MALL OUTPARCEL LEASE AGREEMENT

Exhibits: (Line through non-applicable Exhibits)

Mall: Wilson Mall, formerly known as Parkwood Mall

Landlord: 

Tenant: 

Tenant’s Trade Name: Cornerstone Bank and CB Financial Corporation

Guarantor: Intentionally left blank. 

7.

Premises: All that parcel of land situated and being in the City of Wilson, Wilson County, North Carolina and consisting of approximately 18,750 square feet and fronting 150 feet more or less on Ward Boulevard and with a depth of approximately 125 feet more or less all as outlined on Exhibit B-1.

Building Square Feet: 3,422 approximately

9.

Permitted Use: Commercial and Retail Banking and related purposes and for no other purpose without Landlord’s consent.

Lease Term: Approximately seven (7) years commencing upon the Effective Date and expiring on September 30, 2012.

Target Tender Date: September 1, 2005

12.

Rent Commencement Date: November 1, 2005 or date Bank opens, whichever is later. Provided Bank is diligently pursuing opening.

Expiration Date: October 31, 2012

14.

Options: One option term of eight (8) years commencing on September 1, 2012 and expiring on August 31, 2020.

15.

$3,600

$43,200

$4,200

$50,400

16.

 

 

$-0-

 

 

$-0-

 

 

$-0-

 

 

-0-

17.

$-0-

$-0-

$-0-

-0-

18.

$-0-

$-0-

$-0-

-0-

19.

$-0-

$-0-

$-0-

-0-

20.

$-0-

$-0-

$-0-

$-0-

21.

$3,600

$43,200

$4,200

$50,400

Percentage Rent Rate:  N/A  Breakpoint: N/A

Prepaid Rent Deposit:  Waived

Security Deposit: Waived

Brokers: None

29.

As of the Effective Date, Section V contained in the Mall Outparcel General Lease Provisions of the Lease shall be deleted in its entirety and the following be substituted in lieu thereof:

5.1

Covenant of Quiet Enjoyment. Subject to the terms of this Lease, upon paying the Monthly Rent and Additional Rent and performing the other terms, covenants and conditions of this Lease on Tenant’s part to be performed, Tenant shall and may peaceably and quietly have, hold, occupy, possess and enjoy the Premises during the Lease Term.

5.2

Right to Possession. Landlord covenants, warrants and represents that: (a) the Premises are now unoccupied and tenant-free, (b) absolute, tenant-free possession of the Premises will be delivered to Tenant on the Effective Date, and (c) the Premises will thereafter remain tenant-free up to and including the date of Tenant’s acceptance of possession of the Premises on the Rent Commencement Date.

30.

As of the Effective Date, Section 7.7 contained in the Mall Outparcel General Lease Provisions of the Lease shall be deleted in its entirety and the following be substituted in lieu thereof:

(a)

Landlord’s Liability. Landlord hereby represents and warrants that, to the best of its actual knowledge without investigation, there does not exist on, in or under the Premises any “hazardous substance” or “hazardous waste” as those terms are used under the various applicable federal and state environmental laws, including, without limitation, petroleum, petroleum products and asbestos-containing materials (“Hazardous Material”).

(b)

Tenant’s Liability. Tenant shall not (either with or without negligence) cause or permit the escape, disposal or release of any biologically or chemically active or other hazardous substances or materials on or from the Premises. Tenant shall not allow the storage or use of such substances or materials in or on the Premises in any manner not sanctioned by law and by the highest standards prevailing in the industry for the storage and use of such substances or materials, nor allow to be brought into or on the Premises, any such materials or substances except to use in the ordinary course of business. If any such Hazardous Material is discovered at any time during the Lease Term or any time thereafter under circumstances in which it is reasonably clear that such Hazardous Material became present at any time between the Rent Commencement Date and the expiration or earlier termination of this Lease, Tenant shall indemnify, defend with counsel reasonably satisfactory to Landlord, and hold and save Landlord harmless from and against all claims, liabilities, actions, judgments, responsibilities and damages of every kind and nature arising from or related to the presence of such Hazardous Material during said period, including investigation costs, engineering fees, remediation costs and reasonable attorney’s fees.

(c)

Reporting. Tenant shall notify Landlord in writing immediately after any of the following: (i) Tenant has knowledge, or has reasonable cause to believe, that any Hazardous Material(s) have been released, discharged or located on, under or about the Premises or the Mall, or (ii) Tenant receives any warning, notice of inspection, notice of violation or alleged violation, or Tenant receives notice or knowledge of any proceeding, investigation, order or enforcement action, under any Environmental Law regarding the Premises or the Mall Site.

(d)

Definitions.

(i)

all federal, state and local statutes, regulations, ordinances, orders, decrees, and similar provisions having the force or effect of law for the protection of human health, natural resources, or the environment (including without limitation the Comprehensive Environmental Response, Compensation and Liability Act; the Superfund Amendment and Reauthorization Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Hazardous Materials Transportation Act; the Resource Conservation and Recovery Act; the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Oil Pollution Act; the Coastal Zone Management Act; any “Superfund” or “Superlien” law; the North Carolina Oil Pollution and Hazardous Substances Control Act; the North Carolina Water and Air Resources Act; and the North Carolina Occupational Safety and Health Act, including any amendments thereto from time to time); and

(ii)

all common law concerning public health and safety, worker health and safety, and pollution or protection of the environment, including without limitation all standards of conduct and bases of obligations relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, reporting, testing, processing, discharge, release, threatened release, control, or clean-up of any “Hazardous Materials” (as defined above).”

31.

As of the Effective Date, Section IX contained in the Mall Outparcel General Lease Provisions of the Lease shall be amended to add the following provision:

SEE ATTACHED FOR SECTION 10.3

33.

As of the Effective Date, Section XIII contained in the Mall Outparcel General Lease Provisions of the Lease shall be deleted in its entirety and the following be substituted in lieu thereof:

13.1

Tenant’s Indemnification of Landlord. Tenant agrees to indemnify, protect, defend and hold Landlord and Landlord’s partners, shareholders, employees, lender and managing agent harmless from and against any and all claims, losses, costs, liabilities, actions and damages, including, without limitation, reasonable attorneys’ fees and costs by or on behalf of any person or persons, firm or firms, corporation or corporations, arising from any breach or default on the part of Tenant in the performance of any representation, warranty, covenant or other agreement on the part of Tenant to be performed, pursuant to the terms of this Lease, or arising from the gross negligence or willful misconduct on the part of Tenant or its agents, contractors, servants, employees or licensees, or arising from any accident, injury or damage to the extent caused by Tenant or its agents or employees to any person, firm or corporation occurring during the Term of this Lease or any renewal thereof, in or about the Mall Site, and from and against all costs, reasonable attorneys’ fees, expenses and liabilities actually incurred in or about any such claim or action or proceeding brought thereon, provided Tenant is given written notice of any such claims, losses, costs, liabilities, actions and damages and the opportunity to participate in the defense thereof; and in case any action or proceeding be brought against Landlord or its managing agent by reason of any such claim, Tenant, upon notice from Landlord, covenants to resist or defend such action or proceeding by counsel reasonably satisfactory to Landlord.

13.2

Landlord’s Indemnification of Tenant. Landlord agrees to indemnify, protect, defend and hold Tenant and Tenant’s partners, shareholders, and employees harmless from and against any and all claims, losses, costs, liabilities, actions and damages, including, without limitation, attorneys’ fees and costs by or on behalf of any person or persons, firm or firms, corporation or corporations, arising from any breach or default on the part of Landlord in the performance of any representation, warranty, covenant or other agreement on the part of Landlord to be performed, pursuant to the terms of this Lease, or arising from the gross negligence or willful misconduct of Landlord or its agents, contractors, servants, employees or licensees occurring during the term of this Lease or any renewal thereof, in or about the Mall Site, and from and against all costs, reasonable attorney fees, expenses and liabilities actually incurred in or about any such claim or action or proceeding brought thereon; and in case any action or proceeding be brought against Tenant or its managing agent by reason of any such claim, Landlord, upon notice from Tenant, covenants to resist or defend such action or proceeding by counsel reasonably satisfactory to Tenant and assist or cooperate in the defense thereof.

13.3

Insurance. Tenant shall procure and maintain throughout the Lease Term a policy or policies of:

34.

As of the Effective Date, Section XV contained in the Mall Outparcel General Lease Provisions of the Lease shall be deleted in its entirety and the following be substituted in lieu thereof:

15.1

No Abatement of Rent. Notwithstanding any statute or rule of law of the state in which the Premises are located to the contrary, if the Premises, any improvements thereon or any part thereof are damaged or destroyed by fire or other casualty, this Lease shall continue in full force and effect and such damage or destruction shall not affect, abate or mitigate Tenant’s obligation to pay rental or other sums due hereunder except as provided in the Special Stipulation unless such fire or other casualty is caused by or arises from any negligent act or omission on the part of Landlord or Landlord’s agents, employees, representatives or contractors in which case the payment of Monthly Rent and Additional Rent hereunder shall abate or be mitigated in accordance with applicable laws of the State of North Carolina and Tenant shall be entitled to indemnification as provided herein.

15.2

Restoration of Improvements. In the event of damage to or destruction of the Improvements, then, within a reasonable period of time after the date of the damage or destruction, Tenant shall proceed to repair, restore, and replace the Improvements. The proceeds received from Tenant’s property insurance on the Premises and any Improvements shall be placed in an escrow account and shall be applied exclusively to the costs of repairs and replacements. The escrow account shall be maintained by Landlord or by Tenant’s leasehold mortgagee, if required, and shall be disbursed during the course of the repairs. If the insurance proceeds are insufficient to pay the costs of the repair work, Tenant shall pay any and all deficiency. Except as expressly provided otherwise in this Lease, Landlord shall not be obligated to make any payment, disbursement or contribution towards the cost of the repairs or replacements. If the proceeds exceed the cost of such work, Tenant may retain the excess, except that, where any leasehold mortgage contains a contrary provision regarding the excess, such provision shall govern the application of the excess insurance proceeds. Notwithstanding the foregoing, if such damage or destruction occurs within two (2) years prior to the end of the Term, then Tenant may elect to terminate this Lease by giving Landlord written notice of the same within thirty (30) days following such damage or destruction, in which event all insurance proceeds by reason of such damage or destruction shall be payable to Landlord subject to any superior right of Tenant’s mortgages in such proceeds under a deed of trust or other similar instrument evidencing indebtedness. Promptly following any fire or other casualty damage to the Improvements, Tenant shall remove any debris or other materials that may interfere with or create a hazard with respect to the Shopping Center.”

35.

As of the Effective Date, Section XVI contained in the Mall Outparcel General Lease Provisions of the Lease shall be deleted in its entirety and the following be substituted in lieu thereof:

16.1

Complete Taking. If, at any time during the Lease Term, the whole of the Premises is taken for any public or quasi-public purpose by any lawful power or authority by the exercise of the right of condemnation or eminent domain, including any such taking by “inverse condemnation,” then this Lease shall terminate as of the earlier of the date that title vests in the condemnor or the date that the condemnor takes possession of the property so taken (“Date of Taking”). In such event, Monthly Rent, all Additional Rent, and all other charges payable hereunder shall be prorated and paid to such date of termination. 

16.2

Partial Taking. If, at any time during the Lease Term, more than fifteen percent (15%) of the square footage of the Improvements including parking areas on the Premises, or any part of a driveway or other access way which is reasonably necessary for access to the business on the Premises is taken for the purposes set forth in Section 16.1 and Landlord cannot provide alternative and reasonable parking areas, driveways or access, and such taking materially, adversely affects the operation of Tenant’s business on the Premises, Tenant shall have the right to terminate this Lease as of the Date of Taking, by giving written notice of such termination to Landlord within ninety (90) days after the date of Tenant’s receipt of notice of such taking. In such event, Monthly Rent, all Additional Rent, and all other charges payable hereunder shall be prorated and paid to the date of termination. 

16.3

Allocation of Condemnation Award. If the whole or a part of the Premises is taken by condemnation, Landlord shall have the unqualified right to pursue its remedies against the condemnor for the full value of Landlord’s fee interest and other property interests in and to the Premises. Similarly, Tenant shall have the unqualified right to pursue its remedies against the condemnor for the full value of Tenant’s leasehold interest and other property interests in and to the Premises. If the laws of the state in which the Premises are located allow or require the recovery from the condemnor to be paid into a common fund or to be paid to Landlord only, and if such recovery is so paid into a common fund or to Landlord only, then the recovery so paid shall be apportioned between the parties according to the value of their respective property interests as they existed on the date of the condemnation, giving due consideration for the number of years remaining in the Term and the condition of the buildings and other Improvements comprising the Premises. Tenant shall not be entitled to share in any awards to Landlord for the value of any land owned by Landlord, which is the subject of the taking. The provisions of this Section 16.3 shall survive any termination of this Lease pursuant to the provisions of Section 16.1 or 16.2.

16.4

Rent Reduction in Case of Partial Taking; Restoration. If, at any time during the Lease Term, a part of the Premises is taken by condemnation and Tenant is not entitled to or does not exercise its right to terminate, this Lease shall continue in full force and effect, except that Minimum Monthly Rent shall be reduced as of the Date of Taking, so that for the remainder of the Term, Tenant shall pay only such portion of the Monthly Rent as the rental value of the part remaining after condemnation bears to the rental value of the entire Premises at the date of condemnation with such amount to be determined by multiplying the Monthly Rent then in effect by a fraction of which the numerator is the square footage of the Premises after the condemnation and the denominator is the square footage of the Premises prior to the condemnation. Tenant shall perform the construction, repair, alteration or restoration of the remaining part of the Premises so the same shall continue to be suitable for the use made by Tenant immediately prior to the condemnation; provided, however, that the condemnation award shall be made available to pay for such repairs and Tenant shall not be obligated to expend an amount greater than the amount awarded to Landlord and Tenant on account of the taking of the Improvements, exclusive of that portion of the award attributable to real property taken. If the amount awarded to Landlord and Tenant on account of the taking is not sufficient to permit Tenant to so alter, repair, and restore the Premises, Tenant shall notify Landlord of such deficiency within thirty (30) days after the Date of Taking and Landlord may elect to contribute the amount of the deficiency to the cost of the repair and restoration or to terminate this Lease. Landlord shall notify Tenant of its election within thirty (30) days after the date on which Landlord receives the notice of deficiency from Tenant. If Landlord elects to terminate the Lease, the termination shall be effective as of the Date of Taking and all Monthly Rent, Additional Rent and other charges payable hereunder shall be prorated and paid to such date of termination. The condemnation award received by Landlord and Tenant shall be allocated as set forth in Section 16.3 above.”

36.

As of the Effective Date, Section XVIII contained in the Mall Outparcel General Lease Provisions of the Lease shall be deleted in its entirety and the following be substituted in lieu thereof:

18.1

Real Property Taxes and Assessments. From and after the Rent Commencement Date, Tenant shall pay directly to the taxing authority all real property taxes and assessments, or installments thereof, whether general or special, or ordinary or extraordinary, every nature, name and kind whatever, including all governmental charges of whatever nature or kind, which are levied, assessed, charged or imposed against the Premises or any part of the Premises, the Improvements, the leasehold of Tenant under this Lease or against Tenant by reason of ownership of the Improvements and become due during the Term, at least ten (10) days before the date on which payment of such taxes or assessments would be delinquent. The amount of such taxes and assessments shall constitute “Additional Rent” hereunder. If any tax or assessment is payable in installments, Tenant may pay the tax or assessment in the maximum number of installments permitted by the applicable taxing authority as each becomes due and prior to the delinquency date therefor. In no event shall Tenant be required to pay any taxes or assessments attributable to any period before the Rent Start Date or after the expiration of the Term.

18.2

Personal Property Taxes. During the Lease Term, Tenant shall pay all personal property taxes levied upon the personal property on the Premises, before the date on which such taxes would be delinquent.

18.3

Proration. All of the costs, expenses and charges referred to in this Article XVIII (“Impositions”), except personal property taxes and utility or other charges attributable solely to the operation of Tenant’s business on the Premises, shall be prorated between the parties for the first year of the Term, as of the Rent Commencement Date, and for the last year of the Term, as of the expiration or termination date. Landlord and Tenant agree that until such time as Wilson County assigns the Premises a separate tax lot number and assesses taxes against the Premises separate from the remainder of the Mall Site, Tenant shall pay Landlord on demand as Additional Rent a pro-rata share of the ad valorem taxes assessed against the Mall Site based on the relationship of the square footage of the Premises to the total square footage of the Mall Site.

18.4

Contest. Tenant may, at its expense, contest any Impositions levied or charged against the Premises in any manner permitted by law, in Tenant’s name and, whenever necessary, in Landlord’s name. Landlord shall cooperate with Tenant and execute any documents or pleadings required for such purpose. Such contest may include appeals from any judgments, decrees or orders until a final determination is made by a court or governmental department or authority having final jurisdiction in the matter. Before commencing any such contest, Tenant shall obtain a surety bond in favor of Landlord sufficient to cover the amount of the possible Imposition which would be due if the decision were adverse to Tenant.”

37.

As of the Effective Date, Section XX contained in the Mall Outparcel General Lease Provisions of the Lease shall be deleted in its entirety and the following be substituted in lieu thereof:

38.

As of the Effective Date, Section XXII contained in the Mall Outparcel General Lease Provisions of the Lease shall be deleted in its entirety and the following be substituted in lieu thereof:

39.

As of the Effective Date, Section XXIII contained in the Mall Outparcel General Lease Provisions of the Lease shall be deleted in its entirety and the following be substituted in lieu thereof:

40.

As of the Effective Date, Section XXIV contained in the Mall Outparcel General Lease Provisions of the Lease shall be deleted in its entirety and the following be substituted in lieu thereof:

24.1

Exculpation of Landlord. It is expressly understood and agreed by and between Landlord and Tenant that Landlord shall have no liability for damage or injury to any person or property in, on or about the Premises caused by or resulting from acts or omissions of any tenant, occupant, licensee or invitee of the Mall, electricity, gas, rain, ice, snow, or leakage or flow of water from or into any part of the Improvements, or from any other cause or occurrence, unless such damage or injury is caused by or results from the gross negligence or willful misconduct of Landlord or Landlord’s agents, employees, representatives, or contractors or Landlord’s failure to comply with any of its obligations under this Lease.

24.2

Limitation on Landlord’s Liability. Except with regard to Landlord’s obligation to indemnify Tenant as provided under this Lease or in the event of the negligent act or other omission of Landlord or Landlord’s agents, contractors, servants, employees or licensees, in the event of a default or breach by Landlord in the performance of Landlord’s obligations hereunder or a violation by Landlord of any of the provisions of this Lease, there shall be no personal liability of Landlord and Tenant shall look solely to the equity of Landlord in the Premises and the Mall as well as the current rents, issues, profits and other income Landlord receives from operation of the Mall, net of all current operating expenses, liabilities, reserves and debt service associated with such operation for satisfaction of Tenant’s remedies.”

(Seal)

b.

Resurface the parking lot

2.2

Deleted intentionally.

Three (3) sets of the Plans and Specifications as well as any Special Plans shall be submitted for Landlord review and approval, and Tenant shall allow two weeks for the initial review process.

2.5.1

All specifications shall be typed and placed on architectural drawings or on a separate 24” x 36” plan sheet.

2.5.2

All revisions are to be made by change to the drawings and not by addendum.

2.5.3

Tenant’s Plans and Specifications or Special Plans shall be approved by the Landlord prior to any applications for permits.

2.5.4

One (1) set of the final revised and approved Plans and Specifications and Special Plans, if any (the “Final Tenant Plans”) shall be returned to the Tenant and marked “Approved for Construction”. Such Final Tenant Plans must remain on the jobsite at all times for the use of the Landlord or any designated representative.

Mall Outparcel Tenant Construction Obligations shall not commence unless and until Tenant has received Landlord’s written approval of the Final Tenant Plans.

3.1

Tenant shall obtain Landlord’s prior written approval of Tenant’s general contractor. Landlord may require Tenant to use Landlord’s roofing or any other necessary subcontractors, if any, in order to maintain existing warranties.

3.2

No mobilization of construction shall occur until the following items have been submitted to Landlord’s Tenant Coordinator:

3.2.1

Tenant’s Certificate of Liability insurance naming Landlord as an additional insured with limits of at least One Million ($1,000,000) Dollars for each person and One Million ($1,000,000) Dollars for each occurrence for bodily injury and One Million ($1,000,000) Dollars aggregate for property damage.

3.2.2

Tenant’s Certificate of Worker’s Compensation for all Tenant’s employees.

3.2.3

Contractor’s Certificate of Liability insurance naming Landlord as an additional insured with limits of at least One Million ($1,000,000) Dollars for each person and One Million ($1,000,000) Dollars for each occurrence for bodily injury and One Million ($1,000,000) Dollars aggregate for property damage.

3.2.4

Contractor’s Certificate of Worker’s Compensation for all of Contractor’s employees.

3.2.5

A copy of the Demolition (if necessary) and Building Permit.

3.2.6

Completed W-9 Tax form for Contractor.

3.2.7

Contractors complete name, telephone number, fax number, email address, and a copy of License.

3.2.8

Name and mobile telephone number of Contractor’s project manager and project superintendent.

3.2.9

Copy of Tenant’s contract with the general contractor and the construction schedule of values. Such construction contract shall require the general contractor to waive all lien rights against the Mall or Premises.

Tenant indemnifies Landlord against all liens filed as a result of Tenant’s construction. Tenant shall bond any liens filed against the Mall or the Premises from Tenant’s work within ten (10) days of the filing of the lien.

Construction shall not commence unless and until Tenant has received from Landlord a written Notice to Proceed.

3.5

Tenant shall diligently prosecute the completion of the Mall Outparcel Tenant Construction Obligations and shall notify Landlord in writing when the Mall Outparcel Tenant Construction Obligations have been completed, that the Tenant’s architect (if required) has inspected and approved such work, and that the work has been performed in accordance with Final Tenant Plans and all governmental requirements.

Upon such completion and Landlord’s receipt of Tenant’s notice, Landlord will make a final inspection of the Mall Outparcel Tenant Construction Obligations, and Landlord will require the following:

3.5.1

Certificate of Occupancy.

3.5.2

Final approval letter and inspection certificate from the State Fire Marshal’s Office.

3.5.3

Copy of Certificate of Final Lien Waiver from Tenant’s general contractor, running to the benefit of Landlord and Tenant.

3.5.4

Any work not conforming to the Final Tenant Plans shall be corrected by Tenant. If Tenant does not make the necessary corrections, after receiving written notice of same from Landlord, Landlord shall have the option to make the necessary corrections and Tenant shall, within ten (10) days after demand, reimburse Landlord for the actual costs incurred.

3.5.5

If required by the Special Stipulations, Tenant’s architect’s AIA Certificate of Complete that the Premises has been constructed in accordance with the Final Tenant Plans and all government requirements and are one hundred percent (100%) complete.

Tenant specifically acknowledges that the Premises are located on the Mall Site which is open to the public and occupied by other tenants operating seven days a week and 3,600 hours per year and that the conduct of all construction activity on the Premises shall be subject to Landlord approval in consideration of the requirement not to interfere with the continuous operations of the Mall and the businesses of all other Mall tenants. Certain construction activities including noisy or dusty processes may only take place during non-operating hours. Landlord may in its sole discretion determine the hours and the conditions for certain construction activities. Landlord reserves the right to approve all staging and work areas, and shall keep all such areas clean and safe on a daily basis.

4.2

4.2.1

Contractors are to obtain their own trash containers, and their locations shall be determined by Landlord.

4.2.2

No Mall Site utilities are used by Contractors.

4.2.3

If fire main is shut down, the Fire Department is to be notified. All sprinkler work is to be done by the Landlord’s sprinkler company, paid for by the Tenant.

4.2.4

All roof penetrations are to be done by Landlord’s room contractor, paid for by Tenant.

4.2.5

No fire exits or fire corridors are to be blocked or used for storage.

4.2.6

All construction workers are to maintain proper attire (including shirts) at all time.