Exhibit 10.24

LEASE

 

 

THIS LEASE is made and entered into as of                          , 2002
(“Execution Date”), by and between KRAUSZ ENTERPRISES, a California general
partnership (“Landlord”), and CHICAGO PIZZA & BREWERY, INC., a California
corporation dba “BJ’s Restaurant & Brewhouse/Brewery” (“Tenant”).  For good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant agree as follows:

 

 

ARTICLE 1:  PREMISES.

 

1.1  Landlord hereby demises and lets unto Tenant, and Tenant hereby hires and
takes from Landlord, on the terms hereinafter set forth, those certain premises
commonly known as 11101 183rd Street, City of Cerritos, County of Los Angeles,
State of California, being the cross-hatched area on Exhibit A (attached hereto
and by this reference made a part hereof), containing approximately 11,400
square feet of leasable area, together with a Patio Seating Area (as defined in
Section 15.10) (the “Premises”).  The Premises is part of a larger parcel, all
as set forth in Exhibit A attached hereto and by this reference made a part
hereof, and sometimes hereinafter referred to as “Shopping Center”.

 

1.2  Tenant shall accept the Premises subject to all easements, rights,
restrictions, agreements and encumbrances of record (collectively called “Title
Matters”).  So long as Tenant is not in default hereunder, Tenant shall have the
quiet enjoyment of the Premises without let or hindrance on the part of
Landlord, subject to (i) all of the provisions of this Lease, (ii) any mortgage
or deed of trust to which this Lease is or shall become subordinate, and (iii)
all Title Matters

 

1.3  The site plan of the Shopping Center is tentative notwithstanding Exhibit
A, and Landlord reserves the right from time to time to make changes in the
shape, size, location, number and ex­tent of improvements, buildings,
accommodations and areas, loading area, parking layout or other improvements,
and to eliminate or add any improvements or building to any portion of the
Shop­ping Center.  Landlord shall at all times have the right to determine in
Landlord’s good faith business judgment the nature and extent of the Common
Areas and shall have the right to construct buildings, or temporary or permanent
improvements, to change the character of or make changes at any time in the
size, shape, location, number and extent of the Common Area.  Tenant, its
officers, employees, invitees and customers shall have the right, in common with
Landlord, the other tenants and occupants of the Shopping Center, and all others
legally entitled thereto, to use the Common Area as the same may be changed from
time to time as provided in this Section 1.3, subject to the provisions of this
Lease.

 

Notwithstanding the foregoing, in exercising its rights under this Section,
except as may be due to force majeure, applicable legal requirements, and acts
of governmental authorities, Landlord (a) shall not materially, adversely 
interfere with the ingress to or egress from the Premises, and (b) shall
otherwise use its best efforts not to materially, adversely interfere with
Tenant’s use of the Premises for the Permitted Use, nor to otherwise materially,
adversely affect Tenant’s business in the Premises.

 

1.4  Landlord shall have the exclusive right to use all or any part of the roof
of the Premises for any purpose; to erect additional stories or structures over
all or any part of the Premises; and to erect in connection with the
construction thereof temporary scaffolds and other aids to

 

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construction on the exterior of the Premises.  Landlord shall also have the
right during the Lease Term to install, relocate, maintain and operate columns,
shafts, ducts, pipes, conduits, facilities and structures comprising the air
conditioning system and/or permitting the conveyance of utilities and mechanical
systems in and through the space above the ceiling in the Premises. Landlord
further reserves the right to use up to one percent (1%) of the leasable area of
the Premises as Landlord may designate at any time to accommodate items serving
other portions of the Shopping Center or resulting from the remodeling or
expansion of any portion of the Shopping Center, including without limitation
columns, shafts, ducts, pipes, and conduits provided such item is located
adjacent to an interior wall other than the storefront or otherwise in a
location which does not unreasonably reduce or diminish Tenant’s rights under
this Lease.

 

Notwithstanding the foregoing, in exercising its rights under this Section,
except as may be due to force majeure, applicable legal requirements, and acts
of governmental authorities, Landlord (a) shall not materially, adversely 
interfere with the ingress to or egress from the Premises, and (b) shall
otherwise use its best efforts not to materially, adversely interfere with
Tenant’s use of the Premises for the Permitted Use, nor to otherwise materially,
adversely affect Tenant’s business in the Premises.

 

1.5  If Landlord does not deliver possession of the Premises to Tenant for any
reason, Landlord shall not be subject to any liability therefor. Such failure of
delivery shall not affect the validity of this Lease or the obligations of
Tenant hereunder, or extend the Expiration Date.  If Landlord does not deliver
possession of the Premises to Tenant by the date which is two hundred seventy
(270) days after the Execution Date for any reason (the “Outside Delivery
Date”), except in the case of the Existing Tenancy Termination, which shall be
governed by Section 1.7 below, Landlord may at any time terminate this Lease
without liability by delivering written notice to Tenant.  In all events, if
Landlord does not deliver possession of the Premises to Tenant for any reason
within twelve (12) months after the Execution Date, then this Lease shall
terminate and neither party shall have any further liability to the other. In
the event Landlord terminates this Lease pursuant to this Section 1.5 after it
has given the Plan Submittal Notice to Tenant under Section 2.1 below, and
provided Tenant is not then in default under this Lease, after the giving of
notice and expiration of any applicable cure period, then Landlord will
reimburse Tenant, within thirty (30) days after presentation of written demand
therefor from Tenant (which demand is accompanied by reasonable evidence,
including but not limited to paid invoices, of the sum demanded), for Tenant’s
reasonable, actual out-of-pocket costs and expenses payable to third parties in
connection with the preparation of the Site Plans and Exterior Elevations
referred to in Paragraph 2b of Exhibit C prior to the date of termination.

 

1.6  By taking possession of the Premises Tenant will conclusively be deemed to
have inspected the Premises and found the Premises in satisfactory condition.
Tenant acknowledges that neither Landlord, nor any agent, employee or servant of
Landlord, has made any representation or warranty, expressed or implied, with
respect to the Premises, Building or Common Areas of the Shopping Center, or
with respect to the suitability of them to the conduct of Tenant’s business, nor
has Landlord agreed to undertake any modifications, alterations, or improvements
of the Premises, Building or Common Areas of the Shopping Center, except as may
be specifically provided in this Lease.

 

1.7  Tenant acknowledges that, as of the Execution Date, the Premises is leased
and occupied.  Landlord’s obligations under this Lease are expressly conditioned
upon Landlord’s ability to enter into an agreement sufficient to cause the
termination of the existing leasehold and to cause all tenants and occupants
thereunder to vacate the Premises (collectively, the “Existing Tenancy
Termination”) in order to permit the delivery of the Premises to Tenant as set
forth in this Lease.

 

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Landlord shall not be in breach or default under this Lease is it fails or is
unable to cause the Existing Tenancy Termination to occur. As an inducement to
Landlord to attempt to arrange for the Existing Tenancy Termination, Tenant
agrees to pay to Landlord the non-refundable sum of Fifty Thousand and No/100
Dollars ($50,000.00)(the “Early Delivery Payment”) if Landlord is able to (i)
cause the Existing Tenancy Termination to occur, and (ii) deliver the Premises
to Tenant on or before midnight on the date which is forty five (45) days after
the last party has executed and delivered this Lease (the “Target Delivery
Date”).  If the foregoing conditions are satisfied, Tenant shall pay the Early
Delivery Payment to Landlord within five (5) business days after the Premises
has been delivered to Tenant.  If Landlord fails or is unable, for any reason
whatsoever, to cause the foregoing conditions to be satisfied by the Outside
Delivery Date (which date shall be subject to extension on a day-for-day basis
for force majeure), then either party shall have the right to cancel this Lease
by written notice given to the other at any time thereafter and prior to the
occurrence of the Existing Tenancy Termination, and in the event of such
cancellation, each party shall be relieved of all obligations and liabilities
under this Lease. Landlord shall not be liable for, and Tenant, as a material
part of the consideration to Landlord under this Lease, hereby assumes all risk
of and waives all claims against Landlord for, loss or damage of any kind or
nature relating to Landlord’s failure or inability to terminate the existing
leasehold and/or cause any such existing tenant or occupant to vacate the
Premises. Notwithstanding the foregoing, however, that Tenant shall not have the
right to terminate if the either of the foregoing conditions are not satisfied
due to the failure of Tenant to timely perform work, submit or respond to plans,
or take any other action that Tenant is required to take as and when specified
in this Lease.

 

ARTICLE 2:  TENANT IMPROVEMENTS.

 

2.1 Tenant agrees to lease the Premises from Landlord in an “AS-IS, WHERE-IS”
condition with any then existing improvements in place.  By the earlier of (a)
ten (10) days after delivery of possession of the Premises to Tenant, and (b)
ten (10) days after Landlord notifies Tenant in writing (the “Plan Submittal
Notice”) that it has entered into an agreement providing for the Existing
Tenancy Termination, which notice shall state the estimated, non-binding, date
that Landlord anticipates delivering possession of the Premises to Tenant (the
earlier of (a) and (b) being referred to herein as the “Plan Submittal Date”),
Tenant shall submit to Landlord, for its approval, complete architectural plans,
drawings and specifications, finishes and materials, engineering working
drawings and a construction schedule (“Plans”) showing all work to be performed
by or on behalf of Tenant to prepare the Premises for the Permitted Use
(“Tenant’s Work”), and submit the same for Landlord’s approval. The Plans shall
be prepared by a reputable, licensed and qualified architect or engineer. If
Landlord disapproves of the proposed Plans, it shall state the reasons for such
disapproval in writing, and within ten (10) days thereafter Tenant shall cause
its architect or engineer to revise the Plans to address the concerns raised by
Landlord and resubmit the same to Landlord for its approval or disapproval in
accordance with the procedure set forth above, and revision and resubmittal of
the Plans shall continue until the same have been approved by Landlord in all
respects.

 

2.2  Tenant’s Work shall be done in a good and workmanlike manner, and shall be
in compliance with all governmental rules, orders, licenses, zoning and
build­ing requirements and insurance applicable thereto, and all provisions of
this Lease applicable to construction of Improvements, and pursued with
diligence in accordance with the Plans as approved by Landlord. Tenant shall
cause Tenant’s Work to be constructed and installed by a qualified, reputable,
licensed and insured general contractor bonded by a corporate surety or of
financial strength capable of performing the work without a bond, as selected by
Tenant and approved in advance by Landlord, such approval not to be unreasonably
withheld, and the cost thereof shall be paid by Tenant, including the cost of
design, planning, approvals, insurance and permits.  Upon completion of

 

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construction of the Premises, Tenant shall obtain and deliver to Landlord an
original Certificate of Occupancy or its equivalent and a certificate of
Tenant’s architect certifying to the completion of Tenant’s Work in accordance
with the Plans previously ap­proved by Landlord. The Commencement Date as set
forth in Section 3.1 hereof shall not be affected if the failure of Tenant to
complete “Tenant’s Work” shall prevent Tenant from obtaining a temporary or
permanent Certificate of Occupancy.

 

2.3  As part of Tenant’s Work, Tenant shall, at its sole cost and expense,
furnish and install all trade fixtures, furnishings, signs, equipment, and other
tangible personal property necessary for the Permitted Use. All of the foregoing
must be new when installed in, or attached to, the Premises.

 

2.4   Tenant shall commence and diligently proceed with Tenant’s Work so as to
complete the work contemplated thereby and open for business in the Premises on
or before the Rent Commencement Date.  Tenant’s failure to complete such work
and open for business by the Rent Commencement Date for any reason whatsoever
shall not affect the Rent Commencement Date, and Landlord shall have all of its
remedies under this Lease or at law or in equity for such failure.

 

ARTICLE 3:  LEASE TERM.

 

3.1  The term of this Lease (the “Lease Term”) shall be for a period of
approximately twenty (20) years commencing upon the date Landlord tenders
possession of the Premises to Tenant or Tenant’s agent (the “Commencement
Date”), and ending on the twentieth (20th) anniversary of the last day of the
first full month following the Commencement Date (“Expiration Date”).  Within
thirty (30) days following the last to occur of (a) the Execution Date, (b) the
Commencement Date, and (c) the Rent Commencement Date, Landlord and Tenant will
execute a letter agreement that will set forth and serve to ratify the actual
occurrence of each date referenced in this Section.  In the event this Lease
provides for an express option to extend the Lease Term for one or more periods,
“Lease Term” shall be deemed to include any such period(s) as to which such
option has been properly exercised, and the “Expiration Date” shall be deemed to
be the last day of the last such period as to which such option has been
properly exercised.

 

3.2  Provided Tenant has not at any time been in default under any of the terms,
covenants or conditions of this Lease through and including the commencement
date of the applicable Extended Term as hereinafter set forth, Tenant shall have
the option to extend the Lease Term for two (2) successive periods of five (5)
years each, followed by a third period of four (4) years, six (6) months (the
“Extended Term [s]”), i.e. from the first day following the Expiration Date and
continuing until the last day of the sixtieth (60th) month thereafter (the
“First Extended Term”); from the first day following the end of the First
Extended Term until the last day of the sixtieth (60th) month thereafter (the
“Second Extended Term”); and from the first day following the end of the Second
Extended Term until the last day of the fifty fourth (54th) month thereafter
(the “Third Extended Term”). The option to extend as to the any Extended Term
shall be exercisable by written notice given to Landlord no later than twelve
(12) months nor earlier than eighteen (18) months prior to the expiration of the
initial Lease Term or the end of the previous Extended Term, as the case may
be.  Tenant may not exercise the option to extend as to any Extended Term unless
it has already exercised said option as to all prior Extended Terms.  Tenant
shall have no right to extend or renew this Lease other than for the aforesaid
three (3) Extended Terms.  Time is of the essence with respect to any exercise
of such option by Tenant.  If Tenant fails to exercise the foregoing option when
required for any Extended Term, such option shall thereafter be of no force or
effect. If the option to extend described in this Section is exercised as to any
Extended Term, then all of the covenants and agreements contained in this Lease
shall apply during the

 

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Extended Term, except that Minimum Rent during the Extended Term shall be as set
forth in Section 3.3.  The option set forth in this Section 3.2 is personal to
Chicago Pizza & Brewery, Inc., a California corporation (“Original Tenant”), and
may be exercised only so long as (i) the Original Tenant (or its affiliate)
occupies the Premises without assigning this Lease or subletting the Premises or
any part thereof, or (ii) a national or regional chain restaurant operator who
purchases all or substantially all of Tenant’s other restaurant locations in
Southern California under the same trade name as the Premises, and may not be
exercised or be assigned, voluntarily or involuntarily, by or to any person or
entity other than the foregoing.  Said option is not assignable separate and
apart from this Lease, nor may the same be separated from this Lease in any
manner, either by reservation or otherwise.

 

3.3  Minimum Rent for each year of any Extended Term(s) shall be an amount equal
to: (a) the annual Minimum Rent payable immediately prior to the Expiration Date
pursuant to Section 4.3, increased by (b) of five ­­percent (5%) per annum,
cumulative and compounded, for each year from and after the Expiration Date,
inclusive of the first year of the first Extended Term.

ARTICLE 4:  RENT.

 

4.1  From and after the earlier to occur of (A) one hundred twenty (120) days
after the later of (i) delivery of the Premises to Tenant, or (ii) Tenant’s
receipt of a building permit and any other governmental approval necessary for
the construction of Tenant’s Work, and (B) the date Tenant first opens for
business in the Premises (the “Rent Commencement Date”), Tenant agrees to pay
the following to Landlord, as “Minimum Rent”, in lawful money of the United
States of America, in ad­vance, on the first day of each and every calendar
month from and after the Rent Commencement Date: Twenty Thousand Nine Hundred
and no/100 Dollars ($20,900.00) per month, beginning with the Rent Commencement
Date and continuing  for the remainder of the Lease Term, subject to adjustment
in accordance with Section 4.3. Notwithstanding the foregoing, prepaid Minimum
Rent in the amount of Twenty Thousand Nine Hundred and no/100 Dollars
($20,900.00) shall be paid to Landlord on or before the Execution Date. 
Subparagraph (ii) hereinabove is conditioned upon Tenant’s preparation,
submittal and processing of all plans and permit applications for Tenant’s Work
in a diligent and timely manner and in accordance with all provisions of this
Lease, including but not limited to Exhibit C, and the requirements of any
governmental authority, and the Rent Commencement Date shall be adjusted
accordingly for any failure of Tenant to do so.

 

4.2  If the Rent Commencement Date occurs on a day other than the first day of a
calendar month, the Minimum Rent shall be paid by Tenant to Landlord for the
fractional month on a per diem basis, calculated on the basis of a thirty (30)
day month.

 

4.3  Minimum Rent shall be adjusted effective as of the sixth (6th) anniversary
of the Rent Commencement Date (the “First Adjustment Date”) and each anniversary
thereafter (“Adjustment Dates”) during the Lease Term to reflect the increases
(if any) in the Consumer Price Index (as such term is defined in subsection B
below). For purposes of the First Adjustment Date, the Rent Commencement Date
shall be the Base Date; for all subsequent Adjustment Dates, the fifth (5th)
anniversary of the Rent Commencement Date shall be the “Base Date”.  In either
case, the Consumer Price In­dex in publication two (2) months before the Base
Date shall be the “Base Index”.

 

        A.            The Consumer Price Index in publication two (2) months
before each Adjustment Date shall be the “Comparison Index”.  As of each
Adjustment Date, the Mini­mum Rent payable during the ensuing twelve month
period shall be determined by in­creasing the initial Minimum Rent by a

 

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percentage equal to the percentage in­crease, if any, in the Comparison Index
over the Base Index.  If the Comparison Index for any Ad­justment Date is equal
to or less than the Comparison Index for the preceding Adjustment Date (or the
Base Index, in the case of First Adjustment Date), the Minimum Rent for the
ensuing twelve (12) month period shall remain the amount of Minimum Rent payable
during the preceding twelve (12) month period.  When the Minimum Rent payable as
of each Adjustment Date is determined, Landlord shall promptly give Tenant
written notice of such adjusted Minimum Rent and the manner in which it was
computed.

 

        B.            The term “Consumer Price Index” as used in this lease
shall mean the United States Department of Labor, Bureau of Labor Statistics,
Revised Consumer Price Index for All Urban Consumers, for Los
Angeles-Riverside-Orange County, CA, Subgroup “All Items” (1982-84 = 100),  In
the event that the basis upon which said Consumer Price Index is calculated
should be changed from the basis upon which it is presently calculated, then
said Consumer Price Index shall be adjusted by Landlord or a new index
substituted by Landlord, to reflect the purchasing power of the United States
dollar in such manner that the result shall be equivalent to said Consumer Price
Index as presently constituted.

 

        C.            Notwithstand­ing the foregoing, the Minimum Rent resulting
from any one of the foregoing adjustments shall not exceed the Minimum Rent
which would result from an increase in the initial Minimum Rent of ­­­two
­­percent (2%) per annum, cumulative and compounded, from the Base Date through
the Adjustment Date in question.

 

4.4  All rent shall be paid without notice, demand, offset, abatement or
counterclaim except as otherwise expressly set forth in this Lease, to Landlord:
Krausz Enterprises, P.O. Box 2844, South San Francisco, CA  94083-2844, or to
such other person or place as Landlord may from time to time designate in
writing.

 

4.5  It is the intention of the parties that the rent payable hereunder shall be
net to Landlord, so that this Lease shall yield, net to Landlord, the rent
specified herein during the entire Lease Term, and except as specifically
provided herein, that all costs, expenses and obligations of every kind and
na­ture whatsoever relating to the Premises, and Tenant’s pro rata share of the
Common Area Expenses, Real Estate Taxes and Landlord’s insurance costs, shall be
paid by Tenant as hereinafter set forth.  The term “rent” shall mean all sums
payable under this Lease by Tenant, and “additional rent” shall mean all rent
other than Minimum Rent.

 

4.7   In addition to Minimum Rent, Tenant shall pay “Percentage Rent” for each
partial or full calendar year of the Lease Term equal to six percent (6%) of
Gross Sales in excess of the Breakpoint. “Breakpoint” for any specific period
means the amount obtained by dividing the Minimum Rent payable during such
period by the percentage set forth in this Section.

 

A.    Percentage Rent shall be computed with respect to each calendar quarter
and shall be payable on or before the thirtieth (30th) day of the calendar month
immediately following the close of each quarter.  The payments of Percentage
Rent for a calendar quarter shall be calculated based on Gross Sales for such
period.  If the Rent Commencement Date does not fall on the first day of a
calendar quarter, and if the first partial calendar quarter is within the same
calendar year as the first full calendar quarter, Gross Sales made during such
first partial quarter shall be added to the Gross Sales made during the first
full quarter.

 

B. The total Percentage Rent due and payable for a calendar year shall be
computed based on Tenant’s annual statement of Gross Sales for that calendar
year and if Tenant paid an amount greater than the actual Percentage Rent
payable (provided Tenant is not then in default of its

 

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obligations under this Lease) the amount of such overpayment shall be credited
against Tenant’s next required payment of Percentage Rent; if Tenant paid an
amount less than the required Percentage Rent, then Tenant shall pay such
difference to Landlord together with Tenant’s annual statement of Gross Sales
for said calendar year.

 

C.  Tenant agrees to furnish to Landlord a statement of Gross Sales within
thirty (30) days after the close of each calendar month, and an annual
statement, including a monthly breakdown of Gross Sales, within thirty (30) days
after the close of each calendar year during the Lease Term and any partial
calendar year at the end of the Lease Term.  Such statements shall itemize all
elements of Gross Sales and Gross Sales Adjustments, and shall be certified as
true and correct by a responsible officer of Tenant.  The receipt by Landlord of
any statement or any payment of Percentage Rent for any period shall not bind
Landlord as to the correctness of such statement or payment.  Upon request,
Tenant agrees to furnish to Landlord a copy of Tenant’s and its subtenant’s,
licensee’s and concessionaire’s state and local sales and use tax returns, if
required in the State of California.  If Tenant’s sales are reported on any
State or local sales tax return or any other similar form of return, and sales
as so reported on any of said returns shall exceed the Gross Sales as reported
to Landlord, then the Gross Sales shall be taken at the highest figure so
reported, less all permitted exclusions hereunder.  Tenant shall record at the
time of sale, in the presence of the customer, all receipts from sales or other
transactions using a cash register or computer system that cumulatively numbers
and records all receipts.  Tenant and its subtenants, licensees and
concessionaires, shall keep (i) full and accurate books of account and records
in accordance with generally accepted accounting principles consistently
applied, including, without limitation, a sales journal, general ledger and all
bank account statements showing deposits of Gross Sales revenue, (ii) all cash
register detail tapes with regard to all transactions of Gross Sales, and (iii)
detailed original records of all Gross Sales Adjustments.  Such books, receipts
and records pertaining to a calendar year shall be kept by Tenant, and its
subtenants, licensees and concessionaires, for a period of three (3) years after
the close of such calendar year and shall be available for inspection, audit,
and photocopying by Landlord and Landlord’s representatives at the Premises or
Tenant’s principal place of business at all times during regular business
hours.  Any corrections or adjustments to Gross Sales previously reported by
Tenant which will result in a refund to Tenant must be reported to Landlord
within the ninety (90) day period following the end of the calendar year in
which such Gross Sales were made.  If any governmental authority shall increase
the sales reported by Tenant on any such tax return, after audit for any
calendar year for which such sales have been reported, then Tenant shall notify
Landlord promptly of such increase and pay any additional Percentage Rent due at
that time.  If it shall be determined as a result of an audit that there has
been a deficiency in the payment of Percentage Rent, then such deficiency shall
become immediately due and payable with interest at the Interest Rate from the
date when said payment was due.  In addition, if Tenant understates Gross Sales
by more than three percent (3%), or if any audit shows that Tenant has failed to
maintain the books of account and records as required or if Tenant fails to
appear for and/or cooperate with Landlord’s audit representative and, as a
result, Landlord is unable to verify the accuracy of Tenant’s statement, then
Tenant shall pay to Landlord all reasonable costs and expenses (including,
without limitation, attorneys fees) incurred by Landlord in conducting such
audit and collecting any underpayment.  If such audit shall disclose any fraud
or intentional misrepresentation by Tenant, then, in addition to all other
rights and remedies hereunder, Landlord may elect to terminate this Lease with
no further obligations thereafter accruing from Landlord to Tenant.

 

D.  If during the Lease Term, within a radius of five (5) miles from the
perimeter of the Shopping Center, Tenant or any entity controlled by,
controlling or under common control with Tenant, directly or indirectly,
operates or owns a business under Tenant’s Trade Name or otherwise directly or
indirectly operates or owns any similar type of business not so operated or
owned on

 

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the date Landlord executed this Lease, then while Tenant or such entity is
directly or indirectly owning or operating said other business, Tenant shall
include the Gross Sales of such other business in the Gross Sales made from the
Premises for the purpose of computing the Percentage Rent due hereunder.  Tenant
will provide Landlord with a statement of Tenant’s Gross Sales, in accordance
with the provisions of this Section, for each such business location directly or
indirectly owned or operated by Tenant or such entity within the radius.

 

E.  Intentionally deleted.

 

F.  If at any time subsequent to the Rent Commencement Date, Tenant does not
operate its business in the Premises pursuant to Sections 15.1 and 15.2, then,
in addition to any and all other remedies afforded to Landlord by reason of
default, the Breakpoint shall be reduced by 1/360th for each day or portion
thereof that Tenant does not so operate its business in the Premises. If any
reporting period shall be less than twelve (12) months, the Breakpoint for such
reporting period shall be proportionately adjusted.  Whenever Minimum Rent is
reduced or increased, the applicable Breakpoint shall be proportionately reduced
or increased, as the case may be.

 

G.  “Gross Sales” means the gross selling price of all merchandise and/or
services sold in, at or from any part of the Premises or through the use of the
Premises by Tenant, its subtenants, licensees and concessionaires, whether for
cash or on credit and whether made by store personnel or by approved vending or
gaming machines, or through telephone, electronic mail, Internet, or other
electronic means, or catalogue orders taken at or filled from the Premises,
adjusted to exclude Gross Sales Adjustments.  Gross Sales shall not include any
government imposed taxes upon the sale of merchandise or services which are
collected separately from the selling price and paid directly to the taxing
authority.  All sales originating at the Premises shall be considered Gross
Sales, even though bookkeeping and payment of the account may be transferred to
another place for collection and even though actual filling and/or delivery of
the merchandise may be made from a place other than the Premises.  Each sale
upon installments or credit shall be treated as a sale for the full sale price
at the time of sale. “Gross Sales Adjustments” means the following items but
only to the extent previously reported as Gross Sales: the selling price of all
merchandise returned by customers and accepted for full credit or the amount of
discounts made thereon; sums and credits received in the settlement of claims
for loss or damage to merchandise; the price allowed on merchandise traded in by
customers for credit or the amount of credit for discounts and allowances made
in lieu of acceptance thereof; alteration workroom charges and delivery charges
at Tenant’s cost and collected separately from the selling price; receipts from
vending machines installed solely for Tenant’s employees; and sales of fixtures,
equipment or property which are not stock in trade. “Gross Sales” shall not
include  transfers of food, drinks or merchandise by Tenant from the Premises to
another place of business operated by Tenant (where such transfers are made
solely for the convenient operation of Tenant’s business and not for the purpose
of consummating a sale which has theretofore been made in, on or from the
Premises or for the purpose of depriving Landlord of the benefit of a sale which
otherwise would be made in, on or from the Premises);

 

ARTICLE 5:  REAL ESTATE TAXES

 

5.1  Tenant shall pay to Landlord, as additional rental, “Tenant’s Share” of the
“Real Estate Taxes” upon the Premises, the Shopping Center land, and the Common
Area improve­ments for each tax period included within the Lease Term commencing
with the Rent Commencement Date. For purposes of this Article, “Tenant’s Share”
of the Real Estate Taxes for any tax year shall be the sum of the following:

 

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        (a) five and 67/100 percent (5.67%) of the total assessments on the
Shopping Center land; plus

 

        (b) five and 67/100 percent (5.67%) of the total assessments on the
Common Area improvements; plus

 

        (c) one hundred percent (100%) of the total assessments on the building
of which the Premises is a part (the “Building”), if the Building is separately
assessed; if the Building is not separately assessed, then the percentage shall
be calculated on the basis that Tenant’s 11,400  square feet of leasable area
relates to the leasable area in square feet of all premises in the Shopping
Center jointly assessed with the Premises.  The assessments on the building(s)
jointly assessed shall be deemed to be uniformly assessed on a square foot floor
area basis and, at Landlord’s election, an appropriate adjustment shall be made
with respect to any jointly assessed buildings which do not have a construction
reasonably similar to that of the Premises. The assessment on the land and on
the Common Area improvements shall be deemed to be uniformly assessed.  If the
number of square feet of any building shall change during any tax year, the
condition existing upon the day as of which Real Estate Taxes are assessed for
said tax year shall control.  If, upon the assessment day for real estate taxes
for any tax year fully or partly included within the Lease Term, at Landlord’s
election a portion of such assessment shall be attributable to buildings in the
process of construction, a fair and reasonable adjustment shall be made to carry
out the intent of the parties. Real Estate Taxes for the tax years during which
the Lease Term commences and terminates shall be prorated.  The term “Real
Estate Taxes” used herein shall mean all taxes, assessments (special or
otherwise), water, trash, sewer or other utility fees, fees related to
environmental laws and regulations, and any other governmental levies, fees or
charges of any kind, nature or sort whatsoever, ordinary and extraordinary,
foreseen or unforeseen, and substitutes therefor related in any manner to the
Shopping Center or any part thereof, fixtures, equipment and other property used
in connection therewith, whether real or personal, rents or other amounts
receivable therefrom, sales therefrom, any use thereof, any facility located
therein or used in conjunction therewith, or to the business or activity of
owning, leasing, managing or operating a shopping center, however same shall be
labeled and whether the same be measured by way of rents, sales, use, usage,
square footage, traffic counts, car counts, parking usage, value or cost of land
or improvements, sale or transfer price or measured in any other way and all
expenses incurred in seeking reduction by the taxing authorities of the taxes
and assessments described above.  Real Estate Taxes shall not include Landlord’s
net income or franchise taxes or any inheritance, estate, succession, gift,
corporation or profit tax or capital levy. Real Estate Taxes shall also not
include any Internal Revenue Service lien or obligation on account of any prior
tenant or occupant of the Premises, nor any interest, penalties, fees, charges
or assessments incurred solely as a result of Landlord’s failing to comply with
any Environmental Regulations.

 

5.2  Landlord shall bill Tenant for any amount that may be payable by Tenant
pursuant to the provisions of this Article.  Said bill shall be accompanied by a
computation of the amount payable.  The amount payable by Tenant hereunder for
any tax period shall be payable at least thirty (30) days before such Real
Estate Taxes become delinquent, but if Tenant shall not have received such a
bill from Landlord at least fifteen (15) business days prior to said time for
payment, Tenant shall not be required to make pay­ment until fifteen (15)
business days after the receipt of said bill.  If Real Estate Taxes are payable
to dif­ferent taxing authorities for any tax year at different times, an
appropriate apportionment shall be made of the amount payable by Tenant for said
tax year, and the apportioned amount shall be pay­able at such times.  Landlord
at its option may require Tenant to pay monthly an amount of such taxes into an
impound account; in such event, Tenant’s payments shall be due on a monthly
basis together with the Minimum Rent.

 

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5.3  Should Tenant assign this Lease or sublease in accordance with Article 16
hereof, and if such assignment or sublease results in an increased assessment of
the Premises, Tenant and its assignee shall be responsible for any increase in
Real Estate Taxes resulting therefrom.

 

5.4  In addition to Real Estate Taxes, Tenant shall pay before delinquency all
taxes (including sales and use taxes), assessments, license fees and public
charges levied, assessed or imposed upon Tenant’s business operation as well as
upon Tenant’s merchandise, signs, trade fixtures and other personal property. 
In the event such items of Tenant’s property are assessed with property of
Landlord, Landlord shall allocate such assessment between Landlord and Tenant so
that Tenant shall pay only Tenant’s equitable portion.

 

ARTICLE 6.  INSURANCE

 

6.1  During the Lease Term, Landlord shall, subject to reimbursement by Tenant
as set forth below, maintain or cause to be maintained the following:

 

        a.  Insurance providing protection against any peril generally included
in the classification “Special Form” in the geographic area in which the
Shopping Center is located (including, coverage against sprinkler damage,
vandalism, malicious mischief, and, at Landlord’s election, earthquake and/or
flood), covering the Building, exclusive of any item that Tenant or another
occupant is required to insure, in an amount that is eighty percent (80%) of the
Building’s full replacement cost (exclusive of the cost of excavations,
foundations and footings) or such greater amount as Landlord in its discretion
may elect to carry. Such insurance shall be issued in the names of Landlord and
its mortgagee, as their interests appear, and shall be for the sole benefit of
such parties and under their sole control.  If Landlord elects not to obtain
flood and/or earthquake insurance, Landlord shall have no liability to Tenant
and the provisions of this Lease shall be unchanged. Re­placement cost shall be
determined from time to time by Landlord after consulting an appraiser,
engineer, architect or contractor selected by Landlord. Tenant shall prior to
making any Improvement which may require increasing the amounts of any coverage
provide reasonable prior written notice of same to Landlord, with such
particularity as will enable Landlord to obtain any necessary additional
coverage.

 

        b.   A comprehensive coverage policy of public liability insurance
against claims and liability for personal injury, death or property damage
occurring on, in or about the Shopping Center with aggregate limits of liability
not less than One Million and no/100 Dollars ($1,000,000.00) in respect to any
one occurrence in respect of bodily injury or death of any one person and
destruction or damage to property.

 

        c.  At the election of Landlord, a rental interruption insurance policy
in an amount equal to not more than the annual rent payable by Tenant hereunder,
including Minimum Rent and any additional rent.

 

        d.  Such other insurance, in such amounts and against such other risks,
as Landlord may reasonably require from time to time to provide the protection
customarily provided premises of the character of the Premises.

 

6.2  During the Lease Term, Tenant will keep in force the following:

 

        a.             Commercial general liability and property damage
insurance with broad form contractual liability coverage and with coverage
limits of not less than Two Million and no/100 Dollars ($2,000,000) combined
single limit, per occurrence, insuring against personal or bodily

 

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injury to or death of persons occurring in, on or about the Premises and any and
all liability of the insureds with respect to the Premises or arising out of the
Tenant’s maintenance, use or occupancy of the Premises and all areas appurtenant
thereto, specifically including liquor liability insurance covering consumption
of alcoholic beverages by customers of Tenant, if the sale of alcoholic
beverages is permitted in the Premises, and specifically including product
liability insurance.  Such policy shall insure Tenant’s performance of the
indemnity provisions of this Lease, but the amount of such insurance shall not
limit Tenant’s liability nor relieve Tenant of any obligation hereunder.

 

        b.             Property insurance covering any peril generally included
in the classification “Special Form” covering all Tenant’s Work, Improvements,
and all of Tenant’s personal property, trade fixtures, equipment, merchandise,
furnishings and signs in, on, or about the Premises (whether installed by Tenant
or a prior tenant), in an amount not less than their full replacement cost.  Any
policy proceeds shall be used for the repair or replacement of the property
damaged or destroyed, unless this Lease is terminated under the provisions of
Article 12.

 

        c.             Business interruption insurance covering Tenant’s
business operated in the Premises with limits of liability representing at least
approximately six (6) months of income.

 

        d.             Business auto liability covering owned non-owned and
hired vehicles with a limit of not less than One Million and no/100 Dollars
($1,000,000.00) per accident.

 

        e.             Employer’s liability with limits of $1,000,000 each
accident, $1,000,000 disease policy limited, One Million and no/100 Dollars
($1,000,000.00)  - each employee.

 

        f.              Insurance covering the full replacement cost of all
plate glass on the Premises; Tenant may self-insure such risk upon prior
approval of Landlord.

 

        g.             Boiler and machinery insurance on equipment (or any part
thereof) exclusively serving the Premises.

 

        h.             During any period of construction or alterations by
Tenant (including Tenant’s Work and any Improvements), the insurance coverage
set forth in Exhibit C.

 

6.3   All policies of insurance provided for in Section 6.2 shall be issued by
responsible insurance companies licensed to do business in California that have
a general policyholder’s rating of not less than “A-XI” as rated in the most
current available “Best’s” Insurance Reports or equivalent. All policies of
insurance provided for herein (with the exception of workers’ compensation
insurance) shall name Landlord, Landlord’s property manager, all mortgagees and
such other individuals or entities as Landlord may from time to time designate,
as “additional insureds” using ISO Bureau Form CG2011196 (or a successor form)
or such other endorsement form reasonably acceptable to Landlord; shall contain
a severability of interest clause and a cross-liability endorsement; and shall
be endorsed to provide that the limits and aggregates apply per location using
ISO Bureau Form CG2504397 (or a successor form) or such other endorsement form
reasonably acceptable to Landlord. Certificates of all insurance required of
Tenant hereunder shall be delivered to Landlord at least ten (10) days prior to
the Commencement Date.

 

6.4  All certificates of insurance delivered to Landlord shall be endorsed to
give Landlord and its mortgagee thirty (30) days’ advance written notice of any
cancellation, lapse, reduction or other adverse change respecting such
insurance.  All of Tenant’s insurance policies shall be written as primary
policies, not contributory with or secondary to coverage that Landlord may
carry. The

 

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deductibles for all insurance required to be maintained by Tenant hereunder
shall be reasonably satisfactory to Landlord.  If Landlord or any of the other
additional insureds carries insurance which is applicable to the covered loss on
a contributing, excess or contingent basis, the amount of Tenant’s insurance
company’s liability under the policy of insurance maintained by Tenant shall not
be reduced by the existence of such other insurance. Tenant shall, prior to the
Commencement Date and from time to time during the Lease Term at Landlord’s
request, provide Landlord with a completed Certificate of Insurance, using a
form acceptable in Landlord’s reasonable judgment, attaching thereto copies of
all endorsements required to be provided by Tenant under this Lease. If Tenant
fails to maintain any policy or policies of insurance set forth herein, then
Landlord, in addition to its other rights and remedies, may (but shall not be
obligated to) obtain the applicable insurance for Tenant’s account and at
Tenant’s expense. Landlord, at any time, and from time to time, may require the
insurance limits set forth herein to be increased to reflect the then-prevailing
standards in the industry as to businesses of the type being operated at the
time in the Premises.

 

6.5  Tenant shall pay Landlord, as additional rent, within ten (10) days of
Tenant’s receipt of a written statement from Landlord from time to time,
Tenant’s Share of the cost of all such insurance as Landlord is required to or
elects to maintain under the provisions of this Lease, including any charges for
deferred payment of premiums and the amount of any deductible incurred upon any
covered loss within the Shopping Center,  together with any self-insurance
retention for the risks to be insured or which may be insured pursuant to
Section 6.1.  For purposes of this Article, “Tenant’s Share” shall be
established by the ratio be­tween the leasable area of the Premises and the
total leasable area of the building(s) covered by the insurance bill. Tenant
acknowledges that it will pay for its share of the cost of the insurance
covering the Common Area as part of the Common Area Expenses as provided in
Article 10 hereof.

 

6.6  All insurance provided by Landlord as required by this Article 6 shall be
carried in responsible companies licensed in California.  In lieu of obtaining
such insurance, Landlord reserves the right to self-insure for any such risk.

 

6.7  Tenant shall timely pay all premiums and charges for all insurance policies
which it is required to provide pursuant to this Lease and if Tenant shall fail
to make any such payment when due or carry any such policy, Landlord, at its
option, may, but shall not be obligated to, make payment or carry such policy,
and the amounts paid by Landlord, together with a fifteen percent (15%)
administrative fee, shall be due upon demand as additional rent, but payment by
Landlord of any such premiums or the car­rying by Landlord of any such policy
shall not be, nor be deemed to be, a waiver or release of the default of Tenant
with respect thereto, or the right of Landlord to institute summary proceedings
and/or to take such other action as may be permissible hereunder.

 

6.8  Tenant shall not do or permit to be done anything which shall invalidate or
materially increase the premiums for the insurance policies referred to in this
Article 6 or any other insurance policy relating to any portion of the Shopping
Center and Tenant shall so perform and satisfy the requirements of the companies
writing such policies that at all times companies of good standing satisfactory
to Landlord shall be willing to write and/or continue such insurance.

 

6.9  Tenant shall cooperate with Landlord in connection with the collection of
any insurance monies that may be due in the event of loss, and Tenant shall
execute and deliver such proofs of loss and other instruments which may be
required by Landlord for the pur­pose of obtaining the recovery of any such
insurance monies.

 

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6.10  Landlord may bring its obligations to insure under this Article 6 within
the coverage of any so-called blanket policy or policies of insurance which it
may now or hereafter carry by appropriate amendment, rider, endorsement, or
otherwise.

 

6.11  At all times during the Lease Term, Tenant shall, at its expense, carry
liquor liability coverage, writ­ten on an occurrence basis, in an amount no less
than Two Million and no/100 Dollars ($2,000,000.00), or such greater limit as
Landlord or its mortgagee may hereafter reasonably require. Sections 6.3 and 6.4
shall apply to such insurance.

 

ARTICLE 7.  WAIVER OF SUBROGATION; RISK OF LOSS

 

7.1  Landlord and Tenant each hereby waives any and all rights of recovery
against the other, and Tenant hereby waives any and all rights of recovery
against any other tenant or occupant of the Shopping Center and against the
investment managers, trustees, directors, partners, members, managers,
beneficiaries, officers, employees, agents, management agents, representatives,
customers and business visitors of Landlord, for any loss insured by All Risks
or Special Form coverage or other property insurance now or hereafter existing
for the benefit of the waiving party, but only to the extent of the net
insurance proceeds payable under such policies (or which would have been payable
if such insurance were maintained as required by this Lease).  Each party shall
obtain any special endorsements required by its insurer to evidence compliance
with the foregoing waiver.  The foregoing waiver shall be effective whether or
not a waiving party actually obtains and maintains the insurance required
pursuant to this Lease.  Tenant shall, upon obtaining the policies of insurance
required hereunder, give notice to their respective insurance carriers of the
foregoing waivers of subrogation.

 

7.2  Tenant shall use and occupy the Premises and use all other portions of the
Shopping Center which it is permitted to use by the terms of this Lease at its
own risk, and hereby (for itself and all persons claiming by, through, or under
Tenant) releases Landlord, its managers, trustees, directors, partners, members,
managers, beneficiaries, officers, employees, agents and contractors from all
claims and demands of every kind resulting from any fire, steam, electricity,
gas, water or rain, which may leak or flow from or into any part of the
Premises, or from the breakage, leakage, obstruction or other defects of the
components of the Premises or Shopping Center, or any accident, damage, injury
or breaking and entering occurring therein, and Landlord shall have no
responsibility for any loss of, or damage or injury to, fixtures, improvements
or other property of Tenant from any source whatsoever, except to the extent
that such damage or loss is directly caused by Landlord’s negligence or willful
misconduct and not covered by insurance which Tenant maintains or is required to
maintain under this Lease. Landlord shall not be liable for any damages or
otherwise arising from any use, act or failure to act of any other tenant or
occupant or their employees, invitees, customers, agents or contractors or any
other person in or about the Shopping Center.

 

ARTICLE 8.  COMPLIANCE WITH LAWS AND REGULATIONS

 

8.1  Tenant shall, at its sole cost and expense, comply with all of the
requirements of all municipal, state and federal laws, rules, regulations and
ordinances, now in force, or which may hereafter be in force, pertaining to the
Premises, and shall faithfully observe in the use or occupancy of the Premises
all municipal ordinances and state and federal statutes, laws and regulations
now or hereafter in force, including, without limitation, the “Environmental
Regulations” (as hereinafter defined), and the Americans with Disabilities Act,
42 U.S.C. §§ 12101 et. seq. and any rules, regulations, restrictions,
guidelines, requirements or publications promulgated or published pursuant
thereto (“ADA”), whether or not any of the foregoing were foreseeable or
unforeseeable

 

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at the time of the execution of this Lease.  Tenant’s obligation to comply with
and observe such requirements, ordinances, statutes and regulations shall apply
regardless of whether such requirements, ordinances, statutes and regulations
regulate or relate to Tenant’s particular use of the Premises or regulate or
relate to the use of premises in general, and regardless of the cost thereof. 
The judgment of any court of competent jurisdiction, or the admission of Tenant
in any action or proceeding against Tenant, whether Landlord be a party thereto
or not, that any such requirement, ordinance, statute or regulation pertaining
to the Premises has been violated, shall be conclusive of that fact as between
Landlord and Tenant.  At its sole cost and expense, Tenant shall also comply
promptly with all requirements of all insurance carriers or underwriters
providing coverage on the Shopping Center, the Premises or the contents
thereof.  At Tenant’s sole expense, Tenant shall procure, maintain and make
available for Landlord’s inspection any governmental license or permit required
for the proper and lawful conduct of Tenant’s business.

 

8.2  Landlord shall be responsible for compliance with all laws, including,
without limitation, the ADA, which require changes, improvements and work in the
Common Area, except for changes, improvements or work in the Common Area
required as a result of Tenant’s particular use of the Premises or the operation
of its business therein or the construction of Tenant’s Work or any
Improvements, all which shall be the sole responsibility of Tenant.  Landlord
may perform, or require that Tenant perform, at Tenant’s cost in either case,
work required by ADA “path of travel” provisions due to Improvements in the
Premises or Tenant’s particular use of the Premises or the operation of its
business therein.  Tenant shall be responsible for compliance with all laws,
including, without limitation, the ADA, which require changes, improvements and
work to the Premises, including changes, improvements or work affecting any
leasehold improvements.

 

8.3   Tenant shall comply with the conservation, use and recycling policies and
practices from time to time established by Landlord for the use of utilities and
services supplied by Landlord, and the utility charges payable by Tenant
hereunder may include such excess usage penalties or surcharges as may from time
to time be established by Landlord for the Shopping Center.  Landlord may reduce
the utilities supplied to the Premises and the Common Areas as required or
permitted by any mandatory or voluntary water, energy or other conservation
statute, regulation, order or allocation or other program; except to the extent
due to force majeure, legal requirements or acts of governmental authorities,
Landlord shall furnish Tenant with at least thirty (30) days’ prior written
notice of any such reduction, including an explanation of the reason for
reduction in utility service.

 

ARTICLE 9.  REPAIRS AND MAINTENANCE; ALTERATIONS

 

9.1  Tenant agrees, at its sole cost and expense, to keep the Premises and all
parts thereof in good and sanitary order, condition and repair at all times
during the Lease Term, whether such repairs are interior or exterior, structural
or non-structural, ordinary or extraordinary, foreseen or unforeseen, including,
without limitation, exterior and interior glass; Tenant’s interior demising
partitions; mechanical, plumbing, communications, heating, air ventilation and
conditioning and utility systems exclusively serving the Premises and free flow
up to the main sewer line (all whether or not such systems are located in the
Premises); fixtures; sprinkler systems; signs; locks and closing devices;
windows; window frames and window sashes; casements and frames; the exterior and
interior portion of all doors, door frames and door checks, other entrances;
floor coverings; drop ceilings; any grease traps and piping; the storefront; and
all items of repair, replacement, alteration, or improvement as may be required
by any legal requirement or the insurance underwriter(s) for the Shopping
Center. At Landlord’s election, either Tenant shall contract with a qualified
air conditioning service company approved by Landlord (which approval shall not
be unreasonably withheld) for the monthly maintenance and the repair and
replacement,

 

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as necessary, of the air conditioning system serving the Premises, or Landlord
shall arrange for the same, in which event Tenant shall reimburse Landlord for
the cost of same (or a reasonable share of such cost, if the contract covers
other premises) as additional rent.  All replacements made by Tenant shall be of
like size, kind and quality to the items replaced as such item or items existed
when originally installed and shall be subject to Landlord’s prior approval. 
Tenant, at its expense, shall install and maintain fire extinguishers and other
fire protection devices as may be required from time to time by any agency
having jurisdiction thereof or by Landlord’s insurance carrier. Tenant does
hereby expressly waive all rights it may have to make repairs at the expense of
Landlord as provided for in Section 1941 and 1942 of the California Civil Code;
it being understood that Landlord is not to be called upon and shall not be
required to make any expenditure whatsoever on account of any improvements,
alterations, repairs, modifications, additions or changes to the Premises;
provided, however, Landlord agrees to maintain the exterior walls, roof and
structure of the Building in good order and repair throughout the Lease Term. 
Tenant shall reimburse Landlord for the cost (or, if appropriate, its pro rata
share of the cost) of Landlord’s maintenance and repair under this Section 9.1
within thirty (30) days after Landlord shall have provided Tenant with a written
bill for same.  Tenant’s pro rata share, if applicable, shall be determined as
set forth in subsection 5.1(c). In no event shall Landlord be required to make
repairs necessitated by the negligence or willful misconduct of Tenant or anyone
claiming under Tenant, because of the failure of Tenant to perform or observe
any term or condition of this Lease, or because of Improvements made by Tenant. 
Landlord shall be under no obligation to repair, replace or maintain the
Premises or the mechanical equipment exclusively serving the Premises at any
time.  Notwithstanding anything to the contrary contained in this Lease,
Landlord shall not in any way be liable to Tenant for failure to make repairs as
herein specifically required of Landlord unless Tenant has previously notified
Landlord of the need for such repairs and Landlord has failed to commence and
complete said repairs within a reasonable period following receipt of Tenant’s
notification.  As used in this Article 9, “exterior walls” shall exclude
storefronts, plate glass, window cases or window frames, doors or door frames,
security grilles or similar enclosures.

 

9.2  Upon Landlord’s prior written consent, which shall be given or withheld
pursuant to the provisions of Section 9.3 below, Tenant shall have the right, at
its sole cost and expense, to make interior, non-structural alterations, changes
or improvements (collectively called “Improvements”) which are not visible from
the exterior of the Premises, provided they do not weaken the structure or
lessen the value of the Premises or reduce the leasable area or height thereof,
do not impair the use of the Premises for general retail use, do not involve
puncturing, relocating or removing the roof or any bearing walls, and do not
create new demands on or otherwise affect any shared  mechanical, electrical,
life safety, utilities or telecommunications systems or those of any other
tenant. “Improvements” include, without limitation, the installation or removal
of Tenant’s Work and all trade fixtures, equipment and interior demising
partitions required or used from time to time in or in connection with the
Permitted Use. Tenant shall reimburse Landlord for all of its costs and expenses
(not to exceed $1,000 unless, in connection with such review, Landlord must
retain a third-party engineer or other professional, in which case Tenant shall
in addition reimburse Landlord for all reasonable, out-of-pocket costs and
expenses payable to such third party) incurred by Landlord in approving or
disapproving Tenant’s plans for any proposed Improvements. Tenant shall not
store construction materials outside of the Premises while making Improvements. 
Tenant agrees that during the course of such work, Tenant shall remove all
debris created by such work in a manner reasonably satisfactory to Landlord. 
Any Improve­ments, insofar as they do not involve the installation of trade
fixtures, equipment, fur­niture and furnishings, shall become  the property of
Landlord upon expiration or earlier termination of this Lease.  Landlord’s
reversionary interest in the Improvements shall at all times be prior and
superior to any interest of any lender of Tenant, or of any other entity
claiming any purchase

 

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money lien or other interest in the Improvements.  All Improvements paid for by
or on behalf of Landlord, including without limitation by provision of any
tenant improvement allowance, shall at all times be and remain the property of
Landlord free and clear of any liens or claims of  any person or entity claiming
any interest by, through or under Tenant.

 

9.3   Tenant agrees not to commence construction of any Improvements, regardless
of whether the same are in accordance with the terms hereof, without first
obtaining Landlord’s written approval of such work and the plans and
specifications, a construction schedule, the general contractor and the
construction contract  therefor, and provided Tenant obtains, at its sole cost
and expense, all the necessary approvals and permits therefor from the
governmental authorities having jurisdiction.  Landlord shall not unreasonably
withhold approval of any proposed Improvements so long as prior to the
commencement of any construction Tenant shall provide Landlord with the
following: (a) complete drawings and specifications of the work, which drawings
and specifications shall be prepared by a reputable, licensed and qualified
architect or engineer and shall otherwise be reasonably satisfactory to
Landlord, (b)  documentary proof of the cost of the work, and reasonable proof
of Tenant’s ability to pay for such work, (c) proof to the reasonable
satisfaction of Landlord that the work will not materially affect the structural
integrity of the improvements, and that as a result of said alterations, the
economic value of the improvements after completion of the alterations shall be
not less than the value of the improvements immediately prior to the
commencement of the work, (d) evidence that the work is to be performed by a
qualified, reputable, licensed and insured general contractor bonded by a
corporate surety or of financial strength capable of performing the work without
a bond, and (e) evidence of the insurance coverage set forth in Exhibit C.

9.4  Tenant covenants to pay promptly when due the entire cost of Tenant’s Work,
any Improvements and any other work to the Premises performed by Tenant pursuant
to the provisions of this Lease so that the Premises shall at all times be free
of liens for labor and materials supplied in the prosecution of any work done in
the Premises, and Tenant shall keep the Premises and the Shopping Center free
and clear of all mechanics’ liens and other liens arising out of any work done
for Tenant or persons claiming under Tenant.  Tenant shall promptly notify
Landlord of any claim or lien filed against the Premises or the commencement of
any action affecting the title thereto.  If Tenant fails to provide discharge of
any mechanics’ lien within five (5) days of receipt of written notice of the
same, then Landlord, in addition to any other rights or remedies Landlord may
have, may (but shall not be obligated to) discharge said lien by (i) paying the
claimant an amount sufficient to settle and discharge the claim, (ii) posting a
release bond, or (iii) taking such action as Landlord shall deem appropriate in
Landlord’s sole and absolute discretion, and Tenant shall pay to Landlord on
demand, as additional rent, all costs incurred by Landlord in settling and
discharging such lien (including reasonable attorneys’ fees and bond premiums),
plus a fifteen percent (15%) administration fee. Tenant agrees to give Landlord
not less than ten (10) days’ notice in writing in advance of the commencement of
Tenant’s Work or any other construction, alterations, addition or repair of the
Premises in order that Landlord may post appropriate notices of Landlord’s
non-responsibility and similar notices. Tenant shall indemnify, hold harmless,
defend and protect Landlord from and against all injury, liens, loss, claims,
costs, expenses, liability or damage occasioned by or growing out of Tenant’s
Work or any Improvements, including, but not limited to, mechanics’ and
materialmens’ liens arising therefrom.

 

9.5  All Improvements which are installed in the Premises and attached to the
floor, walls or ceiling of the Premises, including without limitation any floor
covering which is cemented or otherwise affixed to the Premises shall be the
property of Landlord and shall remain upon and be surrendered with the Premises
at the expiration of the Lease Term or sooner termination of this Lease, unless
Landlord shall direct Tenant to remove such items (or some of them), by written

 

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notice given not less than thirty (30) days prior to the expiration of the Lease
Term, or within ten (10) days after the earlier termination hereof, in which
event Tenant shall remove any such items and repair any damage caused by such
removal at Tenant’s sole cost, prior to the expiration of the Lease Term, or in
the event of an early termination, within ten (10) days after Landlord’s notice.

 

9.6  Landlord may, at any time at or after the expiration of the fourth (4th)
full year of the Lease Term and prior to the commencement of the next to last
year of the Lease Term, require Tenant, at Tenant’s cost, to renovate and
refurbish the Premises as necessary to maintain the Premises as a first-class
store.  Such refurbishment or renovation shall be as specified by Landlord by
not less than thirty (30) days’ written notice to Tenant, and may include new
carpeting, painting, new wall covering, new tenant fixtures, storefront and
signage.  Nothing in this Section shall prevent Tenant from performing other
refurbishments or renovations prior to the expiration of the fourth (4th) full
year of the Lease Term.

 

9.7  If Tenant refuses or neglects to repair, replace, or maintain the Premises,
or any part thereof, in a manner reasonably satisfactory to Landlord, Landlord
shall have the right but not the obligation, upon giving Tenant at least twenty
(20) days’ prior notice of Landlord’s election to do so (except for an emergency
in which event no such notice shall be required), to enter the Premises and make
such repairs or perform such maintenance or replacements on behalf of and for
the account of Tenant. Nothing herein contained shall imply any duty of Landlord
to do any work that, under any provision of this Lease, Tenant is required to
do, nor shall Landlord’s performance of any repairs on behalf of Tenant
constitute a waiver of Tenant’s default in failing to do the same.  No exercise
by Landlord of any rights herein reserved shall entitle Tenant to any
compensation, damages or abatement of rent from Landlord for any injury or
inconvenience occasioned thereby.  If Landlord performs any maintenance or other
obligations that Tenant is required to perform under the terms of this Lease,
Tenant shall upon demand pay to Landlord, as additional rent, the costs and
expenses incurred by Landlord’s performance on behalf of Tenant (or shall
deposit with Landlord the anticipated amounts thereof),  plus an administrative
fee of fifteen percent (15%).

 

ARTICLE 10.  COMMON AREA

 

10.1  The term “Common Area” means all of those facilities within the Shopping
Center intended for the non-exclusive use of Tenant in common with other
authorized users, including, but not limited to, vehicle parking areas,
driveways, sidewalks and malls, landscaped areas and service and other areas not
occupied by buildings or improvements, other than buildings and improvements
which are incidental to the use, maintenance or operation of the Common Area.

 

10.2  Landlord grants to Tenant, its subtenants, concessionaires, licensees,
invitees, cus­tomers, and employees, during the Lease Term the non-exclusive
right to use the Common Area in common with Landlord and other tenants of the
Shopping Center and their respective subtenants, concessionaires, licensees,
invitees, customers, employees, successors and assigns, and all other persons
legally entitled thereto, subject to the provisions of this Lease.  Tenant shall
abide by the Rules and Regulations governing the Shopping Center attached to
this Lease as Exhibit B and made a part hereof. Landlord shall have the right to
amend said rules and regulations and/or adopt new rules and regulations
pertaining to the Shopping Center, including without limitation, days and hours
of business operation for the Shopping Center, the use of the Common Area and/or
validation of customer parking tickets, provided that all such amendments and
new rules and regulations shall be commercially reasonable and
non-discriminatory; and further provided that, except for payment of Tenant’s
Share of Common Area Expenses, any charges and fees as may be imposed by
applicable law or act of governmental authority and/or charges for valet

 

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parking, Tenant’s use of the Common Area shall be free of charge. Any amendments
or new rules and regulations shall be in writing given at least two (2) business
days in advance of their effectiveness to Tenant.

 

10.3  Landlord shall keep the Common Area in a neat, clean and orderly
condition, and shall repair, maintain or replace all equipment and facilities
thereof as Landlord shall deem necessary in its sole and absolute discretion. 
Landlord may cause any or all of the services concerning the Common Area to be
provided by an independent contractor(s) or by affiliates of Landlord.  If
Landlord does not maintain all of the Common Area because one or more of the
other tenants or occupants maintains a portion thereof, then, for so long as
such condition exists, Landlord’s responsibility hereunder shall extend to only
those portions of the Common Area not maintained by such other tenants or
occupants and the Common Area Expenses described in this Article shall refer
only to the portions maintained by Landlord. All of Landlord’s costs and
expenses in connection with the Common Area, as determined by Landlord (“Common
Area Expenses”), are sub­ject to reimbursement by Tenant as hereinafter provided
for, and shall include, but not be limited to, the cost of: (1)  supervising,
managing, policing, inspecting, fire protection and traffic direction; (2) 
lighting, painting, cleaning, landscape maintenance and supplies incidental
thereto, and removing rubbish (excluding therefrom Tenant’s garbage and
rubbish), dirt and debris; (3)  labor, payroll taxes, materials and supplies in
connection with such maintenance and operation;  (4) utilities utilized in
connection therewith, including but without limitation, all costs and expenses
of maintaining lighting facilities and drainage systems appurtenant thereto; (5)
repairing, replacing and remarking paved and unpaved surfaces, curbs,
directional and other signs (excepting therefrom Tenant’s or other tenants’
signs), landscaping, lighting facilities, drainage and equipment used in
connection with the above; (6)  all premiums on compensation, casualty, public
liability, property damage and other in­surance on the Common Area; (7) all Real
Estate Taxes levied or assessed against the Common Area including any surcharge
or tax imposed specifically on parking facilities; and (8) an administrative fee
equal to fifteen percent (15%) of the Common Area Expenses. The preceding
sentence shall not impose any obligations upon Landlord to provide the services
contained within such sentence.

 

10.4  The manner in which the Common Area shall be maintained and the
expenditures therefor shall be in the sole discretion of Landlord.  Landlord
shall at all times during the Lease Term have the sole and exclusive control of
the Common Areas, and may at any time and from time to time restrain any use or
occupancy thereof except as authorized by the rules and regulations for the use
of such areas established by Landlord from time to time.  If in the sole opinion
of Landlord unauthorized persons are using any of said areas by reason of the
presence of Tenant in the Shopping Center, Tenant, upon demand of Landlord,
shall restrain such unauthorized use by appropriate proceedings. Nothing herein
shall affect the right of Landlord at any time to remove any such unauthorized
persons. Landlord shall also have the right to close the Common Areas as
Landlord determines shall be necessary to prevent the accrual of prescriptive
rights to temporarily close any portion of the Common Area for repairs or
alterations or for any other reason deemed sufficient by Landlord.  Tenant shall
keep all of the Common Area free and clear of any obstructions created or
permitted by Tenant or resulting from Tenant’s operation. In connec­tion with
the operation of the Common Area the Landlord shall have the right to post at
each entrance to the Shopping Center or at intervals of not more than 200 feet
along the boundary thereof a sign reading substantially as follows:  “Right to
pass by permission, and subject to control of owner:  Section 1008 Civil Code”.

 

10.5  From and after the Rent Commencement Date and thereafter throughout the
Lease Term, Tenant shall pay to Landlord as additional rent, within ten (10)
days of receipt of a statement from Landlord from time to time, but not more
often than monthly, Tenant’s pro rata share of all

 

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Common Area Expenses.  Tenant’s pro rata share shall be equal to five and 67/100
percent (5.67%) of the total amount of Common Area Expenses for the period
covered by the Landlord’s statement  Notwithstanding anything to the contrary
contained hereinabove, upon Landlord’s election, as such may be made from time
to time, Tenant shall pay to Landlord on the first day of each month Tenant’s
pro rata share of the estimated average monthly Common Area Expenses, provided,
however, that such estimate shall be subject to adjustment by Landlord from time
to time, and not less often than annually the aggregate of such estimated
billings shall be reconciled with the actual Common Area Expenses, at which time
any overpayment by Tenant of such costs will be credited to Tenant and any
underpayment will be due to Landlord.  If Tenant does not raise objections to
any such statement within one hundred eighty (180) days after the date Tenant
receives the same, such statement shall be conclusive and binding upon Tenant. 
Landlord’s failure to provide such statement in a time period considered to be
reasonable by Tenant shall in no way excuse Tenant from its obligations to pay
Landlord the costs due hereunder, nor shall it constitute a waiver of Landlord’s
right to bill and collect such costs from Tenant at a future date.  Upon written
request of Tenant from time to time, Landlord shall provide Tenant with copies
of invoices or other back-up documentation, to the extent available, for any
specific items of Common Area Expenses which Tenant is questioning reasonably
and in good faith.

 

10.6  Notwithstanding anything to the contrary contained in this Lease, in the
event that Landlord reasonably determines, at any time during the Lease Term
that it is more appropriate and/or equitable that all or any portion of the
Common Area Expenses be chargeable exclusively to the occupants of a particular
building or to a particular occupant or group of occupants, then such charges
shall be excluded in determining the aggregate amount of the Common Area
Expenses and shall be referred to herein as “Direct Expenses”.  In the event any
Direct Expenses are chargeable to Tenant, then, commencing with the first (1st)
calendar month following the calendar month in which Landlord gives Tenant
written notice of the amount of such Direct Expenses and Tenant’s share thereof,
Tenant shall be obligated to pay a share of such Direct Expenses, plus an
administrative fee of fifteen percent (15%), either in estimated monthly
installments or within ten (10) days of receipt of a statement  for same from
Landlord.  If the Direct Expenses relate to a group of occupants which includes
Tenant, Tenant shall pay a proportionate share of such Direct Expenses in
accordance with the leasable area of the Premises, as it relates to the total
leasable area (including the Premises) of all occupants comprising the group to
which the Direct Expenses relate.  If the Direct Expenses relate solely to
Tenant, Tenant shall pay the entire amount of the Direct Expenses.  Landlord
agrees not to assess Direct Expenses under this Lease unless either (i) such
assessment is made by Landlord in order to equitably allocate the expenses among
the occupants in question in good faith and a reasonable manner, or (ii) the
specific nature of Tenant’s business in the Premises has resulted in a material
and disproportionate demand on Common Areas and/or the services provided by
Landlord to the Shopping Center.

 

10.7  If Tenant desires to operate its business in the Premises beyond the
normal Shopping Center hours of operation, Tenant shall request Landlord’s
permission to do so, which request shall be subject to Landlord’s approval in
its sole discretion and thereafter shall notify Landlord of any changes in the
times or dates of the extended hours of operation.  Landlord will provide those
extended hours services that it deems necessary in its reasonable business
judgment and Tenant shall reimburse Landlord for the increased costs incurred by
Landlord for such extended hours services as a Direct Expense, including without
limitation, lighting and utilities.

 

ARTICLE 11:  INDEMNIFICATION.

 

11.1  Tenant shall indemnify, protect, defend and hold Landlord (and Landlord’s
partners, joint venturers, shareholders, members, managers, affiliates and
property managers, and their

 

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respective officers, directors, employees and agents) and its mortgagee(s) and
ground lessor(s), if any, and the Premises, harmless from and against any and
all losses, damages, liabilities, judgments, costs, claims, liens, penalties and
expenses (including, but not limited to, reasonable attorneys’ fees and costs)
arising out of or in connection with loss of life, personal injury, property
damage, economic loss or other damages arising from (a) the use, occupation,
improvement or maintenance of the Premises or the Shopping Center or any work or
activity in or about the Premises or Shopping Center by Tenant or Tenant’s
assignees or subtenants or their respective agents, employees, contractors,
licensees or invitees, (b) any activity, condition or occurrence in or about the
Premises, (c) the filing or potential filing of any mechanic’s or materialmen’s
lien against the Premises or the Shopping Center in connection with any work
done or caused to be done by Tenant, (d) any breach or failure to perform any
obligation imposed on Tenant under this Lease, and (e) the negligence or willful
misconduct of, or any violation of law by, Tenant or Tenant’s assignees or
subtenants or their respective agents, contractors, employees, customers,
invitees or licensees, except to the extent arising from the gross negligence or
willful misconduct of Landlord which is not covered by insurance carried or
required to be carried by Tenant under this Lease.  Upon notice and request from
Landlord, Tenant shall, at Tenant’s sole expense and by counsel satisfactory to
Landlord, defend any action or proceeding brought against Landlord by reason of
any such claim.  If any of the foregoing indemnified persons, without fault on
Landlord’s part, is made a party to any litigation commenced by or against
Tenant, then Tenant shall indemnify, protect, defend and hold each of such
persons harmless from and against any and all claims arising out of incurred or
paid by any such person in connection with such litigation.

 

11.2  Each party shall have the right to engage its own attorneys in connection
with the provisions of this Article 11 or any other indemnification provision of
this Lease, including, without limitation, any defense of such party or
intervention by such party, notwithstanding any contrary provisions of the laws
or court decisions of the State of California and the other party shall
reimburse such party for the reasonable costs thereof. The obligations of this
Article 11 shall survive the expiration or earlier termination of this Lease.

 

11.3   Subject to the other terms and conditions of this Lease, including but
not limited to Section 20.3, Landlord shall indemnify, protect, defend and hold
Tenant harmless from and against any and all losses, damages, liabilities,
judgments, costs, claims, liens, penalties and expenses (including, but not
limited to, reasonable attorneys’ fees and costs) arising out of or in
connection with loss of life, personal injury, property damage, economic loss or
other damages arising from   the negligence or willful misconduct of Landlord or
Landlord’s agents, contractors, or employees, except to the extent the same are
Tenant’s responsibility under Section 11.1.

 

ARTICLE 12:  DAMAGE OR DESTRUCTION.

 

12.1  Except as otherwise provided for herein, if at any time during the Lease
Term the Premises or the Building is damaged or destroyed, and this Lease is not
terminated by Landlord pursuant to Section 12.2 or 12.3, then this Lease shall
remain in full force and effect, and Landlord shall with due diligence, subject
to any delaying cause, reconstruct (to the extent of available net insurance
proceeds) Landlord’s Work as described in Exhibit C, if any, and the Building
shell to approximately the same condition as same existed on the Commencement
Date, with such modifications thereto as may be reasonably required in
connection with the reconstruction of the balance of the Shopping Center;
promptly upon completion of such work by Landlord, Tenant, at Tenant’s sole cost
and expense, shall reconstruct Tenant’s Work and shall replace Tenant’s Tenant’s
Work and Tenant’s merchandise, Improvements, trade fixtures, furnishings, signs
and other personal property to a condition at least equal to that prior to the
occurrence of the casualty.  Reconstruction by Tenant shall conform to the
provisions of Exhibit C and Articles 2 and 9. 

 

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Tenant shall continue to occupy the Premises to the extent, if any, that such
occupancy is reasonably practicable to the conduct of Tenant’s business during
reconstruction, such determination to be made in the reasonable business
judgment of Tenant, and  the Minimum Rent payable by Tenant shall be abated by
Landlord proportionately with the degree to which Tenant’s use of the Premises
is impaired, commencing from the date of the casualty and continuing until
Landlord has substantially completed its reconstruction obligations under this
Section 12.1. Tenant shall not be entitled to any compensation or damages from
Landlord for loss of use of the whole or any part of the Premises, the Building,
or Tenant’s personal property, or any inconvenience or annoyance occasioned by
such damage, reconstruction or replacement of the Premises or any other part of
the Shopping Center.  In the event the insurance proceeds available to Tenant
are insufficient to restore the Premises or Tenant’s current prototype
restaurant design  has changed, Landlord shall not unreasonably withhold its
consent to changes to the appearance of the Premises to permit restoration of
the Premises.

 

12.2  Notwithstanding any of the foregoing provisions of this Article 12, should
there be a Major Destruction or Uninsured Casualty at any time during the Term,
Landlord shall have the right, in its sole discretion, to terminate this Lease
on written notice to Tenant within ninety (90) days after such casualty, with no
further obligations thereafter accruing from Landlord to Tenant. “Major
Destruction” means any casualty or destruction (whether or not an Uninsured
Casualty) or Hazardous Materials condition, to an extent of more than one-third
(33-1/3%) of the full replacement cost of the Premises as of the date
immediately prior to the casualty, or that results in the termination of the
leases of tenants representing more than one-third (33-1/3%) of the leasable
area of the Building. “Uninsured Casualty” means damage or destruction to any
portion of the Shopping Center resulting from any flood, earthquake, act of war,
nuclear reaction, nuclear radiation or radioactive contamination, the existence
or migration of Hazardous Materials, or any or any other casualty of any kind or
nature whatsoever not covered by the insurance Landlord is required to maintain
under this Lease.  In the event Landlord fails to so terminate this Lease, this
Lease shall not terminate, Landlord shall proceed with the reconstruction of the
Premises and shall be responsible for the costs of same to the extent insurance
proceeds are unavailable.

 

12.3  Notwithstanding anything herein contained to the contrary, if during the
last twelve (12) months of the Lease Term fifteen percent (15%) or more of the
leasable area of the Premises is damaged or destroyed, whether covered by
insurance or not, Tenant may elect to cancel and terminate this lease by giving
written notice of its said election to Landlord within thirty (30) days after
the date of such damage.

 

12.4  Upon any termination of this Lease under any of the provisions of this
Article, the parties shall be released thereby without further obligation to the
other party, coincident with the surrender of possession of the Premises to
Landlord, except the indemnification provisions contained in this Lease which
shall survive the termination, and except for items which have theretofore
accrued and are then unpaid.  In the event of any termination by Tenant under
the provisions of this Article, all proceeds from Tenant’s insurance (including
self-insurance and deductibles), covering Tenant’s Improvements, but excluding
proceeds from Tenant’s merchandise, the unamortized net cost to Tenant of
Tenant’s Improvements with a straight-line amortization schedule and an
amortization period equal to the Lease Term, and personal property, shall be
disbursed and paid to Landlord. Tenant hereby waives any statutory rights of
termination which may arise by reason of any partial or total destruction of the
Premises which Landlord is obligated to restore or may restore under any of the
provisions of this Lease.

 

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ARTICLE 13:  EMINENT DOMAIN.

 

13.1  If the entire Premises shall be appropriated or taken under the power of
eminent domain by any public or quasi-public authority or under threat of and in
lieu of condemnation (hereinafter, “taken” or “taking”), this Lease shall
terminate as of the date of such taking, and Landlord and Tenant shall have no
further liability or obligation, except as otherwise provided for in this Lease,
arising under this Lease after such date.

 

13.2  If more than fifteen percent (15%) of the leasable area of the Premises is
taken, or if by reason of any taking, regardless of the amount so taken, the
remainder of the Premises is not one undivided space or is rendered unusable for
the Permitted Use, either Landlord or Tenant shall have the right to terminate
this Lease as of the date Tenant is required to vacate the portion of the
Premises taken, upon giving notice of such election within thirty (30) days
after receipt by Tenant from Landlord of written notice that said Premises have
been or will be so taken.  In addition, (a) if such a significant portion of the
Shopping Center or Common Area is taken that, in Landlord’s reasonable opinion,
substantial reconstruction is required on the remaining portion, or such that it
is no longer feasible to operate the portion of the Shopping Center in which the
Building is located as a retail shopping center, then Landlord shall have the
right to terminate this Lease within said thirty (30) day period by giving
written notice to Tenant, and (b) if such a significant portion of the parking
area serving the Premises shall be taken that, in Tenant’s reasonable opinion,
the Premises is no longer feasible for the operation of Tenant’s business, then
Tenant shall have the right to terminate this Lease within said thirty (30) day
period by giving written notice to Landlord.  In the event of termination
described in this Section 13.2, both Landlord and Tenant shall thereupon be
released from any liability or obligation hereunder, except as otherwise
provided for in this Lease, arising after the date of termination.  Landlord and
Tenant shall, immediately after learning of any taking, give notice thereof to
each other.

 

13.3  If this Lease does not terminate pursuant to Section 13.2 above, then
Tenant shall continue to occupy that portion of the Premises not taken and the
parties shall proceed as follows:  (a) at Landlord’s cost and expense and as
soon as reasonably possible after receipt of sufficient condemnation proceeds,
Landlord shall restore the Premises remaining to a complete unit of like quality
and character as existed prior to such appropriation or taking, and (b) the
Minimum Rent provided for in Article 1 shall be reduced by Landlord on an
equitable basis, taking into account the relative values of the portion taken as
compared to the portion remaining.  Tenant waives any statutory rights of
termination that may arise because of any partial taking of the Premises.

 

13.4   Landlord shall be entitled to the entire condemnation award for any
taking of the Premises, the Shopping Center or any part thereof. Tenant’s right
to receive any amounts separately awarded to Tenant directly from the condemning
authority for the taking of Tenant’s merchandise, personal property, relocation
expenses, goodwill and/or interests in other than the real property taken shall
not be affected in any manner by the provisions of this Section, provided
Tenant’s award does not reduce or affect Landlord’s or Landlord’s mortgagee’s
award.

 

ARTICLE 14:  UTILITIES.

 

14.1  Tenant shall pay, before delinquency, all charges for water, gas, heat,
sewer, electricity, power, telephone service and all other services and public
utilities furnished to or used, in, upon or about the Premises by Tenant.  Any
utilities shall either be separately metered by Tenant at Tenant’s sole cost and
expense, or, if provided in common with others, then Landlord shall reasonably
determine Tenant’s share of the utilities so provided, and Tenant shall pay the
same to Landlord from time to time upon demand as additional rent. If Landlord
does not provide a

 

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particular utility, Tenant agrees, at Tenant’s own expense, to pay to the
appropriate utility company the cost of same, as and when due.  If Tenant fails
to pay any such charge when due, Landlord may, but shall not be required to, pay
the same, and any amount so paid by Landlord, plus a fifteen percent (15%)
administrative charge, shall immediately become due to Landlord from Tenant as
additional rent. Tenant shall also pay its share of utility services fur­nished
to the Common Area as provided in Section 10.5 hereof.

 

14.2  Landlord makes no representations or warranties with respect to any
utility installations  air conditioning system and/or other systems and
equipment, if any, existing in or serving the Premises as of the date hereof or
in the future.  Landlord shall not be liable in damages or otherwise for any
discontinuance, failure or interruption of service to the Premises of utilities
or other services. Tenant acknowledges that any one or more services may be
suspended or reduced by reason of repairs, alterations or improvements necessary
to be made, by strikes or accidents, by any cause beyond the reasonable control
of Landlord, or by orders or regulations of any federal, state, county or
municipal authority. Any such interruption or suspension of services shall not
be deemed an eviction or disturbance of Tenant’s use and possession of the
Premises or any part thereof, nor render Landlord liable to Tenant for damages
by abatement of rent or otherwise, nor relieve Tenant of performance of Tenant’s
obligations under this Lease or permit Tenant to terminate this Lease. 
Notwithstanding the foregoing, if, as a direct result of the negligence, willful
misconduct or breach of this Lease by Landlord or any of its agents, contractors
or employees, there is an interruption, disruption or discontinuance in any
utilities supplied to the Premises by Landlord, and such violation or condition
results in a substantial and material interference with Tenant’s ability to
conduct its business in the Premises, and as a result Tenant is forced to close
its business in the Premises for a period in excess of forty eight (48) hours,
then the payment of Minimum Rent shall abate until such time as such utility
service is restored or Tenant is able to reopen the Premises for business,
whichever shall first occur.

 

ARTICLE 15:  PERMITTED USE AND USE RESTRICTIONS.

 

15.1  Tenant shall continuously use and occupy the entire Premises  (including,
as set forth in Section 15.10 below, the Patio Seating Area) solely for the
operation of a full-service, sit-down restaurant and brewery, offering the items
set forth on the menu attached to this Lease as Exhibit “E” and made a part
hereof, including, at Tenant’s option (if and to the extent permitted under the
provisions hereinafter set forth), “take-out” service and the sale for
on-Premises consumption of beer and wine (the “Permitted Use”), and under the
trade name of “BJ’s Restaurant & Brewhouse/Brewery” (the “Trade Name”), and for
no other use or purpose whatsoever.  The sale of beer and wine in the Premises
(which may, if desired by Tenant and approved in advance by Landlord, include
the sale of beer and wine as part of Tenant’s “take-out” service) is conditioned
upon Tenant’s obtaining and maintaining in effect appropriate liquor licenses
and related governmental approvals, permits and authorizations and liquor
liability insurance as set forth in Section 6.11 and Tenant’s complying with all
applicable laws, rules, regulations, orders, ordinances and insurance
requirements, including but not limited to Alcoholic Beverage Control (ABC)
requirements and guidelines.

 

15.2  Tenant shall, continuously and uninterruptedly from and after Tenant’s
initial opening for business, (a) operate and conduct within the entire Premises
the Permitted Use under the Trade Name and for no other purpose and under no
other trade name, except while the Premises are wholly untenantable by reason of
fire or other casualty (and Tenant shall be open for business at least during
all operating days and hours, if any, as are established by Landlord for the
Shopping Center pursuant to Section 10.2), (b) maintain within the entire
Premises an adequate stock of merchandise together with sufficient personnel and
personal property to service and supply the

 

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usual and ordinary requirements of Tenant’s customers, and (c) keep the Premises
in a neat, clean and orderly condition, free from any objectionable (due to
intermittence, beat, frequency, shrillness, loudness or otherwise) noises or
sounds, obnoxious odors or nuisances. Tenant shall not conduct or permit to be
conducted any sale by auction on the Premises.  Tenant shall not commit, or
suffer to be committed, any waste upon the Premises. If the Permitted Use
includes the sale of and/or preparation of food, Tenant shall at all times
maintain a health department rating of “A” (or such other highest health
department or similar rating as is available).

 

15.3  Tenant shall not use or occupy, nor permit or suffer, the Premises or any
part thereof, to be used or occupied for any unlawful or illegal business use or
purpose, nor for any busi­ness, use or purpose deemed disreputable or extra
hazardous, nor in such manner as to constitute a nuisance of any kind, nor for
any purpose or in any way in violation of a certificate of occupancy, or of any
present or future governmental laws, ordinances, requirements, orders, rules or
regulations.  Tenant shall immediately upon the discovery of any such unlawful,
illegal, disreputable or extra haz­ardous use take all necessary steps, legal
and equitable, to compel the discontinuance of such use and to oust and remove
any subtenants, occupants, or other persons guilty of such unlawful, illegal,
disreputable or extra hazardous use.  Tenant agrees not to use or permit any use
to be made of the Premises, or any acts to be done therein which will cause a
cancellation of any insurance policy covering said premises, or any part
thereof, or sell or permit to be kept, used or sold in or about said premises
any article which may be prohibited by the standard form of fire insurance
policy.  Tenant shall, at its sole cost and expense, comply with any and all
requirements pertaining to the Premises of any insurance organization or company
necessary for the maintenance of the fire and public liability insurance
covering said premises. Tenant shall indemnify and save harmless Landlord
against and from all costs, expenses, liabilities, losses, damages, injunctions,
suits, fines, penalties, claims and demands, including reasonable counsel fees,
arising out of, by reason of, or on account of, any violation of or default in
the covenants of this Article 15.

 

15.4   During the Lease Term Tenant shall conduct its business in the Premises
in good faith and with adequate facilities, fixtures, merchandise and employees,
and endeavor, in the utmost good faith, to exploit and develop its business in
the Premises in such manner as to produce the maximum amount of sales consistent
with sound business practice.  Tenant shall continuously, during the Lease Term,
operate it business on the Premises with due diligence and efficiency as to
reasonably produce the maximum return to Tenant and shall keep the Premises open
for business and cause such business to be conducted thereon during normal
Shopping Center days and hours, as established by Landlord from time to time
pursuant to Section 10.2.  Tenant shall not operate primarily as a liquidation
or clearance center, nor fail to maintain inventory quality and quantity
comparable to that of Tenant’s other first-class stores in the region.

 

15.5  Tenant agrees that it will not do any of the following: (a) use or operate
any machinery or equipment that, in Landlord’s opinion, is harmful to the
Building or disturbing to other tenants in the Building or the Shopping Center;
nor shall Tenant use any loudspeakers, televisions, phonographs, radios or other
like or differing devices in a manner so as to be heard or seen outside of the
Premises, nor display merchandise on the exterior of the Premises either for
sale, promotion, or other purposes;  (b)  attach any awnings, antenna, or other
projections to the roof or outside walls of the Premises or the Building; (c)
conduct any auction, fire, bankruptcy, liquidation, selling-out or like sale in,
on or about the Premises; (d)  solicit business or distribute any handbills or
other advertising matter in the Common Area including, without limitation,
sidewalks, pedestrian walkways, and parking area and lots; (e) operate vending
machines, pay telephones, pinball machines, or electronic games or similar
services within the Premises; or (f) use the Premises for the sale or display of
pornography, nudity, graphic violence, drug paraphernalia, or as a massage

 

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parlor, adult bookstore or second-hand store, or for the sale of any goods
and/or services that, in the reasonable business judgment of Landlord, might
tend to injure the reputation of the Shopping Center or are otherwise
inconsistent with the image of a community or family-oriented shopping center.

 

15.6  Tenant agrees that all loading and unloading of goods shall be done only
at such time and in the areas and through such entrances as may be designated
for such purposes by Landlord and that trailers or trucks shall not be permitted
to remain parked overnight in any area of the Shopping Center, whether loaded or
unloaded.

 

15.7  Tenant shall not place a load upon any floor of the Premises which exceeds
the load per square foot which such floor was designed to carry, nor shall
Tenant overload any mechanical, electrical, plumbing or utility systems serving
the Premises, all as determined by Landlord or Landlord’s structural engineer. 
The cost of any such determination made by Landlord’s structural engineer shall
be paid for by Tenant upon demand.

 

15.8  Tenant, at Tenant’s expense, shall at all times keep the Premises,
including without limitation the storefront, display windows and signs, orderly,
neat, safe, clean and free from rubbish, dirt and vermin, and shall store all
trash, garbage and other solid waste where designated by Landlord and shall
arrange for and pay for the cost of trash removal.  Tenant shall also retain
pest extermination contractors for the Premises at the sole cost of Tenant,
using an extermination contractor designated by Landlord.

 

15.9  For each day or portion thereof during which Tenant fails to operate as
required by this Article 15, Landlord shall have the right, at its option, to
collect as liquidated damages, and not as a penalty, in addition to all other
charges and Minimum Rent due hereunder, a sum equal to twice the daily prorated
Minimum Rent then payable.

 

15.10   Tenant shall construct and operate during the Lease Term an outdoor
patio seating area (the “Patio Seating Area”) in the location designated on
Exhibit A, subject to the terms and conditions hereinafter set forth.  Tenant’s
operation in the Patio Seating Area shall be subject to Tenant’s obtaining and
maintaining in effect appropriate licenses, approvals, variances, permits and
authorizations from all applicable governmental authorities, and obtaining
Landlord’s prior written approval (which shall not be unreasonably withheld) of
plans, specifications and working drawings for the Patio Seating Area including
without limitation the nature and location of all Improvements, signage,
equipment, flooring, furniture, awnings, tables, chairs, and other personal
property to be located in or otherwise relating to the Patio Seating Area.
Tenant shall design and construct the Patio Seating Area in such a manner that
no additional parking, and no modifications whatsoever to the parking facilities
of the Shopping Center, shall be required. Tenant, at its sole cost and expense,
shall comply with all laws, rules, regulations, orders, ordinances and insurance
requirements in connection with the construction, use and operation of the Patio
Seating Area, shall maintain the same in a safe, clean and neat fashion, shall
be responsible at its sole cost (and not as part of Common Area Expenses) for
collection of trash and debris within a radius of fifteen (15’) feet of the
Patio Seating Area, and shall be solely responsible for installing,
constructing, maintaining, repairing, restoring, replacing and operating all
Improvements (including, but not limited to, the patio slab), signage,
equipment, flooring, furniture, awnings, tables, chairs, and other personal
property located in or otherwise relating to the Patio Seating Area as if the
same were part of the leasable area of the Premises. Tenant’s obligations to
obtain insurance and to indemnify Landlord under Article 11 shall apply to the
Patio Seating Area as if it were part of the leasable area of the Premises.
Tenant shall regularly inspect, clean, bus and sweep the Patio Seating Area,
keeping its tables, chairs and flooring clean, safe and free

 

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of all trash and debris on a continual basis during Tenant’s hours of operation
and shall provide adequate customer-accessible trash receptacles therein. If
Tenant fails to comply with any of the requirements set forth in this Section
within two (2) business days after receipt of written notice from Landlord,
Landlord may cure such failure, including without limitation performing
maintenance and/or other services and, in such event, Tenant shall pay to
Landlord as additional rent the cost thereof plus a fifteen percent (15%)
administrative fee promptly upon receipt of a written statement from Landlord
setting forth such cost. Tenant shall pay no rent on account of the Patio
Seating Area (except that Gross Sales relating to the Patio Seating Area shall
be included in the computation of Percentage Rent), and, solely for purposes of
computing any charges under this Lease which are based upon the leasable area of
the Premises, the Patio Seating Area shall not be considered leasable area.

 

ARTICLE 16:  ASSIGNMENT AND SUBLETTING.

 

16.1  Tenant shall not make, consent to, or suffer any Encumbrance except as
permitted under Section 16.12.  Tenant shall not enter into or consent to an
Occupancy Transaction other than an Encumbrance without first obtaining
Landlord’s written consent, which Landlord shall not unreasonably withhold. 
Landlord may withhold its consent on any reasonable ground, including, without
limitation, any of the following:  (a) the Transferee’s contemplated use of the
Premises following the proposed Occupancy Transaction is not identical to the
Permitted Use, (b) in Landlord’s reasonable business judgment, the Transferee
lacks sufficient business reputation or experience to operate a successful
business of the type and quality permitted under this Lease, (c) in Landlord’s
reasonable business judgment, the present net worth and working capital of the
Transferee are inadequate for the operation of the Transferee’s proposed
business in the Premises and the performance of the Tenant’s obligations under
this Lease, (d) the proposed Occupancy Transaction would breach any covenant of
Landlord in any other lease, financing agreement, or other agreement relating to
the Shopping Center, including, without limitation, radius restriction,
location, use or exclusivity, (e) the proposed Occupancy Transaction provides
for rentals thereunder based on the net income or profits derived by the
Transferee from the Premises, (f) the proposed Transferee’s anticipated use of
the Premises involves the generation, storage, use, treatment or disposal of
Hazardous Materials, (g) the proposed Transferee has been required by any prior
landlord, lender, or governmental authority to take remedial action in
connection with Hazardous Materials, (h) the proposed Transferee is subject to
an enforcement order of any governmental authority in connection with the use,
disposal or storage of Hazardous Materials, (i) the proposed Transferee’s
occupation of the Premises would cause a diminution in the reputation of the
Shopping Center or the other businesses located therein, (j) the impact or
effect of the proposed Transferee on the Common Area or the utility, efficiency
or effectiveness of any utility or telecommunication system serving the Building
or the Shopping Center or the other occupants of the Shopping Center would be
adverse, disadvantageous or require improvements or changes in any utility or
telecommunication capacity currently serving the Building or the Shopping
Center, (k)  Tenant is in default under any provision of this Lease, or (l) the
proposed Transferee is or is likely to be, subject to compliance with additional
laws or other governmental requirements beyond those to which Tenant or Tenant’s
business is subject, including, without limitation the ADA.

16.2  Tenant shall not have the right or power to enter into an Occupancy
Transaction if Tenant shall be in default under any provision of this Lease or
in default of Tenant’s obligations under the provisions of any other lease of
any real property owned or managed (in whole or in part) by Landlord or any
affiliate of Landlord.

 

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16.3  Should Tenant desire to enter into an Occupancy Transaction, Tenant shall
request Landlord’s consent to such transaction in writing at least sixty (60)
days before the effective date of any such transaction.  Such request shall
include the following: (a) a detailed description of the proposed transaction,
including its nature, effective date, the purchase price, payment terms,
allocation among leasehold interest, Personal Property, Improvements, goodwill,
inventory and other items; (b) copies of any offers, draft agreements,
subleases, assignments, letters of commitment or intent, and other documents or
correspondence pertaining to the proposed transaction; (c) a description of the
identity, financial condition and previous business experience of Tenant and the
Transferee, including, without limitation, copies of latest income statement,
balance sheet and statement of cash flows (with accompanying notes and
disclosures of all material changes thereto) in audited form, if available, and
certified as accurate by a responsible officer of Tenant or Transferee
respectively, together with a statement authorizing Landlord or Landlord’s
designated representative(s) to investigate Tenant’s and the Transferee’s
business experience, credit and financial responsibility; (d) a statement
certifying Tenant’s initial and any subsequent costs to construct or improve the
Premises, which shall include an itemized breakdown of those costs and copies of
invoices; (e) a statement by Tenant and the Transferee agreeing that it is their
intention to complete the transaction if Landlord consents thereto; (f) the sum
of One Thousand and no/100 Dollars ($1,000.00) to reimburse Landlord for any
review and processing expenses as well as any legal fees incurred by Landlord;
and (g) at least five (5) business and three (3) personal references from the
proposed Transferee.

16.4  Within thirty (30) days after receipt of Tenant’s request for consent and
all items required under Section 16.3, Landlord may (a) consent to the proposed
Occupancy Transaction, (b) exercise Landlord’s rights under Section 16.6, or (c)
refuse to consent to the Occupancy Transaction.  Any consent by Landlord to any
Occupancy Transaction shall be evidenced by an instrument prepared by Landlord
and executed by Tenant and Transferee.  As a condition to the completion of such
transaction, Transferee shall agree in writing to assume and perform all of the
terms, covenants and conditions of this Lease that are obligations of Tenant. 
Tenant shall remain fully liable to perform its duties under this Lease
following the Occupancy Transaction. Tenant shall, on demand of Landlord, and as
a condition to the effectiveness of the Occupancy Transaction, reimburse
Landlord for all Landlord’s reasonable costs, including attorneys’ fees,
incurred in obtaining advice, any consents and preparing documentation for each
requested Occupancy Transaction in excess of the amount set forth in Section
16.3(f). Landlord’s failure to respond within such thirty (30) day period shall
be deemed disapproval of such Occupancy Transaction.  The acceptance of rent by
Landlord from any person other than Tenant shall not be deemed to be a waiver by
Landlord of any provision of this Lease or to be a consent to any Occupancy
Transaction.  The consent by Landlord to an Occupancy Transaction shall not be
deemed consent to future Occupancy Transactions.

16.5  If Tenant enters into an Occupancy Transaction, the Minimum Rent then
payable and any scheduled increases thereto shall be increased on the effective
date of such transaction to the highest of: (a) the Minimum Rent then payable
plus fifty percent (50%) of all economic consideration, whether described as
rental or otherwise, received from the Transferee in excess of the amounts
otherwise payable by Tenant to Landlord with respect to the space involved; (b)
an amount equal to the total amount of the Minimum Rent (plus percentage rent,
if any) required to be paid by Tenant pursuant to this Lease during the twelve
(12) month immediately preceding such transaction; or (c) the Minimum Rent then
payable and any scheduled increases thereto, increased in accordance with
Section 4.3 using the effective date of such transaction as the Adjustment
Date.  In no event shall the Minimum Rent, as adjusted, be less than the Minimum
Rent which would have been payable but for the Occupancy Transaction.

 

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16.6  If Tenant requests consent to an Occupancy Transaction in accordance with
this Article, within sixty (60) days after receipt of such request, Landlord
shall have the right to (a) terminate this Lease in the event of any assignment
of this Lease or (b) terminate this Lease as to a portion of the Premises to be
sublet, if the sublease is to be of less than the entire Premises, such
termination to be effective thirty (30) days after receipt of Landlord’s
termination notice by Tenant.  If Landlord elects to terminate under the
provisions hereof, and the area to be terminated is less than the entire
Premises, an amendment to this Lease shall be executed in which Tenant’s
obligations for rent and other charges shall be reduced in proportion to the
reduction in the size of the Premises caused thereby by restating the
description of the Premises, and its monetary obligations hereunder shall be
reduced by multiplying such obligations by a fraction, the numerator of which is
the floor area of the Premises offered for sublease and the denominator of which
is the floor area of the Premises immediately prior to such termination, as
determined by Landlord in its sole and absolute discretion.  Failure of Landlord
to give Tenant written notice of termination shall not constitute or be deemed
Landlord’s consent to such Occupancy Transaction.  If Landlord shall exercise
its termination right hereunder, Landlord shall have the right to enter into a
lease or other occupancy agreement directly with the proposed  Transferee under
such lease or occupancy agreement, even if such rents and other consideration
exceed the rent payable under this Lease by Tenant. Notwithstanding the
foregoing, provided Tenant is not in default under any provision of this Lease
(after receipt of notice and expiration of any applicable cure period), Tenant
shall have the right to nullify Landlord’s election to terminate under this
Section by withdrawing its request for Landlord’s consent to the Occupancy
Transaction, in writing, within five (5) days after receipt of Landlord’s notice
of termination.

16.7  Any Occupancy Transaction purportedly consummated in violation of the
provisions of this Article shall be null and void and of no force or effect.

16.8  Landlord has entered into this Lease with Tenant in order to obtain for
the benefit of the entire Shopping Center the unique attraction of Tenant’s
Trade Name and the unique merchandising mix and product line associated with
Tenant’s business. Tenant hereby acknowledges that the provisions of this
Article 16 have been freely negotiated and are expressly agreed to by Tenant as
an inducement to Landlord to enter into this Lease.

16.9  Notwithstanding any Occupancy Transaction, Tenant (and any Guarantor)
shall at all times remain directly and primarily responsible and liable for the
payment of the rent herein specified and for compliance with all other
obligations under this Lease.  Upon the occurrence of a default by Tenant, if
the Premises or any part thereof are then sublet, Landlord, in addition to any
other remedies provided herein or by law, may collect directly from the
Transferee all rents due and becoming due to Tenant under such sublease and
apply such rent against any sums due to Landlord from Tenant hereunder.  No such
collection directly from the Transferee shall be construed to constitute a
novation or a release of Tenant from the further performance of Tenant’s
obligations hereunder.  The acceptance by Landlord of any payment due hereunder
from any other person shall not be deemed to be a waiver by Landlord of any
provision of this Lease or a consent to any Transfer.  Any violation of this
Lease by any assignee or subtenant shall be deemed to be a violation of this
Lease by Tenant.

16.10  The restrictions on transfer described in this Lease are acknowledged by
Tenant to be reasonable for all purposes, including, without limitation, the
provisions of California Civil Code Section 1951.4(b)(2). Tenant expressly
waives any rights which it might otherwise be deemed to possess pursuant to
applicable law, including, without limitation, Section 1997.040 of the
California Civil Code, to limit any remedy of Landlord pursuant to Section
1951.2 or 1951.4 of the

 

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California Civil Code by means of proof that enforcement of a restriction on use
of the Premises would be unreasonable.

16.11 As used in this Article 16: “Occupancy Transaction” means any Transfer,
Encumbrance, Change of Control, or other arrangement whereby the identity of the
person or persons using, occupying or possessing the Premises changes or may
change, whether such change be of an immediate, deferred, conditional,
exclusive, nonexclusive, permanent or temporary nature. “Transfer” means any
voluntary, unconditional and present (i) assignment of some or all of Tenant’s
interest, rights and duties in this Lease and the Premises, including Tenant’s
right to use, occupy and possess the Premises, or (ii) sublease of Tenant’s
right to use, occupy and possess the Premises, in whole or in part.
“Encumbrance” means any conditional, contingent or deferred assignment, sublease
or conveyance voluntarily made by Tenant of some or all of Tenant’s interest,
rights or duties in this Lease or the Premises, including Tenant’s right to use,
occupy or possess the Premises, in whole or in part, including, without
limitation, any mortgage, deed of trust, pledge, hypothecation, lien, franchise,
license, concession or other security arrangement.  “Encumbrance” shall not
include financing secured by Tenant’s furniture, trade fixtures and equipment.
“Transferee” means the proposed assignee, sublessee, mortgagee, beneficiary,
pledgee or other recipient of Tenant’s interest, rights or duties in this Lease
or the Premises in an Occupancy Transaction.  “Change of Control” means the
transfer by sale, merger, assignment, death, incompetency, mortgage, deed of
trust, trust, operation of law, or otherwise of any shares, voting rights or
ownership interests which will result in a change in the identity of the person
or persons exercising, or who may exercise, effective control of Tenant, unless
such change results from the trading of shares listed on a recognized public
stock exchange and such trading is not for the purpose of acquiring effective
control of Tenant.  If Tenant is a private corporation whose stock becomes
publicly held, the transfers of such stock from private to public ownership
shall not be deemed a Change of Control.  If Tenant is a sole proprietorship,
the death or incapacity of Tenant shall be deemed a Transfer.

16.12  At any time and from time to time without Landlord’s consent (provided at
least thirty (30) days’ prior written notice is provided to Landlord, which
notice shall be accompanied by a copy of the applicable Leasehold Mortgage and a
non-refundable review fee of One Thousand Five Hundred and No/100 Dollars
($1,500.00)), Tenant may grant a mortgage, deed of trust, pledge or other
security interest (as the case may be, a “Leasehold Mortgage”) in this Lease and
Tenant’s leasehold interest in the Premises (but not Landlord’s reversionary,
including fee, interest in the Premises, the Building or any other portion of
the Shopping Center), to any bank, savings and loan association, insurance
company, pension or retirement fund or investment banking firm subject to
service of process in the State of California (“Leasehold Mortgagee”) and may
assign its interest in this Lease under such Leasehold Mortgage, provided that:
(a) Landlord’s reversionary (including fee) interest in the Premises, Building
and all other portions of the Shopping Center shall not be affected or
encumbered in any way by such Leasehold Mortgage, and (b) until completion of
Tenant’s Work and the opening of the Premises for business, such Leasehold
Mortgage shall require that all funds obtained by Tenant in connection therewith
be applied to the payment of costs and expenses related to the construction and
opening of the Premises and Tenant’s business therein.  Any Landlord’s lien
covering the Improvements (but not Landlord’s reversionary, including fee, 
interest therein) or Tenant’s personal property shall be and is hereby deemed
subordinate to any such Leasehold Mortgage.  Landlord shall execute such
commercially reasonable documentation as may reasonably be required by the
Leasehold Mortgagee in connection with the making of the Leasehold Mortgage,
provided the same is reasonably satisfactory to Landlord as to form and content
and Landlord is reimbursed for its reasonable attorneys’ fees in connection with
its review of the same.

 

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ARTICLE 17:  HOLDING OVER.

 

17.1  Tenant acknowledges and agrees that any failure of Tenant to surrender
possession of the Premises on the Expiration Date or earlier termination of this
Lease shall result in substantial damages to Landlord.  Accordingly, if Tenant
does not surrender possession of the Premises to Landlord as set forth herein,
Tenant shall be deemed a hold over tenant at sufferance and shall pay to
Landlord for each day that Tenant holds over in the Premises, an amount equal to
one hundred fifty percent (150%) of the prorated daily Minimum Rent applicable
to the last month of the Lease Term, plus additional rent payable in accordance
with the terms of this Lease. No provision of this Lease shall be deemed to
permit Tenant to retain possession of the Premises after the Expiration Date or
earlier termination of this Lease without Landlord’s prior written consent. 
Except as otherwise specifically stated in this Lease, all of the terms and
conditions of this Lease shall remain in effect following any extension, renewal
or hold over of the original Lease Term.  Tenant shall indemnify, defend and
hold harmless Landlord from and against any and all losses, costs, claims,
liability, damages, judgments, and expenses (including, but not limited to,
reasonable attorneys’ fees and costs) resulting from any failure by Tenant to
surrender the Premises in the manner and condition required by this Lease upon
the expiration of the Lease Term or the earlier termination of this Lease,
including, without limitation, any claims made by any proposed new tenant
founded upon such failure.

 

ARTICLE 18:  INTENTIONALLY DELETED

 

ARTICLE 19:  DEFAULT.

 

19.1 The occurrence of any of the following shall constitute a default by Tenant
and a breach of this Lease.

 

(a)   Failing or refusing to pay any amount of Minimum Rent or additional rent
when due in accordance with the provisions of this Lease, should Tenant fail to
cure same within ten (10) days after receipt of written notice of such default.

 

(b)   Failing or refusing to open, occupy and operate the Premises in accordance
with Article 15 or conducting a going-out-of-business or similar sale or
committing a default under this Lease which is incapable of being cured.

 

(c)   Maintaining, committing, or permitting on the Premises waste, a nuisance,
or use of the Premises for an unlawful purpose or entering into an Occupancy
Transaction contrary to the provisions of Article 16, either of which condition
remains uncured for more than forty eight (48) hours after Tenant’s receipt of
written notice from Landlord of the same.  In the event the Permitted Use
involves the sale and/or preparation of food, Tenant’s failure to maintain a
health department rating of “A” (or such other highest health department or
similar rating as is available) for the third (3rd) time in any twelve (12)
month period, provided Landlord has furnished Tenant with written notice after
the second such occasion that the third (3rd) such failure shall result in an
noncurable default hereunder.  In each of the foregoing events, the same shall
immediately constitute a default without notice from Landlord, and Tenant shall
quit the Premises within five (5) days after written notice from Landlord.

 

(d)   Tenant’s failure to provide any instrument or estoppel certificate as
required by this Lease if the failure continues for ten (10) days after written
notice of the failure from Landlord to Tenant.

 

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(e)   If any proceeding shall be commenced to declare Tenant or Guarantor
bankrupt or insolvent or to obtain relief from any debts or obligations or to
delay or extend the payment thereof, or if either Tenant or Guarantor generally
fails to pay, or admits its inability to pay, debts as they become due, or
otherwise becomes insolvent, or if any assignment of Tenant’s or Guarantor’s
property be made for benefit of creditors, or if a receiver or trustee be
appointed for Tenant or Guarantor or for Tenant’s or Guarantor’s property or
business (unless in the case of a petition filed against Tenant or Guarantor,
the same is dismissed within ninety (90) days).

 

(f)    The failure by Tenant to observe or perform any of the express or implied
covenants or provisions of this Lease to be observed or performed by Tenant,
other than as specified in (a), (b) or (c) above, where such failure shall
continue for a period of ten (10) days after written notice thereof from
Landlord to Tenant.  If the nature of Tenant’s default is such that more than
ten (10) days are reasonably required for its cure, then Tenant shall not be
deemed to be in default if Tenant shall commence such cure within said ten (10)
day period and thereafter diligently prosecute such cure to completion within a
reasonable time, not to exceed sixty (60) days after the notice of default.

 

(g)   Any two (2) failures by Tenant to observe and perform any provision of
this Lease during any twelve (12) month period of the Lease Term shall
constitute, at the option of Landlord, a separate and noncurable default,
provided Landlord has furnished Tenant with written notice after the second such
occasion that the third (3rd) such failure shall result in an noncurable default
hereunder.

 

To the extent permitted by applicable state law, the time periods provided in
this Section for cure of Tenant’s defaults under this Lease or for surrender of
the Premises shall be in lieu of, and not in addition to, any similar time
periods prescribed by applicable state law as a condition precedent to the
commencement of legal action against Tenant for possession of the Premises. 
Tenant waives (to the fullest extent permitted under law) any written notice
(other than such notice as this Article specifically requires) which any statute
or law now or hereafter in force prescribes be given Tenant.  Notwithstanding
anything to the contrary contained in the preceding sentence, any notice given
pursuant to this Section 19.1 shall be in lieu of any written notice required by
statute or law, including any notice required under California Code of Civil
Procedure Section 1161 et. seq., and Tenant waives (to the fullest extent
permitted by law) the giving of any notice other than that provided for in this
Section 19.1.

 

19.2  The waiver by Landlord of any breach of any term, covenant or condition
contained in this Lease shall not be deemed to be a waiver of such term,
covenant or condition for any prior or subsequent breach thereof, or of any
other term, covenant or condition contained in this Lease.  Landlord’s consent
to or approval of any act by Tenant requiring Landlord’s consent or approval
shall not be deemed to waive or render unnecessary Landlord’s consent to or
approval of any prior or subsequent similar act by Tenant.  Landlord’s
acceptance of partial rent or performance by Tenant shall not be deemed to be an
accord and satisfaction or a waiver of any preceding breach by Tenant of any
term, covenant or condition of this Lease or of any right of Landlord to a
forfeiture of this Lease by reason of such breach, regardless of Landlord’s
knowledge of such preceding breach at the time of Landlord’s acceptance.  No
term, covenant or condition of this Lease shall be deemed to have been waived by
Landlord unless such waiver is in writing and executed by Landlord.

 

19.3  Should Tenant fail to cure within the time periods specified in Section
19.1 any default specified in subparagraphs (a), (b), (d) or (f) of Section
19.1, or fail to quit the Premises in accordance with subparagraph (c) of
Section 19.1 or is in default under subparagraph (e) of

 

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Section 19.1 or is in default under subparagraph (e) of Section 19.1 with
respect to any default specified in subparagraph (c) of Section 19.1, Landlord
may exercise any of the following rights without further notice or demand of any
kind to Tenant or any other person, except as required by applicable state law:

(a)   The right of Landlord to terminate this Lease and Tenant’s right to
possession of the Premises and to reenter the Premises, take possession thereof
and remove all persons therefrom, following which Tenant shall have no further
claim thereon or hereunder;

(b)   The right of Landlord, without terminating this Lease and Tenant’s right
to possession of the Premises, to reenter the Premises and occupy the whole or
any part thereof for and on account of Tenant and to collect any unpaid rent
which may be or become payable, or which may thereafter become payable, and to
relet the Premises or any part thereof for such term or terms (which may be for
a term extending beyond the Term) at such rental or rentals and upon such other
terms and conditions as Landlord in its sole discretion may deem advisable
(Landlord being under no obligation to do so);

(c)   The right of Landlord, even though it may have reentered the Premises, in
accordance with subparagraph (b) of this Section, to elect thereafter to
terminate this Lease and Tenant’s right to possession of the Premises; and/or

(d)   The right of Landlord (but not the obligation) at any time after five (5)
days’ notice to Tenant, to cure such default for the account and at the expense
of Tenant and to recover the cost of such cure, together with an administrative
fee of fifteen percent (15%), from Tenant as additional rent.

Should Landlord reenter the Premises under the provisions of subparagraph (b) of
this Section 19.3, Landlord shall not be deemed to have terminated this Lease or
have accepted a surrender thereof by any such reentry, unless Landlord notifies
Tenant in writing that it has so elected to terminate this Lease and Tenant’s
right to possession.  Tenant further covenants that the service by Landlord of
any notice pursuant to the unlawful detainer or eviction statutes of the State
of California (including, without limitation, California Code of Civil Procedure
Section 1161 et. seq.) and the surrender of possession pursuant to such notice
shall not be deemed to be a termination of this Lease (unless Landlord elects to
the contrary at the time of, or at any time subsequent to, the serving of such
notice and such election is evidenced by a written notice to Tenant).  In the
event of any reentry or taking possession of the Premises as aforesaid, Landlord
shall have the right, but not the obligation, to remove therefrom all or any
part of the merchandise, Improvements or personal property located therein and
to place the same in storage at a public warehouse at the expense and risk of
Tenant.  The rights and remedies given to Landlord in this Section shall be
additional and supplemental to all other rights or remedies which Landlord may
have under laws in force when the default occurs.

19.4  Should Landlord terminate this Lease and Tenant’s right to possession of
the Premises, pursuant to the provisions of subparagraphs (a) or (c) of Section
19.3, Landlord may recover from Tenant as damages, all of the following:

(a)   The worth at the time of award of any unpaid rent that had been earned at
the time of such termination;

(b)   The worth of any unpaid rent that would have been earned after termination
until the time of award;

 

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(c)   The worth at the time of award of the amount by which the unpaid rent for
the balance of the Lease Term after the time of award exceeds the amount of such
rental loss for the same period that Tenant proves could be reasonably avoided;

(d)   Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform Tenant’s obligations under
this Lease or which would be likely to result therefrom, including, without
limitation, any costs or expense incurred by Landlord in (i) retaking possession
of the Premises, including reasonable attorney fees therefor, (ii) maintaining
or preserving the Premises after such default, (iii) preparing the Premises for
reletting to a new tenant, including repairs or alterations to the Premises for
such reletting, (iv) leasing commissions, (v) any reductions in financing or
refinancing available to Landlord caused by the loss of its ability to show a
future income stream including Tenant’s rent, and (vi) any other costs necessary
or appropriate to relet the Premises;

(e)   The unamortized portion of (i) all costs and expenses incurred by Landlord
in connection with its negotiation of and entry into this Lease, including, but
not limited to, brokerage commissions, attorneys’ fees, space planning costs and
consultant fees, (ii) all costs and expenses, including, but not limited to,
design, architectural, permitting and construction costs, incurred by Landlord
in connection with Landlord’s Work, if any, under Exhibit C, and (iii) the
tenant improvement allowance, if any, paid by Landlord to Tenant in accordance
with this Lease, all of the foregoing to be amortized over the Lease Term at the
“Interest Rate” set forth below;

(f)    The entire amount of any free rent or rent deferrals or other rent
concessions granted Tenant; and

(g)   At Landlord’s election, such other amounts in addition to or in lieu of
the foregoing as may be permitted from time to time by the laws of the State of
California.

As used in subparagraphs (a) and (b) of this Section, the “worth at the time of
award” is computed by allowing interest at the Interest Rate.  “Interest Rate”
means the lesser of (i) the maximum lawful rate permitted by usury or similar
law in the State of California to be charged by Landlord to Tenant, or (ii) four
percent (4%) above the annualized rate of interest publicly announced from time
to time by Bank of America NT&SA (or its successors-in-interest), as its “prime
rate” or “reference rate,” and such interest shall be computed on the basis of
monthly compounding with actual days elapsed compared to a 360-day year. As used
in subparagraph (c) of this Section, the “worth at the time of award” is
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%). All additional
rent shall, for the purposes of calculating any amount due under the provisions
of subparagraph (c) of this Section, be computed on the basis of the average
monthly amount thereof accruing during the immediately preceding sixty (60)
month period, except that, if it becomes necessary to compute such additional
rent before such a sixty (60) month period has occurred, then such additional
rent shall be computed on the basis of the average monthly amount hereof
accruing during such shorter period.

19.5  In the event of any reentry or taking possession of the Premises as
provided in this Article, Landlord shall have the right, but not the obligation,
to remove therefrom all or any part of the merchandise or personal property
located therein and to place the same in storage at a public warehouse at the
expense and risk of Tenant.

19.6  Tenant waives any and all rights of redemption granted by or under any
present or future laws (including, without limitation, California Code of Civil
Procedure Section 1179) if Tenant is

 

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evicted or dispossessed for any cause, or if Landlord obtains possession of the
Premises by reason of the violation by Tenant of any of the terms, covenants and
conditions of this Lease or otherwise.  Tenant expressly waives its right to
plead any noncompulsory counterclaims or offset, in any action or proceeding
brought by Landlord against Tenant for a default under Section 19.1(a) above;
although Tenant shall be entitled to assert any such claims in a separate action
brought by Tenant.  Tenant hereby waives its right to jury trial in the event of
any legal action relating to or affecting the rights of Landlord or Tenant under
this Lease.

19.7  If Tenant fails to pay any amount of Minimum Rent or additional rent when
due, such unpaid amount shall bear interest from the date due until paid, at the
Interest Rate. In addition to such interest, Tenant acknowledges that the late
payment by Tenant of any installment of Minimum Rent or additional rent when due
will cause Landlord to incur certain costs and expenses not contemplated under
this Lease, the exact amount of which costs are extremely difficult or
impracticable to determine.  Such costs and expenses will include, without
limitation, attorneys’ fees, administrative and collection costs, and processing
and accounting expenses and other costs and expenses necessary and incidental
thereto.  Therefore, if any such installment is not received by Landlord from
Tenant within ten (10) days after Tenant receives written notice from Landlord
that such sum is owed (provided that no such notice shall be required if Tenant
has received one (1) or more written notices of nonpayment or past-due payment
from Landlord under this Section within the preceding twelve (12) months),
Tenant shall immediately pay to Landlord, in addition to the interest provided
above, ten percent (10%) of such payment as a late charge.  Landlord and Tenant
agree that such late charge represents a reasonable estimate of such costs and
expenses and is fair compensation to Landlord for Landlord’s loss caused by
Tenant’s late payment.  The interest and late charges set forth herein are in
addition to the unpaid amount, and acceptance of such late charge shall not
constitute a waiver of Tenant’s default with respect to such overdue amount, nor
prevent Landlord from exercising any other rights and remedies granted hereunder
or by law to Landlord.

ARTICLE 20:  DEFAULTS BY LANDLORD.

 

20.1  If Landlord fails to perform or observe any of the terms, covenants or
conditions contained in this Lease on Landlord’s part to be performed or
observed within thirty (30) days after written notice of default from Tenant or,
when more than thirty (30) days shall be required because of the nature of the
default, if Landlord shall fail to proceed diligently to commence to cure such
default within thirty (30) days after written notice thereof from Tenant, said
failure shall constitute a default by Landlord under this Lease.

20.2  If Tenant is given notice of the name and address of any mortgagee, then
prior to exercising its remedies under this Lease, Tenant shall give written
notice of any Landlord’s default to such mortgagee, specifying the default in
reasonable detail, and affording such mortgagee the right to perform on behalf
of Landlord within thirty (30) days after written notice of Landlord’s default
from Tenant or, when more than thirty (30) days shall be required because of the
nature of the default, within such longer period as shall be reasonable under
the circumstances after written notice of Landlord’s default from Tenant.  If
such mortgagee does perform on behalf of Landlord, such default shall be deemed
cured and Tenant shall have no further remedies with respect thereto. For all
purposes under this Lease, “mortgagee” means the holder, beneficiary or ground
lessor under any mortgage, deed of trust, security agreement or ground lease or
similar instrument affecting the Shopping Center.

20.3  Tenant hereby waives the right to terminate this Lease for Landlord’s
defaults, Tenant’s remedies being limited to the right to seek damages or
specific performance.  In the event Tenant

 

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makes any claim or asserts any cause of action against Landlord:  (a) Tenant’s
sole and exclusive remedy shall be against the current rents, issues, profits
and other income Landlord receives from Landlord’s operation of the Shopping
Center, net of all current operating expenses, liabilities, reserves and debt
service associated with said operation (“Net Income” for purposes of this
Section only), and subject to the rights of Landlord’s mortgagees; (b) no other
real, personal or mixed property of Landlord, wherever located, shall be subject
to levy on any judgment obtained against Landlord, (c) if such Net Income is
insufficient to satisfy any judgment, Tenant will not institute any further
action, suit, claim or demand, in law or in equity, against Landlord for or on
the account of such deficiency, and (d) Tenant shall have no right to withhold
rent or perform or cure any such alleged defaults of Landlord at Landlord’s
expense. The limitations set forth in this Section shall be enforceable by
Landlord and/or by any direct or indirect owner, member, shareholder, manager,
partner, trustee, officer, director, employee, agent, contractor or property
manager of Landlord.

20.4  EXCEPT AS PROVIDED BY THE OTHER PROVISIONS OF THIS LEASE WHICH MAY
PRESCRIBE A SHORTER PERIOD, ANY CLAIM, DEMAND, RIGHT OR DEFENSE OF ANY KIND BY
TENANT WHICH IS BASED UPON OR ARISES IN CONNECTION WITH THIS LEASE OR
NEGOTIATIONS PRIOR TO EXECUTION, SHALL BE BARRED UNLESS TENANT COMMENCES AN
ACTION THEREON WITHIN TWELVE (12) MONTHS AFTER THE DATE OF OCCURRENCE OF THE ACT
OR OMISSION TO WHICH THE CLAIM, DEMAND, RIGHT OR DEFENSE RELATES; TENANT HEREBY
WAIVES ANY STATUTORY LIMITATIONS PERIODS UNDER APPLICABLE CALIFORNIA STATE LAW
WHICH MAY PRESCRIBE A LONGER PERIOD.

20.5  Under no circumstances shall either party be liable to the other for any
consequential damages under or in connection with this Lease.

20.6  If any sums are payable by Landlord to Tenant pursuant to any provision of
this Lease, Landlord shall have the right to first offset from such sum any
amounts that are currently payable by Tenant to Landlord pursuant to any
provision contained in this Lease.

ARTICLE 21:  ATTORNEY FEES.

 

21.1 In the event that any party herein employs legal counsel for purposes of
collecting sums due under this Lease, or to commence any legal or equitable
action or proceedings, including, without limitation, an action for declaratory
relief or any other form of relief in order to enforce, interpret, reform,
rescind or in any manner affect the provisions of this Lease, or for the breach
of this Lease, then the prevailing party, in addition to all provable damages,
shall be entitled to reasonable attorneys fees, expert witness fees and costs
which may be set by the court in the same action, including any appellate action
which may be brought in connection with the underlying action, any motion or
adversary proceeding commenced in a bankruptcy proceeding, or any separate
action brought for any of these purposes, in addition to any other relief to
which the party may be entitled.  In the event no judicial or arbitration
proceeding is commenced, or if commenced is not concluded, then the “prevailing
party” for purposes of this paragraph shall be the party that obtains a payment
or other relief from the other party once an attorney has been engaged by the
prevailing party.  All remedies, rights, undertakings, obligations and
agreements contained in this Lease shall be cumulative and none of them shall be
in limitation of any other remedy, right, undertaking, obligation or agreement
of any party.  All references in this Lease to Landlord’s attorneys fees and
costs shall include, without limitation, the reasonable value of services
performed by Landlord’s in-house legal staff.

 

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ARTICLE 22:  PERFORMANCE UNDER PROTEST.

 

22.1  If at any time a dispute shall arise as to any amount or sum of money to
be paid by one party to the other party under the provisions hereof, the party
against whom the obligation to pay the money is asserted shall have the right to
make payment “under protest” and such payment shall not be regarded as a
voluntary payment, and, subject to the other terms and conditions of this Lease,
there shall survive the right on the part of said party to in­stitute suit for
the recovery of such sum.

 

ARTICLE 23:  PARTIAL INVALIDITY.

 

23.1  If any term, covenant, condition or provision of this Lease or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Lease or the application of such
term or provision to persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby and each term,
covenant, condition and provision of this Lease shall be valid and shall be
enforced to the fullest extent per­mitted by law.

 

ARTICLE 24:  PROTECTION OF MORTGAGEES.

 

24.1  Tenant agrees to forthwith execute and deliver to Landlord from time to
time and at any time upon receipt by it of written request therefor from
Landlord, without charge, in such form as may be reasonably required by any
mortgagee, an instrument or instruments whereby Tenant will agree to subordinate
the lease to the lien of its mortgage, deed of trust, or other en­cumbrance,
provided that such mortgagee agrees, in case of foreclosure, to recognize this
Lease as continuing in full force and effect in accordance with the terms
thereof, if Tenant is not then in default hereunder. If a mortgagee, or any
person claiming under it, shall succeed to the interest of Landlord under this
Lease, Tenant agrees to recognize and attorn to said mortgagee or person as
Landlord hereunder.  Without limiting in any way Landlord’s or Landlord’s
mortgagee’s rights under this Article 24, Tenant agrees that it will execute any
subordination agreement which has as its material provisions those set forth in
Exhibit D attached hereto and incorporated herein by this reference or, at
Landlord’s request, such other form as then may be customarily required by
Landlord’s mortgagee.  Tenant acknowledges that any mortgagee has the right to
subordinate at any time its interest in this Lease and the leasehold estate to
that of Tenant, without Tenant’s consent.  Tenant shall, within ten (10) days
after written request therefor, execute and deliver such documents as are
requested by the mortgagee to confirm such subordination.   In the event
Landlord’s current or future mortgagee requires modifications or revisions to
this Lease, Tenant shall not unreasonably withhold its consent to such
modifications or revisions, provided the modifications or revisions do not
materially diminish Tenant’s rights, or materially increase Tenant’s
obligations, under this Lease.

 

ARTICLE 25:  ESTOPPEL CERTIFICATES; TENANT FINANCIAL STATEMENTS.

 

25.1  Tenant shall, without charge, at any time and from time to time, within
ten (10) business days after written request from Landlord, deliver a written
instrument to Landlord, any mortgagee, and/or any other person, firm or
corporation specified by Landlord, duly executed and acknowledged, in such  form
as may be customarily required by Landlord’s mortgagee or as may otherwise be
reasonably required by Landlord.  Tenant’s failure to execute and deliver any
such instrument within said ten (10) day period shall be deemed to make
conclusive and binding upon Tenant in favor of Landlord and any such mortgagee
or other person the statements contained in such instrument without exception. 
If Tenant is required to deliver more than four (4) estoppel

 

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certificates in a single calendar year, Landlord shall reimburse Tenant upon
demand for its reasonable, out-of-pocket costs to prepare any additional
estoppel certificate(s) required to be delivered by Tenant during the remainder
of such calendar year

 

25.2  Within ten (10) business days after request therefor by Landlord, Tenant
shall supply to Landlord and/or any mortgagee or proposed mortgagee, purchaser
or transferee of Landlord’s interest in the Shopping Center, financial
statements of Tenant and of any Guarantor of this Lease prepared in accordance
with generally accepted accounting principles, consistently applied, and
accurately reflecting the financial condition of Tenant, and any Guarantor,
together with such additional financial information as may be required by any
such party.

 

25.3  In connection with any Occupancy Transaction, Encumbrance or personal
property financing permitted under this Lease, Landlord agrees to furnish Tenant
with a similar estoppel certificate, provided Tenant is not then in default
(after the receipt of notice and expiration of any applicable cure period) and
has opened for business in the Premises, and provided further that such
instrument is reasonably satisfactory to Landlord as to form and content and
Landlord is reimbursed for its reasonable attorneys’ fees and other costs in
connection with its preparation or review of the same.

 

ARTICLE 26:  ACCESS TO PREMISES.

 

26.1  Landlord and/or Landlord’s authorized representatives shall have the right
to enter the Premises at all reasonable times for the purpose of showing the
Premises to actual or prospective insurers, governmental authorities, purchasers
or mortgagees, and, during the last year of the Lease Term or during any period
in which Tenant is in default of its obligations under this Lease, to potential
occupants. Tenant additionally shall permit Landlord, or Landlord’s authorized
representatives, to enter the Premises at all times during usual business hours
to inspect the Premises, to perform Landlord’s duties under this Lease, and to
perform any work therein (a) that may be necessary to comply with legal
requirements, (b) that Landlord may deem necessary to prevent waste or
deterioration of the Premises or Shopping Center, and (c) that Landlord may deem
necessary in connection with the expansion, reduction, remodeling, maintenance,
repair or renovation of any portion of the Shopping Center. Landlord may also
enter to post notices of non-responsibility and the like in connection with
Improvements made by Tenant (which notices shall not be removed by Tenant until
after the expiration of the statutory lien period).

 

ARTICLE 27:  WAIVER.

 

27.1  No covenant or condition of this lease can be waived except by written
consent of Landlord, and forbearance or indulgence by Landlord in any regard
whatsoever shall not constitute a waiver of the covenant or condition to be
performed by Tenant to which the same may apply, and, until complete performance
by Tenant of said covenant or condition, Landlord shall be entitled to invoke
any remedy available unto it under this lease or by law, despite said
forbearance or indulgence.  The subsequent acceptance of rental hereunder by
Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of
any term, covenant or condition of this Lease, other than the failure of Tenant
to pay the particular rental so accepted, regardless of Landlord’s knowledge of
such preceding breach at the time of acceptance of such rental.

 

27.2  The waiver by one party of the performance of any covenant, condition or
promise shall not be considered to be a waiver by it of any other covenant,
condition, or promise.  The waiver by either or both parties of the time for
performing any act shall not constitute a waiver of the time for performing any
other act or identical act required to be per­formed at a later time.

 

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ARTICLE 28:  SALE OR CONVEYANCE BY LANDLORD.

 

28.1 If Landlord, at any time, sells, conveys, transfers or otherwise divests
itself or is divested of Landlord’s interest (“transfer”) in the Premises, other
than a transfer for security purposes only, Landlord shall be relieved of all
obligations and liabilities hereunder, provided the transferee assumes, in a
written instrument for the benefit of Tenant, all obligations and liabilities
hereunder.  Any Security Deposit or other funds of Tenant then being held by
Landlord shall be delivered to Landlord’s successor.  The obligations to be
performed by Landlord hereunder shall be binding on Landlord’s successors and
assigns only during their respective periods of ownership.

 

ARTICLE 29:  END OF TERM.

 

29.1  Upon the Expiration Date or earlier termination of this Lease, subject to
Section 19.5, Tenant shall remove all of Tenant’s trade fixtures, furniture,
furnishings, and other personal property from the Premises, repair any damage
caused by such removal, and surrender possession of the Premises to Landlord in
broom clean condition and good state of repair, except ordinary wear and tear. 
All Improvements made by Tenant shall be deemed to have attached to the Premises
and to have become the property of Landlord upon such attachment.  At the
Expiration Date or earlier termination of this Lease, Tenant shall remove
Tenant’s storefront sign and any other illuminated signage in the Premises, as
well as those other Improvements as directed by Landlord, at Tenant’s cost, and
shall repair any damage caused by such removal. No termination or expiration of
this Lease shall relieve Tenant from any indemnities, liabilities, monetary
obligations or other obligations which shall have accrued or relate to a period
prior to the termination or expiration of this Lease. Tenant hereby waives any
notice now or hereafter required by law with respect to vacating the Premises on
any such date.

 

ARTICLE 30:  SIGNS.

 

30.1  Subject to Tenant obtaining all necessary governmental approvals, Tenant
shall, at its sole cost and expense, install signage identifying Tenant’s
business in the Premises. All exterior signage or interior signage which is
visible from the exterior of the Premises which Tenant desires to install or
construct at or on the Premises shall comply with all legal requirements and
Landlord’s sign criteria for the Shopping Center, as the same may exist from
time to time, and shall be subject to Landlord’s prior written approval, which
shall not be unreasonably withheld. Tenant shall pay the cost of providing
utility service to such signs and the cost of all utilities used by same.  Any
taxes upon the signs shall be paid directly by Tenant to the taxing authority. 
Tenant shall remove such signs at the end of the Lease Term.  Tenant, at its
sole cost and expense, shall make all repairs required by reason of the
installation, maintenance and removal of its signs. No sign, picture, placard,
advertisement, notice, lettering, direction or handbill shall be exhibited,
distributed, painted, installed, displayed, inscribed, placed or affixed by
Tenant on any part of the exterior of Premises or the interior of the Premises
which is visible from the exterior of the Premises, the Building or the Common
Area, except with the prior consent of Landlord.  Landlord reserves the
exclusive right in its sole discretion to develop, modify and control all
internal and external signage, advertising and display devices at the Shopping
Center.  Upon notice from Landlord, Tenant shall immediately remove any signs,
advertising or display devices erected or maintained in violation of this Lease
or such sign criteria, and if Tenant fails to do so, Landlord may enter the
Premises and cause such item to be removed; the cost of such removal and of the
restoration of any damaged property, together with a fifteen percent (15%)
administrative fee, shall be paid by Tenant upon demand as additional rent.

 

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ARTICLE 31:   INTENTIONALLY DELETED.

 

ARTICLE 32:  NOTICE.

 

32.1  Wherever in this Lease it shall be required or permitted that any notice,
request, report, communication or demand be given, served or transmitted by
either party to this Lease to or on the other, such notice or demand shall be in
writing and shall be personally delivered or forwarded by certified mail, return
receipt requested, or by nationally recognized courier service providing written
confirmation of delivery, to the addresses of the parties as follows:

 

if to Landlord:

Krausz Enterprises

Post Office Box 2844

South San Francisco, CA 94083-2844

 

if to Tenant:

 

Chicago Pizza and Brewery, Inc.

16162 Beach Boulevard, Suite 100

Huntington Beach, CA 92647

Attn:  Paul Motenko, CEO

 

Notice shall be deemed to have been given or served on the delivery date
indicated by the United States Postal Service or courier service on the return
receipt or on the date such delivery is refused, unless Tenant is served
personally, in which event the date of personal delivery shall be deemed the
effective date of notice.  Either party may change its address by providing
written notice as specified herein; provided, however, that all addresses
provided must be the actual street address of a residence or business
establishment. If either party fails to notify the other of a change in address,
notice shall be deemed given on the date the other party receives the returned
notice marked “undeliverable.”  The foregoing method of service shall be
exclusive, and each party waives, to the fullest extent permitted under law, the
right to any other method of service required by any statute or law now or
hereafter in force. Whenever multiple notices are sent or multiple methods of
transmitting any notice are utilized, any time period that commences upon the
giving or deemed giving of such notice shall commence upon the earliest date
such delivery is effectuated, and such time shall not be extended by operation
of law or otherwise because of any later delivery of the same notice.

 

ARTICLE 33:  BROKERS.

 

Landlord and Tenant represent to each other that no broker or finder is entitled
to any commission by reason of the negotiation and execution of this Lease. 
Each party shall indemnify, defend and protect and hold the other harmless from
any costs, losses, claims, damages, judgments or expenses (including costs of
suit and reasonable attorneys’ fees) for any compensation, commission or fees
claimed by any other real estate broker or agent in connection with this Lease
or its negotiation by reason of any act of such party. Each party’s obligations
under this Article 33 shall survive the expiration of the Lease Term or earlier
termination of this Lease.

 

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ARTICLE 34:  FORCE MAJEURE.

 

The occurrence of any of the following events shall excuse such obligations of
Landlord or Tenant as are thereby rendered impossible or reasonably
impracticable for so long as such event continues:  strikes, lockouts, labor
disputes, acts of God, inability to obtain labor, materials or reasonable
substitutes therefor, governmental restrictions, regulations or controls,
judicial orders, enemy or hostile governmental action, civil commotion, fire or
other casualty, and other causes beyond the reasonable control of the party
obligated to perform.  Notwithstanding the foregoing (a) the occurrence of such
events shall not excuse Tenant’s obligations to pay Minimum Rent or additional
rent or excuse such obligations as this Lease may otherwise impose on the party
to obey, remedy or avoid such event, and (b) should the work performed by Tenant
or Tenant’s contractor result in a strike, lockout and/or labor dispute, such
strike, lockout and/or labor dispute shall not excuse Tenant’s performance.

 

ARTICLE 35:  MISCELLANEOUS.

 

35.1  The language in all parts of this Lease shall be construed as a whole and
simply according to its fair meaning and not strictly for or against either the
Landlord or the Tenant, and the construction of this Lease and any of its
various provisions shall be unaffected by any claim, whether or not justified,
that it has been prepared, wholly or in substantial part, by or on behalf of the
Landlord.

 

35.2  This Lease shall be governed by and construed in accordance with the laws
of the State of California. Each party consents to personal jurisdiction and
venue in the State of California and judicial district in which the Shopping
Center is located.

 

35.3  The Article and Section headings in this Lease are for convenience only
and are not a part of this lease and do not in any way limit or simplify the
terms and provisions of this Lease, nor shall they be used to determine the
intent of the parties.

 

35.4  Time is of the essence of this Lease and each and all of its provisions.

 

35.5  This Lease shall inure to the benefit of the heirs, executors,
ad­ministrators, successors and assigns of Landlord, and each of them, and shall
be binding on the permitted heirs, executors, ad­ministrators, successors and
assigns of Tenant, and each one of them always providing that nothing in this
Section contained shall impair any of the provisions set forth in Article 16.

 

35.6  No act or conduct of Landlord, whether consisting of the acceptance of the
keys to the Premises or otherwise, shall be deemed to be or constitute an
acceptance of the surrender of the Premises by Tenant prior to the expiration of
the Lease Term hereof, and such acceptance of sur­render by Tenant must be
evidenced by a written acknowledgment of acceptance of surrender signed by
Landlord.

 

35.7 Each party acknowledges that:

 

        A.            This Lease, and the exhibits and schedules attached
hereto, if any (this “Lease”) contain the entire and only agreement between the
parties, and set forth all the covenants, promises, as­surances, agreements,
representations, conditions, warranties, statements, and understandings
(“Representations”) between Landlord and Tenant concerning the Premises and the
Shop­ping Center, and there exist no Representations, either oral or written,
between them other than those in this Lease.  No oral agreement or
representations or prior written matter not

 

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contained in this instrument shall have any force or effect.  This Lease shall
not be modified in any way or ter­minated, except by a writing executed by both
parties.

 

        B.            This Lease supersedes and revokes all previous
negotiations, arrangements, letters of intent, offers to lease, lease proposals,
brochures, Representations, and information conveyed, whether oral or in
writing, between the parties hereto or their respective representatives or any
other per­son purporting to represent Landlord or Tenant.  Tenant acknowledges
that it has not been induced to enter into this Lease by any Representations not
set forth in this Lease, it has not relied on any such Representations, no such
Representations shall be used in the interpretation or construction of this
Lease, and Landlord shall have no liability for any consequences arising as a
result of any such Repre­sentations.

 

        C.            This Lease shall be effective only when it is signed by
both the Landlord and Tenant.  Tenant’s submission of a signed lease for review
by Landlord does not give Tenant any interest, right, or option in the Premises.

 

35.8  Either Landlord or Tenant shall, upon request of the other, execute,
acknowledge and deliver to the other a short form memorandum of this Lease,
which shall be in form reasonably satisfactory to the other party, for recording
purposes.  The party requesting recordation shall be responsible for payment of
any fees or taxes applicable thereto. Within five (5) business days following
the expiration of the Lease Term or the sooner termination of this Lease, Tenant
shall furnish Landlord with a recordable instrument, reasonably satisfactory to
both parties, quitclaiming or releasing any such short-form memorandum of this
Lease.  Tenant’s obligation under this Section shall survive the Expiration Date
or sooner termination of this Lease.

 

35.9  Tenant covenants for itself, its heirs, executors, administrators,
successors and assigns and all persons claiming under or through Tenant, that
there shall be no discrimination against or segregation of any person or group
of persons on account of race, color, religion, creed, sex, marital status,
sexual orientation, national origin, ancestry, age, physical handicap or medical
condition, in the leasing, subleasing, transferring, use, occupancy, tenure or
enjoyment of the Premises herein leased, and Tenant and any person claiming
under or through Tenant shall not establish or permit any such practice or
practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, subtenants, licensees, vendees or
customers in the Premises.

 

35.10  Tenant represents, warrants and covenants to and with Landlord that
Tenant shall at no time use or permit the Premises to be used in violation of
any Federal, state and local laws, including all zoning laws and ordinances, and
all regulations, codes, require­ments, public and private land use restrictions,
rules and orders (collectively, “Regulations”) that apply to the Building or
Tenant’s use or occupancy thereof, including any Regulations which relate to or
govern Hazardous Materials (defined below) and/or the environmental conditions
in, on, un­der or about the Premises, including, but not limited to, air
quality, soil and surface and subsurface water conditions (collectively,
“Environmental Regulations”).  Tenant shall assume sole and full responsibility
for, and shall remedy at its sole cost and expense, all such violations.  Tenant
shall at no time use, generate, release, store, treat, dispose of, or otherwise
deposit, in, on, under or about the Premises any hazardous or toxic substances,
wastes or related materials (“Hazardous Materials”) or permit or allow any third
party to do so, without Landlord’s express prior written con­sent and Tenant’s
compliance, at Tenant’s sole cost and expense, with all Environmental
Regula­tions.  Tenant shall pay or reimburse Landlord for any costs or expenses
incurred by Landlord, including reasonable attorneys’, engineers’, consultants’
and other experts’ fees and disbursements, incurred or payable to determine,
review, approve, consent to or monitor

 

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compliance with Environmental Regulations. Landlord may enter the Premises
without any liability whatsoever for the purposes of inspecting the Premises and
inspecting the performance by Tenant of the terms and conditions hereof.  Except
in the case of an emergency, Landlord shall give Tenant reasonable prior notice
of any and all intended entries or inspections.  Landlord’s election to conduct
such inspections shall not be construed as ap­proval of Tenant’s use of the
Premises or any activities conducted thereon, and shall in no way con­stitute an
assumption by Landlord of any responsibility whatsoever of Tenant’s use of the
Premises or Hazardous Materials.  Further, Tenant shall give to Landlord
immediate notice of the presence of any Hazardous Materials and/or the
applicability or violation of any Environmental Regulations. For the purposes
hereof, Hazardous Materials shall include, but not be limited to, asbestos,
asbestos-containing matter, and the group of organic compounds known as
polychlorinated biphenyls, as well as substances defined as “hazardous
substances” or “toxic substances” in the Com­prehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et
seq; (“CERCLA”); the Hazardous Materials Transportation Act, 49 U.S.C. Section
1802;  the Resource Conservation Recovery Act of 1976, 42 U.S.C. Section 6901,
et seq. (“RCRA”); those substances identified in regulations, orders, and
publications adopted pursuant to California Health and Safety Code and in the
regulations adopted and publications promulgated pursuant thereto and any
Environmental Regulation which now exists or which may be enacted or become
effective after the date of this Lease; all as the foregoing may be amended or
recorded from time to time. In addition, Tenant shall indemnify and hold
Landlord harmless from and against, and shall reimburse the Landlord for any
loss, claim, liability, damages, injuries (to person, property or natural
resources), cost, expense, action or cause of action, including all foreseeable
and unforeseeable consequential damages, directly or indirectly arising out of
the release, presence, use, generation, storage or dis­posal of Hazardous
Materials at the Premises, including, without limitation, the cost of any
re­quired or necessary repair, clean-up, detoxification, or other compliance
with any law, regulation or order with respect to the discharge or removal of
such substances and the preparation of any closure or other required plans,
whether such action is required or necessary prior to or following termination
of the Lease or transfer of title to the Premises, all costs associated  claims
for damages to persons or property, and Landlord’s reasonable attorneys’ and
consultants’ fees and court costs, to the full extent that the same are
attributable, directly or indirectly, to the use, release, generation, storage
or disposal of Hazardous Materials on the Premises.  Tenant’s duty to indemnify
Landlord shall survive the expiration, termination, release and/or cancellation
of the Lease.

 

35.11  As used in this Lease, “leasable area” means (i) with respect to the
Premises, the square footage of the Premises set forth in Section 1.1; and (ii)
with respect to any other area, the aggregate number of square feet of floor
space of all floor levels therein, excluding any mezzanine space not used for
sales, measured from the exterior surface of building walls and  from the center
line of side demising walls, without deduction for the width of or space
occupied by air conditioning equipment, columns, sprinkler risers, roof drains,
structural braces, expansion joints and/or shear walls. Common Area shall not be
considered “leasable area”.

 

35.12  Wherever in this Lease consent, approval or permission (collectively
referred to in this Section as “consent”) is required, such consent shall be
given in writing and shall not be unreasonably withheld or delayed, unless
otherwise expressly provided.  Landlord shall not be deemed to have withheld
Landlord’s consent unreasonably where Landlord’s right to give Landlord’s
consent is conditioned on Landlord obtaining the consent of any other person,
entity, agency or government authority and such other person, entity, agency or
government authority does withhold its consent.  If Landlord fails to give any
consent that a court later holds Landlord was required to give under the terms
of this Lease, Tenant shall be entitled solely to specific performance and such
other remedies as may be specifically reserved to Tenant under this

 

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Lease, but in no event shall Landlord be responsible for monetary damages
(including incidental and consequential damages) for such failure to give
consent.

 

35.13  Landlord shall have the absolute right to lease or permit the use or
occupancy of space in the Shopping Center as Landlord shall determine in
Landlord’s sole and absolute judgment.  Tenant does not rely on the fact, nor
does Landlord represent, that there shall be any specific occupants or minimum
occupancy level of space in the Shopping Center at any time.

 

35.14   If two (2) or more persons or corporations execute this Lease as Tenant,
the word “Tenant” as used in this Lease shall refer to all such persons or
corporations, and the liability of such persons or corporations for compliance
with and performance of all the terms, covenants and conditions of this Lease
shall be joint and several.  The masculine pronoun used herein shall include the
feminine or the neuter, as the case may be, and the use of the singular shall
include the plural. Nothing contained in this Lease shall be deemed or construed
as creating a partnership, joint venture, principal-agent, or employer-employee
relationship between Landlord and any other person or entity (including, without
limitation, Tenant) or as causing Landlord to be responsible in any way for the
debts or obligations of such other person or entity.

 

35.15  Should Landlord be or become a real estate investment trust during the
Lease Term, Landlord may request reasonable amendments to the Lease to preserve
its status as such under applicable law, and Tenant will not unreasonably
withhold, delay or defer Tenant’s consent thereto, provided that such amendments
do not (a) increase the monetary obligations of Tenant pursuant to this Lease or
(b) in any other manner adversely affect Tenant’s interest in the Premises.

 

35.16  To secure the payment of rent and the performance of Tenant’s other
obligations hereunder, Tenant hereby grants to Landlord an express contractual
lien on and security interest in all equipment, inventory, fixtures, consumer
goods, goods and any and all personal property of any kind or character of
Tenant which may be placed in or on the Premises and also upon all proceeds
thereof (including the proceeds of any insurance which may accrue to Tenant by
reason of damage to or destruction of any such property).  This lien and
security interest are given in addition to, and not in lieu of, Landlord’s
statutory lien and shall be cumulative thereto.  To the extent permitted by law,
this lien and security interest may be foreclosed with or without court
proceedings, by public or private sale, with or without notice, and Landlord
shall have the right to become purchaser at any such sale upon being the highest
bidder.  Upon request of Landlord, Tenant shall execute Uniform Commercial Code
financing statements relating to the aforesaid security interest.  Prior to the
installation of fixtures, equipment or improvements permanently affixed to the
Premises or which would otherwise become the property of Landlord under the
terms of this Lease, Tenant shall notify the holder of any security interest in
the same of Landlord’s rights to such property under the terms of this Lease,
and at the request of Landlord, Tenant shall furnish Landlord with evidence of
such notification.

 

Notwithstanding anything to the contrary set forth in this Lease, Landlord
hereby subordinates any liens which Landlord may have against Tenant’s personal
property, trade fixtures, equipment or  merchandise therein, whether such lien
is statutory, constitutional, or contractual, or arises out of operation of law
or otherwise (collectively, “Landlord’s Lien”) to any lien(s) on such property
in favor of any lender or personal property lessor holding an interest therein,
including but not limited to any personal property lessor, any vendor or
supplier, and/or the lender under any revolving line of credit or letter of
credit facility financing obtained by Tenant. The foregoing subordination is
intended to be automatic and self-executing, but Landlord shall execute such
instruments and agreements in connection therewith as Tenant (or its lender(s)
or lessor(s)) may reasonably

 

43

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request from time to time, provided Tenant is not then in default (after the
receipt of notice and expiration of any applicable cure period) and has opened
for business in the Premises, and provided further that such instrument is
reasonably satisfactory to Landlord as to form and content and Landlord is
reimbursed for its reasonable attorneys’ fees and other costs in connection with
its preparation or review of the same..

 

35.17   If Tenant is a corporation, the person or persons executing this Lease
on behalf of Tenant covenant and warrant as of the date Tenant executes and
delivers this Lease that:  (a) Tenant is a duly constituted corporation,
qualified to do business in the State of California, (b) Tenant has paid all
applicable franchise and corporate taxes, (c) Tenant will file when due all
future forms, reports, fees and other documents necessary to comply with
applicable laws, and (d) the signatories signing on behalf of Tenant have the
requisite authority to bind Tenant pursuant to Tenant’s bylaws or a certified
copy of a resolution authorizing the same by Tenant’s board of directors. 
Landlord hereby represents and warrants to Tenant that this Lease has been duly
executed and delivered by Landlord.

 

35.18   Landlord and Tenant agree that the terms of this Lease are confidential
and constitute proprietary information of the parties hereto.  Disclosure of the
terms hereof could adversely affect the ability of Landlord to negotiate with
other tenants of the Shopping Center.  Each of the parties hereto agrees that
such party, and its respective partners, officers, directors, employees, agents
and attorneys, shall not disclose the terms and conditions of this Lease to any
other person without the prior written consent of the other party hereto except
pursuant to an order of a court of competent jurisdiction; provided, however,
that each party may disclose the terms hereof to its lenders or prospective
lenders or its accountants who audit its financial statements or prepare its tax
returns, to any prospective transferee of all or any portions of its interests
hereunder, to any governmental entity agency or person to whom disclosure is
required by applicable law or regulation and in connection with any action
brought to enforce the terms of this Lease, on account of the breach or alleged
breach hereof or to seek a judicial determination of the rights or obligations
of the parties hereunder, and provided further that Tenant may make such
disclosures as may otherwise be required in connection with Tenant’s status as a
publicly-held company.

 

35.19  This Lease may be executed in counterparts, each of which is an original
but all of which shall constitute one and the same instrument.

 

This Lease is continued directly on the Signature Page.

 

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IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease as of the
Execution Date.

 

 

 

 

 

 

 

LANDLORD:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KRAUSZ ENTERPRISES,

 

 

 

 

 

 

a California general partnership

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

F. Ron Krausz,

 

 

 

 

 

 

 

a general partner

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TENANT:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHICAGO PIZZA & BREWERY, INC.,

 

 

 

 

 

 

a California corporation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

Title:

 

 

Note: If Tenant is corporation, its authorized officers must sign on behalf of
the corporation and indicate the capacity in which they are signing. This Lease
must be executed by the president, vice president, or chairman of the board, and
the corporate secretary, assistant secretary, chief financial officer or
assistant treasurer, unless the bylaws or a resolution of the board of directors
shall otherwise provide in which event, the bylaws or a certified copy of the
resolution, as the case may be, must be provided to Landlord.

 

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EXHIBIT A

SITE PLAN

 

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EXHIBIT B

RULES AND REGULATIONS

 

1.               Tenant will deposit its trash only in the Shopping Center trash
receptacles and shall participate in and comply with any procedures established
for the collection, sorting, separation and recycling of waste products,
garbage, refuse and trash.

2.               Tenant shall use its best efforts to complete, or cause to be
completed, all deliveries, loading, unloading and services to the Premises prior
to 10:00 a.m. of each day.  Tenant shall attempt to prevent any delivery trucks
or other vehicles servicing the Premises from parking or standing in front of
the Premises while the Shopping Center is open for business.

3.               Tenant shall not solicit business in the parking areas or
display, paint or place, or cause to be displayed, painted or placed, any
handbills, bumper stickers or other advertising devices on any vehicle parked in
the parking area of the Shopping Center, whether belonging to Tenant, or to
Tenant’s agent, or to any other person, nor shall Tenant distribute, or cause to
be distributed, in the Shopping Center, any handbills or other advertising
devices.

4.               Employees of Tenant shall not park their automobiles in those
automobile parking areas of the Common Area which Landlord may from time to time
designate for use by patrons of the Shopping Center.  Tenant shall not leave
vehicles in the parking area overnight or long-term nor park any vehicles in the
parking areas other than automobiles, motorcycles, motor driven or non-motor
driven bicycles or four-wheeled trucks. All vehicles must be parked entirely
within the painted stall lines of a single parking stall, and Tenant may not
park or permit its employees to park (i) in areas not striped for parking; (ii)
in driveways; (iii) where “no parking” signs are posted; (iv) in cross-hatched
areas; and (v) in such other areas as may be designated by Landlord or its
parking operator.  Unless otherwise marked by Landlord, the speed limit within
all parking areas shall be 10 miles per hour.  All directional signs and arrows
must be observed by Tenant.  Washing, waxing, cleaning or servicing of any
vehicle by Tenant is prohibited.

5.               At Landlord’s election, Tenant and its employees shall park
their cars only in those parking areas, if any, as are from time to time
designated for that purpose by Landlord for employee parking and Landlord may
change such designated areas at any time upon written notice to Tenant. Landlord
may, if such violation continues following Tenant’s receipt of written notice
thereof from Landlord (provided that no such notice shall be required if Tenant
has received one (1) or more written notices of violation from Landlord under
this Paragraph within the preceding twelve (12) months), charge the vehicle
owner a commercially reasonable fine, immobilize and/or tow from the Shopping
Center any vehicle parked in violation hereof, and/or attach violation stickers
for notice to such vehicle.  Tenant further agrees to hold Landlord harmless and
defend Landlord against any and all claims of owner(s) of the vehicles which are
fined or towed or to which violation stickers have been stuck.

6.               If Landlord elects or is required to limit or control parking
by customers or invitees of the Shopping Center, whether by validation or
parking tickets or any method of assessment, or any program for free or reduced
cost transportation, Tenant agrees to participate in such validation, assessment
or transportation program under such reasonable rules and regulations as are
from time to time established by Landlord with respect thereto.

 

Exhibit B, Page 1

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7.               Tenant shall not display or sell merchandise, or place carts,
portable signs, devices or any other objects in any part of the Shopping Center
other than inside the Premises and Tenant shall not solicit or distribute
materials in any manner in any part of the Shopping Center other than the
Premises.

8.               No animals or pets are permitted in the Premises other than as
required by law (e.g., seeing eye or guide dogs).

9.               Tenant shall not place, affix or maintain any signs,
advertising placards, names, insignia, trademarks, descriptive material or any
other similar item or items outside the Premises, or on the sidewalk, the
storefront, the glass panes and supports of the show windows, or any window,
door, roof or demising wall of the Premises, except such signs as Landlord shall
approve in writing in accordance with this Lease, nor shall any of said items be
placed within the Premises in such a manner as to materially obstruct a view of
Tenant’s store from the Shopping Center or from any part of the outside, nor
shall Tenant place any vents, structures, improvements, or obstructions of any
type or kind on the exterior of the Premises.  Landlord shall have the right,
without prior notice to Tenant and without any liability, to remove any of the
foregoing from the Premises, except for items as to which Tenant shall have
first received express written approval of Landlord as to size, type, color,
location, copy, nature and display qualities.  Anything to the contrary in this
Lease notwithstanding, Tenant shall not affix any sign to the roof of the
Premises.

10.         Tenant shall utilize no medium which can be heard or experienced
outside of the Premises.

11.         Tenant shall not cause or permit to be used any advertising
materials or methods which are objectionable to Landlord, including without
limitation, loudspeakers, mechanical or moving display devices, unusually bright
or flashing lights and similar devices the effect of which may be seen or heard
outside the Premises.

12.         Tenant shall not use any sign or advertising material that is not of
professional quality.

13.         Tenant shall not erect an aerial or antenna, loudspeaker or other
device on the roof or exterior walls of the Premises. Tenant shall not interfere
with broadcasting or reception from or in the Building or elsewhere. Nor shall
Tenant make any penetration through the roof without prior written consent from
the Landlord.

14.         Tenant shall not install or affix to the exterior of the Premises
any lighting or plumbing fixtures, shades, awnings, or exterior decorations
(including exterior painting).

15.         Tenant shall keep its display windows well lighted during all
operating hours of Tenant, but in no event less than the hours, if any,
established by Landlord as the operating hours of the Shopping Center plus one
hour before opening and one hour after the closing of the Shopping Center.

16.         Landlord reserves the exclusive right in its sole discretion to
develop, modify and control for signage, advertising and display devices at the
Shopping Center.  Except for such signage as has been previously approved by
Landlord in writing, Tenant shall immediately remove any signs or advertising or
display devices erected or maintained in violation of this Lease or such
criteria, and if Tenant fails to do so after notice from Landlord, Landlord may
enter the Premises and cause such item to be removed, and the cost of such
removal and restoring any damaged property shall be paid by Tenant upon demand.

 

Exhibit B, Page 2

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17.         Tenant shall at all times keep its store well stocked with new items
for retail sale, consistent with good retail merchandising practices and with
the use clause and other provisions of this Lease.

Tenant shall be responsible for the observance of the forgoing rules and
regulations by Tenant’s employees, agents, customers, invitees and guests 
Landlord may waive any one or more the rules and regulations as to any tenant
without being construed as having waived same as to any other tenant. Landlord
reserves the right upon two (2) business days’ prior written notice to Tenant,
to rescind, alter or waive any rule or regulation at any time prescribed for the
Shopping Center, or to establish additional rules and regulations when, in
Landlord’s sole judgment, it is necessary, desirable or proper for the best
interest of the Shopping Center and its tenants.

 

Exhibit B, Page 3

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EXHIBIT C

CONSTRUCTION PROVISIONS

 

I.                                         DESCRIPTION OF LANDLORD’S WORK

None.  Tenant shall accept the Premises in “as is” condition.  Tenant has
inspected the existing building and acknowledges that the Premises are in
satisfactory condition.  Landlord shall have no responsibility to pay for any
improvements to the Premises or perform any work with respect to the
improvements to the Premises.

 

II.            DESCRIPTION OF TENANT’S WORK

1.             “Tenant’s Work” shall have the same meaning as set forth in
Section 2.1 of this Lease and shall include, without limitation, demolition,
grading and compaction of the Premises as a building pad (if applicable),
payment for all utilities, utility connection fees, plan fees, and permits
including conditional use permit, the purchase and/or installation of all of the
Improvements necessary to construct and complete construction of Tenant’s
store.  All costs of Tenant’s Work shall be paid for by the Tenant regardless of
whether or not Tenant actually performed the work.  Tenant’s Work shall be
designed, constructed and installed pursuant to the requirements and criteria as
set forth in the Tenant Package.

Tenant shall retain a designer (“Architect, Engineers and/or Designer”) to
prepare Improvement Plans as defined below. The Architect/Engineer/Designer
shall be licensed to practice in the State of California and be familiar with
the building, the base building plans, and with all applicable laws, statutes,
codes, rules and regulations (collectively, “Laws”) applicable to Tenant’s Work.

Tenant shall be required to use a contractor that is licensed, bonded, insured
in the State of California, and pre-approved by Landlord prior to Tenant
commencing work in the Premises.

 

2.             Improvement Plans

 

a.             Base Building Plans.   Landlord has previously permitted access
and provided site and other additional information sufficient to allow the
Tenant’s Architect/Engineer/Designer to prepare Site Plans and Exterior
Elevations, Civil Site and Utility Plans, Preliminary Plans (all disciplines),
Final Plans (all disciplines) as defined below. Tenant also acknowledges the
Improvement Plan document timeline and milestone dates as defined below.

 

                                                b.             Site Plans and
Exterior Elevations:    By the “Plan Submittal Date” set forth in Section 2.1 of
this Lease, Tenant shall provide to Landlord Site Plans and Exterior Elevations
for Tenant’s building. The Site Plans shall indicate the location and
orientation of the building on the site, proposed entries, driveways, handicap
parking stalls and building utility locations (transformers, grease
interceptors, water supply, etc.) and landscaping. Exterior Elevations shall
depict the building exterior appearance and finishes from each compass
direction. Landlord shall review and approve the Site Plans and Exterior
elevations and/or

 

Exhibit C, Page 1

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provide Tenant with its comments within ten (10) days after Landlord’s receipt
of said plans. If disapproved the Tenant shall make all necessary revisions
within ten (10) days after Tenant’s receipt thereof. This procedure will be
repeated until Landlord ultimately approves the Site Plans and Exterior
Elevations. On receipt of Landlord’s approval, Tenant shall immediately submit
approved Site Plans and Exterior Elevations to the City of Cerritos Department
for Conditional Use Permit and City Council approval.

 

c.             Preliminary Plans:                 Within thirty (30) days after
receipt of Landlord’s approval of the Site Plan and Exterior Elevations, Tenant
shall provide complete Preliminary Plans for Landlord’s review and approval. The
Preliminary Plans shall be based upon and shall incorporate the approved Site,
Utility and Exterior Elevation Plans. These Plans shall include Tenant’s
interior space plan with sufficient information and details of interior finish,
exterior signage, roof plan, etc. Preliminary Plans will also include civil,
architectural, structural, mechanical, plumbing and electrical plans with
sufficient information for Landlord’s review. Landlord shall review and approve
these Plans and/or provide Tenant with its comments within ten (10) days after
Landlord’s receipt of same. If disapproved the Tenant shall make all necessary
revisions within ten (10) days after Tenant’s receipt thereof. This procedure
will be repeated until Landlord ultimately approves the Preliminary Plans.

 

d.             Final Plans:            Within fifteen (15) days following
receipt of Landlord’s approval and comments on the Preliminary Plans, the Final
Plans shall be prepared by the Tenant’s Architect/Engineer/Designer and
submitted to the Landlord for approval. The Final Plans shall be a fully
coordinated and engineered set of civil, architectural, structural, mechanical,
plumbing and electrical plans and specifications to allow for the full and
complete construction of the Tenant Improvements. Landlord shall review and
approve these Plans and/or provide Tenant with its comments within ten (10) days
after Landlord receipt of same. If disapproved the Tenant shall make all
necessary revisions within five (5) days after Tenant’s receipt thereof. This
procedure will be repeated until Landlord ultimately approves the Final Plans.
On receipt of Landlord’s approval of Final Plans, Tenant shall promptly submit
approved Preliminary Plans to the City of Cerritos Building and Safety
Department for plan check review and building permits.

 

 

 

Contractor Insurance and Indemnity Requirements:

 

 

Tenant’s contractor agrees to indemnify, defend and hold harmless Landlord’s
beneficiaries and their respective agents and employees from and against all
claims, liabilities, losses, damages, and expenses of whatever nature including
those to the person and property of Tenant’s contractor, its employees, agents,
invitees, licensees and others arising out of or in conjunction with the
performance of Tenant’s Work except to the extent same may arise out of
Landlord’s, Landlord’s beneficiaries’ or their agents’ or employees’ negligence,
it being understood that the foregoing indemnity shall be in addition to the
insurance requirements set forth below and shall not be in discharge of or in
substitution for same.

 

Exhibit C, Page 2

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Before commencement of construction, Tenant’s contractor shall provide to
Landlord evidence of the following insurance:

 

Comprehensive General Liability must include Premises/Operations,
Products/Completed Operations, Blanket Contractual, Personal Injury, Broad Form
PD, Explosion, Collapse and Underground Damage.  This General Liability must be
a minimum of $2,000,000.  It must cover a minimum of all operations other than
Auto and Worker’s Compensation, or must carry a minimum rating of “A plus VII”
or better.

 

General Liability must be the “Occurrence” type.  The occurrence coverage
provided must apply to covered losses that occur during the policy period
regardless of when the claim is reported.  Certificates showing “Claims Made”
and “Modified Occurrence” coverage shall not be acceptable.

 

The Auto insurance policy shall be for “any auto”, thus providing coverage for
owned, rented or hired vehicles of the insured and the insured’s liability
arising from the use of his employees vehicles for a required minimum of
$2,000,000.  If the entity (contractor) issuing the certificate claims to not
own any vehicles, the minimum general liability insurance acceptable policy
shall cover “Non-Owned” and “Hired” vehicles.

 

The Owner (Landlord) prefers the Umbrella Form of Excess Liability coverage for
a minimum of $2,000,000.

 

Workers’ Compensation policies in the State of California also cover Employers’
Liability.  The Employers’ Liability policy shall show a minimum statutory limit
of $1,000,000 per accident or disease.

 

NOTICE

 

If the contractor’s Workmen’s Compensation policy is not furnished

by the same insurance provider as the General Liability policy and

certificate, an additional certificate and endorsement must be

submitted from your Workers’ Compensation provider for this

portion of the insurance.  It must name the Landlord as certificate

holder.

 

The insurance as is afforded by this policy, for the benefit of the additional
insured (Landlord as is noted below) shall be primary insurance and any
insurance maintained by the additional insured shall be excess and
non-contributory.

 

Landlord requires that Tenant’s contractor’s certificate of Workers Compensation
insurance include an endorsement indicating that coverage is primary.

 

In the case of Aircraft Liability or Crane Lifting Liability, etc., specialized
coverage must be provided to the Landlord.  Contact the Landlord for the limits
and the coverage required for any unusual activities.

 

In all instances other than Worker’s Compensation, the Landlord must be named as
“Additionally Insured” and “Certificate Holder”.  Based on the jobsite, the
Landlord should read as follows:

 

Exhibit C, Page 3

--------------------------------------------------------------------------------

 

                The Krausz Companies, Inc., a California Corporation

                Krausz Enterprises, a California Corporation

                Bank of America (Lender)

 

Each contractor must read and sign the attached Tenant Contractor
Indemnification Release Form.

 

Exhibit C, Page 4

--------------------------------------------------------------------------------

 

LESSEE CONTRACTOR INDEMNIFICATION RELEASE FORM

 

To the fullest extent permitted by law, Tenant’s Contractor shall indemnify,
defend, protect, and hold harmless The Krausz Companies, Inc., Krausz
Enterprises, Bank of America, their officers, agents and employees and any other
person designated by Landlord, and officers, directors, members, managers,
shareholders, partners, representatives, agents and employees of each of them
(collectively the “Indemnitiees”) from and against all claims, demands,
liabilities, damages, losses, costs and expenses, including but not limited to
attorney’s and Contractor’s fees and expenses, arising out of or resulting from
the performance of the work, provided that any such claim, damage, loss, cost or
expense is caused in whole or in part by any willful or negligent act or
omission of Tenant’s Contractor, any Subcontractor, anyone directly employed by
any of them or anyone for whose acts any of them may be liable, regardless of
whether or not it is caused in part by a party indemnified hereunder.  Such
obligation shall not be construed to negate, abridge, or otherwise reduce any
other right or obligation of indemnity, which would otherwise exist as to any
party or person, described in this paragraph.

 

In any and all claims against of the Indemnitiees, the indemnification
obligation under this paragraph shall not be limited in any way by any
limitation on the amount or type of damages, compensation or benefits payable to
Tenant’s Contractor under workmen’s compensation acts, disability benefit acts
or other employee benefit acts.

 

 

 

 

Tenant Store Name

 

Contractor

 

 

 

 

 

 

Date

 

Best Plaza Tenant’s Address

 

 

 

 

 

 

Contractor License Number

 

 

 

 

Exhibit C, Page 5

--------------------------------------------------------------------------------

 

RECORDING REQUESTED BY

 

AND WHEN RECORDED MAIL TO:

 

 

 

Attn:

 

 

Loan No.:

 

 

 

 

 

                                                                                        
SPACE ABOVE THIS LINE RESERVED FOR RECORDER’S USE

 

SUBORDINATION, NONDISTURBANCE AND ATTORNMENT AGREEMENT

 AND TENANT ESTOPPEL

 

 

                NOTICE: THIS SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
AGREEMENT RESULTS IN YOUR LEASEHOLD ESTATE BECOMING SUBJECT TO AND OF LOWER
PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT.

 

                This Subordination, Nondisturbance and Attornment Agreement
(“Agreement”) is entered into as of the           day of                   ,
199     by and among                               
                  (“Tenant”),                                                               
(“Borrower”)
and                                                                           
(“Lender”).

 

Factual Background

 

                A.            Borrower owns certain real property in the County
of                   , State of California, more particularly described in the
attached Exhibit A.  The term “Property” herein means that real property
together with all improvements (the “Improvements”) located on it.

 

                B.            Lender has made or agreed to make a loan to
Borrower in the principal amount of $                       (the “Loan”) as
provided in a loan agreement (the “Loan Agreement”).  The Loan is or will be
evidenced by a promissory note (the “Note”) which is or will be secured by a
deed of trust encumbering the Property (the “Deed of Trust”) with an assignment
of rents.  The Loan Agreement, the Note, the Deed of Trust, this Agreement and
all other documents and instruments identified in the Loan Agreement as “Loan
Documents” shall be collectively referred to herein as the “Loan Documents.”

 

                C.            Tenant and Borrower (as landlord) entered into a
lease dated            , 199    (the “Lease”) under which Borrower leased to
Tenant a portion of the Improvements located within the Property and more
particularly described in the Lease (the “Premises”).

 

                D.            It is a requirement of the Loan to Borrower that
Tenant agree, among other things, to subordinate Tenant’s rights under the Lease
to the lien of the Loan Documents and to attorn to Lender on the terms and
conditions of this Agreement.  Tenant is willing to agree to

 

--------------------------------------------------------------------------------

 

such subordination and attornment and other conditions, provided that Lender
agrees to nondisturbance provisions, all as set forth more fully below.

 

Agreement

 

Therefore, the parties agree as follows:

 

                1.             Subordination.  The Loan Documents and all
supplements, amendments, modifications, renewals, replacements and extensions of
and to them shall unconditionally be and remain at all times a lien on the
Property prior and superior to the Lease, to the leasehold estate created by it,
and to all rights and privileges of Tenant under it.  The Lease and leasehold
estate, together with all rights and privileges of Tenant under that Lease, are
hereby unconditionally made subordinate to the lien of the Loan Documents in
favor of Lender.  Tenant consents to Borrower and Lender entering into the Deed
of Trust and the other Loan Documents.  Tenant intentionally and unconditionally
waives, relinquishes and subordinates all of Tenant’s right, title and interest
in and to the Premises to the lien of the Deed of Trust and understands that in
reliance upon, and in consideration of, this waiver, relinquishment and
subordination, specific loans and advances are being and will be made by Lender
and, as part and parcel thereof, specific monetary and other obligations are
being and will be entered into which would not be made or entered into but for
said reliance upon this waiver, relinquishment and subordination.

 

                                 Tenant further declares, agrees and
acknowledges that in making disbursements under the Loan Documents Lender has no
obligation or duty to, nor has Lender represented that it will, see to the
application of such proceeds by the person or persons to whom they are disbursed
by Lender, and any application or use of such proceeds for purposes other than
those provided for in the Loan Documents shall not defeat the subordination made
in this Agreement, in whole or in part.

 

                2.             Definitions of “Transfer of the Property” and
“Purchaser.”  As used herein, the term “Transfer of the Property” means any
transfer of Borrower’s interest in the Property by foreclosure, trustee’s sale
or other action or proceeding for the enforcement of the Deed of Trust or by
deed in lieu thereof.  The term “Purchaser,” as used herein, means any
transferee, including Lender, of the interest of Borrower as a result of any
such Transfer of the Property and also includes any and all successors and
assigns, including Lender, of such transferee.

 

                3.             Nondisturbance.  The enforcement of the Deed of
Trust shall not terminate the Lease or disturb Tenant in the possession and use
of the Premises unless (i) there shall then exist a breach, default, or event of
default on the part of Tenant under the Lease or this Agreement, and (ii) Lender
so notifies Tenant in writing at or prior to the time of the foreclosure sale
that the Lease will be terminated by foreclosure because of such breach, default
or event of default.  The nondisturbance herein granted is subject to section 5 
below.  This nondisturbance applies to any option to extend or renew the Lease
term which is set forth in the Lease as of the date of this Agreement.

 

Exhibit D, page 2

--------------------------------------------------------------------------------

 

                4.             Attornment.  Subject to Section 3 above, if any
Transfer of the Property should occur, Tenant shall and hereby does attorn to
Purchaser, including Lender if it should be the Purchaser, as the landlord under
the Lease.  Tenant shall be bound to Purchaser under all of the terms, covenants
and conditions of the Lease for the balance of the Lease term and any extensions
or renewals of it which may then or later be in effect under any validly
exercised extension or renewal option contained in the Lease, all with the same
force and effect as if Purchaser had been the original landlord under the Lease,
including the payment of all rent required to be made by Tenant pursuant to the
terms of the Lease.  This attornment shall be effective and self-operative
without the execution of any further instruments upon Purchaser’s succeeding to
the interest of the landlord under the Lease.

 

                Upon receipt by Tenant of written notice from Lender that Lender
has elected to terminate the license granted to Borrower to collect rents, as
provided in the Deed of Trust, and directing the payments of rents by Tenant to
Lender, Tenant shall comply with such direction to pay and shall not be required
to determine whether Borrower is in default under the Loan and/or the deed of
Trust. To the extent that the Lease shall entitle Tenant to notice of any deed
of trust, this agreement shall constitute such notice to Tenant with respect to
the Deed of Trust and Tenant hereby waives notice of any and all renewals,
modifications, extensions, substitutions, replacements, and/or consolidations of
the Deed of Trust.

 

                5.             Subordination of Options and Rights of First
Refusal.  The Loan Documents and all supplements, amendments, modifications,
renewals, replacements and extensions of and to them shall unconditionally be
and remain at all times a lien on the Property prior and superior to any
existing or future rights of Tenant, whether arising out of the Lease or
otherwise, regarding the use of insurance proceeds or condemnation proceeds with
respect to the Premises or the Property which is inconsistent with the terms of
the Deed of Trust, or to any existing or future rights of Tenant to exercise any
option or right of first refusal:

 

                                (a)           to purchase the Premises or the
Property or any interest or portion in or of either of them; or

 

                                (b)           to expand into other space in the
Improvements.

 

                                Tenant specifically agrees and acknowledges that
upon any Transfer of the Property, any such purchase or expansion option or
right of first refusal, whether now existing or in the future arising, shall
terminate and be inapplicable to the Property notwithstanding the nondisturbance
granted to Tenant in Section 3 above.  If any option or right of first refusal
to purchase is exercised prior to a Transfer of the Property, any title so
acquired to all or any part of the Property shall be subject to the lien of the
Loan Documents, which lien shall in no way be impaired by the exercise of such
option or right of first refusal.  Lender specifically reserves all of its
rights to enforce any accelerating transfer, due on sale, due on encumbrance or
similar provision in the Deed of Trust or any other Loan Document.

 

                6.             Notices of Default; Material Notices; Lender’s
Rights to Cure Default.  Tenant shall send a copy of any notice of breach or
default or similar statement with respect to the Lease to Lender at the same
time such notice or statement is sent to Borrower.  In the event of

 

Exhibit D, page 3

--------------------------------------------------------------------------------

 

any act or omission by Borrower which would give Tenant the right to terminate
the Lease or to claim a partial or total eviction, or otherwise invoke any of
its remedies under the Lease or any other remedies available to Tenant at law or
in equity.  Tenant shall not exercise any such right or make any such claim
until it has given Lender written notice of such act or omission and Lender
shall have either thirty (30) days from and after the expiration of the time
period provided for Borrower in the Lease to cure the default if the default is
monetary or Lender shall have a reasonable time to cure the default if the
default is nonmonetary, so long as Lender pursues such cure with diligence. 
Nothing in this Agreement, however, shall be construed as a promise or
undertaking by Lender to cure any default of Borrower; Lender shall have the
right but not the obligation to cure any breach or default specified in such
notice.

 

                7.             Limitation on Lender’s Performance.  Nothing in
this Agreement shall be deemed or construed to be an agreement by Lender to
perform any covenant of Borrower as landlord under the Lease.  Tenant agrees
that if Lender becomes Purchaser then, upon subsequent transfer of the Property
by Lender to a new owner, Lender shall have no further obligations under the
Lease after said transfer.

 

                8.             Limitation on Liability.  No Purchaser who
acquires title to the Property shall have any obligation or liability beyond its
interest in the Property.

 

                9.             Tenant’s Covenants.  Tenant agrees that during
the term of the Lease, without Lender’s prior written consent, Tenant shall not:

 

                                (a)           pay any rent or additional rent
more than one month in advance of the time when the same becomes due under the
Lease to any landlord including Borrower; or

 

                                (b)           cancel, terminate or surrender the
Lease, except at the normal expiration of the Lease term or as provided in
Section 6 above; or

 

                                (c)           accept Borrower’s waiver of or
release from the performance of any obligations under the Lease regarding the
length of the term or reduction of rent or otherwise enter into any amendment,
modification, termination or cancellation of the Lease (in whole or in part) or
other agreement relating to the Lease without Lender’s prior written consent and
will not make any payment to Landlord in consideration of any amendment,
modification, termination or cancellation of the Lease (in whole or in part); or

 

                                (d)           assign or sublet any portion of
the Lease or the Premises, except as expressly permitted in the Lease; or

 

                                (e)           make any structural changes to the
Premises.

 

                10.           Lender Not Obligated.  Lender, if it becomes the
Purchaser or if it takes possession under the Deed of Trust, and any other
Purchaser shall not (a) be liable for any damages or other relief attributable
to any act or omission of any prior Landlord under the Lease including Borrower;
or (b) be subject to any offset or defense which Tenant may have against any
prior landlord under the Lease; or (c) be bound by any prepayment by Tenant of
more than

 

Exhibit D, page 4

--------------------------------------------------------------------------------

 

one month’s installment of rent; or (d) be obligated for any security deposit
not actually delivered to Purchaser; or (e) be bound by any modification or
amendment of or to the Lease unless the amendment or modification shall have
been approved in writing by the Lender.

 

                11.           Tenant’s Estoppel Certificate.

 

                                (a)           True and Complete Lease.  Tenant
represents and warrants to Lender that Exhibit B accurately identifies the Lease
and all amendments, supplements, side letters and other agreements and memoranda
pertaining to the Lease, the leasehold and/or the Premises.

 

                                (b)           Entire Agreement.  Tenant
represents and warrants that the Lease constitutes the entire agreement between
Tenant and Borrower with respect to the Premises and the Property and Tenant
claims no rights with respect to the Premises or the Property other than as set
forth in the Lease.

 

                                (c)           Tenant’s Option Rights.  Tenant
has no right or option of any nature whatsoever, whether arising out of the
Lease or otherwise, to purchase the Premises or the Property, or any interest or
portion in or of either of them, to expand into other space in the Improvements
or to extend or renew the term of the Lease, nor any existing claims, defenses
or offsets against rental due or to become due under the Lease, except as
described in the attached Exhibit C.

 

                                (d)           No Default.  As of the date of
this Agreement, Tenant represents and warrants that to the best of Tenant’s
knowledge there exist no breach or event of default or events that with notice
or the passage of time or both would constitute a breach or event of default
under the Lease on either the Tenant’s part or the Borrower’s, nor are there any
claims, defenses or rights of offset against rental due or to become due under
the Lease or against any of Tenant’s obligations under the Lease, except as
described in the attached Exhibit D.  Tenant represents and warrants that the
Lease is in full force and effect as of the date of this Agreement.

 

                                (e)           Hazardous Substances.  Tenant
represents and warrants that it has not used, generated, released, discharged,
stored or disposed of any Hazardous Substances on, under, in or about the
Property other than Hazardous Substances used in the ordinary and commercially
reasonable course of Tenant’s business in compliance with all applicable laws. 
Except for such legal and commercially reasonable use by Tenant, Tenant has no
actual knowledge that any Hazardous Substance is present or has been used,
generated, released, discharged, stored or disposed of by any party on, under,
in or about the Property.  As used herein “Hazardous Substance” means any
substance, material or waste (including petroleum and petroleum products), which
is designated, classified or regulated as being “toxic” or “hazardous” or a
“pollutant” or which is similarly designated, classified or regulated under any
federal, state or local law, regulation or ordinance.

 

                12.           Assignment.         Tenant acknowledges and
consents to the assignment of the Lease by Borrower in favor of Lender.

 

Exhibit D page 5

--------------------------------------------------------------------------------

 

                13.           Integrated; Etc.  This Agreement integrates all of
the terms and conditions of the parties’ agreement regarding the subordination
of the Lease to the Loan Documents, attornment, nondisturbance and the other
matters contained herein.  This Agreement supersedes and cancels all oral
negotiations and prior and other writings with respect to (a) such subordination
(only to such extent, however, as would affect the priority between the Lease
and the Loan Documents), including any provisions of the Lease which provide for
the subordination of the Lease to a deed of trust or to a mortgage and (b) such
attornment, non-disturbance and other matters contained herein.  If there is any
conflict between the terms, conditions and provisions of this Agreement and
those of any other agreement or instrument, including the Lease, the terms,
conditions and provisions of this Agreement shall prevail.  This Agreement may
not be modified or amended except by a written agreement signed by the parties
or their respective successors in interest.  This Agreement may be executed in
counterparts, each of which is an original but all of which shall constitute one
and the same instrument.

 

                14.           Notices.  All notices or other communications
given under this Agreement shall be in writing and shall be given by personal
delivery, overnight receipted courier or by registered or certified United
States mail, postage prepaid, sent to the party at its address appearing below. 
Notices shall be effective upon delivery or, if mailed, upon the first to occur
of receipt of the expiration of three (3) days after deposit in the United
States mail or with the overnight courier (or on the date when proper delivery
is refused.)  Addresses for notices may be changed by any party by notice to all
other parties in accordance with this Section.  Service of any notice on any one
Borrower shall be effective service on the Borrower for all purposes.

 

To Lender:

 

To Borrower:

 

To Tenant:

 

                15.           Attorneys’ Fees.  If any lawsuit, judicial
reference or arbitration is commenced which arises out of or relates to this
Agreement, the prevailing party shall be entitled to recover from each other
party such sums as the court, referee or arbitrator may adjudge to be reasonable
attorneys’ fees, including the costs for any legal services by in-house counsel,
in addition to costs and expenses otherwise allowed by law.

 

                16.           Miscellaneous Provisions.   This Agreement shall
inure to the benefit of and be binding upon the parties and their respective
heirs, successors and assigns.  This

 

Exhibit D, page 6

--------------------------------------------------------------------------------

 

Agreement is governed by the laws of the State of California without regard to
the choice of law rules of that State.  This Agreement satisfies any condition
or requirement in the Lease relating to the granting of a nondisturbance
agreement by the Lender.  As used herein, the word “include(s)” means
“include(s) without limitation,” and the word “including” means “including but
not limited to.”  Lender, at its sole discretion, may but shall not be obligated
to record this Agreement.

 

                17.           Arbitration; Judicial Reference.  Lender and
Borrower have agreed in the Loan Agreement that any dispute shall be resolved by
arbitration or judicial reference.  Therefore any controversy or claim between
or among the parties hereto (including Tenant) which arises out of or relates to
this Agreement, including any claim based on or arising from an alleged tort,
shall also be determined by arbitration or judicial reference as set forth
below.

 

                                (a)           Judicial Reference.  In any
judicial action between or among the parties, including any action or cause of
action arising out of or relating to this Agreement or based on or arising from
an alleged tort, all decisions of fact and law shall at the request of any party
be referred to a referee in accordance with California Code of Civil Procedure
Sections 638 et seq.  The parties shall designate to the court a referee or
referees selected under the auspices of the American Arbitration Association
(“AAA”) in the same manner as arbitrators are selected in AAA-sponsored
proceedings.  The presiding referee of the panel, or the referee if there is a
single referee, shall be an active attorney or retired judge.  Judgment upon the
award rendered by such referee or referees shall be entered in the court in
which such proceeding was commenced in accordance with California Code of Civil
Procedure Sections 644 and 645.

 

                                (b)           Mandatory Arbitration.  After the
Lender’s Deed of Trust has been released, fully reconveyed or extinguished, any
controversy or claim between or among the parties, including those arising out
of or relating to this Agreement or any claim based on or arising from an
alleged tort, shall at the request of any party be determined by arbitration. 
The arbitration shall be conducted in accordance with the United States
Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Agreement, and under the Commercial Rules of the AAA.  The
arbitrator(s) shall give effect to statutes of limitation in determining any
claim.  Any controversy concerning whether an issue is arbitrable shall be
determined by the arbitrator(s).  Judgment upon the arbitration award may be
entered in any court having jurisdiction.  The institution and maintenance of an
action for judicial relief or pursuit of a provisional or ancillary remedy shall
not constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.

 

                                (c)           Real Property Collateral. 
Notwithstanding the provisions of Subsection (b), no controversy or claim shall
be submitted to arbitration without the consent of all parties if, at the time
of the proposed submission, any obligation of Borrower to Lender is secured by
real property collateral.  If all parties do not consent to submission of such a
controversy or claim to arbitration, the controversy or claim shall be
determined by judicial reference as provided in Subsection (a).

 

Exhibit D, page 7

--------------------------------------------------------------------------------

 

                                (d)           Provisional Remedies, Self-Help
and Foreclosure.  No provision of this Section shall limit the right of any
party to this Agreement to exercise self-help remedies such as setoff,
foreclosure against or sale of any real or personal property collateral or
security, or to obtain provisional or ancillary remedies from a court of
competent jurisdiction before, after, or during the pendency of any arbitration
or other proceeding.  The exercise of a remedy does not waive the right of a
party to resort to arbitration or reference.  At Lender’s option, foreclosure
under a deed of trust or mortgage may be accomplished either by exercise of
power of sale under the deed of trust or mortgage or by judicial foreclosure.

 

                                (e)           The parties agree that this
arbitration and judicial reference provision shall not prohibit or limit summary
proceedings to obtain possession of real property pursuant to Chapter 4 of the
California Code of Civil Procedure (Section 1159 et seq.) as amended from time
to time, or any similar law, statute or ordinance now or hereafter in effect.

 

                18.           Remedies Cumulative.         All rights of Lender
herein to collect rents on behalf of Borrower under the Lease are cumulative and
shall be in addition to any and all other rights and remedies provided by law
and by other agreements between Lender and Borrower or others.

 

                19.           Paragraph Headings.           Paragraph headings
in this Agreement are for convenience only and are not to be construed as part
of this Agreement or in any way limiting or applying the provisions hereof.

 

Exhibit D, page 8

--------------------------------------------------------------------------------

NOTICE:  THIS AGREEMENT CONTAINS A PROVISION WHICH ALLOWS THE PERSON OBLIGATED
ON YOUR LEASE TO OBTAIN A LOAN, A PORTION OF WHICH MAY BE EXPENDED FOR PURPOSES
OTHER THAN IMPROVEMENT OF THE PROPERTY.

 

TENANT:

 

,

 

 

 

 

a

 

,

 

 

 

 

By:

 

 

 

 

 

 

Name:

 

 

 

 

 

 

Title:

 

 

 

 

 

BORROWER:

 

,

 

 

 

 

a

 

,

 

 

 

 

By:

 

 

 

 

 

 

Name:

 

 

 

 

 

 

Title:

 

 

 

 

 

LENDER:

 

,

 

 

 

 

a

 

,

 

 

 

 

By:

 

 

 

 

 

 

Name:

 

 

 

 

 

 

Title:

 

 

 

Exhibit D, page 9

--------------------------------------------------------------------------------

 

 

EXHIBIT A

PROPERTY DESCRIPTION

 

 

Exhibit A to the Subordination, Non-Disturbance and Attornment Agreement and
Tenant Estoppel

 

1

--------------------------------------------------------------------------------

 

 

EXHIBIT B

 

IDENTIFY LEASE AND LIST ALL AMENDMENTS, SUPPLEMENTS, SIDE LETTERS AND OTHER
AGREEMENTS AND MEMORANDA PERTAINING TO LEASE, PREMISES OR PROPERTY

 

 

Exhibit B to the Subordination, Non-Disturbance and Attornment Agreement and
Tenant Estoppel

 

 

1

--------------------------------------------------------------------------------

                                                                                             
EXHIBIT C

 

LIST OF PURCHASE, EXPANSION, FIRST REFUSAL,EXTENSION AND RENEWAL OPTIONS

 

 

Exhibit C to the Subordination, Non-Disturbance and Attornment Agreement and
Tenant Estoppel

 

1

--------------------------------------------------------------------------------

 

                                                                                             
EXHIBIT D

LIST ANY EXISTING DEFAULTS OR OFFSETS UNDER LEASE

 

 

 

Exhibit D to the Subordination, Non-Disturbance and Attornment Agreement and
Tenant Estoppel

 

1

--------------------------------------------------------------------------------

 

EXHIBIT E

 

MODIFIED LEASE TERMS

 

 

 

Exhibit E to the Subordination, Non-Disturbance and Attornment Agreement and
Tenant Estoppel

 

1

--------------------------------------------------------------------------------

 

ACKNOWLEDGMENT

 

STATE OF CALIFORNIA  )

COUNTY OF                                  )

 

                On                           before me, (***INSERT NAME OF
NOTARY PUBLIC OR NAME AND TITLE OF OTHER NOTARIZING OFFICER***)
                                         [, a Notary Public in and for the State
of California,] personally appeared (***INSERT NAME(S) OF PERSON(S) SIGNING THE
DOCUMENT***)                                                                  
[and                                       ],  personally known to me (or proved
to me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument, the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

 

WITNESS my hand and official seal.

 

 

 

 

 

(***Signature***)

 

(Space above for official notarial seal)

 

 

ACKNOWLEDGMENT

 

STATE OF CALIFORNIA  )

COUNTY OF                                  )

 

                On                                       before me, (***INSERT
NAME OF NOTARY PUBLIC OR NAME AND TITLE OF OTHER NOTARIZING OFFICER***)
                                              [, a Notary Public in and for the
State of California,] personally appeared (***INSERT NAME(S) OF PERSON(S)
SIGNING THE DOCUMENT***)                                           
[and                                        ],  personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument, the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

 

WITNESS my hand and official seal.

 

 

 

 

(***Signature***)

 

(Space above for official notarial seal)

 

 

 

2

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EXHIBIT E

MENU (WITH PRICES DELETED)

 

 

Exhibit E

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