Document:

Exhibit 10.18

 

LEASE

 

 

 

 

1670 South Broadway

Santa Maria, California

 

 

 

By and Between

 

RICHARD C. BLAKE and

MISSION COMMUNITY BANK, a California corporation

 

 

 

 

 

Diehl & Rodewald

1043 Pacific Street

San Luis Obispo, CA  93401

 

 

1

 

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Lease

  	
  2

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Term of Lease

  	
  2

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Option to Extend

  	
  2

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Minimum Monthly Rent

  	
  2

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Rent on Extended Terms

  	
  2

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Use/Hazardous
  Substance/Compliance With Law

  	
  4

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Utilities

  	
  6

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Taxes

  	
  6

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Condition of Premises

  	
  8

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Repairs and Maintenance

  	
  8

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Alterations

  	
  10

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Entry

  	
  11

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Surrender of Premises;
  Holding Over

  	
  11

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Indemnity

  	
  11

  
	
   

  	
   

  	
   

  
	
  16.

  	
  Insurance

  	
  12

  
	
   

  	
   

  	
   

  
	
  17.

  	
  Trade Fixtures

  	
  14

  
	
   

  	
   

  	
   

  
	
  18.

  	
  Signs

  	
  15

  
	
   

  	
   

  	
   

  
	
  19.

  	
  Damage and Destruction

  	
  15

  
	
   

  	
   

  	
   

  
	
  20.

  	
  Condemnation

  	
  16

  
	
   

  	
   

  	
   

  
	
  21.

  	
  Assignment and Subletting

  	
  17

  
	
   

  	
   

  	
   

  
	
  22.

  	
  Default

  	
  18

  
	
   

  	
   

  	
   

  
	
  23.

  	
  Remedies

  	
  19

  
	
   

  	
   

  	
   

  
	
  24.

  	
  Late Charge

  	
  21

  
	
   

  	
   

  	
   

  
	
  25.

  	
  Default Interest

  	
  21

  
	
   

  	
   

  	
   

  
	
  26.

  	
  Waiver of Breach

  	
  21

  
	
   

  	
   

  	
   

  
	
  27.

  	
  Estoppel Certificates

  	
  21

  
	
   

  	
   

  	
   

  
	
  28.

  	
  Attorney Fees

  	
  22

  
	
   

  	
   

  	
   

  
	
  29.

  	
  Hazardous Substance
  Conditions

  	
  22

  
	
   

  	
   

  	
   

  
	
  30.

  	
  Security Deposit

  	
  23

  
	
   

  	
   

  	
   

  
	
  31.

  	
  Warranty of Authority

  	
  23

  
	
   

  	
   

  	
   

  
	
  32.

  	
  Notices

  	
  23

  

 

 

2

 

 

	
   

  	
   

  	
   

  
	
  33.

  	
  Heirs and Successors

  	
  24

  
	
   

  	
   

  	
   

  
	
  34.

  	
  Partial Invalidity

  	
  24

  
	
   

  	
   

  	
   

  
	
  35.

  	
  Entire Agreement

  	
  24

  
	
   

  	
   

  	
   

  
	
  36.

  	
  Time of Essence

  	
  24

  
	
   

  	
   

  	
   

  
	
  37.

  	
  Rent

  	
  24

  
	
   

  	
   

  	
   

  
	
  38.

  	
  Amendments

  	
  24

  
	
   

  	
   

  	
   

  
	
  39.

  	
  Subordination

  	
  24

  
	
   

  	
   

  	
   

  
	
  40.

  	
  Right of First Offer

  	
  25

  
	
   

  	
   

  	
   

  
	
  41.

  	
  Merger

  	
  25

  
	
   

  	
   

  	
   

  
	
  42.

  	
  Option to Purchase.

  	
  25

  
	
   

  	
   

  	
   

  
	
  43.

  	
  Landlord’s Entry

  	
  26

  
	
   

  	
   

  	
   

  
	
  44.

  	
  Governing Law

  	
  26

  
	
   

  	
   

  	
   

  
	
  45.

  	
  Memorandum of Lease

  	
  26

  
	
   

  	
   

  	
   

  
	
  46.

  	
  Regulator
  Requirements

  	
  26

  
	
   

  	
   

  	
   

  

 

 

3

 

 

LEASE

 

                This Lease (“Lease”) is entered into as of March 1,
2008, between RICHARD C. BLAKE (“Landlord”) and MISSION COMMUNITY BANK, a
California corporation (“Tenant”)

 

Recitals

 

                A.  Landlord is
the owner of certain land, building, and improvements located in Santa Maria,
California, generally described as a commercial building located at 1670 South
Broadway, and more particularly described in attached Exhibit “A” (“Premises”).

 

                B.  Landlord
desires to lease to Tenant and Tenant desires to lease from Landlord the
Premises on the terms and conditions in this Lease.

 

                For good and valuable consideration, the parties
agree as follows:

 

1.                           Definitions.  As used in this Lease the following terms
shall have the following definitions:

 

                Adjustment Date is defined in Section 5.

 

                Commencement Date is defined in Section 3.

 

                Extended Term is defined in Section 4.

 

                Event of Default is defined in Section 22.

 

                Hazardous Substance is defined in Section 7.c.

 

                Initial Monthly Rent is defined in Section 5.a.

 

                Landlord is defined in the preamble of this Lease.

 

                Lease is defined in the preamble of this Lease.

 

                Minimum Monthly Rent is defined in Section 5.a.

 

                Option Notice is defined in Section 4

 

                Premises is defined in Recital A.

 

                Reportable Use is defined in Section 7.c.

 

                Tenant is defined in the preamble of this Lease.

 

                Term is defined in Section 3.

 

                Termination Date
is defined in Section 3.

 

 

1

 

 

                Trade Fixture is defined in Section 17.a.

 

2.                           Lease.  Landlord leases to Tenant and Tenant leases
from Landlord the Premises on the terms and conditions in this Lease.

 

3.                           Term of Lease.  The initial term of this Lease (“Term”) shall
be for five (5) years commencing on March 1, 2008 (“Commencement Date”),
and ending on February 28, 2013, unless sooner terminated pursuant to the
terms of this Lease (“Termination Date”).

 

4.                           Option to Extend.  Tenant is given two (2) separate and
consecutive options to extend the Term on all of the provisions contained in
this Lease, except for the Minimum Monthly Rent and Option to Purchase (Section 42),
each for a five (5) year period (“Extended Term”) following expiration of
the initial Term or Extended Term, by giving notice of exercise of the option (“Option
Notice”) to Landlord at least six (6) months, but not more than one (1) year
before the expiration of the Term or Extended Term.  Provided that if Tenant is in default on the
date of giving the Option Notice, the Option Notice shall be totally
ineffective, or if Tenant is in default on the date any Extended Term is to
commence, provided that Landlord has given Tenant prior written notice of such
default, the Extended Term shall not commence and this Lease shall expire at
the end of the initial Term or then-current Extended Term.  The First Extended Term shall refer to the
period of March 1, 2013 through February 28, 2018.  The Second Extended Term shall refer to the
period of March 1, 2018 through February 28, 2023.

 

Tenant
shall have no other right to extend the Term beyond February 28, 2023.

 

5.                           Minimum Monthly Rent.

 

a.             For the period commencing March 1,
2008, and ending February 28, 2009, the minimum monthly rental shall be
Eight Thousand Six Hundred Seventy-nine Dollars ($8,679.00) (Initial Monthly
Rent and as adjusted from time to time, Minimum Monthly Rent).  The Minimum Monthly Rent shall be payable in
advance not later than the fifth (5th) business day of each month.  The payment shall be made by electronic
transfer into Landlord’s account at Mission Community Bank, 581 Higuera Street,
San Luis Obispo, California, Account No. 001 819313, or by electronic
transfer or other method as Landlord may from time to time designate by written
notice to Tenant.

 

The
Minimum Monthly Rent shall be adjusted annually as of March 1 (“Adjustment
Date”) to  one hundred three percent
(103%) of the Minimum Monthly Rent in effect immediately prior to the
Adjustment Date (without regard to any temporary abatement of rental then or
previously in effect pursuant to the provisions of this Lease.

 

6.                           Rent on Extended Terms.

 

a.             Rent on First Extended Term.  The Minimum Monthly Rent at the commencement
of the First Extended Term shall be one hundred three percent (103%) 

 

 

2

 

 

of the
Minimum Monthly Rent in effect immediately prior to the extension date.  Thereafter, on each year’s anniversary date during
the First Extended Term, the Minimum Monthly Rent shall be one hundred three
percent (103%) of the Minimum Monthly Rent in effect immediately prior to the
anniversary date.

 

b.             Rent on Second Extended Term.  The parties shall have thirty (30) days after
Landlord receives the Option Notice for the Second Extended Term in which to
agree on Minimum Monthly Rent during the Second Extended Term.  If the parties agree on the Minimum Monthly
Rent for the Second Extended Term during that period, they shall immediately
execute an amendment to this Lease stating the Minimum Monthly Rent.

 

If the
parties are unable to agree on the Minimum Monthly Rent for the Second Extended
Term within that period, then within ten (10) days after the expiration of
that period each party, at its cost and by giving notice to the other party,
shall appoint an M.A.I. real estate appraiser or licensed real estate broker
with at least ten (10) years’ full-time commercial appraisal or commercial
real estate experience in northern Santa Barbara or San Luis Obispo County and
set the Minimum Monthly Rent for the Second Extended Term.  If a party does not appoint an appraiser
within ten (10) days after the other party has given notice of the name of
its appointee, the single appointee shall set the Minimum Monthly Rent for the
Second Extended Term.  If the two
appraisers/brokers are appointed by the parties as stated in this paragraph,
they shall meet promptly and attempt to set the Minimum Monthly Rent for the
Second Extended Term.  If they are unable
to agree within thirty (30) days after the second appraiser/broker has been
appointed, they shall attempt to elect a third appraiser who must be an M.A.I.
appraiser with at least ten years of commercial appraisal experience in
northern Santa Barbara or San Luis Obispo Counties within ten (10) days
after the last day the two appraisers/brokers are given to set the Minimum
Monthly Rent.  If they are unable to
agree on the third appraiser/broker, either of the parties to this Lease by
giving ten (10) days’ notice to the other party can file a petition with
the American Arbitration Association solely for the purpose of selecting a
third appraiser who meets the qualifications stated in this paragraph.  Each party shall bear half the cost of the
American Arbitration Association appointing the third appraiser and of paying
the third appraiser’s fee.  The third
appraiser, however selected, shall be a person who has not previously acted in
any capacity for either party.

 

Within
thirty (30) days after the selection of the third appraiser, a majority of the
appointees shall set the Minimum Monthly Rent for the Second Extended
Term.  If a majority of the appointees
are unable to set the Minimum Monthly Rent within the stipulated period of
time, the three appraisals shall be added together and their total divided by
three; the resulting quotient shall be the Minimum Monthly Rent for the
Premises during the Second Extended Term.

 

In
setting the Minimum Monthly Rent for the Second Extended Term, the
appraiser/broker shall consider the highest and best commercial/retail use as
allowed by the current zoning ordinance for the Premises without regard to the
restriction on use of the Premises contained in this Lease.  The appraisal shall be on the basis of a
triple net lease.

 

 

3

 

 

In no
event, shall the rent on the Second Extended Term be less than the rent
determined in accordance with Section 5 as of the last day of the Initial
Term or then-current Extended Term.  The
rent determined in accordance with this paragraph shall thereafter, on each
year’s anniversary date during the Second Extended Term, be adjusted to one
hundred three percent (103%) of the Minimum Monthly Rent in effect immediately
prior to the Adjustment Date.

 

7.                           Use/Hazardous Substance/Compliance With
Law.

 

a.             Tenant will occupy and use the
Premises for a retail banking business and all other operations incident to the
conduct of the business, and Tenant agrees not to use the Premises for any
immoral or unlawful purpose.  Landlord
agrees that, subject to Section 18 and to the prior reasonable review and
approval by Landlord and compliance with all applicable governmental
requirements and restrictions recorded prior to the date of this Lease, Tenant
may erect and maintain on the Premises and the building and improvements any
signs advertising Tenant’s business, as Tenant may desire.

 

b.             Tenant shall not commit any acts on
the Premises, nor use the Premises in any manner that will increase the
existing rates for or cause the cancellation of any fire, liability, or other
insurance policy insuring the Premises or the improvements on the
Premises.  Tenant shall, at Tenant’s own
cost and expense, comply with all requirements of Landlord’s insurance carriers
that are necessary for the continued maintenance at reasonable rates of
replacement cost fire and comprehensive general liability insurance policies on
the Premises and the improvements on the Premises.

 

c.             The term “Hazardous Substance” as
used in this Lease shall mean any product, substance, chemical, material or
waste whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, spill, release or effect, either by
itself or in combination with other materials expected to be on the Premises,
is either:  (i) potentially
injurious to the public health, safety or welfare, the environment or the
Premises, (ii) regulated or monitored by any governmental authority, or (iii) a
basis for liability of Landlord to any governmental agency or third party under
any applicable statute or common law theory. 
Hazardous Substance shall include, but not be limited to, hydrocarbons,
petroleum, gasoline, crude oil or any products, byproducts or fractions
thereof.  Tenant shall not engage in any
activity in, on or about the Premises which constitutes a Reportable Use (as
hereinafter defined) of Hazardous Substances without the express prior written
consent of Landlord and compliance in a timely manner (at Tenant’s sole cost
and expense) with all applicable law.  “Reportable
Use” shall mean (i) the installation or use of any above or below ground
storage tank, (ii) the generation, possession, storage, use,
transportation, or disposal of a Hazardous Substance that requires a permit
from, or with respect to which a report, notice, registration or business plan
is required to be filed with, any governmental authority.  Reportable Use shall also include Tenant’s
being responsible for the presence in, on or about the premises of a Hazardous
Substance with respect to which any applicable law requires that a notice be
given to persons entering or occupying the Premises or neighboring
properties.  Notwithstanding the
foregoing, Tenant may, without Landlord’s prior consent, but in compliance with
all applicable law, use any ordinary and customary materials reasonably
required to be used by Tenant in the normal course of Tenant’s business
permitted on the 

 

 

4

 

 

Premises,
so long as such use is not a Reportable Use and does not expose the Premises or
neighboring properties to any meaningful risk of contamination or damage or
expose Landlord to any liability therefor. 
In addition, Landlord may (but without any obligation to do so)
condition his consent to the use or presence of any Hazardous Substance,
activity or storage tank by Tenant upon Tenant’s giving Landlord such
additional assurances as Landlord, in his reasonable discretion, deems
necessary to protect himself, the public, the Premises and the environment
against damage, contamination or injury and/or liability therefrom or therefor,
including, but not limited to, the installation (and removal on or before Lease
expiration or earlier termination) of reasonably necessary protective
modifications to the Premises (such as concrete encasements) and/or the deposit
of an additional security deposit under Paragraph 30 hereof.

 

d.             If Tenant knows, or has reasonable
cause to believe, that a Hazardous Substance, or a condition involving or
resulting from same, has come to be located in, on, under or about the
Premises, other than as previously consented to by Landlord, Tenant shall
immediately give written notice of such fact to Landlord.  Tenant shall also immediately give Landlord a
copy of any statement, report, notice, registration, application, permit,
business plan, license, claim, action or proceeding given to, or received from,
any governmental authority or private party, or persons entering or occupying
the Premises, concerning the presence, spill, release, discharge of, or
exposure to, any Hazardous Substance or contamination in, on, or about the
Premises, including but not limited to all such documents as may be involved in
any Reportable Uses involving the Premises.

 

e.             Tenant shall indemnify, protect,
defend and hold Landlord, his agents, employees, lenders and the Premises,
harmless from and against any and all loss of rents and/or damages,
liabilities, judgments, costs, claims, liens, expenses, penalties, permits and
attorney’s and consultant’s fees arising out of or involving any Hazardous
Substance or storage tank brought onto the Premises by or for Tenant or under
Tenant’s control.  Tenant’s obligations
under this paragraph shall include, but not be limited to, the effects of any
contamination or injury to person, property or the environment created or
suffered by Tenant, and the cost of investigation (including consultant’s and
attorney’s fees and testing), removal, remediation, restoration and/or
abatement thereof, or of any contamination therein involved, and shall survive
the expiration or earlier termination of this Lease.  No termination, cancellation or release
agreement entered into by Landlord and Tenant shall release Tenant from its
obligations under this Lease with respect to Hazardous Substances or storage
tanks, unless specifically so agreed by Landlord in writing at the time of such
agreement.

 

f.              Except as otherwise provided in
this Lease, Tenant shall, at Tenant’s sole cost and expense, fully, diligently
and in a timely manner comply with all “Applicable Law,” which term is used in
this Lease to include all laws, rules, regulations, ordinances, directives,
covenants, easements and restrictions of record, permits, the requirements of
any applicable fire insurance underwriter or rating bureau, and the
recommendations of Landlord’s engineers and/or consultants, relating in any
manner to the Premises (including but not limited to matters pertaining to (i) industrial
hygiene, (ii) environmental condition on, in, under or about the Premises,
including soil and groundwater conditions,

 

 

5

 

(iii) the use,
generation, manufacture, production, installation, maintenance, removal,
transportation, storage, spill or release of any Hazardous Substance or storage
tank), (iv) seismic retrofitting, (v) fire suppression requirements,
and (vi) Americans With Disabilities Act accommodations, now in effect or
which may hereafter come into effect, and whether or not reflecting a change in
policy from any previously existing policy. 
Tenant shall, within five (5) days after receipt of Landlord’s
written request, provide Landlord with copies of all documents and information,
including but not limited to permits, registrations, manifests, applications,
reports and certificates, evidencing Tenant’s compliance with any Applicable
Law specified by Landlord, and shall immediately upon receipt, notify Landlord
in writing (with copies of any documents involved) of any threatened or actual
claim, notice, citation, warning, complaint or report pertaining to or
involving failure by Tenant or the Premises to comply with any Applicable Law.

 

g.                                      Subject to the requirements of paragraph 46, Landlord and Landlord’s
lenders shall have the right to enter the Premises at any time, in the case of
an emergency, and otherwise at reasonable times, for the purpose of inspecting
the condition of the Premises and for verifying compliance by Tenant with this
Lease and all Applicable Laws (as defined in Paragraph 7.f) and to employ
experts and/or consultants in connection therewith and/or to advise Landlord
with respect to Tenant’s activities, including but not limited to the
installation, operation, use, monitoring, maintenance, or removal of any
Hazardous Substance or storage tank on or from the Premises.

 

8.                                                                                       Utilities.  During
the Term, Tenant shall pay, before delinquency, all charges or assessments for
telephone, water, sewer, gas, heat, electricity, garbage disposal, trash
disposal, CATV, and all other utilities and services of any kind that may be
used on the Premises.

 

9.                                                                                       Taxes.

 

a.                                       Subject to the terms of Section 9(d), Tenant shall pay to the
public authorities charged with the collection on or before the last day on
which payment may be made without penalty or interest, or ten (10) days
after receipt of the tax bill, whichever is later, as additional rent, all
taxes; and permit, inspection, and license fees; and other public charges of
whatever nature that are assessed against the Premises or arise because of the
occupancy, use, or possession of the Premises (including but not limited to
taxes on, or which shall be measured by, any rents or rental income, and taxes
on personal property, whether of Landlord or Tenant), subsequent to the
commencement of the Term, and all installments of assessments that are due
during the Term.

 

b.                                      Landlord shall notify Tenant of the real property taxes and immediately
on receipt of the tax bill furnish Tenant with a copy of the tax bill.

 

c.                                       All real estate taxes levied on the Premises for the tax year in which
the Commencement Date falls shall be appropriately prorated between Landlord
and Tenant, so that Tenant’s share will reflect the portion of that tax year in
which Tenant had possession of the Premises under this Lease.  Taxes levied on the Premises for the tax year
in which the Termination Date occurs shall be similarly prorated between
Landlord and Tenant to reflect the period of Tenant’s possession of the
Premises during that tax year.  Tenant
shall pay Tenant’s share of those taxes to Landlord directly rather than to 

 

6

 

the public authorities,
and that payment shall constitute full performance under this Lease with
respect to this tax liability.

 

d.                                      Tenant shall not be required to pay, discharge, or remove any tax
(including penalties and interest), assessment, tax lien, forfeiture, or other imposition
or charge against the Premises or any part of the Premises or any improvements,
so long as Tenant diligently and in good faith contests the validity or the
legality of the assessment, levy, or charge by appropriate legal proceedings,
which should prevent the collection of the tax, assessment, imposition, or
charge contested; provided however, that Tenant, prior to the date that the
tax, assessment, imposition, or charge is due and payable, shall either have
paid it under protest or shall have, (i) posted a bond with Landlord
sufficient to cover the amount of the taxes and penalties and interest and, (ii) in
the case of taxes other than real estate taxes, given to Landlord a letter
executed by an officer of Tenant assuring Landlord that the tax, assessment,
imposition, or charge will be paid when and to the extent that the legal
proceedings conclude in a final determination that the tax, assessment,
imposition, or charge is valid, legal and owing.  Upon such final determination, Tenant agrees
to immediately pay the contested tax, assessment, imposition, or charge,
together with all interest and penalties, if any, and remove and discharge any
lien or forfeiture arising from the prior nonpayment.  Any proceedings for contesting the validity,
legality, or amount of any tax, assessment, imposition, or charge, or to
recover any tax, assessment, imposition, or charge paid by Tenant, may be
brought by Tenant in the name of Landlord or in the name of Tenant, or both, as
Tenant deems advisable.  Landlord agrees
that Landlord will, upon the reasonable request of Tenant, execute or join in
the execution of any instrument or document necessary in connection with any
proceeding including Landlord’s attorneys’ fees incurred in connection with
such proceeding.  However, if any
proceedings are brought by Tenant, Tenant agrees to indemnify Landlord for all
reasonable loss, cost, or expense that may be imposed on Landlord in connection
with the proceeding.  Tenant’s right to
contest taxes as provided in this Lease shall not extend beyond the point where
Landlord’s title to the Premises could be lost. 
In any event, Tenant shall notify Landlord in advance of any tax contest
proceedings that Tenant intends to initiate, and shall then inform Landlord of
all significant developments in the proceedings as they may occur.

 

e.                                       If Tenant has not paid any tax, assessment, or public charge required by
this Lease to be paid by Tenant before its delinquency, or if a tax,
assessment, or public charge is contested by Tenant and that tax, assessment,
or public charge has not been paid within thirty (30) days after a final
determination of the validity, legality, or amount of the tax, assessment or
public charge, then Landlord may, but shall not be required to, pay and
discharge the tax, assessment, or public charge.  If a tax, assessment, or public charge,
including penalties and interest, are paid by Landlord, the amount of that
payment shall be due and payable to Landlord by Tenant with the next succeeding
rental installment, and shall bear interest at the rate of ten percent (10%)
per annum from the date of the payment by Landlord until repayment by Tenant.

 

f.                                         If any assessments for local improvements become a lien after the
Commencement Date, Tenant shall pay only the installments of the assessments
that become due and payable during the Term. 
On the request of Tenant, Landlord agrees to cooperate or join with
Tenant in any application that may be necessary to permit the payment of the
assessments in installments.

 

7

 

g.                                      The covenants and agreements to pay taxes by Tenant in Section 9
shall not be deemed to include the payment of any inheritance, estate,
succession, transfer, gift, franchise, corporation, income, or profit tax, or
capital levy that is or may be imposed on Landlord.  If any excepted taxes become a lien against
the Premises, Landlord agrees to pay and discharge them before foreclosure of
the lien or to take the steps analogous to those permitted to Tenant under Section 9(d) to
contest the taxes, so long as the steps sufficiently protect Tenant’s quiet
enjoyment of the Premises.  If Landlord
fails to pay and discharge those taxes prior to the institution of proceedings
to foreclose the lien, Tenant, at Tenant’s sole option, may advance the funds
required to pay and discharge the taxes, together with all penalties and
interest, in which event the amount of funds so advanced shall be immediately
due and payable from Landlord to Tenant and shall bear interest at the rate of
ten percent (10%) per annum from the date of payment by Tenant, until
repaid.  Alternatively, Tenant may apply
the amount advanced to the payment of the next succeeding rental installment or
installments otherwise payable to Landlord until the advance, with interest,
has been repaid to Tenant; provided, however, that the rights of Tenant under Section 9(g) shall
be limited to those instances where the foreclosure or other enforcement of the
lien may disturb Tenant’s possession and peaceful enjoyment of the Premises.

 

10.                                 Condition of
Premises.  Tenant acknowledges that as of
the date of this Lease, Tenant has inspected the Premises and had such
contractors, consultants, engineers, architects, roofers, HVAC inspectors and
other persons, as Tenant so desires, inspect the Premises for Tenant.  Based on Tenant’s own inspection, and the
inspection of Tenant’s inspectors, consultants and experts, Tenant acknowledges
that the improvements are in good order, repair and condition.  Landlord makes no representations regarding
the condition of the Premises, which are leased “AS IS.”

 

11.                                 Repairs and
Maintenance.

 

a.                                       Landlord’s
Obligations. Subject to the terms of this Section, Landlord
shall maintain the interior and exterior structural portions of the roof,
foundation, and load-bearing portions of walls of the Building, excluding wall
coverings, painting, glass, and doors. Landlord will not be required to make
any repair resulting from:

 

i)                                         any alteration
or modification to the building or to mechanical equipment within the building
performed by, for, or because of Tenant or to special equipment or systems
installed by, for, or because of Tenant;

 

ii)                                      the
installation, use, or operation of Tenant’s property, fixtures, and equipment;

 

iii)                                   the moving of
Tenant’s property in or out of the building or in and about the Premises;

 

iv)                                  Tenant’s use or
occupancy of the Premises in violation of this Lease or in the manner not
contemplated by the parties at the time of the execution of this Lease;

 

8

 

v)                                     the acts or
omissions of Tenant and Tenant’s employees, agents, invitees, subtenant’s,
licensees, or contractors;

 

vi)                                  fire and other
casualty, except as provided by Section 19 of this Lease; or

 

vii)                               condemnation,
except as provided in Section 20 of this Lease.

 

Landlord
shall have no obligation to make repairs under this Section until a
reasonable time after receipt of written notice from Tenant of the need for
repairs. Tenant waives any right to repair at the expense of Landlord under any
applicable governmental laws, ordinances, statutes, orders, or regulations now
or later in effect.

 

b.                                      Tenant’s
Obligations. Except for the portions of the Premises expressly
required to be maintained by Landlord under Section 11(a), Tenant, at
Tenant’s expense, will maintain the Premises in good order including, without
limitation, roof membrane, subfloors and floor coverings, walls and wall
coverings, mechanical, electrical, and plumbing systems, doors, windows,
parking lots, and truck aprons, gutters, and downspouts, landscaping, and any
signage. Tenant will enter into preventive maintenance and service contracts
with maintenance contractors for regularly scheduled maintenance that are
reasonably acceptable to Landlord for servicing all mechanical systems,
including but not limited to elevator, fire sprinklers, fire extinguishers,
backflow, hot water, heating, and air-conditioning systems and equipment in the
Premises, and Tenant further agrees to provide Landlord with annual reports of
such maintenance.  Tenant agrees to enter
into a maintenance contract with a reputable landscape contractor for the
provision of ground maintenance and landscaping, on no less than a bi-weekly
basis, and for parking lot maintenance and exterior lighting maintenance on no
less than a bi-weekly basis, and as needed. 
If Tenant fails, in the reasonable judgment of Landlord, to maintain the
Premises in good order, Landlord may perform the maintenance, repairs,
refurnishing, or repairing at Tenant’s expense.

 

i)                                         Tenant
shall, not less frequently than once each ten (10) years of the Term and
Extended Terms, resurface the parking lot. 
Tenant shall, not less frequently than once every three (3) years
of the Term and Extended Terms, slurry coat and restripe the parking lot.  Tenant shall, not less frequently than once
each ten (10) years of the Term and Extended Terms, repaint the exterior
of the building with the color scheme to be approved in advance by Landlord, if
different from existing color scheme.

 

ii)                                      Tenant
shall, on or before October 31, 2015, treat the polyurethane foam roof
with a Class A acrylic elastomeric coating meeting the specifications as
set forth in attached Exhibit “B”. 
Tenant acknowledges that it is responsible for maintaining the integrity
of the polyurethane foam roofing membrane and that Tenant will be familiar with
and comply with all standards necessary to protect the roofing membrane.  Tenant shall provide written proof by way of
invoice from a roofing contractor on or before October 31, 2015,
documenting the application of the elastomeric coating.  Failure to timely provide the coating which
may cause deterioration and early failure of the roofing 

 

9

 

membrane
by the time set forth in this section shall be a material breach of this Lease.

 

c.                                       If at any time during the Term, including renewals or extensions, Tenant
fails to maintain the Premises or make any repairs, restoration, or
replacements as required by Section 11, Landlord may, on thirty (30) days’
prior written notice, unless repairs are deemed emergency or structural, but
shall not be required to, enter the Premises and perform the maintenance or
make the repairs or replacements for the account of Tenant; any sums expended
by Landlord in so doing, together with interest at ten percent (10%) per annum,
shall be deemed additional rent and shall be immediately due from Tenant on
demand of Landlord.

 

d.                                      Tenant waives the provisions of Civil Code §§ 1941 and 1942 and any
other law that would require Landlord to maintain the Premises in a tenantable
condition or would provide Tenant with the right to make repairs and deduct the
cost of those repairs from the rent.

 

12.                                 Alterations.

 

a.                                       Tenant shall have the right to make alterations to the building and
improvements on the Premises, provided that, if the reasonably estimated cost
of alterations exceeds Ten Thousand Dollars ($10,000.00), or involves
structural modifications, Landlord shall have the right to consent to the
alterations, and Landlord agrees not to unreasonably withhold approval of the
alterations.  Approval, however, may be
conditioned upon the receipt by Landlord of a set of plans and specifications
for the alterations no later than twenty (20) days prior to the scheduled
construction of the alterations, and upon Tenant’s agreement to restore the
Premises, if Landlord requires it at the end of the Term, to the same condition
as before the alterations.  All
improvements, additions, alterations, and major repairs shall be in accordance
with applicable laws and at Tenant’s own expense.  Tenant will indemnify and defend Landlord for
all liens, claims, or damages caused by remodeling, improvements, additions,
alterations, and major repairs.  Landlord
agrees, when requested by Tenant, to execute and deliver any applications,
consents, or other instruments required to permit Tenant to do this work or to
obtain permits for the work.

 

b.                                      Except as set forth in Section 12(a), and except as to removable
trade fixtures as set forth in Section 17, all alterations and
improvements made to the Premises shall become the property of Landlord and
shall remain on and be surrendered with the Premises at the expiration or
sooner termination of this Lease, including any renewals or extensions.

 

c.                                       At least ten (10) days before any construction commences or
materials are delivered for any alterations that Tenant is making to the
Premises, whether or not Landlord’s consent is required, Tenant shall give
written notice to Landlord as to when the construction is to commence or the materials
are to be delivered.  Landlord shall then
have the right to post and maintain on the Premises any notices that are
required to protect Landlord and Landlord’s interest in the Premises from any
liens for work and labor performed or materials furnished in making the
alterations; provided, however, that it shall be Tenant’s duty to keep the
Premises free and clear of all liens, 

 

10

 

claims, and demands for
work performed, materials furnished, or operations conducted on the Premises at
the request of Tenant.

 

d.                                      Tenant will not at any time permit any mechanics’, laborers’, or
materialmen’s liens to stand against the Premises for any labor or material
furnished to Tenant or claimed to have been furnished to Tenant or Tenant’s
agents, contractors, or subtenants, in connection with work of any character
performed or claimed to have been performed on the Premises by or at the
direction or sufferance of Tenant; provided, however, that Tenant shall have
the right to contest the validity or amount of any lien or claimed lien, upon
giving to Landlord a letter executed by Tenant assuring that the lien or
claimed lien will be paid, when and to the extent that the lien is finally
determined to be valid and owing.  Tenant’s
right, however, to contest these liens shall not extend beyond the point where
Landlord’s title to the Premises could be lost. 
On final determination of the lien or claim of lien, Tenant will
immediately pay any final judgment rendered, with all property costs and
charges, and shall have the lien released or judgment satisfied at Tenant’s own
expense.  If Tenant fails to pay the
judgment promptly or otherwise fails to prevent any sale, foreclosure, or
forfeiture of the Premises because of a lien, Landlord shall have the right,
upon five (5) days’ written notice to Tenant, to pay or prevent this
action, and the amount paid by Landlord shall be immediately due and payable to
Landlord, and shall bear interest at the rate of ten percent (10%) per annum from
the date of payment by Landlord until repayment by Tenant.

 

13.                                 Entry.  Subject to the requirements of paragraph
46,Tenant shall permit Landlord or Landlord’s agents, representatives, or
employees to enter the Premises at all reasonable times and upon reasonable
notice to inspect the Premises to determine whether Tenant is complying with
the terms of this Lease, to show the Premises to prospective purchasers,
lenders or tenants, and to do other lawful acts that may be necessary to
protect Landlord’s interest in the Premises under this Lease or to perform
Landlord’s duties under this Lease. 
Landlord may place “For Rent” signs during the last six (6) months
of any term.

 

14.                                 Surrender of
Premises; Holding Over.

 

a.                                       On the Termination Date or the end of any extension or renewal of this
Lease, Tenant shall promptly surrender and deliver the Premises to Landlord in
as good condition as they are now at the date of this Lease.

 

b.                                      At the end of the Term, or any extension, should Tenant hold over for
any reason, it is agreed that in the absence of a written agreement to the
contrary, that tenancy shall be from month-to-month only and not a renewal of
this Lease, or an extension for any further term.  Tenant shall pay Minimum Monthly Rent in an
amount equal to one hundred ten percent (110%) of the Minimum Monthly Rent
payable immediately prior to the end of the Term or any extension and the
month-to-month tenancy shall be subject to every other term, covenant, and
condition in this Lease that is consistent with and not contrary to a
month-to-month tenancy.

 

15.                                 Indemnity.  Tenant agrees to protect, defend, indemnify
and hold harmless Landlord from any claims, demands, and causes of action of
any nature and any expense incident to the defense, for injury to or death of
persons or loss of or damage to property occurring on or about the Premises
that grow out of or are connected with Tenant’s use 

 

11

 

and occupation of the
Premises or the condition of the Premises, unless such claim arises as a result
of Landlord’s grossly negligent or willful conduct during the Term.  Tenant’s duty and obligation of defense shall
arise at the time any claim is first asserted against Landlord, whether or not
a lawsuit or proceeding has actually commenced. 
Tenant’s obligation to defend shall include the reimbursement of all
reasonable attorneys’ fees, expert witness fees, paralegal fees, costs and
expenses incurred by Landlord in investigating, responding to, and defending
such claim or proceeding.

 

Tenant
hereby agrees that Landlord shall not be liable for injury to Tenant’s business
or any loss of income therefrom or for damages to the goods, wares,
merchandise, inventory, supplies or other property of Tenant, Tenant’s
employees, invitees, customers, or any othe r person in or about the Premises,
nor shall Landlord be liable for injury to Tenant’s employees, agents or
contractors, whether such damage or injury is caused by or results from fire,
steam, electricity, gas, water or rain, or from the breakage, leakage,
obstruction or other defects of the pipes, sprinklers, wires, appliances,
plumbing, air conditioning or lighting fixtures, or from any other cause,
whether the damage or injury results from conditions arising upon the Premises
or from other sources or places and regardless whether the cause of such damage
or injury or the means of repairing the same is inaccessible to Tenant.

 

16.                                 Insurance.

 

a.                                       Fire Insurance
on Building.  Landlord
shall maintain on the building and other improvements which are part of the
Premises, a policy of fire and extended coverage insurance with vandalism and
malicious mischief endorsements, inflation guard protection riders, change in
building code endorsements, and such other endorsements as Landlord determines
are reasonable and appropriate to fully insure the Premises for its full
insurable replacement cost, as the same may exist from time to time, or such
amount as required by Landlord’s lender. 
Notwithstanding Landlord’s insurance, Tenant shall separately insure
Tenant’s own alterations, utility installations, trade fixtures, and Tenant’s
personal property in accordance with Section 16.b.  If such coverage is available and
commercially reasonable, the policy or policies of fire insurance shall insure
against all risks of direct physical loss or damage (except flood or earthquake
unless required by Landlord’s lender), including coverage for debris removal
and for compliance with all applicable, rules, regulations and ordinances
pertaining to upgrading, demolition and reconstruction, or replacement of any
portion of the Premises as a result of the covered loss.  Said policies shall also contain an agreed
valuation provision in lieu of any co-insurance costs.  If such insurance coverage has a deductible
clause, the deductible amount shall not exceed $5,000 per occurrence, and
Tenant shall be liable for the deductible amount in the event of an insured
loss.

 

Tenant shall reimburse Landlord for the
premiums paid by Landlord for maintaining the insurance required by this
section.  Reimbursement shall be made by
Tenant within ten (10) days after Tenant receives a copy of the premium
notice.  Tenant’s obligation to pay
insurance costs shall be prorated for any partial year at the commencement and
expiration or termination of the term.

 

12

 

b.                                      Tenant’s Insurance.

 

i)                                         Tenant
agrees to procure and maintain public liability insurance, from a responsible
insurance company authorized to do business in California, with a combined
single limit of not less than Two Million Dollars ($2,000,000.00) for injury or
death to any person or damage to the Premises and at least Two Million Dollars
($2,000,000.00) excess umbrella coverage for injury or death or property
damage, for any claims, demands, or causes of action of any person arising out
of accidents occurring on the Premises during the Term or arising out of Tenant’s
use, occupancy or maintenance of the Premises. 
Such insurance shall be on an occurrence basis with an “Additional Insured
- Managers or Lessors of Premises Endorsement” and contain the “Amendment of
the Pollution Exclusion Endorsement” for damage caused by heat, smoke or fumes
from a hostile fire.

 

ii)                                      Tenant,
at its cost, shall maintain on all of its personal property, tenant
improvements and alterations in or about the Premises, a policy of standard
fire and extended coverage insurance. 
Such insurance shall be for full replacement costs with a deductible not
to exceed $5,000 per occurrence.  The
proceeds from any such insurance shall be used by Tenant for replacement of
Tenant’s personal property, trade fixtures, and alterations.

 

c.                                       Tenant shall, in addition, obtain and keep in force during the Term of
this Lease a policy or policies in the name of Landlord, with loss payable to
Landlord and Landlord’s Lender(s), if any, insuring the loss of the full rental
payable by Tenant to Landlord under this Lease for one (1) year, or such
shorter period if this Lease is terminated under paragraph 19 hereinbelow.  Subject to the preceding sentence, said
insurance shall provide that in the event the Lease is terminated by reason of
an insured loss, the period of indemnity for such coverage shall be extended
beyond the date of the completion of repairs or replacement of the Premises, to
provide for one full year’s loss of rental revenues from the date of any such
loss.  Said insurance shall contain an
agreed valuation provision in lieu of any coinsurance clause, and the amount of
coverage shall be adjusted annually to reflect the projected rental income,
property taxes, insurance premium costs and other expenses, if any, otherwise
payable by Tenant, for the next twelve (12) month period.  Tenant shall be liable for any deductible
amount in the event of such loss.

 

d.                                      Each policy of insurance shall be issued by a responsible insurance
company authorized to do business in California, and shall be issued in the
names of Landlord, Tenant, and any beneficiary under any deed of trust covering
the Premises, if required by the deed of trust, as their respective interests
may appear.  Tenant shall deliver a
duplicate policy and certificate for each insurance policy to Landlord with all
relevant endorsements.  Each policy of
insurance shall be primary and noncontributory with any policies carried by
Landlord and, to the extent obtainable, any loss shall be payable
notwithstanding any act or negligence of Landlord that might otherwise result
in forfeiture of insurance.  Each
insurance policy shall provide that a thirty (30) day notice of cancellation
and of any material modification of coverage shall be given to all named
insureds.  The insurance coverage
required under this Section may be carried by Tenant under a blanket
policy insuring other locations of Tenant’s business, provided that the Premises
covered by this Lease are specifically identified as included under that
policy.  Tenant agrees that upon the
failure to insure as provided in this Lease, or to pay the

 

13

 

 

premiums in the insurance, Landlord may contract
for the insurance and pay the premiums, and all sums expended by Landlord for
the insurance shall be considered additional rent under this Lease and shall be
immediately repayable by Tenant.

 

e.                                       The insurance companies issuing policies under this section shall have a
general policyholder’s rating of at least “A” and a financial rating of at
least Class VI as rated in the most current available Best’s Key Rating Guide.

 

f.                                         At all times during the Term and any extensions or renewals, Tenant
agrees to keep and maintain, or cause Tenant’s agents, contractors, or
subcontractors to keep and maintain, workmen’s compensation insurance and other
forms of insurance as may from time to time be required by law or may otherwise
be necessary to protect Landlord and the Premises from claims of any person who
may at any time work on the Premises, whether as a servant, agent, or employee
of Tenant or otherwise.  This insurance
shall be maintained at the expense of Tenant or Tenant’s agents, contractors,
or subcontractors and not at the expense of Landlord.

 

g.                                      Landlord agrees that it will tender and turn over to Tenant or to Tenant’s
insurers the defense of any claims, demands, or suits instituted, made, or
brought against Landlord or against Landlord and Tenant jointly, within the
scope of this Section.  However, Landlord
shall have the right to approve the selection of legal counsel, to the extent
that selection is within Tenant’s control, which approval shall not be
unreasonably withheld or delayed.  In
addition, Landlord shall retain the right at Landlord’s election and cost to
have Landlord’s own legal counsel participate as co-counsel, to the extent that
claims are made that may not be covered by Tenant’s insurers.

 

h.                                      Tenant and Landlord each release the other and waive the entire right of
recovery against the other for loss or damage arising out of or incident to the
perils insured against, which perils occur in, on, or about the Premises,
whether due to the negligence of Landlord or Tenant or their agents, employees,
contractors, or invitees.  Tenant and
Landlord shall, upon obtaining the required policies of insurance, give notice
to the insurance carriers that this mutual waiver of subrogation is in this
Lease.

 

17.                                 Trade Fixtures.

 

a.                                       Tenant shall have the right, at any time and from time to time during
the Term and any renewals or extensions, at Tenant’s sole cost and expense, to
install and affix on the Premises items for use in Tenant’s trade or business,
which Tenant, in Tenant’s sole discretion, deems advisable (collectively Trade
Fixtures).  Trade Fixtures installed in
the Premises by Tenant shall always remain the property of Tenant and may be
removed at the expiration of the Term or any extension, provided that any
damage to the Premises caused by the removal of the Trade Fixtures shall be
repaired by Tenant, and further provided that Landlord shall have the right to
keep any Trade Fixtures or to require Tenant to remove any Trade Fixtures that
Tenant might otherwise elect to abandon.

 

b.                                      Any Trade Fixtures that are not removed from the Premises by Tenant
within thirty (30) days after the Termination Date shall be deemed abandoned by
Tenant and shall automatically become the property of Landlord as owner of the
real property to which they are affixed.

 

14

 

18.                                 Signs.  Tenant may maintain on the exterior of the
Premises any sign, awning, canopy, marquee or other advertising, provided that
such sign, awning, canopy, marquee or advertising complies with all applicable
city and county ordinances governing the placement of signs and
advertising.  Thirty (30) days after the
Termination Date, all of the items mentioned in this section that are not
removed from the Premises may, without damage or liability, be destroyed by the
Landlord.

 

19.                                 Damage and
Destruction.

 

a.                                       Casualty. If the Premises is damaged or
destroyed by fire or other casualty, Tenant will give immediate written notice
to Landlord. Within thirty (30) days after receipt, Landlord will notify Tenant
whether repairs can reasonably be made (1) within ninety (90) days, (2) in
more than ninety (90) days, but in less than one hundred eighty (180) days; or (3) in
more than one hundred eighty (180) days from the date of notice.

 

i)                                         Less Than 90 Days. If the Premises is
damaged only to the extent that rebuilding or repairs can be reasonably
completed within ninety (90) days, this Lease will not terminate and, provided
that insurance proceeds are available to fully repair the damage, Landlord will
repair the Premises. However, Landlord will not be required to rebuild, repair,
or replace any Alterations that may have been placed on the Premises for
Tenant.

 

ii)                                      Greater Than 90 Days. If
the Premises is damaged only to the extent that rebuilding or repairs can be
reasonably completed in more than ninety (90) days, but in less than one
hundred eighty (180) days, Landlord will have the option of (1) terminating
the Lease effective upon the occurrence of the damage, in which event the Rent
will be abated from the date Tenant vacates the Premises; or (2) electing
to repair the Premises, provided insurance proceeds are available to fully
repair the damage. However, Landlord will not be required to rebuild, repair,
or replace any part of the Alterations that may have been placed on the
Premises for the Tenant. If Landlord fails to complete repairs within one
hundred eighty (180) days after the date on which Landlord is notified by
Tenant (that period to be extended for delays caused by Tenant or because of
any items of Force Majeure), Tenant may, within ten (10) days after the
expiration of the one hundred eighty (180) day period, terminate this Lease by
delivering written notice to Landlord as Tenant’s exclusive remedy. All rights
under this Lease will cease and terminate thirty (30) days after Landlord’s
receipt of notice.

 

iii)                                   Greater Than 180 Days. If
the Premise is so damaged that rebuilding or repairs cannot be completed within
one hundred eighty (180) days, either Landlord or Tenant may terminate by
giving written notice within ten (10) days after notice from Landlord
regarding the time period of repair. This Lease and the Rent will be abated
from the date Tenant vacates the Premises. If neither party elects to terminate
this Lease, Landlord will promptly commence and diligently prosecute to
completion the repairs to the Premises, provided insurance proceeds are
available to fully repair the damage. However, Landlord will not be required to
rebuild, repair, or replace any Alterations that may have been placed on the
Premises for the Tenant.

 

15

 

b.                                      Tenant’s Fault. If any portion of the
Premises is damaged resulting from the fault or breach of this Lease by Tenant
or Tenant’s Parties, the Rent will be diminished during the repair of the
damage only to the extent the Premises are unfit for occupancy and Tenant will
be liable to Landlord for the cost of the repair to the extent the cost is not
covered by insurance proceeds.

 

c.                                       Uninsured Casualty. Tenant is responsible
for and will pay to Landlord any deductible amount under the property insurance
for the Premises. If any portion of the Premises is damaged and is not fully
covered by insurance proceeds received by Landlord for any reason (and Tenant
elects not to pay any difference) or if the holder of any indebtedness secured
by the Premises requires that the insurance proceeds be applied to the
indebtedness, Landlord will have the right to terminate this Lease by
delivering written notice of termination to Tenant within thirty (30) days
after the date of notice to Tenant. All rights and obligations will then cease
and terminate under this Lease.

 

d.                                      Waiver. With respect to any damage or
destruction that Landlord is obligated to repair or may elect to repair, Tenant
waives all rights to terminate this Lease pursuant to rights otherwise
presently or later accorded by law.

 

20.                                 Condemnation.

 

a.                                       If, during the Term or any renewal or extension, the whole of the
Premises shall be taken pursuant to any condemnation proceeding, this Lease
shall terminate as of 12:01 a.m.  of
the date that actual physical possession of the Premises is taken, and after
that, both Landlord and Tenant shall be released from all obligations under
this Lease.

 

b.                                      If, during the Term or any renewal or extension, only a part of the
Premises is taken pursuant to any condemnation proceeding and the remaining
portion is not suitable or adequate for the purposes for which Tenant was using
the Premises prior to the taking, or if by reason of any law or ordinance the
use of the Premises for the purposes specified in this Lease shall become
unlawful, then and after the taking or after the occurrence of other described
events, Tenant shall have the option to terminate, and the option can be
exercised only after the taking or after the occurrence of other described
events by Tenant giving ten (10) days’ written notice to Landlord, and
rent shall be paid only to the time when Tenant surrenders possession of the
Premises.  Without limiting the
generality of the previous provision, it is agreed that in the event of a
partial taking of the Premises pursuant to any condemnation proceeding, if the
number of square feet of floor area in the portion of the buildings located on
the Premises remaining after the taking is less than seventy-five percent (75%)
of the number of square feet of floor area at the commencement of the Term,
Tenant shall, after the taking, have the option to terminate this Lease on ten (10) days’
written notice to Landlord, and rent shall be paid only to the time when Tenant
surrenders possession of the Premises.

 

c.                                       If only a part of the Premises is taken pursuant to any condemnation
proceeding under circumstances that Tenant does not have the option to
terminate this Lease as provided in this Section, or having the option to
terminate, Tenant elects not to terminate, then Landlord shall at Landlord’s
expense promptly proceed to restore the remainder of the Premises to a
self-contained architectural unit, and the Minimum 

 

16

 

Monthly Rent payable shall be reduced effective
the date of the taking to an amount that shall be in the same proportion to
Minimum Monthly Rent payable prior to the taking, as the number of square feet
of floor area remaining after the taking bears to the number of square feet of
floor area immediately prior to the taking.

 

d.                                      If the whole or any part of the Premises are taken pursuant to any
condemnation proceeding, then Landlord shall be entitled to the entirety of any
condemnation award except (1) that portion allocable to Tenant’s
unsalvageable trade fixtures, or if Tenant elects to remove Tenant’s trade
fixtures, a sum for the reasonable removal and relocation costs not to exceed
the undepreciated value of such fixtures as reflected in Tenant’s most recent
federal income tax return; (2) Tenant’s relocation costs; (3) Tenant’s
loss of goodwill excluding any “bonus value” based on the actual rent reserved
under the Lease to its fair rental value as of the date of condemnation; and (4) the
undepreciated percentage of the lesser of (a) actual cost of the tenant
improvements completed at the inception of this Lease, or (b) the increase
in value of Landlord’s Premises as a result of Tenant’s tenant improvements.  As an example of subparagraph (4), if Tenant
has invested $100,000 in tenant improvements and has depreciated 50% of those
improvements, and the value of the Premises has been increased by $50,000 as a
result of Tenant’s improvements; then Tenant would be entitled to 50% times
$50,000 (the lesser of the increase in value of the Premises or cost of tenant
improvements) as and for its portion of a condemnation award.  The value of Tenant’s tenant improvements in
the Premises shall be determined as of the date of the condemnation award.

 

21.                                 Assignment and
Subletting.

 

a.                                       Except as provided in Section 21(b), Tenant shall not assign this
Lease without the prior written consent of Landlord, which shall not be
unreasonably withheld, provided that subsequent to any assignment Tenant shall
remain primarily liable for the rental to be paid under this Lease and the
performance of all terms and conditions of this Lease.  In evaluating whether or not to provide
consent to a proposed assignment or sublease, Tenant, at a minimum, shall
provide to Landlord a copy of the proposed assignment or sublease, a current
financial statement from the proposed subtenant/assignee, a statement of
intended use by the proposed assignee/subtenant, and such other information as
may be reasonably requested by Landlord in evaluating the proposed assignment
or sublease.  Landlord shall be entitled
to condition his consent on the agreement of Tenant to share equally any
increase in rent over the rent stated in this Lease for the duration of the
proposed assignment or sublease.

 

b.                                      However, Tenant may assign this Lease without Landlord’s written consent
if the assignment is made

 

i)                                         to a successor corporation into which or with which Tenant is merged or
consolidated in accordance with applicable statutory provisions for the merger
or consolidation of corporations,

 

ii)                                      to a wholly-owned subsidiary of Tenant, or

 

iii)                                   to a corporation to which Tenant shall sell all or substantially all of
Tenant’s assets; and the liabilities of the corporations participating in the
merger or consolidation or of the transferor corporation must be assumed by the

 

17

 

corporation surviving
the merger or created by the consolidation or by the transferee corporation, in
the event of a transfer to a wholly-owned subsidiary or a sale of all or
substantially all assets, and that corporation (except in the case of a
wholly-owned subsidiary) must have a net worth at least equal to the net worth
of Tenant at the time of execution of this Lease.  Upon delivery to Landlord, by a successor
corporation to which this Lease is assigned or transferred, of the agreement of
the corporation to be bound by the terms, covenants, and conditions of this
Lease to be performed by Tenant after the date of the assignment or transfer
and documentation satisfactory to Landlord demonstrating net worth and
operating income, Tenant shall be released and discharged from all obligations
later arising under this Lease, except where the transfer is to a wholly-owned
subsidiary of Tenant.

 

c.                                       In the event Tenant shall assign or sublet the Premises or request the
consent of Landlord to any assignment or subletting, or if Tenant shall request
the consent of Landlord for any act Tenant proposes to do, then Tenant shall
pay Landlord’s reasonable attorneys’ fees and consultants’ fees in connection
with evaluating such requests and/or proposed sublease or assignment not to
exceed $2,500.00.

 

22.                                 Default.  Any of the following events or occurrences
shall constitute a material breach of this Lease by Tenant and, after the
expiration of any applicable grace period, shall constitute an event of default
(each an Event of Default):

 

a.                                       The failure by Tenant to pay any amount in full when it is due under the
Lease;

 

b.                                      The failure by Tenant to perform any obligation under this Lease, which
by its nature Tenant has no capacity to cure;

 

c.                                       The failure by Tenant to perform any other non-monetary obligation under
this Lease, if the failure has continued for a period of thirty (30) days after
Landlord demands in writing that Tenant cure the failure.  If, however, by its nature the failure cannot
be cured within thirty (30) days, Tenant may have a longer period as is
necessary to cure the failure, but this is conditioned upon Tenant’s promptly
commencing to cure within the thirty (30) day period and thereafter diligently
completing the cure.  Tenant shall
indemnify and defend Landlord against any liability, claim, damage, loss, or
penalty that may be threatened or may in fact arise from that failure during
the period the failure is uncured;

 

d.                                      Any of the following: A general assignment by Tenant for the benefit of
Tenant’s creditors; any voluntary filing, petition, or application by Tenant
under any law relating to insolvency or bankruptcy, whether for a declaration
of bankruptcy, a reorganization, an arrangement, or otherwise; the abandonment,
vacation, or surrender of the Premises by Tenant without Landlord’s prior
written consent; or the dispossession of Tenant from the Premises (other than
by Landlord) by process of law or otherwise;

 

e.                                       The appointment of a trustee or receiver to take possession of all or
substantially all of Tenant’s assets; or the attachment, execution or other
judicial seizure of all or substantially all of Tenant’s assets located at the
Premises or of Tenant’s interest in this Lease, unless the appointment or
attachment, execution, or seizure is discharged 

 

18

 

within thirty (30) days; or the involuntary filing
against Tenant, or any general partner of Tenant if Tenant is a partnership, of

 

i)                                         a petition to have Tenant, or any partner of Tenant if Tenant is a
partnership, declared bankrupt, or

 

ii)                                      a petition for reorganization or arrangement of Tenant under any law
relating to insolvency or bankruptcy, unless, in the case of any involuntary
filing, it is dismissed within sixty (60) days;

 

f.                                         The abandonment of the Premises by Tenant.

 

g.                                      Failure to timely complete roof coating per Section 11.b.ii, above.

 

23.                                 Remedies.  Upon the occurrence of an Event of Default,
Landlord, in addition to any other rights or remedies available to Landlord at
law or in equity, shall have the right to

 

a.                                       terminate this Lease and all rights of Tenant under this Lease by giving
Tenant written notice that this Lease is terminated, in which case Landlord may
recover from Tenant the aggregate sum of

 

i)                                         the worth at the time of award of any unpaid rent that had been earned
at the time of termination;

 

ii)                                      the worth at the time of award of the amount by which (A) the
unpaid rent that would have been earned after termination until the time of
award exceeds (B) the amount of the rental loss, if any, as Tenant
affirmatively proves could have been reasonably avoided;

 

iii)                                   the worth at the time of award of the amount by which (A) the
unpaid rent for the balance of the term after the time of award exceeds (B) the
amount of rental loss, if any, as Tenant affirmatively proves could be
reasonably avoided;

 

iv)                                  any other amount necessary to compensate Landlord for all the detriment
caused by Tenant’s failure to perform Tenant’s obligations or that, in the
ordinary course of things, would be likely to result from Tenant’s failure; and

 

v)                                     all other amounts in addition to or in lieu of those previously set out
as may be permitted from time to time by applicable California law.

 

As used in clauses (i) and
(ii) of Section 23(a), the worth at the time of award is computed by
allowing interest at the rate of ten percent (10%) per annum.  As used in clause (iii) of Section 23(a),
the worth at the time of award is computed by discounting that amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus one percent (1%).  As used in this
Section, the term rent shall include Minimum Monthly Rent and any other
payments required by Tenant under this Lease.

 

b.                                      continue this Lease, and from time to time, without terminating this
Lease, either

 

19

 

i)                                         recover all rent and other amounts payable as they become due or

 

ii)                                      relet the Premises or any part on behalf of Tenant on terms and at the
rent that Landlord, in Landlord’s sole discretion, may deem advisable, all with
the right to make alterations and repairs to the Premises, at Tenant’s cost,
and apply the proceeds of reletting to the rent and other amounts payable by
Tenant.  To the extent that the rent and
other amounts payable by Tenant under this Lease exceed the amount of the
proceeds from reletting, the Landlord may recover the excess from Tenant as and
when due.

 

c.                                       Subject to the requirements of paragraph 46, upon the occurrence of an
Event of Default, Landlord shall also have the right, with or without
terminating this Lease, to re-enter the Premises and remove all persons and
property from the Premises.  Landlord may
store the property removed from the Premises in a public warehouse or elsewhere
at the expense and for the account of Tenant.

 

d.                                      None of the following remedial actions, alone or in combination, shall
be construed as an election by Landlord to terminate this Lease unless Landlord
has in fact given Tenant written notice that this Lease is terminated or unless
a court of competent jurisdiction decrees termination of this Lease: any act by
Landlord to maintain or preserve the Premises; any efforts by Landlord to relet
the Premises; any re-entry, repossession, or reletting of the Premises; or any
re-entry, repossession, or reletting of the Premises by Landlord pursuant to
this Section.  If Landlord takes any of
the previous remedial actions without terminating this Lease, Landlord may
nevertheless at any later time terminate this Lease by written notice to
Tenant.

 

e.                                       If Landlord relets the Premises, Landlord shall apply the revenue from
the reletting as follows: first, to the payment of any indebtedness other than
rent due from Tenant to Landlord; second, to the payment of any cost of
reletting, including without limitation finder’s fees and leasing commissions;
third, to the payment of the cost of any maintenance and repairs to the
Premises; and fourth, to the payment of rent and other amounts due and unpaid
under this Lease.  Landlord shall hold
and apply the residue, if any, to payment of future amounts payable under this
Lease as the same may become due, and shall be entitled to retain the eventual
balance with no liability to Tenant.  If
the revenue from reletting during any month, after application pursuant to the
previous provisions, is less than the sum of (i) Landlord’s expenditures
for the Premises during that month and (ii) the amounts due from Tenant
during that month, Tenant shall pay the deficiency to Landlord immediately upon
demand.

 

f.                                         After the occurrence of an Event of Default, Landlord, in addition to or
in lieu of exercising other remedies, may, but without any obligation to do so,
cure the breach underlying the Event of Default for the account and at the
expense of Tenant.  However Landlord must
by prior notice first allow Tenant a reasonable opportunity to cure, except in
cases of emergency, where Landlord may proceed without prior notice to
Tenant.  Tenant shall, upon demand,
immediately reimburse Landlord for all costs, including costs of settlements,
defense, court costs, and attorney fees that Landlord may incur in the course
of any cure.

 

20

 

g.                                      No security or guaranty for the performance of Tenant’s obligations that
Landlord may now or later hold shall in any way constitute a bar or defense to
any action initiated by Landlord for unlawful detainer or for the recovery of
the Premises, for enforcement of any obligation of Tenant, or for the recovery
of damages caused by a breach of this Lease by Tenant or by an Event of
Default.

 

h.                                      Except where this is inconsistent with or contrary to any provisions of
this Lease, no right or remedy conferred upon or reserved to either party is
intended to be exclusive of any other right or remedy, or any right or remedy
given or now or later existing at law or in equity or by statute.  Except to the extent that either party may
have otherwise agreed in writing, no waiver by a party of any violation or
nonperformance by the other party of any obligations, agreements, or covenants
under this Lease shall be deemed to be a waiver of any subsequent violation or
nonperformance of the same or any other covenant, agreement, or obligation, nor
shall any forbearance by either party to exercise a remedy for any violation or
nonperformance by the other party be deemed a waiver by that party of the
rights or remedies with respect to that violation or nonperformance.

 

24.                                 Late Charge.  Tenant acknowledges that Tenant’s failure to
pay any installment of the Minimum Monthly Rent, or any other amounts due under
this Lease as and when due may cause Landlord to incur costs not contemplated
by Landlord when entering into this Lease, the exact nature and amount of which
would be extremely difficult and impracticable to ascertain.  Accordingly, if any installment of the
Minimum Monthly Rent or any other amount due under the Lease is not received by
Landlord as and when due, then, without any notice to Tenant, Tenant shall pay
to Landlord an amount equal to six percent (6%) of the past due amount, which
the parties agree represents a fair and reasonable estimate of the costs
incurred by Landlord as a result of the late payment by Tenant.

 

25.                                 Default
Interest.  If Tenant fails to pay any
amount due under this Lease as and when due, that amount shall bear interest at
the maximum rate then allowable by law from the due date until paid.

 

26.                                 Waiver of
Breach.  Any express or implied waiver of
a breach of any term of this Lease shall not constitute a waiver of any further
breach of the same or other term of this Lease; and the acceptance of rent
shall not constitute a waiver of any breach of any term of this Lease, except
as to the payment of rent accepted.

 

27.                                 Estoppel
Certificates.  At any time, with at least
fifteen (15) days’ prior notice by Landlord, Tenant shall execute, acknowledge,
and deliver to Landlord a certificate certifying:

 

a.                                       the Commencement Date and the Term,

 

b.                                      the amount of the Minimum Monthly Rent,

 

c.                                       the dates to which rent and other charges have been paid,

 

21

 

 

d.             that this Lease is unmodified and
in full force or, if there have been modifications, that this Lease is in full
force, as modified, and stating the date and nature of each modification,

 

e.             that no notice has been received by
Tenant of any default by Tenant that has not been cured, except, if any exist,
those defaults must be specified in the certificate, and Tenant must certify
that no event has occurred that, but for the expiration of the applicable time
period or the giving of notice or both, would constitute an Event of Default
under this Lease,

 

f.              that no default of Landlord is
claimed by Tenant, except, if any, those defaults must be specified in the
certificate, and

 

g.             other matters as may be reasonably
requested by Landlord.

 

                An estoppel certificate requested pursuant to this
section may be relied on by prospective purchasers, mortgagees, or
beneficiaries under any deed of trust on the Premises or any part of it.

 

28.                                 Attorney Fees.  If any action at law or in equity is brought
to recover any rent or other sums under this Lease, or for or on account of any
breach of or to enforce or interpret any of the covenants, terms, or conditions
of this Lease, or for the recovery of the possession of the Premises, the
prevailing party shall be entitled to recover from the other party as part of
prevailing party’s costs reasonable attorney fees, the amount of which shall be
fixed by the court and shall be made a part of any judgment rendered.

 

29.                                 Hazardous
Substance Conditions.  If a Hazardous Substance condition occurs,
unless Tenant is legally responsible therefor (in which case Tenant shall make
the investigation and remediation thereof required by applicable law and this
Lease shall continue in full force and effect, but subject to Landlord’s rights
under this Paragraph 29), Landlord may, at Landlord’s option, either (i) investigate
and remediate such Hazardous Substance condition, if required, as soon as
reasonably possible at Landlord’s expense, in which event this Lease shall
continue in full force and effect, or (ii) if the estimated cost to
investigate and remediate such condition exceeds twelve (12) times the then
monthly base rent or $50,000, whichever is greater, give written notice to
Tenant within thirty (30) days after receipt by Landlord of knowledge of the
occurrence of such Hazardous Substance condition of Landlord’s desire to
terminate this Lease as of the date sixty (60) days following the giving of
such notice.  In the event Landlord
elects to give such notice of Landlord’s intention to terminate this Lease,
Tenant shall have the right within ten (10) days after the receipt of such
notice to give written notice to Landlord of Tenant’s commitment to pay for the
investigation and remediation of such Hazardous Substance condition totally at
Tenant’s expense and without reimbursement from Landlord except to the extent
of an amount equal to twelve (12) times the then monthly Base Rent or $50,000,
whichever is greater.  Tenant shall
provide Landlord with the funds required of Tenant or satisfactory assurance
thereof within thirty (30) days following Tenant’s said commitment.  In such event, this Lease shall continue in
full force and effect, and Lessor shall proceed to make such investigation and
remediation as soon as reasonably possible and the required funds are
available.  If Tenant does not give such
notice and provide the required funds or assurance thereof within the times
specified above, this Lease shall terminate as of the date specified in 

 

22

 

Landlord’s
notice of termination.  If a Hazardous
Substance condition occurs for which Tenant is not legally responsible, there
shall be abatement of Tenant’s obligations under this Lease for a period of not
to exceed twelve (12) months while Landlord remediates the condition.

 

30.                                 Security
Deposit.  There is no Security Deposit
required from Tenant at the inception of this Lease.  However, in the event that Tenant is
permitted to assign or sublet the Premises, Landlord shall be entitled to
require a Security Deposit from the sublessee or assignee, in an amount equal
to one and one-half (11⁄2) times the then-current Base Rent for the
Premises.  The Security Deposit will
secure the full and faithful performance of each provision of this Lease to be
performed by Tenant. Landlord may use and commingle the Security Deposit with
other funds of Landlord. If Tenant fails to perform any of Tenant’s obligations
under this Lease, Landlord may apply all or any portion of the Security Deposit
toward fulfillment of Tenant’s unperformed obligations. If Landlord does apply
the Security Deposit, Tenant must immediately pay Landlord sufficient cash to
restore the Security Deposit to the full original amount. The Security Deposit
will not bear interest.

 

31.                                 Warranty of Authority.  The undersigned warrant and represent to
Landlord that they are duly authorized corporate officers of Tenant, and that
they are acting within the scope of their authority to bind Tenant to the
provisions in this Lease without any further action, approval or consent of the
Board of Directors of Tenant.

 

32.                                 Notices.  Any notice or other communication pursuant to
this Lease shall be in writing and shall be deemed to be properly given if
delivered, mailed, or sent by wire, facsimile transmission or other telegraphic
communication in the manner provided in this paragraph, to the following
persons:

 

Mission
Community Bank

581
Higuera  Street

San
Luis Obispo, CA  93401

FAX:  (805) 269-0117

(805)
782-5000 - phone

 

Richard
C. Blake

6171
Alta Mira Lane

San
Luis Obispo, CA  93401

(805)
878-5875

 

Either
party may change the party’s address for these purposes by giving written
notice of the change to the other party in the manner provided in this
section.  If sent by mail, any notice,
delivery, or other communication shall be effective or deemed to have been
given forty-eight (48) hours after it has been deposited in the United States
mail, duly registered or certified, with postage prepaid, and addressed as set
forth above.  Notices sent by wire,
telegraph or facsimile transmission shall be deemed received on the next
business day after transmission. 
Facsimile machines used for fax notice must generate a “Transmission
Record” stating the telephone number of the receiving fax, number of pages sent
out, date and time of transmission and indication of any transmission errors.

 

23

 

33.                                 Heirs and
Successors.  This Lease shall be binding on
and shall inure to the benefit of the heirs, executors, administrators, successors,
and assigns of Landlord and Tenant.

 

34.                                 Partial
Invalidity.  Should any provision of this
Lease be held by a court of competent jurisdiction to be either invalid or
unenforceable, the remaining provisions of this Lease shall remain in effect,
unimpaired by the holding.

 

35.                                 Entire
Agreement.  This instrument constitutes the
sole agreement between Landlord and Tenant respecting the Premises, the leasing
of the Premises to Tenant, and the specified lease term, and correctly sets
forth the obligations of Landlord and Tenant. 
Any agreement or representations respecting the Premises or their
leasing by Landlord to Tenant not expressly set forth in this instrument are
void.

 

36.                                 Time of Essence.  Time is of the essence in this Lease.

 

37.                                 Rent.  All monetary obligations of Tenant to
Landlord under the Lease, including but not limited to the Minimum Monthly
Rent, tax reimbursements and insurance reimbursements, shall be deemed rent.

 

38.                                 Amendments.  This Lease may be modified only in writing
and only if signed by the parties at the time of the modification.

 

39.                                 Subordination.

 

a.             This Lease shall be subordinate to
any ground lease, mortgage, deed of trust, or any other hypothecation for
security now or later placed upon the Premises and to any advances made on the
security of it or Landlord’s interest in it, and to all renewals,
modifications, consolidations, replacements, and extensions of it.  However, if any mortgagee, trustee, or ground
Landlord elects to have this Lease prior to the lien of its mortgage or deed of
trust or prior to its ground lease, and gives notice of that to Tenant, this
Lease shall be deemed prior to the mortgage, deed of trust, or ground lease,
whether this Lease is dated prior or subsequent to the date of the mortgage,
deed of trust, or ground lease, or the date of recording of it.  If any mortgage or deed of trust to which
this Lease is subordinate is foreclosed or a deed in lieu of foreclosure is
given to the mortgagee or beneficiary, Tenant shall attorn to the purchaser at
the foreclosure sale or to the grantee under the deed in lieu of
foreclosure.  If any ground lease to
which this Lease is subordinate is terminated, Tenant shall attorn to the
ground lessor.  Tenant agrees to execute
any documents, in form and substance commercially reasonable, required to for
the subordination, to make this Lease prior to the lien of any mortgage or deed
of trust or ground lease, or to evidence the attornment.

 

b.             If any mortgage or deed of trust to
which this Lease is subordinate is foreclosed or a deed in lieu of foreclosure
is given to the mortgagee or beneficiary, or if any ground lease to which this
Lease is subordinate is terminated, this Lease shall not be barred, terminated,
cut off, or foreclosed.  Neither shall
the rights and possession of Tenant under this Lease be disturbed, if Tenant is
not then in default in the payment of rental and other sums due under this
Lease or otherwise in default under the terms of this Lease, and if Tenant
attorns to the purchaser, grantee, or ground lessor as provided in 

 

24

 

Section 38(a) or,
if requested, enters into a new lease for the balance of the term of this Lease
on the same terms and provisions in this Lease. 
Tenant’s covenant under Section 38(a) to subordinate this
Lease to any ground lease, mortgage, deed of trust, or other hypothecation
later executed is conditioned on each senior instrument containing the
commitments specified in this subsection.

 

40.                                 Right of First
Offer.  If Landlord determines to sell
the Premises, or any portion of its interest in the Premises, or have received
an acceptable bona fide offer to purchase the Premises or such interest,
Landlord shall notify Tenant of the terms on which Landlord will be willing to
sell.

 

If
Tenant, within ten (10) business days after receipt of Landlord’s notice,
indicates in writing its agreement to purchase the Premises on the terms stated
in Landlord’s notice, Landlord shall sell and convey the Premises to Tenant on
the terms stated in the notice.  If
Tenant does not indicate its agreement within ten (10) business days,
Landlord thereafter shall have the right to sell and convey the Premises to a
third party on the same terms stated in the notice.  If Landlord does not sell and convey the
Premises on the same terms stated in the notice within one hundred eighty (180)
days, any further transaction shall be deemed a new determination by Landlord
to sell and convey the Premises and the provisions of this paragraph shall be
applicable.

 

If
Tenant purchases the Premises, this Lease shall terminate on the date title
vests in Tenant, and Landlord shall remit to Tenant all prepaid and unearned
rent.

 

Tenant’s
right of first refusal shall not apply to a transfer between any of those
persons who constitute Landlord and the blood relatives of any of those
persons, either outright or in trust, or to a legal entity (i.e., partnership,
corporation, trust, or like entity) when the majority interest is owned by all
or some of those persons who constitute Landlord.

 

41.                                 Merger.  The voluntary or other surrender of this
Lease by Tenant, or a mutual cancellation of the Lease, or a termination by
Landlord, shall not work a merger, and shall, at the option of Landlord,
terminate all or any existing subtenancies or may, at the option of Landlord,
operate as an assignment to a Landlord of any of the subtenancies.

 

42.                                 Option to
Purchase.  Landlord
grants to Tenant the option to purchase the Premises in accordance with the
provisions of this Lease, as long as Tenant is not in default at the time
Tenant exercises the option.

 

a.             Option Period.  Tenant shall have the right to exercise the
option to purchase for a sixty (60) day period between November 1, 2010
and December 31, 2010.

 

b.             Method of Exercising Option.  Tenant shall exercise the option by executing
in duplicate (including initialing of Sections 15, 16 and 17) and delivering
the Agreement of Purchase and Sale and Joint Escrow Instructions On Exercise of
Option to Purchase, attached hereto as Exhibit “D”, to First American
Title Company, 899 Pacific Street, San Luis Obispo, CA 93401, and delivering
one duplicate executed copy to Landlord’s attorneys, Diehl & Rodewald,
1043 Pacific Street, San Luis Obispo, CA 93401. 
Concurrently, Tenant shall deliver its deposit to First American Title
Company.

 

25

 

c.             Purchase Price.  The purchase price of the Premises shall be
Two Million Dollars ($2,000,000) payable in accordance with the attached
Agreement of Purchase and Sale and Joint Escrow Instructions on Exercise of
Option to Purchase.

 

43.                                 Landlord’s
Entry.  Subject to the requirements of
paragraph 46, any time that Landlord is entitled to enter the Premises under
the terms of this Lease, such entry shall be on a minimum of twenty-four (24)
hours’ prior notice. Landlord shall not maintain a key to the Premises, except
that during the last six (6) months of the Term or any Extended Term of
this Lease, Tenant shall allow prospective tenants or purchasers, agents,
contractors, consultants to inspect and have reasonable access to the Premises
to evaluate the Premises for rental or purchase on all business days and one
day per weekend between the hours of 8:00 a.m. and 6:00 p.m.  If Tenant fails to provide such access,
Tenant shall provide a key to Landlord.

 

44.                                 Governing Law.  This Lease shall be governed by and construed
in accordance with California law.

 

45.                                 Memorandum of Lease.  Tenant may record a short form memorandum of
this Lease in a form attached hereto as Exhibit “C”.

 

46.                                 Regulator Requirements.

 

a.             Notwithstanding any other provision
of this Lease, Landlord shall not have the right to take possession of any of
Tenant’s business records or personal property located on the Premises, of any
customer of Tenant, or of any other third party. Furthermore, any rights and
remedies of Landlord under this Lease are subject to the power of the State of
California Department of Financial Institutions (“DFI”), the Federal Deposit
Insurance Corporation (“F.D.I.C.”), and other bank regulatory agencies, to
enter upon and/or assume control of the Premises and of any personal property
therein as permitted under applicable laws.

 

b.             Also, notwithstanding any other
provisions contained in this Lease, in the event (a) Tenant or its
successors or assigns shall become insolvent or bankrupt, or, if their
interests under this Lease shall be levied upon or sold under execution or
other legal process; or, (b) the depository institution then operating on
the Premises is closed or is taken over by any depository institution
supervisory authority (“Authority”), Landlord may, but shall not be required
to, in either such event, terminate this Lease only with the concurrence of any
receiver or liquidator, to the extent required by applicable law.

 

                The
parties have executed this Lease as of the date first above written.

 

	
  TENANT:

  	
   

  	
  LANDLORD:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  MISSION
  COMMUNITY BANK

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Anita M. Robinson

  	
   

  	
   

  	
  /s/
  Richard C. Blake

  	
   

  
	
   

  	
  Anita
  M. Robinson, CEO

  	
   

  	
   

  	
  Richard
  C. Blake

  	
   

  

 

26

 

Exhibit “A”            Description of Premises (Recital A)

Exhibit “B”            Roof Maintenance Specifications (Section 1.b.ii)

Exhibit “C”            Memorandum of Lease (Section 45)

Exhibit “D”            Purchase Agreement (Section 42)

 

27

 

EXHIBIT “A”

 

                Parcel A of Parcel Map No. 5195, in the City of
Santa Maria, County of Santa Barbara, State of California, as per Map recorded
in Book 17, Page 29 of Parcel Maps, in the Office of the County Recorder
of said County; subject to all matters shown of record.

 

28

 

EXHIBIT “B”

 

Elastomeric Coating

 

Install one or more coats of a “Class A”
Acrylic Elastomeric coating system at the rate of 3 gallons per 100 sq. ft. to
yield a theoretical dry film thickness of 28.8 mils.  Broadcast Roofing Granules into top coat at
the rate of 35#/100 sq. ft.

 

29Exhibit 10.18

 

AMENDMENT
#3

TO THE FIRST AMENDED AND RESTATED

SOFTWARE
DISTRIBUTION LICENSE AGREEMENT

 

This AMENDMENT #3
(“Amendment”) to the Software Distribution License Agreement between Microsoft
Corporation (“Microsoft) and Ezenia! Inc. (“Company”), effective January 1st
2005 (“Agreement’) is made and entered into as of January l, 2007 (the
“Amendment Effective Date”).

 

RECITALS

 

WHEREAS, the parties wish
to reinstate the Agreement and extend the Term until December 31, 2008; and

 

WHEREAS, the parties wish
to apply new royalty payment amounts and schedules to the state Extension Term.

 

AGREEMENT

 

NOW, THEREFORE,
in consideration of the mutual promises herein and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:

 

1. Extension of the
Agreement’s Term. The parties agree to extend the Term of the Agreement to
expire on December 31, 2008. For the purposes of this Amendment the period
commencing on January 1, 2007 and terminating on December 31, 2008 shall be
referred to as the “Extension Term,”

 

2. Section 6.1,1 is
hereby added to the Agreement as follows:

 

6.1.1
Minimum Royalty Payment During Extension Term. During the
Extension Term, beginning January 1, 2007 and expiring on December 31, 2008,
Company agrees to pay Microsoft a cumulative minimum of Four Million Nine
Hundred Fifty Thousand US Dollars ($4,950,000.00) (“Extension Term Minimum
License Fee Payment”). During each period of the Extension Term, Company agrees
to pay Actual License Fees as set forth below:

 

	
   

  	
  January 1 - June 30,
  2007

  	
   

  	
  =

  	
   

  	
  $

  	
  500,000.00

  	
   

  
	
   

  	
  July 1 - December, 2007

  	
   

  	
  =

  	
   

  	
  $

  	
  1,200,000.00

  	
   

  
	
   

  	
  TOTAL CY 2007

  	
   

  	
  =

  	
   

  	
  $

  	
  1,700,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  January 1 - June 30,
  2008

  	
   

  	
  =

  	
   

  	
  $

  	
  1,000,000.00

  	
   

  
	
   

  	
  July 1 - December, 2008

  	
   

  	
  =

  	
   

  	
  $

  	
  1,750,000.00

  	
   

  
	
   

  	
  TOTAL CY 2008

  	
   

  	
  =

  	
   

  	
  $

  	
  2,750,000.00

  	
   

  

 

 

 

 

Any Actual License Fees
above the minimum commitment for a given period will count towards the
Extension Term Minimum License Fee Payment.

 

If at the end of CY2008
(December 31, 2008) the cumulative Actual License Fees for CY2007 and CY2008 is
less than the Extension Term Minimum License Fee Payment, Company will, no
Later than thirty (30) days after the expiration of the Extension Term, pay
Microsoft the remaining balance owed or $500,000.00 USD, whichever is the
lesser amount.

 

IN WITNESS WHEREOF,
the parties have executed and delivered this Amendment effective as of the date
first set forth above.

 

 

	
  MICROSOFT CORPORATION

  	
   

  	
  EZENIA! INC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Kim Akers

  	
   

  	
  By:

  	
  /s/ Roger Tuttle

  
	
  Name:

  	
  Kim Akers

  	
   

  	
  Name:

  	
  Roger Tuttle

  
	
  Title:

  	
  COM

  	
   

  	
  Title:

  	
  CFO

  
	
  Date:

  	
  5/7/07

  	
   

  	
  Date:

  	
  4/20/07

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}]]