Document:

ex10_2.htm

    
      

    

    Exhibit
10.2

    

    COMMERCIAL LEASE
AGREEMENT

    

    

    THIS
COMMERCIAL LEASE AGREEMENT (hereinafter called the "Lease") is
made   this __26___ day of
October, 2009 by and between POLARIS LOWER NAZ DEVELOPMENT,
LLC, a Pennsylvania limited liability company, which has as its address
7562 Penn Drive, Suite 100, Allentown, Pennsylvania 18106, or its assignee or
nominee (the "Lessor")

    

    AND

    

    EMBASSY BANK FOR THE LEHIGH
VALLEY, a Pennsylvania financial institution, which has as its address
100 Gateway Drive, Suite 100, Bethlehem, Pennsylvania 18017 (the
"Lessee").

    

    WITNESSETH:

    

    WHEREAS,
Joseph I Limited Partnership, a Pennsylvania limited partnership (the "Ground
Lessor") is the title owner of a certain tract or parcel of land located in
Lower Nazareth Township, Northampton County, Pennsylvania, as more particularly
described in Exhibit "A" attached hereto and made a part hereof (the “Ground
Lease Premises”); and

    

    WHEREAS,
Ground Lessor has leased to Assignor and Assignor has leased from Ground Lessor
the Ground Lease Premises pursuant to a certain “Shopping Center Lease” dated
March 13, 2009, as assigned to and assumed by Lessor (collectively, the “Ground
Lease”).  The Ground Lease is attached hereto as Exhibit “B” and
incorporated herein by reference; and

    

    WHEREAS,
Lessee has assigned to Lessor, and Lessor assumed, all of Lessee’s rights and
obligations as Tenant under the Ground Lease by an Assignment, Assumption and
Modification of Ground Lease dated October _26_, 2009 (the
“Assignment”); and

    

    WHEREAS,
Lessee has requested that Lessor construct on the Ground Lease Premises a bank
building in accordance with the Tenant’s Plans as described in the Ground Lease;
which improved Ground Lease Premises the Lessee will then lease from
Lessor.

    

    NOW,
THEREFORE, the parties hereto, in consideration of the covenants and agreements
herein, and intending to be legally bound hereby, agree as follows:

    

    1.         
    IMPROVED LEASE
PREMISES.  Subject to the terms and conditions of this Lease,
Lessor hereby leases to Lessee and Lessee hereby leases from Lessor the Ground
Lease Premises, together with the improvements to be constructed thereon
(collectively, the “Improved Lease Premises”) as provided
herein.  Lessor will complete the improvements to the Ground Lease
Premises in accordance with the Work Letter attached hereto as Exhibit “C” and
incorporated herein.  Lessee agrees to the terms and conditions set
forth on Exhibit “C” hereto.  Lessee acknowledges and agrees that this
Lease shall be in all respects subject to the terms and conditions of the Ground
Lease, provided however that in no event shall the Lessee hereunder be entitled
to exercise any right of first refusal granted in the Ground Lease unless
expressly assigned by Lessor to Lessee.

    

    
      
        
           

        

        
          1

          
            

          

        

        
           

        

      

    

    

    2.           
  TERM.

    

    (a)  The
term of this Lease for the Improved Lease Premises (the “Term”) shall be nine
(9) years commencing on the date Lessor has substantially completed the
improvements in accordance with the Work Letter attached hereto as Exhibit “C”
and a certificate of occupancy is issued by the applicable municipal authority
(the "Commencement Date") and ending at midnight on the day preceding the ninth
(9th)
anniversary of the Commencement Date.

    

    (b)    Provided
that Lessee shall not then be in default hereunder, Lessee shall have the option
to extend the Term of this Lease for one (1) renewal term of six (6) years,
followed by two (2) successive renewal terms of five (5) years each, followed by
one (1) additional renewal period of four (4) years and eleven (11) months
(each, a “Renewal Term”), on the same terms and conditions set forth herein and
with the rental for each Renewal Term continuing to increase at the rate of two
and one-half percent (2-1/2%) per year such that the rental for each lease year
during any Renewal Term shall be 102.5% of the rental for the immediately
preceding lease year as set forth on Exhibit “D” hereto.  Lessee’s
extension rights provided herein shall be deemed exercised unless Lessee gives
Lessor written notice of its election not to extend the term of this Lease no
later than eight (8) months prior to the expiration of the then-current Term or
any Renewal Term.

    

    (c)   Notwithstanding
anything to the contrary contained herein, this Lease shall automatically and
without further action terminate upon termination of the Ground Lease, unless
Lessor shall have acquired fee simple title to the Improved Lease
Premises.

    

    (d)  Notwithstanding
the Commencement Date of the Term, Lessee shall be bound by all of the terms and
conditions hereof, from and after the date of execution of this
Lease.

    

    3.           
  USE.  Lessee
shall use the Improved Lease Premises as an Embassy Bank or any successor bank
or, with Lessor’s and Ground Lessor’s prior written consent, for any other
lawful purpose permitted under zoning and other applicable laws, ordinances, and
regulations.  Lessee shall comply in all respects with the use
provisions set forth in Article V of the Ground Lease.

    

    4.            
 RENT.

    

    (a)  Until
the Commencement Date, Lessee shall pay to Ground Lessor all rents and other
sums due (whether to Ground Lessor or third parties) under the Ground
Lease.  In the event that at the Commencement Date, Lessee shall have
previously paid rent to the Ground Lessor pursuant to the Ground Lease for the
period of the first month’s rent hereunder, Lessee shall be entitled to a
pro-rata, dollar-for-dollar credit against the rent due hereunder for such
amount paid under the Ground Lease.

    

    (b)  During
the first year of the Term, Lessee shall pay to Lessor as minimum annual rent
the sum of One Hundred Sixty-five Thousand Four Hundred Twenty Dollars
($165,420.00), payable in equal monthly installments of Thirteen Thousand Seven
Hundred Eighty-five Dollars ($13,785.00) each.  Thereafter, for each
Lease year during the Term and any Renewal Term, minimum annual rent shall equal
the minimum annual rent payable in the immediately preceding Lease year,
multiplied by 102.5% (e.g., the prior year’s rental plus an increase of 2.5%) as
set forth in Exhibit “D” attached hereto.  Such minimum annual rent
shall be payable in advance, in equal monthly installments on the first day of
each calendar month during the Term and any Renewal Term hereof, without demand,
offset or deduction, and shall be payable in lawful money of the United States
of America.  Notwithstanding the foregoing, Lessee acknowledges and
agrees that the minimum annual rent for the first year of the Term is subject to
adjustment in the event of modification of the scope of Lessor Work as set forth
in the Work Letter attached hereto as Exhibit “C” and/or unforeseen subsurface
conditions, provided that such adjustment shall be limited to the actual cost of
the additional Lessor Work undertaken and the actual construction management
fees applicable thereto.

    

    
      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

    

    (c)  This
Lease is intended to be a "triple net" lease.  Accordingly, Lessee
agrees to pay as additional rent, all charges for utilities, taxes, property
insurance, assessments and other governmental charges with respect to the
Improved Lease Premises and as may be further provided in this Lease or charged
to Lessor under the Ground Lease, including without limitation monthly and other
CAM charges as required pursuant to the Ground Lease.  It is the
parties’ intent that Lessee shall pay all such charges directly.  In
the event Lessor shall receive any such charges, Lessor shall bill Lessee for
any such charges and Lessee shall promptly pay Lessor for such charges upon
invoice.  In the event of nonpayment of additional rent, Lessor shall
have, in addition to all other rights and remedies, all the rights and remedies
provided for herein or by law in the case of nonpayment of the minimum
rent.

    

    (d)  For
all purposes under this Lease, rent shall mean both minimum and additional
rent.  Rent shall be delivered to Lessor at Lessor's address as set
forth above, or at such other place or to such other person as Lessor may
designate in writing from time to time.

    

    (e)  If
any default by Lessor in its obligations with respect to this Lease or the
Ground Lease results in an emergency or a loss of services to or within the
Improved Lease Premises or threatens Lessee’s right to possession of Improved
Lease Premises, and provided that Lessee is not then (and continues thereafter
not to be) in default under this Lease, Lessee shall, upon not less than thirty
(30) days prior written notice to Lessor of such default and provided that
Lessor shall fail within such thirty (30) days (or a reasonable time thereafter
if such default is not capable of cure within thirty (30) days) to cure such
default, have the right to itself cure Lessor’s default.  Upon
Lessee’s paying the reasonable costs to cure Lessor’s default and providing paid
receipts therefor to Lessor, Lessor shall reimburse Lessee for such costs within
thirty (30) days of Lessor’s receipt of the documentation of such
costs.  In the event Lessor fails to substantially complete the Lessor
Work as set forth in Exhibit “C” hereto, by __8/15/2010___(subject
however to force majeure), and Lessee is not then (and continues thereafter not
to be) in default under this Lease, Lessor shall, upon thirty (30) days prior
written notice thereof to Lessor and Lessor’s failure within such period to
complete the Lessor Work, have the right to complete the Lessor Work at Lessee’s
cost.  Upon Lessee’s paying the reasonable cost of such completion and
providing paid receipts therefor to Lessor, Lessor shall reimburse Lessee such
costs within thirty (30) days of Lessor’s receipt of the documentation of said
costs.

    

    
      
        
           

        

        
          3

          
            

          

        

        
           

        

      

    

    

    (f)   In
the event that Lessor fails to pay any monthly installment of Minimum Rent due
under the Ground Lease following any applicable notice and cure period, Lessee
shall have the right to pay such unpaid monthly installment of Minimum Rent due
under the Ground Lease and, upon such payment and provided that Lessee shall
have previously paid to Lessor the entire monthly installment of rent due under
this Lease for the same month that the Ground Lease monthly installment was due
and unpaid, to offset against the next monthly installment of minimum rent due
under this Lease, the amount of the monthly installment of Minimum Rent so paid
by Lessee to the Ground Lessor.  Lessee shall give prior written
notice of such set-off to Lessor’s mortgagee.

    

    5.            
 ALTERATIONS AND
IMPROVEMENTS.

    

    (a)  Lessee
shall not make or cause to be made any alterations, additions or improvements to
the Improved Lease Premises without the prior written consent of
Lessor.  All alterations, additions or improvements approved by Lessor
shall be made solely at Lessee's expense by a contractor approved by Lessor,
shall be made in a good and workmanlike manner and shall be performed in
compliance with all laws, ordinances and requirements of any and all Federal,
State, Municipal and/or other authorities, the Board of Fire Underwriters and
any mortgages to which the Improved Lease Premises is subject.  Any
alteration, addition or improvement made by Lessee under this Section 5, and any
fixtures installed as a part thereof, shall, at Lessor's option, become the
property of Lessor upon the expiration or other termination of this
Lease.  Lessor shall have the right, however, to require Lessee to
remove such fixtures at Lessee's cost upon such termination of this Lease, and
Lessee shall promptly remove the same and repair any damage to the Improved
Lease Premises caused by such removal.  Notwithstanding the foregoing,
Lessee shall not be obligated to remove the vault from the Improved Lease
Premises.

    

    (b)  All
persons to whom these presents may come are put upon notice of the fact that
Lessee shall never, under any circumstances, have the power to subject the
interest of Lessor, Ground Lessor or any mortgagee in the Improved Lease
Premises to any mechanic's, materialman's or similar lien.

    

    (c)  Any
contract or agreement for labor, equipment, services, materials or supplies in
connection with the rights set forth hereunder shall provide that no lien or
claim shall thereby be created or arise, or be filed by anyone thereunder, upon
or against the Improved Lease Premises and/or the interest of Lessor, Ground
Lessor or any mortgagee, or the buildings or improvements thereon to be erected
on the Improved Lease Premises or any of the equipment thereof.

    

    (d)  In
the event of a lien or claim of any kind, arising out of the exercise of the
rights set forth hereunder by Lessee, its agents, employees, contractors,
subcontractors, and materialmen, being filed against the interest of Lessor,
Ground Lessor, any mortgagee and/or against the Improved Lease Premises, Lessee
covenants and agrees that at its expense it will within thirty (30) days after
written notice from Lessor, or within such shorter time as may be required
pursuant to the Ground Lease, cause the Improved Lease Premises and any such
interest therein to be released from the legal effect of such lien or claim,
either by payment or by posting of bond or by the payment into court of the
amount necessary to relieve and release the Improved Lease Premises or the
interest from such claim or in any manner satisfactory to Lessor, Ground Lessor
and any mortgagee.  If Lessee desires to contest the validity of any
lien or claim, Lessee may do so upon Lessor's prior written consent, provided
Lessee sustains the cost of such contest, and Lessee remains liable to pay or
discharge any lien or claim deemed to be due or payable.  Lessee
hereby indemnifies and holds Lessor harmless against any and all liability, loss
or damage sustained by Lessor by reason of such contest, unless such contest
arises from any negligent or intentional act or omission of Lessor.

    

    
      
        
           

        

        
          4

          
            

          

        

        
           

        

      

    

    

    6.            
 UTILITIES.  Lessee
shall pay, when the same shall become due, all charges for utilities consumed by
it on the Improved Lease Premises including without limitation electricity, heat
and telephone, and any other utilities, as well as water and sewer
charges.  Lessor shall not be required to furnish to Lessee any
utility, janitorial or other service of any kind whatsoever during the Term of
this Lease.

    

    7.             
MAINTENANCE AND
REPAIRS.  Lessor has made no representations concerning the
condition of the Improved Lease Premises other than that the improvements will
be completed in accordance with the agreement between the parties as referred to
in Section 1 hereof.  Lessee shall maintain and be responsible for
maintaining and repairing all portions of the Improved Lease
Premises.  Lessee, at its sole cost and expense, shall take good care
of the Improved Lease Premises and will maintain the same in good order and
condition, ordinary wear and tear excepted, and make all necessary repairs
thereto, interior as well as exterior, including and without limiting the
generality of the foregoing, roof and structural members, including
walls.  Lessee shall be responsible for the routine regular cleaning
and maintenance of the Improved Lease Premises, snow removal and landscaping and
shall keep all portions of the Improved Lease Premises in a clean and orderly
condition, free of unlawful obstruction, and shall not permit or cause any
damage, waste or injury to the building or other improvements on the Improved
Lease Premises.

    

    8.         
    REFUSE
REMOVAL.  Lessee shall provide for its own garbage, rubbish and
refuse disposal and recycling and agrees to keep the Improved Lease Premises
free and clear of debris.  Lessee agrees to keep all rubbish, garbage
and refuse in covered containers within the Improved Lease Premises (or at such
other location identified by Lessor) and to have the same removed
regularly.

    

    9.             
COMPLIANCE.  With
regard to its use of the Improved Lease Premises, Lessee shall, at its own
expense, comply with all laws, rules, orders, regulations, and requirements of
all Federal, State, and municipal governments, courts, departments, commissions,
boards, and officers having jurisdiction over the Improved Lease Premises, the
lawful orders, rules, and regulations of the Board of Fire Underwriters having
jurisdiction over the Improved Lease Premises, any mortgages to which the
Improved Lease Premises is subject, and any rules and regulations of
Lessor.  Lessee shall have the right to contest by appropriate legal
proceedings, diligently pursued, without cost or expense to Lessor, the validity
of any governmental law, rule, order, regulation or
requirement.  Lessee hereby indemnifies and holds Lessor harmless
against any and all liability, loss, or damage sustained by Lessor by reason of
such contest.  Notwithstanding any of the foregoing, Lessee shall
promptly comply with any such law, rule, order, regulation or requirement if at
any time the Improved Lease Premises or any part thereof shall then be
immediately subject to forfeiture or Lessee shall be subject to criminal
liability for non-compliance therewith.

    

    
      
        
           

        

        
          5

          
            

          

        

        
           

        

      

    

    

    10.        
   TAXES.  Lessee
shall pay as and when the same shall become due, but in any event not later than
fifteen (15) days after receipt of a bill therefor, all real property taxes,
assessments and other governmental charges assessed against the Improved Lease
Premises during the Term of this Lease.  Lessee shall have the right
to contest by appropriate legal proceedings, diligently pursued, without cost or
expense to Lessor, the validity of any such tax, assessment or other
governmental charge.  Lessee hereby indemnifies Lessor against any and
all liability, loss or damage sustained by Lessor by reason of such
contest.  Notwithstanding any of the foregoing, Lessee shall promptly
pay any such tax, assessment or other government charge if at any time the
Improved Lease Premises or any part thereof shall then be immediately subject to
forfeiture or Lessee shall be subject to any criminal liability for nonpayment
thereof.  Lessor agrees to promptly forward to Lessee all applicable
tax bills when received from Ground Lessor, and Lessee shall pay same in
accordance with the Ground Lease.

    

    11.         
  SURRENDER
OF IMPROVED LEASE PREMISES.  Lessee covenants that upon the
termination or expiration of this Lease or any renewal thereof, Lessee shall
surrender the Improved Lease Premises in good order and condition and shall
surrender all keys to the Improved Lease Premises to Lessor at the place then
fixed for the payment of rent.  This covenant shall survive
termination of this Lease.

    

    12.         
  RIGHT OF
ENTRY.  Upon prior notice and in the presence of an authorized
representative of Lessee (whom Lessee agrees to provide upon such notice
received from Lessor), Lessor and/or its agents shall have the right to enter
upon and inspect the Improved Lease Premises at all reasonable times and to
exhibit the Improved Lease Premises to prospective purchasers and prospective
tenants (but in this case, only during the last eight (8) months of the term of
this Lease).  Lessor shall be permitted to affix a "To Let" or "For
Sale" sign on the Improved Lease Premises during the last ninety (90) days of
the term of this Lease in such place as shall not interfere with the business
then being conducted at the Improved Lease Premises.  Lessee
acknowledges that Ground Lessor shall have such rights with respect to entry and
signage as are set forth in the Ground Lease.

    

    13.         
  SIGNS.  Lessee
shall have the right to install and maintain on the Improved Lease Premises such
signs and advertising matter as Lessee may reasonably desire, subject to the
prior consent of Lessor and subject to the Ground Lease.  Lessee shall
comply with any laws or ordinances with respect to such signs or advertising,
and shall obtain any necessary permits.  Lessee agrees to maintain
such signs or advertising in good condition, and to repair any damage which may
be caused by erection, maintenance, repair or removal of such signs or
advertising.

    

    14.          
 LIABILITY AND
OTHER INSURANCE.  Lessee shall, during the entire term hereof,
keep in full force and effect policies of comprehensive liability and property
damage insurance and all insurances required by the Ground Lease, with respect
to the Improved Lease Premises and the business operated by Lessee in and upon
the Improved Lease Premises, in which the limits of bodily injury liability and
property damage liability shall be mutually agreed upon but shall be in no event
less than set forth in the Ground Lease.  The policy (or policies)
shall name Lessor, and any persons, firms, or corporations designated by Lessor,
including the Ground Lessor and mortgagees, if any, and Lessee as insured and
shall contain a clause that the insurer will not cancel or modify the insurance
without first giving the named parties thirty (30) days prior written
notice.  Copies of the policy or certificates of accord or insurance
shall be delivered to Lessor upon the Commencement Date or sooner as may be
required by Ground Lessor.  If Lessee shall not comply with its
covenants made in this section, Lessor may, at its option, cause insurance as
aforesaid to be issued and in such event, Lessee agrees to pay the premium for
such insurance promptly upon Lessor's demand as additional rent.  All
obligations contained in this Section 14 shall be subject to the requirements of
Lessor’s lender and/or mortgagee.  In the event Lessor’s lender
requires minimum insurance coverages in excess of the limits described herein,
then Lessee expressly agrees to comply with all requirements of Lessor’s
lender.  Failure to do so shall constitute an Event of Default under
this Lease.  Lessor agrees to promptly forward to Lessee all
applicable insurance bills when received from Ground Lessor, and Lessee shall
pay same in accordance with the Ground Lease.

    

    
      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    

    

    (a)           Property and Personal Injury
Liability Insurance.  At all times during the Term of this
Lease, Lessee shall maintain, at its sole cost, comprehensive broad-form general
public liability insurance against claims and liability for personal injury,
death, and property damage arising from the use, occupancy, disuse, or condition
of the Improved Lease Premises and Improvements.  The insurance shall
be carried by insurance companies authorized to transact business in
Pennsylvania, selected by Lessee and approved by Lessor, which approval shall
not be unreasonably withheld, delayed or conditioned.  In addition,
the following conditions shall be met:

    

    (i)           
 The insurance provided pursuant to this Paragraph 14(a)(i) shall be in an
amount no less than One Million ($1,000,000.00) Dollars for property coverage,
and in an amount no less than One Million ($1,000,000.00) Dollars for one person
and Two Million ($2,000,000.00) Dollars for one accident for personal
injury.

    

    (ii)          
 The insurance shall be maintained for the mutual benefit of Lessor and
Lessee, any succeeding owners of the fee title in the Leased Premises, any
successors and assigns of this Lease.  The insurance policy or
policies shall name Lessor and Lessee as insureds and shall not be subject to
cancellation unless Lessor has received a minimum of thirty (30) days prior
written notice of the intention of the insurer to cancel the
coverage.

    

    (iii)           Construction Liability
Insurance.  Lessee agrees either to obtain and maintain (to the
extent reasonably procurable) construction liability insurance at all times when
demolition, excavation, or construction work is in progress on the Improved
Lease Premises, or cause its contractors to maintain such construction liability
insurance, provided however that this obligation shall not apply to Lessee prior
to the Commencement Date.  This insurance shall be carried by
insurance companies authorized to transact business in Pennsylvania, selected by
Lessee and shall be paid for by Lessee.  The insurance shall have
limits of no less than One Million ($1,000,000.00) Dollars for property damage,
and One Million ($1,000,000.00) Dollars for one person and Two Million
($2,000,000.00) Dollars for one accident for personal injury.  The
insurance shall be maintained for the mutual benefit of Lessor and Lessee, as
well as any succeeding owners of the fee title in the Improved Lease Premises,
any successors and assigns of this Lease, against all liability for injury or
damage to any person or property in any way arising out of demolition,
excavation, or construction work on the premises.  The insurance
policy or policies shall name Lessor and Lessee as insureds and shall not be
subject to cancellation unless Lessor has received a minimum of thirty (30) days
prior written notice of the intention of the insurer to cancel the
coverage.

    

    
      
        
           

        

        
          7

          
            

          

        

        
           

        

      

    

    

    (iv)           Certificates of
Insurance.  Lessee shall furnish Lessor with certificates of
all insurance required by this Section 14.  Lessee agrees that if it
does not keep this insurance in full force and effect, Lessor may notify Lessee
of this failure, and if Lessee does not deliver to Lessor certificates showing
all of the required insurance to be in full force and effect within ten (10)
days after this notice, Lessor may, at its option, take out and pay the premiums
on the insurance needed to fulfill Lessee’s obligations herein.  On
demand from Lessor, Lessee shall reimburse Lessor the full amount of any
insurance premiums paid by Lessor, with interest at the rate of ten (10%)
percent per annum from the date of Lessor’s demand until reimbursement by
Lessee.

    

    15.        
   WAIVER OF
SUBROGATION.  Neither Lessee nor anyone claiming by, through,
under or on behalf of Lessee, shall have any claim, right of action, or right of
subrogation against Lessor for or based upon any loss or damage caused by any
casualty, including but not limited to fire or explosion, relating to the
Improved Lease Premises or property therein.  Neither Lessor nor
anyone claiming by, through, under or on behalf of Lessor, shall have any claim,
right of action, or right of subrogation against Lessee for or based upon any
loss or damage caused by any casualty, including but not limited to fire or
explosion, relating to the Improved Lease Premises or property
therein.  This release shall be applicable and in force and effect
only with respect to loss or damage occurring during such time as the releasor’s
policies shall contain a clause or endorsement to the effect that any such
release shall not adversely affect or impair or prejudice the right of the
releasor to recover thereunder.  Lessor and Lessee each agree that
their policies will include such a clause or endorsement so long as the same is
obtainable and if not obtainable, shall so advise the other in writing and such
notice shall release both parties from the obligation to obtain such a clause or
endorsement.

    

    16.          
 INDEMNITY.  Lessee
hereby agrees to indemnify, hold harmless and defend, at its own expense, Lessor
from and against any and all claims, actions, damages, liability, judgments and
expenses, including without limitation reasonable attorneys' fees, which may be
imposed upon or incurred by or asserted against Lessor or Lessor's interest in
the Improved Lease Premises, by reason of any loss of life, personal injury or
claim of injury, or damage to property or claim of damage to property in or
about the Improved Lease Premises, howsoever caused, arising out of or relating
to the occupancy or use by Lessee, its employees, agents or invitees, of the
Improved Lease Premises, including without limitation the streets, alleys,
sidewalks or parking areas.  Lessee shall indemnify Lessor for any
environmental liability to the extent such claims, damages, liability, judgments
and expenses are caused by the negligence or willful misconduct of Lessee, its
employees, agents and/or invitees.  In addition, Lessee shall
indemnify, defend and hold Lessor harmless from and against any and all expenses
incurred by Lessor arising out of or relating to Lessee’s failure to pay or
perform its obligations under this Lease.

    

    
      
        
           

        

        
          8

          
            

          

        

        
           

        

      

    

    

    17.          
 CASUALTY.  In
the event that the Improved Lease Premises, or any portion thereof, are damaged
or destroyed by any cause whatsoever, Lessee shall commence such restoration as
soon as possible after such occurrence so as to permit such use and enjoyment of
the Improved Lease Premises, but in no event later than thirty (30) days
thereafter (but except in the case of an act of God not later than sixty (60)
days after the damage or destruction), and shall diligently pursue such repair
or restoration to completion, with a contractor approved by
Lessor.  Only to the extent that the casualty or damage to the
Improved Lease Premises is caused directly by the gross negligence of Lessor,
Rent shall be equitably abated based on the area of the Improved Lease Premises
rendered untenantable, if any, during the period of such untenantability,
provided however that any other charges due under the Ground Lease (other than
Minimum Rent for which Lessor in such event shall remain obligated under the
Ground Lease) shall not be abated or reduced as a result of damage to the
Improved Lease Premises, and Lessee shall continue to be obligated
therefor.

    

    18.        
   EMINENT
DOMAIN.

    

    If the
entire Improved Lease Premises shall be taken by reason of condemnation or under
eminent domain proceedings, Lessee may terminate this Lease as of the date when
possession of the Improved Lease Premises is so taken by the condemning
entity.  If a portion of the Improved Lease Premises, including
without limitation the building, site improvements, parking or access, shall be
taken under eminent domain or by reason of condemnation to such an extent that
the taking materially adversely affects Lessee’s use of the Improved Lease
Premises, Lessee shall have the option to terminate this Lease by written notice
to Lessor, provided that such notice is given to Lessor before the last to
expire of (i) the twenty (20) day period after the taking authority has taken
actual physical possession of any portion of the Improved Leased Premises or the
parking area or highway access appurtenant thereto or (ii) ten (10) days after
notice from Lessor to Lessee or Lessee to Lessor of the fact of such
taking.  If this Lease is not so terminated, Lessee may at its sole
cost and expense, and with a contractor acceptable to Lessor, restore the
remaining portions of the Improved Lease Premises as Lessee deems necessary or
appropriate (subject to applicable law) without abatement of
rent.  For purposes of this Section 18, (i) a partial taking shall be
deemed to include loss or impairment of access to and from the Improved Lease
Premises and (ii) grants or conveyances made in lieu or in anticipation of or
under threat of a taking or condemnation shall be deemed a
taking.  Both parties shall pursue their own damage awards with
respect to any such taking, provided however that Lessee shall be entitled to,
and nothing herein shall prevent Lessee from seeking, an award for taking of or
damage to Lessee’s trade fixtures and any award for Lessee’s moving expenses, so
long as said awards do not diminish the award to which Lessor is
entitled.  Notwithstanding anything to the contrary contained in this
Section 18, in the event of any conflict between this Section 18 and Article
XIII of the Ground Lease, Lessee shall be bound by the provisions of Article
XIII of the Ground Lease.

    

    19.           
DEFAULT.  The
occurrence of any one or more of the following events shall constitute an "Event
of Default" hereunder:

    

    
      
        
           

        

        
          9

          
            

          

        

        
           

        

      

    

    

    (a)           Lessee
shall fail to pay in full when due, any installment of rent or any other sum
payable by Lessee hereunder, and such failure shall continue for a period of ten
(10) days;

    

    (b)           Lessee
shall fail to perform or observe (or cause or permit any such failure) any other
covenant, term, condition, agreement or obligation to be performed or observed
by Lessee under this Lease or under the Ground Lease, and such failure shall
continue for twenty (20) days after written notice thereof from Lessor to
Lessee; provided however that a failure as described in this Section 19(b) shall
not constitute a default if it is curable but cannot with reasonable diligence
be cured by Lessee within a period of twenty (20) days, so long as Lessee
promptly commences cure and proceeds to cure the failure with reasonable
diligence and in good faith.

    

    (c)           The
insolvency of Lessee, as evidenced by (i) the adjudication of Lessee as a
bankrupt or insolvent; (ii) the filing of a petition seeking reorganization of
Lessee or an arrangement with creditors, or any other petition seeking
protection of any bankruptcy or insolvency law; (iii) the filing of a petition
seeking the appointment of a receiver, trustee or liquidator of Lessee or of all
or any part of Lessee's assets or property; (iv) an assignment by Lessee for the
benefit of creditors; or (v) the levy against any portion of Lessee's assets or
property by any sheriff or other officer.

    

    (d)           Lessor
acknowledges and agrees that, notwithstanding any other provisions contained in
this Lease Agreement, in the event (i) Lessee or its successors or assignees
shall become subject to a bankruptcy case pursuant to Title 11 of the U.S. Code
or similar proceeding during the term of this Lease or (ii) the depository
institution then operating the Improved Lease Premises is closed or is taken
over by any depository institution supervisory authority during the term of this
Lease, Lessor shall be bound by all applicable federal statutes and regulations,
including specifically 12 U.S.C. 1821(e)(4).

    

    (e)           Lessee
shall fail to open as an Embassy Bank at the Improved Lease Premises as required
by the Ground Lease.

    

    20.         
  REMEDIES.  Upon
the occurrence of any Event of Default, Lessor shall have the following rights
and remedies in addition to all other rights and remedies otherwise available at
law or in equity:

    

    (a)           If
Lessee shall at any time fail to pay any sum, charge, or imposition or perform
any other act on its part to be performed, then Lessor, after ten (10) days
written notice to Lessee and without waiving or releasing Lessee from any
obligation hereunder, may pay such charge or sum of money or make any other
payment or perform any other act on the Lessee's part to be made or performed,
and may enter upon the Improved Lease Premises for any such purpose, and take
all such action thereon as may be necessary therefor.  All sums so
paid by Lessor and all costs and expenses incurred by Lessor in connection with
the performance of any such act, together with interest thereon at the rate of
ten percent (10%) per annum from the respective dates of Lessor's making of each
such payment or incurring of each such cost and expense, shall constitute
additional rent payable by Lessee under this Lease and Lessor shall have the
same remedies for the collection thereof as in the case of a failure to pay
rent.

    

    
      
        
           

        

        
          10

          
            

          

        

        
           

        

      

    

    

    (b)           At
the option of Lessor and upon written notice to Lessee, this Lease, without
waiver of any other rights of Lessor herein, may be terminated and declared
void, without any right on the part of Lessee to save forfeiture by payment of
any sum due or by performance of any term, covenant, or condition broken and
Lessor may re-enter and possess the Improved Lease Premises without demand or
notice, with or without process of law, using such reasonable force as may be
necessary, without being deemed guilty of trespass, eviction, forcible entry,
conversion or becoming liable for any loss or damage which may be occasioned
thereby.  In such event, Lessor shall be entitled to recover from
Lessee all damages incurred by Lessor by reason of Lessee's default including,
but not limited to, the cost of recovering possession of the Improved Lease
Premises; expenses of reletting, including necessary renovation and alteration
of the Improved Lease Premises; reasonable attorneys' fees; rent payment through
the balance of the term; or the difference between the rent to be paid by the
Lessee pursuant to this Lease and the rent charges collected by Lessor upon
reletting;

    

    (c)        
   Lessor may retake possession of the Improved Lease Premises
without terminating the Lease, in which case this Lease shall continue in effect
whether or not Lessee shall have abandoned the Improved Lease
Premises.  In such event, Lessor shall be entitled to enforce all of
Lessor's rights and remedies under this Lease, including the right to recover
the rent and any other charges and adjustments as may become due
hereunder;

    

    (d)           At
Lessor's option, the entire rent and other charges which would have become due
during the balance of the lease term or renewal thereof shall be accelerated and
shall at once become due and payable as if by the terms of this Lease it were
all payable in advance, without presentment, demand, notice of nonpayment,
protest, notice of protest, or other notice, all of which are hereby expressly
waived by Lessee;

    

    (e)        
   FOR VALUE RECEIVED, LESSEE HEREBY AUTHORIZES AND EMPOWERS ANY
PROTHONOTARY OR ANY ATTORNEY OF ANY COURT OF RECORD TO APPEAR FOR LESSEE, AS
WELL AS FOR ALL PERSONS CLAIMING BY, THROUGH OR UNDER LESSEE, AND WITH OR
WITHOUT DECLARATION FILED, UPON THE EXPIRATION OF A TEN (10) DAY PRIOR NOTICE
AND CURE PERIOD, TO CONFESS JUDGMENT AGAINST LESSEE AND IN FAVOR OF LESSOR, ITS
SUCCESSORS AND ASSIGNS, FOR THE SUM DUE BY REASON OF SAID DEFAULT IN THE PAYMENT
OF RENT, INCLUDING UNPAID RENT FOR THE BALANCE OF THE TERM IF THE SAME SHALL
HAVE BECOME DUE AND PAYABLE UNDER THE PROVISIONS OF THIS LEASE, AND/OR FOR THE
SUM DUE BY REASON OF ANY BREACH OF ANY OTHER COVENANT BY LESSEE HEREIN, TOGETHER
WITH INTEREST AND COSTS OF SUIT AND AN ATTORNEYS' COMMISSION OF FIVE (5%)
PERCENT (BUT NO LESS THAN $1,000.00) FOR COLLECTION.  LESSOR MAY
THEREAFTER ISSUE A WRIT OR WRITS OF EXECUTION UPON THE JUDGMENT OBTAINED, AND
LESSEE HEREBY WAIVES AND RELEASES ALL ERRORS AND EXEMPTIONS WHICH LESSEE COULD
OTHERWISE RAISE AS DEFENSES TO SAID EXECUTION.  SUCH AUTHORITY SHALL
NOT BE EXHAUSTED BY ONE EXERCISE THEREOF, BUT JUDGMENT MAY BE CONFESSED AS
AFORESAID FROM TIME TO TIME AS OFTEN AS ANY SAID RENT AND/OR OTHER SUMS SHALL BE
IN ARREARS.  FOR THE PURPOSE OF PROCEEDING UNDER THIS SECTION, THIS
LEASE SHALL BE A SUFFICIENT WARRANT, AND A TRUE AND CORRECT COPY OF THIS LEASE
MAY BE FILED WITH THE COURT IN LIEU OF FILING AN ORIGINAL HEREOF;

    

    
      
        
           

        

        
          11

          
            

          

        

        
           

        

      

    

    

    (f)        
    IN ADDITION, FOR DEFAULT WITH FAILURE TO CURE AS SET
FORTH ABOVE, LESSEE FURTHER AUTHORIZES, AT THE OPTION OF LESSOR, ANY
PROTHONOTARY OR ANY ATTORNEY OF ANY COURT OF RECORD, EITHER IN ADDITION TO OR
WITHOUT JUDGMENT FOR THE AMOUNT DUE UNDER THE LEASE, TO APPEAR AS ATTORNEY FOR
LESSEE, AS WELL AS FOR ALL PERSONS CLAIMING BY, THROUGH OR UNDER LESSEE, AND TO
CONFESS JUDGMENT IN EJECTMENT AGAINST LESSEE AND IN FAVOR OF LESSOR, FOR
RECOVERY BY LESSOR OF POSSESSION OF THE IMPROVED LEASE PREMISES, FOR WHICH THIS
LEASE OR A TRUE COPY THEREOF SHALL BE SUFFICIENT WARRANT; THEREUPON, IF LESSOR
SO DESIRES, AN APPROPRIATE WRIT OF POSSESSION MAY ISSUE FORTHWITH WITHOUT LEAVE
OF COURT.  IF FOR ANY REASON ANY SUCH ACTION SHALL BE TERMINATED AND
POSSESSION SHALL REMAIN IN OR BE RESTORED TO LESSEE, SUCH AUTHORITY SHALL NOT BE
EXHAUSTED BY ONE EXERCISE THEREOF, BUT JUDGMENT MAY BE CONFESSED AS AFORESAID AS
OFTEN AS THERE SHALL BE ANY DEFAULT WITH FAILURE TO CURE; AND

    

    (g)           LESSEE
HEREBY WAIVES ANY RIGHT IT MAY HAVE, INCLUDING ANY CONSTITUTIONAL RIGHT, TO
NOTICE OR OPPORTUNITY FOR A HEARING PRIOR TO JUDGMENT BEING ENTERED AGAINST IT
UNDER (e) OR (f) ABOVE AND PRIOR TO EXECUTION AGAINST ITS ASSETS UNDER (e) OR
(f) ABOVE.  LESSEE ACKNOWLEDGES THAT IT UNDERSTANDS THE CONFESSION OF
JUDGMENT PROVISIONS IN (e) AND (f) ABOVE, AND THIS (g).

    

    (h)           LESSEE
SHALL PAY LESSOR A TEN PERCENT (10%) LATE CHARGE FOR ANY RENT PAYMENT NOT PAID
WHEN DUE, ACCRUING ON THE FIRST DAY FOLLOWING THE EXPIRATION OF THE TEN (10) DAY
GRACE PERIOD SET FORTH IN SECTION 20(a).

    

    21.         
  CUMULATIVE
REMEDIES.  Lessor shall have and may exercise all remedies
available to Lessor hereunder and at law and in equity and all such remedies
shall be cumulative, concurrent, and nonexclusive.  The waiver of or
failure to exercise any one or more rights or remedies shall be wholly without
prejudice to the exercise and enforcement of any other right or remedy, whether
herein expressly provided for or given by law or in equity.

    

    22.          
 SUBORDINATION
AND ATTORNMENT TO LEASEHOLD MORTGAGEE.

    

    (a)           Lessee
agrees that this Lease shall be subordinate to any mortgages that may presently
or hereafter be placed upon the Lessor's leasehold interest in the Ground Lease
Premises and to any and all advances to be made thereunder, and all renewals,
replacements, and extensions thereof, without the necessity of any further
instrument or act on the part of Lessee, subject however to the execution of a
customary subordination and non-disturbance agreement which Lessee agrees to
execute in the form required by Lessor’s lender.  Lessee will, upon
written demand by Lessor, execute such instruments as may be required at any
time and from time to time to confirm such subordination.  Although
this subordination shall be self-operative, Lessor agrees to provide Lessee with
a non-disturbance agreement executed by Lessor’s current mortgagee,
substantially in the form attached as Exhibit “E.”  Lessor further
agrees to use its best efforts to provide a customary non-disturbance agreement
signed by any future mortgagee of Lessor.

    

    
      
        
           

        

        
          12

          
            

          

        

        
           

        

      

    

    

    (b)           Lessee
shall, in the event any proceedings are brought for the foreclosure of any
mortgage made by Lessor covering the Improved Lease Premises, attorn to the
purchaser upon any such foreclosure and sale and recognize such purchaser as the
Lessor under this Lease.

    

    23.        
   ESTOPPEL
CERTIFICATE.  Lessee agrees, within five (5) business days
after Lessor’s written request, to execute, acknowledge and deliver to the
Lessor party a written instrument in recordable form reasonably required by
Lessor and/or Lessor/s lender or mortgagee, certifying (i) whether this Lease is
in full force and effect and whether there have been any modifications,
supplements, side agreements or amendments and, if so, stating such
modifications, supplements, side agreements and amendments; (ii) the date to
which rent has been paid; (iii) the amount of any prepaid rent and any credit
due Lessee if any; (iv) the Commencement Date and whether any option to renew
the Term has been exercised and, if so, the day that Renewal Term expires; (v)
whether either party is in default in the performance of any covenant, agreement
or condition contained in this Lease and, if so, specifying each such default;
and (vi) such other matters as Ground Lessor or Ground Lessor’s mortgagee,
Lessor or Lessor’s mortgagee may reasonably require.  Any such
instrument delivered pursuant to this section may be relied upon by Ground
Lessor, Lessor and any mortgagee or permitted assignee of any of them, and any
prospective purchaser of the Improved Lease Premises.

    

    24.      
     MEMORANDUM OF LEASE AND
RECORDING.  Lessor and Lessee shall execute a Memorandum of
Lease hereof, in form reasonably satisfactory to each of them, and Lessee may
record such Memorandum of Lease in the office of the Recorder of Deeds of and
for Northampton County, Pennsylvania.

    

    25.        
   TERMINATION OF GROUND
LEASE.  In the event that Lessor's interest in the Ground Lease
Premises shall be terminated pursuant to the terms of the Ground Lease prior to
the termination of this Lease, Lessee shall recognize Ground Lessor as the
Lessor under this Lease if the Ground Lease has not been terminated by the
Ground Lessor.

    

    26.         
  ASSIGNMENT
AND SUBLETTING.  Neither Lessee or its successors or permitted
assigns shall assign this Lease or any interest therein, sublet the whole or any
portion of the Improved Lease Premises or subject its interest in this Lease to
any leasehold mortgage without the prior written consent of Lessor, Ground
Lessor and their respective lenders.  No assignment or sublease shall
release Lessee from its obligations to perform the terms, covenants, and
conditions of this Lease.

    

    
      
        
           

        

        
          13

          
            

          

        

        
           

        

      

    

    

    27.         
  BINDING
OBLIGATION.  Each and every provision of this Lease shall bind
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.

    
 

    28.         
  PROHIBITED
ACTS.  Lessee shall not use or operate any equipment or
machinery or in any way use the Improved Lease Premises in a way which is
harmful to the Improved Lease Premises or not permitted pursuant to the terms of
the Ground Lease.  Lessee shall not cause or permit any hazardous
substances to be utilized at, on or in the Improved Lease Premises except with
the prior written consent of Lessor and Ground Lessor and in strict compliance
with all applicable environmental laws, ordinances, rules and
regulations.  Lessee shall not do or allow to be done any acts,
omissions, or activity which would cause the fire, hazard, or any other
insurance now in force or hereinafter to be placed on the Improved Lease
Premises or building, or any part thereof, to become void, suspended, or rated
as a more hazardous risk than at the date of the execution of this
Lease.  Furthermore, Lessee shall not be permitted to act or conduct
business in any way that is against any applicable law.

    

    29.         
  FURTHER
AGREEMENTS.

    

    (a)           During
the Term and any Renewal Term, Lessor agrees to give notice to Lessee in the
event that Lessor elects to sell the bank building on the Improved Lease
Premises and to assign Lessor’s rights as ground lessee under the Ground Lease
(other than an assignment as security).  The parties acknowledge that
this agreement to give a one-time notice is to enable Lessee, should it elect to
do so, to negotiate with Lessor to acquire the bank building and Lessor’s
interest in the Ground Lease.  It is acknowledged and agreed that
Lessee shall have no obligation to acquire same from Lessor.  It is
further acknowledged and agreed by the parties that Lessor’s agreement to give
notice to Lessee pursuant to this Section 29(a) does not constitute a right of
first refusal.

    

    (b)           During
the Term and any Renewal Term and subject to the conditions hereinafter set
forth in (i) and (ii) below, Lessor agrees that it will not sell the
Improvements located on the Improved Lease Premises or assign the Ground Lease
to the Leased Premises (other than an assignment as security) to another bank
which directly competes with Lessee in the Lehigh Valley, provided however that
(i) Lessee is still existing as the same legal entity as on the date of this
Lease and has not been sold, merged or acquired, and (ii) Lessee is not in
default of any of its obligations under this Lease.

    

    (c)           Lessee
shall remain solely responsible for payment of all sums due to Ground Lessor in
accordance with Section 3.2(d) of the Ground Lease.

    

    (d)           Lessee
shall be solely obligated for the purchase and installation of the following at
the Improved Lease Premises, all to be coordinated with Lessor so as to not
hinder or delay the Lessor Work:

    

    
      	
               
      

            	
              (i)

            	
              signage,
      furniture, fixtures, window
treatments;

            

    

    
      	
               
      

            	
              (ii)

            	
              specialty
      electric, fire alarm, phone and data lines and
  equipment;

            

    

    
      	
               
      

            	
              (iii)

            	
              bank
      vault and specialized security equipment;
and

            

    

    

    
      
        
           

        

        
          14

          
            

          

        

        
           

        

      

    

    

    
      	
               
      

            	
              (iv)

            	
              pneumatic
      tube conveying system.

            

    

    

    30.        
   CONSTRUCTION AND
INTERPRETATION.  This Lease shall be considered as having been
made, executed, and delivered in the Commonwealth of Pennsylvania, and all
questions regarding its validity, interpretation, or construction shall be
construed in accordance with the laws of this Commonwealth.  Words
contained herein that are gender specific, singular, or plural, shall, if the
context permits, be construed to include all genders, and both singular and
plural forms.

    

    31.           
WAIVER.  No
waiver by Lessor of any breach by Lessee of any of its obligations, agreements,
or covenants hereunder and no failure of Lessor to exercise available remedies
allowed upon the occurrence of an Event of Default, shall be a waiver of any
subsequent breach of obligations, agreements, or covenants and nor shall it be a
waiver by Lessor of its rights or remedies with respect to such or any
subsequent Event of Default.

    

    32.          
 ENTIRE
AGREEMENT.  This Lease and any exhibits attached hereto and
forming a part hereof set forth all of the covenants, promises, agreements,
conditions, and understanding between Lessor and Lessee concerning the Improved
Lease Premises, and there are no covenants, promises, agreements, conditions, or
understandings, either oral or written, between the parties other than as are
herein set forth.  No subsequent alteration, amendment, change or
addition to this Lease shall be binding upon either Lessor or Lessee unless the
same is reduced to writing and executed by Lessor and Lessee.

    

    33.          
 NOTICES.  All
notices, elections, requests, demands or other communications with respect to
this Lease shall be in writing and shall be deemed to have been given when hand
delivered, when deposited with a reputable overnight delivery service (such as
Federal Express) or when deposited in a postal depository maintained by the
United States Postal Service, first class certified mail, postage prepaid to
Lessor or Lessee at the addresses recited in the Preamble to this Lease, or to
such other address as designated in writing by Lessor or Lessee.

    

    34.        
   PARTIAL
INVALIDITY.  If any term, covenant, or condition of this Lease
or the application thereof to any person, partnership, association, corporation,
or other entity, is determined to be invalid or unenforceable, the remainder of
this Lease, or the application of such term, covenant, or condition to persons,
partnerships, associations, corporations or other entities other than those as
to which it is held invalid or unenforceable, shall not be affected thereby and
each term, covenant, or condition of this Lease shall be valid and be enforced
to the fullest extent permitted by law.

    

    35.         
  HEADINGS.  Any
headings preceding the text of the sections set forth herein are inserted solely
for convenience and shall not in any way define, limit, or describe the scope,
intent, or meaning of such sections, and such headings shall not constitute a
part of this Lease.

    

    36.         
  QUIET
ENJOYMENT.  Lessor agrees that Lessee, on payment of the rent
and all other charges provided for in this Lease and Lessee’s fulfillment of all
obligations under the covenants, agreements and conditions of this Lease shall
and may (subject to the exceptions, reservations, terms and conditions of this
Lease, superior mortgages, the Ground Lease and matters of record) peaceably and
quietly have, hold and enjoy the Improved Lease Premises for the Term without
interference by or from Lessor or any party claiming through or under
Lessor.

    

    
      
        
           

        

        
          15

          
            

          

        

        
           

        

      

    

    

    37.         
  TIME OF
THE ESSENCE.  Time is of the essence in the performance by
Lessee of its obligations hereunder.

    

    

    [Remainder
of page intentionally left blank.  Signature page
follows.]

    

    
      
        
           

        

        
          16

          
            

          

        

        
           

        

      

    

    

    IN
WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have
caused this Lease to be executed by persons duly authorized as of the day and
year first above written.

    

    
      	
              WITNESS:

            	
              LESSOR:

            
	 
      	 
      	
              POLARIS
      LOWER NAZ DEVELOPMENT, LLC

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              /s/ Mary Louise Hardcastle

            	 
      	
              By:

            	/s/ Jessica Gentile
	 
      	 
      	 
      	
              Name:

            	
              Jessica Gentile

            
	 
      	 
      	 
      	
              Title:

            	
              Manager

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
              LESSEE:

            
	
              ATTEST/WITNESS:

            	
              EMBASSY
      BANK FOR THE LEHIGH VALLEY

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              /s/ Mary Louise Hardcastle

            	 
      	
              By:

            	/s/ David M. Lobach Jr.
	 
      	 
      	 
      	
              Name:

            	
              David M. Lobach Jr.

            
	 
      	 
      	 
      	
              Title:

            	
              CEO,
Chairman

            

    

    

    
      
        
           

        

        
          17

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
A

    

    “Ground
Lease Premises”

    

    All areas
subject to the Ground Lease and within the Building Perimeter as described
therein, including without limitation the Building and drive-thru
lanes.

    

    
      
        
           

        

        
          18

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
B

    

    “Ground
Lease”

    

    Incorporated
by reference to Exhibit 10.9 of Embassy Bancorp, Inc.'s Form 10-K filed on March
30, 2009.

    

    
      
        
           

        

        
          19

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
C

    

    “Work
Letter”

    

    

    Work
Letter

    

    This
Exhibit is attached to and forms a part of the lease (the “Lease”) by and
between POLARIS LOWER NAZ
DEVELOPMENT, LLC, a Pennsylvania limited liability company (“Lessor”),
and EMBASSY BANK FOR THE LEHIGH
VALLEY, a Pennsylvania financial institution (“Lessee”) wherein Lessor
has agreed to lease and Lessee has agreed to hire and lease from Lessor the
Improved Lease Premises.  The words “Ground Lease Premises,”
“Building,” “Term,” and other capitalized or defined terms as used herein shall
have the respective meanings assigned to them in the Lease, except as otherwise
provided or defined herein.

    

    Lessor
and Lessee agree as follows:

    

    1.              Lessor
Work.  Lessor Work shall consist of certain work at the Ground
Lease Premises more particularly described in Attachment WL-I to this Exhibit “C” (“Lessor
Work”).  Lessor Work will be performed at Lessor’s expense and in a
good and workmanlike manner.

    

    2.          
   Plans and
Specifications.  The parties have mutually approved
construction plans for the Premises consisting of a floor plan labeled, “FL1,”
dated 6/22/09 and an elevation plan labeled, “E1,” dated 6/24/09, both prepared
by North Star Construction Management, Inc. (collectively, “Construction
Drawings”).  The Lessor Work shall be based on the Construction
Drawings.

    

    3.            
 Lessee
Work.  Lessee shall, at Lessee’s sole cost and expense,
complete the installation of the bank vault and the other items identified as
“Project Omissions” at the end of Attachment WL-I hereto, with a contractor or
contractors acceptable to Lessor, at the locations on the Improved Lease
Premises as depicted on, and in accordance with, the Construction Drawings
(collectively, the “Lessee Work”).  Lessee shall cooperate with Lessor
to timely complete the Lessee Work so as to enable the Lessor Work to be
expeditiously completed.

    

     4.          
  Lessee
Work Performance.  All of the Lessee Work shall be completed in
a good and workmanlike manner and shall be in conformity with applicable
building codes and all applicable laws, and in accordance with Lessor’s
construction rules and regulations pertaining to contractors.  Upon
completion of the Lessee work, Lessee shall furnish Lessor:

    

    (a)           a
notarized affidavit from Lessee’s contractor(s) that all amounts due for work
done and materials furnished in completing the Lessee work have been
paid;

    

    (b)           releases
of lien from any subcontractor or material supplier that has given Lessor a
notice thereof pursuant to Pennsylvania law; and

    

    (c)           as-built
drawings of the Improved Lease Premises with a list and description of all work
performed by the contractors, subcontractors and material suppliers retained by
Lessee.

    

    

    
      
        
           

        

        
          20

          
            

          

        

        
           

        

      

    

    

    5.           
  Lessee
Liabilities for Performance.  Any damage to the Building,
including without limitation existing finishes, caused by the Lessee Work shall
be patched and repaired by Lessee, at its expense, and all such work shall be
done to Lessor’s reasonable satisfaction.  If any patched and painted
area does not match the original surface, then the entire surface shall be
repainted at Lessee’s expense.  Lessee agrees to indemnify and hold
harmless Lessor and Lessor’s agents, representatives and employees from and
against any and all costs, expenses, damage, loss, or liability, including, but
not limited to, attorneys’ fees and costs, which arise out of, are occasioned
by, or are in any way attributable to, the Lessee Work pursuant to the Lease,
provided that Lessor’s acts or failures to act or cooperate are not a
significant contributing factor to such damages.  Lessee, at its
expense, shall be responsible for the maintenance, repair, and replacement of
any and all items constructed and/or installed as a part of the Lessee Work,
including without limitation any Lessee leasehold improvements.

    

    6.            
 Repairs and
Corrections.  Subject to the limitations set forth in Section 7
hereof, Lessor agrees to repair and correct any work or materials installed by
Lessor or its contractor(s) in the Improved Lease Premises which prove to be
defective as a result of faulty materials, equipment or
workmanship.

     

    7.        
     Delivery of
Premises.  Lessee acknowledges and agrees that the Improved
Lease Premises shall be delivered to Lessee on an “AS IS,” “WHERE IS” basis, in
their then “AS IS,” “WHERE IS” condition.  Except as otherwise
expressly provided in the Lease, this Work Letter or other documents expressly
incorporated in and forming a part of either, Lessor shall have no
responsibility for the construction, improvement or installation of the Improved
Lease Premises, nor any obligation to supply money, labor, materials, furniture,
fixtures or equipment, other than the Lessor Work, in accordance with the terms
of the Lease.  The taking of possession of the Improved Lease Premises
or any part thereof by Lessee shall constitute an acknowledgement by Lessee that
the Improved Lease Premises are in good condition and that all work and
materials provided by Lessor are satisfactory, except as to any defects or
incomplete work that are described in a written notice given by Lessee to Lessor
no later than ten (10) days after Lessee commences occupancy of the Improved
Lease Premises.

    

    8.           
  Event of
Default under Lease.  Lessee’s breach of or failure to comply
with the terms, conditions and/or obligations contained in this Work Letter,
shall be deemed an Event of Default under the Lease.

    

    9.           
  Limited
Warranty.  The provisions of Section 7 above notwithstanding,
Lessor hereby guarantees that all aspects of the Lessor Work including roof (and
all components thereof), walls, floors, floor slabs, footings, foundation,
plumbing and electrical within the walls and beneath the flooring, shall be free
from all defects and workmanship, materials, equipment and labor for a period of
one (1) year after Substantial Completion of the Lessor Work.

    

    
      
        
           

        

        
          21

          
            

          

        

        
           

        

      

    

    

    Attachment
WL-I

    

    Embassy
Bank at Route 248 and Corriere Road,

    Lower
Nazareth Township, Northampton County, Pennsylvania

     
 

    PROJECT
SPECIFICATIONS

    

    DESIGNS TO BE
PROVIDED

    
      	
              ·

            	
              Architectural
      Plans

            

    

    
      	
              ·

            	
              Structural
      Drawings

            

    

    
      	
              ·

            	
              MPE
      Plans

            

    

    
      	
              ·

            	
              Interior
      Design

            

    

    
      	
              ·

            	
              Rendering

            

    

    GENERAL
REQUIREMENTS

    Professional
Supervision:  Professional supervision during the course of
designs and construction

    

    Construction
Coordination:  Coordinate all construction sequencing including
technical drawings, shop drawings, diagrams, and outline
specifications.

    

    Temporary Construction
Services:  Provide the following on-site construction
services:

    
      	
               
      

            	
              ·

            	
              Temporary
      Electric

            

    

    
      	
               
      

            	
              ·

            	
              Temporary
      Telephone

            

    

    
      	
               
      

            	
              ·

            	
              Temporary
      Sanitary Facilities

            

    

    
      	
               
      

            	
              ·

            	
              Temporary
      Water

            

    

    
      	
               
      

            	
              ·

            	
              Temporary
      Access Roads

            

    

    
      	
               
      

            	
              ·

            	
              Construction
      Trailer

            

    

    
      	
               
      

            	
              ·

            	
              Dumpsters

            

    

    

    Testing:  Perform
and distribute reports for the following quality assurance testing procedures
(All testing will be completed by a certified independent testing
agency):

    
      	
               
      

            	
              ·

            	
              Concrete
      Compression

            

    

    
      	
               
      

            	
              ·

            	
              Concrete
      Air Entrainment

            

    

    
      	
               
      

            	
              ·

            	
              Concrete
      Slump

            

    

    
      	
               
      

            	
              ·

            	
              Soil
      Compaction

            

    

    
      	
               
      

            	
              ·

            	
              Soil
      Bearing

            

    

    

    Surveying:  Provide
all infrastructure surveying

    

    Site Cleaning: Maintain a
professional job site clean and free of debris throughout the course of
construction.

    

    Permits:  Assist in
the securing of all required State and Local permits

    

    Certificate of
Occupancy:  Secure a certificate of occupancy at project
completion

    

    
      
        
           

        

        
          22

          
            

          

        

        
           

        

      

    

    

    Abide
by all regulations and requirements of pertinent state and local
codes

    

    SITEWORK ALLOWANCE
($31,719)

    
      	
               
      

            	
              ·

            	
              Construct
      sidewalk and provide landscaping within the building curb
    line

            

    

    

    

    STRUCTURE &
EXTERIOR

    CONCRETE

    Footings & Foundations:
Strip and spread concrete footings for structural support

    
      	
               
      

            	
              ·

            	
              3000
      PSF assumed soil bearing capacity

            

    

    

    Floor Slab: 4” concrete slab
on 4” stone base

    

    All
concrete procedures shall conform to ASTM and ACI specifications

    

    MASONRY

    
      	
              Project
      Overview

            

    

    
      	
              Walls: 

            	
              Facebrick
      (4 x 12) and “Decro-face” CMU accents per previous architectural drawings
      and sketch plan

            

    

    

    METALS

    Roof: Steel joist girders,
open web bar joists and 22 gauge Type B metal roof decking

    
      	
               
      

            	
              ·

            	
              Ballasted
      rubber roof (EPDM)

            

    

    
      	
               
      

            	
              ·

            	
              R-20
      rigid insulation

            

    

    
      	
               
      

            	
              ·

            	
              20
      yr. material, 15 yr. labor warranty

            

    

    
      	
               
      

            	
              ·

            	
              Gutter
      and downspouts

            

    

    
      Canopy:

    

    
      	
               
      

            	
              ·

            	
              Entrance canopy per
      previous architectural drawings and sketch
plan

            

    

    
      	
               
      

            	
              ·

            	
              Drive
      Through canopy per previous architectural drawings and sketch
      plan

            

    

    

    WOOD, PLASTICS, AND
CARPENTRY

    Rough carpentry: Miscellaneous
fasteners, anchors, wood blocking, installation of doors, frames & hardware
etc.

    
      	
               
      

            	
              ·

            	
              Roof
      blocking as required

            

    

    

    THERMAL AND MOISTURE
PROTECTION

    Insulation:

    
      	
               
      

            	
              ·

            	
              1”
      Rigid Foam and R-13 Batt Insulation on all exterior
  walls

            

    

    

    Sealants
and Caulking:

    
      	
               
      

            	
              ·

            	
              Pecora
      or approved equal at vertical exterior construction
  joints

            

    

    

    DOORS AND
WINDOWS

    Doors:

    
      	
               
      

            	
              ·

            	
              Exit
      Doors: (1) hollow metal exit door and associated
  hardware

            

    

     

    
      
        
           

        

        
          23

          
            

          

        

        
           

        

      

    

     

    Glass:

     

    
      	
               
      

            	
              ·

            	
              Windows:
      aluminum framed with 1” insulated glass per previous architectural
      drawings and sketch plan (champagne clear
  anodized)

            

    

    
      	
               
      

            	
              ·

            	
              Entrance:
      8’ x 9’ wide with glass entrance door per previous architectural drawings
      and sketch plan

            

    

    

    LIGHTING

    
      	
               
      

            	
              ·

            	
              (2)
      Decorative sconces at front
entrance

            

    

    
      	
               
      

            	
              ·

            	
              (9)
      Hi-hat fixtures at drive through

            

    

    

    

    INTERIOR
FINISHES

    GENERAL

    
      	
              ·

            	
              3
      5/8” metal studs and 1⁄2” drywall both sides at all interior partitions
      unless otherwise noted with sound batt insulation per previous
      architectural drawings and sketch
plan

            

    

    
      	
              ·

            	
              Solid
      core flush cherry veneer interior doors, premachined, with wood frames and
      standard hardware as required per previous architectural drawings and
      sketch plan

            

    

    
      	
              ·

            	
              42
      S.F. interior glazing with wood frames, stain to match doors and chair
      rail

            

    

    

    CEILINGS

    
      	
               
      

            	
              ·

            	
              Acoustical
      ceiling tile system per previous architectural drawings and sketch plan
      Ceiling height varies from 8’0” to 9’6”
  (nominal)

            

    

    
      	
               
      

            	
              ·

            	
              Drywall
      ceiling at entrance accent per previous architectural drawings and sketch
      plan

            

    

    
      	
               
      

            	
              ·

            	
              Fiberglass
      dome at entrance area per previous architectural
  drawings

            

    

    

    FLOORING

    
      	
               
      

            	
              ·

            	
              Vinyl
      floor tiles in all accessory areas and toilet rooms per sketch
      plan

            

    

    
      	
               
      

            	
              ·

            	
              Ceramic
      tile accent (60 S.F.) at entrance

            

    

    
      	
               
      

            	
              ·

            	
              Carpet
      as required ($50.00/SY material and labor
  allowance)

            

    

    
      	
               
      

            	
              ·

            	
              Vinyl
      and wood wall base per previous architectural drawings and sketch
      plan

            

    

    
      	
               
      

            	
              ·

            	
              Anti-Static
      VCT in work room

            

    

    

    WALL
FINISHES

    
      	
               
      

            	
              ·

            	
              Paint
      all hollow metal frames

            

    

    
      	
               
      

            	
              ·

            	
              Wood
      doors to be stained and
polyurethaned

            

    

    
      	
               
      

            	
              ·

            	
              Vinyl
      wall covering ($2.00/SF material and labor allowance) per previous
      architectural drawings

            

    

    
      	
               
      

            	
              ·

            	
              Drywall
      to be painted with 2 coat latex system in all other
  areas

            

    

    

    MILLWORK

    
      	
               
      

            	
              ·

            	
              All
      millwork and cabinetry per previous architectural drawings and sketch
      plan

            

    

    
      	
               
      

            	
              ·

            	
              Cabinetry
      and countertops to be custom built plastic laminate with plastic laminate
      edging

            

    

    
      	
               
      

            	
              ·

            	
              Wood
      chair rail and trim to be supplied and installed per previous
      architectural drawings and sketch
plan

            

    

    

    
      
        
           

        

        
          24

          
            

          

        

        
           

        

      

    

    

    
      	
               
      

            	
              ·

            	
              All
      countertops to have 6” front apron and 4”
  backsplash

            

    

    
      	
               
      

            	
              ·

            	
              Wood
      blocking as required for kitchenette, cabinetry and miscellaneous hardware
      items

            

    

    
      	
               
      

            	
              ·

            	
              All
      exterior window sills stained to match
doors

            

    

    

    SPECIALTIES

    
      	
               
      

            	
              ·

            	
              Handicap
      toilet accessories to include:

            

    

    
      	
               
      

            	
              o

            	
              Paper
      towel dispenser

            

    

    
      	
               
      

            	
              o

            	
              Toilet
      paper holder

            

    

    
      	
               
      

            	
              o

            	
              Wall
      mirror

            

    

    
      	
               
      

            	
              o

            	
              Handicap
      grab bars

            

    

    
      	
               
      

            	
              ·

            	
              (1)
      Fire extinguisher in semi-recessed
cabinet

            

    

    

    

    UTILITIES

    

    HVAC

    
      	
               
      

            	
              ·

            	
              Approximately
      (7) Total tons of air conditioning via gas fired roof top mounted units by
      York, Carrier, Trane or approved
equal

            

    

    
      	
               
      

            	
              ·

            	
              Fully
      ducted supply & return systems

            

    

    
      	
               
      

            	
              ·

            	
              Trunk
      ducts to be galvanized steel with external duct
  wrap

            

    

    
      	
               
      

            	
              ·

            	
              Roof
      top units shall be single zone units controlled with electronic 7-day
      setback thermostat

            

    

    
      	
               
      

            	
              ·

            	
              Design
      temperature:

            

    

    
      	
               
      

            	
              o

            	
              70°
      F inside when 0° F outside

            

    

    
      	
               
      

            	
              o

            	
              75°
      F inside when 95° F outside

            

    

    

    ELECTRICAL

    

    Power:

    
      	
               
      

            	
              ·

            	
              400
      amp, 120/208 volt main electric
service

            

    

    
      	
               
      

            	
              ·

            	
              (1)
      Duplex receptacle on each wall of each room except toilet
      rooms

            

    

    
      	 
      

    

    
      	
               
      

            	
              ·

            	
              (1)
      GFI receptacle in toilet rooms

            

    

    
      	
               
      

            	
              ·

            	
              (1)
      Duplex receptacle every 24’ o.c. in long runs of
  wall

            

    

    
      	
               
      

            	
              ·

            	
              (1)
      Single pole light switch per room

            

    

    
      	
            	
              ·

            	
              (4)
      3-way light switches

            

    

    

    Lighting
(all electronic ballast):

    
      	
               
      

            	
              ·

            	
              2’
      x 4’ fluorescent light fixtures with prismatic
  lens

            

    

    
      	
               
      

            	
              ·

            	
              Hi-hat
      fluorescent fixtures in customer areas and
  corridor

            

    

    
      	
               
      

            	
              ·

            	
              Polycarbonate
      exit signs with 25 year LED light and integral emergency
    head

            

    

    

    PLUMBING

    
      	
               
      

            	
              ·

            	
              (1)
      10 gallon electric hot water heater

            

    

    
      	
               
      

            	
              ·

            	
              Associated
      hot and cold-water piping as
required

            

    

    

    
      
        
           

        

        
          25

          
            

          

        

        
           

        

      

    

    

    
      	
               
      

            	
              ·

            	
              Associated
      sanitary piping (PVC) as required tied into
  existing

            

    

    

    Fixture
Types:

    
      	
               
      

            	
              ·

            	
              (2)
      Flush tank toilets (pressure
assisted)

            

    

    
      	
               
      

            	
              ·

            	
              (2)
      drop in sinks

            

    

    
      	
               
      

            	
              ·

            	
              (1)
      Stainless steel counter sink in break
room

            

    

    
      	
               
      

            	
              ·

            	
              (1)
      Janitor sink

            

    

    
      	
               
      

            	
              ·

            	
              (1)
      Hi/Low Drinking Fountain

            

    

    

    

    PROJECT
OMISSIONS

    

    The
following items are not included in the scope of work:

    
      	
               
      

            	
              ·

            	
              Signage
      / Furniture / Fixtures / Window
Treatments

            

    

    
      	
               
      

            	
              ·

            	
              Specialty
      electric / Fire Alarm / Phone and
Data

            

    

    
      	
               
      

            	
              ·

            	
              Bank
      Vault & Specialized Security
Equipment

            

    

    
      	
               
      

            	
              ·

            	
              Pneumatic
      Tube Conveying System

            

    

    

    
      
        
           

        

        
          26

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
D

    

    
      	
              Embassy
      Bank for the Lehigh Valley

            	 
	
              Route
      248 & Corriere Road

            	 
	
              First
      Year Rate - $13,785 per month

            	 
	
              2.5%
      Yearly Escalator

            	 	 	 	 
	 
      	 	 	 	 	 	 
	
              Rental
      Year

            	 	
              Monthly

            	 	 	
              Annually

            	 
	
              1

            	 	$	13,785.00	 	 	$	165,420.00	 
	
              2

            	 	$	14,129.63	 	 	$	169,555.50	 
	
              3

            	 	$	14,482.87	 	 	$	173,794.39	 
	
              4

            	 	$	14,844.94	 	 	$	178,139.25	 
	
              5

            	 	$	15,216.06	 	 	$	182,592.73	 
	
              6

            	 	$	15,596.46	 	 	$	187,157.55	 
	
              7

            	 	$	15,986.37	 	 	$	191,836.49	 
	
              8

            	 	$	16,386.03	 	 	$	196,632.40	 
	
              9

            	 	$	16,795.68	 	 	$	201,548.21	 
	 
      	 	 	 	 	 	 	 	 
	
              Renewal
      Option #1

            	 	 	 	 	 
	
              Rental
      Year

            	 	
              Monthly

            	 	 	
              Annually

            	 
	
              10

            	 	$	17,215.58	 	 	$	206,586.91	 
	
              11

            	 	$	17,645.97	 	 	$	211,751.59	 
	
              12

            	 	$	18,087.11	 	 	$	217,045.37	 
	
              13

            	 	$	18,539.29	 	 	$	222,471.51	 
	
              14

            	 	$	19,002.77	 	 	$	228,033.30	 
	
              15

            	 	$	19,477.84	 	 	$	233,734.13	 
	 
      	 	 	 	 	 	 	 	 
	
              Renewal
      Option #2

            	 	 	 	 	 
	
              Rental
      Year

            	 	
              Monthly

            	 	 	
              Annually

            	 
	
              16

            	 	$	19,964.79	 	 	$	239,577.48	 
	
              17

            	 	$	20,463.91	 	 	$	245,566.92	 
	
              18

            	 	$	20,975.51	 	 	$	251,706.09	 
	
              19

            	 	$	21,499.90	 	 	$	257,998.75	 
	
              20

            	 	$	22,037.39	 	 	$	264,448.71	 
	 
      	 	 	 	 	 	 	 	 
	
              Renewal
      Option #3

            	 	 	 	 	 
	
              Rental
      Year

            	 	
              Monthly

            	 	 	
              Annually

            	 
	
              21

            	 	$	22,588.33	 	 	$	271,059.93	 
	
              22

            	 	$	23,153.04	 	 	$	277,836.43	 
	
              23

            	 	$	23,731.86	 	 	$	284,782.34	 
	
              24

            	 	$	24,325.16	 	 	$	291,901.90	 
	
              25

            	 	$	24,933.29	 	 	$	299,199.45	 
	 
      	 	 	 	 	 	 	 	 
	
              Renewal
      Option #4

            	 	 	 	 	 
	
              Rental
      Year

            	 	
              Monthly

            	 	 	
              Annually

            	 
	
              26

            	 	$	25,556.62	 	 	$	306,679.43	 
	
              27

            	 	$	26,195.53	 	 	$	314,346.42	 
	
              28

            	 	$	26,850.42	 	 	$	322,205.08	 
	
              29

            	 	$	27,521.68	 	 	$	330,260.21	 
	
              30**

            	 	$	28,209.73	 	 	$	310,306.99	 
	
              **
      11 months only

            	 	 	 	 	 

    

    

    
      
        
           

        

        
          27

          
            

          

        

        
           

        

      

    

    

    EXHIBIT
E

    

    

    SUBORDINATION,
NON-DISTURBANCE

    AND ATTORNMENT
AGREEMENT

    

    

    THIS
AGREEMENT, dated the ____ day of ________, 2009 between UNIVEST NATIONAL BANK
AND TRUST CO. (hereinafter called "Mortgagee"), and
EMBASSY BANK FOR THE LEHIGH VALLEY, a Pennsylvania financial institution
(hereinafter called "Tenant").

    

    (a)           Tenant
has entered into a certain lease (the "Lease") dated October
_____, 2009, with Polaris Lower Naz Development, LLC (hereinafter called "Landlord"), covering
premises located at Route 248 and Corriere Road, Lower Nazareth Township,
Northampton County, Pennsylvania, being a portion of PIN Number ______________
(the “Property”);
and

    

    (b)           Mortgagee
has made, or shall make, a mortgage loan (the "Mortgage") to the
Landlord, which Mortgage is, or shall be, filed against the above
premises.

    

    NOW,
THEREFORE, in consideration of the above and of the sum of ONE DOLLAR ($1.00) by
each party in hand paid to the other, the receipt of which is hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:

    

    1.          
  The Lease is, and shall continue to be, subject and subordinate to
the Mortgage insofar as it affects the real property of which the demised
premises form a part, and to all renewals, modifications, consolidations,
replacements and extensions of the Mortgage, to the full extent of the
liabilities secured thereby, whether now existing or hereafter
arising.

    

    2.            
Tenant agrees that it will attorn to and recognize Mortgagee or any purchaser at
a foreclosure sale under the Mortgage, any transferee who acquires the demised
premises by deed in lieu of foreclosure, and the successors and assigns of such
purchasers, as its Landlord for the unexpired balance (and any extensions, if
exercised) of the term of said Lease upon the same terms and conditions set
forth in the Lease.

    

    
      
        
           

        

        
          28

          
            

          

        

        
           

        

      

    

    

    3.            
If it should become necessary to foreclose the Mortgage, so long as Tenant is
not in default under any of the terms, covenants, or conditions of the Lease
beyond the expiration of any applicable grace period, (a) Mortgagee thereunder
will not terminate the Lease nor join Tenant in summary or foreclosure
proceedings (unless required by law or rule of court), and (b) Tenant's
possession of the premises and all of Tenant's rights under the Lease shall
remain undisturbed by the holder of the Mortgage, so long as Tenant complies
with all terms, covenants and conditions contained therein.

    

    4.            
In the event that Mortgagee shall succeed to the interest of Landlord under such
Lease, Mortgagee shall not be

    

    (a)          
 liable for or subject to any act or omission of any prior landlord
(including Landlord);

    

    (b)         
 subject to any offsets or defenses which Tenant has or could have against
any prior landlord (including Landlord);

    

    (c)           
bound by or subject to offset for any rent or additional rent which Tenant may
have paid in advance for more than the current month to any prior landlord
(including Landlord); or

    

    (d)           
bound by or subject to any amendment or modification of the lease made without
Mortgagee's prior written consent.

    

    5.             
This Agreement shall be binding on and inure to the benefit of the parties
hereto and their respective successors and assigns.

    

    IN
WITNESS WHEREOF, the parties hereto have executed these presents the day and
year first above written.

    

    
      
        
           

        

        
          29

          
            

          

        

        
           

        

      

    

    

    
      	 
      	 
      	
              MORTGAGEE:

            
	 
      	 
      	
              UNIVEST
      NATIONAL BANK AND TRUST CO.

            
	 
      	 
      	 
      	 
      
	 
      	 
      	
              By:

            	 
      
	 
      	 
      	 
      	
              David
      J. Kepler, Executive Vice President

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
              TENANT:

            
	 
      	 
      	 
      	 
      
	
              Witness

            	 
      	
              EMBASSY
      BANK FOR THE LEHIGH VALLEY

            
	 
      	 
      	
              a
      Pennsylvania financial institution

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 	 
      	
              By:

            	 
      
	 
      	 
      	
              Name:

            	 
      
	 
      	 
      	
              Title:

            	 
      

    

     

     

     

    30ex10_1.htm

    
      

    

    Exhibit 10.1

     

    LOAN
AGREEMENT

    

    This Loan
Agreement, dated as of ____________, 2009 (this “Agreement”), is by and between
PureSafe Water Systems, Inc., a Delaware corporation with a principal place of
business at 25 Fairchild Avenue, Suite 250, Plainview, New York 11803 (the
"Company"), and ______________, an
individual residing at  ______________________________(the
"Lender").

    

    W I T N E S S E T H :

    

    WHEREAS, the Lender desires to
loan (the “Loan”) to the Company, and the Company desires to borrow from Lender,
________________________ ($_________) (the “Loan Amount”) all in accordance with
the terms and conditions set forth herein; and

    

    WHEREAS, pursuant to the terms
and conditions hereinafter set forth, the Company desires to grant to the Lender
(1) the option to convert the Loan Amount, and all accrued and unpaid interest
due under the Note (as defined below), into shares (each, a “Share”) of the
common stock, par value $0.001 per share (the “Common Stock”) of the Company,
and (2) warrants (the “Warrants”) to purchase shares of Common Stock (the
“Warrant Shares”).

    

    NOW, THEREFORE, in
consideration of the mutual premises and of the representations, warranties,
covenants and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which each of the parties hereby
acknowledge, the parties hereto hereby agree as follows:

    

    
      Section
1           
  Loan.

    

    

    The Lender shall tender the Loan
Amount, in full, to the Company to an account designated by the
Company.  For the purposes of this Agreement, the date on which funds
are received by the Company shall be referred to as the “Closing
Date.”  The Loan Amount shall accrue interest at the rate of 10% per
annum.  All accrued and unpaid amounts of interest and principal shall
be due by or on ____________, 2010 (the “Maturity Date”).  In
consideration of the payment by the Lender to the Company of the Loan
Amount:

    

    (a)           The
Company shall issue a promissory note (the “Note”) in the principal amount of
________________________ Dollars ($_________), substantially in form attached
hereto as Exhibit
A.  The Loan Amount, plus all accrued and unpaid interest due
under the Note, shall be convertible, at the sole option of the Lender, into
Shares by, or on, the Maturity Date.  The number of Shares that the
Lender shall receive upon conversion of the Loan Amount (plus all accrued and
unpaid interest as of the date of conversion) shall be determined by dividing
the Loan Amount (plus all accrued and unpaid interest as of the date of
conversion) by the closing market price (the “Conversion Price”) of the Common
Stock as of the Closing Date.

    

    (b)           On
the Closing Date, the Company shall issue to the Lender a warrant agreement (the
“Warrants”) entitling the Lender to purchase shares of Common Stock of the
Company (the “Warrant Shares”).  The Lender shall have 5 years from
the Closing Date to exercise the Warrants.  The Warrants shall entitle
the Lender to purchase shares of Common Stock in an amount equal to 20% of the
number derived by dividing the Loan Amount by the Conversion
Price.  The per-share exercise price for the Warrant Shares shall be
20% greater than the Conversion Price as of the Closing Date.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
2               Representations
and Warranties of the Company.

    

    The Company hereby represents and
warrants to the Lender as follows:

    

    (a)           The
Company is duly organized, validly existing, and in good standing in the State
of Delaware and has full corporate power and authority to operate its business
as now being conducted, and to execute and perform this Agreement and the
transactions contemplated by this Agreement.

    

    (b)           If
the Lender elects to convert the outstanding Loan Amount (and any accrued and
unpaid interest thereon) into Shares, and/or if the Lender elects to exercise
its Warrants, then following the consummation of such transaction, the Lender
shall be the owner of such Shares and Warrant Shares, free of any encumbrances,
liens, claims, equities or liability of every nature.

    

    (c)           The
execution and delivery hereof, the fulfillment of the terms contained herein,
and the consummation of the transactions contemplated hereby, will not conflict
or contravene (i) the corporate laws governing the activities of the Company,
(ii) the restated certificate of incorporation or bylaws of the Company in
effect as of the date hereof, or (iii) any agreement or other instrument to
which the Company is a party or by which it is bound.

    

    (d)           All
action on the part of the Company and its directors or stockholders legally
required for the authorization, execution, delivery, and performance of this
Agreement by the Company and the consummation of the transactions contemplated
hereby, have been taken or will be taken by, or on, the Closing
Date.

    

    (e)           The
Company has not utilized the services of any broker, finder or other
intermediary with respect to this Agreement or the transactions contemplated
hereby, and no such person or entity is entitled to any commission or free in
connection herewith.

    

    (f)      
     No representation or warranty of the Company
contained herein, or information with respect to the Company contained herein or
in any statement, certificate, exhibit or other document furnished or to be
furnished to the Lender by the Company or its representatives pursuant hereto or
in connection with the transactions contemplated hereby, contains or will
contain any untrue statement of fact or omits or will omit to state any material
fact necessary to make the statement herein or therein not false or
misleading.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    Section
3                Representations
and Warranties of the Lender.

    

    The Lender hereby represents to the
Company as follows:

    

    (a)           The
Lender has conducted his/her own independent review and analysis of the Company
and its respective assets and liabilities.  In entering into this
Agreement, the Lender has relied, in part, upon his/her own investigation and
analysis.

    

    (b)            No
representation or warranty of the Lender contained herein, or information with
respect to the Lender contained herein or in any certificate, exhibit or other
document furnished or to be furnished to the Company by the Lender or the
Lender’s representatives pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of fact or
omits or will omit to state any material fact necessary to make the statements
herein or therein not false or misleading.

    

    Section
4               Miscellaneous.

    

    (a)           Fees and
Expenses.  Each of the parties hereto shall pay its own legal
and accounting charges and other expenses incident to the execution of this
Agreement and the consummation of the transactions contemplated
hereby.

    

    (b)           Survival.  All
agreements, representations and warranties and covenants contained herein or
made in writing by or on behalf of the parties hereto in connection with the
transactions contemplated hereby shall survive the execution of this Agreement
and the consummation of such transactions.

    

    (c)           Severability.  Any
term or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction.

    

    (d)           Modification or
Waiver.  This Agreement may not be changed, modified or
rescinded orally.  Any change, modification or rescission need be in
writing, signed by the party against whom enforcement of any change,
modification or rescission is sought.  Any waiver of any of the
provisions of this Agreement, or of any inaccuracy in or non-fulfillment of any
of the representations, warranties or obligations hereunder or contemplated
hereby, shall not be effective unless made in a writing signed by the party
against whom the enforcement of any such waiver is sought.  A waiver
given in any case shall only apply with respect to that particular act or
omission, and shall not be effective as to any further acts or omissions,
regardless of whether they be of the same or similar nature.

    

    (e)           Notices.  Notices
or other communications required or permitted to be given hereunder shall be in
writing and shall be deemed duly given if (a) personal delivered, against
written receipt therefor, (b) forwarded by pre-paid certified or registered
mail, return receipt requested, or (c) forwarded via a nationally recognized
overnight courier service (e.g., Federal Express, USPS
Express Mail, UPS, DHL, etc.) to the parties to which such notice or other
communication is required by this Agreement to be given, at the address of such
parties as follows:

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    
      	
            	
              If
      to the Lender: 

            	
              _________________________

            

    

    ______________________________

    

    
      	
               
      

            	
              With
      a copy to:

            	
              _______________________________

            

    

    _______________________________

    _______________________________

    Attn:  __________________________

    

    
      	
               
      

            	
              If
      to the Company:

            	
              PureSafe
      Water Systems, Inc.

            

    

    25
Fairchild Avenue, Suite 250

    Plainview,
New York 11803

    Attn:
Leslie Kessler,
President

    

    
      	
               
      

            	
              With
      a copy to:

            	
              Michael
      Paige, Esq.

            

    

    c/o
Jackson & Campbell, P.C.

    1120
20th
Street, N.W.

    South
Tower

    Washington,
D.C. 20036

    

    or to
such other person or address as the Lender shall furnish to the Company or the
Company shall furnish to the Lender in writing.  Notices delivered
personally shall be deemed communicated as of the date of actual receipt, mailed
notices shall be deemed communicated as of the date three  business
days after mailing, and notices sent by courier shall be deemed communicated as
of the date two business days after pick-up.

    

    (f)    
       Binding Effect;
Assignment.  This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective administrators, successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned or assignable by any of the parties hereto without the prior written
consent of the other party.

    

    (g)           Governing Law;
Jurisdiction.  This Agreement and the rights and obligations of
the parties shall be interpreted under and governed by the laws of the State of
New York, without regard to its conflicts of laws principles.  Any and
all matters of dispute of any nature whatsoever arising out of or in any way
connected with this Agreement or in any way connected with the relationship of
the parties to this Agreement, shall be subject to determination only by the
State courts sitting in the State of New York, County of Nassau, or the Federal
courts for the Eastern District of New York.

    

    (h)           Entire
Agreement.  This Agreement sets forth the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein, and supersedes all prior agreements, promises, understandings, letters
of intent, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any party hereto or by any related or
unrelated third party.  Any exhibits and schedules attached hereto,
and all certificates, documents and other instruments delivered or to be
delivered pursuant to the terms hereof are hereby expressly made a part of this
Agreement as fully as though set forth herein, and all references herein to the
terms "this Agreement," "hereunder," "herein," "hereby" or "hereto" shall be
deemed to refer to this Agreement and to all such writings.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (i)       
    Headings.  The
headings of the sections of this Agreement are inserted for convenience only and
shall not constitute a part or affect in any way the meaning or interpretation
of this Agreement.

    

    (j)     
      Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute the same
instrument.  This Agreement shall be binding upon the execution and
delivery by facsimile by all parties to this Agreement as if the same were
manually executed and delivered by such parties.  The parties agree to
promptly deliver to each other original executed counterparts of this
Agreement.

    

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

    

    THE
COMPANY

    

    PURESAFE
WATER SYSTEMS, INC.

    

    
      	
              By:

            	 
      	 
      
	
              Name:
      Leslie Kessler

            
	
              Title:   President
      and Chief Executive Officer

            
	 
      	 
      	 
      
	
              THE
      LENDER

            
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              Name:

            	 
      	 
      

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    Exhibit
A

    

    PROMISSORY
NOTE

    

    NEITHER
THIS NOTE NOR THE SHARES OF COMMON STOCK OR ANY OTHER SECURITIES ISSUABLE UPON
CONVERSION OF THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED.  THIS NOTE HAS BEEN ACQUIRED, AND ANY SHARES OF COMMON
STOCK OR ANY OTHER SECURITIES ISSUABLE UPON CONVERSION OF THE AMOUNTS
OUTSTANDING UNDER THIS NOTE ARE REQUIRED TO BE ACQUIRED, FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR THIS NOTE AND/OR SUCH SHARES OR OTHER SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THIS NOTE AND SUCH SHARES OR
OTHER SECURITIES TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT
AND SUCH STATE SECURITIES LAWS.

    

    PureSafe
Water Systems, Inc.

    10%
Convertible Promissory Note

     

    
      	
              Dated:

            	 
      	
              ,
      2009

            	
              Principal
      Amount: $

            	 
      

    

    Plainview,
New York

    

    For Value Received, the
undersigned, PureSafe Water
Systems, Inc. (together with its successors and assigns, the “Company”),
a Delaware corporation, hereby promises to pay to the order of _______________ (the “Lender”)
or registered assignees (Lender or such assignees shall be referred to herein
collectively as the “Holder”), the principal sum of _________________ Dollars
($____________), together with interest as set forth below.  This 10%
Convertible Promissory Note (this “Note”) is issued pursuant to, and is the
“Note” referred to in that certain Loan Agreement dated _____________, 2009 (the
“Agreement”) between the Company and the Lender, and is made subject to the
terms and conditions of the Agreement as if set forth in full in this
Note.

    

    1.         
   Interest
Rate.  Until an Event of Default shall have occurred, the
principal amount evidenced by this Note shall bear interest at the rate of 10%
per annum, computed on the basis of a 360-day year for the actual number of days
elapsed (the “Applicable Interest Rate”).  Upon the occurrence of an
Event of Default, the outstanding principal amount and any accrued but unpaid
interest thereon shall bear interest until paid at the greater of (a) 16%, or
(b) the maximum legal rate of interest (the “Default Interest
Rate”).

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    2.    
        Payment Date; Payment
Method.

    

    (a)           Payment Dates.  The
outstanding principal amount evidenced by this Note (and any accrued but unpaid
interest thereon) shall be paid by, or on ____________, 2010 (the “Maturity
Date”).  Upon payment in full of the principal evidenced by this Note
(and any accrued but unpaid interest thereon), Lender, by Lender’s acceptance of
this Note, agrees to mark this Note “CANCELLED” and return this Note as so
marked to the Company within five Business Days after such payment in full is
received.  For purposes of this Note, the term “Business Day” shall
mean any day other than a Saturday, Sunday or a day on which banking
institutions in the State of New York are authorized or obligated by law or
executive order to close.  This Note may be prepaid by the Company,
and at the Company’s sole discretion, without penalty in whole or in part at any
time upon ten days’ prior written notice to Holder, provided that such
prepayment includes any accrued but unpaid interest thereon through the date of
prepayment.

    

    (b)           Payment
Method.  Payment of the principal evidenced by this Note (and
any accrued but unpaid interest thereon) shall be made by check, subject to
collection, tendered to Holder, via postage-paid, first class mail, at the
address for the giving of notices as set forth in Section 10 of this
Note.

    

    3.        
    Default;
Acceleration.

    

    (a)           Any
of the following shall constitute an “Event of Default” under this
Note:

    

    (i)             the
failure by the Company to pay any amounts required to be paid under this Note on
or before the date on which such payment was due;

    (ii)       
    the breach or noncompliance by the Company of any of its
material representations, warranties or covenants contained herein or in the
Agreement;

    (iii)           the
Company shall

    (A)          apply
for or consent to the appointment of a receiver or trustee of the Company’s
assets,

    (B)           make
a general assignment for the benefit of creditors,

    (C)           file
a petition or other request no matter how denominated (“Petition”) seeking
relief under Title 11 of the United States Code or under any other federal or
state bankruptcy, reorganization, insolvency, readjustment of debt, dissolution
or liquidation law or statute (“Bankruptcy Statute”), or

    (D)          file
an answer admitting the material allegations of a Petition filed against it in
any proceeding under any Bankruptcy Statute;

    (iv)           there
shall have entered against the Company an order for relief under any Bankruptcy
Statute; or

    (v)           a
Petition seeking an order for relief under any Bankruptcy Statute is filed by
any one other than the Company and without the Company’s consent or agreement
which is not dismissed or stayed within 60 days after the date of such filing,
or such Petition is not dismissed upon the expiration of any stay
thereof.

    

    (b)           Upon
the occurrence of an Event of Default, the unpaid principal amount evidenced by
this Note (and any accrued but unpaid interest thereon) shall be immediately due
and payable.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (c)           Until
the occurrence of an Event of Default, the principal amount evidenced by this
Note shall bear interest at the Applicable Interest Rate and upon an Event of
Default, any unpaid principal amount under this Note and any accrued but unpaid
interest through the date of effectiveness of such Event of Default shall bear
interest until paid at the Default Interest Rate.

    

    4.           
 Conversion
Right.

    

    (a)           Voluntary
Conversion.  The Holder of this Note has the right, at the
Holder’s option and at any time following the date of this Note and prior to the
Maturity Date, to convert the principal balance of this Note (plus all accrued
and unpaid interest under this Note), in accordance with the procedures
contained in Section 4(b) hereof, in whole or in part, into a number of fully
paid and nonassessable shares of the common stock, par value $0.001 per share
(the “Common Stock”), of the Company at the Conversion Price (as defined
below).  The number of Shares that the Holder shall receive upon
conversion of the Loan Amount (plus all accrued and unpaid interest as of the
date of conversion) shall be determined by dividing the Loan Amount (plus all
accrued and unpaid interest as of the date of conversion) by the closing market
price (the “Conversion Price”) of the Common Stock as of the Closing Date (as
defined in the Agreement), subject to adjustment, if any, as provided in Section
5.

    

    (b)           Conversion
Procedure.  Before the Holder shall be entitled to convert this
Note into Conversion Shares, it shall surrender this Note at the office of the
Company and shall give written notice by mail, postage prepaid, to the Company
at its principal corporate office, of the election to convert the same pursuant
to Section 4(a), and shall state therein the name or names in which the
certificate or certificates for shares of Common Stock are to be
issued.  The Company shall, as soon as practicable thereafter, issue
and deliver at such office to the Holder of this Note a certificate or
certificates for the number of shares of Common Stock to which the Holder of
this Note shall be entitled.  Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of such
surrender of this Note, and the person or persons entitled to receive the
Conversion Shares issuable upon such conversion shall be treated for all
purposes as the record holder or holders of the shares of Common Stock as of
such date.

    

    (c)           Fractional
Shares.  No fractional shares of Common Stock shall be issued
upon conversion of indebtedness evidenced by this Note.  Instead of
any fractional shares of Common Stock which would otherwise be issuable upon
conversion, the Company shall pay a cash adjustment in respect of such
fractional share in an amount equal to the product resulting from multiplying
(i) the Conversion Price by (ii) such fractional share.

    

    (d)           Liability for Taxes on Conversion
Shares.  The Company shall pay all documentary, stamp and other
transactional taxes attributable to the issuance of Conversion Shares or other
securities issuable upon conversion of any portion of the principal and accrued
interest evidenced by this Note if issued in the name of Holder.  In
all other cases, such taxes shall be paid by Holder.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (e)           Reservation of Conversion
Shares.  The Company shall reserve, free from preemptive
rights, out of its authorized but unissued shares of Common Stock a sufficient
number of shares of Common Stock for issuance as Conversion Shares.

    

    (f)           Status of Conversion
Shares.  All Conversion Shares which may be is­sued in
connection with the conversion provisions set forth ­in this Section 4 will,
upon delivery by the Company, be duly and validly issued, fully paid and
non-assessable, with no personal liability attaching to the ownership of such
Conversion Shares, and free from all taxes, liens or charges with respect
thereto and not subject to any preemptive rights.

    

    5.   
         Conversion Price
Adjustments.

    

    (a)           Adjustments for Stock Splits and
Subdivisions.  In the event the Company should at any time or
from time to time after the date of issuance hereof fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common Stock
or the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as “Common Stock Equivalents”) without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record date is fixed),
the Conversion Price of this Note shall be appropriately decreased so that the
number of shares of Common Stock issuable upon conversion of this Note shall be
increased in proportion to such increase of outstanding shares.

    

    (b)           Adjustments for Reverse Stock
Splits.  If the number of shares of Common Stock outstanding at
any time after the date hereof is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date of such combination, the
Conversion Price for this Note shall be appropriately increased so that the
number of shares of Common Stock issuable on conversion hereof shall be
decreased in proportion to such decrease in outstanding shares.

    

    (c)           Adjustment for Certain Capital
Transactions.  If any capital
reorganization or reclassification of the capital stock of the Company or
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation shall be effected
in such a way that holders of the Company’s Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for such
Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, the Holder shall have the right to receive upon
the basis and upon the terms and conditions specified in this Note and in lieu
of the Conversion Shares immediately theretofore receivable upon the conversion
of this Note, such shares of stock, other securities or assets as would have
been issued or delivered to the Holder if Holder had converted this Note and had
received the Conversion Shares immediately prior to such reorganization,
reclassification, consolidation, merger or sale.  The Company shall
not effect any such consolidation, merger or sale unless prior to the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume by written instrument, executed and delivered to the Holder,
the obligation to deliver to the Holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, the Holder may be
entitled to purchase.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (d)           Notices of Record Date,
etc.  In the event of:

    

    (i)        
   Any action taken by the Company of a record of the holders of
any class of securities of the Company for the purpose of determining the
holders thereof who are entitled to receive any dividend or other distribution,
or any right to subscribe for, purchase or otherwise acquire any shares of stock
of any class or any other securities or property, or to receive any other right;
or

    (ii)           Any
capital reorganization of the Company, any reclassification or recapitalization
of the capital stock of the Company or any transfer of all or substantially all
of the assets of the Company to any other person or any consolidation or merger
involving the Company; or

    (iii)           Any
voluntary or involuntary dissolution, liquidation or winding-up of the
Company;

    

    the Company will mail to the holder of
this Note at least ten business days prior to the earliest date specified
therein, a notice specifying:

    

    (x)           The
date on which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend,
distribution or right; and

    (y)           The
date on which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding-up is expected to
become effective and the record date for determining shareholders entitled to
vote thereon.

    

    6.        
    Assignment.  This
Note is not assignable by the Company, and any purported assignment of this Note
shall be null and void and of no effect.  This Note is not assignable
by the Holder except in compliance with applicable federal and state securities
laws.

    

    7.          
  Waiver and
Amendment.  Any provision of this Note may be amended, waived
or modified upon the written consent of the Company and the Holder.

    

    8.         
   Usury.
This Note is hereby expressly limited so that in no event whatsoever,
whether by reason of acceleration of maturity of the loan evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to the Holder hereunder
for the loan, use, forbearance or retention of money exceed that permissible
under applicable law.  If at any time the performance of any provision
of this Note or of any other agreement or instrument entered into in connection
with this Note involves a payment exceeding the limit of the interest that may
be validly charged for the loan, use, forbearance or detention of money under
applicable law, then automatically and retroactively, ipso facto, the obligation
to be performed shall be reduced to such limit, it being the specific intent of
the Company and the Holder that all payments under this Note are to be credited
first to interest as permitted by law, but not in excess of (a) the agreed rate
of interest set forth herein or therein or (b) that permitted by law, whichever
is the lesser, and the balance toward the reduction of principal.  The
provisions of this Section 8 shall never be superseded or waived and shall
control every other provision of this Note and all other agreements and
instruments between the Company and the Holder entered into in connection with
this Note.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    9.          
  Governing
Law.  This Note and all rights and obligations hereunder shall
be governed by and construed in accordance with the laws of the State of New
York applicable to agreements made and be performed wholly within such State,
without regard to such State’s conflicts of laws principles.

    

    10.           Notices.  All
requests, demands, notices and other communications required or otherwise given
under this Note shall be sufficiently given if (a) delivered by hand, against
written receipt therefor, (b) forwarded by overnight courier requiring
acknowledgment of receipt or (c) mailed by postage prepaid, registered or
certified mail, return receipt requested, addressed as follows:

    

    
      	
              If
      to the Company, to:

            	
              PureSafe
      Water Systems, Inc.

            

    

    25
Fairchild Avenue, Suite 250

    Plainview,
New York 11803

    Attn:
Leslie J. Kessler, President

    

    
      	
               
      

            	
              with
      a copy to:

            	
              Michael
      Paige, Esq.

            

    

    c/o
Jackson & Campbell, P.C.

    1120
20th
Street, N.W.

    South
Tower

    Washington,
D.C. 20036

    

    
      	
              If
      to Holder, to:

            	
              ____________________

            

    

    _______________________________

    

    or, in
the case of any of the parties hereto, at such other address as such party shall
have furnished in writing, in accordance with this Section 10, to the other
parties hereto.  Each such request, demand, notice or other
communication shall be deemed given (a) on the date of delivery by hand, (b) on
the first business day following the date of delivery to an overnight courier or
(c) three business days following mailing by registered or certified
mail.

    

    IN WITNESS WHEREOF, this Note
has been duly executed and delivered as of the date first above
written.

    

    PureSafe
Water Systems, Inc.

    

    
      	
              By:

            	 
      

    

    Name:
Leslie Kessler

    Title:
President and Chief Executive Officer

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    Exhibit
B

    

    THE
SECURITIES EVIDENCED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE LAWS OF ANY STATE.  SUCH SECURITIES
AND ANY SECURITIES ISSUED HEREUNDER MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
UNLESS THEY ARE REGISTERED UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

     

    

    _________Warrants

    

    ________________

     

    WARRANT
CERTIFICATE

     

    This
warrant certificate ("Warrant Certificate") certifies that pursuant to the
certain Loan Agreement dated as of ____________,
2009  (the “Agreement”) by and between PureSafe Water Systems, Inc.
and ______________ or
her registered assigns (the "Holder") is the owner of the number of warrants
("Warrants") specified above, each of which entitles the Holder thereof to
purchase, at any time on or before the Expiration Date (hereinafter defined),
one fully paid and non-assessable share (each, a “Share”) of common stock,
$0.001 par value ("Common Stock"), of PureSafe Water Systems, Inc., a Delaware
corporation (the "Company"), at a purchase price as determined pursuant to this
Warrant Certificate.

     

    1.      
      Warrant; Purchase
Price

     

    Each
Warrant shall entitle the Holder to purchase one Share and the purchase price
payable upon exercise of the Warrants shall initially be $0.0     per
Share, subject to adjustment as hereinafter provided (the "Purchase
Price").  The Purchase Price and number of Shares issuable upon
exercise of each Warrant are subject to adjustment as provided in Article
6.  The Purchase Price shall be payable as hereinafter
provided.

     

    2.        
    Exercise; Expiration
Date

     

    2.1           The
Warrants are exercisable, at the option of the Holder, at any time after
issuance and on or before the Expiration Date, upon surrender of this Warrant
Certificate to the Company together with a duly completed Notice of Exercise, in
the form attached hereto as Exhibit A, and payment of an amount equal to the
Purchase Price times the number of Warrants to be exercised.  In the
case of exercise of less than all the Warrants represented by this Warrant
Certificate, the Company shall cancel the Warrant Certificate upon the surrender
thereof and shall execute and deliver a new Warrant Certificate for the balance
of such Warrants.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    2.2           The
Purchase Price shall be paid in cash or by bank or certified check or a
combination thereof.

     

    2.3           The
term "Expiration Date" shall mean 5:00 p.m. New York time on the day which is
five years after the Closing Date of the Agreement, or if such date shall in the
State of New York be a holiday or a day on which banks are authorized to close,
then 5:00 p.m. New York time the next following date which in the State of New
York is not a holiday or a day on which banks are authorized to
close.

     

    3.     
       Registration and Transfer on
Company Books

     

    3.1           The
Company shall maintain books for the registration and transfer of the Warrants
and the registration and transfer of the shares of Common Stock issued upon
exercise of the Warrants. The Company may, by written notice to the Holder,
appoint an agent for the purpose of maintaining the register referred to in this
Section 3.1, issuing the Common Stock or other securities then issuable
upon the exercise of this Warrant, exchanging this Warrant, replacing this
Warrant, or any or all of the foregoing.  Thereafter, any such
registration, issuance, exchange or replacement, as the case may be, shall be
made at the office of such agent.

     

    3.2           Prior
to due presentment for registration of transfer of this Warrant Certificate, or
the Shares of Common Stock issued upon exercise of the Warrants, the Company may
deem and treat the registered Holder as the absolute owner thereof.

     

    3.3           Neither
this Warrant Certificate, nor the Warrants represented hereby, may be sold,
assigned, pledged or otherwise transferred by the Holder without the consent of
the Company.  Any transfer shall be made only if permitted by, and
made only in accordance with, all applicable federal and state securities
laws.  The Company shall register upon its books any permitted
transfer of a Warrant Certificate, upon surrender of same to the Company with a
written instrument of transfer duly executed by the registered Holder or by a
duly authorized attorney, and evidence of payment of all applicable transfer
taxes, if any.  Upon any such registration of transfer, new Warrant
Certificate(s) shall be issued to the transferee(s) and the surrendered Warrant
Certificate shall be canceled by the Company.  A Warrant Certificate
may also be exchanged, at the option of the Holder, for new Warrant Certificates
representing in the aggregate the number of Warrants evidenced by the Warrant
Certificate surrendered.

     

    4.  
          Reservation of
Shares

     

    The
Company covenants that it will at all times reserve and keep available out of
its authorized Common Stock, solely for the purpose of issue upon exercise of
the Warrants, such number of Shares of Common Stock as shall then be issuable
upon the exercise of all outstanding Warrants.  The Company covenants
that all Shares of Common Stock which shall be issuable upon exercise of the
Warrants shall be duly and validly issued and fully paid and non-assessable and
free from all taxes, liens and charges with respect to the issue thereof, and
that upon issuance such Shares shall be listed on each national securities
exchange, if any, on which the other shares of outstanding Common Stock of the
Company are then listed.

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    5.             Loss or
Mutilation

     

    Upon
receipt by the Company of reasonable evidence of the ownership of and the loss,
theft, destruction or mutilation of any Warrant Certificate and, in the case of
loss, theft or destruction, of indemnity reasonably satisfactory to the Company,
or, in the case of mutilation, upon surrender and cancellation of the mutilated
Warrant Certificate, the Company shall execute and deliver in lieu thereof a new
Warrant Certificate representing an equal number of Warrants.

     

    6.       
     Adjustment of Purchase Price
and Number of Shares Deliverable

     

    The
number of Shares of Common Stock purchasable upon the exercise of each Warrant
and the Purchase Price with respect to the Shares shall be subject to adjustment
as follows:

     

    6.1

     

    (a)           If
the Company at any time divides the outstanding shares of its Common Stock into
a greater number of shares (whether pursuant to a stock split, stock dividend or
otherwise), and conversely, if the outstanding shares of its Common Stock are
combined into a smaller number of shares, the Purchase Price in effect
immediately prior to such division or combination shall be proportionately
adjusted to reflect the reduction or increase in the value of each such Common
Share.

     

    (b)           If
any capital reorganization or reclassification of the capital stock of the
Company or consolidation or merger of the Company with another corporation, or
the sale of all or substantially all of its assets to another corporation shall
be effected in such a way that holders of the Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for such
Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, the Holder shall have the right to purchase and
receive upon the basis and upon the terms and conditions specified in this
warrant and in lieu of the Shares of the Common Stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby,
such shares of stock, other securities or assets as would have been issued or
delivered to the Holder if Holder had exercise this Warrant Certificate and had
received such Shares of Common Stock immediately prior to such reorganization,
reclassification, consolidation, merger or sale.  The Company shall
not effect any such consolidation, merger or sale unless prior to the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume by written instrument executed and mailed to the Holder at
the last address of the Holder appearing on the books of the Company the
obligation to deliver to the Holder such shares of stock, securities or assets
as, in accordance with the foregoing provisions, the Holder may be entitled to
purchase.

     

    (c)           Upon
each adjustment of the Purchase Price, the Holder shall thereafter be entitled
to purchase, at the Purchase Price resulting from such adjustment, the number of
Shares obtained by multiplying the Purchase Price in effect immediately prior to
such adjustment by the number of Shares purchasable pursuant hereto immediately
prior to such adjustment and dividing the product thereof by the Purchase Price
resulting from such adjustment.

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    6.2           No
adjustment in the number of Shares purchasable under this Warrant Certificate,
or in the Purchase Price with respect to the Shares, shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
number of Shares issuable upon the exercise of such Warrant, or in the Purchase
Price thereof; provided, however, that any
adjustments which by reason of this Section 6.2 are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment.  All final results of adjustments to the number of Shares
and the Purchase Price thereof shall be rounded to the nearest one thousandth of
a share or the nearest cent, as the case may be.  Anything in this
Section 6 to the contrary notwithstanding, the Company shall be entitled, but
shall not be required, to make such changes in the number of Shares purchasable
upon the exercise of each Warrant, or in the Purchase Price thereof, in addition
to those required by such Section, as it in its discretion shall determine to be
advisable in order that any dividend or distribution in shares of Common Stock,
subdivision, reclassification or combination of shares of Common Stock, issuance
of rights, warrants or options to purchase Common Stock, or distribution of
shares of stock other than Common Stock, evidences of indebtedness or assets
(other than distributions of cash out of retained earnings) or convertible or
exchangeable securities hereafter made by the Company to the holders of its
Common Stock shall not result in any tax to the holders of its Common Stock or
securities convertible into Common Stock.

     

    6.3           Whenever
the number of Shares purchasable upon the exercise of each Warrant or the
Purchase Price of such Shares is adjusted, as herein provided, the Company shall
mail to the Holder, at the address of the Holder shown on the books of the
Company, a notice of such adjustment or adjustments, prepared and signed by the
Chief Financial Officer or Secretary of the Company, which sets forth the number
of Shares purchasable upon the exercise of each Warrant and the Purchase Price
of such Shares after such adjustment, a brief statement of the facts requiring
such adjustment and the computation by which such adjustment was
made.

     

    6.4           The
form of Warrant Certificate need not be changed because of any change in the
Purchase Price, the number of Shares issuable upon the exercise of a Warrant or
the number of Warrants outstanding pursuant to this Section 6, and Warrant
Certificates issued before or after such change may state the same Purchase
Price, the same number of Warrants, and the same number of Shares issuable upon
exercise of Warrants as are stated in the Warrant Certificates theretofore
issued pursuant to this Agreement.  The Company may, however, at any
time, in its sole discretion, make any change in the form of Warrant Certificate
that it may deem appropriate and that does not affect the substance thereof, and
any Warrant Certificates thereafter issued or countersigned, whether in exchange
or substitution for an outstanding Warrant Certificate or otherwise, may be in
the form as so changed.

     

    7.      
      Voluntary Adjustment by the
Company.

     

    The
Company may, at its option, at any time during the term of the Warrants, reduce
the then current Purchase Price to any amount deemed appropriate by the Board of
Directors of the Company and/or extend the date of the expiration of the
Warrants.

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    8.        
    Fractional Shares and
Warrants.

     

    Anything
contained herein to the contrary notwithstanding, the Company shall not be
required to issue any fraction of a share of Common Stock in connection with the
exercise of Warrants.  Warrants may not be exercised in such number as
would result (except for the provisions of this paragraph) in the issuance of a
fraction of a share of Common Stock unless the Holder is exercising all Warrants
then owned by the Holder.  In such event, the Company shall, upon the
exercise of all of such Warrants, issue to the Holder the largest aggregate
whole number of Shares of Common Stock called for thereby upon receipt of the
Purchase Price for all of such Warrants and pay a sum in cash equal to the
remaining fraction of a Share multiplied by its exercise price as of the last
business day preceding the date on which the Warrants are presented for
exercise.

     

    9.       
     Governing
Law

     

    This
Warrant Certificate shall be governed by and construed in accordance with the
laws of the State of New York.

     

    IN
WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed by its officers thereunto duly authorized and its corporate seal to be
affixed hereon, as of ___________, 2009.

     

    
      	 
      	
              PURESAFE
      WATER SYSTEMS, INC.

            
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	 
      	
              Name:
      Leslie Kessler

            
	 
      	 
      	
              Title:  President
      and Chief Executive Officer

            

    

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    EXHIBIT
A

     

    NOTICE OF
EXERCISE

     

    The
undersigned hereby irrevocably elects to exercise, pursuant to Section 2 of the
Warrant Certificate accompanying this Notice of Exercise, _______ Warrants of
the total number of Warrants owned by the undersigned pursuant to the
accompanying Warrant Certificate, and herewith makes payment of the Purchase
Price of such shares in full.

     

    
      	 
      	 
      
	 
      	
              Name
      of Holder

            
	 
      	 
      
	 
      	 
      
	 
      	
              Signature

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    ADDENDUM TO THE LOAN
AGREEMENT

    

    The
Company and the Lender understand that the funds provided by the Lender to the
Company are to be earmarked for production only and will not be used for any
other purpose. The Company agrees that the lender’s funds will be transferred to
a separate bank account maintained by the Company’s wholly owned subsidiary Pure
Safe Manufacturing and Research Corporation.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00165-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00165-of-00352.parquet"}]]