant irrevocably appoints Landlord as Tenant’s special
attorney-in-fact to execute and deliver such documents or instruments on behalf
of Tenant if Tenant refuses or fails to do so.

 

47.  Limitations on Landlord’s Liability.  If Landlord is in default of this Lease, and
as a consequence Tenant recovers a money judgment against Landlord, such
judgment shall be satisfied only out of the proceeds of sale received upon
execution of such judgment and levy against the right, title, and interest of
Landlord in the Project,

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

18

 

and
out of rent or other income from the Project receivable by Landlord or out of
the consideration received by Landlord from the sale or other disposition of
all or any part of Landlord’s right, title, and interest in the Project.
Neither Landlord nor Landlord’s shareholders, officers, directors, agents,
property managers, employees, contractors, or the partners comprising Landlord
(if any) shall be personally liable for any deficiency.

 

48.  Sale or Transfer of Premises.  If Landlord sells or transfers any portion of
the Premises, Landlord, on consummation of the sale or transfer, shall be
released from any liability thereafter accruing under this Lease. If any
security deposit or prepaid rent has been paid by Tenant, Landlord may transfer
the security deposit and/or prepaid rent to Landlord’s successor-in-interest
and on such transfer Landlord shall be discharged from any further liability arising
from the security deposit or prepaid rent.

 

49.  Quitclaim Deed.  Tenant shall execute and deliver to Landlord
on the Expiration Date or earlier termination of this Lease, promptly on
Landlord’s request, a quitclaim deed to the Premises, in recordable form,
designating Landlord as transferee.

 

50.  No Merger.  The voluntary or other surrender of this Lease
by Tenant, or a mutual cancellation of this Lease, or a termination by
Landlord, shall not work a merger, and shall, at the option of Landlord, terminate
any existing subleases or may, at the option of Landlord, operate as an
assignment to Landlord of any such subleases.

 

51.  Confidentiality.  Except as essential to the consummation of the
transaction contemplated by this Lease (together with and all amendments and
addenda hereto):

 

51.1.  Tenant shall keep and
maintain the terms of this Lease and the transactions contemplated by this
Lease or any aspect of this Lease in strict confidence; and

 

51.2.  Tenant may not make or
allow any notices (other than a recorded Memorandum of Lease to be approved in
advance and in writing by Landlord) statements, disclosures, communication, or
news releases concerning this Lease, the terms of this Lease and the
transactions contemplated by this Lease or any aspect of this Lease. Nothing
provided herein, however, shall prevent Tenant from disclosing to its legal
counsel and/or certified public accountants, insurance brokers or agents,
prospective purchasers state or federal regulators of Tenant, or lenders the
existence and terms of this Lease or any transaction under this Lease, or any
aspect of this lease, or from complying with any governmental or court order or
similar legal requirement which requires such party to disclose this Lease, the
terms of this Lease, the transaction contemplated by this Lease and/or any
aspect of this Lease; provided that such party uses reasonable and diligent
good faith efforts to disclose no more than is absolutely required to be
disclosed by such legal requirement.

 

51.3.   If Tenant violates this confidentiality
provision, in addition to all other remedies to which Landlord may be entitled
under law or in equity, Landlord shall be entitled to receive immediately the
entire value of any rent relief, rent abatement, free rent, reimbursement, or
other concession which Landlord has previously granted to Tenant.

 

52.  Miscellaneous.

 

52.1.  Tenant covenants and
agrees not to protest or in any way oppose any application for a license to
serve or sell liquor filed by tenants or other users of space within the
Project.

 

52.2.  Upon Landlord’s written
request, Tenant shall promptly furnish to Landlord, from time to time,
financial statements certified by Tenant to be true and correct, reflecting
Tenant’s then current financial condition. Such financial statements shall
include a current balance sheet and a profit and loss statement covering the
most recent 12-month period available.

 

52.3.  Notwithstanding any other
provision in this Lease to the contrary, Tenant shall refrain from selling or
otherwise distributing any alcoholic beverages unless such sale is specifically
permitted pursuant to Paragraph 2.12, above, and in any event, such sales shall
be expressly forbidden under this Lease unless and until Tenant holds the
appropriate license as issued and/or approved by the California Alcoholic
Beverage Control Agency.

 

52.4.  This Lease shall be
governed by and construed in accordance with the laws of the state in which the
Premises are located. If the Premises are located outside of California, then
the references in this Lease to California statutes shall be deemed to include
any relevant statute of the jurisdiction in which the Premises are located that
is comparable to such California statutes.

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/ [ILLEGIBLE]

  	
   Tenant

  	
  /s/ [ILLEGIBLE]

  

 

19

 

52.5.  For purposes of venue and
jurisdiction, this Lease shall be deemed made and to be performed in the City
of San Diego, California (whether or not the Premises are located in San
Diego, California and Landlord and Tenant hereby consent to the jurisdiction of
the Courts of the County of San Diego.

 

52.6.  This Lease may be executed
in counterparts, each of which shall be deemed an original and all of which
together shall constitute one document.

 

52.7.  Whenever the context so
requires, all words needs in the singular shall be construed to have been used
in the plural (and vice versa), each gender shall be construed to include any
other genders, and the word “person” shall be construed to include a natural
person, a corporation, a firm, a partnership, a joint venture, a trust, an
estate or any other entity.

 

52.8.  Each provision of this
Lease shall be valid and enforceable to the fullest extent permitted by law. If
any provision of this Lease or the application of such provision to any person
or circumstance shall, to any extent, be invalid or unenforceable, the
remainder of this Lease, or the application of such provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected by such invalidity or unenforceability, unless such
provision or such application of such provision is essential to this Lease.

 

52.9.  In the event any
litigation, arbitration, mediation, or other proceeding (“Proceeding”) is
initiated by any party against any other party to enforce, interpret or
otherwise obtain judicial or quasi-judicial relief in connection with this
Lease the prevailing party in such Proceeding shall be entitled to recover from
the unsuccessful party all costs, expenses, and actual attorney’s fees and
expert witness fees relating to or arising out of such Proceeding (whether or
not such Proceeding proceeds to judgment), and any post-judgment or post-award
proceeding including without limitation one to enforce any judgment or award
resulting from any such Proceeding. Any such judgment or award shall contain a
specific provision for the recovery of all such subsequently incurred costs,
expenses, and actual attorney’s fees and expert witness fees.

 

52.10.  This Lease shall become
effective when it has been executed by each of Landlord and Tenant.

 

52.11.  Subject to any
restriction on transferability contained in this Lease, this Lease shall be
binding upon and shall inure to the benefit of the successors-in-interest and
assigns of each party to this Lease. Nothing in this Paragraph shall create any
rights enforceable by any person not a party to this Lease, except for the
rights of the successors-in-interest and assigns of each party to this Lease,
unless such rights are expressly granted in this Lease to other specifically
identified persons.

 

52.12.  The headings of the
Paragraphs of this Lease have been included only for convenience, and shall not
be deemed in any manner to modify or limit any of the provisions of this Lease,
or be used in any manner in the interpretation of this Lease.

 

52.13.  Time and strict and
punctual performance are of the essence with respect to each provision of this
Lease.

 

52.14.  Each party to this Lease
and its legal counsel has had an opportunity to review and revise this Lease.
The rule of construction that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Lease or any
Addendum or Exhibit to this Lease, and such rule of construction is hereby
waived by Tenant.

 

52.15.  All notices required or
permitted to be given by Tenant to Landlord shall be in writing and shall be
personally delivered, sent by certified mail, postage prepaid, return receipt
requested, or sent by a nationally recognized overnight express courier service
that provides written confirmation of delivery to Landlord at the address set
forth in Paragraph 2.10 of this Lease, unless alternate notice provisions are
specifically stated elsewhere herein. Each such notice or other communication
shall be deemed given, delivered and received upon its actual receipt, except
that if it is sent by mail in accordance with this Paragraph, then it shall be
deemed given, delivered and received three days after the date such notice or
other communication is deposited with the United States Postal Service in
accordance with this Paragraph. Landlord or Tenant must give a notice of a
change of its address to the other, if such address changes. Landlord shall be
required to give all notices pursuant to Paragraph 26 of this Lease writing and
shall be personally delivered, sent by certified mail, postage prepaid, return
receipt requested, or sent by a nationally recognized overnight express courier
service that provides written confirmation of deliver to Tenant at the address
set forth in Paragraph 2.11 of this Lease. Each such notice or other
communication shall be deemed given, delivered and received upon its actual
receipt, except that if it is sent by mail in accordance with this Paragraph,
then it shall be deemed given, delivered and received three days after the date
such notice or other communication is deposited with the United States Postal
Service in according with this Paragraph.

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

20

 

Notwithstanding
the foregoing, routine correspondence between Landlord and Tenant shall be
deliverable by regular U.S. mail or other such means of delivery as may become
customary.

 

52.16.  If more than one person
is Tenant, then the obligations of Tenant under this Lease shall be the joint
and several obligations of each of such persons; provided, however, that any
act or signature of one or more of any of such persons and any notice or refund
given to or served on any of such persons shall be fully binding on each of
such persons.

 

52.17.   All provisions, whether covenants or
conditions, to be performed or observed by Tenant shall be deemed to be both
covenants and conditions.

 

52.18.  All payments to be made
by Tenant to Landlord under this Lease shall be in United States currency.

 

52.19.  The Exhibits and Addendum
attached to this Lease are incorporated herein by this reference.

 

52.20.  Intentionally omitted.

 

52.21.  Intentionally omitted.

 

52.22.  This Lease, the Exhibits
A, B, C, D and Addendum(s), if any, attached hereto and forming a part hereof,
as if set forth herein, constitute all of the covenants, promises, assurances,
representations, warranties, statements, agreements, conditions and understandings
between Landlord and Tenant concerning the Premises and the Project and there
are no covenants, promises, assurances, representations, warranties,
statements, conditions, or understandings, either oral or written, between
them, other than as herein set forth. Except as herein otherwise provided, no
subsequent alteration, change, or addition to this Lease shall be binding upon
Landlord or Tenant unless reduced to writing and signed by each of them.
Notwithstanding the foregoing, the Landlord may, from time to time, establish
and amend such rules, regulations, and signage criteria, in a written form, for
the benefit of the Project and Building provided, however, that such rules are
consistent with all laws, rules and regulations to which Tenant is subject as a
financial institution. Violations of such rules, regulations, and signage
criteria by Tenant or Tenant’s invitees shall constitute a material default of
this Lease.

 

52.23.  This Lease, upon full
execution, supersedes and revokes any and all pervious leases governing the
Premises, lease negotiations, arrangements, letters of intents, offers to
lease, lease proposals or drafts, brochures, representations, and information
conveyed, whether oral or written, between parties hereto or their respective
representations or any other person purported to represent Landlord or Tenant.
The Tenant acknowledges it has not been induced to enter into this Lease by any
representations not set forth in the Leases, nor has it relied on any such
representations. No such representations should be used in the interpretation
or construction of this Lease and the Landlord shall have no liability for any
consequences arising as a result of any such representations.

 

52.24.  Any claim, demand or
right of defense of any kind by Tenant that is based upon or arises in any
connection with the Lease or negotiations prior to its execution shall be
barred unless Tenant commences an action thereon or initiates a legal
proceeding or defense by reason thereof within one hundred eighty (180) days
after the date of the occurrence of the event, act or omission to which the
claim, demand or right of defense relates.

 

52.25.  Except for such
regulatory approvals as are hereinafter required, including becoming a chartered
bank, Tenant represents and warrants that it has full power and authority to
execute and fully perform its obligations under this Lease pursuant to its
governing instruments, without the need for any further action, and that the
person(s) executing this Lease on behalf of Tenant are the duly designated
agents of Tenant and are authorized to do so. Prior to execution of this Lease,
Tenant shall supply Landlord with such evidence as Landlord may request
regarding the authority of Tenant to enter into this Lease. Any actual or
constructive taking of possession of the Premises by Tenant shall constitute a
ratification of this Lease by Tenant.

 

52.26.  Tenant for itself and its
and its officers, directors, shareholders, partners, principals, employees,
agents, representatives, and other related entities and individuals, agrees to
comply fully with any and all laws and other requirements prohibiting
discrimination against any person or group of persons on account of race,
color, religion, creed, sex, marital status, sexual orientation, national
origin, ancestry, age, physical handicap or medical condition, in the use,
occupancy or patronage of the Premises and/or of Tenant’s business. Tenant
shall indemnify and hold Landlord and its affiliates harmless from and against
all damage and liability incurred by Landlord in the event of any violation of
the foregoing covenant or because of any event of or practice of discrimination
a against any such persons or group of persons by Tenant or its officers,
directors, shareholders, partners, principals, employees, agents,
representatives, and other related entities and individuals in accordance with
the indemnification provisions of Paragraph 37.

 

	
  525-937-A, B
  and C

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Landmark
  National Ban—Revised 8-16-01

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Standard
  Shopping Lease FINAL 8-16-01

  	
   

  	
   

  	
  Landlord

  	
  /s/
  [ILLEGIBLE]

  	
   Tenant

  	
  /s/
  [ILLEGIBLE]

  

 

21

 

Signature Page

 

	
  LANDLORD
  : Pacific Solana Beach Holdings, LP

  
	
  a
  California limited partnership

  	
   

  
	
   

  	
   

  
	
  By:
  American Assets, Inc., as Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jonathan Hughes

  	
   

  
	
   

  	
  Jonathan
  Hughes

  	
   

  
	
  Its:

  	
  Senior
  Portfolio Manager, Commercial Real Estate

  
	
   

  	
   

  
	
  Date:

  	
  8/20/01

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ John Chamberlain

  	
   

  
	
   

  	
  John
  Chamberlain

  	
   

  
	
  Its:

  	
  Chief
  Executive Officer

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  8/21/01

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  TENANT:
  Landmark National Bank

  	
   

  
	
  (a
  proposed national bank)

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Ronald P. Bird

  	
   

  
	
   

  	
  Ronald
  P. Bird

  	
   

  
	
  Its:
  

  	
  Agent
  for Landmark National Bank

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  8/17/2001

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  BY:

  	
  /s/ Ronald J. Carlson

  	
   

  
	
   

  	
  Ronald
  J. Carlson

  	
   

  
	
  Its:
  

  	
  Agent
  For Landmark National Bank

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  8/17/2001

  	
   

  
									

 

	
  525-937 A, B
  and C

  Landmark National Ban—Revised 8-16-01

  [ILLEGIBLE]

  

  [ILLEGIBLE]

  	
  Landlord

  	
  [ILLEGIBLE]

  	
  Tenant

  	
  [ILLEGIBLE]

  

 

22

 

 

 

EXHIBIT “B”

TO STANDARD RETAIL LEASE

 

DEMISED PREMISES PLAN

 

Demised
Premises Plan is to be the set of construction drawings as completed by the
Landlord or the Landlord’s approved representative and approved by the
appropriate government agency. Actual area of Demised Premises Plan to be field
verified upon occupancy of premises by Tenant. Rental rate (basic rent) to be
adjusted (increased or decreased) to reflect the actual square footage.

 

TO BE PROVIDED AT A LATER DATE

 

	
  [ILLEGIBLE]

  	
  Landlord

  	
  [ILLEGIBLE]

  	
  Tenant

  	
  [ILLEGIBLE]

  

 

 

EXHIBIT “C”

 

TENANT IMPROVEMENTS TO THE PREMISES

 

Lomas Santa Fe Plaza

 

General
Recital:   Landlord shall provide a standard tenant
finish for the Premises, and Landlord shall provide a tenant improvement
allowance for Tenant to construct further improvements to the Premises, subject
to the terms and conditions as more completely described herein.

 

Section 1. Landlord’s
Work. Following execution of this Lease by Landlord and Tenant, Landlord
shall cause the Premises to be built-out and delivered to Tenant in accordance
with mutually approved plans. The build-out of the Premises shall be completed
by Landlord in a good and workmanlike manner, and in accordance with working
drawings, plans, and specifications for the Premises attached hereto, or if no
such working drawings, plans, and specifications are attached, then as mutually
approved by Landlord and Tenant within ten days after the date that Landlord
submits such working drawings, plans, and specifications to Tenant for Tenant’s
approval (“Landlord’s Work”). If such working drawings, plans, and
specifications are not approved within such ten-day period, this Lease shall,
at Landlord’s election, terminate and be of no further force and effect.
Landlord’s Work shall comply with all applicable federal, state and local laws,
ordinances, codes and regulations.

 

Section 2. Landlord’s
Contribution. Landlord shall be responsible for bearing all costs and
expenses of completing the Landlord’s Work. All costs and expenses in excess of
such Tenant Improvement Allowance shall be payable by Tenant upon demand by
Landlord. If Landlord at any time determines that the cost of the Landlord’s
Work is likely to exceed the amount of the Allowance, Landlord may require
Tenant to advance such estimated excess to Landlord prior to (and as a
condition to) commencing or completing the Landlord’s Work and any failure by
Tenant to immediately provide such funds to Landlord shall constitute a default
under this Lease.

 

Section 3. Condition
of Premises Following Completion of Landlord’s Work:  The Premises shall be delivered in “As Is”
condition subject to the following improvements:

 

SEE ATTACHMENT MARKED AS EXHIBIT “D”

 

Section 4. Estimated
Completion Date. Landlord shall make reasonable efforts to cause the
Landlord’s Work to be substantially completed within 90 days following
mutual execution of this Lease, subject to delays from causes beyond the
reasonable control of Landlord such as, but not limited to, acts of God,
strikes, work stoppages, unavailability of or delay in receiving permits, labor
or materials, defaults by contractors or subcontractors, weather conditions,
fire or other casualty, or action of governmental authorities. For purposes of
this Exhibit, the term “substantial completion” or “substantially completed”
shall have the meaning set forth in Paragraph 4 of the Lease.

 

Section 5. Effect
of Delay on Lease Term. In the event the Landlord’s Work is not
substantially completed by the estimated date above, and/or the Lease
Commencement Date does not occur by the date specified in Paragraph 2.4.1 of
the Lease, this Lease shall not, except as provided in Section 6, below, be
affected or modified and shall remain in full force and effect and Landlord
shall not be liable for any damage suffered or incurred on account of any delay
in completion.

 

Section 6. Initial
Commencement of Lease Term. The Lease Term shall commence upon September
1,2001. The commencement date for payment of rent under the Lease (“Rent
Commencement Date”) shall follow the initial commencement of the term of the
Lease in accordance with Lease Addendum No. 1. Landlord shall provide Tenant
with an “Acceptance of Premises” letter upon Tenant’s acceptance of possession,
and a “Confirmation of Lease Terms” written memorandum following the Rent
Commencement Date reflecting the exact date of commencement of the Lease Term
(the “Lease Commencement Date”) as set forth herein; however, any failure to do
so shall not affect the Lease Commencement Date. If the Lease Commencement Date
provided for by this Section is different than the estimated Lease Commencement
Date set forth in Paragraph 2.4.1 of the Lease, then (a) the Lease Commencement
Date provided for by this Section shall control and (b) Paragraphs 2.4.1 and
2.4.2  of the Lease shall be deemed
amended accordingly, except that if Landlord fails to provide Tenant with a
Confirmation of Lease Terms written memorandum of such dates, as provided
above, then the Lease Commencement Date and Expiration Date act forth in
Paragraphs 2.4.1 and 2.4.2 referenced above, shall conclusively be deemed to be
the actual Lease Commencement Date and Expiration Date under this Lease. Tenant
shall execute the Acceptance of Premises letter on the date of Landlord’s
turnover of possession to Tenant, subject to any punchlist items identified
therein. Tenant shall execute and return to Landlord the

 

	
  525-937 A, B
  and C

  Landmark National Bank-Revised 8-16-01

  C #3 rev. 9.20.98

  	
   

  	
   

  	
   

  	
   

  
	
  [ILLEGIBLE]

  	
  Landlord

  	
  [ILLEGIBLE]

  	
  Tenant

  	
  [ILLEGIBLE]

  

 

 

Confirmation
of Lease Terms memorandum within ten days of submittal by Landlord. Failure by
Tenant to execute the Acceptance of Premises letter or the Confirmation of
Lease Terms memorandum shall not amend the terms thereof, but shall be deemed
as Tenant’s final and conclusive acceptance of the terms thereof.

 

Section 7. Tenant’s
Plan Approval. Concurrently with, or within forty-five calendar days
following the execution of this Lease, Tenant shall cause detailed plans and
specifications (the “Plans”) to be prepared and delivered to Landlord; which
Plans shall reflect the work to be performed within the Premises by Tenant
following completion of the Landlord’s Work in order to suitably prepare the
Premises for Tenant’s use (the “Tenant’s Work”). Landlord shall, within ten
calendar days following its receipt of the Plans, either approve such Plans or
provide Tenant with the reasons that Landlord is withholding such consent. If
Landlord does not approve the Plans, Tenant shall immediately cause the Plans
to be revised, consistent with Landlord’s comments, and then resubmit the Plans
to Landlord for review within ten calendar days of Landlord’s notice to Tenant
of said non-approval of Tenant’s Plans. No work shall be undertaken by Tenant
until the Plans have been finally approved by Landlord. Performance of the
Tenant’s Work shall strictly conform to the approved Plans and any deviation
will require Landlord’s prior approval. Any delays caused by Tenant with
respect to submittal, revision, or approval of plans pursuant to this paragraph
shall accelerate the Rent Commencement Date accordingly. In the event that
Tenant’s Plans have not been mutually approved within 40 days following the
Lease Commencement Date, Landlord may, at Landlord’s option, terminate this
Lease, regain possession of the Premises, and Tenant shall reimburse Landlord
for Landlord’s costs in preparing the Premises for Tenant’s occupancy.

 

Section 8. Tenant’s
Work Completion Period. Following the Lease Commencement Date of this Lease
and Tenant’s acceptance of the Premises and Tenant’s obtaining necessary OCC
approvals in accordance with Addendum No. 1, Paragraph 5, Tenant shall cause
Tenant’s Work to be completed in accordance with sound construction practices
and in a manner consistent with this Exhibit “C” (“Tenant’s Work Completion
Period”).

 

Section 9. Construction
of Tenant Improvements by Tenant’s Contractor. After the Plans for the
Tenant’s Work have been approved by Landlord, Tenant, and the local governing
agencies, Tenant shall submit to Landlord the name, address, license number,
evidence of insurance, and any other information required by Landlord of Tenant’s
proposed contractor(s) (“Contractor”) for Landlord’s review and approval. If
Landlord deems, in Landlord’s reasonable discretion, that Tenant’s proposed
Contractor is unacceptable, Tenant shall resubmit information on a replacement
contractor until a mutually approved Contractor is selected. Upon said
selection, Tenant shall enter into a construction contract with the Contractor
which shall include a provision for compliance with Landlord’s rules and
regulations as defined herein, and Tenant shall provide Landlord with a copy of
said contract. In no event shall Tenant be permitted access to the Premises to
perform Tenant’s Work prior to providing all information requested by Landlord
relating to Tenant’s Work. Failure by Tenant to provide any information
requested by Landlord, including but not limited to evidence of Tenant’s and
Tenant’s Contractor’s compliance with all of the insurance requirements hereof,
shall not delay the Lease Commencement Date or the Rent Commencement Date, but
will constitute grounds for Landlord’s denying access to the Premises by
Tenant. Violations of Landlord’s rules, regulations, and requirements as set
forth herein or as otherwise established by Landlord shall constitute a default
of this Lease if not corrected by Tenant and/or Tenant’s Contractor within two
(2) days notice, either written or oral, by Landlord to Tenant. Landlord shall
have the right to post a notice of non-responsibility at a prominent location
within Tenant’s Premises.

 

 It shall be the responsibility of Tenant to
enforce the following requirements of Tenant’s Contractor, and all
subcontractors of Tenant’s Contractor, at every level:

 

9.1  Tenant’s
Contractor shall perform Tenant’s Work in a manner and at times which do not
impede or delay Landlord’s contractor in the Project. Any delays in the
completion work by the Landlord or Landlord’s contractor on the Project, or the
commencement of the annual rental and any damage to any work caused by Tenant’s
Contractor shall be at the sole cost and expense of Tenant.

 

9.2  Tenant’s
Contractor shall be responsible for the repair, replacement, or clean-up of any
damage by him to other contractors’ work which specifically includes access
ways to the Premises which may be concurrently used by others. Firelanes,
sidewalks, hallways, and access to other tenant’s suites may not be blocked or
obstructed at any time.

 

9.3  Tenant’s
Contractor shall accept the Premises prior to starting any trenching
operations. Any rework of sub-base or compaction required after Tenant’s
Contractor’s initial acceptance of the Premises shall be done by Tenant’s
Contractor, which shall include the removal from the Premises of any excess
soil or debris. All work shall be done in accordance with sound construction
practices and, as required, in compliance with specifications of a soils
engineer or consultant as approved by Landlord.

 

9.4  Tenant’s
Contractor shall contain his storage of materials and his operations within the
Premises

 

	
  525-937 A, B
  and C

  Landmark National Bank-Revised 8-16-01

  C #3 rev. 9.20.98

  	
  Landlord

  	
  [ILLEGIBLE]

  	
  Tenant

  	
  [ILLEGIBLE]

  	
   

  

 

 

and
such other space as he may be assigned by Landlord. Should he be assigned space
outside of the Premises, he shall move to such other space as Landlord shall
direct from time to time to avoid interference or delays with other work.
Tenant’s Contractor shall park construction vehicles in areas designated by
Landlord.

 

9.5  All
trash and surplus construction materials shall be stored within the Premises
and shall be promptly removed from the Premises. Tenant’s Contractor shall not
use common area trash enclosures or waste bins for disposal of trash or surplus
construction material.

 

9.6  Tenant’s
Contractor shall provide temporary utilities, portable toilet facilities and
portable drinking water as required for his work within the Premises.

 

9.7  Noise
shall be kept to a minimum at all times, and shall not be permitted to
interfere with the conduct of other tenant’s business, or the general operation
of the Project. Tenant’s Contractor shall notify Landlord or Landlord’s project
manager of any planned work to be done on weekends or other than normal job
hours.

 

9.8  Tenant
and Tenant’s Contractor are responsible for compliance with all applicable
codes and regulations of duly constituted authorities having jurisdiction as
far as the performance of the Tenant’s Work is concerned and for all applicable
safety regulations established by the Landlord, OSHA, or other regulatory
agencies, and Tenant further agrees to save and hold Landlord harmless for
Tenant’s actions arising from Tenant’s Work. Prior to commencement of
construction, Tenant shall submit to Landlord evidence of insurance as required
by this Lease and evidence of insurance for Tenant’s Contractor.

 

9.9  Tenant’s
Contractor shall not post signs on any part of the Project or on the Premises,
without Landlord’s prior written approval.

 

9.10  Tenant
shall be responsible for and shall obtain and record a Notice of Completion
promptly following completion of Tenant’s work.

 

9.11  Intentionally
omitted.

 

9.12  Tenant
shall provide to Landlord a copy of the fully executed construction contract,
including all addendum and a line item breakdown by trade thereto, between
Tenant and its Contractor for the Tenant’s Work.

 

9.13  All
required permits and approvals, including but not limited to Planning,
Building, Fire, and Health department permits, must be obtained and all
necessary calculations, including, but not limited to, those required under
Title 24, must be submitted to the local governing agencies for all work to be
performed by Tenant or Tenant’s Contractor in the Premises.

 

9.14  Any
modifications to the building exterior shall be subject to Landlord’s prior
approval. No romex wiring shall be allowed, nor shall water lines be placed in
slabs, unless approved by Landlord prior to installation. All equipment placed
upon the roof as a result of the Tenant’s Work, and all roof penetrations,
shall be approved by Landlord prior to the commencement of work.

 

9.15  Landlord,
at Landlord’s reasonable discretion, may from time to time establish such other
rules and regulations for protection of property and the general safety of
occupants and invitees of the Project. Such rules and regulations shall apply
to Tenant and Tenant’s Contractor as though established upon the execution of
this Exhibit “C”.

 

Section 10. Coordination
of Construction. Tenant covenants and agrees that Tenant and Tenant’s
Contractor shall not destroy or in any way damage any portion of the Project.
Further, Tenant covenants and agrees that Tenant and Tenant’s Contractor shall
coordinate the Tenant’s Work with any construction schedule for any work being
performed by or on behalf of Landlord or any other tenant, and that the
performance of the Tenant’s Work shall not interfere with Landlord’s or any
other tenant’s construction activities. If there be such interference or
conflict, notice thereof shall be given to Tenant, and immediately after
receipt of such notice the Tenant agrees to cease or cause to be terminated
such interference or conflict. Further, should Tenant delay Landlord’s work due
to acts of Tenant or Tenant’s Contractor, Construction Change Orders,
subsequent review and approvals required or other matters that materially
affect Landlord’s construction progress, Tenant shall be responsible to
Landlord for any lost rents due to the delay of the commencement of the Lease
Term. Tenant further covenants and agrees that Tenant and Tenant’s Contractor
shall comply with all rules and regulations promulgated by Landlord, or its
agent, and all directives of Landlord governing construction or installation
activities, including but not limited to, permissible hours for

 

	
  525-937 A, B
  and C

  Landmark National Bank-Revised 8-16-01

  C #3 rev. 9.20.98

  	
  Landlord

  	
  [ILLEGIBLE]

  	
  Tenant

  	
  [ILLEGIBLE]

  	
   

  

 

 

 

construction
or installation activities, storage of equipment and responsibility for
cleaning of work areas. If Tenant or Tenant’s Contractor shall fail to comply
with the provisions of this Section any costs incurred by Landlord as a result
of such failure shall be at Tenant’s sole and exclusive expense.

 

Section 11. No
Landlord Liability. Landlord shall not be liable for any loss, cost,
damage, or expense incurred or claimed by Tenant or any other person or party
on account of the construction or installation of the Tenant’s Work or any other
person or party on account of the construction or installation of the Tenant’s
Work or any other improvements to the Premises made by Tenant. Tenant hereby
acknowledges and agrees that the compliance of the Tenant’s Work, or other
Alterations made to the Premises by the Tenant and any plans therefore, with
all applicable government laws, codes, and regulations shall be solely Tenant’s
responsibility. Landlord assumes no liability or responsibility resulting from
the failure of the Tenant to comply with all applicable governmental laws,
codes and regulations or for any defect in any of the Tenant’s Work or other
Alteration to the Premises made by Tenant. Tenant further agrees to indemnify,
defend, and hold harmless Landlord from any loss, cost, damage or expense
incurred, claimed, asserted, or arising in connection with any of the
foregoing.

 

Section 12. Tenant
Improvement Allowance. Provided that the Tenant’s Work is constructed by
Tenant’s Contractor in accordance with this Exhibit “C”, Landlord shall
reimburse Tenant for Tenant’s actual construction costs up to a maximum of $10.00
per square foot Dollars for said Tenant’s Work (“Tenant improvement
Allowance”). Such Tenant Improvement Allowance shall be paid directly to Tenant
in two equal installments. The first installment of fifty percent (50%) shall
be paid within ten business days following fifty percent (50%) completion of
the Tenant’s Work based on submitted invoices, work performed, and all
unconditional waiver and release upon progress payment for material and labor
lien releases from Tenant’s contractor, subcontractors, and suppliers. The
final fifty percent (50%), shall be paid within ten business days following
proper recordation of a Notice of Completion for the Tenant’s Work, upon
commencement of Tenant’s business within the Premises, and upon receipt of all
unconditional waiver and release upon final payment for material and labor lien
releases from Tenant’s contractor, subcontractors, and suppliers, and subject
to satisfaction of the following conditions:

 

12.1  Tenant
must have completed the Tenant’s Work in accordance with the Landlord approved
final Plans and specifications.

 

12.2  A
Notice of Completion has been properly recorded for Tenant’s Work and 35 days
have elapsed since the date of such recording.

 

12.3  Tenant
has submitted a complete set of “as built” plans and specifications to
Landlord.

 

12.4  Tenant
has provided to Landlord copies of all insurance certificates required under
this Lease.

 

12.5  A
final, unconditional certificate of occupancy for the Premises has been issued
by the appropriate governmental agency, and a copy thereof provided to
Landlord.

 

12.6  Tenant
has provided Landlord with all unconditional waiver and release upon final
payment for material and labor lien releases from Tenant’s contractor,
subcontractors, and suppliers. Said lien releases must total at least the
amount of Landlord’s construction advance to Tenant.

 

12.7  Tenant
has provided Landlord all construction warranties and guarantees in connection
with construction of Tenant’s Work.

 

12.8  Landlord
has inspected and approved the Tenant’s Work and is satisfied that the Tenant’s
Work has been performed in a good and workmanlike manner in accordance with the
approved Plans; provided, however, no such inspection shall impose any
liability upon Landlord, nor absolve Tenant or Tenant’s Contractor from
liability for any defect or failure to comply with the requirements hereof.

 

Section 13. Use
of Landlord’s Tenant Improvement Allowance.

 

13.1  The
Tenant Improvement Allowance that Landlord agrees to contribute toward the cost
of Tenant’s Work shall in no event be applied toward Tenant’s furniture,
fixtures, furnishings, personal property, signs or any monetary obligations of
Tenant under this Lease. Such funds will be used only to pay the cost of tenant
improvements that shall become the property of Landlord and remain upon and be
surrendered with the Premises, as a

 

	
  525-937 A, B
  and C

  Landmark National Bank-Revised 8-16-01

  C #3 rev. 9.20.98

  	
  Landlord

  	
  [ILLEGIBLE]

  	
  Tenant

  	
  [ILLEGIBLE]

  	
   

  

 

 

part
thereof, at the end of the Term of this Lease.

 

13.2  All fees, permits, utility charges, or
assessments associated with the construction of Landlord’s Work or Tenant’s Work
are Tenant’s responsibility to pay, but may be paid by the Landlord on Tenant’s
behalf from the Tenant Improvement Allowance if not paid directly by Tenant.

 

Section 14. Future
Improvements by Tenant to the Premises. In the event that Tenant shall
desire to perform future improvements to the Premises during the term of this
Lease or any extension thereof, Tenant shall construct such improvements in
accordance with the terms and conditions of this Exhibit “C”, except that no
Tenant Improvement Allowance shall be granted by Landlord to Tenant for said future
improvements. All costs arising from said future improvements shall be the sole
and exclusive responsibility of Tenant to pay, in a prompt and timely fashion
as said costs become due.

 

	
  525-937 A, B
  and C

  Landmark National Bank-Revised 8-16-01

  C #3 rev. 9.20.98

  	
  Landlord

  	
  [ILLEGIBLE]

  	
  Tenant

  	
  [ILLEGIBLE]

  	
   

  

 

 

 

EXHIBIT “D”

TO STANDARD RETAIL LEASE

 

CONDITION OF PREMISES

 

GENERAL
DESCRIPTION OF THE “AS-IS” CONDITION OF THE PREMISES AS ACCEPTED BY TENANT:

 

a.               Electrical service panel – 600 amp. Service,
120/208 volts,

 

b.              Restroom – NOT INCLUDED;

 

c.               Ceiling – NOT INCLUDED;

 

d.              Floor – uncolored concrete slab;

 

e.               Walls – unpainted masonry OR firetaped
drywall ready for finish, as specified by Landlord;

 

f.                 Electrical outlets – duplex convenience
outlets along perimeter walls per code and Landlord plans;

 

g.              Lighting – NOT INCLUDED;

 

h.              Sign outlet – per Landlord plans;

 

i.                  Telephone outlet – one (1) outlet box at
location designated by Landlord, with empty conduit stubbed to above ceiling;

 

j.                  Air conditioning and heating – refrigerated
air conditioning and heating units per Landlord’s design, adequate for a
typical retail business. Ducting and distribution of HVAC or any extraordinary
requirements necessitated by Tenant’s use or proposed use of the premises will
be at the sole expense of Tenant;

 

k.               Store front – per Landlord’s plans.

 

TENANT
SHALL BE RESPONSIBLE FOR THE COST OF ALL IMPROVEMENTS NOT LISTED ABOVE.

 

	
  525-937 A, B
  and C

  Landmark National Bank

  Exh. D

  	
  Landlord

  	
  [ILLEGIBLE]

  	
  Tenant

  	
  [ILLEGIBLE]

  	
   

  

 

 

 

ADDENDUM NO.1

TO STANDARD LEASE

 

Lomas Santa Fe Plaza

 

1.                                       RENT COMMENCEMENT DATE

 

The
payment of Basic Monthly Rent shall commence upon September 1, 2001.

 

2.                                       BASIC MONTHLY RENT

 

Basic
Monthly Rent for each Lease Year, (as defined below), during the Lease Term
shall be as follows:

 

                                                

 

	
  ANNUAL

  	
   

  	
  MONTHLY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Lease Years 1 & 2

  	
   

  	
  $

  	
  176,267.40

  	
   

  	
  Basic Monthly Rent

  	
   

  	
  $

  	
  14,688.95

  	
   

  	
  9/1/2001–8/31/2003

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lease Year 3 & 4

  	
   

  	
  $

  	
  185,080.77

  	
   

  	
  Basic Monthly Rent

  	
   

  	
  $

  	
  15,423.40

  	
   

  	
  9/1/2003–8/31/2005

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lease Year 5 & 6

  	
   

  	
  $

  	
  194,334.81

  	
   

  	
  Basic Monthly Rent

  	
   

  	
  $

  	
  16,194.57

  	
   

  	
  9/1/2005–8/31/2007

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lease Year 7 & 8

  	
   

  	
  $

  	
  204,051.55

  	
   

  	
  Basic Monthly Rent

  	
   

  	
  $

  	
  17,004.30

  	
   

  	
  9/1/2007–8/31/2009

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lease Year 9 & 10

  	
   

  	
  $

  	
  214,254.13

  	
   

  	
  Basic Monthly Rent

  	
   

  	
  $

  	
  17,854.51

  	
   

  	
  9/1/2009–8/31/2011

  	
   

  

 

The
term “Lease Year” shall mean (i) as to the first Lease Year, that period
commencing on the Lease Commencement Date and ending 12 months following the
Rent Commencement Date (provided; however, if the Rent Commencement Date falls
on a day other than the first day of a calendar month, then the first Lease
Year will be extended through the final day of the calendar month in which the
first annual anniversary of the Rent Commencement Date occurs), (ii) as to
every subsequent Lease Year other than the final Lease Year of the Term, the 12
month period following the prior Lease Year, and (iii) as to the final Lease
Year of the Term, the period commencing on that day immediately following the
final day of the penultimate Lease Year of the Term and ending on the
Expiration Date.”

 

(As
an example of the foregoing, a Commencement Date of April 20, 1951 followed by
a Rent Commencement Date of June 15, 1951 would yield a first Lease Year
of April 20, 1951 through June 30, 1952. The following Lease Year would be July
1, 1952 through June 30, 1953. A “three year” Term would end on June 30,1954.)

 

3.                                       OPTION TO EXTEND

 

Tenant
shall have the option to extend the Term of this Lease (the “Option”) for Two
(2) periods of Five (5) Years (each such period an “extension term”)
provided Tenant gives Landlord and Landlord is in receipt thereof a written
notice delivered by U.S. Postal Service, mail return receipt requested, of
Tenant’s election to exercise the Option a minimum of 180 days and a maximum of
270 days prior to the Expiration Date of the Term of this Lease (or the then
applicable extension term, to the extent the Term has been previously extended
by the terms of this Article). The terms and conditions governing each such
extension term will be the same as those for the Initial Lease Term, except and
to the extent modified by the terms of Paragraphs E and F, below. Time is of
the essence with respect to each and every term of this article.

 

A.           The Option herein granted to Tenant may not
be assigned without any permitted assignment of this Lease or sublease of the
Premises (or any portion thereof).

 

B.             Tenant shall not have the right to exercise
the Option, notwithstanding anything set forth above to the contrary:

 

1.               During any period of time commencing from the
date Landlord gives to Tenant a written notice that Tenant is in default under
any provision of this Lease,  and
continuing until the default alleged in said notice is cured;

 

	
  Landmark National Bank Revised
  8-16-01

  525-937-A,B and C

  ADDENDUM NO. 1

  Addendum No. 1 final. 8-16-01

  Addendum #1 rev 3.9.00

  	
  Landlord

  	
  [ILLEGIBLE]

  	
    Tenant

  	
  [ILLEGIBLE]

  	
   

  

 

1

 

2.               During the period of time commencing on
the day after a monetary obligation to Landlord is due from Tenant and unpaid
(without any necessity for notice thereof to Tenant) and continuing until the
obligation is paid;

 

3.               At any time after the occurrence of any
default described in Paragraph 26 of the Lease that remains occurred as of the
date of exercise of the Option; or

 

4.               In the event that Landlord has given to
Tenant two or more notices of default or two or more late charges have become
payable under the Lease during the twelve-month period prior to the time that
Tenant intends to exercise the Option.

 

C.             The period of time within which the Option
may be exercised shall not be extended or on enlarged by reason of Tenant’s
inability to exercise the Option because of the foregoing provisions of
Paragraph B, even if the effect thereof is to eliminate Tenant’s right to
exercise the Option.

 

D.            All rights with respect to the Option shall
terminate and be of no further force or effect even after Tenant’s due and
timely exercise of the Option, if, after such exercise, but prior to the
commencement of the applicable extension term, (1) Tenant fails to pay to
Landlord a monetary obligation of Tenant for a period of ten days after such
obligation become due (without any necessity of Landlord to give notice thereof
to Tenant); (2) Tenant fails to cure a non-monetary default within 30 days
after the date the Landlord gives notice to Tenant of such default; or (3)
Landlord gives to Tenant two or more notices of default or a late charge becomes
payable for any such default, whether or not such defaults are cured.

 

E.              The Basic Monthly Rent shall be increased
on the first day of each extension term (the “Rental Adjustment Date”) to the
“fair rental value” of the Premises (including all improvements), determined in
the following manner.

 

1.               Not later than 120 days prior to the
applicable Rental Adjustment Date, Landlord and Tenant shall meet in an effort
to negotiate, in good faith, the fair rental value of the Premises as of such
applicable Rental Adjustment Date. If Landlord and Tenant have not agreed upon
the fair rental value of the Premises at least 90 days prior to the applicable
Rental Adjustment Date, the fair rental value shall be determined by appraisal
as described below.

 

2.               If Landlord and Tenant are not able to
agree upon the fair rental value of the Premises within the time period
prescribed in Paragraph 1, then Landlord and Tenant shall attempt to agree in
good faith upon a single appraiser not later than 75 days prior to the
applicable Rental Adjustment Date, if Landlord and Tenant are unable to agree
upon a single appraiser within such time period, then Landlord and Tenant shall
each appoint an appraiser not later than 65 days prior to the applicable Rental
Adjustment Date. Within five days thereafter, the two appointed appraisers
shall appoint a third appraiser. If Landlord and Tenant agree upon an
appraiser, or if either Landlord or Tenant fails to appoint its appraiser
within the prescribed time period, the single appraiser appointed shall
determine the fair rental value of the Premises. If both parties fail to
appoint appraisers within the prescribed time periods, then the first appraiser
thereafter selected by a party shall determine the fair rental value of the
Premises. Each party shall bear the cost of its own appraiser and the parties
shall share equally the cost of the single or third appraiser if applicable.
Each such appraiser must have at least five years experience in the appraisal
of commercial/industrial real property in the area in which the Project is
located and shall be members of a professional organization such as MAI or
equivalent.

 

3.               For the purposes of such appraisal, the
term “fair rental value” shall mean the price that a ready and willing tenant
would pay, as of the applicable Rental Adjustment Date, as monthly rent to a
ready and willing Landlord of property comparable to the Premises if such
property were exposed for lease on the open market for a reasonable period of
time and taking into account all of the purposes for which such property may be
used. If a single appraiser is chosen, then such appraiser shall determine the
fair rental value of the Premises. Otherwise, the fair rental value of the
Premises shall be the arithmetic average of the two of the three appraisals
which are closest in amount, and the third appraisal shall be disregarded. In
no event, however, shall the Basic Monthly Rent for the first year of the
extension term be less than the Basic Monthly Rent Payable by Tenant during the
last year of the proceding Lease term.

 

Landlord and Tenant shall instruct the appraiser(s) to complete their
determination of the fair rental value no later than 30 days prior to the
applicable Rental Adjustment Date. If, notwithstanding such instruction, the
fair rental value is not determined before the first day of an extension term,
then Tenant shall continue to pay to Landlord the Basic Monthly Rent applicable
to the Premises immediately prior to such extension term, until the fair rental
value of the Premises is determined. When the fair rental value of the Premises
is determined, Landlord shall deliver notice thereof to Tenant, and Tenant
shall pay to

 

	
  Landmark National Bank Revised
  8-16-01

  525-937-A,B and C

  ADDENDUM NO. 1

  Addendum No. 1 final. 8-16-01

  Addendum #1 rev 3.9.00

  	
  Landlord

  	
  [ILLEGIBLE].

  	
  Tenant

  	
  [ILLEGIBLE]

  	
   

  

 

2

 

Landlord,
within ten days after receipt of such notice, the difference between the Basic
Monthly Rent actually paid by Tenant to Landlord and the new Basic Monthly Rent
determined hereunder.

 

F.              On each bi-annual anniversary date of the
commencement of an extension term the Basic Monthly Rent will increase by a
fixed amount of five percent, unless other terms if adjustment are otherwise
agreed to in writing by a mutually executed document between Landlord and Tenant.

 

4.                                       SIGNAGE

 

Tenant
shall have the right to the maximum signage (including parapet but not tower
signage) allowed by the City of Solana Beach and Landlord’s sigh criteria. All
costs associated with the installation and fabrication of said signage shall be
paid solely by the Tenant. Landlord shall provide a copy of its sign criteria
to Tenant during Lease documentation.

 

5.                                       CONTINGENCIES

 

A.           Tenant shall have a six month contingency
period (“Contingency Period”), commencing upon the Lease Commencement Date and
ending February 28, 2002, within which to secure Tenant’s approvals to operate
a financial institution from the Office of Controller of the Currency (“OCC
Approvals”). If Tenant, after employing all reasonable efforts to do so, shall
fail to obtain OCC Approvals within the Contingency Period then Tenant shall
have the right to terminate this Lease effective immediately upon Tenant’s
delivery of written notice of its termination of this Lease (“Termination
Notice”) to the Landlord. Failure by Tenant to exercise its right to terminate
the Lease on or before the expiration of the Contingency Period shall be deemed
Tenant’s waiver of its termination right hereunder. Concurrently with the
Termination Notice, Tenant shall pay to Landlord the net balance of unpaid
Basic Monthly Rent and monthly estimated Lease Expenses then due under the
Lease through February 28, 2002, plus a termination fee in the amount of Ten
Thousand Dollars. Tenant, by written notice to Landlord at any time during the
Contingency Period, may elect to relinquish its right to terminate the Lease
pursuant to the Contingency Period above.

 

B.             Notwithstanding the foregoing, it is
acknowledged and agreed that Landlord shall not pay any real estate
commissions, tenant improvement allowances, nor shall Landlord or Tenant make
any additional improvements to the Premises until such time as Tenant has
relinquished its termination right as stated in Paragraph 5 (A) above.

 

6.                                       FIRST RIGHT TO LEASE

 

Landlord
hereby grants to Tenant the First Right to Lease additional space on the
following terms and conditions.

 

6.1  At
any time that a demised space becomes available in the Building for lease
during the term of this Lease, Landlord shall give written notice thereof to
Tenant. Landlord’s notice shall include a brief description of the available
space.

 

6.2  Within
fourteen (14) days after delivery to Tenant of the written notice referenced in
Paragraph 6.1 above, Tenant shall deliver written notice to Landlord of Tenant’s
intention to accept or reject the First Right of Lease. Tenant’s failure to
exercise its right within said fourteen (14) day period shall be deemed to be a
rejection of the First Right to Lease.

 

6.3  In
the event that Tenant elects to lease the available space as herein set fourth,
this Lease shall be amended to incorporate the additional space. All of the
terms and conditions of this Lease shall then apply to also cover the
additional space except the following:

 

(a)                                  There shall be no tenant allowance for
leasehold improvements;

 

(b)                                 The Base Rent shall be the then current rent
for similar space in the community. If the parties cannot agree on the rent
within fourteen days after Tenant accepts the First Right to Lease, the issue
shall be submitted to the American Arbitration Association, San Diego,
California, for arbitration, one arbitrator presiding. The decision of the
arbitrator shall be final and enforceable in any court of competent
jurisdiction; and

 

(c)                                  The available space shall not be used for
administrative offices.

 

	
  Landmark National Bank Revised
  8-16-01

  525-937-A,B and C

  ADDENDUM NO. 1

  Addendum No 1 final. 8-16-01

  Addendum #1 rev 3.9.00

  	
  Landlord

  	
  [ILLEGIBLE].

  	
  Tenant

  	
  [ILLEGIBLE]

  	
   

  

 

3

 

6.4  Notwithstanding
the above, Tenant’s First Right to Lease shall be invalid and void if at the time
(i) the available space becomes available for lease or (ii) the lease to the
available space is to commence, Tenant is in default under this Lease.

 

7.                                       PROJECT EXPANSION/MODIFICATION

 

A.           Further Construction.  Tenant
acknowledges that Landlord may, from time to time, at its sole election,
construct, reconstruct modify, expand, or otherwise alert the Project
(collectively, “Construction Work”), or portions thereof (in no event however
will Landlord have any obligation to do so). Tenant acknowledges that any such
Construction Work will necessarily involve, among other things, the generation
of noise, dust, and vibrations, barricading portions of the Project and the
placement of scaffolding within the Project, demolition, structural
alterations, storage of materials and equipment withtin the Project, and the
presence of workmen within the Project, all of which may require the
rearrangement of parking areas, common areas, roadways, lighting facilities,
and the re-direction of vehicular and pedestrian traffic. Except as provided
below, Tenant waives any and all claims, defenses, rights of offset, or
deductions based upon any inconvenience suffered by Tenant or any interruption
of or interference with Tenant’s business including, without limitation, any
loss of business, decreased sales, or inconvenience to Tenant or Tenant’s
Invitees as a result of or relating to such Construction Work. Subject to laws,
rules and regulations applicable to financial institutions and accompanied by
an officer of Tenant, Landlord and its agents, employees, licensees and
contractors, shall have the right to enter the Premises to the extent
reasonably necessary to pursue such Construction Work upon 24 hours’ prior
notice to Tenant. The exercise of any of Landlord’s rights pursuant to this
paragraph will not entitle Tenant to any abatement of Rent or other claim,
right of offset, or defense against Landlord, except that Tenant shall have the
right to bring an action against Landlord (as Tenant’s sole remedy) in the
event Tenant suffers any damages as a result of Landlord gross negligence or intentional
misconduct in pursuing such Construction Work. Tenant further acknowledges that
expansion of the Project may affect the amount of the Lease Expenses and the
portion thereof payable by Tenant. Landlord shall use it reasonable efforts to
effect such further construction without interfering with Tenant’s business
operations.

 

B.             Reserved Rights.  Landlord
hereby reserves such license and casements in, on, above or below the Premises
as may be reasonably required (i) for the installation, inspection, surveying,
maintenance, or construction of mains, conduits, shafts, columns, footings,
piers, pipes or other facilities to serve any building within the Project, or
(ii) for any Construction Work; provided, however, Landlord will use its best
efforts to minimize any unreasonable interference with Tenant’s use, occupancy,
or enjoyment of the Premises as contemplated by this Lease.

 

C.             Right of Abatement.  Notwithstanding
anything to the contrary contained in Paragraph A, above, in the event any
Construction Work undertaken by the Landlord prevents Tenant from conducting
its business within the Premises, Tenant’s Base Monthly Rent will be abated
during the period during which Tenant is unable to conduct it business at the
Premises as a result thereof. The foregoing right of abatement will constitute
Tenant’s sole and absolute right against Landlord or otherwise in connection
with any such Construction Work and Tenant releases and waives any other claims,
defenses, or rights in connection therewith.

 

D.            Remodel.  Landlord may in the future
remodel, renovate or refurbish (“remodel”) all or any portion of the
storefronts or other portions of the Project, which remodel may include the
Premises. The remodeling will be done in accordance with design specifications
prepared by the project architect and reviewed and approved by Landlord. Tenant
agrees that Tenant will not, through any act or omission on the part of Tenant,
in any way impede, delay or prevent the completion of such remodeling in a
timely manner. If a new storefront is required as part of the remodeling,
Tenant shall pay the cost of said storefront but not to exceed $10.00 per
linear foot, except that any remodel that involves the renovation or remodel of
the ATM shall be at Tenant’s sole cost, subject to Tenant’s reasonable review
and approval. As part of the design specifications, a new exterior tenant sign
criteria may be developed, in which case Tenant shall comply with paragraph 13
with respect to the removal and replacement of its signs at Tenant’s sole cost.

 

8.                                       CONDITIONS OF THE PREMISES

 

By
taking possession hereunder, Tenant is accepting the Premises in “As-Is”
condition. Tenant acknowledges and agrees that Landlord has no obligation to
improve the Premises other than as set forth specifically in this Lease, if at
all. In particular, Tenant acknowledges that any additional improvements or
alterations needed to accommodate Tenant’s intended use shall be made solely at
Tenant’s sole cost and expense, and strictly in accordance with the
requirements of this Lease (including the requirement to obtain Landlord’s
consent thereto), unless such improvements and alterations are specifically
required of Landlord and expressly set forth in this Lease and in Exhibit “C”.

 

	
  Landmark National Bank Revised
  8-16-01

  525-937-A,B and C

  ADDENDUM NO. 1

  Addendum No 1 final. 8-16-01

  Addendum #1 rev 3.9.00

  	
  Landlord

  	
  [ILLEGIBLE]

  	
    Tenant

  	
  [ILLEGIBLE]

  	
   

  

 

4

 

Should
tenant improvements be made to the Premises in the future, the Premises shall
be constructed in accordance with the procedures outlined in Exhibit “C” of
this Lease. Landlord shall have no responsibility to do any work required under
any building codes or other governmental requirements not in effect or
applicable at the time the Premises were constructed, including without
limitation any requirements related to sprinkle retrofitting, seismic
structural requirements, accommodation of disabled persons, or hazardous materials.

 

9.                                      FIELD VERIFICATION OF THE
PREMISES

 

Landlord
or Tenant may elect to measure the leasable portion of the Premises at any time
following the Lease Commencement Date, for the purpose of verifying the actual
floor area thereof. Landlord shall use a licensed architect for the purpose of
such measurement, and shall use the prevailing standards for measurement of
similar types of buildings in the vicinity. In the event that the architect’s
measurements differ from the area stated in Section 2.3 of this Lease, Landlord
shall adjust the monthly rental for the Premises accordingly.

 

	
  Landmark National Bank Revised
  8-16-01

  525-937-A,B and C

  ADDENDUM NO. 1

  Addendum No 1 final. 8-16-01

  Addendum #1 rev 3.9.00

  	
  Landlord

  	
  [ILLEGIBLE].

  	
  Tenant

  	
  [ILLEGIBLE]

  	
   

  

 

5

 

FIRST LEASE AMENDMENT

 

This
First Lease Amendment is entered into by the parties signing below, effective
as of February 1, 2002, with regard to the Standard Retail Lease dated August
16, 2001 between them (including exhibits and addendum)(the “Lease”). All
capitalized terms used in this First Lease Amendment have the meanings set
forth in the Lease.

 

This
First Lease Amendment is made under the authority of Section 52.22 of the
Lease, which provides that for a change in the Lease to be binding it must be
reduced in writing and signed by Landlord and Tenant.

 

Landlord
and Tenant hereby make the following changes to Paragraph 5(A) of Addendum No.
1 to Standard Lease, which is included in the Lease:

 

The
references to “February 28, 2002” are hereby changed to “June 28, 2002,” and
the reference to a “six month contingency period” is hereby changed to a “ten
month contingency period.”

 

Subject
to this First Lease Amendment, Landlord and Tenant confirm the provisions of the
Lease and confirm that it remains in full force and effect.

 

 

	
   

  	
  LANDLORD: Pacific Solana Beach Holdings, LP 

  
	
   

  	
  a
  California limited partnership

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: American Assets, Inc., as Agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  [ILLEGIBLE]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  V.P.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  2/13/02

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  [ILLEGIBLE]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Its: [ILLEGIBLE]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  2/13/02

  	
   

  
					

 

 

(execution blocks continue on next page)

 

 

	
   

  	
  TENANT: Landmark National Bank

  	
   

  
	
   

  	
  (a
  proposed national bank)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Ronald P.Bird (mcw)

  	
   

  
	
   

  	
   

  	
  Ronald
  P. Bird

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its: 

  	
  Agent
  for Landmark National Bank

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:
  

  	
  2/1/02

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ronald J. Carlson (mcw)

  	
   

  
	
   

  	
   

  	
  Ronald
  J. Carlson

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its: 

  	
  Agent
  for Landmark National Bank

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
  2/1/02

  	
   

  
						

 

2

 

SECOND AMENDMENT TO STANDARD RETAIL LEASE

 

This
SECOND AMENDMENT TO STANDARD RETAIL LEASE (“Second Amendment”) is made and
executed as of this 23rd day of May, 2002, by and between PACIFIC
SOLANA BEACH HOLDINGS, L.P., a California limited liability company, hereinafter
called “Landlord”, and LANDMARK NATIONAL BANK, a proposed national bank,
hereinafter called “Tenant”, and is based on the following facts:

 

A.                                   On or about August 16, 2001, Landlord and
Tenant entered into a Standard Retail Lease (“the Lease”) dated as of said date
whereby Landlord, as lessor, agreed to lease to Tenant, as lessee, certain
property (“Premises”) known as 937 Lomas Santa Fe Drive, Suites A, B and C,
Solana Beach, California 92075, and more particularly described in the Lease.

 

B.                                     The Lease was amended by a First Lease
Amendment thereto dated and effective February 1, 2002, which provided an
extension of the contingency time period (“Contingency Period”) referenced in
Paragraph 5.A. of Addendum No.1 To Standard Lease (“the Addendum”) until June
28, 2002.

 

C.                                     Tenant has requested early possession of the
Premises.

 

D.                                    Landlord is willing to allow Tenant early
possession of the Premises on the terms and conditions set forth in the Lease
as hereinafter amended.

 

IT IS HEREBY AGREED by the parties hereto as follows:

 

1.                                       Paragraph 5.A. of the Addendum is hereby amended by the
addition of the following:

 

“Tenant is hereby granted the early possession of
the Premises during the Contingency Period, effective immediately, to enter
upon the Premises to construct and install its Tenant Improvements pursuant to
the provisions of Exhibit “C” subject to the following:

 

“Tenant shall pay to Landlord the additional sum of
twenty thousand dollars ($20,000.00) for Tenant’s right to early possession of
the Premises and the right to construct tenant improvements during the
Contingency Period. If Tenant elects to terminate the Lease during the
Contingency Period, Landlord shall retain the $20,000.00 paid to Landlord as “liquidated
damages.”  The granting of the early possession
and the right to construct tenant improvements during the Contingency Period
will cause Landlord to incur costs not contemplated by the agreement of the
parties herein, the exact amount of which would be impracticable or extremely
difficult to fix. Such fee represents a fair and reasonable estimate of the
costs that Landlord will incur by reason of this early possession and right to
construct tenant improvements, and therefore it is reasonable under the
circumstances existing at the time this Second Amendment is made. If Tenant
does not elect to terminate the Lease during the Contingency Period, or elects
to waive the right of termination, then the $20,000.00 fee paid to Landlord
shall be returned to Tenant. If Tenant elects to terminate the Lease

 

 

during
the Contingency Period, it will not be entitled to payment of any of the Tenant
Improvement Allowance referenced in Section 12 of Exhibit C.”

 

2.                                       Ratification. Except as hereinabove expressly amended,
the Lease, as previously amended, is hereby ratified and confirmed.

 

IN WITNESS THEREOF, the undersigned execute this document on the date first above written.

 

 

	
  LANDLORD:
  Pacific Solana
  Beach Holdings, LP

  
	
  a
  California limited partnership

  	
   

  
	
   

  	
   

  
	
  By:  American
  Assets, Inc., as Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
  /s/ Jamie Cronemeyer

  	
   

  
	
   

  	
  Jamie
  Cronemeyer

  	
   

  
	
   

  	
   

  	
   

  
	
  Its: Vice President, Commercial Real Estate

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  5/23/02

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jonathan Hughes

  	
   

  
	
   

  	
  Jonathan
  Hughes

  	
   

  
	
   

  	
   

  	
   

  
	
  Its:       Senior Portfolio Manager, Commercial Real
  Estate

  
	
   

  	
   

  
	
  Date:

  	
  5/23/02

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  TENANT: Landmark National Bank

  	
   

  
	
  (a
  proposed national bank)

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Ronald P. Bird

  	
   

  
	
   

  	
  Ronald
  P. Bird

  	
   

  
	
   

  	
   

  
	
  Its:   Agent for Landmark National Bank

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  5.23.2002

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Ronald
  J. Carlson

  	
   

  
	
   

  	
   

  
	
  Its:   Agent for Landmark National Bank

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  
					

 

 

THIRD AMENDMENT TO LEASE

 

This
Third Amendment to Lease (the “Amendment”) is made, for reference
purposes only, this 1st day of December, 2005, by and between
Pacific Solana Beach Holdings, LP, a California limited partnership (“Landlord”),
and Landmark National Bank, a proposed national bank (“Tenant”), with
reference to the following facts:

 

RECITALS

 

A.                 Landlord and Tenant entered into that certain
Lease dated as of August 16, 2001, as amended by that certain (i) First
Amendment to Lease dated as of February 1,2002, and (ii) Second Amendment to
Standard Retail Lease dated as of May 23, 2002 (collectively, the “Lease”)
for that certain premises located at 937 Lomas Santa Fe Drive, Suites A, B, and
C, Solana Beach, CA 92075 consisting of approximately 5,543 leasable square
feet (the “Original Premises”).

 

B.                   The parties desire to amend the Lease as set
forth in this Amendment.

 

C.                   All capitalized terms used in this Amendment
unless specifically defined herein shall have the same meaning as the capitalized
terms used in the Lease.

 

NOW, THEREFORE,
for valuable consideration, this receipt and adequacy of which are expressly
acknowledged, Landlord and Tenant agree as follows:

 

AGREEMENT

 

1.                                      Expansion. Effective as of the Delivery Date (as
hereafter defined) and by virtue of this Amendment, (i) Landlord and Tenant
agree the Lease shall be amended to reflect the addition of commercial retail
space located at 909 Lomas Santa Fe Drive, Solana Beach, CA 92075 consisting of
approximately 1,970 leasable square feet as more specifically referenced on
Exhibit “A” attached hereto (“Expansion Premises”) in addition to the
Original Premises (937 Lomas Santa Fe Drive, Suites A, B, and C, Solana Beach,
CA 92075) and (ii) the defined term “Premises” as defined in the Lease shall be
amended to include the Expansion Premises. The estimated delivery date of the
Expansion Premises by Landlord to Tenant shall be on or about February 1, 2006
(the actual delivery date, being the “Delivery Date”).

 

2.                                      Term. Landlord and Tenant hereby agree that the
term of the Lease for the Expansion Premises shall commence on the earlier of
(i) ninety (90) days after the Delivery Date or (ii) the date Tenant commences
business operations in the Expansion Premises (“Expansion Premises Lease
Commencement Date”), and expire on August 31, 2011 (“Expansion Premises
Expiration Date”), subject to the terms and conditions contained herein and
the Lease. For the purposes of this Amendment, the period of time between and
including the Expansion Premises Lease Commencement Date and the Expansion
Premises Expiration Date shall be referred to herein as, the “Expansion
Premises Term.”

 

3.                                      Rent. Tenant shall continue to pay to Landlord
basic rent in monthly installments (“Basic Monthly Rent”) for the
Original Premises in advance on or before the first day of every calendar
month, without any set-off or deduction, pursuant to the current rate as set
forth in the Lease. In addition to the foregoing, as of the Expansion Premises
Lease Commencement Date, Tenant’s Basic Monthly Rent for the Expansion Premises
shall be as follows for each Lease Year (as defined below) during the Expansion
Premises Term:

 

Basic Monthly Rent

 

	
  Lease Year

  	
   

  	
  Total per Month

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1 (Lease Commencement Date – 8/31/06)

  	
   

  	
  $

  	
  6,895.00

  	
   

  
	
  2 (9/1/06 - 8/31/07)

  	
   

  	
  $

  	
  6,895.00

  	
   

  
	
  3 (9/1/07 - 8/31/08)

  	
   

  	
  $

  	
  7,239.75

  	
   

  
	
  4 (9/1/08 - 8/31/09)

  	
   

  	
  $

  	
  7,239.75

  	
   

  
	
  5 (9/1/09 - 8/31/10)

  	
   

  	
  $

  	
  7,601.74

  	
   

  
	
  6 (9/1/10 - 8/31/11)

  	
   

  	
  $

  	
  7,601.74

  	
   

  

 

 

For
the purposes of this Amendment, Lease Year shall mean (i) as to the first Lease
Year, that period beginning on Expansion Premises Lease Commencement Date, (ii)
as to every subsequent Lease Year other than the final Lease Year of the
Expansion Premises Term, the 12 month period following the prior Lease Year,
and (iii) as to the final Lease Year of the Lease Term, the period commencing
on that day immediately following the final day of the penultimate Lease Year
of the Expansion Premises Term and ending on the Expansion Premises Expiration
Date.

 

4.                                      Option to Extend.   Tenant
shall have the option to extend the term of the Lease (the “Option”) for two
(2) periods of five (5) years each (each such period an “extension term”)
provided Tenant gives Landlord and Landlord is in receipt thereof a written
notice delivered by U.S. Postal Service, certified mail return receipt
requested, of Tenant’s election to exercise the Option a minimum of 180 days
and a maximum of 270 days prior to the Expiration Date of the Term of this
Lease (or the then applicable extension term, to the extent the Term has been
previously extended by the terms of this Article). The terms and conditions
governing each such extension term will be the same as those for the Initial
Lease Term, except and to the extent modified by the terms of Paragraphs E and
F, below. Time is of the essence with respect to each and every term of this
article.

 

A.                                   The Option is personal to the Tenant
originally named in the Lease and may not be exercised by or be assigned to,
voluntarily or involuntarily, any other person or entity. The Option herein
granted to Tenant may not be assigned with any permitted assignment of this
Lease or sublease of the Premises (or any portion thereof).

 

B.                                     Tenant shall not have the right to exercise
the Option, notwithstanding anything set forth above to the contrary:

 

1.                                       During any period of time commencing from the
date Landlord gives to Tenant a written notice that Tenant is in default under
any provision of this Lease, and continuing until the default alleged in said
notice is cured;

 

2.                                       During the period of time commencing on the
day after a monetary obligation to Landlord is due from Tenant and unpaid
(without any necessity for notice thereof to Tenant) and continuing until the
obligation is paid;

 

3.                                       At any time after the occurrence of any
default described in Paragraph 26 of the Lease other than those described in
the preceding paragraphs (without any necessity of Landlord to give notice of
such default to Tenant); or

 

4.                                       In the event that Landlord has given to
Tenant two or more notices of default or a late charge has become payable under
the Lease during the twelve-month period prior to the time that Tenant intends
to exercise the Option.

 

C.                                     The period of time within which the Option
may be exercised shall not be extended or enlarged by reason of Tenant’s inability
to exercise the Option because of the foregoing provisions of Paragraph B, even
if the effect thereof is to eliminate Tenant’s right to exercise the Option.

 

D.                                    All rights with respect to the Option shall
terminate and be of no further force or effect even after Tenant’s due and
timely exercise of the Option, if, after such exercise, but prior to the
commencement of the applicable extension term, (1) Tenant fails to pay to
Landlord a monetary obligation of Tenant for a period of ten days after such obligation
become due (without any necessity of Landlord to give notice thereof to
Tenant); (2) Tenant fails to cure a non-monetary default within 30 days after
the date the Landlord gives notice to Tenant of such default; or (3) Landlord
gives to Tenant two or more notices of default or a late charge becomes payable
for any such default, whether or not such defaults are cured.

 

E.                                      The Basic Monthly Rent shall be increased on
the first day of each extension term (the “Rental Adjustment Date”) to the “fair
rental value” of the Premises, determined in the following manner:

 

1.                                       Not later than 120 days prior to the
applicable Rental Adjustment

 

 

Date,
Landlord and Tenant shall meet in an effort to negotiate, in good faith, the
fair rental value of the Premises as of such applicable Rental Adjustment Date.
If Landlord and Tenant have not agreed upon the fair rental value of the
Premises at least 90 days prior to the applicable Rental Adjustment Date, the
fair rental value shall be determined by appraisal as described below.

 

2.                                       If Landlord and Tenant are not able to agree
upon the fair rental value of the Premises within the time period prescribed in
Paragraph 1, then Landlord and Tenant shall attempt to agree in good faith upon
a single appraiser not later than 75 days prior to the applicable Rental
Adjustment Date. If Landlord and Tenant are unable to agree upon a single
appraiser within such time period, then Landlord and Tenant shall each appoint
an appraiser not later than 65 days prior to the applicable Rental Adjustment
Date. Within five days thereafter, the two appointed appraisers shall appoint a
third appraiser. If Landlord and Tenant agree upon an appraiser, or if either
Landlord or Tenant fails to appoint its appraiser within the prescribed time
period, the single appraiser appointed shall determine the fair rental value of
the Premises. If both parties fail to appoint appraisers within the prescribed
time periods, then the first appraiser thereafter selected by a party shall
determine the fair rental value of the Premises. Each patty shall bear the cost
of its own appraiser and the parties shall share equally the cost of the single
or third appraiser if applicable. Each such appraiser must have at least five
years experience in the appraisal of commercial/industrial real property in the
area in which the Project is located and shall be members of a professional
organization such as MAI or equivalent.

 

3.                                       For the purposes of such appraisal, the term “fair
rental value” shall mean the price that a ready and willing tenant would pay,
as of the applicable Rental Adjustment Date, as monthly rent to a ready and
willing Landlord of property comparable to the Premises if such property were
exposed for lease on the open market for a reasonable period of time and taking
into account all of the purposes for which such property may be used. If a
single appraiser is chosen, then such appraiser shall determine the fair rental
value of the Premises. Otherwise, the fair rental value of the Premises shall
be the arithmetic average of the two of the three appraisals which are closest
in amount, and the third appraisal shall be disregarded. In no event, however,
shall the Basic Monthly Rent for the first year of the extension term be less
than the Basic Monthly Rent payable by Tenant during the last year of the
preceding Lease term.

 

Landlord
and Tenant shall instruct the appraiser(s) to complete their determination of
the fair rental value no later than 30 days prior to the applicable Rental
Adjustment Date. If, notwithstanding such instruction, the fair rental value is
not determined before the first day of an extension term, then Tenant shall
continue to pay to Landlord the Basic Monthly Rent applicable to the Premises
immediately prior to such extension term, until the fair rental value of the
Premises is determined. When the fair rental value of the Premises is
determined, Landlord shall deliver notice thereof to Tenant, and Tenant shall
pay to Landlord, within ten days after receipt of such notice, the difference
between the Basic Monthly Rent actually paid by Tenant to Landlord and the new
Basic Monthly Rent determined hereunder.

 

F.                                      On each annual anniversary date of the
commencement of an extension term the Basic Monthly Rent will increase by a
fixed amount of five percent, unless other terms of adjustment are otherwise
agreed to in writing by a mutually executed document between Landlord and
Tenant.

 

5.                                      Tenant Improvement Allowance.   Tenant
shall complete the build-out of the Expansion Premises as set forth and
required in Exhibit “B” attached hereto.

 

6.                                      Tenant Certification.   By
execution of this Amendment, Tenant hereby certifies that as of the date
hereof, and to the best of Tenant’s Knowledge, that Tenant is not in default of
the performance of its obligations pursuant to the Lease, and Tenant has no
claim, defense, or offset with respect to the Lease.

 

7.                                      Confirmation.   Except,
as and to the extent modified by this Amendment, all provisions of the Lease
shall remain in full force and effect. In the event of a conflict between the
terms of the Lease and the terms of this Amendment , the terms in this
Amendment shall control.

 

3

 

IN
WITNESS WHEREOF,
Landlord and Tenant agree to the foregoing as evidenced by affixing their
signatures below.

 

	
   

  	
  LANDLORD:
  Pacific Solana Beach Holdings, LP

  
	
   

  	
  a
  California limited partnership

  
	
   

  	
   

  
	
   

  	
  By:
    American Assets, Inc., as Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John W. Chamberlain

  
	
   

  	
   

  	
  John
  W. Chamberlain – CEO

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  12.1.05

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/ Chris Sullivan

  
	
   

  	
   

  	
  Chris
  Sullivan – Vice President

  
	
   

  	
   

  
	
   

  	
  Date:.

  	
  12.1.05

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:
  Landmark National Bank,

  
	
   

  	
  a
  proposed national bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ F. J. Rick Mandelbaum President

  
	
   

  	
  Print
  Name:

  	
   F. J. Rick Mandelbaum

  
	
   

  	
  Date:

  	
  11-1-05

  
					

 

 

EXHIBIT “B”

 

TENANT IMPROVEMENTS TO THE EXPANSION PREMISES

 

General
recital:   Tenant accepts the Expansion Premises in “As-Is”
condition, and Landlord shall provide a tenant improvement allowance for Tenant
to construct further improvements to the Expansion Premises, subject to the
terms and conditions as more completely described herein.

 

Section 1. Tenant’s
Plan Approval.  Concurrently with, or
within thirty (30) calendar days following the execution of this Amendment,
Tenant shall cause derailed plans and specifications (the “Plans”) to be
prepared and delivered to Landlord; which Plans shall reflect the work to be
performed within the Expansion Premises by Tenant following completion of the
Landlord’s Work in order to suitably prepare the Expansion Premises for Tenant’s
use (the “Tenant’s Work”). Landlord shall, within ten (10) calendar days
following its receipt of the Plans, either approve such Plans or provide Tenant
with the reasons that Landlord is withholding such consent. If Landlord does
not approve the Plans, Tenant shall immediately cause the Plans to be revised,
consistent with Landlord’s comments, and then resubmit the Plans to Landlord
for review within ten (10) calendar days of Landlord’s notice to Tenant of said
non-approval of Tenant’s Plans. No work shall be undertaken by Tenant until the
Plans have been finally approved by Landlord. Performance of the Tenant’s Work
shall strictly conform to the approved Plans and any deviation will require
Landlord’s prior approval. Any delays caused by Tenant with respect to submittal,
revision, or approval of plans pursuant to this paragraph shall accelerate the
Lease Commencement Date accordingly. In the event that Tenant’s Plans have not
been mutually approved within ten (10) days following the Delivery Date,
Landlord may, at Landlord’s option, terminate this Amendment and Lease, regain
possession of the Expansion Premises, and Tenant shall reimburse Landlord for
Landlord’s costs in preparing the Expansion Premises for Tenant’s occupancy.

 

Section 2. Tenant’s
Work Completion Period Following the Lease Commencement Date of this
Amendment and Tenant’s acceptance of the Expansion Premises, Tenant shall cause
Tenant’s Work to be completed in accordance with sound construction practices
and in a manner consistent with this Exhibit B (“Tenant Work Completion Period”).
Landlord and Tenant estimate that completion of Tenant’s Work shall not exceed
Ninety (90) days from the Deliver Date.

 

Section 3. Construction
of Tenant Improvements by Tenant’s Contractor.  After the Plans for the Tenant’s Work have
been approved by Landlord, Tenant, and the local governing agencies, Tenant
shall submit to Landlord the name, address, license number, evidence of
insurance, and any other information required by Landlord of Tenant’s proposed
contractor(s) (“Contractor”) for Landlord’s review and approval. If Landlord
deems, in Landlord’s reasonable discretion, that Tenant’s proposed Contractor
is unacceptable, Tenant shall resubmit information on a replacement contractor
until a mutually approved Contractor is selected. Upon said selection, Tenant
shall enter into a construction contract with the Contractor which shall
include a provision for compliance with Landlord’s rules and regulations as
defined herein, and Tenant shall provide Landlord with a copy of said contract.
In no event shall Tenant be permitted access to the Expansion Premises to
perform Tenant’s Work prior to providing all information requested by Landlord
relating to Tenant’s Work. Failure by Tenant to provide any information
requested by Landlord, including but not limited to evidence of Tenant’s and
Tenant’s Contractor’s compliance with all of the insurance requirements hereof,
shall not delay the Lease Commencement Date, but will constitute grounds for
Landlord’s denying access to the Expansion Premises by Tenant. Violations of
Landlord’s rules, regulations, and requirements as set forth herein or as
otherwise established by Landlord shall constitute a default of this Amendment
and Lease if not corrected by Tenant and/or Tenant’s Contractor within
twentyfour (24) hours notice, either written or oral, by Landlord to Tenant.
Landlord shall have the right to post a notice of non-responsibility at a
prominent location within Tenant’s Expansion Premises.

 

It
shall be responsibility of Tenant to enforce the following requirements of
Tenant’s Contractor, and all subcontractors of Tenant’s Contractor, at every
level:

 

3.1
 Tenant’s Contractor shall perform Tenant’s
Work in a manner and at times which do not impede or delay Landlord’s
contractor in the Project. Any delays in the completion work by the Landlord or
Landlord’s contractor on the Project, or the commencement of the annual rental
and any damage to any work caused by Tenant’s Contractor shall be at the sole
cost and expense of Tenant.

 

3.2
 Tenant’s Contractor shall be responsible
for the repair, replacement, or clean-up of any damage by him to other
contractors’ work which specifically includes access ways to the Expansion
Premises which may be concurrently used by others. Firelanes, sidewalks, hallways,
and access to other tenant’s suites may not be blocked or obstructed at any
time.

 

3.3
 Tenant’s Contractor shall accept the
Expansion Premises prior to starting any trenching operations. Any rework of
sub-base or compaction required after Tenant’s Contractor’s initial acceptance
of the Expansion Premises shall be done by Tenant’s Contractor, which shall
include the removal from the Expansion Premises of any excess soil or debris.
All work shall be done in accordance with sound construction practices and, as
required, in compliance with specifications of a soils engineer or consultant
as approved by Landlord.

 

3.4
 Tenant’s Contractor shall contain his
storage of materials and his operations within the Expansion Premises and such
other space as he may be assigned by Landlord. Should he be assigned space
outside of the Expansion Premises, he shall move to such other space as
Landlord shall direct from time to time to avoid interference or delays with
other work. Tenant’s Contractor shall park construction vehicles in areas
designated by Landlord.

 

 

3.5
 All trash and surplus construction
materials shall be stored within the Expansion Premises and shall be promptly
removed from the Expansion Premises. Tenant’s Contractor shall not use common
area trash enclosures or waste bins for disposal of trash or surplus
construction material.

 

3.6
 Tenant’s Contractor shall provide
temporary utilities, portable toilet facilities and portable drinking water as
required for his work within the Expansion Premises.

 

3.7
 Noise shall be kept to a minimum at all
times, and shall not be permitted to interfere with the conduct of other tenant’s
business, or the general operation of the Project. Tenant’s Contractor shall
notify Landlord or Landlord’s project manager of any planned work to be done on
weekends or other than normal job hours.

 

3.8
 Tenant and Tenant’s Contractor are
responsible for compliance with all applicable codes and regulations of duly
constituted authorities having jurisdiction as far as the performance of the
Tenant’s Work is concerned and for all applicable safety regulations
established by the Landlord, OSHA, or other regulatory agencies, and Tenant
further agrees to save and hold Landlord harmless for Tenant’s actions arising
from Tenant’s Work. Prior to commencement of construction, Tenant shall submit
to Landlord evidence of insurance as required by this Amendment and Lease and
evidence of insurance for Tenant’s Contractor.

 

3.9
 Tenant’s Contractor shall not post signs
on any part of the Project or on the Expansion Premises, without Landlord’s
prior written approval.

 

3.10
 Tenant shall be responsible for and
shall obtain and record a Notice of Completion promptly following completion of
Tenant’s work.

 

3.11
 Landlord may require that, prior to the commencement
of construction, Tenant shall obtain or cause its contractor to obtain payment
and performance bonds covering the faithful performance of the contract for the
construction of the Tenant’s Work and the payment of all obligations arising
thereunder. Such bonds shall be for the mutual benefit of both Landlord and
Tenant.

 

3.12
 Tenant shall provide to Landlord a copy
of the fully executed construction contract, including all addendum and a line
item breakdown by trade thereto, between Tenant and its Contractor for the
Tenant’s Work.

 

3.13
 All required permits and approvals,
including but not limited to Planning, Building, Fire, and Health department
permits, must be obtained and all necessary calculations, including, but not
limited to, those required under Title 24, must be submitted to the local
governing agencies for all work to be performed by Tenant or Tenant’s
Contractor in the Expansion Premises.

 

3.14
 Any modifications to the building
exterior shall be subject to Landlord’s prior approval. No romex wiring shall
be allowed, nor shall water lines be placed in slabs, unless approved by
Landlord prior to installation. All equipment placed upon the roof as a result
of the Tenant’s Work, and all roof penetrations, shall be approved by Landlord
prior to the commencement of work.

 

3.15
 Landlord, at Landlord’s reasonable
discretion, may from time to time establish such other rules and regulations
for protection of property and the general safety of occupants and invitees of
the Project. Such rules and regulations shall apply to Tenant and Tenant’s
Contractor as though established upon the execution of this Exhibit B.

 

Section 4. Coordination
of Construction.   Tenant covenants
and agrees that Tenant and Tenant’s Contractor shall not destroy or in any way
damage any portion of the Project. Further, Tenant covenants and agrees that
Tenant and Tenant’s Contractor shall coordinate the Tenant’s Work with any
construction schedule for any work being performed by or on behalf of Landlord
or any other tenant, and that the performance of the Tenant’s Work shall not
interfere with Landlord’s or any other tenant’s construction activities. If
there be such interference or conflict, notice thereof shall be given to
Tenant, and immediately after receipt of such notice the Tenant agrees to cease
or cause to be terminated such interference or conflict. Further, should Tenant
delay Landlord’s work due to acts of Tenant or Tenant’s Contractor,
Construction Change Orders, subsequent review and approvals required or other matters
that materially affect Landlord’s construction progress, Tenant shall be
responsible to Landlord for any lost rents due to the delay of the commencement
of the Term. Tenant further covenants and agrees that Tenant and Tenant’s
Contractor shall comply with all rules and regulations promulgated by Landlord,
or its agent, and all directives of Landlord governing construction or
installation activities, including but not limited to, permissible hours for
construction or installation activities, storage of equipment and
responsibility for cleaning of work areas. If Tenant or Tenant’s Contractor
shall fail to comply with the provisions of this Section any costs incurred by
Landlord as a result of such failure shall be at Tenant’s sole and exclusive
expense.

 

Section 5. No
Landlord Liability.  Landlord shall
not be liable for any loss, cost, damage, or expense incurred or

 

 

claimed
by Tenant or any other person or party on account of the construction or
installation of the Tenant’s Work or any other person or party on account of
the construction or installation of the Tenant’s Work or any other improvements
to the Expansion Premises made by Tenant. Tenant hereby acknowledges and agrees
that the compliance of the Tenant’s Work, or other Alterations made to the
Expansion Premises by the Tenant and any plans therefore, with all applicable
governmental laws, codes, and regulations shall be solely Tenant’s
responsibility. Landlord assumes no liability or responsibility resulting from
the failure of the Tenant to comply with all applicable governmental laws,
codes, and regulations or for any defect in any of the Tenant’s Work or other
Alteration to the Expansion Premises made by Tenant. Tenant further agrees to
indemnify, defend, and hold harmless Landlord from any loss, cost, damage or
expense incurred, claimed, asserted, or arising in connection with any of the
foregoing.

 

Section 6. Tenant
Improvement Allowance.  Provided that
the Tenant’s Work is constructed by Tenant’s Contractor in accordance with this
Exhibit B, Landlord shall reimburse Tenant for Tenant’s actual construction
costs up to a maximum of Forty Two Thousand Five Hundred and No/100 Dollars
($42,500.00) for said Tenant’s Work (“Tenant Improvement Allowance”). Such
Tenant Improvement Allowance shall be paid directly to Tenant within thirty
(30) business days following proper recordation of a Notice of Completion for
the Tenant’s Work, upon commencement of Tenant’s business within the Expansion
Premises, and subject to satisfaction of the following conditions:

 

6.1
 Tenant must have completed the Tenant’s
Work in accordance with the Landlord approved final Plans and specifications.

 

6.2
 A Notice of Completion has been properly
recorded for Tenant’s Work and 35 days have elapsed since the date of such recording.

 

6.3
 Tenant has submitted a complete set of “as
built” plans and specifications to Landlord.

 

6.4
 Tenant has provided to Landlord copies
of all insurance certificates required under this Amendment and Lease.

 

6.5
 A final, unconditional certificate of
occupancy for the Expansion Premises has been issued by the appropriate
governmental agency, and a copy thereof provided to Landlord.

 

6.6
 Tenant has provided Landlord with all
unconditional waiver and release upon final payment for material and labor lien
releases from Tenant’s contractor, subcontractors, and suppliers. Said lien
releases must total at least the amount of Landlord’s construction advance to
Tenant.

 

6.7
 Tenant has provided Landlord all
construction warranties and guarantees in connection with construction of
Tenant’s Work.

 

6.8
 Landlord has inspected and approved the
Tenant’s Work and is satisfied that the Tenant’s Work has been performed in a
good and workmanlike manner in accordance with the approved Plans; provided,
however, no such inspection shall impose any liability upon Landlord, nor
absolve Tenant or Tenant’s Contractor from liability for any defect or failure
to comply with the requirements hereof.

 

Notwithstanding
the foregoing, Tenant shall not be entitled to the Tenant Improvement Allowance
and the Tenant Improvement Allowance shall be deemed null and void if Tenant
has not requested the Tenant Improvement Allowance and satisfied each of the
above conditions by June 30, 2006. Except as otherwise set forth above, Tenant
shall be responsible in its sole cost and expense for all costs relating to
Tenant’s relocation to the Expansion Premises, including, without limitation,
moving expenses, new stationary and utility change/set-up fees (if applicable).

 

Section 7. Use
of Landlord’s Tenant Improvement Allowance.

 

7.1
 The Tenant Improvement Allowance that
Landlord agrees to contribute toward the cost of Tenant’s Work shall in no
event be applied toward Tenant’s furniture, fixtures, furnishings, personal
property, signs or any monetary obligations of Tenant under this Amendment and
Lease. Such funds will be used only to pay the cost of tenant improvements that
shall become the property of Landlord and remain upon and be surrendered with
the Expansion Premises, as a part thereof, at the end of the Term of this
Amendment and Lease.

 

7.2
 All fees, permits, utility charges, or
assessments associated with the construction of Landlord’s Work or Tenant’s
Work are Tenant’s responsibility to pay, but may be paid by the Landlord on
Tenant’s behalf from the Tenant Improvement Allowance if not paid directly by
Tenant.

 

Section 8. Future
Improvements by Tenant to the Expansion Premises. In the event that Tenant
shall desire to perform future improvements to the Expansion Premises during
the term of this Amendment and Lease or any extension thereof, Tenant shall
construct such improvements in accordance with the terms and conditions of this
Exhibit B, except that no Tenant Improvement Allowance shall be granted by
Landlord to Tenant for said future improvements. All costs

 

 

arising
from said future improvements shall be the sole and exclusive responsibility of
Tenant to pay, in a prompt and timely fashion as said costs become due.Exhibit 10.3

 

NEITHER THIS SECURITY NOR ANY SECURITIES INTO WHICH THIS SECURITY IS
EXERCISABLE HAS BEEN REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY U.S. STATE OR OTHER JURISDICTION
OR ANY EXCHANGE OR SELF-REGULATORY ORGANIZATION, IN RELIANCE UPON EXEMPTIONS
FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND SUCH
OTHER LAWS AND REQUIREMENTS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR LISTING OR PURSUANT
TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, SUCH
REGISTRATION AND/OR LISTING REQUIREMENTS AS EVIDENCED BY A LEGAL OPINION OF
COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH WILL BE REASONABLY
ACCEPTABLE TO THE COMPANY.

 

 

VUBOTICS, INC.

 

COMMON STOCK PURCHASE WARRANT

 

 

	
  Warrant Shares:                

  	
   

  	
  Initial
  Exercise Date:                 ,
  2007

  

 

                THIS COMMON STOCK
PURCHASE WARRANT (the “Warrant”) certifies that, for value received,                 ,
a                
(the “Holder”), is entitled, upon the terms and conditions herein, at any time
on or after the date hereof (the “Initial Exercise Date”) and on or prior to
the close of business on                 ,
2012 (the “Termination Date”), to subscribe for and purchase from VuBotics,
Inc., a Georgia corporation (the “Company”), up to                 
shares (the “Warrant Shares”) of common stock, par value $0.001 per share, of
the Company (the “Common Stock”). The purchase price of each share of Common
Stock under this Warrant will be equal to the Exercise Price as set forth in
Section 2(b).

 

Section
1.               Definitions.
Capitalized terms used and not defined herein will have the respective meanings
as set forth in that certain Securities Purchase Agreement (the “Purchase
Agreement”), dated August 28, 2007, by and between the Company, Holder and
certain other parties.

Section
2.               Exercise.

(a)           Exercise
of Warrant. Exercise of the purchase rights represented by this Warrant may
be made, in whole or in part, at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by delivery to the Company
of a duly 

 

 

executed facsimile copy of
the Notice of Exercise Form attached as Exhibit A; and, within three (3)
Trading Days of the date said Notice of Exercise is delivered to the Company,
Holder will forward payment of the aggregate Exercise Price of the shares
thereby purchased by wire transfer. Each exercise of this Warrant  will be for a whole number of shares.  Holder will not be required to physically
surrender this Warrant to the Company until Holder has purchased all of the
Warrant Shares and the Warrant has been exercised in full, in which case,
Holder will surrender this Warrant to the Company for cancellation within three
(3) Trading Days of the date the final Notice of Exercise is delivered to the
Company. Partial exercises of this Warrant resulting in purchases of a portion
of the total number of Warrant Shares will have the effect of reducing the
number of Warrant Shares purchasable thereafter in an amount equal to the
number of Warrant Shares purchased. The Company will maintain records showing
the number of Warrant Shares purchased and the date of such purchases. The
Company will deliver any objection to any Notice of Exercise Form within two
(2) Business Days of receipt of such notice. “Business Day” means any day
except Saturday, Sunday, any day which will be a federal legal holiday in the
United States or any day on which banking institutions in the State of New York
are authorized or required by law or other governmental action to close. Holder
and any assignee, by acceptance of this Warrant, acknowledge and agree that
following the purchase of a portion of the Warrant Shares hereunder, the number
of Warrant Shares available for purchase hereunder at any given time may be
less than the amount stated on the face hereof.

(b)           Exercise Price. The exercise
price per share of the Common Stock under this Warrant will be Twenty Cents
($0.20), subject to adjustment hereunder (the “Exercise Price”).

(c)           Mechanics of Exercise.

(i)            Form of Consideration.  The Warrant is exercisable, in whole or in
part, by either (a) delivery of the exercise price in cash or (b) the Holder’s
election of a cashless exercise, which will result in the Holder receiving that
number of shares of Common Stock equal to (X) the excess of the fair market
value per share (as determined by the volume weighted average price of the
Common Stock on the OTC Bulletin Board over any 10 consecutive trading days (“VWAP”)
over the exercise price per share on the date of exercise, multiplied by (Y)
the total number of shares as to which exercised, and then divided by (Z) the
VWAP.

(ii)           Authorization of Warrant Shares.
The Company covenants that all Warrant Shares which may be issued upon the
exercise of the purchase rights represented by this Warrant will, upon exercise
of the purchase rights represented by this Warrant (including payment for the
Warrant Shares), be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges (other than taxes in
respect of any transfer occurring contemporaneously with such issue).

(iii)          Delivery
of Certificates Upon Exercise. Certificates for shares purchased hereunder
will be by physically delivery to the address specified by Holder in the Notice
of Exercise within three (3) Trading Days from the delivery to the Company of
the Notice of Exercise Form, surrender of this Warrant (if required) and
payment of the aggregate Exercise Price as set forth above (“Warrant Share
Delivery Date”). This Warrant will be deemed 

 

2

 

to have been exercised on
the date the Exercise Price is received by the Company.  The Warrant Shares will be deemed to have
been issued, and Holder or any other person so designated to be named therein
will be deemed to have become a holder of record of such shares for all
purposes, as of the date the Warrant has been exercised by payment to the
Company of the Exercise Price and all taxes required to be paid by Holder, if
any, pursuant to Section 2(d)(vii) prior to the issuance of such shares, have
been paid.

(iv)          Delivery of New Warrants Upon
Exercise. If this Warrant is exercised in part, the Company will, at the
request of Holder and upon surrender of this Warrant certificate, at the time
of delivery of the certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of Holder to purchase the
un-purchased Warrant Shares called for by this Warrant, which new Warrant will
be identical with this Warrant.

(v)           No Fractional Shares or Scrip.
No fractional shares or scrip representing fractional shares will be issued
upon the exercise of this Warrant. As to any fraction of a share which Holder
would otherwise be entitled to, the Company will at its election, either pay a
cash adjustment in respect of such final fraction in an amount equal to such
fraction multiplied by the Exercise Price or round up to the next whole share.

(vi)          Charges, Taxes and Expenses.
Issuance of certificates for Warrant Shares will be made without charge to
Holder for any issue or transfer tax or other incidental expense in respect of
the issuance of such certificate, all of which taxes and expenses will be paid
by the Company, and such certificates will be issued in the name of Holder or
in such name or names as may be directed by Holder; however if certificates for
Warrant Shares are to be issued in a name other than the name of Holder, this
Warrant when surrendered for exercise will be accompanied by the Assignment
Form attached as Exhibit B duly executed by Holder; and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse
it for any transfer tax incidental thereto.

(vii)         Closing of Books. The Company
will not close its stockholder books or records in any manner which prevents
the timely exercise of this Warrant, pursuant to the terms hereof.

Section
3.               Adjustments.

(a)           If
the Company pays a dividend of Common Stock or makes a distribution in Common
Stock, subdivides its issued and outstanding Common Stock into a greater number
of shares, increases or decreases the number of shares of Common Stock
outstanding by reclassifying its Common Stock (whether through a recapitalization,
consolidation, merger or otherwise), then (a) the Exercise Price on the record
date of such division or distribution or the effective date of such action will
be adjusted by multiplying the Exercise Price by a fraction whose numerator is
the number of shares of Common Stock outstanding immediately before such event
and whose denominator is the number of shares of Common Stock outstanding
immediately after such event, and (b) the number of shares of Common Stock for
which this Warrant may be converted immediately before such event will be
adjusted by multiplying such number by a fraction, the numerator of which is
the number of 

 

3

 

shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock outstanding immediately before such event

(b)           If the Company issues additional
Common Stock or other securities convertible into Common Stock or exercisable
to purchase Common Stock (other than (x) in a transaction for which an
adjustment is made pursuant to Section 3(a) hereof or (y) Common Stock (i)
options issued to any directors, officers or individual contractors of Issuer
as incentive compensation and any Common Stock issued upon exercise thereof,
(ii) issued for consideration other than cash pursuant to a merger,
consolidation, acquisition or similar business combination, (iii) issued in
exchange for services rendered to the Company, or (iv) with respect to which
the holders of Warrants representing a majority of the shares of Common Stock
issuable upon exercise thereof waive their anti-dilution rights under this
Section 3(b)) at a purchase price less than the $0.10 per share, then the
Exercise Price will be subject to a weighted average adjustment to reduce
dilution using the following formula:

NEP = OEP * ((CSO + CSP) / (CSO + CSAP)),
where

                                                NEP = new
Exercise Price; and

                                                OEP = old
Exercise Price; and

                                                CSO = shares of
Common Stock outstanding prior to the issuance of the securities triggering the
adjustment to the Exercise Price plus all shares of Common Stock issuable upon
exercise of all outstanding options, warrants, conversion rights and/or other
similar rights to acquire Common Stock, at an exercise or conversion price less
than or equal to the old Exercise Price, outstanding prior to the issuance of
the securities triggering the adjustment to the Exercise Price; and

CSP
= shares of Common Stock purchasable with consideration received by the Company
in the issuance of securities triggering the adjustment to the Exercise Price
had such securities reflected a per share price for Common Stock that was the
same as the old Exercise Price; and

CSAP
= shares of Common Stock actually purchased, or deemed purchased, in the
issuance of securities triggering the adjustment to the Exercise Price.

(c)           Calculations. All calculations
under this Section 3 will be made to the nearest cent or the nearest 1/100th of
a share, as the case may be. For purposes of this Section 3, the number of
shares of Common Stock deemed to be issued and outstanding as of a given date
will be the sum of the number of shares of Common Stock (excluding treasury
shares, if any) issued and outstanding.

(d)           Notice to Holder.

(i)            Adjustment
to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any
provision of this Section 3, the Company will promptly mail to Holder a notice
setting forth the Exercise Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment.

 

4

 

Section
4.                                            Transfer of
Warrant.

(a)           Transferability. Subject to
compliance with any applicable securities laws and the conditions set forth in
Section 4(d) hereof, this Warrant and all rights hereunder (including, without
limitation, any registration rights) are transferable, in whole or in part,
upon surrender of this Warrant at the principal office of the Company or its
designated agent, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by Holder or its agent
or attorney and funds sufficient to pay any transfer taxes payable upon the
making of such transfer. Upon such surrender and, if required, such payment,
the Company will execute and deliver a new Warrant or Warrants in the name of
the assignee or assignees and in the denomination or denominations specified in
such instrument of assignment, and will issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant will
promptly be cancelled. A Warrant, if properly assigned, may be exercised by a
new holder for the purchase of Warrant Shares without having a new Warrant
issued.

(b)           New Warrants. This Warrant may
be divided or combined with other Warrants upon presentation hereof at the
aforesaid office of the Company, together with a written notice specifying the
names and denominations in which new Warrants are to be issued, signed by
Holder or its agent or attorney. Subject to compliance with Section 4(a), as to
any transfer which may be involved in such division or combination, the Company
will execute and deliver a new Warrant or Warrants in exchange for the Warrant
or Warrants to be divided or combined in accordance with such notice.

(c)           Warrant Register. The Company
will register this Warrant, upon records to be maintained by the Company for
that purpose (the “Warrant Register”), in the name of the record Holder hereof
from time to time. The Company may deem and treat the registered Holder of this
Warrant as the absolute owner hereof for the purpose of any exercise hereof or
any distribution to Holder, and for all other purposes, absent actual notice to
the contrary.

(d)           Transfer Restrictions. If, at
the time of the surrender of this Warrant in connection with any transfer of
this Warrant, the transfer of this Warrant will not be registered pursuant to
an effective registration statement under the Securities Act and under
applicable state securities or blue sky laws, the Company may require, as a
condition of allowing such transfer, that (i) Holder or transferee of this
Warrant, as the case may be, furnish to the Company a written opinion of
counsel (which opinion will be in form, substance and scope customary for
opinions of counsel in comparable transactions) to the effect that such
transfer may be made without registration under the Securities Act and under
applicable state securities or blue sky laws and (ii) Holder or transferee
execute and deliver to the Company an investment letter in form and substance
acceptable to the Company and a fully completed investor questionnaire in the
form of Exhibit F to the Purchase Agreement.

Section
5.                                            Registration
Rights.  The Common Stock issuable upon
exercise of this Warrant is subject to registration pursuant to a Registration
Rights Agreement, dated as of the date hereof among the Company, the placement
agents for the securities contemplated under the Purchase Agreement, Holder and
the other purchasers under the Purchase Agreement.

 

5

 

 

[The following clause is optional at the
request of the Purchaser of this Warrant, with the choice between 4.99% and
9.99% being at the option of the Purchaser.]

 

Section 6.                                            Limitation on
Beneficial Ownership.   The Company
will not effect and will have no obligation to effect any exercise of this
Warrant, and the Holder will have no right to convert any portion of this Note,
to the extent that after giving effect to such conversion, the beneficial owner
of such shares (together with such person’s affiliates) would have acquired,
through exercise of this Warrant or otherwise, beneficial ownership of a number
of shares of Common Stock that exceeds [4.99% / 9.99%] (“Maximum Percentage”) of the number of
shares of Common Stock outstanding immediately after giving effect to such
conversion.    For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by a person and its
affiliates shall include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which the determination of such sentence is
being made, but shall exclude the number of shares of Common Stock which would
be issuable upon (A) exercise of the remaining, non-exercised portion of this
Warrant beneficially owned by such person or any of its affiliates and (B)
exercise or conversion of the unexercised or unconverted portion of any other
securities of the Company (including, without limitation, the Notes) subject to
a limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by such person or any of its affiliates.  Except
as set forth in the preceding sentence, for purposes of this Section 6,
beneficial ownership will be calculated in accordance with Section 13(d) of the
Exchange Act.  For purposes of this Section 6, in determining the number
of outstanding shares of Common Stock, a Holder may rely on the number of
shares of outstanding Common Stock as reflected in (1) the Company’s most
recent Form 8-K, Form 10-Q, Form 10-QSB, Form 10-K or Form 10-KSB as the case
may be, (2) a more recent public announcement by the Company, or (3) any other
notice by the Company or its transfer agent setting forth the number of shares
of Common Stock outstanding.  Upon the written request of any Holder, the
Company will promptly, but in no event later than 2 business days following the
receipt of such notice, confirm orally and in writing to any such Holder the
number of shares of Common Stock then outstanding.  In any case, the
number of outstanding shares of Common Stock will be determined after giving
effect to conversions of preferred shares by such Holder and its affiliates
since the date as of which such number of outstanding Common Stock was
reported.  By written notice to the Company, the Holder may increase or
decrease the Maximum Percentage to any other percentage not in excess of  [4.99% / 9.99%] specified in such notice, but
(i) any such increase will not be effective until the sixty-first (61st) day
after such notice is delivered to the Company, and (ii) any such increase or
decrease will apply only to the Holder and not to any other Holder.

Section
7.                                            Miscellaneous.

(a)           No Rights as Shareholder Until
Exercise. This Warrant does not entitle Holder to any voting rights or
other rights as a shareholder of the Company prior to the exercise hereof as
set forth in Section 2(d)(ii).

(b)           Loss,
Theft, Destruction or Mutilation of Warrant. The Company covenants that
upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant or any stock certificate
relating to the Warrant Shares, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory 

 

6

 

to it (which, in the case of
the Warrant, will not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate of like tenor and dated
as of such cancellation, in lieu of such Warrant or stock certificate.

(c)           Saturdays, Sundays, Holidays, etc.
If the last or appointed day for the taking of any action or the expiration of
any right required or granted herein will not be a Business Day, then such
action may be taken or such right may be exercised on the next succeeding
Business Day.

(d)           Authorized Shares.

                The Company
covenants that during the period the Warrant is outstanding, it will reserve
from its authorized and unissued Common Stock a sufficient number of shares to
provide for the issuance of the Warrant Shares upon the exercise of any
purchase rights under this Warrant. The Company further covenants that its
issuance of this Warrant will constitute full authority to its officers who are
charged with the duty of executing stock certificates to execute and issue the
necessary certificates for the Warrant Shares upon the exercise of the purchase
rights under this Warrant. The Company will take all such reasonable action as
may be necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of any stock exchange or quotation service upon which the Common
Stock is traded, listed or quoted at such time.

 

                Except and to the
extent as waived or consented to by Holder, the Company will not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder as set forth in this Warrant
against impairment. Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to such increase
in par value, (b) take all such action as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use
commercially reasonable efforts to obtain all such authorizations, exemptions
or consents from any public regulatory body having jurisdiction thereof as may
be necessary to enable the Company to perform its obligations under this
Warrant.

 

                Before taking any
action which would result in an adjustment in the number of Warrant Shares for
which this Warrant is exercisable or in the Exercise Price, the Company will
obtain all such authorizations or exemptions thereof, or consents thereto, as
may be necessary from any public regulatory body or bodies having jurisdiction
thereof.

 

(e)           Jurisdiction.
All questions concerning the construction, validity, enforcement and
interpretation of this Warrant will be determined in accordance with the
provisions of the Purchase Agreement.

 

7

 

(f)            Restrictions. Holder
acknowledges that the Warrant Shares acquired upon the exercise of this
Warrant, if not registered, will have restrictions upon resale imposed by state
and federal securities laws.

(g)           Nonwaiver and Expenses. No
course of dealing or any delay or failure to exercise any right hereunder on
the part of Holder will operate as a waiver of such right or otherwise prejudice
Holder’s rights, powers or remedies, notwithstanding the fact that all rights
hereunder terminate on the Termination Date. If the Company willfully and
knowingly fails to comply with any provision of this Warrant, which results in
any material damages to Holder, the Company will pay to Holder such amounts as
will be sufficient to cover any costs and expenses including, but not limited
to, reasonable attorneys’ fees, including those of appellate proceedings,
incurred by Holder in collecting any amounts due pursuant hereto or in
otherwise enforcing any of its rights, powers or remedies hereunder.

(h)           Notices. Any notice, request
or other document required or permitted to be given or delivered to Holder by
the Company will be delivered in accordance with the notice provisions of the
Purchase Agreement.

(i)            Limitation of Liability. No
provision hereof, in the absence of any affirmative action by Holder to
exercise this Warrant to purchase Warrant Shares, and no enumeration herein of
the rights or privileges of Holder, will give rise to any liability of Holder
for the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.

(j)            Remedies. Holder, in addition
to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the
provisions of this Warrant and hereby agrees to waive and not to assert the
defense in any action for specific performance that a remedy at law would be
adequate.

(k)           Successors and Assigns.
Subject to applicable securities laws, this Warrant and the rights and
obligations evidenced hereby will inure to the benefit of and be binding upon
the successors of the Company and the successors and permitted assigns of
Holder. The provisions of this Warrant are intended to be for the benefit of
all Holders from time to time of this Warrant and will be enforceable by any
such Holder or holder of Warrant Shares.

(l)            Amendment. This Warrant may
be modified or amended or the provisions hereof waived with the written consent
of the Company and Holder.

(m)          Severability. Wherever
possible, each provision of this Warrant will be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Warrant will be prohibited by or invalid under applicable law, such provision
will be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Warrant.

(n)           Headings.
The headings used in this Warrant are for the convenience of reference only and
will not, for any purpose, be deemed a part of this Warrant.

 

8

 

[signatures for Purchase Warrant]

 

SIGNED, SEALED AND DELIVERED as of the date first above
written.

 

	
   

  	
  VUBOTICS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:
  Philip E. Lundquist

  
	
   

  	
  Title: Chief Executive
  Officer

  

 

9

 

EXHIBIT A

 

NOTICE OF EXERCISE

 

 

TO:
[               

 

 

                                                (1) The
undersigned hereby elects to purchase                
Warrant Shares of the Company pursuant to the terms of the attached Warrant
(only if exercised in full), and tenders herewith payment of the exercise price
in full, together with all applicable transfer taxes, if any.

 

                                                (2) Payment
will be in lawful money of the United States.

 

                                                (3) Please
issue a certificate or certificates representing said Warrant Shares in the
name of the undersigned or in such other name as is specified below:

 

	
   

  	
   

  

 

The Warrant Shares will be delivered by physical delivery of a
certificate to:

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

                                                (4) Accredited
Investor. The undersigned is an “accredited investor” as defined in Regulation
D promulgated under the Securities Act of 1933, as amended.

 

[SIGNATURE OF HOLDER]

 

	
  Name of Investing Entity:

  	
   

  
	
  Signature of Authorized
  Signatory of Investing Entity:

  	
   

  
	
  Name of Authorized
  Signatory:

  	
   

  
	
  Title of Authorized
  Signatory:

  	
   

  
	
  Date:

  	
   

  
						

 

10

 

EXHIBIT B

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

 

                FOR VALUE
RECEIVED, [          ] all of
or [               ]
shares of the foregoing Warrant and all rights evidenced thereby are hereby
assigned to                                              
whose address is                                                                                           .

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  
	
   

  	
   

  
	
  Holder’s Signature: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Holder’s Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  
											

 

NOTE: The signature to this Assignment Form must correspond with the
name as it appears on the face of the Warrant, without alteration or
enlargement or any change whatsoever, and must be guaranteed by a bank or trust
company. Officers of corporations and those acting in a fiduciary or other
representative capacity should file proper evidence of authority to assign the
foregoing Warrant.

 

11

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