Document:

Exhibit
        10.1

       

      AGREEMENT
        AND PLAN OF MERGER

      

       

      This
        Agreement and Plan of Merger (the “Plan”)
        is
        adopted as of October 14, 2005, by and between VioQuest Delaware, Inc., a
        Delaware corporation (“VioQuest
        Delaware”),
        and
        VioQuest Pharmaceuticals, Inc., a Minnesota corporation (“VioQuest
        Minnesota”).

       

       

      WHEREAS,
        VioQuest Delaware is a corporation duly organized and existing under the
        laws of
        the State of Delaware;

       

      WHEREAS,
        VioQuest Minnesota is a corporation duly organized and existing under the
        laws
        of the State of Minnesota;

       

      WHEREAS,
        on the
        date hereof, VioQuest Delaware has authority to issue One Hundred Ten Million
        (110,000,000) shares of capital stock consisting of One Hundred Million
        (100,000,000) shares of common stock, $.001 par value per share (“Delaware
        Common Stock”),
        and
        Ten Million (10,000,000) shares of preferred stock, $.001 par value per
        share;

       

       

      WHEREAS,
        on the
        date hereof, One Hundred (100) shares of Delaware Common Stock are issued
        and
        outstanding, all of which are owned by VioQuest Minnesota;

       

       

      WHEREAS,
        on the
        date hereof, VioQuest Minnesota has authority to issue 50,000,000 shares
        of
        undesignated capital stock, par value $.01 per share (the “Minnesota
        Common Stock”),
        of
        which 17,827,924 shares are issued and outstanding;

       

       

      WHEREAS,
        the
        respective boards of directors of VioQuest Delaware and VioQuest Minnesota
        have
        determined that, for the purpose of effecting the reincorporation of VioQuest
        Minnesota in the State of Delaware, it is advisable and in the best interests
        of
        such corporations and their respective shareholders that VioQuest Minnesota
        merge with and into VioQuest Delaware upon the terms and conditions herein
        provided; and

       

       

      WHEREAS,
        the
        respective boards of directors of VioQuest Delaware and VioQuest Minnesota
        have
        approved this Plan; and

       

       

      WHEREAS,
        the
        respective shareholders of VioQuest Delaware and VioQuest Minnesota have
        approved this Plan;

       

       

      NOW,
        THEREFORE,
        in
        consideration of the mutual agreements and covenants set forth herein, VioQuest
        Minnesota and VioQuest Delaware hereby agree to merge as follows:

       

      1.          
        Merger.
        Subject
        to the terms and conditions hereinafter set forth, VioQuest Minnesota shall
        be
        merged with and into VioQuest Delaware, which shall be the surviving corporation
        in the merger (the “Merger”).
        The
        Merger shall be effective on the later of the date and time (the “Effective
        Time”)
        that a
        properly executed certificate of merger consistent with the terms of this
        Merger
        Agreement and Section 252 of the Delaware General Corporation Law (“DGCL”)
        is
        filed with the Secretary of State of Delaware or articles of merger are filed
        with the Secretary of the State of Minnesota as required by Section 302A.615
        of
        the Minnesota Business Corporation Act (“MBCA”).
        

      

      2.          
        Principal
        Office of VioQuest Delaware.
        The
        principal office of VioQuest Delaware is 7 Deer Park Drive, Suite E, Monmouth
        Junction, New Jersey, 08852. 

      

      3.          
        Corporate
        Documents.
        The
        Certificate of Incorporation of VioQuest Delaware, as in effect immediately
        prior to the Effective Time, shall continue to be the Certificate of
        Incorporation of VioQuest Delaware as the surviving corporation without change
        or amendment until further amended in accordance with the provisions thereof
        and
        applicable law, except that the Certificate of Incorporation of VioQuest
        Delaware shall be amended to change the name of VioQuest Delaware to “VioQuest
        Pharmaceuticals, Inc.,” as provided in the certificate of merger filed with the
        Secretary of State of Delaware pursuant to this Plan. The Bylaws of VioQuest
        Delaware, as in effect immediately prior to the Effective Time, shall continue
        to be the Bylaws of VioQuest Delaware as the surviving corporation without
        change or amendment until further amended in accordance with the provisions
        thereof and applicable law.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
 

      4.          
        Directors
        and Officers.
        The
        directors and officers of VioQuest Minnesota at the Effective Time shall
        be and
        become directors and officers, holding the same titles and positions, of
        VioQuest Delaware at the Effective Time, and after the Effective Time shall
        serve in accordance with the Bylaws of VioQuest Delaware.

      

      5.          
        Succession.
        At the
        Effective Time, VioQuest Delaware shall succeed to VioQuest Minnesota in
        the
        manner of and as more fully set forth in Section 259 of the DGCL and in Section
        302A.641 of the MBCA.

      

      6.          
        Further
        Assurances.
        From
        time to time, as and when required by VioQuest Delaware or by its successors
        and
        assigns, there shall be executed and delivered on behalf of VioQuest Minnesota
        such deeds and other instruments, and there shall be taken or caused to be
        taken
        by it such further and other action, as shall be appropriate or necessary
        in
        order to vest or perfect in or to confer of record or otherwise in VioQuest
        Minnesota the title to and possession of all the interests, assets, rights,
        privileges, immunities, powers, franchises and authority of VioQuest Minnesota,
        and otherwise to carry out the purposes and intent of this Merger Agreement,
        and
        the officers and directors of VioQuest Delaware are fully authorized in the
        name
        and on behalf of VioQuest Minnesota or otherwise to take any and all such
        actions and to execute and deliver any and all such deeds and other
        instruments.

      

      7.          
        Common
        Stock of VioQuest Minnesota.
        At the
        Effective Time, by virtue of the Merger and without any action on the part
        of
        the holder thereof, each share of Minnesota Common Stock outstanding immediately
        prior thereto shall be changed and converted automatically into one fully
        paid
        and nonassessable share of Delaware Common Stock.

      

      8.          
        Stock
        Certificates.
        At and
        after the Effective Time, all of the outstanding certificates which prior
        to
        that time represented shares of Minnesota Common Stock shall be deemed for
        all
        purposes to evidence ownership of and to represent shares of Delaware Common
        Stock into which the shares of the Minnesota Common Stock represented by
        such
        certificates have been converted as herein provided. The registered owner
        on the
        books and records of VioQuest Minnesota or its transfer agent of any such
        outstanding stock certificate shall, until such certificate shall have been
        surrendered for transfer or otherwise accounted for to VioQuest Delaware
        or its
        transfer agent, have and be entitled to exercise any voting and other rights
        with respect to and to receive any dividend and other distributions upon
        the
        shares of Delaware Common Stock evidenced by such outstanding certificate
        as
        above provided.

      

      9.          
        Options.
        Each
        option, warrant or other right to purchase shares of Minnesota Common Stock,
        which are outstanding at the Effective Time shall, by virtue of the Merger
        and
        without any action on the part of the holder thereof, be converted into and
        become an option, warrant or right to purchase one share of Delaware Common
        Stock at an option price per share equal to the purchase price applicable
        to the
        option, warrant or other right to purchase Minnesota Common Stock. 

      

      10.          
        Common
        Stock of VioQuest Delaware.
        At the
        Effective Time, the previously outstanding One Hundred (100) shares of Delaware
        Common Stock registered in the name of VioQuest Minnesota and which shall,
        by
        reason of the Merger, be reacquired by VioQuest Delaware, shall be retired
        and
        shall resume the status of authorized and unissued shares of Delaware Common
        Stock, and no shares of Delaware Common Stock or other securities of VioQuest
        Delaware shall be issued in respect thereof.

      

      11.          
        Amendment. At
        any
        time before or after approval by the shareholders of VioQuest Minnesota,
        this
        Plan may be amended in any manner (except that Section 7 and any of the other
        principal terms may not be amended without the approval of the shareholders
        of
        VioQuest Minnesota) as may be determined in the judgment of the respective
        Boards of Directors of VioQuest Delaware and VioQuest Minnesota to be necessary,
        desirable or expedient in order to clarify the intention of the parties hereto
        or to effect or facilitate the purposes and intent of this Merger
        Agreement.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
 

      12.          
        Abandonment.
        At any
        time before the Effective Time, this Merger Agreement may be terminated and
        the
        Merger contemplated hereby may be abandoned by the Board of Directors of
        either
        VioQuest Minnesota or VioQuest Delaware or both, notwithstanding approval
        of
        this Merger Agreement by the sole shareholder of VioQuest Delaware or the
        shareholders of VioQuest Minnesota, or both.

      

      13.          
        Rights
        and Duties of VioQuest Delaware.
        At the
        Effective Time and for all purposes the separate existence of VioQuest Minnesota
        shall cease and shall be merged with and into VioQuest Delaware which, as
        the
        surviving corporation, shall thereupon and thereafter possess all the rights,
        privileges, immunities, licenses and franchises (whether of a public or private
        nature) of VioQuest Minnesota; and all property (real, personal and mixed),
        all
        debts due on whatever account, all choses in action, and all and every other
        interest of or belonging to or due to VioQuest Minnesota shall continue and
        be
        taken and deemed to be transferred to and vested in VioQuest Delaware without
        further act or deed; and the title to any real estate, or any interest therein,
        vested in VioQuest Minnesota shall not revert or be in any way impaired by
        reason of such Merger; and VioQuest Delaware shall thenceforth be responsible
        and liable for all the liabilities and obligations of VioQuest Minnesota;
        and,
        to the extent permitted by law, any claim existing, or action or proceeding
        pending, by or against VioQuest Minnesota may be prosecuted as if the Merger
        had
        not taken place, or VioQuest Delaware may be substituted in the place of
        such
        corporation. Neither the rights of creditors nor any liens upon the property
        of
        VioQuest Minnesota shall be impaired by the Merger. If at any time VioQuest
        Delaware shall consider or be advised that any further assignment or assurances
        in law or any other actions are necessary or desirable to vest the title
        of any
        property or rights of VioQuest Minnesota in VioQuest Delaware according to
        the
        terms hereof, the officers and directors of VioQuest Delaware are empowered
        to
        execute and make all such proper assignments and assurances and do any and
        all
        other things necessary or proper to vest title to such property or other
        rights
        in VioQuest Delaware, and otherwise to carry out the purposes of this Merger
        Agreement.

      

      14.          
        Consent
        to Service of Process.
        VioQuest Delaware hereby irrevocably appoints the Secretary of the State
        of
        Minnesota and the successors of such officer its attorney in the State of
        Minnesota upon whom may be served any notice, process or pleading in any
        action
        or proceeding against it to enforce against VioQuest Delaware any obligation
        of
        VioQuest Minnesota or to enforce the rights of a dissenting shareholder of
        VioQuest Minnesota.

      

      IN
        WITNESS WHEREOF, this Agreement and Plan of Merger, having first been duly
        approved by resolution of the Boards of Directors of VioQuest Minnesota and
        VioQuest Delaware, has been executed on behalf of each of said two corporations
        by their respective duly authorized officers.

       

      
        	 	
                VIOQUEST PHARMACEUTICALS, Inc. 

                a Minnesota corporation

              	 	 	
                VIOQUEST DELAWARE, INC.

                a Delaware corporation

              
	 	 	 	 	 
	 	 	 	 	 
	By:	/s/ 
                Daniel Greenleaf	 	By:	/s/ 
                Daniel Greenleaf
	 	
                
Daniel
                Greenleaf	 	 	
                
Daniel
                Greenleaf
	 	
                Chief
                  Executive Officer

              	 	 	
                Chief
                  Executive OfficerExhibit
        10.42

       

      LEASE

       

      BY
        THIS
        LEASE dated July 15, 2005, The Silva Family Trust dated July 25, 1992,
        ("Lessor") leases to Heritage Oaks Bank, ("Lessee”) that certain real property,
        (“premises") in the City of Atascadero, County of San Luis Obispo, State of
        California, commonly known as 9900 El Camino Real, Atascadero, California.
        The
        premises consist of a commercial lot and two story building with on-site
        parking.

      

      ARTICLE
        1. TERM OF LEASE

      Original
        Term

      Section
        1.01. This lease shall be for a term of five (5) years commencing at 12:00
        a.m.
        on August 13, 2005, and ending at 11:59 p.m. on August 12, 2010 unless sooner
        terminated, or extended, as provided in this agreement. 

      

      Extended
        Term

      Section
        1.02. Should Lessee perform all the terms and conditions of this lease for
        the
        full term specified in Section 1.01 of this lease, Lessee may extend this
        lease
        for four (4) additional terms of five (5) years each, commencing on expiration
        of the previous term, by giving Lessor written notice of Lessee's desire
        to do
        so at least ninety (90) days prior to expiration of the immediately preceding
        term specified above.

      

      Hold
        Over

      Section
        1.03. Should Lessee hold over and continue in possession of the premises
        after
        expiration of the term of this lease or any extension thereof, Lessee's
        continued occupancy of the premises shall be considered a month-to-month
        tenancy
        subject to all of the terms and conditions of this lease.

      

      Lessor's
        Inability to Deliver Possession

      Section
        1.04. Should Lessor for any reason be unable to deliver possession of the
        premises to Lessee on the date specified in Section 1.01 of this lease as
        the
        date on which the term of this lease is to commence, this lease shall not
        be
        void or voidable nor shall Lessor be liable to Lessee for any loss or damage
        resulting from such failure to deliver possession to Lessee so long as Lessor
        has exercised, and continues to exercise, reasonable diligence to deliver
        possession of the premises to Lessee. No rent shall, however, accrue or become
        due from Lessee to Lessor under this lease until the actual physical possession
        of the premises is delivered, or the right to actual physical possession
        of the
        premises is delivered, or the right to actual, unrestricted physical possession
        of the premises under this lease is tendered, by Lessor to Lessee. Furthermore,
        the term of this lease shall not be extended by Lessor's inability to deliver
        possession of the premises to Lessee on the date specified in Section 1.01
        for
        commencement of the term of this lease.

       

      ARTICLE
        2. RENT

      Minimum
        Rent Section 2.01. For the first five (5) years of the term hereof, Lessee
        agrees to pay to Lessor a fixed minimum rental for the use and occupancy
        of the
        premises of $5,026.45 per month payable on the first (1st) day of each and
        every
        month commencing September 1, 2005, prorated for any partial months, at the
        mailing address of Lessor at 6850 Adelaida Road, Paso Robles, CA 93446,
        California, or any such other place as Lessor may from time to time designate
        by
        written notice delivered to Lessee.

      

      Rent
        Adjustment

      Section
        2.02. The minimum monthly rent provided for herein shall be subject to
        adjustment at the end of the fifth year of this lease, ("the adjustment date")
        as follows:

      

      The
        base
        for computing the adjustment is The Consumer price Index for All Items for
        All
        Urban Consumers in the Los Angeles-Long Beach-Anaheim Metropolitan Area,
        published by the United States Department of Labor, Bureau of Labor Statistics
        ("Index"), which is last published prior to the date of the commencement
        of the
        term ("Beginning Index"). If the Index last published prior to the adjustment
        date ("Extension Index") has increased over the Beginning Index, the minimum
        monthly rent for the following term (until the next rent adjustment) shall
        be
        set by multiplying $5,026.45 by a fraction, the numerator of which is the
        Extension Index and the denominator of which is the Beginning Index. Upon
        adjustment of the minimum monthly rent as provided in this section, the parties
        shall immediately execute an amendment to this lease stating the new minimum
        monthly rent, which shall be subject to adjustment on the following adjustment
        date.

      
        
          
          

        

        
          •
            PAGE • 1
•

          
            

          

        

        
          
          

        

      

      

      If
        the
        Index is changed so that the base year differs from that used immediately
        preceding the month in which the term commences, the Index shall be converted
        in
        accordance with the conversion factor published by the United States Department
        of Labor, Bureau of labor Statistics. If the Index is discontinued or revised
        during the term, such other government index or computation with which it
        is
        replaced shall be used in order to obtain substantially the same result as
        would
        be obtained if the Index had not been discontinued or revised.

      

      If
        Lessee
        exercises its options for additional lease terms, the rent for each new term
        shall be determined using the same computation, using the base rent from
        the
        previous term as the multiplier and the Extension Index from the previous
        term
        as the denominator of the fraction.

      

      Utilities
        and Taxes

      Section
        2.03.

      (a)
        This
        is a net lease, and Lessee shall pay all utilities, including electricity,
        gas,
        water, sewer, trash collection, and telephone, and real property taxes assessed
        against the property. Lessor shall provide Lessee with real property tax
        bills
        as they are received to facilitate timely payment of the taxes by
        Lessee.

      

      Personal
        Property Taxes

      (b)
        Lessee shall pay before they become delinquent all taxes, assessments, or
        other
        charges levied or imposed by any governmental entity on the personal property
        placed by Lessee in, on, or about the premises.

      

      Late
        Charges

      Section
        2.04. If any installment of rent or other payment required to be paid by
        Lessee
        to Lessor is not paid within ten (10) days of the date on which it is due,
        a
        late charge equal to five percent (5%) of the late payment shall be due from
        Lessee to Lessor to compensate Lessor for the additional administrative work
        caused by such default and to compensate Lessor for the loss of use of such
        defaulted payment. The late charge herein shall be in addition to any other
        remedy which Lessor may have hereunder for such default.

      

      ARTICLE
        3. USE OF PREMISES

      Permitted
        Use

      Section
        3.01. The premises shall, during the term of this lease and any extensions
        thereof, be used for the purpose of operating a retail banking branch office,
        for uses normally incident to such purpose, and for no other purpose without
        the
        prior written consent of Lessor.

      

      Insurance
        Hazards

      Section
        3.02. Lessee shall not commit or permit the commission of any acts on the
        premises or use or permit the use of the premises in any manner that will
        increase the existing rates for or cause the cancellation of any fire,
        liability, or other insurance policy insuring the premises or the improvements
        on the premises.

      

      Waste
        or
        Nuisance

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

      
        
          
          

        

        
          •
            PAGE • 2
•

          
            

          

        

        
          
          

        

      

      

      Compliance
        with Law

      Section
        3.04. Lessee
        shall at Lessee's own cost and expense comply with all statutes, ordinances,
        regulations, and requirements of all governmental entities, both Federal
        and
        State and County or Municipal, relating to lessee's use and occupancy of
        the
        premises whether such statutes, ordinances, regulations, and requirements
        are
        now in force or later enacted. The judgment of any court of competent
        jurisdiction, or the admission by Lessee in a proceeding brought against
        Lessee
        by any government entity, that Lessee has violated any such statute, ordinance,
        regulation, or requirement shall be conclusive as between Lessor and Lessee.
        Lessor agrees that any requirements of the Municipal, State, or Federal
        authorities which require alteration of Lessor's building shall not be the
        responsibility of Lessee, unless required because of an act or a use of the
        premises by Lessee.

       

      ARTICLE
        4. ALTERATIONS AND REPAIRS

      Conditions
        of Premises

      Section
        4.01. By entering into possession of the premises at the commencement of
        the
        lease term, Lessee accepts the premises in their present condition and
        stipulates with Lessor that the premises are in good, clean, safe, and
        tenantable condition. Lessee further represents to Lessor that the premises
        have
        been inspected by Lessee and that it has been assured by means independent
        of
        Lessor of the truth of all facts material to this lease and that the premises
        are being leased by Lessee as a result of its inspection and investigation
        and
        not as a result of any representations made by Lessor.

      

      Maintenance
        by Lessor

      Section
        4.02. Lessor shall, at its own cost and expense, maintain in good condition
        and
        repair the exterior roof and the foundations of the premises; provided that
        Lessor shall not be liable for any damages to Lessee or the property of Lessee
        resulting from Lessor's failure to make any repairs required by this section
        unless written notice of the need for such repairs has been given to Lessor
        and
        Lessor has failed for a reasonable period, not exceeding 30 days after receipt
        of the notice, unless prevented by causes not the fault of the Lessor, to
        make
        the needed repairs; provided, further, that Lessor shall promptly be reimbursed
        by Lessee for the full cost of any repairs made pursuant to this section
        required because of the negligence or other fault, other than normal and
        proper
        use, of Lessee or its employees or sublessees, if any. Lessee shall notify
        Lessor by personal delivery or certified mail of any unsafe conditions in
        or
        about the premises. Lessor shall not be liable to Lessee for any liability
        relating to any unsafe conditions on the premises or common areas of which
        Lessee is aware or reasonably should have been aware and for which notice
        was
        not given to Lessor by Lessee.

      In
        the
        event Lessor fails to so maintain the above-described components of the
        Premises, Lessee is hereby authorized to do so if reasonably necessary to
        protect Lessee's interest hereunder and to deduct the amount expended in
        performing Lessor's duty from the rent installment next accruing; provided,
        however, that Lessee may not deduct amounts in excess of one (1) month’s rent in
        any twelve month period without Lessor's prior written consent. Lessee shall
        provide Lessor with written receipts for all sums so deducted, showing the
        amount, to whom paid and purpose of such expenditures.

       

      Maintenance
        by Lessee

      Section
        4.03. 

      (a) Except
        as
        expressly provided in Section 4.02 above, Lessee shall, at its sole cost
        and
        expense, maintain all portions of the premises as well as all improvements
        on
        the premises, including but not limited to the interior walls, window glass,
        heating, ventilation and air conditioning systems in premises, in good order
        and
        repair and in as safe and clean a condition as they were when received by
        Lessee
        from Lessor, reasonable wear and tear excepted.

      (b) Should
        Lessee fail to maintain the premises as set forth above, Lessor may, at Lessor's
        option, perform such maintenance on behalf of Lessee. In such event, Lessee
        shall promptly, on written demand, reimburse Lessor for all cost and expense
        incurred by Lessor in performing Lessee's maintenance obligations.

      

      Alterations
        and Liens

      Section
        4.04. Lessee shall not make or permit any other person to make any alterations
        to the premises without the written consent of Lessor. Lessee shall keep
        the
        premises free and clear from any and all liens, claims, and demands for work
        performed, materials furnished, or operations conducted on the premises at
        the
        request of Lessee. Furthermore, any and all alternations, additions,
        improvements, and fixtures, except furniture and trade fixtures, made or
        placed
        in or on the premises by Lessee or any other person shall, upon termination
        of
        this lease, become the property of Lessor and remain on the premises; provided,
        however, that Lessor shall have the option upon termination of this lease
        of
        requiring Lessee, at Lessee's sole cost and expense, to remove any or all
        of
        such alterations, additions, improvements, or fixtures from the
        premises.

      
        
          
          

        

        
          •
            PAGE • 3
•

          
            

          

        

        
          
          

        

      

      

      

      Inspection
        by Lessor

      Section
        4.05. Lessee shall permit Lessor to enter the premises during business hours
        for
        the purpose of inspection, or for the purpose of posting notices of
        non-liability for alterations, additions or repairs, or for the purpose of
        placing upon the premises any "For Sale" signs, without any rebate of rent
        and
        without any liability to Lessee for any loss of occupation or quiet enjoyment
        of
        the premises; and shall permit Lessor, at any time within one hundred fifty
        (150) days prior to the expiration of this lease, to place upon the premises
        any
        "For Lease" signs. Entries made by Lessor may not unreasonably interfere
        with
        the conduct of Lessee's business.

      

      Surrender
        of Premises

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

      

      ARTICLE
        5. INDEMNITY AND INSURANCE

      Hold-Harmless
        Clause

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

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

      (b) Any
        work
        performed on the premises or materials furnished to the premises at the request
        of Lessee, its agent or employee;

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

       

      Notwithstanding
        the above, Lessee shall be under no duty to indemnify and hold Lessor harmless
        from any liability, claims, or damages arising because of any grossly negligent,
        intentional or willful acts of Lessor, its agent or employee acting in the
        course and scope of their agency or employment.

      

      Liability
        Insurance

      Section
        5.02. Lessee shall, at its own cost and expense, maintain during the entire
        term
        of this lease and any renewals or extensions of the lease, a broad form
        comprehensive coverage policy of public liability insurance issued by an
        insurance company acceptable to Lessor and insuring Lessee and Lessor against
        loss or liability caused by or connected with Lessee's occupation and use
        of the
        premises under this lease in amounts not less than:

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

       

      Such
        public liability insurance and property damage insurance shall insure
        performance of Lessee of the indemnity provisions of Section 5.01 above.
        Lessor
        shall be named as an additional insured in the policy. 

      

      Fire
        and
        Casualty Insurance

      Section
        5.03. Lessee shall, at Lessee's own cost and expense, at all times during
        the
        term of this lease keep all furniture, fixtures and equipment located on
        the
        premises insured for their full insurable value by insurance companies
        authorized to issue such insurance in California against loss or destruction
        by
        fire and the perils commonly covered under the standard extended coverage
        endorsement to fire insurance policies in San Luis Obispo County. Any loss
        payable under such insurance shall be payable to Lessee and Lessor as their
        interests may appear. Any proceeds received because of a loss covered by
        such
        insurance shall be used and applied in the manner required by Section 6.06
        of
        this lease.

      
        
          
          

        

        
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      Deposit
        of Insurance with Lessor

      Section
        5.04. Lessee shall within 10 days after the execution of this lease and promptly
        thereafter when any policy is replaced, rewritten, or renewed, deliver to
        Lessor
        a copy of each insurance policy required by this lease or a certificate executed
        by the insurance company or companies or their authorized agent evidencing
        such
        policy or policies.

       

      ARTICLE
        6. SIGNS AND TRADE FIXTURES

      Installation
        and Removal of Trade Fixtures

      Section
        6.01. Lessee shall have the right at any time, at Lessee's sole cost and
        expense, to install and affix in, to, or on the premises such items, ("trade
        fixtures"), for use in Lessee's trade or business as Lessee may deem advisable.
        Any trade fixtures which can be removed without structural damage to the
        premises shall remain the property of the Lessee and may be removed by Lessee
        at
        any time prior to the termination of this lease. Any damage caused by the
        removal of trade fixtures shall be repaired by Lessee at Lessee's sole cost
        and
        expense.

      

      Unremoved
        Trade Fixtures

      Section
        6.02. Any trade fixtures which are not removed from the premises by Lessee
        within ten (10) days after the termination, regardless of cause, of this
        Lease
        shall be deemed abandoned by Lessee and shall automatically become the property
        of Lessor as owner of the real property to which they are affixed, unless
        Lessor
        notifies Lessee, in writing, of Lessor's election to have Lessee remove such
        trade fixtures and to repair any damage caused thereby. Upon election by
        Lessor
        to require Lessee to remove such trade fixtures, Lessee shall have fifteen
        (15)
        days from the date of the written notice in which to remove trade fixtures
        and
        repair any damage caused by such removal. If Lessee fails to remove the trade
        fixtures and/or repair any such damage, Lessor may do so at Lessee's sole
        cost
        and expense, including any costs of storing such property.

      

      Signs

      Section
        6.03. Lessee may place and maintain, on or in any exterior door, wall, or
        window
        of the premises, any sign, awning, canopy, marquee, or other advertising
        provided such sign, awning, canopy, marquee, or other advertising is in
        compliance with then existing governmental regulations affecting the premises.
        Lessee may place any decoration, lettering, or advertising matter on the
        glass
        of any exterior window of the premises. Lessee shall maintain such sign,
        awning,
        canopy, marquee, or other advertising in good appearance and repair. On
        termination of this lease, any of the items mentioned in this section not
        removed from the premises by Lessee on termination of this lease may be removed
        by Lessor.

      

      Partial
        Destruction

      Section
        6.04. Should premises be partially destroyed by any cause not the fault of
        Lessee, this lease shall continue in full force and effect and Lessor, at
        Lessor's own cost and expense, shall promptly commence the work of repairing
        and
        restoring the premises to their prior condition providing such work can be
        accomplished under all applicable governmental laws and regulations within
        90
        working days at a cost not exceeding 55 percent of the total replacement
        cost of
        the premises.

      

      Total
        Destruction

      Section
        6.05. Should the premises be so far destroyed by any cause not the fault
        of
        Lessee that they cannot be repaired or restored to their former condition
        within
        90 working days or at a cost not exceeding 55 percent of the total replacement
        cost of the premises, Lessor may at Lessor's option either:

      (a) Continue
        this lease in full force and effect by repairing and restoring, at Lessor's
        own
        cost and expense, the premises to their former condition; or

      (b) Terminate
        this lease by giving Lessee written notice of such termination.

      

      Insurance
        Proceeds

      Section
        6.06. Any insurance proceeds received by Lessor because of the total or partial
        destruction of the premises or the building on the premises shall be the
        sole
        property of Lessor, free from any claims of Lessee, and may be used by Lessor
        for whatever purpose Lessor may desire.

      
        
          
          

        

        
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•

          
            

          

        

        
          
          

        

      

      

      Abatement
        of Rent

      Section
        6.07. Should Lessor elect under Section 6.05 of this lease or be required
        under
        Section 6.04 of this lease to repair and restore the premises to their former
        condition following partial or total destruction:

      (a) Lessee
        shall not be entitled to any damages for any loss or inconvenience sustained
        by
        Lessee by reason of the making of such repairs and restoration;

      (b) Lessor
        shall have full right to enter the premises and take possession of so much
        of
        the premises, including the whole premises, as may be reasonably necessary
        to
        enable Lessor promptly and efficiently to carry out the work of repair and
        restoration; and

      (c) The
        fixed
        rent payable by Lessee to Lessor pursuant to Section 2.01 shall be abated
        to the
        extent and for the time Lessee is prevented from using the whole of the
        premises.

      

      Total
        Condemnation

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

      

      Termination
        Option for Partial Condemnation

      Section
        6.09. Should, during the term of this lease or any renewal or extension,
        title
        and possession of only a portion of the premises be taken under the power
        of
        eminent domain by any public or quasi-public agency or entity, Lessee may,
        at
        Lessee's option, terminate this lease if, in Lessee’s sole opinion, the taking
        makes the operation of Lessee’s business impractical or uneconomical for Lessee.
        Lessee shall exercise its option by giving written notice to Lessor not later
        than 30 days after actual physical possession of the portion subject to the
        eminent domain power is taken by the agency or entity exercising that power.
        This lease shall terminate as of 12:01 A.M. on the date the notice is deemed
        given to Lessor but the minimum rent specified in Section 2.01 shall be reduced
        in the manner specified in Section 6.07 from the date of taking to the date
        of
        termination of the lease.

      

      Partial
        Condemnation without Termination

      Section
        6.10. Should Lessee fail to exercise the option described in Section 6.09,
        then,
        in that event:

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

      (b) The
        fixed
        rent specified in Section 2.01 shall, after the date of taking, be reduced
        by an
        amount that bears the same ratio to the fixed rent specified in Section 2.01
        as
        the square footage of the portion of the premises taken under the power of
        eminent domain bears to the total square footage of the premises;
        and

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

      

      Condemnation
        Award

      Section
        6.11. Should, during the term of this lease or any renewal or extension,
        title
        and possession of all or any portion of the premises be taken under the power
        of
        eminent domain by any public or quasi-public agency or entity, the portion
        of
        the compensation or damages for the taking awarded to each of the parties
        to
        this lease, Lessor and Lessee, shall belong to and be the sole property of
        the
        party to whom it is awarded. Lessee shall be entitled to that portion of
        the
        compensation or damages awarded for the eminent domain taking that represents
        (1) reasonable value of Lessee's rights under this lease for the unexpired
        term
        of this lease; (2) the cost or loss sustained by Lessee because of the removal
        of Lessee's trade fixtures, equipment and furnishings from the portion of
        the
        premises taken by eminent domain; and (3) the damages to Lessee caused by
        the
        reduction or elimination of Lessee’s business opportunity as a result of the
        taking.

      
        
          
          

        

        
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      Arbitration
        of Condemnation Award

      Section
        6.12. Should separate awards not be made to Lessor and Lessee for the taking
        by
        eminent domain of all or any portion of the premises, and should Lessor and
        Lessee be unable to agree on the manner the total award is to be divided
        between
        them pursuant to Section 6.11, the proper division of the award between Lessor
        and Lessee shall be settled by arbitration under the Commercial Rules for
        Arbitration prescribed by the American Arbitration Association

       

      ARTICLE
        7. DEFAULT, ASSIGNMENT, AND TERMINATION

      Subleasing
        or Assigning as Breach

      Section
        7.01. Lessee shall not encumber, assign, or otherwise transfer this lease,
        any
        right or interest in this lease, or any right or interest in the without
        the
        express written consent of Lessor. Lessee shall not sublet the premises or
        any
        part of the premises without the written consent of Lessor. Consent by Lessor
        to
        one assignment or one subletting shall not be deemed to be consent to any
        subsequent assignment or subletting. Any encumbrance, assignment, transfer,
        or
        subletting without the written consent of Lessor, whether it be voluntary
        or
        involuntary, by operation of law or otherwise, is void and shall, at the
        option
        of Lessor, terminate this lease. The consent of Lessor to any assignment
        of
        Lessee's interest in this lease or the subletting by Lessee of the premises
        or
        parts of the premises shall not be unreasonably withheld. The transfer by
        Lessee
        to a corporation which is wholly owned by, or a subsidiary of Lessee or its
        holding company shall not constitute a prohibited assignment within the meaning
        of this section.

      

      Abandonment
        by Lessee

      Section
        7.02. Should Lessee breach this lease and abandon the premises prior to the
        natural expiration of this lease, Lessor may:

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

      (b) Terminate
        this lease and recover from Lessee:

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

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

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

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

      

      Default
        by Lessee

      Section
        7.03. Should
        Lessee default in the performance of any of the covenants, conditions, or
        agreements in this lease, Lessee shall have breached the lease and Lessor
        may,
        in addition to the remedy specified in the subparagraph (b) of Section 7.02,
        reenter and regain possession of the premises in the manner provided by the
        laws
        of unlawful detainer in the State of California then in effect.

      

      Insolvency
        of Lessee

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

      

      Cumulative
        Remedies

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

      
        
          
          

        

        
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            PAGE • 7
•

          
            

          

        

        
          
          

        

      

      

      Waiver
        of
        Breach

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

       

      ARTICLE
        8. MISCELLANEOUS

      Force
        Majeure - Unavoidable Delays

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

      

      Attorney's
        Fees

      Section
        8.02. Should any litigation be commenced between the parties to this lease
        concerning the premises, this lease, or the rights and duties of either in
        relation thereto, the party prevailing in such litigation shall be entitled,
        in
        addition to such other relief as may be granted in the litigation, to a
        reasonable sum for its attorney's fees in such litigation, which shall be
        determined by the court.

      

      Notices

      Section
        8.03. All notices to be given to Lessee shall be given in writing personally
        or
        by depositing the same in the United States mail, postage prepaid, and addressed
        to Lessee at the premises, and with a copy to P.O. Box 7012, Paso Robles,
        CA
        93447-7012, whether or not Lessee has departed from, abandoned or vacated
        the
        premises. All notices to be given to Lessor shall be given in writing personally
        or by depositing the same in the United State mail, postage prepaid, and
        addressed to the Lessor at 6850 Adelaida Road, Paso Robles, CA 93446 or at
        such
        other place or places as may be designated by Lessor.

      

      No
        Merger

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

      

      Binding
        on Heirs and Successors

      Section
        8.05. This lease shall be binding on and shall inure to the benefit of the
        heirs, successors, and assigns of Lessor and Lessee.

      

      Partial
        Invalidity

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

      

      Sole
        and
        Only Agreement

      Section
        8.07. This instrument constitutes the sole and only agreement between Lessor
        and
        Lessee regarding the leasing of the premises to Lessee and correctly sets
        forth
        the obligations of Lessor and Lessee to each other. Any agreements or
        representations regarding the premises or their leasing by Lessor to Lessee
        not
        expressly set forth in this agreement are null and void.

      

      Waiver

      Section
        8.08. The waiver by Lessor of any breach of any term, covenant or condition
        of
        this lease shall not be deemed to be a waiver of any subsequent breach of
        the
        same or any other term, covenant or condition.

      

      Subordination

      Section
        8.09. This
        lease is subject and subordinate to all mortgages and deeds of trust which
        may
        now or hereafter affect the real property on which the premises are located,
        and
        to all renewals, modifications, replacements, and extensions thereof. Lessee
        agrees to execute any instruments for the benefit of the Lessor as may be
        necessary to effectuate this provision of the lease.

       

      
        
          
          

        

        
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            PAGE • 8
•

          
            

          

        

        
          
          

        

      

      

      Time
        of
        Essence

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

      

      This
        Lease is executed at Paso Robles, California, by the undersigned:

       

      
        
          	 	 	 
	Lessee:	Buyer: 
	Heritage
                  Oaks
                  Bank	The Silva Family Trust
                  dated July
                  25, 1992
	 	 
 	 
 	 
 
	by:  	/s/
                  Lawrence P. Ward	by:  	/s/ David
                  J. Silva
	 	
                  
Lawrence
                  P. Ward, President	
                  
David
                  J. Silva, Trustee

        

         

        
          
            	 	 	 
	 	 
	Heritage
                    Oaks
                    Bank	The Silva Family Trust
                    dated July
                    25, 1992
	 	 
 	 
 	 
 
	by:  	/s/
                    Gwen Pelfrey	by:  	/s/ Cecilia
                    J. Silva 
	 	
                    
Gwen
                    Pelfrey, CAO	
                    
Cecilia
                    J. Silva, Trustee
	 	 	 

          

      

      
        
          
          

        

        
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            PAGE • 9
•

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