**Exhibit10.4**

** **

**AMENDEDAND RESTATED**

**MASTERLEASE**

 

**BETWEEN**

 

**ARG PROPERTIES I, LLC,**

 

**as Landlord**

 

**AND**

 

**ARG ENTERPRISES, INC.,**

 

**As Tenant**

 

**Dated: May 11, 1998**

 

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**LEASE**

 

In consideration of the rents and covenants set forthbelow, Landlord (as hereinafter defined) hereby leases to Tenant (ashereinafter defined), and Tenant hereby leases from Landlord, the followingPremises (as hereinafter defined) upon the following terms and conditions:

 

***ARTICLE 1***

**FUNDAMENTALLEASE PROVISIONS**

 

This Amended and Restated Master Lease amends andrestates that certain Master Lease by and between Landlord (as hereinafterdefined) and Tenant (as hereinafter defined) datedSeptember 11, 1996, as heretofore amended, as it applies to thePremises (as hereinafter defined), in its entirety.

 
| Date:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | May 11, 1998                                                                                                                                                             |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                     |
| Commencement   Date:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | May 11, 1998                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                     |
| Landlord:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | ARG Properties I, LLC, a California limited  liability company                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                     |
| Tenant:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | ARG Enterprises, Inc., a California corporation                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                     |
| Tenant’s   Trade Name:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Stuart Anderson’s Black Angus or Stuart Anderson’s  Cattle Company restaurants                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                     |
| Guarantor:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | American Restaurant Group, Inc., a Delaware  corporation                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                     |
| Guaranty                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Guaranty of Lease dated May 11, 1998 by  Guarantor in favor of Landlord                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                     |
| Lease Term:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Twenty-Five (25) years, commencing on the  Commencement Date and ending on June 1, 2023, with three (3) renewal options  of five (5) years each.  (Article 4)       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                     |
| Annual  Rent:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | One Million Eight Hundred Sixty-Six Thousand Three  Hundred Thirty Dollars ($1,866,330), subject to adjustment as hereinafter  provided.  (Article 6, Section 6.01) |
| The Annual Rent  shall be payable on the first day of each month, commencing on June 1, 1998,  in twelve (12) equal installments each in the amount of One Hundred  Fifty-Five Thousand Five Hundred Twenty Seven and 50/100 Dollars  ($155,527.50) during each year of the term of this Lease subject to proration  or adjustment as hereinafter provided. Annual Rent is allocated on Exhibit D  attached hereto and made a part hereof among the eight (8) properties  constituting the Premises for certain purposes specified in this Lease.  This initial allocation of |

 

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|   | Annual Rent  shall be subject to proration or adjustment as hereinafter provided. |
|--------|-----------------------------------------------------------------------------------|

 

 
|   | To Landlord: | ARG Properties I, LLC                                                |
|--------|--------------|----------------------------------------------------------------------|
|   |         | c/o Griffin Capital                                                  |
|   |         | 10940 Wilshire Blvd., Suite 1600                                     |
|   |         | Los Angeles, CA 90024                                                |
|   |         | Attn:       Kevin  A. Shields          |
|   |         | Fax:         (310)  443-4117 |

 
|   | To Tenant: | ARG Enterprises, Inc.                                                |
|--------|------------|----------------------------------------------------------------------|
|   |       | 6th Floor                                                            |
|   |       | 450 Newport Center Drive                                             |
|   |       | Newport Beach, CA   92660                                       |
|   |       | Attn:       Chief  Financial Officer   |
|   |       | Fax:         (949)  721-8941 |

Addresses for Notice:
|   | With a copy to: | American Restaurant Group, Inc.                                      |
|--------|-----------------|----------------------------------------------------------------------|
|   |            | Suite 201                                                            |
|   |            | 4410 El Camino Real                                                  |
|   |            | Los Altos, CA   94022                                           |
|   |            | Attn:       Legal  Department               |
|   |            | Fax:         (650)  949-6420 |

 
|   | With a copy to: | Stuart Anderson’s Restaurants                                   |
|--------|-----------------|----------------------------------------------------------------------|
|   |            | 4410 El Camino Real, Suite 201                                       |
|   |            | Los Altos, California  94022                                    |
|   |            | Attn:       Director  of Real Estate   |
|   |            | Fax:         (650)  949-6245 |

 
| Premises: | That  certain real property described in Exhibit A attached hereto, and all  appurtenances, easements and rights of way now or subsequently pertaining  thereto, together with all improvements now or hereafter located thereon,  consisting of eight (8) restaurants known as either Stuart Anderson*s Black  Angus or Stuart Anderson*s Cattle Company restaurants.  References to the “Premises” shall refer  to one location, or to all locations, as the context shall require. |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

References in this Article 1 to other Articles are forconvenience and designate some of the other Articles where references to theFundamental Lease Provisions appear. Each reference in this Lease to any of the Fundamental Lease Provisionscontained in this Article 1 shall be construed to incorporate all of the termsprovided under such Fundamental Lease Provisions.  In the event of any conflict between any Fundamental LeaseProvision and the balance of this Lease, the latter shall control.

 

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***ARTICLE 2***

**EXHIBITS**

 

The following are attached hereto as Exhibits and madea part of this Lease:

 

EXHIBIT A—Description of the Premises

 

EXHIBIT B—Form of Subordination, Non-Disturbance andAttornment Agreement

 

EXHIBIT C—Form of Notice of Non–Responsibility

 

EXHIBIT D—Allocated Rent Schedule

 

In the event of any conflict between any of theabove-referenced Exhibits and the balance of this Lease, the Exhibit shallcontrol.

 

***ARTICLE******3***

**PREMISES**

 

Landlord hereby leases and demises unto Tenant andTenant hereby leases and takes from Landlord, for the term, at the rental, andupon the terms, covenants, and conditions hereinafter set forth, the propertyreferred to in Article 1 as the Premises and described on Exhibit A attachedhereto.

*** ***

***ARTICLE******4***

**TERM**

 

4.01         Term.  The term of this Lease shall be the termspecified in Article 1 hereof (the initial term and any extensions exercised byTenant thereof are hereinafter referred to as the “Lease Term”) and shallcommence on the Commencement Date.

 

4.02         Optionto Extend Lease Term.  Tenantshall have the option to extend the initial term of this Lease with respect toany of the Premises that Tenant may elect to continue to lease from Landlordfor three (3) additional, successive periods of five (5) years each (each, an“Extension Period”) on the same terms, covenants and conditions of this Lease.In the event Tenant elects to exercise the option(s), Tenant shall provideLandlord written notice of Tenant’s exercise of the option(s) not less thanninety (90) days prior to the end of the then-current term, such notice shallidentify each of the Premises which Tenant has elected to remain subject tothis Lease during the applicable Extension Period and is to be given in themanner provided in Section 25.04 of this Lease.  Provided that Tenant has duly exercised its option to extend the termof this Lease as set forth herein and further provided that Tenant is not indefault under this Lease at the end of the then current term of this Lease,this Lease shall be amended to reflect the exclusion of any of the Premisesfrom the Lease and the corresponding reduction in the Annual Rent in connectionwith Tenant’s exercise of the applicable extension option.  Tenant’s right to exercise the foregoingoption(s) is conditioned upon Tenant’s performance of all of the duties andobligations on its part to be performed under this Lease so that, at the timeof the exercise of such options, Tenant shall not be in default hereunder.  In the event that Tenant elects to extend

 

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the initial term of this Lease, the Annual Rent shall continue to be adjustedas provided in Section 6.02 of this Lease.

 

***ARTICLE 5***

**LIENS**

 

Tenant shall do all things necessary to prevent thefiling of any mechanics’ or other liens or encumbrances against the Premises,or any part thereof, or upon any interest of Landlord or any mortgagee orbeneficiary under a deed of trust or any ground or underlying lessor in anyportion of the Premises, by reason of work, labor, services, or materialssupplied or claimed to have been supplied to Tenant, or anyone holding thePremises, or any part thereof, through or under Tenant.  If any such lien or encumbrance shall at anytime be filed against the Premises, or any portion thereof, Tenant shall eithercause same to be discharged of record within thirty (30) days after the date offiling of same or, if Tenant in good faith determines that such lien should becontested, Tenant will give Landlord prior notice of Tenant’s intention tocontest any such lien and, upon demand by Landlord, will procure and record alien release bond under applicable law in the amount prescribed by applicablelaw or if no amount is prescribed by applicable law in an amount equal to 150%of the lien amount.  If a final judgmentis rendered against Tenant by a court of competent jurisdiction, or if thePremises or any portion thereof are in danger of being foreclosed upon as aresult of any such lien, Tenant will satisfy such judgment or lien atonce.  If Tenant does not post therelease bond or fails to pay any such adverse judgment or to discharge any lienin the event of any imminent foreclosure, then Landlord may post the bond orpay the judgment or discharge the lien, as applicable, and Tenant will promptlyreimburse Landlord for all sums paid by it in connection therewith, togetherwith the applicable Administrative Fee (as hereinafter defined).  Tenant shall give Landlord notice of theintended commencement date of any work, labor, services or material to beperformed or provided to any of the Premises or any portion thereof involvingtotal expenditures for any project in excess of one and twenty–five onehundredths percent (1.25%) of the Annual Rent, as it may be adjusted from timeto time as provided herein, at least ten (10) days before said date, and inconnection with the performance or provision of any such work, labor, servicesor materials, Tenant shall file and post onthe applicable Premises a notice of nonresponsibility on behalf of Landlord inthe form attached hereto as Exhibit C within any time period and in the mannerprescribed under the laws of the state(s) in which the Premises or applicableportion thereof is located in order to protect Landlord from responsibilityfor, and evidencing Tenant’s obligations with respect to, any of the matterscovered by this Article, and shall provide Landlord with a copy thereof.  Landlord shall also have the rightand opportunity, to post and maintain on the Premises such notices, includingnotices of nonresponsibility and other similar notices, as are provided forunder the Laws of the state(s) in which the Premises are located, evidencingTenant’s obligations with respect to any of the matters covered by this Articleand Landlord shall have the right to enter the Premises and post such noticesat any reasonable time.

 

***ARTICLE 6*****RENT**

 

6.01         Rent.  Tenant covenants and agrees to pay for theuse and occupancy of the Premises, the Annual Rent specified in Article 1hereof, subject to increase pursuant to the provisions of Section 6.02 hereof,in twelve (12) equal monthly installments during each year of

 

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the Lease Term, in advance, on the first day of each calendar month,without any offset or deduction.  Shouldthe Lease Term commence on a day other than the first day of a calendar month,then the rental for such first fractional month shall be computed on a dailybasis for the period from the Commencement Date to the end of such calendarmonth at an amount equal to one three hundred sixty-fifth (1/365) of the AnnualRent for each day.  Should the LeaseTerm end on a day other than the last day of a calendar month, then the rentalfor such fractional month shall be computed on a daily basis at an amount equalto one three hundred sixty-fifth (1/365) of the Annual Rent for each day.  Rent shall be paid in lawful money of theUnited States to Landlord at the address stated in Article 1 or to such otherpersons or at such other places as Landlord may designate in writing to Tenant.

 

6.02         **RentalAdjustments****.**  The Annual Rent payable under this Leaseshall be increased on October 1, 2001 and every five (5) years thereafter(each, an “Increase Date”) during the Lease Term as follows:

 

(a)           Thebasis for computing the increase shall be the Consumer Price Index for allUrban Consumers - All Items U.S. Cities Average, published monthly by theBureau of Labor Statistics of the United States Department of Labor (BasePeriod 1982-1984=100) (“Index”), published on September 20, 1996 forAugust, 1996, i.e., 157.3 (the “Beginning Index”).

 

(b)           Ifthe Index published for the date nearest the applicable Increase Date (the“Extension Index”) has increased over the Beginning Index, the Annual Rent willbe calculated by multiplying the then Annual Rent by a fraction, the numeratorof which is the Extension Index and the denominator of which is the BeginningIndex, not to exceed an increase equal to 10% of the Annual Rent in effectduring the five-year period immediately preceding the applicable Increase Date.

 

(c)           Inthe event the Extension Index is not available on the applicable Increase Date,Tenant will continue to pay the Annual Rent in effect immediately prior to theIncrease Date.  As soon as practicable,Landlord will furnish Tenant with a true copy of the Extension Index figuretogether with a computation of the increase in the Annual Rent for the ensuingfive-year period, if any, and an appropriate adjustment will be paid within 30days of Tenant’s receipt of Landlord’s statement.

 

(d)           Ifthe Index is changed so that the base year differs from that in effect on theCommencement Date, the Index shall be converted in accordance with theconversion factor published by the Bureau of Labor Statistics.  If the Index is discontinued or revisedduring the Lease Term, such other governmental index or computation with whichit is replaced will be used in order to obtain substantially the same result aswould be obtained if the Index had not been discontinued or revised.

 

6.03         NetLease; Impositions.  This Leaseis what is commonly called a “triple net lease,” it being understood thatLandlord shall receive the Annual Rent set forth in Article 1 hereof, asincreased pursuant to Section 6.02, free and clear of any and all otherimpositions, taxes, liens, charges, or expenses of any nature whatsoeverincurred in connection with the ownership and operation of any of thePremises.  In addition to the AnnualRent reserved by

 

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Article 1 hereof, as increased pursuant to Section 6.02, Tenant shallpay to the appropriate parties all impositions, insurance premiums, RealProperty Taxes (as defined below), operating charges, maintenance charges,construction costs, accounting and legal fees, and any other charges, costs andexpenses which arise or may be contemplated under any provision of this Leaseduring the Lease Term (collectively “Impositions”).  All of such Impositions shall constitute additional rent, andupon the failure of Tenant to pay any of such Impositions, Landlord shall havethe same rights and remedies as otherwise provided in this Lease for the failureof Tenant to pay rent.  Tenant shallfurnish to Landlord, promptly upon the reasonable request of Landlord, officialreceipts or other satisfactory proof evidencing payment of any suchImpositions.  Upon Tenant’s failure topay any Real Property Taxes as provided herein, Landlord shall have the right,at Landlord’s option, to require Tenant to (a) promptly deposit with Landlordfunds sufficient for the payment of the current Real Property Taxes required tobe paid by Tenant hereunder; and (b) also deposit one-twelfth of the currentannual or annualized Real Property Taxes (or those of the preceding years ifthe current amounts thereof have not been fixed), on the first day of eachmonth in advance.  It is the intentionof the parties hereto that this Lease shall not be terminable for any reason byTenant, and that Tenant shall in no event be entitled to any abatement of,deductions of any kind, offset or reduction in rent payable under this Lease,except as may otherwise be expressly set forth in this Lease.  Any present or future Law to the contraryshall not alter this agreement of the parties.

 

***ARTICLE 7***

**USEOF THE PREMISES**

 

7.01         Use.  Tenant shall occupy and use each of thePremises solely for the operation of a Stuart Anderson’s Black Angus or CattleCompany restaurant or any other lawful use, provided such other use does notdecrease the market value of the Premises.

 

7.02         ComplianceWith Laws.

 

(a)           Tenantaccepts the Premises in its “AS IS” condition. Tenant accepts each of the Premises “AS IS” in reliance upon Tenant’sown knowledge as owner and/or occupier of the Premises prior to commencement ofthis Lease.  Landlord makes norepresentations or warranties of any type whatsoever, including withoutlimitation, whether there has been or are currently any violations of anycovenants or restrictions of record, or any applicable Laws in effect regardingany of the Premises on the Commencement Date.

 

(b)           Tenantshall, at Tenant’s sole expense, comply in all material respects with allapplicable laws, ordinances, building codes, orders, zoning ordinances, rules,and regulations of any governmental authorities and with any directive of anypublic officer which shall impose any order or duty upon Landlord or Tenantwith respect to any of the Premises or the use or occupation thereof orrelating to the environment, health or safety with respect to any of thePremises or the use or occupation thereof (including, without limitation, anyrule of common law and judicial decisions and The Americans With DisabilitiesAct), and any covenants, conditions or restrictions of record relating to thePremises or the use or occupation thereof, in each case as now or hereafter ineffect (collectively, “Laws”).

 

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(c)           Notwithstandingany other provision of this Lease, Tenant shall not use or permit any of thePremises to be used in any manner which will result in waste or the creation ofa nuisance, and Tenant shall maintain each of the Premises free of anyobjectionable noises, odors, or disturbances; provided that, as betweenLandlord and Tenant only, odors and exhaust incidental to a restaurant,excluding odors of deteriorating food, will not be deemed a nuisance orobjectionable provided the same do not violate applicable Laws and do notsubject Landlord to any civil liability.

 

(d)           Notwithstandingany other provision of this Lease, in the event that any new Law which goesinto effect during any Extension Period requires an investment in any of thePremises in excess of 30% of the replacement cost of such Premises (exclusiveof land, foundations and footings), and which has an economic life in excess offive (5) years, Tenant, at its option, may elect to terminate this Lease as tosuch Premises only at any time during such Extension Period written notice toLandlord and payment to Landlord of all accrued rent and other obligationshereunder with respect to such Premises through the date of such termination,except as to obligations hereunder which expressly survive any termination ofthis Lease.

 

7.03         Permitsand Licenses.  As betweenLandlord and Tenant, Tenant shall be solely responsible to apply for and secureany building permit or permission of any duly constituted authority for thepurpose of doing any of the things which Tenant is required or permitted to dounder the provisions of this Lease. Landlord shall cooperate as reasonably requested by Tenant to facilitateTenant’s compliance with this obligation but at no cost to Landlord.

 

***ARTICLE 8***

**UTILITIES**

 

8.01         Payment.  Tenant shall pay to the utility companies orother parties entitled to payment the cost of all water, sewer, heat, airconditioning, gas, electricity, garbage collection, telephone, and otherutilities and services provided to or for any of the Premises, includingconnection fees and taxes thereon.

 

8.02         Interruptionin Service.  Landlord shall notbe liable in damages or otherwise for any failure or interruption of anyutility or other service being furnished to any of the Premises subject to theprovisions of Section 11.04(b) hereof, and no such failure or interruptionshall entitle Tenant to any abatement of, setoff of or reduction in the amountspayable to Landlord hereunder or otherwise entitle Tenant to terminate thisLease.

 

***ARTICLE 9***

**TAXES**

 

9.01         Payment ofTaxes.  Tenant shall pay theReal Property Taxes (as defined in Section 9.02) applicable to each of thePremises during the Lease Term. Landlord and Tenant agree to cooperate to ensure that all tax billsapplicable to each of the Premises are sent directly to Tenant by the taxingauthority.  All such payments shall bemade prior to delinquency.  UponLandlord’s request, Tenant shall promptly furnish Landlord with satisfactoryevidence that such Real Property Taxes have been paid.  If any such Real Property Taxes paid byTenant shall cover any period of time prior to or after the expiration of theLease Term, Landlord shall promptly

 

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reimburse Tenant to the extent required.  If Tenant shall fail to pay any such Real Property Taxes,Landlord shall have the right but not the obligation to pay the same in whichcase Tenant shall repay such amount plus any penalties and interest resultingtherefrom to Landlord with Tenant’s next Annual Rental installment togetherwith the applicable Administrative Fee.

 

9.02         Definitionof “Real Property Taxes”.  Asused herein, the term “Real Property Taxes” shall mean any form of real estatetax or assessment, ad valorem or value–added tax or occupancy tax orgross receipts tax, fee, levy, penalty, interest or other charge, imposed byany authority having the direct or indirect power to tax, including any city,county, state, or federal government, or any school, agricultural, sanitary,fire, street, drainage, or other improvement district thereof, on, against orwith respect to any of the Premises, this Lease, any legal or equitableinterest of Landlord or any superior landlord or any mortgagee of Landlord inthe Premises or in the real property of which any of the Premises are a part,and Landlord’s right to rent.  The term“Real Property Taxes” shall also include any tax, fee, levy, assessment,penalty, interest or other charge (i) in substitution of, partially ortotally, any tax, fee, levy, assessment, or charge included within theforegoing definition of Real Property Taxes, (ii) the nature of which wasincluded within the foregoing definition of Real Property Taxes, or(iii) any tax or increase in any tax which is imposed as a result of atransfer, either partial or total, of Landlord’s interest in the Premises orwhich is added to a tax or charge hereinbefore included within the definitionof Real Property Taxes by reason of such transfer (other than documentary,stamp or other transfer taxes resulting from any such transfer but includingany increase in any Real Property Taxes attributable to any such transfer), orwhich is imposed by reason of the transfer of any of the Premises to Landlordor this transaction, any modifications or changes hereto, or any other transfershereof.  Notwithstanding the foregoing,the term “Real Property Taxes” shall not include any general income taxes,inheritance taxes, and estate taxes imposed upon Landlord or any superiorlandlord or any mortgagee or beneficiary of Landlord or any taxes attributableto the recording of any mortgage or deed of trust on Landlord’s interest in thePremises.

 

9.03         PersonalProperty Taxes.  Tenant shallpay, prior to delinquency, all taxes assessed against and levied upon tradefixtures, furnishings, equipment, and all other personal property of Tenantcontained in any of the Premises or elsewhere. Tenant shall seek to cause said trade fixtures, furnishings, equipment,and all other personal property to be assessed and billed separately from thereal property of Landlord.

 

9.04         Tenant’sRight to Contest Taxes.

 

(a)           Tenantshall have the right, at its cost and expense, to contest the amount orvalidity, in whole or in part, of any Real Property Taxes of any kind byappropriate proceedings diligently conducted in good faith, but no such contestshall be carried on or maintained by Tenant after the time limit for thepayment of any Real Property Taxes unless Tenant, at its option: (i) shallpay the amount involved under protest; or (ii) shall procure and maintaina stay of all proceedings to enforce any collection of any Real Property Taxes,together with all penalties, interest, costs and expenses, by a deposit of asufficient sum of money, or by such undertaking, as may be required orpermitted by law to accomplish such stay; or (iii) shall deposit withLandlord, as security for the performance by Tenant of its obligationshereunder with respect to such Real Property Taxes, security in the amount, ifany, prescribed by applicable law, or if no amount is prescribed by applicablelaw, in amounts equal to one hundred fifty

 

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percent (150%) of the contested amount or such other reasonablesecurity as may be demanded by Landlord to ensure payment of such contestedReal Property Taxes and all penalties, interest, costs and expenses which mayaccrue during the period of the contest. Upon the termination of any such proceedings, it shall be the obligationof Tenant to pay the amount of such Real Property Taxes or part thereof, asfinally determined in such proceedings, together with any costs, fees(including attorneys’ fees), penalties or other liabilities in connectiontherewith; provided, however, that if Tenant has deposited cash or cashequivalents with Landlord as security under clause (iii) above, then, so longas no material default exists under this Lease, Landlord shall pay such RealProperty Taxes (or part thereof) together with the applicable costs, fees andliabilities as described above out of such cash or cash equivalents and returnany unused balance, if any, to Tenant. Otherwise, Landlord shall return or cause to have returned to Tenant allamounts, if any, held by or on behalf of Landlord which were deposited by Tenantin accordance with the provisions hereof.

 

(b)           Tenantshall have the right, at its cost and expense, to seek a reduction in thevaluation of the Premises as assessed for tax purposes and to prosecute anyaction or proceeding in connection therewith. Provided Tenant is not in material default hereunder, Tenant shall beauthorized to collect any tax refund of any tax paid by Tenant obtained byreason thereof and to retain the same.

 

(c)           Landlordagrees that whenever Landlord’s cooperation is required in any of theproceedings brought by Tenant as aforesaid, Landlord will reasonably cooperatetherein, provided same shall not entail any cost, liability or expense toLandlord, and Tenant will pay, indemnify and save Landlord harmless of andfrom, any and all liabilities, losses, judgments, decrees, costs and expenses(including all reasonable attorneys’ fees and expenses) in connection with anysuch contest and will, promptly after the final settlement, fully pay anddischarge the amounts which shall be levied, assessed, charged or imposed or bedetermined to be payable therein or in connection therewith, and Tenant shallperform and observe all acts and obligations, the performance of which shall beordered or decreed as a result thereof. No such contest shall subject Landlord to the risk of any civilliability or the risk of any criminal liability, and Tenant shall give suchreasonable indemnity or security to Landlord, as may reasonably be demanded byLandlord, to ensure compliance with the foregoing provisions of this Section9.04.

 

9.05         Survival of Tenant’s Tax Obligations.  Tenant’s obligations pursuant to thisArticle 9 shall survive the termination or expiration of this Lease, inwhole or in part, such that, notwithstanding such termination or expiration ofthis Lease, such that Tenant shall continue to be responsible for that portionof the Real Property Taxes and/or personal property taxes which pertain to theperiod prior to the date of such termination or expiration of this Lease, whichtaxes shall be prorated and apportioned in accordance with the number of dayselapsed in the applicable tax year.

 

***ARTICLE 10***

**MAINTENANCEAND REPAIRS**

 

10.01       Tenant’sObligations.

 

(a)           Tenantshall, at Tenant’s expense, maintain in good repair, order, and serviceablecondition, reasonable wear and tear excepted, the Premises and every partthereof,

 

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including but not limited to all plumbing, ventilation, heating, airconditioning, and electrical systems and equipment in, on, or exclusivelyserving any of the Premises, and windows, doors, storefronts, plate glass,interior walls, and ceilings which are part of any of the Premises.

 

(b)           Tenantshall not commit or suffer to be committed any waste upon or about thePremises, and shall promptly at Tenant’s cost and expense, make all necessaryreplacements, restorations, renewals and repairs to each of the Premises andall appurtenances thereto which are material to the operation of any of thePremises, whether interior or exterior, structural or non-structural, ordinaryor extraordinary, and foreseen or unforeseen; provided that with respect toappurtenances to the Premises which are material to the operation of thePremises, if third parties are obligated to repair or maintain suchappurtenances, Tenant shall use commercially reasonable efforts to enforce suchobligations of third parties or, if such third parties fail to perform suchobligations, Tenant shall perform such obligations to the extent Tenant has thelegal right to do so.  Tenant shall payto the appropriate parties Tenant’s pro rata share of any maintenance, repairor other costs to the extent required under any appurtenances to any of thePremises.  Repairs, restorations,renewals and replacements shall be at least equivalent in quality to theoriginal work or the property replaced, as the case may be.  Tenant shall not make any claim or demandupon or bring any action against Landlord for any loss, cost, injury, damage orother expense caused by any failure or defect, structural or non-structural, ofthe Premises or any part thereof.

 

(c)           Uponthe expiration or earlier termination of this Lease, Tenant shall return eachof the Premises to Landlord in good and clean condition and repair, reasonablewear and tear excepted.  Any damage toany of the Premises, including any structural damage, resulting from Tenant’suse or from the removal of Tenant’s fixtures, furnishings, and equipmentpursuant to Section 12.04 hereof, shall be repaired by Tenant at Tenant’sexpense.

 

10.02       Landlord’sObligations.  Except for theobligations of Landlord under Article 14 hereof (relating to destruction of thePremises), and under Article 15 hereof (relating to the condemnation of thePremises), it is intended by the parties hereto that Landlord have noobligation, in any manner whatsoever, to repair and maintain any of thePremises nor any building located thereon nor any fixtures thereon or equipmentor personal property therein, whether interior or exterior, structural ornonstructural, ordinary or extraordinary, all of which obligations are that ofTenant under Section 10.01 hereof. Tenant expressly waives the benefit of any statute or law now orhereafter in effect which would otherwise afford Tenant the right to terminatethis Lease because of Landlord’s failure to keep the Premises or any partthereof or any building located thereon or fixtures thereon or equipment orpersonal property therein in good order, condition, and repair, or the right torepair and offset the cost related thereto against rent.

 

10.03       Landlord’sRights.  If Tenant refuses orneglects to make repairs or maintain the Premises, or any part thereof, or anyappurtenances thereto material to the operation of the Premises or to enforcemaintenance or repair obligations of third parties with respect to any suchappurtenances, as provided above, in a manner reasonably satisfactory toLandlord, without prejudice to any other remedy Landlord may have hereunder,upon giving Tenant ten (10) days’ prior written notice, Landlord shall have theright to enter such Premises and perform such maintenance or make such repairson behalf of and for the account of Tenant. In the event Landlord so elects, Tenant shall pay the cost of suchrepairs, maintenance, or replacements

 

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promptly following Tenant’s receipt of a bill therefor, together withthe applicable Administrative Fee. Tenant agrees to permit Landlord or its agent to enter the Premises,upon reasonable notice by Landlord, during normal business hours for the purposeof inspecting the Premises.

 

***ARTICLE 11***

**INSURANCEAND INDEMNIFICATION**

 

11.01       Tenant’sInsurance Obligation.  Tenantcovenants and agrees that Tenant will carry and maintain, at its sole cost andexpense, the following types of insurance with respect to each of the Premises,in the amounts specified and in the form hereinafter provided for:

 

(a)           COMMERCIALGENERAL LIABILITY.  Commercial generalliability insurance (including liquor liability insurance) against any loss,liability or damage on or relating to the Premises, with limits of not lessthan Two Million Dollars ($2,000,000) in any one occurrence for death orinjuries to one or more persons and/or for damage to property.

 

(b)           WORKERS’COMPENSATION.  Worker’s compensationinsurance or self insurance as required by the jurisdiction in which thePremises are located.

 

(c)           PROPERTYDAMAGE.  Insurance covering allimprovements located on the Premises and all of Tenant’s fixtures, merchandise,and personal property from time to time in, on or upon each of the Premises, inan amount not less than one hundred percent (100%) of their full replacementvalue providing protection against perils commonly included within theclassification “All Risk”.  Any policyproceeds shall be used for the repair or replacement of the property damaged ordestroyed to the extent necessary to maintain the standard of operation of thePremises and the business operated thereon existing prior to the damage ordestruction except as provided in Article 14.

 

(d)           POLICYFORM.

 

(i)            Allpolicies of insurance provided for herein shall be issued by reputable andfinancially sound insurance companies reasonably satisfactory to Landlord, andsuch insurance companies shall be qualified to do business in the jurisdictionwhere the applicable Premises are situated. All such policies shall be issued in Tenant’s name, with Landlord namedas an additional insured and/or loss payee as applicable, and, if requested byLandlord, name any superior landlord and any mortgagee or beneficiary ofLandlord as an additional insured or loss payee.  The policies shall be for the mutual and joint benefit andprotection of Landlord, Tenant, any superior landlord and any mortgagee orbeneficiary of Landlord.  Certificatesof insurance shall be delivered to Landlord prior to Landlord’s execution ofthis Lease, and thereafter certificates or other evidence of renewal orreplacement coverage shall be delivered to Landlord within five (5) days priorto the expiration of the term of each such policy.  As often as any such policy shall expire or terminate, renewal oradditional policies shall be procured and maintained by Tenant in like mannerand to like extent.  All certificates ofinsurance delivered to Landlord must contain a provision giving Landlord, anysuperior landlord, and any mortgagee or beneficiary of Landlord thirty (30)days’ notice in writing in advance of any cancellation or lapse, except onlyten (10) days’ notice will be provided for cancellation due

 

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to premium non-payment, of insurance. All public liability, property damage, and other casualty policies shallbe written on an occurrence basis as primary policies, not contributing with orin excess of coverage which Landlord may carry.

 

(ii)           Tenant’sobligations to carry the insurance provided for above may be brought within thecoverage of a so-called blanket policy or policies of insurance carried andmaintained by Tenant; provided, however, that such policy or policies must havelimits of not less than Five Million and 00/100 Dollars ($5,000,000) for anyone occurrence and that Landlord, any superior landlord and any mortgagee orbeneficiary of Landlord shall be named as an additional insured or loss payeethereunder as their interests may appear and that the coverage affordedLandlord will not be reduced or diminished by reason of the use of such blanketpolicies and the requirements set forth herein are otherwise satisfied.

 

11.02       SubrogationWaiver.  Landlord (for itselfand its insurer) hereby waives any rights, including rights of subrogation, andTenant (for itself and its insurer) hereby waives any rights, including rightsof subrogation, each may have against the other on account of any loss ordamage occasioned to Landlord or Tenant, as the case may be, to theirrespective property, any of the Premises or their respective contents that arecaused by or result from risks insured against under any property insurancepolicies carried by the parties hereto and in force at the time of any suchdamage.  The foregoing waivers ofsubrogation shall be operative only so long as available in the jurisdictionwhere the Premises are located and so long as no policy of insurance isinvalidated thereby.

 

11.03       InsuranceUse Restrictions.  Tenant agreesthat it will not carry any stock or goods or do anything in, on, or about thePremises outside of the ordinary course of Tenant’s business which willsubstantially increase the insurance rates upon the building of which any ofthe Premises are a part.

 

11.04       Indemnification.  (a) Tenant shall at all times indemnifyLandlord and any mortgagee or beneficiary of Landlord for, defend (with counselreasonably satisfactory to Landlord) Landlord against, and save Landlord andany mortgagee or beneficiary of Landlord harmless from, any liability, loss,cost, injury, damage or other expense or risk (including without limitationreasonable attorneys’ fees) whatsoever that may occur or be claimed by or withrespect to any person(s) or property on or relating to any of the Premises andresulting directly or indirectly from the use, misuse, occupancy, possession ordisuse of any of the Premises by Tenant or other persons claiming through orunder Tenant, or their respective agents, employees, licensees, invitees,guests or other such persons, or from the condition of any of thePremises.  Tenant shall, at its cost andexpense, defend against any and all such actions, claims and demands and shallindemnify Landlord and any mortgage or beneficiary of Landlord for all costs,expenses and liabilities (including, without limitation, reasonable attorneys’fees) it may incur in connection therewith. Neither Landlord nor any mortgagee or beneficiary of Landlord shall inany event whatsoever be liable for any injury or damage to any of the Premisesor to the Tenant or to any other persons claiming through or under Tenant, ortheir respective agents, employees, licensees, invitees, guests or other suchpersons or to any property of any such persons except as provided insubparagraph (b) below.  Tenant shallnot make any claim or demand upon or institute any action against Landlord as aresult of such injury or damage except as provided in subparagraph (b)below.  Tenant covenants and agreesduring the Lease Term

 

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hereof to pay when due or reimburse and indemnify and hold Landlord andany mortgagee or beneficiary of Landlord harmless from and against allinspection fees, taxes, bonds, permits, certificates, assessments and sales,use, property or other taxes, fees or tolls of any nature whatsoever (togetherwith any related interest or penalties) now or hereafter imposed againstLandlord, any superior landlord or any mortgagee or beneficiary of Landlord orTenant by any federal, state, county or local governmental authority upon orwith respect to any of the Premises or the use thereof or upon the possession,leasing, use, operation or other disposition of any thereof or upon the rents,receipts or earnings arising therefrom or upon or with respect to this Lease(excepting only federal, state, and local net income taxes on the income ofLandlord or any superior landlord or any mortgagee or beneficiary of Landlordor any taxes attributable to the recording of any mortgage or deed of trust onLandlord’s interest in the Premises.

 

(b)           Notwithstandingthe waiver of subrogation under Section 11.02, Landlord shall indemnify, holdharmless and defend (with counsel reasonably satisfactory to Tenant) Tenantfrom and against any liability, loss, cost, injury, damage or other expense orrisk (including, without limitation, reasonable attorneys’ fees) whatsoever tothe extent arising out of the negligence or willful misconduct of Landlord orits representatives in connection with any entry by Landlord or its representativeson the Premises or in connection with any maintenance, construction, or otheractivity of Landlord on any adjacent property, except to the extent arisingfrom the negligence or willful misconduct of Tenant, its representatives, ortheir respective agents, employees, licensees, invitees or guests, or from thecondition of any of the Premises.

 

11.05       Paymentof Insurance.  In the event thatTenant shall fail to obtain the insurance policies required hereunder, Landlordshall have the right, but not the obligation, to purchase the same in whichcase Tenant shall repay the cost thereof to Landlord with Tenant’s next AnnualRent installment together with the applicable Administrative Fee.

*** ***

***ARTICLE 12***

**ALTERATIONS**

 

12.01       PermittedImprovements.  Except asprovided in Section 12.03 hereof, and subject to the provisions of this Article12, at Tenant’s own expense and after giving Landlord notice in writing of itsintention to do so as required under Article 5, Tenant may from time to timemake alterations, replacements, additions, changes, and improvements(collectively referred to in this Article 12 as “Alterations”) in and to any ofthe Premises as it may find necessary or convenient for its purposes; provided,however, that no such Alterations shall decrease the value of any of thePremises.

 

12.02       Liens.  Tenant shall pay the costs of anyAlterations done on any of the Premises pursuant to Section 12.01, and shallkeep each of the Premises free and clear of liens of any kind as required underArticle 5.  Tenant shall indemnify anddefend Landlord from and against any liability, loss, damage, costs, attorneys’fees, and any other expense incurred as a result of claims of lien by anyperson performing work or furnishing materials or supplies for Tenant or anyperson claiming under Tenant.

 

12.03       StructuralAlterations.  Tenant shall notmake any Alterations to any of the foundations, perimeter or load bearingwalls, or roof structure involving expenditures in excess

 

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of the amounts specified in Article 5, other than minor repairs made inthe ordinary course of Tenant’s business which do not decrease the value of anyof the Premises, without obtaining the prior written consent of Landlord, whichconsent shall not be unreasonably withheld. All work with respect to any Alteration shall be done in a good andworkmanlike manner by properly qualified and licensed personnel, and such workshall be diligently prosecuted to completion.

 

12.04       Removalof Alterations.  All Alterationsmade on any of the Premises shall become the property of Landlord at theexpiration or termination of the Lease Term and shall be surrendered with suchPremises; provided, however, that if Tenant is not in default at the time ofsuch expiration or termination, (i) Tenant shall have the right to removeany Alterations made in accordance with this Article 12 provided the removalthereof does not decrease the value of any of the Premises as reasonablydetermined by Landlord and provided Tenant repairs any damage to any of thePremises caused by such removal, and (ii) Tenant’s equipment, machinery,and trade fixtures shall remain the property of Tenant and may be removed byTenant, provided Tenant shall repair any damage caused by its removal of anysuch equipment, machinery, and trade fixtures.

 

Landlord agrees from time to time during the term ofthis Lease, upon written request from Tenant, to execute and deliver anyinstrument, release, or other document that may be reasonably required by anyequipment supplier or vendor and in form and substance reasonably satisfactoryto Landlord whereby Landlord waives and/or releases any rights it may have oracquire with respect to any such equipment or trade fixtures which may beaffixed to any of the Premises and which is subject to a security interest orequipment lease in favor of such supplier or vendor and agrees that the same donot constitute realty regardless of the manner same are attached.

 

12.05       AlterationsRequired by Law.  Any Alteration,structural or otherwise, to or on any of the Premises, or any part thereof,which may be necessary or required by reason of any applicable Laws, shall bemade by and at the sole cost and expense of Tenant, subject to the provisionsof Section 7.02(d).

 

12.06       General Conditions Relating toAlterations.  Any Alteration,structural or otherwise, to or on the Premises, shall be subject to thefollowing conditions:

 

(a)           NoAlteration shall be undertaken until Tenant shall have procured and paid forall required permits and authorizations of all municipal departments andgovernmental subdivisions having jurisdiction.

 

(b)           Anystructural Alteration involving an estimated cost of more than One HundredThousand and 00/100 Dollars ($100,000) (which amount shall be subject toperiodic increase in the same manner as Annual Rent under Section 6.02) shall,at Landlord’s reasonable request, be conducted under the supervision of alicensed architect or engineer selected by Tenant and satisfactory to Landlordand shall be made in accordance with detailed plans and specifications (the“Plans and Specifications”) and cost estimates prepared by such architect orengineer and approved in writing in advance by Landlord.

 

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(c)           AnyAlteration shall be made promptly and in a good workmanlike manner and incompliance with all applicable Laws.

 

(d)           NoAlteration shall tie-in or connect any of the Premises or any improvementsthereon with any property outside such Premises without the prior writtenconsent of Landlord.

 

(e)           NoAlteration shall reduce the value of any of the Premises or impair thestructural integrity of any building comprising a part of any of the Premises.

*** ***

***ARTICLE 13***

**SIGNS**

 

In addition to those signs already existing at thePremises, Tenant shall have the right to erect or affix signs on the Premisesof such sizes, colors, and designs as required by Tenant.  All signs on the Premises shall fully complywith all applicable Laws.

*** ***

***ARTICLE 14***

**DAMAGE, DESTRUCTION, OBLIGATION TOREBUILD**

 

14.01       Obligationto Rebuild.  If any portion ofthe Premises is damaged or destroyed by fire or other casualty, Tenant shallforthwith give notice thereof to Landlord. Tenant shall, at its sole cost and expense, diligently repair, restore, rebuildor replace the damaged or destroyed improvements, fixtures or equipment, anddiligently complete the same as soon as reasonably possible, to the conditionthey were in prior to such damage or destruction, except for permittedAlterations and such changes in design or materials as may then be required byapplicable Laws.  Landlord, in suchevent, shall, to the extent and at the times the proceeds of the insurance aremade available to Landlord, reimburse Tenant for the costs of making suchrepairs, restoration, rebuilding and replacements on such terms as Landlord mayreasonably require.  To the extent thatavailable proceeds of insurance are insufficient to pay the entire cost ofmaking such repairs, restoration, rebuilding and replacements, and notwithstandingthe expiration or termination of the Lease Term of this Lease, Tenant shall paythe amount by which such costs exceed the available insurance proceeds.  Any surplus of insurance proceeds over thecost of restoration, net of all reasonable out-of-pocket expenses incurred byLandlord in connection with the administration thereof, shall be promptly paidover to Tenant.

 

Notwithstanding the foregoing, if any such damage ordestruction occurs during any Extension Period, Tenant may elect to terminatethis Lease upon written notice to Landlord within sixty (60) days after theoccurrence of such damage or destruction provided Tenant pays to Landlord allrent and other amounts accruing under this Lease through the date oftermination, and except as to obligations hereunder which expressly survive anytermination of this Lease.  In the eventof any such termination of this Lease, Landlord shall be entitled to retain allproceeds of insurance relating to such damage and destruction, and Tenant shallpromptly pay to Landlord any such insurance proceeds received by Tenant andhereby assigns to Landlord all rights of Tenant to receive such insuranceproceeds.

 

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14.02       NoAbatement of Rent. Notwithstanding the partial or total destruction of any of the Premises,there shall be no abatement of rent or of any other obligation of Tenanthereunder by reason of such damage or destruction.

 

***ARTICLE 15***

**EMINENTDOMAIN**

 

15.01       Total Taking.  If any of the Premises are taken in theirentirety under the power of eminent domain, this Lease shall terminate withrespect to such taken Premises as of the date of such taking, and upon Tenant’spayment to Landlord of all rents and other amounts accruing hereunder throughsuch date, Landlord and Tenant shall each thereafter be released from accruingany further liability under this Lease with respect to the Premises so takensubject to the rights of Landlord and Tenant to receive condemnation awards towhich each is entitled as provided in Section 15.03, and except as toobligations under this Lease which survive the termination hereof.  Upon any such taking, the Annual Rent shallbe adjusted pursuant to Section 15.05 below.

 

15.02       PartialTaking.  In the event that(a) more than twenty-five percent (25%) of the floor area of any of thePremises is taken under the power of eminent domain; or (b) by reason ofany appropriation or taking, regardless of the amount so taken, the remainderof any of the Premises is not one undivided parcel of property; or (c) asa result of any taking, regardless of the amount so taken, the remainder of anyof the Premises is rendered unsuitable for the continued operation of Tenant’sbusiness as determined by Tenant in good faith and based on commercially reasonablestandards and criteria, Tenant shall have the right, in addition to its rightsunder Article 24, to terminate this Lease with respect to such taken Premises,upon giving notice in writing of such election within sixty (60) days afterreceipt by Tenant from Landlord of written notice that said Premises have beenso appropriated or taken (with the understanding that such period of time maybe extended as reasonably necessary for Tenant to assess the effect of suchpartial taking on Tenant’s continued operation of its business at the Premises,subject to Landlord’s prior written consent, which consent shall not beunreasonably withheld) provided Tenant shall continue to pay Annual Rent andother amounts accruing hereunder through the date of termination.  In the event of such termination, uponTenant’s payment to Landlord of all rents and other amounts accruing hereunderthrough such date and in connection with such termination as set forth herein,both Landlord and Tenant shall thereupon be released from any liabilitythereafter accruing hereunder, except as to obligations hereunder which survivethe termination hereof and the Annual Rent shall be adjusted as set forth inSection 15.05 below.  Each Party agreesimmediately after learning of any actual or contemplated appropriation ortaking to give to the other party notice in writing thereof.  If this Lease is not terminated, Tenantshall remain in that portion of the Premises not so taken and Tenant, atTenant’s sole cost and expense, shall restore the remaining portion of thePremises as soon as possible to a complete unit of the quality and character asexisted prior to such taking.  Landlordagrees to reimburse Tenant for the cost of restoration, but in no event shallLandlord’s obligation to reimburse Tenant for the cost of restoring theremaining portion of the Premises exceed the amount of award of compensationthat Landlord receives for a partial taking of that portion of the Premisesresulting in the need for restoration. So long as this Lease is not terminated in the manner provided above,there shall be an adjustment of the Annual Rent payable by Tenant hereunder forthe Premises by reason of any partial taking as set forth in Section 15.05below.  Tenant hereby waives any

 

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statutory rights of termination which may arise by reason of anypartial taking of any of the Premises under the power of eminent domain.

 

15.03       Award.  In the event of any taking, the entire awardor compensation in any eminent domain proceeding affecting the Premises,whether awarded to Tenant or Landlord for a total or partial taking and subjectto the remaining provisions of this Section 15.03, shall be distributed toLandlord, provided, however, that in all instances Tenant will be entitled toreceive, and Landlord will have no right to pursue for itself, any award forclaims based on (a) the value of Tenant’s Alterations to the Premiseswhich Tenant has the right to remove pursuant to the provisions of this Leasebut elects not to remove, (b) loss of or damage to Tenant’s personalproperty, (c) loss to Tenant because of interruption of business,(d) Tenant’s loss of goodwill, and (e) Tenant’s cost of removal andrelocation and any rent differential payable by Tenant for replacement premisesas a result of any relocation necessitated by the taking (collectively, the“Tenant Award”).  Landlord and Tenantmay separately pursue their claims against the condemning authority, provided, however,that notwithstanding anything to the contrary contained in this Lease, Tenantwill have no right to pursue a claim based upon the residual value of the realproperty comprising the Premises after expiration of the Lease Term or pursueclaims or retain any award to which Landlord is entitled so as inequitably todiminish Landlord’s award.  Landlord andTenant shall cooperate to maximize the award payable by the condemningauthority.  Tenant hereby assigns to Landlordall rights of Tenant to receive any award of compensation as a result of anytaking except the Tenant Award.  In theevent that Tenant elects to terminate this Lease with respect to any of thePremises pursuant to Section 15.01, and after the application of the proceedsof such condemnation action award (excluding any Tenant Award) and payment ofall fees and expenses set forth in Section 15.05, Landlord shall, to the extentthat there are any excess net condemnation award proceeds, pay to Tenant fiftypercent (50%) of any such excess net condemnation award proceeds. In the eventthat Tenant elects to terminate this Lease with respect to any of the Premisespursuant to Section 15.02, and after the application of the proceeds of suchcondemnation action award (excluding any Tenant Award) and payment of all feesand expenses set forth in Section 15.05, then (i) Landlord shall, to the extentthat there are any excess net condemnation award proceeds, pay to Tenant fiftypercent (50%) of any such excess net condemnation award proceeds and (ii)Landlord shall sell or otherwise transfer the Premises, which sale or transfershall be pursued diligently by Landlord, which were the subject of such takingand, after the payment of all costs and expenses of Landlord in connection withholding, preparing for sale and selling such Premises from the proceeds of suchsale, Landlord shall pay to Tenant fifty percent (50%) of any remaining saleproceeds.

 

15.04       TransferUnder Threat of Taking.  For thepurposes of this Article only, a voluntary sale or conveyance under threat andin lieu of condemnation shall be deemed an appropriation or taking under thepower of eminent domain.

 

15.05       Adjustment of Annual Rent inconnection with Takings.

 

(a)           Inthe event that Tenant elects to terminate this Lease with respect to any of thePremises pursuant to Section 15.01 or 15.02, upon receipt by Landlord of fundsfrom the condemnation action award pursuant to Section 15.03 plus funds fromTenant in the total amount equal to the sum of (i) the loan balance allocatedto the Premises which are the subject of such 

 

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termination at the time of such termination as set forth on theapplicable Financing Schedule (defined below), (ii) any prepayment penalties orpremiums and/or defeasance costs required to be paid by Landlord under anyFinancing Documents (defined below) in connection with such termination and(iii) all reasonable costs and expenses of Landlord in connection with suchtermination, including, reasonable attorneys’ fees, the Annual Rent hereundershall be reduced by the amount of the then current Annual Rent allocated to thePremises which are the subject of such termination.

 

(b)           Inthe event that the Lease with respect to any of the Premises is not terminatedpursuant to Section 15.02, upon receipt by Landlord of funds from thecondemnation action award pursuant to Section 15.03 plus funds from Tenant inthe total amount equal to the sum of (i) the loan balance allocated to thePremises which are the subject of such condemnation at the time of such condemnationas set forth on the applicable Financing Schedule, (ii) any prepaymentpenalties or premiums and/or defeasance costs required to be paid by Landlordunder any Financing Documents in connection with such condemnation and (iii)all reasonable costs and expenses of Landlord in connection with suchcondemnation, including, reasonable attorneys’ fees and expenses, less thecosts to restore the affected Premises, the Annual Rent hereunder shall bereduced by an amount equal to the product of (i) the percentage of the Premisesso taken multiplied by (ii) the then current Annual Rent allocated to thePremises which are the subject of such condemnation; provided, however, thatsaid Annual Rent shall not be reduced below an amount which bears the sameratio to the annual scheduled payments of principal and interest due byLandlord under the Financing Documents with respect to the portion of the loanwhich is not prepaid or defeased with the proceeds of said condemnationreceived by Landlord as the ratio between the Annual Rent before such reductionbears to the total annual scheduled payments of principal and interest payableunder such Financing Documents prior to such prepayment or defeasance.

 

In connection with any loan, mortgage or other debtobtained by Landlord that is to be secured by Landlord’s interest in thePremises or this Lease, Landlord shall deliver to Tenant concurrently with theclosing of any such transaction a schedule (a “Financing Schedule”) containing(i) an allocation of the original loan balance to each of the Premises, and(ii) an amortization schedule of such loan with respect to each of the Premisesand the corresponding loan balance allocation. As used herein, the term “Financing Documents” shall mean any mortgageor deed of trust or other document evidencing or securing a loan or loans toLandlord secured by Landlord’s interest in the Premises or this Lease.

 

***ARTICLE 16***

**ASSIGNMENTAND SUBLETTING**

 

16.01       Landlord’sConsent Required.  For purposesof this Article 16, the terms “assign” and “assignment” shall include and meanany act attempting to, or document purporting to, assign, transfer, sublet,change ownership of Tenant’s interest in and to any of the Premises or any partthereof, or enter into license or concession agreements for a material portionof any of the Premises or any part thereof. Tenant shall not assign this Lease or Tenant’s interest in and to thePremises without obtaining the prior written consent of Landlord, such consentnot to be unreasonably withheld.  Anyattempted assignment without such consent shall be void, and shall constitute abreach of this Lease.  Notwithstandingthe foregoing, Tenant may at any time

 

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encumber its leasehold interest, by deed of trust, mortgage,assignment, or other security agreement, without the consent of Landlord, butno such encumbrance will constitute a lien on Landlord’s estate.

 

16.02       Assumptionof Obligations.  Any assignmentto which Landlord has consented shall be evidenced by an instrument in writingand any assignee or transferee shall agree for the benefit of Landlord to bebound by, assume, and perform all of the terms, covenants, and conditions ofthis Lease.  Consent by Landlord to anyassignment shall not constitute consent to any subsequent assignment.

 

16.03       Assignmentto Affiliate.  Notwithstandinganything to the contrary contained in this Article 16, Tenant shall have theright to assign this Lease, or sublet the Premises or any portion thereof,without the consent of, but with notice to, Landlord, to any corporation(a) with which Tenant may merge or consolidate, (b) which is a parentor subsidiary of Tenant at any tier, (c) which is the successorcorporation to Tenant in the event of a corporate reorganization, or (d) whichacquires all or substantially all of the voting stock of Tenant or all orsubstantially all of the assets of Tenant, provided that said assignee assumes,in full, the obligations of Tenant under this Lease and Tenant remainsprimarily liable under this Lease.  Inaddition, nothing contained herein shall prohibit the public offering of orsubsequent sale of shares of stock in Tenant in the public markets.

 

16.04       NoRelease of Tenant.  Regardlessof Landlord’s consent, no assignment shall release Tenant of Tenant’sobligation or alter the primary liability of Tenant to pay the rent and toperform all other obligations to be performed by Tenant hereunder.  The acceptance of rent by Landlord from anyother person shall not be deemed to be a waiver by Landlord of any provisionhereof.  Consent to one assignment shallnot be deemed consent to any subsequent assignment.  In the event of default by any assignee of Tenant or any successorto Tenant, in the performance of any of the terms hereof, Landlord may proceeddirectly against Tenant without the necessity of exhausting remedies againstsaid assignee.  Landlord may consent tosubsequent assignments of this Lease or amendments or modifications to thisLease with assignees of Tenant, without notifying Tenant, or any successor ofTenant, and without obtaining its or their consent thereto and such actionshall not relieve Tenant of liability under this Lease, provided that Tenantshall not be liable to the extent of amendments or modifications made to thisLease, with assignees not affiliated with Tenant without Tenant’s consent,which consent shall not be unreasonably withheld, which materially increaseTenant’s monetary obligations under this Lease (such as an increase in theAnnual Rent payable hereunder or extension of the Lease Term beyond theoriginal term hereof and any renewal options hereunder).

 

***ARTICLE 17***

**DEFAULT;REMEDIES**

 

17.01       Default.  The occurrence of any one or more of thefollowing events shall constitute a material default under this Lease by Tenant:

 

(a)           Thevacating or abandonment of the Premises by Tenant.

 

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(b)           Thefailure by Tenant to make any payment when due of Annual Rent, Impositions orany other payment required to be made by Tenant hereunder, where such failureshall continue for a period of ten (10) days after written notice fromLandlord.

 

(c)           Exceptas otherwise provided in this Lease, the failure by Tenant to observe orperform any of the covenants, conditions, or provisions of this Lease to beobserved or performed by Tenant, other than described in subparagraph (b)above, where such failure shall continue for a period of thirty (30) days afterwritten notice thereof from Landlord to Tenant; provided, however, that if thenature of Tenant’s noncompliance is such that more than thirty (30) days arereasonably required for its cure, then Tenant shall not be deemed to be indefault if Tenant commences such cure within said thirty (30)-day period andthereafter diligently and in good faith prosecutes such cure to completion.

 

(d)           (i) Themaking by Tenant of any general arrangement or general assignment for thebenefit of creditors; (ii) Tenant becomes a “debtor” as defined in 11U.S.C. Section 101 or any successor statute thereto (unless, in the case of apetition filed against Tenant, the same is dismissed within sixty (60) days);(iii) the appointment of a trustee or receiver to take possession ofsubstantially all of Tenant’s assets located at the Premises or of Tenant’sinterest in this Lease, where possession is not restored to Tenant within sixty(60) days; or (iv) the attachment, execution, or other judicial seizure ofsubstantially all of Tenant’s assets or of Tenant’s interest in this Lease,where such seizure is not discharged within sixty (60) days.  In the event that any provision of thisSection 17.01(d) is contrary to any applicable Law, such provision shall be ofno force or effect.

 

(e)           Thebreach of any representation or warranty by Tenant hereunder in any materialrespect.

 

(f)            Thedefault, breach or insolvency of any guarantor of this Lease beyond anyapplicable notice and/or grace period under its guarantee.

 

(g)           AtLandlord’s option, a default by Tenant under that certain Amended and RestatedMaster Lease of even date herewith by and between Tenant and ARG Properties II,LLC, a California limited liability company; provided, however, that thisSection 17.01(g) shall terminate and be of no force and effect if (i) forty–ninepercent (49%) or more of the beneficial ownership interest in Landlord shall besold or otherwise transferred or (ii) a sale or transfer of less than forty–ninepercent (49%) of the beneficial ownership interest in Landlord shall occur andsuch sale or transfer shall cause a reassessment or revaluation of the Premisesfor purposes of any ad valorem or other property tax.

 

17.02       Remedies.  In the event of any such material default byTenant, Landlord may at any time thereafter, with or without notice or demandand without limiting Landlord in the exercise of any right or remedy whichLandlord may have by reason of such default:

 

(a)           TerminateTenant’s right to possession of any of the Premises by any lawful means, inwhich case this Lease shall terminate as to such Premises and Tenant shallimmediately surrender possession of the Premises to Landlord.  In such event, Landlord shall be entitled torecover from Tenant all damages incurred by Landlord by reason of Tenant’sdefault

 

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including, but not limited to, the cost of recovering possession of thePremises, expenses of reletting, including reasonable and necessary renovationand alteration of the Premises, reasonable attorneys’ fees, and any real estatecommission actually paid; and the worth at the time of award by the courthaving jurisdiction thereof of the amount by which the unpaid rent for thebalance of the term after the time of such award exceeds the amount of suchunpaid rent for the same period that Tenant proves could be reasonably avoided.

 

(b)           MaintainTenant’s right to possession of any of the Premises by any lawful means, inwhich case this Lease and the term hereof shall continue in effect with respectto such Premises whether or not Tenant shall have vacated or abandoned suchPremises.  In such event Landlord shallbe entitled to enforce all of Landlord’s rights and remedies under the Leasewith respect to such Premises, including the right to recover the rent as itbecomes due hereunder.

 

(c)           Pursueany other remedy now or hereafter available to Landlord under the Laws of thejurisdiction where the Premises are located.

 

(d)           Tothe extent permitted by applicable Law, the rights and provided remedies underthis Lease shall be cumulative, and the exercise of any one right or remedyshall not preclude the exercise of or act as a waiver of any other right orremedy of Landlord hereunder, or which may be existing at law, or in equity orby statute or otherwise.

 

(e)           Inaddition to the foregoing, Tenant, and its successors and assigns, shall at alltimes indemnify Landlord for, defend Landlord against and save Landlordharmless from any liability, loss, cost, injury, damage or other expense orrisk (including, without limitation, reasonable attorney’s fees) whatsoever,directly or indirectly, arising out of, resulting from or otherwise inconnection with (i) the failure for any reason on the part of Tenant toperform, observe or comply with any of the covenants, conditions andobligations under this Lease to be performed, observed or complied with byTenant, and/or (ii) the failure for any reason of any representation orwarranty given by Tenant in connection with the execution of this Lease byLandlord to be materially true, complete and accurate.

 

17.03       AdministrativeFee.  Tenant hereby acknowledgesthat late payment by Tenant to Landlord of rent and other sums due hereundermay cause Landlord to incur administrative costs not contemplated by thisLease, the exact amount of which will be extremely difficult to ascertain.  Such administrative costs may include, butare not limited to, processing and accounting charges and late charges whichmay be imposed on Landlord by the terms of any superior lease, mortgage ortrust deed covering the Premises. Accordingly, if any installment of rent or any other sum due from Tenantis not received by Landlord or Landlord’s designee within ten (10) days afterwritten notice from Landlord, then, without any requirement for further noticeto Tenant, Tenant shall pay to Landlord an administrative fee equal to the Bankof America, NT & SA, reference rate plus four percent (4%) per annum (butin no event higher than the maximum rate permitted by Law) multiplied by suchoverdue amount from the date such overdue amount was due until paid (the“Administrative Fee”).  The partieshereby agree that such Administrative Fee represents a fair and reasonableestimate of the costs Landlord will incur by reason of late payment byTenant.  Acceptance of suchAdministrative Fee by Landlord shall in no event constitute a waiver of Tenant’sdefault with respect to such overdue amount, nor prevent Landlord fromexercising any of the other rights and remedies granted hereunder.

 

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17.04       Defaultby Landlord.  Landlord willcommit a default if Landlord fails to perform any provision of this Leaserequired of it and the failure is not cured within 30 days after notice hasbeen given to Landlord.  If, however,the failure cannot reasonably be cured within the cure period, Landlord willnot be in default of this Lease if Landlord commences to cure the failurewithin the cure period and diligently and in good faith continues to cure thefailure.  Notices given under thisSection 17.04 will specify the alleged breach and the applicable Lease provisions.  Tenant may, after expiration of the cureperiod unless there is an emergency, correct or remedy any failure of Landlordnot timely cured and deduct the reasonable cost paid by Tenant from future rentas it becomes due.

 

17.05       Mitigation.  Landlord and Tenant will each exercise bestefforts to mitigate the damages caused by the other party’s breach of thisLease.  Efforts to mitigate damages willnot be construed as a waiver of the nonbreaching party’s right to recoverdamages.

 

17.06       Lender’sRight to Cure.  The respectivelenders of each party will have the right, in the party’s behalf, to cure theparty’s alleged breach within the same time period allocated under this Lease,Landlord shall upon written request from Tenant provide copies of any noticesof default given to Tenant hereunder to lenders of Tenant as specified in suchwritten request, provided, however, that Landlord shall not be deemed to be indefault hereunder if Landlord fails to provide any such notices to any ofTenant’s lenders nor shall any such failure relieve Tenant from any liabilityhereunder or affect any of Landlord’s rights or remedies hereunder.

 

***ARTICLE 18***

**SUBORDINATION**

 

At Landlord’s option, this Lease shall be subordinateto any superior lease, mortgage, deed of trust, or any other hypothecation orsecurity now or hereafter placed upon any of the Premises and to any and alladvances made on the security thereof and to all renewals, modifications,consolidations, replacements, and extensions thereof, provided that Landlordand any mortgagee or beneficiary of Landlord shall execute the SubordinationAgreement (as defined below) with Tenant. In furtherance thereof, Tenant hereby agrees, upon request by Landlord,to execute and deliver a subordination, non-disturbance and attornmentagreement substantially in the form attached hereto as Exhibit B (a“Subordination Agreement”) with respect to any such superior lease, mortgage,deed of trust, hypothecation, or security.

 

***ARTICLE 19***

**QUIETENJOYMENT**

 

Subject to the terms and conditions of this Lease andconditional upon the performance of all of the provisions to be performed byTenant hereunder, Landlord agrees to secure to Tenant during the Lease Term andany and all extensions thereof, the quiet and peaceful possession of each ofthe Premises and all rights and privileges appertaining thereto and under thisLease.

 

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***ARTICLE 20***

**REPRESENTATIONSAND WARRANTIES**

 

20.01       Representationsand Warranties.  To induceLandlord to enter into this Lease, Tenant represents and warrants to Landlordand any mortgagee or beneficiary of Landlord as follows:

 

(a)           Itis a corporation duly organized and validly existing, in good standing underthe laws of California, has stock outstanding which has been duly and validlyissued, and is qualified to do business and is in good standing in thejurisdiction in which any of the Premises are located with full power andauthority to consummate the transactions contemplated hereby.

 

(b)           Theexecution and delivery of this Lease has been duly authorized by all action asmay be required under the terms and provisions of its governing instruments andthe laws of the jurisdiction where each of the Premises is located; this Leasewill not violate or result in any breach of, or constitute a default under, orresult in the creation of any lien, encumbrance, attachment, charge or otherright or claim of any other party upon any assets of Tenant or upon Tenant’sbeneficiary interest under the terms of this Lease pursuant to any instrumentor applicable Laws to which Tenant is a party or by which it may be bound orcreate in favor of or grant to any third party any interest whatsoever inTenant’s interest under the terms of this Lease; this Lease is valid andenforceable in accordance with its terms, and the execution and delivery ofthis Lease, and the consummation of the transactions contemplated hereby, donot require the approval or consent of any governmental authority havingjurisdiction over Tenant or its property, or if such approval or consent isrequired, it has been obtained.

 

(c)           Tenant’sfinancial statements and, if applicable, the guarantors’ financial statementsheretofore delivered to Landlord are true and correct in all material respects,have been prepared in accordance with generally accepted accounting principles,and fairly present the respective financial conditions of the subjects thereofas of the respective dates thereof.  Nomaterially adverse change has occurred in the financial conditions reflected thereinsince the respective dates thereof.

 

(d)           Thereare no actions, suits or proceedings pending, or to the best of Tenant’sknowledge, threatened, against or affecting it or any of the Premises or anyguarantor of this Lease, or involving the validity or enforceability of thisLease, at law or in equity, or before or by any governmental authority exceptactions, suits and proceedings fully covered by insurance or which, ifadversely determined, would not materially impair the ability of Tenant or any guarantorof this Lease to satisfy their obligations under this Lease or any guarantee ofthis Lease.

 

(e)           Tenantis not in default under any obligation for the payment of borrowed money, forthe deferred purchase price of property or for the payment of any rent underany lease agreement, which, either individually or in the aggregate, wouldadversely affect the financial condition of Tenant, or the ability of Tenant toperform its obligations hereunder, or comply with the terms of this Lease.

 

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***ARTICLE 21***

**SURRENDEROF PREMISES**

 

Except for changes resulting from eminent domainproceedings, at the expiration or sooner termination of the Lease Term, Tenantshall surrender the Premises in good and clean condition, reasonable wear andtear excepted, and shall surrender all keys for each of the Premises toLandlord at the place then fixed for the payment of rent and shall informLandlord of all combinations on locks, safes and vaults, if any, in each of thePremises.  Tenant shall at such timeremove all of Tenant’s property, as well as any alterations or improvementsother than permitted Alterations made in accordance with Article 12, ifrequested to do so by Landlord, and shall repair any damage to any of the Premisescaused thereby, and any or all of such property not so removed shall, atLandlord’s option, become the exclusive property of Landlord or be disposed ofby Landlord, at Tenant’s cost and expense, without further notice to or demandupon Tenant.  If any of the Premises arenot so surrendered, Tenant shall indemnify Landlord against loss or liabilityresulting from the delay by Tenant in so surrendering such Premises including,without limitation, any claims made by any succeeding occupant founded on suchdelay.  Tenant’s obligation to observeor perform this covenant shall survive the expiration or other termination ofthe Lease Term with respect to all or any of the Premises.

 

***ARTICLE 22***

**BANKRUPTCYOR INSOLVENCY**

 

22.01       Bankruptcyor Insolvency.  Subject toapplicable Law, Landlord and Tenant acknowledge and agree that (i) theprovisions of this Section 22.01 shall control notwithstanding anything to thecontrary contained in this Lease, and (ii) with respect to the rights of Tenantand Landlord in any bankruptcy or insolvency proceeding relating to Tenant,this Lease shall be interpreted as if each of the Premises were subject to aseparate lease on terms and conditions identical to those set forth in thisLease and the Annual Rent allocable to the Premises covered by each separatelease and each such separate lease providing that a default under any suchseparate lease constitutes a default under all other such separate leases.

 

(a)           Inthe event that Tenant shall become a debtor under Chapter 7 of the BankruptcyReform Act of 1978, 11 U.S.C. 1 et seq (“Bankruptcy Code”), and Tenant’strustee or Tenant shall elect to assume this Lease for the purpose of assigningthe same or otherwise, such election and assignment may be made only if theprovisions of this Section 22.01 are satisfied.  If Tenant or Tenant’s trustee shall fail to assume this Leasewithin sixty (60) days after the entry of an order for relief, this Lease shallbe deemed to have been rejected. Immediately thereupon Landlord shall be entitled to possession of eachof the Premises without further obligation to Tenant or Tenant’s trustee andthis Lease, upon the election of Landlord, shall terminate, but Landlord’sright to be compensated for damages shall survive, whether or not this Leaseshall be terminated.

 

(b)           Inthe event that a voluntary petition for reorganization is filed by Tenant, oran involuntary petition is filed against Tenant under Chapter 11 of theBankruptcy Code, or in the event of the entry of an order for relief underChapter 7 in a case which is then transferred to Chapter 11, Tenant’s trusteeor Tenant, as debtor-in-possession, must elect to assume this Lease withinsixty (60) days from the date of the filing of the petition under Chapter 11 orthe transfer

 

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thereto, or Tenant’s trustee or the debtor-in-possession shall bedeemed to have rejected this Lease. Immediately thereupon Landlord shall be entitled to possession of eachof the Premises without further obligation to Tenant or Tenant’s trustee andthis Lease, upon the election of Landlord, shall terminate, but Landlord’sright to be compensated for damages, shall survive, whether or not this Leaseshall be terminated.

 

(c)           Noelection by Tenant’s trustee or the debtor-in-possession to assume this Lease,whether under Chapter 7 or Chapter 11, shall be effective unless each of thefollowing conditions has been satisfied:

 

(i)            Tenant’s trustee or thedebtor-in-possession has cured all defaults under this Lease, or has providedLandlord with evidence satisfactory to Landlord that it will cure all defaultssusceptible of being cured by the payment of money within ten (10) days fromthe date of such assumption and that it will cure all other defaults under thisLease which are susceptible of being cured by the performance of any act withinthirty (30) days after the date of such assumption.

 

(ii)           Tenant’s trustee or thedebtor-in-possession has compensated, or has provided Landlord with evidencesatisfactory to Landlord that, within ten (10) days from the date of suchassumption, that it will compensate Landlord for any actual pecuniary lossincurred by Landlord arising from the default of Tenant, Tenant’s trustee, orthe debtor-in-possession as indicated in any statement of actual pecuniary losssent by Landlord to Tenant’s trustee or the debtor-in-possession.

 

(iii)          Tenant’s trustee or thedebtor-in-possession (A) has provided Landlord with “Assurance”, ashereinbelow defined, of the future performance of each of the obligations underthis Lease of Tenant, Tenant’s trustee, or the debtor-in-possession, and(B) shall, in addition to any other security deposits held by Landlord,deposit with Landlord, as security for the timely payment of Annual Rent andfor the performance of all other obligations of Tenant under this Lease, anamount equal to three (3) monthly installments of Annual Rent (at the rate thenpayable), and (C) pay in advance to Landlord on the date each installmentof Annual Rent is due and payable, one-twelfth of Tenant’s annual obligationsfor Impositions to be made by Tenant pursuant to this Lease.  The obligations imposed upon Tenant’strustee or the debtor-in-possession by this Section 22.01 shall continue withrespect to Tenant or any assignee of this Lease, after the conclusion ofproceedings under the Bankruptcy Code.

 

(iv)          Such assumption will not breach orcause a default under any provision of any other lease, mortgage, financingagreement or other agreement by which Landlord is bound, relating to the Premises.

 

(d)           Forpurposes of Section 22.01(c)(iii) hereof, Landlord and Tenant shall acknowledgethat “Assurance” shall mean no less than:

 

(i)            Tenant’s trustee or thedebtor-in-possession has and will continue to have sufficient unencumberedassets after the payment of all secured obligations and

 

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administrative expenses to assure Landlord thatsufficient funds will be available to fulfill the obligations of Tenant underthis Lease; and

 

(ii)           To secure to Landlord the obligationsof Tenant, Tenant’s trustee or the debtor-in-possession and to assure theability of Tenant, Tenant’s trustee or the debtor-in-possession to cure thedefaults under this Lease, monetary and/or nonmonetary, there shall have been: (A) sufficientcash deposited with Landlord, or (B) the bankruptcy court shall haveentered an order segregating sufficient cash payable to Landlord, and/or(C) Tenant’s trustee or the debtor-in-possession shall have granted toLandlord a valid and perfected first lien and security interest and/or mortgagein property of Tenant, Tenant’s trustee or the debtor-in-possession, acceptableas to value and kind to Landlord.

 

(e)           Inthe event that this Lease is assumed in accordance with Section 22.01(b) hereofand thereafter Tenant is liquidated or files, or has filed against it, asubsequent petition under any provision of the Bankruptcy Code or any similarstatute for relief of debtors, Landlord may, at its option, terminate thisLease and all rights of Tenant hereunder, by giving Tenant notice of itselection to so terminate within thirty (30) days after the occurrence of eitherof such events.

 

(f)            IfTenant’s trustee or the debtor-in-possession has assumed this Lease pursuant tothe terms and provisions of this Section 22.01 for the purpose of assigning (orelects to assign) this Lease, this Lease may be so assigned only if theproposed assignee has provided adequate assurance of future performance of allof the terms, covenants and conditions of this Lease to be performed byTenant.  Landlord shall be entitled toreceive all consideration for such assignment, whether cash or otherwise.  As used in this Section 22.01(f) “adequateassurance of future performance” shall mean at least that clauses (B) and (C)of Section 22.01(c)(iii)hereof and each of the following conditions, has beensatisfied:

 

(i)            The proposed assignee has furnishedLandlord with a current financial statement audited by a certified publicaccountant determined in accordance with generally accepted accountingprinciples consistently applied indicating a credit rating, net worth andworking capital in amounts which Landlord reasonably determines to besufficient to assure the future performance of such assignee of Tenant’sobligations under this Lease, but in no event indicating a net worth less thanthe net worth of the Tenant and any guarantors of this Lease, on the date ofexecution hereof.

 

(ii)           Such assignment will not breach orcause a default under any provision of any other lease, mortgage, financingagreement or other agreement by which Landlord is bound, relating to thePremises.

 

(iii)          The proposed assignment will notrelease or impair any guarantee under this Lease.

 

(g)           When,pursuant to the Bankruptcy Code, Tenant’s trustee or the debtor-in-possessionshall be obligated to pay reasonable use and occupancy charges for the use ofthe Premises, such charges shall not be less than the Annual Rent and alladditional rent payable by 

 

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Tenant under this Lease and shall be paid at the times and when due asthough such charges were Annual Rent and additional rent.

 

(h)           Anythingin this Lease to the contrary notwithstanding, neither the whole nor anyportion of Tenant’s interest in this Lease or its estate in the Premises shallpass to any trustee, receiver, assignee for the benefit of creditors, or anyother similar person or entity, or otherwise by operation of law under theBankruptcy Code or any similar federal statute now or hereinafter enacted, orunder the laws of any state, district or municipality having jurisdiction ofthe person or property of Tenant unless Landlord shall have consented to suchtransfer in writing.  No acceptance byLandlord of rent or any other payments from any such trustee, receiver,assignee, person or other entity shall be deemed to constitute such consent byLandlord nor shall it be deemed a waiver of Landlord’s right to terminate thisLease for any transfer of Tenant’s interest under this Lease without suchconsent.

 

***ARTICLE 23***

**HAZARDOUSMATERIALS**

 

23.01       Representationsand Warranties.  Notwithstandinganything to the contrary which may be contained in this Lease, Tenantrepresents, warrants and covenants to Landlord and any mortgagee or beneficiaryof Landlord as follows:

 

(a)           Tothe best of Tenant’s Knowledge (as defined below), except as set forth in theenvironmental and engineering reports for the Premises previously delivered byTenant or its affiliates to Landlord and any environmental and engineeringreports for the Premises prepared by Landlord in connection herewith(collectively, the “Reports”), there are no and have been no violations of theRelevant Environmental Laws (as hereinafter defined) respecting any of thePremises and no consent orders have been entered with respect thereto, exceptwhere noncompliance could not reasonably be expected to have a materiallyadverse effect on the value or the use or operation of the Premises for itsintended purpose or the ability of Tenant to perform its obligations under thisLease (a “Material Adverse Effect”).

 

(b)           Tothe best of Tenant’s Knowledge and except as set forth in the Reports, thereare no and have been no Hazardous Wastes (as hereinafter defined) or Asbestos(as hereinafter defined) either at, upon, under or within, or discharged oremitted at or from, any of the Premises, including, but not limited to, theair, soil, surface, and ground water; no Hazardous Wastes or Asbestos haveflowed, blown or otherwise become present at any of the Premises from neighboringland; and no Hazardous Wastes or Asbestos have been removed from any of thePremises other than those Hazardous Wastes or Asbestos which are used and/orincidental to the ordinary course of Tenant’s business provided that the sameare used, stored, handled and disposed of in accordance with all RelevantEnvironmental Laws and all other applicable Laws, industry standards andmanufacturers specifications.

 

(c)           Noneof the Premises will be used for the purpose of storing Hazardous Wastes, andno such storage or use will otherwise be allowed on any of the Premises whichwill cause or increase the likelihood of causing the release of HazardousWastes onto any of the Premises other than those Hazardous Wastes which areused and/or incidental to the ordinary course of Tenant’s business providedthat the same are used, stored, handled and disposed of in

 

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accordance with all Relevant Environmental Laws and all otherapplicable Laws, industry standards and manufacturers specifications.  Neither Tenant, nor to the best of Tenant’sKnowledge and except as set forth in the Reports any third party, hasinstalled, used or removed any storage tanks on, from or in connection with thePremises except in full compliance with all Relevant Environmental Laws, and tothe best of Tenant’s Knowledge, there are no storage tanks or wells (whetherexisting or abandoned) located on, under or about the Premises.  To the best of Tenant’s Knowledge, except asset forth in the Reports, the Property does not consist of any buildingmaterials that contain Hazardous Wastes or Asbestos.

 

(d)           Tenantis not aware of any claims or litigation, and has not received anycommunication from any person (including any governmental authority), concerningthe presence or possible presence of Hazardous Wastes or Asbestos at oradjacent to any of the Premises or concerning any violation or allegedviolation of the Relevant Environmental Laws respecting any of the Premises.  Tenant shall promptly notify Landlord of anysuch claims and shall furnish Landlord with a copy of any such communicationsreceived by Tenant.

 

(e)           Tenantshall notify Landlord promptly and in reasonable detail in the event thatTenant becomes aware of or suspects the presence of Hazardous Wastes orAsbestos (other than those Hazardous Wastes or Asbestos which are used and/orincidental to the ordinary course of Tenant’s business provided that the sameare used, stored, handled and disposed of in accordance with all RelevantEnvironmental Laws and all other applicable Laws, industry standards andmanufacturers specifications) or a violation of the Relevant EnvironmentalLaws, at or adjacent to any of the Premises.

 

(f)            Tenantshall ensure that the Premises complies and continues to comply in all respectswith all Relevant Environmental Laws.

 

(g)           Ifthe Premises or any part thereof are used or maintained so as to subjectTenant, Landlord or any mortgagee or beneficiary of Landlord or the user of anyof the Premises to a claim of violation of the Relevant Environmental Laws(unless contested in good faith by appropriate proceedings), Tenant shallimmediately cease or cause a cessation of such use or operations and shallremedy and fully cure any conditions arising therefrom, at its own cost andexpense.

 

(h)           UponLandlord’s reasonable belief that there is a material breach of one of theenvironmental representations or warranties set forth above, Tenant shallpermit Landlord, at its option, at any time upon five (5) days’ prior writtennotice to Tenant, to cause or conduct a complete environmental audit to beperformed.  The audit shall be atTenant’s sole cost and expense.

 

23.02       Definitions.

 

(a)           The“Relevant Environmental Laws,” as referred to herein, shall mean all applicablefederal, state and local laws, rules, regulations, orders, judicialdeterminations, and decisions or determinations by any judicial, legislative orexecutive body of any governmental or quasi-governmental entity, whether in thepast, the present or the future, with respect to: (A) the installation,existence, or removal of, or exposure to, Asbestos on any of the Premises;(B) the

 

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existence on, discharge from, or removal from any of the Premises ofHazardous Wastes; or (C) the effects on the environment of any of thePremises or of any activity now, previously, or hereafter conducted on any ofthe Premises.  The RelevantEnvironmental Laws shall include, but not be limited to, the following:(1) the Comprehensive Environmental Response, Compensation, and LiabilityAct, 42 U.S.C. Sections 9601 et seq.; the Superfund Amendments andReauthorization Act, Public Law 99-499, 100 Stat. 1613; the ResourceConservation and Recovery Act, 42 U.S.C. Sections 6901 et seq.; the NationalEnvironmental Policy Act, 42 U.S.C. Section 4321; the Safe Drinking Water Act,42 U.S.C. Sections 300F et seq.; the Toxic Substances Control Act, 15 U.S.C.Section 2601; the Hazardous Materials Transportation Act, 49 U.S.C. Section1801; the Federal Water Pollution Control Act, 33 U.S.C. Sections 1251 et seq.;the Clean Air Act, 42 U.S.C. Sections 7401 et seq.; and the regulationspromulgated in connection therewith; (2) Environmental Protection Agencyregulations pertaining to Asbestos (including 40 C.F.R. Part 61, Subpart M);Occupational Safety and Health Administration regulations pertaining toAsbestos (including 29 C.F.R. Sections 1910. 1001 and 1926.58); as each may nowor hereafter be amended; and (3) any other federal, state and local laws andregulations pertaining to Hazardous Wastes and/or Asbestos;

 

(b)            “Asbestos,” as referred to herein, shall havethe meanings provided under the Relevant Environmental Laws, and shall include,but not be limited to, asbestos fibers and friable asbestos, as such terms aredefined under the, Relevant Environmental Laws; and

 

(c)            “Hazardous Wastes,” as referred to herein,shall mean any of the following as defined by the Relevant Environmental Laws:solid wastes; petroleum and petroleum derivatives; natural or synthetic gas;radon gas; toxic or hazardous substances, wastes, pollutants or contaminants(including, but not limited to, polychlorinated biphenyls (“PCB’s”, paintcontaining lead, and urea formaldehyde); and discharges of sewage or effluent.

 

(d)            “Knowledge” shall mean the actual knowledgeof any executive officer after due inquiry of property management.

 

23.03       Tenant’sObligation.  At its sole cost and expense, Tenant shall:

 

(a)           Payimmediately when due the cost of compliance with the Relevant EnvironmentalLaws.

 

(b)           Keepeach of the Premises free of any lien imposed pursuant to the RelevantEnvironmental Laws.

 

23.04       LandlordOptions.  In the event thatTenant fails to comply with the requirements of this Article 23, after noticeto Tenant and the earlier of the expiration of any applicable cure periodhereunder, or the expiration of the cure period permitted under theRelevant Environmental Laws, if any, or such earlier time if Landlorddetermines that life, person or property is in jeopardy, Landlord may, butshall not be obligated to, exercise its right to do one or more of thefollowing: (a) declare that such failure constitutes a default; and/or(b) take any and all actions, at Tenant’s expense, that Landlordreasonably deems necessary or desirable to cure said failure ofcompliance.  Any costs incurred pursuantto this Section 23.04 shall become

 

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immediately due and payable by Tenant together with the applicableAdministrative Fee, and shall be paid or reimbursed to Landlord promptly uponwritten notice from Landlord.

 

23.05       Indemnity.  Landlord shall not be liable for and Tenantshall immediately pay to Landlord when incurred and shall indemnify, defend andhold Landlord and any mortgagee or beneficiary of Landlord harmless from andagainst, all loss, cost, liability, damage and expense (including, but notlimited to, attorneys’ fees and costs incurred in the investigation, defenseand settlement of claims) that Landlord or any mortgagee or beneficiary ofLandlord may suffer or incur as a result of or in connection in any way withany Asbestos or Hazardous Wastes now or hereafter present, discharged,released, generated, disposed, transported or emitted to, from, in on or underany of the Premises or in connection with any violation of any of the RelevantEnvironmental Laws, or any environmental assessment or study from time to timeundertaken or requested by Tenant or Landlord, or any breach of anyrepresentation, covenant or undertaking by Tenant herein.

 

23.06       Survival.  The provisions of this Article 23 shallsurvive the expiration or termination of the Lease Term.

 

***ARTICLE 24***

**SUBSTITUTEPREMISES**

 

Tenant shall have the right, from time to time, tosubstitute a property for any one of the Premises (collectively, “SubstitutePremises”) on the terms and conditions set forth below provided that Tenant, atTenant’s sole cost and expense (except with respect to costs and expensesrelating to Clauses (xiii), (xiv) and (xv), which shall be borne by Landlordand for which Landlord shall be required to provide satisfactory evidence toLandlord’s Mortgagee (defined below) of Landlord’s ability to pay such costs asa condition to such substitution, failure of which shall not constitute adefault by Landlord under this Lease, but shall give Tenant the option to payfor such costs and expenses and if so paid by Tenant, Tenant shall have theright to offset on the next Increase Date (and on subsequent Annual Rentpayment dates if necessary) any amount so paid plus interest at the rate setforth in Section 17.03 only from the amount by which the Annual Rent  is increased on such Increase Date pursuantto Section 6.02), delivers to Landlord and any mortgagee or beneficiary ofLandlord (“Landlord’s Mortgagee”) all of the following:

 

(i)            Writtennotice of Tenant’s election to provide a Substitute Premises (a “SubstitutionNotice”) at least sixty (60) days  priorto the date on which the substitution transaction is to close (the“Substitution Date”).  Such SubstitutionNotice shall identify the Substitute Premises, the Premises for which theSubstitute Premises is offered as a substitute and the scheduled SubstitutionDate;

 

(ii)           Onor prior to the date that is twenty (20) days prior to the Substitution Date,an appraisal by an independent appraisal firm which is a member of the AmericanInstitute of Real Estate Appraisers of the National Association of Realtors,with at least ten years’ experience in the valuation of commercial real estatein the metropolitan area in which the Substitute Premises is located andotherwise who is reasonably acceptable to the Landlord and the Landlord’sMortgagee (x) indicating that the fair market value of the Substitute Premises(taking into account utility and the remaining useful life of the land andimprovements as if encumbered by this Lease and as vacant assuming a usecomparable to Tenant’s use of the Premises) (the

 

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“Substitute Premises Value”) is not less than the fair market value ofthe Premises (taking into account utility and the remaining useful life of theland and improvements constituting the Premises as encumbered by this Lease andas vacant assuming a use comparable to Tenant’s use of the Premises) for which theSubstitute Premises is offered as a substitute (the “Premises Value”) and (y)otherwise reasonably satisfactory in all respects to the Landlord and theLandlord’s Mortgagee.  In the event thatthe Substitute Premises Value is less than the Premises Value, provided thatsuch differential in value does not exceed ten percent (10%) of the PremisesValue and further provided that all other requirements of this Article 24 aresatisfied, Tenant shall deposit with Landlord’s Mortgagee, as additionalcollateral for Landlord’s Mortgagee’s loan to Landlord, funds in an amountequal to the difference between the Substitute Premises Value and the PremisesValue (an “Appraisal Shortfall Deposit”) and the requirement in (x) above shallbe deemed satisfied.  Upon the fullsatisfaction of the Landlord’s Mortgagee’s loan, any Appraisal ShortfallDeposit shall be returned by Landlord’s Mortgagee to Tenant;

 

(iii)          Specialwarranty deed (or the approximate local equivalent) in form and substancesatisfactory to the Landlord and the Landlord’s Mortgagee, duly executed andacknowledged by the Tenant, conveying to the Landlord good and marketable feesimple title to the land and improvements constituting the Substitute Premises,subject only to liens and matters of record which are reasonably approved byLandlord and Landlord’s Mortgagee;

 

(iv)          Anamendment to this Lease duly executed by the Tenant providing for the lease ofthe Substitute Premises by the Landlord to the Tenant upon all of the terms andconditions set forth in this Lease, except that the term shall be equal to thethen remaining term under this Lease, and the Annual Rent for all of thePremises (including the Substitute Premises and excluding the Premises forwhich the Substitute Premises is a substitute) shall be equal to the AnnualRent under this Lease immediately prior to the substitution;

 

(v)           Amemorandum of lease (or the approximate local equivalent) with respect to theSubstitute Premises, duly executed and acknowledged by the Tenant and in properform for recording;

 

(vi)          Suchamendments, supplements and/or confirmations of the Guaranty and of any otherrelated documents as the Landlord or the Landlord’s Mortgagee reasonably mayrequire in connection with such substitution, including without limiting the generalityof the foregoing, amendments, supplements and/or confirmations to any loanagreement, promissory note, mortgage or deed of trust by and between Landlordand Landlord’s Mortgagee or by Landlord in favor of Landlord’s Mortgagee (allof the documents in this Clause (vi) and in Clauses (ii) through (v) above,being referred collectively as the “Substitution Documents”);

 

(vii)         Opinion(s)of counsel to Tenant, including local counsel in the jurisdiction in which theSubstitute Premises is located, opining, subject only to reasonable andcustomary assumptions, exceptions and qualifications (A) that the execution anddelivery by the Tenant of the Substitution Documents and the performance by theTenant of its obligations under the Substitution Documents have been dulyauthorized by all necessary corporate actions on the part of the Tenant, (B)that the Substitution Documents have been validly executed and delivered by theTenant, (C) that the Substitution Documents constitute the legal, valid andbinding obligations of the Tenant enforceable against the Tenant in accordancewith their respective

 

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terms, (D) that each of the Substitution Documents to be recorded orfiled in the jurisdiction in which the Substitute Premises is located is inproper form for recording or filing in the appropriate land records or in theappropriate filing office, as the case may be, in such jurisdiction and, whenrecorded or filed, as the case may be, will be effective (x) to validlytransfer legal fee title in the Substitute Premises to the Landlord, (y) tocreate a valid leasehold estate in the Substitute Premises in favor of theTenant and (z) to create a valid and perfected mortgage lien on the SubstitutePremises in favor of the Landlord’s Mortgagee, and (E) as to such other mattersas the Landlord or the Landlord’s Mortgagee reasonably may require inconnection with the Substitute Premises and the Substitution Documents;

 

(viii)        (A)to the Landlord’s Mortgagee, a reissued ALTA extended coverage Lender’s Policyof Title Insurance or an endorsement to the Landlord’s Mortgagee’s ALTAextended coverage Lender’s Policy of Title Insurance, as applicable, in formreasonably acceptable to the Landlord’s Mortgagee, issued by the titleinsurance company, its successor and/or assigns, which issued Landlord’sMortgagee’s existing ALTA extended coverage Lender’s Policy of Title Insurance,ensuring that the lien of the mortgage or deed of trust in favor of Landlord’sMortgagee continues to be a valid first priority mortgage lien on the Premisesand is a valid first priority lien on the Substitute Premises, subject only toliens and other matters of record reasonably acceptable to Landlord’s Mortgageeand (B) to the Landlord, an ALTA extended coverage Owner’s Policy of TitleInsurance, issued by a title insurance company reasonably acceptable toLandlord’s Mortgagee in an amount equal to the fair market value of theSubstitute Premises, and ensuring that the Landlord has good and marketable feesimple title to the Substitute Premises, subject only to liens and othermatters of record reasonably acceptable to Landlord;

 

(ix)           AnALTA survey of the Substitute Premises, dated no more than (90) days before theSubstitution Date, certified to the Landlord, the title insurance companyissuing the title insurance or title endorsement referred to in Clause (viii)above and the Landlord’s Mortgagee, by land surveyor duly registered andlicensed in the state where the Substitute Premises is located and in form andsubstance similar to the surveys delivered in connection with the closing ofthe loan from Landlord’s Mortgagee to Landlord and otherwise reasonablyacceptable to the Landlord and the Landlord’s Mortgagee;

 

(x)            APhase I environmental study in respect of the Substitute Premises by aqualified, independent environmental consulting firm reasonably acceptable tothe Landlord and the Landlord’s Mortgagee showing that the Substitute Premisesis in full compliance with all applicable environmental laws or otherwiseshowing such manner of environmental noncompliance or risk as shall beacceptable in the reasonable discretion of the Landlord and the Landlord’sMortgagee;

 

(xi)           Anengineering study in respect of the Substitute Premises by a qualified, independentengineering firm reasonably acceptable to the Landlord and the Landlord’sMortgagee, reasonably acceptable in form and substance to the Landlord and theLandlord’s Mortgagee;

 

(xii)          (A)evidence that Tenant has paid any and all transfer taxes, recording fees,mortgage recording taxes, intangible taxes and similar charges in connectionwith such

 

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substitution and (B) a commitment by the Tenant to pay all of thereasonable costs and expenses (including reasonable attorney’s fees) incurredby the Landlord and the Landlord’s Mortgagee and such other persons party toany Substitution Documents or that shall have provided services in connectionwith such substitution;

 

(xiii)         Inthe event that the debt of Landlord to Landlord’s Mortgagee shall have beendeposited with a trust or other entity, which trust or other entity shall havesold certificates to investors evidencing an ownership interest in the assetsof such trust or other entity, or securities collateralized by such debt shallhave been sold to one or more investors (in either event, a “Secondary MarketTransaction”), Standard & Poor’s Ratings Service (and/or any other ratingagency then rating such certificates or securities) shall have confirmed inwriting or Landlord’s Mortgagee has determined to its reasonable satisfactionthat the substitution of the Substitute Premises for the Premises beingsubstituted will not result in a downgrade, withdrawal or qualification of therating then assigned to such certificates or securities;

 

(xiv)        Ifrequested by Landlord’s Mortgagee, an opinion of tax counsel selected byLandlord and reasonably acceptable to the Tenant and Landlord’s Mortgageeconfirming that neither the Landlord nor the Landlord’s Mortgagee will sufferor incur any adverse tax consequences in connection with the substitution;

 

(xv)         Inthe event that a Secondary Market Transaction shall have occurred, and if thedebt of the Landlord to the Landlord’s Mortgagee is at such time held by a realestate mortgage investment conduit (“REMIC”) as defined in Section 860D of theInternal Revenue Code of 1986, as amended (the “Code”) or a financial assetsecuritization investment trust (“FASIT”) as defined in Section 860L of theCode, an opinion of tax counsel selected by Landlord’s Mortgagee or itssuccessor in interest confirming that such REMIC or FASIT, as the case may be,will not fail to maintain its status as a REMIC or FASIT as the result of suchsubstitution; and

 

(xvi)        Suchother documents, instruments, due diligence, reports and information as theLandlord or the Landlord’s Mortgagee may reasonably request, it beingunderstood that a request for documents, instruments, due diligence, reportsand information similar to that delivered at or in connection with the closingof the loan by Landlord’s Mortgagee to Landlord are deemed reasonable.

 

Upon the satisfaction of all of the conditionscontained in Clauses (i) through (xvi) above and the payment by Tenant toLandlord of any accrued but unpaid Annual Rent and other amounts, if any, dueunder this Lease as of the closing date of such substitution, (x) the Landlordshall convey the Premises for which the Substitute Premises is a substitute onan “as is, where is” basis and without recourse to or warranty by the Landlord,except as to the absence of liens caused or imposed by the Landlord without theknowledge and consent of the Tenant and subject to the same disclaimers as setforth above, (y) Landlord’s Mortgagee shall reconvey or release the lien of Landlord’sMortgagee’s mortgage or deed of trust with respect to the Premises for whichsuch substitution is being effectuated, and (z) Tenant shall convey theSubstitute Premises to the Landlord.

 

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***ARTICLE 25***

**GENERALPROVISIONS**

 

25.01       EstoppelCertificates.  Each party(“Responding Party”) shall at any time upon not less than fifteen (15) businessdays’ prior written notice from the other party (“Requesting Party”) execute,acknowledge, and deliver to the Requesting Party a statement reasonablysatisfactory to Landlord certifying and acknowledging the following:(i) that this Lease represents the entire agreement between Landlord andTenant, and is unmodified and in full force and effect (or, if modified, statingthe nature of such modification and certifying that this Lease, as so modified,is in full force and effect) and the date to which the Annual Rent and othercharges are paid in advance, if any; and (ii) that there are not, to theResponding Party’s knowledge, any uncured defaults on the part of theRequesting Party, or specifying such defaults if any are claimed.  Any such statement may be conclusivelyrelied upon by any prospective purchaser, mortgagee or encumbrancer of thePremises or of the business of the Requesting Party.

 

25.02       Severability.  The invalidity of any provision of thisLease as determined by a court of competent jurisdiction shall in no way affectthe validity of any other provision hereof.

 

25.03       EntireAgreement.  It is understoodthat there are no oral or other written agreements or representations betweenthe parties hereto concerning the subject matter of this Lease, and that thisLease and the Exhibits hereto supersede and cancel any and all previousnegotiations, arrangements, representations, brochures, displays, projections,estimates, agreements, and understandings, if any, made by Landlord or Tenantwith respect to the subject matter hereof, and none thereof shall be used tointerpret, construe, supplement, or contradict this Lease.  This Lease, and the Exhibits hereto, and allamendments hereto, constitute and shall be considered to be the only agreementbetween the parties hereto and their representatives and agents.  All negotiations and oral agreementsacceptable to both parties have been merged into and are included herein and inthe Exhibits hereto.

 

25.04       Notices.  Any notice required or permitted to be givenhereunder shall be in writing and may be given by personal delivery, certifiedmail, return-receipt requested or by nationally recognized overnight courierservice and, if given by mail or courier service, shall be deemed sufficientlygiven if addressed to Tenant or to Landlord, as the case may be, at theaddresses noted in Article 1 hereof. Delivery by courier will be deemed given on the date indicated in thecourier’s records; delivery by certified mail will be deemed given on the dateindicated on the return receipt.  Eitherparty may by notice to the other specify a different street address for noticepurposes.  A copy of all noticesrequired or permitted to be given hereunder shall be concurrently transmittedto such party or parties at such addresses as may from time to time hereafterbe designated by notice.

 

25.05       Waivers.  No waiver by a party of any provision hereofshall be deemed a waiver of any other provision hereof or of any subsequentbreach by the other party of the same of any other provision.  Landlord’s consent to, or approval of, anyact shall not be deemed to render unnecessary the obtaining of Landlord’sconsent to or approval of any subsequent act by Tenant.  The acceptance of rent hereunder by Landlordshall not be a waiver of any preceding breach by Tenant of any provisionhereof, other than the failure of Tenant to pay the particular rent so

 

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accepted, regardless of Landlord’s knowledge of such preceding breachat the time of acceptance of such rent.

 

25.06       Recording.  Either Landlord or Tenant shall, uponrequest of the other, execute, acknowledge, and deliver to the other a “shortform” memorandum of this Lease for recording purposes in each county where anyof the Premises is located.  Suchmemorandum shall be in a form reasonably acceptable to Landlord and sufficientfor Tenant to obtain a leasehold policy of title insurance based thereon.  In the event of any termination of thisLease, Tenant agrees to execute and deliver to Landlord one or more terminationagreements satisfactory to Landlord, which termination agreement shall besimilarly recorded.

 

25.07       Holding Over.  If Tenant remains in possession of thePremises or any part thereof after the expiration or termination of the LeaseTerm, such occupancy shall be a tenancy from month-to-month upon all theprovisions of this Lease pertaining to the obligations of Tenant and Tenantshall thereby waive its rights to any additional notice to quit, but alloptions, if any, granted under the terms of this Lease shall be deemedterminated and be of no further force or effect.  The monthly rental during such hold-over period shall be equal toone hundred ten percent (110%) of the monthly installment of Annual Rentpayable immediately prior to expiration or termination of the Lease Term.  In addition, Tenant shall continue to beobligated to pay all Impositions and other amounts required to be paid by theterms of this Lease.

 

25.08       CumulativeRemedies.  No remedy or election hereunder shall bedeemed exclusive but shall, wherever possible, be cumulative with all otherremedies at law or in equity.

 

25.09       Choice of Law.  This Lease shall be governed by the laws ofthe State of California without regard to conflicts of laws, provided that thelaws of the jurisdiction in which a particular Premises is located shall, tothe extent mandated by the Laws of such jurisdiction, govern the exercise byLandlord of its remedies under this Lease with respect to such Premises.  Except as may otherwise be required by theLaws of the jurisdiction in which any of the Premises is located, the partieshereto (i) submit and consent in advance to the exclusive and in personamjurisdiction of any state or federal court located within Los Angeles County,California, in any action or suit pertaining to this Lease or to any matterarising out of or related to this Lease, (ii) waives any right to transferor change the venue of litigation brought under this Lease, and(iii) agrees to service of process, to the extent permitted by law, bymail.

 

25.10       Attorneys’Fees.  Should either partyinstitute any action or proceeding to enforce any provision hereof or for adeclaration of such party’s rights or obligations hereunder, the prevailingparty shall be entitled to receive from the losing party such amounts as thecourt may adjudge to be reasonable attorneys’ fees for services rendered to theparty prevailing in any such action or proceeding, and such fees shall bedeemed to have accrued upon the commencement of such action or proceeding.

 

25.11       Force Majeure.  Except for payment obligations imposedpursuant to this Lease, if there is any prevention, delay, or stoppage of anact required of a party pursuant to this Lease because of strikes, lockouts,other labor disputes, material shortages, embargoes, civil unrest, governmentalregulations, governmental controls, enemy or hostile governmental action,judicial order, public emergency, fire, earthquake, other Acts of God, andother causes (other than

 

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financial condition beyond the reasonable control of the partyobligated to perform, performance of the act will be excused for the period ofthe delay.

 

25.12       Consent.  Whenever the consent or approval of eitherparty is required pursuant to this Lease, such consent or approval will not beunreasonably withheld or delayed except as otherwise expressly provided herein.

 

25.13       Liabilityof Landlord.

 

(a)           Inthe event of any sale or other transfer of Landlord’s interest in any of thePremises, Landlord shall be and hereby is entirely freed and relieved of allliabilities and obligations of Landlord hereunder with respect to such Premisesto the extent accruing after the date of such transfer.

 

(b)           Notwithstandinganything contained herein to the contrary, it is specifically understood andagreed that there shall be no personal liability of Landlord or any of itsshareholders, members, officers or directors in respect of any of the terms,covenants, conditions or provisions of this Lease, and in the event of a breachor default by Landlord of any of its liabilities and obligations under thisLease, Tenant and any persons claiming by, through or under Tenant shall looksolely to the equity of Landlord in the Premises for the satisfaction ofTenant’s and/or such persons’ remedies and claims for damages.

 

25.14       No Merger.  There shall be no merger of this Lease, orthe leasehold estate created by this Lease, with any other estate or interestin the Premises, or any part thereof, by reason of the fact that the sameperson, firm, corporation or other entity may acquire or own or hold, directlyor indirectly, (a) this Lease or the leasehold estate created by thisLease, or any interest in this Lease or in any such leasehold estate, and(b) any such other estate or interest in the Premises or any part thereof,and no such merger shall occur unless and until all persons, corporations,firms, and other entities having an interest (including a security interest) in(i) this Lease or the leasehold estate created by this Lease; and(ii) any such other estate or interest in the Premises, or any partthereof, shall join in a written instrument effecting such merger and shallduly record the same.

 

25.15       Reports.  Tenant agrees to furnish to Landlord, withreasonable promptness upon Landlord’s request: financial statements, reports and documents which Tenant and eachguarantor of this Lease sends to or makes available to its shareholders,noteholders or bondholders.

 

25.16       Definitionof Rent.  All monetaryobligations of Tenant to Landlord under the terms of this Lease, including,without limitation, all Impositions, Real Property Taxes and insurance premiumspayable hereunder, shall be deemed to be “rent”.

 

25.17       Interpretation.  The captions by which the Articles andSections of this Lease are identified are for convenience only and shall haveno effect upon the interpretation of this Lease.  Whenever the context so requires, singular numbers shall includethe plural, the plural shall refer to the singular, the neuter gender shallinclude the masculine and feminine genders, and the words “Landlord” and “Tenant”and “person” shall include corporations, partnerships, associations, otherlegal entities, and individuals.

 

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25.18       Relationshipof the Parties.  Nothing in thisLease shall create a partnership, joint venture, employment relationship,borrower and lender relationship, or any other relationship between Landlordand Tenant other than the relationship of landlord and tenant.

 

25.19       Successors.  This Lease shall be binding upon and inureto the benefit of the parties hereto and their respective personal and legalrepresentatives, heirs, successors, and assigns.

 

25.20       Modifications.This Lease may not be altered, amended, changed, terminated, or modified in anymanner unless the same shall be in writing and signed by or on behalf of theparty to be bound.  No waiver of anyprovision of this Lease of any right of Landlord hereunder shall be effectiveunless in writing signed by or on behalf of the person to be bound.

 

25.21       BrokerageFees.  Landlord and Tenant eachrepresent and warrant that they have not employed a broker in connection withthe execution of this Lease.  Landlordand Tenant shall each indemnify and hold the other harmless from and againstany claim or claims for brokerage or other commissions arising from such partyhaving employed a broker contrary to its representation in this Section 25.21.

 

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25.22.      NotBinding Until Executed.  ThisLease does not constitute an “offer” and is not binding until fully executedand delivered by Landlord.

 
|   | LANDLORD:                                                           |
|--------|---------------------------------------------------------------------|
|   |                                                                |
|   | **ARG  PROPERTIES I, LLC, a California  limited liability company** |
|   |                                                                |
|   | By:                                                                 | ARG Properties (DE) Corporation, a Delaware  corporation, its Manager |
|   |                                                                |   |
|   |                                                                | By |   |
|   |                                                                |   | Kevin A.  Shields, President |
|   |                                                                | Date: |   |
|        |                                                                     |  |  |  |

 
|   | TENANT:                                               |
|--------|-------------------------------------------------------|
|   |                                                  |
|   | **ARG  Enterprises, Inc., a California  corporation** |
|   |                                                  |
|   | By                                                    |   |
|   | Its                                                   |   |
|   | Date:                                                 |   |
|        |                                                       |  |  |

 

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| STATE OF CALIFORNIA | )     |
|---------------------|-------|
|                | ) SS. |
| COUNTY OF           | )     |

 

The foregoing instrument was acknowledged before methis             day of                 , 199     , by                   ,  as                      of                        ,  a                     , on  behalf    of                             .

 
|   |                                         |   |
|--------|----------------------------------------------|--------|
|   | Notary Public Los Angeles County, California |
|   | My Commission Expires:                       |   |   |
|   | [Notary Public’s Seal]                  |
|   |                                         |
|        |                                              |        |  |

 
| STATE OF CALIFORNIA | )     |
|---------------------|-------|
|                | ) SS. |
| COUNTY OF           | )     |

 

The foregoing instrument was acknowledged before methis                 day of              , 199   ,  by                      , as                of ARG Enterprises, Inc., aCalifornia corporation, on behalf of ARG Enterprises, Inc.

 
|   |                                         |   |
|--------|----------------------------------------------|--------|
|   | Notary Public Los Angeles County, California |
|   | My Commission Expires:                       |   |   |
|   | [Notary Public’s Seal]                  |
|        |                                              |        |  |

 

39

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**EXHIBIT A**

**TO**

**LEASE**

 

[Insert legal descriptionof Premises] 

 

1

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**EXHIBIT B**

**TO**

**LEASE**

 

Recording RequestedBy and When Recorded Mail To:

American Restaurant Group, Inc.Attn:  Law Department4410 El Camino Real, Suite 201Los Altos, California  94022

 

 

**SUBORDINATION, NON-DISTURBANCE AND**

**ATTORNMENT AGREEMENT[ AND NOTICE OF NON-RESPONSIBILITY]**

 

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENTAGREEMENT[ AND NOTICE OF NON-RESPONSIBILITY] (this “Agreement”) is made andentered into as of the         dayof                      , 199      , by and among (i) ARG Enterprises,Inc., a California corporation (“Tenant”); (ii)                                      (“Landlord”); and(iii) [LENDER], [ENTITY] (“Lender”).

 

**WITNESSETH:**

 

WHEREAS, Lender is the holder of that certainmortgage/deed of trust, dated                                            ,            (“Mortgage/Deed of Trust”)encumbering those certain parcels of real property and the improvementsthereon, relating to (      ) restaurantassets commonly known as either Stuart Anderson’s Black Angus or StuartAnderson’s Cattle Company restaurant(s) located at and more particularlydescribed in Exhibit 1 attached hereto and incorporated herein by thisreference (individually and collectively, “Property”);

 

WHEREAS, Lender and Landlord are parties to theMortgage/Deed of Trust, pursuant to which Landlord financed the Property withLender; and

 

WHEREAS, Landlord and Tenant are parties to thatcertain Lease, dated                      , 1996 (the “Lease”), pursuant to which Tenant leased the Property fromLandlord.

 

NOW, THEREFORE, in consideration for the mutualcovenants and agreements contained herein, the sufficiency of which is herebyacknowledged, the parties hereto hereby agree as follows:

 

1.             Subordination.  Subject to the terms of this Agreement, theLease, and the rights of Tenant in, to and under the Lease and the Property,are hereby made subject, junior, and subordinate in all respects to theMortgage/Deed of Trust and to all renewals, modifications, consolidations,replacements, and extensions thereof and to the respective rights of Lender

 

1

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thereunder as if all such instruments had been executed, delivered andrecorded prior to the execution of the Lease. This clause shall be self-operative, and no further instrument shall berequired.  However, Tenant covenants andagrees that if requested by Lender it will execute, acknowledge and deliver anyinstrument or document reasonably requested to confirm the foregoingsubordination of the Lease within twenty (20) days after receipt of writtenrequest therefor.

 

2.             Non-Disturbance.  So long as Tenant is not in default beyondany applicable grace or cure period in the payment of rent or any other sumspayable under the Lease or in the performance of any of the other terms,covenants or conditions of the Lease on Tenant’s part to be performed, then:(a) Tenant’s possession of the Property shall not be diminished orinterfered with by Lender or any third-party purchaser; (b) the Leaseshall not be terminated or affected by the foreclosure of the Mortgage/Deed ofTrust or the Lender’s exercise of any remedy provided for in the Mortgage/Deedof Trust; and (c) in the event that Lender forecloses upon the Property,Lender shall elect to preserve the Lease as a lease between Lender and Tenantin accordance with the terms of this Agreement.

 

3.             Attornment.  In the event that the Lender forecloses uponthe Property, then:

 

(a)           Tenantshall be bound to Lender, and Lender shall be bound to Tenant, under all of theterms, covenants and conditions of the Lease for the balance of the termthereof remaining, and any extensions or renewals thereof which may be effectedin accordance with any option therefor contained in the Lease, with the sameforce and effect as if Lender were the original landlord under the Lease,except that Paragraph 3(b) below and the other provisions of this Agreementshall modify the Lease, and Tenant does hereby attorn to Lender as itslandlord, said attornment to be effective and self-operative without theexecution of any further instruments; provided, however, that within twenty(20) days after receipt of written request therefor from Lender, Tenant willexecute and deliver to Lender any instrument or other documents reasonablyrequested by Lender to confirm Tenant’s attornment to Lender.

 
| (b)    | It is agreed that in no event shall Lender: |
|--------|---------------------------------------------|
|   |                                        |   |
|   | (1)                                         | be liable for any act or omission of any prior  landlord (including Landlord); |
|   |                                        |   |
|   | (2)                                         | be obligated to cure any defaults of any prior  landlord (including Landlord) which occurred prior to the date that Lender  succeeded to the interest of such prior landlord under the Lease; provided  that from and after the date Lender becomes owner of the Property, Lender  shall be obligated to cure any continuing default of the landlord under the  Lease to the extent such default is capable of being cured by Lender; |
|   |                                        |   |
|   | (3)                                         | be subject to any offsets or defenses which Tenant  may be entitled to assert against any prior landlord (including Landlord)  with respect to events occurring prior to the date Lender succeeded to  Landlord’s interest; |

 

 

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|   | (4)    | be bound by any Annual Rent or other amounts paid by  Tenant to any prior landlord (including Landlord) more than one (1) month in  advance of the date that Lender succeeded to the interest of such prior  landlord under the Lease; or |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                      |
|   | (5)    | be bound by any amendment or modification of the  Lease or any supplemental agreement made without the written consent of  Lender, such consent not to be unreasonably withheld.                                                          |

 

4.             Paymentof Rent to Lender.  Tenant agrees topay the Annual Rent and any other payments due under the Lease to Lender uponreceipt of written notice from Lender that it has succeeded to the interest ofLandlord under the Lease, and Landlord agrees that Tenant is entitled to relyconclusively upon such notice without any duty of inquiry.

 

5.             Limitationon Liability of Lender.  There shallbe no personal liability on the part of Lender or any officer, director,employee, shareholder or partner of Lender for the performance of the Lease orany covenant or agreement contained therein or in this Agreement.  Tenant shall look solely to Lender’s estateand interest in the Property for the satisfaction of every remedy of Tenant forany breach by Lender under the Lease or this Agreement or otherwise arising outof or in connection with the Lease, and Tenant will not collect or attempt tocollect any such claim out of any other assets of Lender.

 

6.             Performanceby Lender: Conflict.  Nothing inthis Agreement shall be or be deemed to be an agreement by Lender to performany obligation of Landlord under the Lease unless and until the Lender acquiresthe Property, and then only if required to do so by the terms of the Lease, asmodified and limited by this Agreement. In the event of any conflict between the terms of this Agreement and theterms of the Lease, the terms of this Agreement shall control.

 

7.             Notices.  Any notice required or permitted to be givenhereunder shall be in writing and may be given by personal delivery, certifiedmail, return receipt requested or by nationally recognized overnight courierservice and, if given by mail or by courier service, shall be deemedsufficiently given if addressed to the parties at the addresses set forthbelow.  Delivery by courier will bedeemed given on the date indicated in the courier’s records; delivery bycertified mail will be deemed given on the date indicated on the returnreceipt.  Any party may by noticespecify a different street address for notice purposes.

 

Addresses for Notices:

 
|   | To Lender: | [LENDER] |
|--------|------------|----------|
|   |       |     |
|   |       |     |
|   |       |     |

 

3

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|   | To Landlord:                                                         | ARG Properties I, LLC |
|--------|----------------------------------------------------------------------|-----------------------|
|   | c/o Griffin Capital                                                  |
|   | 10940 Wilshire Blvd., Suite 1600                                     |
|   | Los Angeles, CA 90024                                                |
|   | Attn:       Kevin  A. Shields          |
|   | Fax:         (310)  443-4117 |

 
|   | To Tenant:                                                           | ARG Enterprises, Inc. |
|--------|----------------------------------------------------------------------|-----------------------|
|   | 6th Floor                                                            |
|   | 450 Newport Center Drive                                             |
|   | Newport Beach, CA   92660                                       |
|   | Attn:       Director  of Real Estate   |
|   | Fax:         (949)  721-8941 |

 
|   | With a copy to:                                                      | American Restaurant Group, Inc. |
|--------|----------------------------------------------------------------------|---------------------------------|
|   | Suite 201                                                            |
|   | 4410 El Camino Real                                                  |
|   | Los Altos, CA   94022                                           |
|   | Attn:       Legal  Department               |
|   | Fax:         (650)  949-6420 |

 
|   | With a copy to:                                                      | Stuart Anderson’s Restaurants |
|--------|----------------------------------------------------------------------|------------------------------------|
|   | 4410 El Camino Real, Suite 201                                       |
|   | Los Altos, California  94022                                    |
|   | Attn:       Director  of Real Estate   |
|   | Fax:         (650)  949-6245 |

 

8.             Successorsand Assigns.  This Agreement andeach and every covenant and provision contained herein shall be binding uponand shall inure to the benefit of the parties hereto and their respectiverepresentatives, successors and assigns.

 

9.             Modifications,Counterparts.  This Agreement shallnot be modified or amended in whole or in part except by a writing executed byall of the parties hereto or their respective representatives, successors orassigns.  This Agreement may be executedin one or more counterparts, each of which shall be deemed to be an originaland all of which shall constitute one and the same instrument.

 

10.           GoverningLaw: Jurisdiction.  This Agreementshall be governed by and construed in accordance with the laws of thejurisdiction in which the Property is located.

 

11. [         NOTICEOF NON-RESPONSIBILITY.  NOTICE ISHEREBY GIVEN THAT NEITHER LANDLORD NOR ANY LENDER WILL BE LIABLE OR RESPONSIBLEFOR ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO TENANT, ORTO ANYONE HOLDING AN INTEREST IN THE PROPERTY OR ANY PART THEREOF THROUGH ORUNDER TENANT, AND THAT NO MECHANIC’S OR OTHER LIENS FOR ANY SUCH LABOR,SERVICES OR MATERIALS SHALL ATTACH

4

----

 

TO OR AFFECT THE INTEREST OF LANDLORD OR ANY LENDER IN AND TO THEPROPERTY.]

 

[SIGNATURE PAGEFOLLOWS]

 

5

----

 

IN WITNESS WHEREOF, the parties hereto have causedthis Agreement to be executed and delivered as of the date set forth below.

 
|   | TENANT:                    |
|--------|----------------------------|
|   |                       |
|   | **ARG  Enterprises, Inc.** |
|   |                       |
|   | By                         |   |
|   | Its                        |   |
|   | Dated:                     |   |
|        |                            |  |  |

 
|   | LANDLORD:                        |
|--------|----------------------------------|
|   |                             |
|   | **ARG  PROPERTIES I, LLC**  |
|   |                             |
|   | By:                              | ARG Properties (DE) Corporation II, its Manager |
|   |                             |
|   |                             | By |   |
|   |                             | Its |   |
|   |                             | Dated: |   |
|        |                                  |  |  |  |  |

 
|   | LENDER:      |
|--------|--------------|
|   |         |
|   | **[LENDER]** |
|   |         |
|   | By           |   |   |
|   | Its          |   |
|   | Dated:       |   |
|        |              |  |  |  |

 

6

----

 

**CALIFORNIAALL-PURPOSE NOTARY ACKNOWLEDGMENT**

 
| State of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | ***** OPTIONAL SECTION *****

**CAPACITY CLAIMED BY SIGNER**  Through  statute does not require the Notary to fill in the data below, doing so may  prove invaluable to persons relying on the document |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| County of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| On this                            day of                       , 199     , before me,                                                                                                                                                       |
| ,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Name,  Title of Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | o  INDIVIDUAL                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | o   CORPORATE OFFICERS(S)                                                                                                                                                                               |
| personally appeared                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | ,      |                                                                                                                                                                                                         | o   PARTNER(S) | o  LIMITED |
| Name(s)  of Signer(s)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                                                                         | o  GENERAL |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | o   ATTORNEY-IN-FACT                                                                                                                                                                                    |
| o personally known to me **- OR -**o 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.                                                                               |   | o   TRUSTEE(S)                                                                                                                                                                                          |
| o   GUARDIAN/CONSERVATOR                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| o  OTHER                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                         |
| WITNESS my hand and official  seal.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | **SIGNER IS REPRESENTING:**                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | NAME OF PERSON(S) OR ENTITY(IES)                                                                                                                                                                             |
| SIGNATURE  OF NOTARY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                         |
| *****************  OPTIONAL SECTION *****************

 

THIS CERTIFICATE MUST BE  ATTACHED TO THE DOCUMENT DESCRIBED BELOW:

TITLE OR TYPE OF DOCUMENT

NUMBER OF PAGES                            DATE OF DOCUMENT

SIGNER(S) OTHER THAN NAMED  ABOVE

Though the data requested here  is not required by law, it could prevent fraudulent reattachment of this  form. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |        |                                                                                                                                                                                                              |  |  |  |  |

 

----

 

**CALIFORNIAALL-PURPOSE NOTARY ACKNOWLEDGMENT**

 
| State of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | ***** OPTIONAL SECTION *****

**CAPACITY CLAIMED BY SIGNER**  Through  statute does not require the Notary to fill in the data below, doing so may  prove invaluable to persons relying on the document |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| County of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| On this                            day of                       , 199     , before me,                                                                                                                                                       |
| ,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Name,  Title of Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | o   INDIVIDUAL                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | o   CORPORATE OFFICERS(S)                                                                                                                                                                               |
| personally appeared                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | ,      |                                                                                                                                                                                                         | o   PARTNER(S) | o  LIMITED |
| Name(s)  of Signer(s)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                                                                         | o  GENERAL |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | o   ATTORNEY-IN-FACT                                                                                                                                                                                    |
| o personally known to me **- OR -**o 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.                                                                               |   | o   TRUSTEE(S)                                                                                                                                                                                          |
| o   GUARDIAN/CONSERVATOR                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| o  OTHER                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                         |
| WITNESS my hand and official  seal.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | **SIGNER IS REPRESENTING:**                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | NAME OF PERSON(S) OR ENTITY(IES)                                                                                                                                                                             |
| SIGNATURE  OF NOTARY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                         |
| *****************  OPTIONAL SECTION *****************

 

THIS CERTIFICATE MUST BE  ATTACHED TO THE DOCUMENT DESCRIBED BELOW:

TITLE OR TYPE OF DOCUMENT

NUMBER OF PAGES                            DATE OF DOCUMENT

SIGNER(S) OTHER THAN NAMED  ABOVE

Though the data requested here  is not required by law, it could prevent fraudulent reattachment of this  form. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |        |                                                                                                                                                                                                              |  |  |  |  |

 

----

 

**CALIFORNIAALL-PURPOSE NOTARY ACKNOWLEDGMENT**

 
| State of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | ***** OPTIONAL SECTION *****

**CAPACITY CLAIMED BY SIGNER**  Through  statute does not require the Notary to fill in the data below, doing so may  prove invaluable to persons relying on the document |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| County of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| On this                            day of                       , 199     , before me,                                                                                                                                                       |
| ,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Name,  Title of Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | o   INDIVIDUAL                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | o   CORPORATE OFFICERS(S)                                                                                                                                                                               |
| personally appeared                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | ,      |                                                                                                                                                                                                         | o   PARTNER(S) | o  LIMITED |
| Name(s)  of Signer(s)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                                                                         | o  GENERAL |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | o   ATTORNEY-IN-FACT                                                                                                                                                                                    |
| o personally known to me **- OR -**o 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.                                                                               |   | o   TRUSTEE(S)                                                                                                                                                                                          |
| o   GUARDIAN/CONSERVATOR                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| o  OTHER                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                         |
| WITNESS my hand and official  seal.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | **SIGNER IS REPRESENTING:**                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | NAME OF PERSON(S) OR ENTITY(IES)                                                                                                                                                                             |
| SIGNATURE  OF NOTARY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                         |
| *****************  OPTIONAL SECTION *****************

 

THIS CERTIFICATE MUST BE  ATTACHED TO THE DOCUMENT DESCRIBED BELOW:

TITLE OR TYPE OF DOCUMENT

NUMBER OF PAGES                            DATE OF DOCUMENT

SIGNER(S) OTHER THAN NAMED  ABOVE

Though the data requested here  is not required by law, it could prevent fraudulent reattachment of this  form. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |        |                                                                                                                                                                                                              |  |  |  |  |

 

----

EXHIBIT 1 to

**SUBORDINATION,NONDISTURBANCE AND ATTORNMENT AGREEMENT**

[Insert legal description ofthe Premises]

 

----

 

EXHIBIT C

(Article 5)

 
| RECORDING REQUESTED BY AND  WHEN RECORDED RETURN TO: |   |
|------------------------------------------------------|--------|
|                                                 |   |
| Orrick, Herrington & Sutcliffe LLP               |   |
| 777 South Figueroa Street                            |   |
| Suite 3200                                           |   |
| Los Angeles, California  90017                  |   |
| Attn: Michael A. McAndrews, Esq.                     |   |

----

 

(Space above this linefor Recorder's use)

 

NOTICE OFNON-RESPONSIBILITY OF OWNER

 

NOTICE IS HEREBY GIVEN that the undersigned, ARGProperties I, LLC, a California limited liability company ("Owner"),is the owner of the real property located in the City of                                                   , County of                                   `  , commonly identified as                                                                             , and more particularlydescribed in Exhibit A attached hereto (the "Property").

 

That ARG Enterprises, Inc., a California corporation("Tenant"), is the lessee of the Property.

 

That on                              , the undersigned first obtainedknowledge that certain remodeling, construction, repair, or other work of or tothe building or other improvements located on the Property was being performedon the Property, and that materials, equipment, labor, services and supplieswere being supplied in connection therewith.

 

----

 

That neither the Owner nor any mortgagee orbeneficiary of Owner will be responsible for such work, materials, equipment,labor, services or supplies or for any mechanics', materialmens' or other lienthat may be claimed in connection therewith.

 
|   | Dated:                                                           | .                                        |   |   |
|--------|------------------------------------------------------------------|------------------------------------------|--------|--------|
|   |                                                             |
|   | ARG PROPERTIES I, LLC, a California  limited   liability company |
|   |                                                             |
|   | By:                                                              | ARG Properties (DE) Corporation, Manager |
|   |                                                             |
|   |                                                             | By:                                      |   |   |
|   |                                                             | Its:                                     |   |   |
|        |                                                                  |                                          |        |        |  |  |  |  |

 

The undersigned acknowledges that it has read theforegoing Notice of Non-Responsibility and knows its contents, and it is trueto the undersigned's own knowledge.

 

Executed at Los Angeles, California on                                          .

 

The undersigned declares under penalty of perjury thatthe foregoing is true and correct.

 
|   | ARG ENTERPRISES, INC., a California   corporation |
|--------|---------------------------------------------------|
|   |                                              |
|   | By:                                               |   |   |   |
|   | Its:                                              |   |   |   |

 

----

 

**CALIFORNIAALL-PURPOSE NOTARY ACKNOWLEDGMENT**

 
| State of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | ***** OPTIONAL SECTION *****

**CAPACITY CLAIMED BY SIGNER**  Through  statute does not require the Notary to fill in the data below, doing so may  prove invaluable to persons relying on the document |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| County of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| On this                            day of                       , 199     , before me,                                                                                                                                                       |
| ,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Name,  Title of Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | o   INDIVIDUAL                                                                                                                                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | o   CORPORATE OFFICERS(S)                                                                                                                                                                               |
| personally appeared                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | ,      |                                                                                                                                                                                                         | o   PARTNER(S) | o  LIMITED |
| Name(s)  of Signer(s)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                                                                         | o  GENERAL |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | o   ATTORNEY-IN-FACT                                                                                                                                                                                    |
| o personally known to me **- OR -**o 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.                                                                               |   | o   TRUSTEE(S)                                                                                                                                                                                          |
| o   GUARDIAN/CONSERVATOR                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| o  OTHER                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                         |
| WITNESS my hand and official  seal.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | **SIGNER IS REPRESENTING:**                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | NAME OF PERSON(S) OR ENTITY(IES)                                                                                                                                                                             |
| SIGNATURE  OF NOTARY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                                                                                                                         |
| *****************  OPTIONAL SECTION *****************

 

THIS CERTIFICATE MUST BE  ATTACHED TO THE DOCUMENT DESCRIBED BELOW:

TITLE OR TYPE OF DOCUMENT

NUMBER OF PAGES                            DATE OF DOCUMENT

SIGNER(S) OTHER THAN NAMED  ABOVE

Though the data requested here  is not required by law, it could prevent fraudulent reattachment of this  form. |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |        |                                                                                                                                                                                                              |  |  |  |  |

 

----

 

**EXHIBITD**

 

**ARGPROPERTIES I, LLC**

 

**AllocatedRent Schedule**

 
| **Prop.  Num.** |   | **Property  Address**                      |       |   |       | **Allocated   Rent Amount** |          |
|-----------------|--------|--------------------------------------------|------------|--------|------------|-----------------------------|---------------|
| 1059            |   | 5259 West Indian  School Road, Phoenix     |       | AZ     |       | $                           | 192,505       |   |
| 1066            |   | 6875 South  Broadway, Littleton            |       | CO     |       | $                           | 174,600       |   |
| 1070            |   | 1625 Watt  Avenue, Sacramento              |       | CA     |       | $                           | 230,000       |   |
| 1076            |   | 101 East Bay  Street, Alhambra             |       | CA     |       | $                           | 262,775       |   |
| 1080            |   | 1704 Shadeland  Avenue, Indianapolis       |       | IN     |       | $                           | 220,000       |   |
| 1083            |   | 1011 Blossom  Hill Road, San Jose          |       | CA     |       | $                           | 276,450       |   |
| 1085            |   | 7853 South U.S.  31, Indianapolis          |       | IN     |       | $                           | 210,000       |   |
| 1090            |   | 139 W. Thousand  Oaks Blvd., Thousand Oaks |       | CA     |       | $                           | 300,000       |   |
|            |   |                                       |       |   |       |                        |          |
|            |   | **Total**                                  | ** ** |   | ** ** | **$**                       | **1,866,330** |   |

 

----

 

**TABLE OFCONTENTS**

 
| ARTICLE 1  |   FUNDAMENTAL LEASE  PROVISIONS                  |   |
|------------|-------------------------------------------------------|--------|
| ARTICLE 2  |   EXHIBITS                                       |   |
| ARTICLE 3  |   PREMISES                                       |   |
| ARTICLE 4  |   TERM                                           |   |
| 4.01       |   Term                                           |   |
| 4.02       |   Option to Extend Lease  Term                   |   |
| ARTICLE 5  |   LIENS                                          |   |
| ARTICLE 6  |   RENT                                           |   |
| 6.01       |   Rent                                           |   |
| 6.02       |   Rental Adjustments                             |   |
| 6.03       |   Net Lease; Impositions                         |   |
| ARTICLE 7  |   USE OF THE PREMISES                            |   |
| 7.01       |   Use                                            |   |
| 7.02       |   Compliance With Laws                           |   |
| 7.03       |   Permits and Licenses                           |   |
| ARTICLE 8  |   UTILITIES                                      |   |
| 8.01       |   Payment                                        |   |
| 8.02       |   Interruption in Service                        |   |
| ARTICLE 9  |   TAXES                                          |   |
| 9.01       |   Payment of Taxes                               |   |
| 9.02       |   Definition of  “Real Property Taxes” |   |
| 9.03       |   Personal Property Taxes                        |   |
| 9.04       |   Tenant’s Right to  Contest Taxes          |   |
| 9.05       |   Survival of  Tenant’s Tax Obligations.    |   |
| ARTICLE 10 |   MAINTENANCE AND REPAIRS                        |   |
| 10.01      |   Tenant’s Obligations                      |   |
| 10.02      |   Landlord’s Obligations                    |   |
| 10.03      |   Landlord’s Rights                         |   |
| ARTICLE 11 |   INSURANCE AND  INDEMNIFICATION                 |   |
| 11.01      |   Tenant’s Insurance  Obligation            |   |
| 11.02      |   Subrogation Waiver                             |   |

 

i

----

 
| 11.03      |   Insurance Use Restrictions                             |   |
|------------|---------------------------------------------------------------|--------|
| 11.04      |   Indemnification                                        |   |
| 11.05      |   Payment of Insurance                                   |   |
| ARTICLE 12 |   ALTERATIONS                                            |   |
| 12.01      |   Permitted Improvements                                 |   |
| 12.02      |   Liens                                                  |   |
| 12.03      |   Structural Alterations                                 |   |
| 12.04      |   Removal of Alterations                                 |   |
| 12.05      |   Alterations Required by  Law                           |   |
| 12.06      |   General  Conditions Relating to Alterations            |   |
| ARTICLE 13 |   SIGNS                                                  |   |
| ARTICLE 14 |   DAMAGE, DESTRUCTION, OBLIGATION TO REBUILD             |   |
| 14.01      |   Obligation to Rebuild                                  |   |
| 14.02      |   No Abatement of Rent                                   |   |
| ARTICLE 15 |   EMINENT DOMAIN                                         |   |
| 15.01      |   Total Taking                                           |   |
| 15.02      |   Partial Taking                                         |   |
| 15.03      |   Award                                                  |   |
| 15.04      |   Transfer Under Threat  of Taking                       |   |
| 15.05      |   Adjustment  of Annual Rent in connection with Takings. |   |
| ARTICLE 16 |   ASSIGNMENT AND SUBLETTING                              |   |
| 16.01      |   Landlord’s Consent  Required                      |   |
| 16.02      |   Assumption of Obligations                              |   |
| 16.03      |   Assignment to Affiliate                                |   |
| 16.04      |   No Release of Tenant                                   |   |
| ARTICLE 17 |   DEFAULT; REMEDIES                                      |   |
| 17.01      |   Default                                                |   |
| 17.02      |   Remedies                                               |   |
| 17.03      |   Administrative Fee                                     |   |
| 17.04      |   Default by Landlord                                    |   |
| 17.05      |   Mitigation                                             |   |

 

ii

----

 
| 17.06      |   Lender’s Right to Cure     |   |
|------------|----------------------------------------|--------|
| ARTICLE 18 |   SUBORDINATION                   |   |
| ARTICLE 19 |   QUIET ENJOYMENT                 |   |
| ARTICLE 20 |   REPRESENTATIONS AND WARRANTIES  |   |
| 20.01      |   Representations and  Warranties |   |
| ARTICLE 21 |   SURRENDER OF PREMISES           |   |
| ARTICLE 22 |   BANKRUPTCY OR INSOLVENCY        |   |
| 22.01      |   Bankruptcy or Insolvency        |   |
| ARTICLE 23 |   HAZARDOUS MATERIALS             |   |
| 23.01      |   Representations and  Warranties |   |
| 23.02      |   Definitions                     |   |
| 23.03      |   Tenant’s Obligation        |   |
| 23.04      |   Landlord Options                |   |
| 23.05      |   Indemnity                       |   |
| 23.06      |   Survival                        |   |
| ARTICLE 24 |   SUBSTITUTE PREMISES             |   |
| ARTICLE 25 |   GENERAL PROVISIONS              |   |
| 25.01      |   Estoppel Certificates           |   |
| 25.02      |   Severability                    |   |
| 25.03      |   Entire Agreement                |   |
| 25.04      |   Notices                         |   |
| 25.05      |   Waivers                         |   |
| 25.06      |   Recording                       |   |
| 25.07      |   Holding Over                    |   |
| 25.08      |   Cumulative Remedies             |   |
| 25.09      |   Choice of Law                   |   |
| 25.10      |   Attorneys’ Fees            |   |
| 25.11      |   Force Majeure                   |   |
| 25.12      |   Consent                         |   |
| 25.13      |   Liability of Landlord           |   |
| 25.14      |   No Merger                       |   |

 

iii

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|   |                                |   |
|--------|-------------------------------------|--------|
| 25.15  |   Reports                      |   |
| 25.16  |   Definition of Rent           |   |
| 25.17  |   Interpretation               |   |
| 25.18  |   Relationship of the  Parties |   |
| 25.19  |   Successors                   |   |
| 25.20  |   Modifications                |   |
| 25.21  |   Brokerage Fees               |   |
| 25.22  |   Not Binding Until Executed   |   |

 

iv

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