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C-4028 - Off-Site Parking Agreement (for 3446 East Coast Highway)
00 0 RECORDING REQUESTED BY AND V WHEN RECORDED RETURN TO: City Clerk City of Newport Beach 3300 Newport Boulevard P. 0. Box 1768 Newport Beach, CA 92658-8915 Recorded in Official Records, County of Orange Gary Granville, Clerk -Recorder 1111111 1111111111111111111111111111111111111111 11111NO FEE 2001017673312:15pm 03127101 110 67 Al2 34 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 I Space Above This Line for Recorder's Use Only ' OFF-SITE PARKING AGREEMENT 4 ' Restaurant Building / 3446 E. Coast Highway, Corona del Mar, Newport Beach, CA This Agreement, made and entered into this I3th day of February, 2001, by and between CITY OF NEWPORT BEACH, a municipal corporation and charter city, hereinafter referred to as "City" and SIBLING ASSOCIATES, LLC a California limited liability company hereinafter referred to as "Owner" and COCO' S RESTAURANTS, INC., a California corporation hereinafter referred to as "Lessee" is made with reference to the following facts, the materiality and existence of which is stipulated and agreed by the parties hereto: 1. Owner owns certain real property located at 411 and 413 Narcissus Avenue, Corona del Mar, in the City of Newport Beach, County of Orange, State of California, which real property is more particularly described as: LOTS 1 AND 3 OF BLOCK 440 OF CORONA DEL MAR TRACT AS SHOWN ON A MAP RECORDED IN BOOK 3, Off -Site Parking Agreement 3446 E. Coast Highway PAGES 41 AND 42 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA In addition, pursuant to that certain Land Lease executed by C. W. Welter and Guyla A. Welter, as lessor, and by James D. Ray and Hazel M. Ray, as lessee, recorded January 28, 1960 in Book 5704, page 36 of the Official Records of Orange County, California, Owner owns a ground leasehold estate in a portion of that certain real property located at 3446 E. Coast Highway, Corona del Mar, in the City of Newport Beach, County of Orange, State of California, which portion of said real property is more particularly described as: LOT 5 IN BLOCK T OF TRACT NO. 323 AS SHOWN ON A MAP RECORDED IN BOOK 14, PAGES 40 AND 41 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA All of said property owned by Owner in fee or ground leasehold estate is hereinafter referred to as "the parking property;" and II. Owner owns a portion of that certain real property located at 3446 E. Coast Highway, Corona del Mar, in the City of Newport Beach, County of Orange, State of California (the "restaurant property") which portion of said real property is more particularly described as: LOT 4 IN BLOCK T OF TRACT NO. 323 AS SHOWN ON A MAP RECORDED IN BOOK 14, PAGES 40 AND 41 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA Lessee operates a restaurant known as Coco's Bakery Restaurant on the restaurant property. Provisions of the Newport Beach Municipal Code require persons conducting a restaurant business to provide parking spaces for their customers; and III. Lessee has applied to City for Amendment of Conditional Use Permit 3678, Parking Modification and Accessory Outdoor Dining Permit to expand its existing restaurant and add accessory outdoor dining to its existing restaurant, which requires Lessee to provide additional parking spaces; and IV. Lessee has entered into a written Standard Industrial/Commercial Single - Tenant Lease -Net (the "Lease Agreement") between Owner, as successor in title to Sibling Associates I, a California general partnership, and Lessee dated June 1, 1999, which Lease Agreement leases to Lessee the restaurant property upon which Lessee operates Lessee's restaurant and further grants to Lessee the exclusive right to use thirty- three (33) automobile parking space on the parking property. A copy of the written Lease Agreement is attached hereto and marked Exhibit "A". 2 Off -Site Parking Agreement 3446 E. Coast Highway V. The Planning Commission of the City of Newport Beach approved Lessee's Application for Amendment of Conditional Use Permit 3678, Parking Modification and Accessory Outdoor Dining Permit, and required execution of this Off - Site Parking Agreement, after determining that the conditions of Section 20.30.035(D) of the Newport Beach Municipal Code were satisfied; and VI. Owner's ground leasehold estate in the portion of the property located at 3446 E. Coast Highway, Corona del Mar, City of Newport Beach, California is for a duration equal to the term of the Lease Agreement pursuant to which Lessee occupies the land upon which Lessee operates Lessee's restaurant. Accordingly, Owner's ground leasehold estate is of a duration adequate to serve Lessee's proposed use as applied for in Lessee's Application for Amendment of Conditional Use Permit 3678, Parking Modification and Accessory Outdoor Dining Permit and qualifies as a separate lot for purposes of off-street parking pursuant to Section 20.66.080 of the Newport Beach Municipal Code. NOW, THEREFORE, the parties hereto agree as follows: 1. Lessee shall do all things necessary to ensure the effectiveness and validity of the written Lease Agreement (Exhibit "A") pursuant to which Lessee has the right to automobile parking spaces on the property. Lessee further agrees to fully perform all of the duties and responsibilities imposed upon Lessee by the Lease Agreement (Exhibit "A') pursuant to which Lessee has the right to parking spaces, and further agrees that any breach by Lessee of the terms of the Lease Agreement (Exhibit "A") constitutes a breach of this Agreement. The duties of Lessee pursuant to this paragraph shall continue for such time as the Lessee operates a restaurant located at 3446 E. Coast Highway, Corona del Mar, Newport Beach, and with the characteristics and intensity of use, authorized by the Lease and any previous approvals granted by City. 2. In the event that the use of the off-street automobile parking spaces provided for in the Lease Agreement (Exhibit "A") are lost to Lessee, for any reason, Lessee agrees to do the following: a. Alter the characteristics of, or reduce the capacity of, the restaurant located at 3446 E. Coast Highway, Corona del Mar, Newport Beach, such that the automobile parking spaces available to, and under the control of, Lessee are, given consideration to any non -conforming rights that Lessee may have as of the date of this Agreement, sufficient to satisfy the parking requirements of the Newport Beach Municipal Code; b. Notify, in writing and within 30 days of the loss of the parking spaces, the Planning Director of the City of Newport Beach that automobile parking spaces previously available to Lessee as no longer available; and C. Prior to resuming business in the manner authorized prior to the loss of the parking spaces, Lessee shall submit to the Planning Director of the City of Newport Beach 3 Off -Site Parking Agreement 3446 E. Coast Highway a new or amended Off -Site Parking Agreement, giving Lessee the use of at least the same number of parking spaces required by the Lease Agreement (Exhibit "A") and this Agreement and shall further obtain such recommendations and approvals of such Agreement, by the Planning Commission and City Council of the City of Newport Beach, as required by the Charter of the City of Newport Beach and the Newport Beach Municipal Code. 3. Lessee shall fully perform all of the conditions of approval imposed by the Planning Commission and/or City Council of the City of Newport Beach in conjunction with the approval of Lessee's Application for Amendment of Conditional Use Permit 3678, Parking Modification and Accessory Outdoor Dining Permit. The minutes of the Planning Commission and/or City Council reflecting the conditions imposed are attached hereto, marked Exhibit `B", and are incorporated herein by reference. 4. Lessee shall, at least 90 days prior to the expiration of the written Lease Agreement (Exhibit "A") provide a new or amended parking agreement which grants the use of at least the same number of parking spaces required by this Agreement and contains terms no more restrictive than those contained in the existing Lease Agreement (Exhibit "A,) 5. This Agreement shall run with the property and shall bind the heirs, successors -in -interest, transferees, vendees and/or assignees of the parties hereto, and shall be recorded in the Office of the County Recorder of the County of Orange. This Agreement shall terminate on the date that the restaurant business on the restaurant property permanently ceases to be in accordance with Conditional Use Permit 3678 whether such cessation of operation occurs due to the lapse or termination of Conditional Use Permit 3678, expiration or termination of the Lease Agreement or for any other cause so long as such cessation of operation is permanent. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first written above. Attest: City Clerk CITY OF NEWPORT BEACH, a Municipal corporation By:yext--�41, Homer Bluda City Manager 4 Off -Site Parking Agreement 3446 E. Coast Highway CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California ss. County of �� CW\ c�sZ__ On U ' before me _0_0,4" VA� �� Date ' V \ Na J rtte and ltl nicer (e.g., "Jape Doe, Notary Public") ` v� L/ personally appeared \ ��11M^M' A C!'Wl��//)0 11` V\�. , l� Name(s) of Signer(s) CATHY FISHER Commission # 1174329 Z z Notary Public - California Orange County My Comm. Feb 21,2002 fflpersonally known to me ❑ proved to me on the basis of satisfactory evidence to be the perso (s) whose nam (s is/ re subscribed to the within ins,Uu,ment and acknowledged to me that he/ they xecuted the same in his/her their author' d capacity ies) and that y his/he /their signatur s n the instrument the perso (s or the entity upon behalf of which the perso (s) acted, executed the instrument. SS my hand and offi ial seal. Place Notary Seal Above Signatu a notary PLIblic OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Doc( nt e Title or Type of Document: U ' – Document Date: C7 J , Number of Pages: Q e h b t Signer(s) Other Than Named Above: Capacity(les) Claimed by Signer Signer's Name: ❑ Individual ❑ Corporate Officer— Title(s): ❑ Partner — ❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: RIGHT THUMBPRINT OF SIGNER © 1997 National Notary Association • 9350 De Soto Ave., P.O. Box 2402 - Chatsworth, CA 91313-2402 Prod. No. 5907 Reorder: Call Toll -Free 1-800.876-6827 Owner: SIBLING ASSOCIATES LLC, a California limited liability company Lessee: COCO'S RESTAURANTS, INC., a California corporation By: —ted Name: GLV i cC — V Title: >✓�� (Cie •- Off -Site Parking Agreement 3446 E. Coast Highway CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of 0"id County of _ 0n �7 personally appeared ,before me, __ j Name and Title of Officer (e.g., "Jane Doe, Notary Public") R /4 -- --® Name(s) df Signer(s) 1-1personallyknown to me - OR - (proved to me on the basisofsatisfactory evidence to be the person.( /\ whose nam e(./are`16ubscribed to the within instrument and acknowledged to me that he/.she7f xecuted the same in his/hef/fheff-a uthorized capacity(' , and that by his/heWthetrsignature(&6n the instrument the person(s);, or the entity upon behalf of which the person(&) -acted, �R executed the instrument. Denise Michelle Carroll String Comm. A 1159641 N NOTARY PUBUC-CAUFORNM WITNESS my hand and official seal. ORANGE COUNTY + Comm. Exp. Oct. 26, 2001 Signature oT Notary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: �-2N -f %1 Document Date: Number of Pages: Signer(s) Other Than Named Above: Capacity(les) Claimed by Signer(s) Signer's Name: Individual Corporate Officer Title(s): Partner — ❑ Limited ❑ General Attorney -in -Fact Trustee Guardian or Conservator Other: Signer Is Representing RIGHT THUMBPRINT OF SIGNER of Signer's Name: 1 i Individual Corporate Officer Title(s): Partner — ❑ Limited ❑ General Attorney -in -Fact Trustee Guardian or Conservator Other: Signer Is Representing RIGHT THUMBPRINT OF SIGNER .. of thumb here 9 1994 National Notary Association • 8236 Remmet Ave., P.O. Box 7184 • Canoga Park, CA 91309-7184 Prod. No. 5907 Reorder: Call Toll -Free 1-800-876-6827 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT State of California County of Vy�� ss. J Onlbefore me, Date aTie an Title of Officer (e.g., "Jan Doe, Notary Public personally appeared S Name(t) of Signer(s) personally known to me ❑ proved to me on the basis of satisfactory ot evidence Place Notary Seal Above 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. ITN S my h n an official seal. r Signature of Notary Public OPTIONAL Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: Document Date: Number of Pages Signer(s) Other Than Named Above: Capacity(ies) Claimed by Signer Signer's Name: ❑ Individual • Top of thumb here ❑ Corporate Officer — Title(s): ❑ Partner — ❑ Limited ❑ General ❑ Attorney in Fact ❑ Trustee ❑ Guardian or Conservator ❑ Other: Signer Is Representing: © 1997 National Notary Association • 9350 De Soto Ave., P.O. Box 2402 • Chatsworth, CA 91313-2402 Prod. No. 5907 Reorder: Call Toll -Free 1-800-876-6827 EXHIBIT A TO OFF-SITE PARKING AGREEMENT LEASE AGREEMENT EXHIBIT A Off -Site Parking Agreement 3446 E. Coast Highway AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION STANDARD INDUSTRIAUCOMMERCIAL SINGLE-TENANT LEASE - NET (DO NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS) 1. Basic Provisions ("Basic Provisions") 1.1 Parties: This Lease ("Lease"), dated for reference purposes only June 1 1999 , is made by and between SIBLING ASSOCIATES I, a California general partnership ("Lessor") and COCO'S RESTAURANTS, INC., a California corporation ("Lessee"), (collectively the "Parties;' or individually a "Party"). 1.2 Premises: That certain real property, including all improvements therein or to be provided by Lessor under the terms of this Lease, and commonly known as 3446 East Coast Highway, Corona del Mar-Newport Beach, located in the County of Orange , State of California and generally described as (describe briefly the nature of the property and, if applicable, the "Project", if the property is located within a Project) one story building (the "Building") containing approximately 5871 square feet, together with Parking Arpa_A and Parking Area B as shown on Exhibit "A" hereto. See 952.1 of Addendum for determination of exact Square footage and rent adjustment. See Exhibit "A" for a legal description of the Premises. ("Premises"). (See also Paragraph 2) 1.3 Term: 15 years and 0 months ("Original Term") commencing July 1, 1999 ("Commencement Date") and ending June 30. 2014 ("Expiration Date"). (See also Paragraph 3) 1.4 Early Possession: [AP SRI of Addendum ("Early Possession Date"). (See also Paragraphs 3.2 and 3.3) 1.5 Base Rent: $16.145.00 per month ("Base Rent"), payable on the 1st day of each month commencing July 1, 1999 (see 952 of Addendum) (See also Paragraph 4) ❑ If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted. 1.6 Base Rent Paid Upon Execution: $ N/A as Base Rent for the period 1.7 Security Deposit: $ N/A ("Security Deposit"). (See also Paragraph 5) 1.8 Agreed Use: COCO's Bakery and Restaurant, COCO's Cafe & Bakery or other restaurant concept developed by Lessee and approved by Lessor (See also Paragraph 6) 1.9 Insuring Party. Lessor is the "Insuring Party" unless otherwise stated herein. (See also Paragraph 8) 1.10 Real Estate Brokers: (See also Paragraph 15) (a) Representation: The following real estate brokers (collectively, the "Brokers") and brokerage relationships exist in this transaction (check applicable boxes): ❑ N/A represents Lessor exclusively ("Lessor's Broker"); ❑ N/A represents Lessee exclusively ("Lessee's Broker"); or ❑ N/A represents both Lessor and Lessee ("Dual Agency"). (b) Payment to Brokers: Upon execution and delivery of this Lease by both Parties, Lessor shall pay to the Broker the fee agreed to in their separate written agreement (or if there is no such agreement, the sum of % of the total Base Rent for the brokerage services rendered by said Broker). 1.11 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by FRD ACQUISITION CO., a Delaware corporation ('Guarantor' '). (See also Paragraph 37) 1.12 Addenda and Exhibits. Attached hereto is an Addendum or Addenda consisting of Paragraphs 50 through 59 and Exhibits "A" all of which constitute a part of this Lease. 2. Premises. See 451 and 954 of Addendum. e, or that may have been used in calculating rental, is an approximation which the Parties agree is reasonable and the rental based th n is not ' ct to revision whether or not the actual size is more or less. 2.2 'tion. Lessor shall deliver the Premises to Lessee broom clean and free of debris on the Commenceme to or the Early Possession Date, w ver first occurs ("Start Date"), and, so long as the required service contracts described in P raph 7.1(b) below are obtained by Lessee within ' (30) days following the Start Date, warrants that the existing electrical, plumbin i sprinkler, lighting, heating, ventilating and air conditioning ems ("HVAC"), loading doors, if any, and all other such element ' the Premises, other than those constructed by Lessee, shall be in g operating condition on said date and that the structur ements of the roof, bearing walls and foundation of any buildings on the Premises "Building") shall be free of material defects non-compliance with said warranty exists as of the Start Date, Lessor shall, as Lessor's sole ob n with respect to such matter, a as otherwise provided in this Lease, promptly after receipt of written notice from Lessee setting forth with spa ' ' ' the nature and ex of such non-compliance, rectify same at Lessor's expense. If, after the Start Date, Lessee does not give Lessor written no f any n mpliance with this warranty within: (i) one year as to the surface of the roof and the structural portions of the roof, foundations and be ' walls, (ii) six (6) months as to the HVAC systems, (iii) thirty (30) days as to the remaining systems and other elements of the Buildin rection ch non-compliance shall be the obligation of Lessee at Lessee's sole cost and expense. 2.3 Compliance. Lessor warrants that provements on the Premises com ith all applicable laws, covenants or restrictions of record, building codes, regulations and ordces ("Applicable Requirements") in effect on Start Date. Said warranty does not apply to the use to which Lessee will put the ises or to any Alterations or Utility Installations (as define ' aragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee is r risible for determining whether or not the zoning is appropriate for Less ' intended use, and acknowledges that past uses of the Pre ' s may no longer be allowed. If the Premises do not comply with said warranty, Le shall, except as otherwise provided, promptl r receipt of written notice from Lessee setting forth with specificity the nature and extent of suc n-compliance, rectify the same at sor's expense. If Lessee does not give Lessor written notice of a non-compliance with this warranty wi i six (6) months followi a Start Date, correction of that non-compliance shall be the obligation of Lessee at Lessee's sole cost and expense. If plicable irements are hereafter changed (as opposed to being in existence at the Start Date, which is addressed in Paragraph 6.2(e) belo so as east a! ati 1V PAGE 1 Initials 01997 — American Industrial Real Estate Association FORM 2 N-R-2/97 ch Capital Expenditure is required during the last two (2) years of this Lease and the cost thereof exceeds six (6) months' Base Rent, Le e may ad terminate this Lease unless Lessor notifies Lessee, in writing, within ten (10) days after receipt of Lessee's termination a that Lessor ha ected to pay the difference between the actual cost thereof and the amount equal to six (6) months' Base Rent. I ssee elects termination, Ldtsee shall immediately cease the use of the Premises which requires such Capital Expenditure and del'v o Lessor written notice specifying a ination date at least ninety (90) days thereafter. Such termination date shall, however, in no nt be earlier than the last day that Lessee cou all utilize the Premises without commencing such Capital Expenditure. (b) If such Capital enditure is not the result of the specific and unique use of the Premises�essueresuch as, governmentally mandated seismic modifications), ih Lessor and Lessee shall allocate the obligation to pay for costs psuant to the provisions of Paragraph 7.1(c); provided, however, that ch Capital Expenditure is required during the last years of this Lease or if Lessor reasonably determines that it is not economically feasible t its share thereof, Lessor shall have the,_W on to terminate this Lease upon ninety (90) days prior written notice to Lessee unless Lessee notifies sor, in writing, within ten (10) days,61ter receipt of Lessor's termination notice that Lessee will pay for such Capital Expenditure. If Lessor does not t to terminate, and fail tender its share of any such Capital Expenditure, Lessee may advance such funds and deduct same, with Interest, fro nt until Les s share of such costs have been fully paid. If Lessee is unable to finance Lessor's share, or if the balance of the Rent due and pay f e remainder of this Lease is not sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the right to terminate this Le thirty (30) days written notice to Lessor. (c) Notwithstanding the above, the provisions ncerning Cap Expenditures are intended to apply only to non-voluntary, unexpected, and new Applicable Requirements. If the C al Expenditures are ins triggered by Lessee as a result of an actual or proposed change in use, change in intensity of use, or modif• ion to the Premises then, and in 1 event, Lessee shall be fully responsible for the cost thereof, and Lessee shall not have any right t rminate this Lease. 2.4 Acknowledgements. Le acknowledges that: (a) it has been advised by Lessor a r Brokers to satisfy itself with respect to the condition of the Premises (incl g but not limited to the electrical, HVAC and fire sprinkler systems, curity, environmental aspects, and compliance with Applicable Irements), and their suitability for Lessee's intended use, (b) Lessee has ma uch investigation as it deems necessary with referenc such matters and assumes all responsibility therefor as the same relate to its occu cy of the Premises, and (c) neither Lessor, or's agents, nor any Broker has made any oral or written representations or warranties with respe o said matters other than as set f in this Lease. In addition, Lessor acknowledges that: (a) Broker has made no representations, prom or warranties concerni essee's ability to honor the Lease or suitability to occupy the Premises, and (b) it is Lessor's sole responsibility to i tigate the fine capability and/or suitability of all proposed tenants. to H e Ste t Bale 1: ... ee m. tl an tei o meapant of in., P. .... suel event, I:easea shall be espe sible la ai) ieeessftry -eerreet+vewrerk. 3. Term. 3.1 Term. The Commencement Date, Expiration Date and Original Term of this Lease are as specified in Paragraph 1.3. 3.2 Early Possession. If Lessee totally or partially occupies the Premises prior to the Commencement Date, the obligation to pay Base Rent shall be abated for the period of such early possession. All other terms of this Lease (including but not limited to the obligations to pay Real Property Taxes and insurance premiums and to maintain the Premises) shall, however, be in effect during such period. Any such early possession shall not affect the Expiration Date. 3.3 Delay In Possession. Lessor agrees to use its best commercially reasonable efforts to deliver possession of the Premises to Lessee by the Commencement Date. If, despite said efforts, Lessor is unable to deliver possession as agreed, Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease. Lessee shall not, however, be obligated to pay Rent or perform its other obligations until it receives possession of the Premises. If possession is not delivered within sixty (60) days after the Commencement Date, Lessee may, at its option, by notice in writing within ten (10) days after the end of such sixty (60) day period, cancel this Lease, in which event the Parties shall be discharged from all obligations hereunder. If such written notice is not received by Lessor within said ten (10) day period, Lessee's right to cancel shall terminate. Except as otherwise provided, if possession is not tendered to Lessee by the Start Date and Lessee does not terminate this Lease, as aforesaid, any period of rent abatement that Lessee would otherwise have enjoyed shall run from the date of delivery of possession and continue for a period equal to what Lessee would otherwise have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of Lessee. If possession of the Premises is not delivered within four (4) months after the Commencement Date, this Lease shall terminate unless other agreements are reached between Lessor and Lessee, in writing. 3.4 Lessee Compliance. Lessor shall not be required to tender possession of the Premises to Lessee until Lessee complies with its obligation to provide evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee shall be required to perform all of its obligations under this Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessor's election to withhold possession pending receipt of such evidence of insurance. Further, if Lessee is required to perform any other conditions prior to or concurrent with the Start Date, the Start Date shall occur but Lessor may elect to withhold possession until such conditions are satisfied. 4. Rent. See also paragraph 52 of addendum 4.1. Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease (except for the Security Deposit) are deemed to be rent ("Rent"), 4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful money of the United States, without offset or deduction (except as specifically permitted in this Lease), on or before the day on which it is due. Rent for any period during the term hereof which is for less than one (1) full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rent shall be made to Lessor at its address stated herein or to such other persons or place as Lessor may from time to time designate in writing. Acceptance of a payment which is less than the amount then due shall not be a waiver of Lessor's rights to the balance of such Rent, regardless of Lessor's endorsement of any check so stating. 5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as security for Lessee's faithful performance of its obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or retain all or any portion of said Security Deposit for the payment of any amount due Lessor or to reimburse or compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or incur by reason thereof. If Lessor uses or applies all or any portion of said Security Deposit, Lessee shall within ten (10) days after written request therefor deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. If the Base Rent increases during the term of this Lease, Lessee shall, upon written request from Lessor, deposit additional moneys with Lessor so that the total amount of the Security Deposit shall at all times bear the same proportion to the increased Base Rent as the initial Security Deposit bore to the initial Base Rent. Should the Agreed Use be amended to accommodate a material change in the business of Lessee or to accommodate a sublessee or assignee, Lessor shall have the right to increase the Security Deposit to the extent necessary, in Lessor's reasonable judgment, to account for any increased wear and tear that the Premises may suffer as a result thereof. If a change in control of Lessee occurs during this Lease and following such change the financial condition of Lessee is, in Lessor's reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with Lessor as shall be sufficient to cause the Security Deposit to be at a commercially reasonable level based on said change in financial condition, Lessor shall not be required to keep the Security Deposit separate from its general accounts. Within fourteen (14) days after the expiration or termination of this Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and otherwise within thirty (30) days after the Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of the Security Deposit not used or applied by Lessor. No part of the Security Deposit shall be considered to be held in trust, to bear interest or to be prepayment for any monies to be paid by Lessee under this Lease. PAGE 2 Initials FORM 04N-R-2197 6. Use. See also 953 of Addendum. 6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, creates damage. waste or a nuisance, or that disturbs owners and/or occupants of, or causes damage to neighboring properties. Lessor shall not unreasonably withhold or delay its consent to any written request for a modification of the Agreed Use, so long as the same will not impair the structural integrity of the improvements on the Premises or the -mechanical or electrical systems therein, is not significantly more burdensome to the Premises. If Lessor elects to withhold consent, Lessor shall within five (5) business days after such request give written notification of same, which notice shall Include an explanation of Lessor's objections to the change in use. 6.2 Hazardous Substances. (a) Reportable Uses Require Consent. The term "Hazardous Substance" as used in this Lease shall mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation, or release, either by itself or in combination with other materials expected to be on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a basis for potential liability of Lessor to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substances shall include, but not be limited to, hydrocarbons. petroleum, gasoline, and/or crude oil or any products, by-products or fractions thereof. Lessee shall not engage in any activity in or on the Premises which constitutes a Reportable Use of Hazardous Substances without the express prior written consent of Lessor and timely compliance (at Lessee's expense) with all Applicable Requirements. "Reportable Use"shall mean (i) the installation or use of any above or below ground storage tank, (ii) the generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit from, or with respect to which a report, notice, registration or business plan is required to be filed with, any governmental authority, and/or (iii) the presence at the Premises of a Hazardous Substance with respect to which any Applicable Requirements requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in the normal course of the Agreed Use, so long as such use is in compliance with all Applicable Requirements, is not a Reportable Use, and does not expose the Premises or neighboring property to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In addition, Lessor may condition its consent to any Reportable Use upon receiving such additional assurances as Lessor reasonably deems necessary to protect itself, the public, the Premises and/or the environment against damage, contamination, injury and/or liability, including, but not limited to, the installation (and removal on or before Lease expiration or termination) of protective modifications (such as concrete encasements) and/or increasing the Security Deposit. (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that a Hazardous Substance has come to be located in, on, under or about the Premises, other than as previously consented to by Lessor, Lessee shall immediately give written notice of such fact to Lessor, and provide Lessor with a copy of any report, notice, claim or other documentation which it has concerning the presence of such Hazardous Substance. (c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be spilled or released in, on, under, or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, at Lessee's expense, take all investigatory and/or remedial action reasonably recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises or neighboring properties, that was caused or materially contributed to by Lessee, or pertaining to or involving any Hazardous Substance brought onto the Premises during the term of this Lease, by or for Lessee, or any third party. (d) Lessee Indemnification. Lessee shall indemnity, defend and hold Lessor, its agents, employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents and/or damages, liabilities, judgments, claims, expenses, penalties, and attorneys' and consultants' fees arising out of or involving any Hazardous Substance brought onto the Premises by or for Lessee, or any third party (provided, however, that Lessee shall have no liability under this Lease with respect to underground migration of any Hazardous Substance under the Premises from adjacent properties). Lessee's obligations shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or suffered by Lessee, and the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease. No termination, cancellation or release agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this Lease with respect to Hazardous Substances, unless specifically so agreed by Lessor in writing at the time of such agreement. (e) Lessor Indemnification. Lessor and its successors and assigns shall indemnity, defend, reimburse and hold Lessee, its employees and lenders, harmless from and against any and all environmental damages, including the cost of remediation, which existed as a result of Hazardous Substances on the Premises prior to the Start Date or which are caused by the gross negligence or willful misconduct of Lessor, its agents or employees. Lessor's obligations, as and when required by the Applicable Requirements, shall include, but not be limited to, the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease. (f) Investigations and Remediations. Lessor shall retain the responsibility and pay for any investigations or remediation measures required by governmental entities having jurisdiction with respect to the existence of Hazardous Substances on the Premises prior to the Start Date, unless such remediation measure is required as a result of Lessee's use (including "Alterations", as defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible for such payment. Lessee shall cooperate fully in any such activities at the request of Lessor, including allowing Lessor and Lessor's agents to have reasonable access to the Premises at reasonable times in order to carry out Lessor's investigative and remedial responsibilities. (g) Lessor Termination Option. If a Hazardous Substance Condition occurs during the term of this Lease, unless Lessee is legally responsible therefor (in which case Lessee shall make the investigation and remediation thereof required by the Applicable Requirements and this Lease shall continue in full force and effect, but subject to Lessor's rights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor's option, either (i) investigate and remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at Lessor's expense, in which event this Lease shall continue in full force and effect, or (fi) if the estimated cost to remediate such condition exceeds twelve (12) times the then monthly Base Rent or $100.000, whichever is greater, give written notice to Lessee, within thirty (30) days after receipt by Lessor of knowledge of the occurrence of such Hazardous Substance Condition. of Lessor's desire to terminate this Lease as of the date sixty (60) days following the date of such notice. In the event Lessor elects to give a termination notice, Lessee may, within ten (10) days thereafter, give written notice to Lessor of Lessee's commitment to pay the amount by which the cost of the remediation of such Hazardous Substance Condition exceeds an amount equal to twelve (12) times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within thirty (30) days following such commitment. In such event, this Lease shall continue in full force and effect, and Lessor shall proceed to make such remediation as soon as reasonably possible after the required funds are available. If Lessee does not give such notice and provide the required funds or assurance thereof within the time provided, this Lease shall terminate as of the date specified in Lessor's notice of termination. 6.3 Lessee's Compliance with Applicable Requirements. Except as otherwise provided in this Lease, Lessee shall, at Lessee's sole expense, fully, diligently and in a timely manner, materially comply with all Applicable Requirements, the requirements of any applicable fire insurance underwriter or rating bureau, and the recommendations of Lessor's engineers and/or consultants which relate in any manner to the Premises, without regard to whether said requirements are now in effect or become effective after the Start Date. Lessee shall, within ten (10) days after receipt of Lessor's written request, provide Lessor with copies of all permits and other documents, and other information evidencing . Lessee's compliance with any Applicable Requirements specified by Lessor, and shall immediately upon receipt, notify Lessor in writing (with copies of any documents involved) of any threatened or actual claim, notice, citation, warning, complaint or report pertaining to or involving the failure of Lessee or the Premises to comply with any Applicable Requirements. 6.4 Inspection; Compliance. Lessor and Lessor's "Lender" (as defined in Paragraph 30 below) and consultants shall have the right to enter into Premises at any time, in the case of an emergency, and otherwise at reasonable times, for the purpose of inspecting the condition of the Premises and for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid by Lessor, unless a violation of Applicable Requirements, or a contamination is found to exist or be imminent, or the inspection is requested or ordered by a governmental authority. In such case, Lessee shall upon request reimburse Lessor for the cost of such inspections, so Ion such inspection Is reasonably related to the violation or contamination. PAGE 3 Initials _ FORM 04N -R-2/97 7. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations. 7.1 Lessee's Obligations. (a) In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable Requirements), 7.2 (Lessor's Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises, Utility Installations, and Alterations in good order, condition and repair (whether or not the portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee's use, any prior use, the elements or the age of such portion of the Premises), including, but not limited to, all equipment or facilities, such as plumbing, heating, ventilating, air-conditioning, electrical, lighting facilities, boilers, pressure vessels, fire protection system, fixtures, walls (interior and exterior), foundations, ceilings, roofs, floors, windows, doors, plate glass, skylights, landscaping, driveways, parking lots, fences, retaining walls, signs, sidewalks and parkways located in, on, or adjacent to the Premises. Lessee, in keeping the Premises in good order, condition and repair, shall exercise and perform good maintenance practices, specifically including the procurement and maintenance of the service contracts required by Paragraph 7.1(b) below. Lessee's obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition and state of repair. Lessee shall, during the term of this Lease, keep the exterior appearance of the Building in a first-class condition consistent with the exterior appearance of other similar facilities of comparable age and size in the vicinity, including, when necessary, the exterior repainting of the Building. (b) Service Contracts. Lessee shall, at Lessee's sole expense, procure and maintain contracts, with copies to Lessor, in customary form and substance for, and with contractors specializing and experienced in the maintenance of the following equipment and improvements, if any, if and when installed on the Premises: (i) HVAC equipment, (ii) boiler, and pressure vessels, (iii) fire extinguishing systems, including fire alarm and/or smoke detection, (iv) landscaping and irrigation systems, (v) roof covering and drains, (vi) driveways and parking lots, (vii) clarifiers (viii) basic utility feed to the perimeter of the Building, and (ix) any other equipment, if reasonably required by Lessor. (c) Replacement. Subject to Lessee's indemnification of Lessor as set forth in Paragraph 8.7 below, and without relieving Lessee of liability resulting from Lessee's failure to exercise and perform good maintenance practices, if the Basic Elements described in Paragraph 7.1(b) cannot be repaired other than at a cost which is in excess of 50% of the cost of replacing such Basic Elements, then such Basic Elements shall be replaced by Lessor, and the cost thereof shall be prorated between the Parties and Lessee shall only be obligated to pay, each month during the remainder of the term of this Lease, on the date on which Base Rent is due, an amount equal to the product of multiplying the cost of such replacement by a fraction, the numerator of which is one, and the denominator of which is the number of months of the useful life of such replacement as such useful life is specified pursuant to Federal income tax regulations or guidelines for depreciation thereof (including interest on the unamortized balance as is then commercially reasonable in the judgment of Lessor's accountants), with Lessee reserving the right to prepay its obligation at any time. 7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 9 (Damage or Destruction) and 14 (Condemnation), it is intended by the Parties hereto that Lessor have no obligation, in any manner whatsoever, to repair and maintain the Premises, or the equipment therein, all of which obligations are intended to be that of the Lessee. It is the intention of the Parties that the terms of this Lease govern the respective obligations of the Parties as to maintenance and repair of the Premises, and they expressly waive the benefit of any statute now or hereafter in effect to the extent it is inconsistent with the terms of this Lease. 7.3 Utility Installations; Trade Fixtures; Alterations. furniture, furnishings, (a) Definitions; Consent Required. The term "Utility InstallationsXY to all floor and window coverings, air lines, power panels, electrical distribution, security and fire protection systems, communicatio s, lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises. The term "Trade Fixtures" shall mean Lessee's achinery and equipment that can be removed without doing material damage to the Premises. The term "Alterations" shall mean any modification of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion. "Lessee Owned Alterations and/or Utility Installations" are defined as Alterations and/or Utility Installations made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a). Lessee shall not make any Alterations or Utility Installations to the Premises without Lessor's prior written consent. Lessee may, however, make non-structural Utility Installations to the interior of the Premises (excluding the roof) without such consent but upon notice to Lessor, as long as they are not visible from the outside, do not involve puncturing, relocating or removing the roof or any existing walls, and the cumulative cost thereof during this Lease as extended does not exceed $50,000 in the aggregate or $10,000 in any one year. (b) Consent. Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with detailed plans. Consent shall be deemed conditioned upon Lessee's: (i) acquiring all applicable governmental permits, (ii) furnishing Lessor with copies of both the permits and the plans and specifications prior to commencement of the work, and (iii) compliance with all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed in a workmanlike manner with good and sufficient materials. 'Lessee shall promptly upon completion furnish Lessor with as -built plans and specifications. For work which costs an amount equal to the greater of one month's Base Rent, or $10,000, Lessor may condition its consent upon Lessee providing a lien and completion bond in an amount equal to one and one-half times the estimated cost of such Alteration or Utility Installation and/or upon Lessee's posting an additional Security Deposit with Lessor. (c) Indemnification. Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic's or materialmen's lien against the Premises or any interest therein. Lessee shall give Lessor not less than ten (10) days' notice prior to the commencement of any work in, on or about the Premises, and Lessor shall have the right to post notices of non -responsibility. If Lessee shall contest the validity of any such lien, claim or demand, then Lessee shall, at its sole expense defend and protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof. If Lessor shall require, Lessee shall furnish a surety bond in an amount equal to one and one-half times the amount of such contested lien, claim or demand, indemnifying Lessor against liability for the same. If Lessor elects to participate in any such action, Lessee shall pay Lessor's attorneys' fees and costs. 7.4 Ownership; Removal; Surrender; and Restoration. and 7.4(d) (a) Ownership. Subject to Lessor's right to re or elect ownership as hereinafter provided, all Alterations and Utility Installations made by Lessee shall be the essee, but considered a part of the Premises. Lessor may, at any time, elect in writing to be the owner of all o i ied part of the Lessee Owned Alterations and Utility Installations. Unless otherwise .instructed per Paragraph 7.4(b)Zereof, all Lessee Owned Alterations and Utility Installations shall, at the expiration or termination of this Lease, become the property of Lessor and be surrendered by Lessee with the Premises. (b) Removal. By delivery to Lessee of written notice from Lessor not earlier than ninety (90) and not later than thirty (30) days prior to the end of the term of this Lease, Lessor may require that any or all Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of this Lease. Lessor may require the removal at any time of all or any part of any Lessee Owned Alterations or Utility Installations made without the required consent. (c) Surrender/Restoration. Lessee shall surrender the Premises by the Expiration Date or any earlier termination date, with all of, the improvements, parts and surfaces thereof broom clean and free of debris, and in good operating order, condition arid state of repair, ordinary wear and tear excepted. "Ordinary wear and tear" shall not include any damage or deterioration that would have been prevented by good maintenance practice. Lessee shall repair any damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee Owned Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any storage tank installed by or for Lessee, and the removal, replacement, or remediation of any soil, material or groundwater contaminated by Lessee. Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express written consent of Lessor shall constitute a holdover under the provisions of Paragraph 26 below. (d) [see next page] # For work involving structural modifications, PAGE InitialsQ . Fp9j�7 4N -R-2/97 (d) The parties acknowledge that Lessee owns valuable trademark and trade dress rights associated with the name "Coco's Bakery Restaurant" and "Coco's Cafe & Bakery," and that certain Trade Fixtures, Alterations or Utility Installations may contain elements protected by the applicable trademark and trade dress laws. Therefore, notwithstanding anything to the contrary contained herein, within ten (10) days after the expiration or earlier termination of the Lease, Lessee shall have the right at Lessee's sole cost to make such changes and alterations to the Premises as are necessary to protect its trademarks and trade dress rights and to prevent the Premises from being recognized by the general public as a "Coco's Bakery Restaurant" or "Coco's Cafe & Bakery". The immediately preceding sentence does not diminish Lessee's obligation to leave the Premises in the condition required in 7.4(c). � � Page 4a v Initials 1 8. Insurance; Indemnity. 8.1 Payment For Insurance. Lessee shall pay for all insurance required under Paragraph 8 except to the extent of the cost attributable to liability insurance carried by Lessor under Paragraph 8.2(b) in excess of $2,000.000 per occurrence. Premiums for policy periods commencing prior to or extending beyond the Lease term shall be prorated to correspond to the Lease term. Payment shall be made by Lessee to Lessor within ten (10) days following receipt of an invoice. 8.2 Liability Insurance. (a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability Policy of Insurance protecting Lessee and Lessor against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $2,000,000 per occurrence with an "Additional Insured -Managers or Lessors of Premises Endorsement" and contain the "Amendment of the Pollution Exclusion Endorsement" for damage caused by heat. smoke or fumes from a hostile fire. The Policy shall not contain any intra -insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Lease as an "insured contract" for the performance of Lessee's indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the liability of Lessee nor relieve Lessee of any obligation hereunder. All insurance carried by Lessee shall be primary to and not contributory with any similar insurance carried by Lessor, whose insurance shall be considered excess insurance only. (b) Carried by Lessor. Lessor shall maintain liability insurance as described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance required to be maintained by Lessee. Lessee shall not be named as an additional insured therein. 8.3 Property Insurance — Building, Improvements and Rental Value. (a) Building and Improvements. The Insuring Party shall obtain and keep in force a policy or policies in the name of Lessor, with loss payable to Lessor, any groundlessor, and to any Lender(s) insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full replacement cost of the Premises, as the same shall exist from time to time, or the amount required by any Lenders, but in no event more than the commercially reasonable and available insurable value thereof. If Lessor is the Insuring Party, however, Lessee Owned 'Alterations and Utility Installations, Trade Fixtures, and Lessee's personal property shall be insured by Lessee under Paragraph 8.4 rather than by Lessor. If the coverage is available and commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (exeepf the perils of flood and/or earthquake ), including coverage for debris removal and the enforcement of any Applicable Requirements requiring the upgrading, demolition, reconstruction or replacement of any portion of the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause, waiver of subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of not less than the adjusted U.S, Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where the Premises are located. If such insurance coverage has a deductible clause, the deductible amount shall not exceed $1,000 per occurrence, and Lessee shall be liable for such deductible amount in the event of an Insured Loss. (b) Rental Value. The Insuring Party shall obtain and keep in force a policy or policies in the name of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent for one (1) year. Said insurance shall provide that in the event the Lease is terminated by reason of an insured loss, the period of indemnity for such coverage shall be extended beyond the date of the completion of repairs or replacement of the Premises, to provide for one full year's loss of Rent from the date of any such loss. Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflect the projected Rent otherwise payable by Lessee, for the next twelve (12) month period. Lessee shall be liable for any deductible amount in the event of such loss. (c) Adjacent Premises. If the Premises are part of a larger building, or of a group of buildings owned by Lessor which are adjacent to the Premises, the Lessee shall pay for any increase in the premiums for the property insurance of such building or buildings if said increase is caused by Lessee's acts, omissions, use or occupancy of the Premises. 8.4 Lessee's Property/Business Interruption Insurance. (a) Property Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. Such insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000 per occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of personal property, Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee shall provide Lessor with written evidence that such insurance is in force. (b) Business Interruption. Lessee shall obtain and maintain loss of income and extra expense insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable to all perils commonly insured against by prudent lessees in the business of Lessee or attributable to prevention of access to the Premises as a result of such perils. (c) No Representation of Adequate Coverage. Lessor makes no representation that the limits or forms of coverage of insurance specified herein are adequate to cover Lessee's property, business operations or obligations under this Lease. /A-, V11 M 8.5 Insurance Policies. Insurance required herein shall be by companies duly licensed or admitted to transact siness in the state where the Premises are located, and maintaining during the policy term a "General Policyholders Rating" of at least as set forth in the Lmost current issue of "Best's Insurance Guide", or such other rating as may be required by a Lender. Lessee shall not do or permit to be done t anything which invalidates the required insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of N such insurance or certificates evidencing the existence and amounts of the required insurance. No such policy shall be cancelable or subject to modification except a er days prior written notice to Lessor. Lessee shall, at least thirty (30) days prior to the expiration of such policies, furnish Lessor with evidence of renewals or "insurance binders" evidencing renewal thereof, or Lessor may order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee to Lessor upon demand. Such policies shall be for a term of at least one year, or the length of the remaining term of this Lease, whichever is less. If either Party shall fail to procure and maintain the insurance required to be carried by it, the other Party may, but shall not be required to, procure and maintain the same. 8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor each hereby release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property arising out of or incident to the perils required to be insured against herein. The effect of such releases and waivers is not limited by the amount of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to have their respective property damage insurance carriers waive any right to subrogation that such companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not invalidated thereby. 8.7 Indemnity. Except for Lessor's gross negligence or willful misconduct, Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor's master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, liens, judgments, penalties, attorneys' and consultants' fees, expenses and/or liabilities arising out of, involving, or in connection with, the use and/or occupancy of the Premises by Lessee. If any action or proceeding is brought against Lessor by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be defended or indemnified. 8.8 Exemption of Lessor from Liability. Lessor shall not be liable for injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessee's employees, contractors, invitees, customers, or any other person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upon the Premises or upon other portions of the Building of which the Premises are a part, or from other sources or places. Lessor shall not be liable for any damages arising from any act or neglect of any other tenant of Lessor. Notwithstanding Lessor's negligence or breach of this Lease, Lessor shall under no circumstances be liable for injury to Lessee's business or for any loss of income or profit therefrom. See also 960 of Addendum. 9. Damage or Destruction. 9.1 Definitions. (a) "Premises Partial Damage" shall mean damage or destruction to the improvements on the Premises, other than Lessee Owned Alterations and Utility Installations, which can reasonably be repaired in six (6) months or less from the date of the a or destruct' n. PAGE 5 itials ___ Lessor shall notify Lessee in writing within thirty (30) days from the date of the damage or destruction as to whether or not the damage is Partial or Total. (b) "Premises Total Destruction" shall mean damage or destruction to the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in six (6) months or less from the date of the damage or destruction. Lessor shall notify Lessee in writing within thirty (30) days from the date of the damage or destruction as to whether or not the damage is Partial or Total. (c) "Insured Loss" shall mean damage or destruction to improvements on the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurance described in Paragraph 8.3(a). irrespective of any deductible amounts or coverage limits involved. (d) "Replacement Cost" shall mean the cost to repair or rebuild the improvements owned by Lessor at the time of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by the operation of Applicable Requirements, and without deduction for depreciation. (e) "Hazardous Substance Condition" shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the Premises. 9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and this Lease shall continue in full force and effect; provided, however, that Lessee shall, at Lessor's election, make the repair of any damage or destruction the total cost to repair of which is $10,000 or less. and, in such event. Lessor shall make any applicable insurance proceeds available to Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required insurance was not to force or the insurance proceeds are not sufficient to effect such repair, the Insuring Party shall promptly contribute the shortage in proceeds (except as to the deductible which is Lessee's responsibility) as and when required to complete said repairs. In the event, however, such shortage was due to the fact that, by reason of the unique nature of the improvements, full replacement cost insurance coverage was not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same, or adequate assurance thereof. within ten (10) days following receipt of written notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof within said ten (10) day period, the party responsible for making the repairs shall complete them as soon as reasonably possible and this Lease shall remain in full force and effect. If such funds or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within ten (10) days thereafter to: (i) make such restoration and repair as is commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease shall remain in full force and effect, or have this Lease terminate thirty (30) days thereafter. Lessee shall not be entitled to reimbursement of any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3. notwithstanding that there may be some insurance coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party. 9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss occurs, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee's expense), Lessor may either: (f) repair such damage as soon as reasonably possible at Lessor's expense, in which event this Lease shall continue in full force and effect, or (ii) terminate this Lease by giving written notice to Lessee within thirty (30) days after receipt by Lessor of knowledge of the occurrence of such damage. Such termination shall be effective sixty (60) days following the date of such notice. In the event Lessor elects to terminate this Lease, Lessee shall have the right within ten (10) days after receipt of the termination notice to give written notice to Lessor of Lessee's commitment to pay for the repair of such damage without reimoursement from Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within thirty (30) days after making such commitment. In such event this Lease shall continue in full force and effect, and Lessor shall proceed to make such repairs as soon as reasonably possible after the required funds are available. If Lessee does not make the required commitment, this Lease shall terminate as of the date specified in the termination notice. 9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, this Lease shall terminate sixty (60) days following such Destruction. If the damage or destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall have the right to recover Lessor's damages from Lessee, except as provided in Paragraph 8.6. 9.5 Damage Near End of Term. If at any time during the last six (6) months of this Lease there is damage for which the cost to repair exceeds one 11 i month's Base Rent, whether or not an Insured Loss, Lessor may terminate this Lease effective sixty (60) days following the date of occurrence of such damage by giving a written termination notice to Lessee within thirty (30) days after the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable option to extend this Lease or to purchase the Premises, then Lessee may preserve this Lease by, (a) exercising such option and (b) providing Lessor with any shortage in insurance proceeds (or adequate assurance thereof) needed to make the repairs on or before the earlier of (i) the date which is ten days after Lessee's receipt of Lessor's written notice purporting to terminate this Lease, or (ii) the day prior to the date upon which such option expires. If Lessee duly exercises such option during such period and provides Lessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor's commercially reasonable expense, repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option and provide such funds or assurance during such period, then this Lease shall terminate on the date specified in the termination notice and Lessee's option shall be extinguished. 9.6 Abatement of Rent; Lessee's Remedies. (a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Rent payable by Lessee for the period required for the repair, remediation or restoration of such damage shall be abated in proportion to the degree to which Lessee's use of the Premises is impaired, but not to exceed the proceeds received from the Rental Value insurance. All other obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such damage, destruction, remediation, repair or restoration except as provided herein. (b) Remedies. If Lessor shall be obligated to repair or restore the Premises and does not commence, in a substantial and meaningful way, such repair or restoration within ninety (90) days after such obligation shall accrue, Lessee may, at any time prior to the commencement of such repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of Lessee's election to terminate this Lease on a date not less than sixty (60) days following the giving of such notice. If Lessee gives such notice and such repair or restoration is not commenced within thirty (30) days thereafter, this Lease shall terminate as of the date specified in said notice. If the repair or restoration is commenced within said thirty (30) days, this Lease shall continue in full force and effect. "Commence" shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual work on the Premises, whichever first occurs. 9.7 Termination -Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's Security Deposit as has not been, or is not then required to be, used by Lessor, 9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease shall govern the effect of any damage to or destruction of the Premises with respect to the termination of this Lease and hereby waive the provisions of any present or future statute to the extent inconsistent herewith. 10. Real Property Taxes. See also 457 of Addendum. 10.1 Definition of "Real Property Taxes:' As used herein, the term "Real Property Taxes" shall include any form of assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax (other than inheritance, personal income or estate taxes); improvement bond: and/or license fee imposed upon or levied against any legal or equitable interest of Lessor in the Premises, Lessor's right to other income therefrom, and/or Lessor's business of leasing, by any authority having the direct or indirect power to tax and where the funds ene ate PAGE 6 Initials FORM 204N -R--2/97 with reference to the Building address and where the proceeds so generated are to be applied by the city, county or other local taxing authority of a jurisdiction within which the Premises are located. The term "Real Property Taxes" shall also include any tax, fee, levy, assessment or charge, or any increase therein, imposed by reason of events occurring during the term of this Lease, including but not limited to, a change in the ownership of the Premises. 10.2 (a) Payment of Taxes.pLessee shall pay the Real Property Taxes applicable to the Premises during the term of this Lease. Subject to Paragraph 10.2(b), all such payments shall be made at least ten (10) days prior to any delinquency date. Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes have been paid. If any such taxes shall cover any period of time prior to or after the expiration or termination of this Lease, Lessee's share of such taxes shall be prorated to cover only that portion of the tax bill applicable to the period that this Lease is in effect, and Lessor shall reimburse Lessee for any overpayment. If Lessee shall fail to pay any required Real Property Taxes, Lessor shall have the right to pay the same, and Lessee shall reimburse Lessor therefor upon demand. (b) Advance Payment hin the event Lessee incurs a late charge on any Rent payment, Lessor may, at Lessor's option, estimate the current Real Property Taxes, and require that such taxes be paid in advance to Lessor by Lessee, either: (i) in a lump sum amount equal to the installment due, at least twenty (20) days prior to the applicable delinquency date, or (ii) monthly in advance with the payment of the Base Rent. If Lessor elects to require payment monthly in advance, the monthly payment shall be an amount equal to the amount of the estimated installment of taxes divided by the number of months remaining before the month in which said installment becomes delinquent. When the actual amount of the applicable tax bill is known, the amount of such equal monthly advance payments shall be adjusted as required to provide the funds needed to pay the applicable taxes. If the amount collected by Lessor is insufficient to pay such Real Property Taxes when due, Lessee shall pay Lessor, upon demand, such additional sums as are necessary to pay such obligations. All moneys paid to Lessor under this Paragraph may be intermingled with other moneys of Lessor and shall not bear interest. In the event of a Breach by Lessee in the performance of its obligations under this Lease, then any balance of funds paid to Lessor under the provisions of this Paragraph may at the option of Lessor, be treated as an additional Security Deposit. 10.3 Joint Assessment. If the Premises are not separately assessed, Lessee's liability shall be an equitable proportion of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be conclusively determined by Lessor from the respective valuations assigned in the assessor's work sheets or such other information as may be reasonably available. 10.4 Personal Property Taxes. Lessee shall pay, prior to delinquency, all taxes assessed against and levied upon Lessee Owned Alterations, Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee. When possible, Lessee shall cause such property to be assessed and billed separately from the real property of Lessor. If any of Lessee's said personal property shall be assessed with Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee's property within ten (10) days after receipt of a written statement. 11. Utilities. Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal and other utilities and services supplied to the Premises, together with any taxes thereon. If any such services are not separately metered to Lessee, Lessee shall pay a reasonable proportion, to be determined by Lessor, of all charges jointly metered. 12. Assignment and Subletting. 12.1 Lessor's Consent Required. (a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber (collectively, "assign or assignment") or sublet all or any part of Lessee's interest in this Lease or in the Premises without Lessor's prior written consent. (b) A change in the control of Lessee shall constitute an assignment requiring consent. The transfer, on a cumulative basis, of twenty-five percent (25%) or more of the voting control of Lessee shall constitute a change in control for this purpose. (c) The involvement of Lessee or its assets in any transaction, or series of transactions (by way of merger, sale, acquisition, financing, transfer, leveraged buy-out or otherwise), whether or not a formal assignment or hypothecation of this Lease or Lessee's assets occurs, which results or will result in a reduction of the Net Worth of Lessee by an amount greater than twenty-five percent (25%) of such Net Worth as it was represented at the time of the execution of this Lease or at the time of the most recent assignment to which Lessor has consented, or as it exists immediately prior to said transaction or transactions constituting such reduction, whichever was or is greater, shall be considered an assignment of this Lease to which Lessor may withhold its consent. "Net Worth of Lessee" shall mean the net worth of Lessee (excluding any guarantors) established under generally accepted accounting principles. (d) An assignment or subletting without consent shall, at Lessor's option, be a Default curable after notice per Paragraph 13.1(c), or a noncurable Breach without the necessity of any notice and grace period. If Lessor elects to treat such unapproved assignment or subletting as a noncurable Breach, Lessor may either: (i) terminate this Lease, or (ii) upon thirty (30) days written notice, increase the monthly Base Rent to one hundred ten percent (110%) of the Base Rent then in effect. Further, in the event of such Breach and rental adjustment, (i) the purchase price of any option to purchase the Premises held by Lessee shall be subject to similar adjustment to one hundred ten percent (110%) of the price previously in effect, and (ii) all fixed and non -fixed rental adjustments scheduled during the remainder of the Lease term shall be increased to One Hundred Ten Percent (110%) of the scheduled adjusted rent. (e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or injunctive relief. 12.2 Terms and Conditions Applicable to Assignment and Subletting. (a) Regardless of Lessor's consent, any assignment or subletting shall not: (i) be effective without the express written assumption by such assignee or sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of any obligations hereunder, or (iii) alter the primary liability of Lessee for the payment of Rent or for the performance of any other obligations to be performed by Lessee. (b) Lessor may accept Rent or performance of Lessee's obligations from any person other than Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver or estoppel of Lessor's right to exercise its remedies for Lessee's Default or Breach. (c) Lessor's consent to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting. (d) In the event of any Default or Breach by Lessee, Lessor may proceed directly against Lessee, any Guarantors or anyone else responsible for the performance of Lessee's obligations under this Lease, including any assignee or sublessee, without first exhausting Lessor's remedies against any other person or entity responsible therefore to Lessor, or any security held by Lessor�1'n 00 (e) Each request for consent to an assignment or subletting shall be in writing, accompamation relevant to Lessor's determination as to the financial and operational responsibility and appropriateness of the proposed aublessee, including but not limited to the intended use and/or required modification of the Premises, if any, together with a fee of as consideration for Lessor's considering and processing said request. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested. (f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment or entering into such sublease, be deemed to have assumed and agreed to conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Lessee during the term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of an assignment or sublease to which Lessor has specifically consented to in writing. 12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein: (a) Lessee hereby assigns and transfers to Lessor all of Lessee's interest in all Rent payable on any sublease, and Lessor may collect such Rent and apply same toward Lessee's obligations under this Lease; provided, however, that until a Breach shall occur in the performance of Lessee's obligations, Lessee may collect said Rent. Lessor shall not, by reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee for any failure of Lessee to perform a comply with any of Lessee's obligations to such sublessee. Lessee hereby irrevocably authorizes and directs any such sublessee, uponrriptWawritte noticeand (� ** -see next V,\ pagePAGE 7 Insert *: Lessor shall deliver all tax bills relating to the Property to Lessee at the address indicated in the notice provision of this Lease not later than thirty (30) days prior to the delinquency date. Insert **: Provided Lessor has timely provided copies of all tax bills to Lessee pursuant to Paragraph 10.2(a) hereof Page 7a � \ ` from Lessor stating that a Breach exists in the performance of Lessee's obligations under this Lease, to pay to Lessor all Rent due and to become due under the sublease. Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from Lessee to the contrary. (b) In the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attom to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of such sublease; provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor. (c) Any matter requiring the consent of the sublessor under a sublease shall also require the consent of Lessor. (d) No sublessee shall further assign or sublet all or any part of the Premises without Lessor's prior written consent. (e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the sublessee, who shall have the right to cure the Default of Lessee within the grace period, if any, specified in such notice. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee. See also 958 of Addendum. 13. Default; Breach; Remedies. 13.1 Default; Breach. A "Default" is defined as a failure by the Lessee to comply with or perform any of the terms, covenants, conditions or rules under this Lease. A "Breach" is defined as the occurrence of one or more of the following Defaults, and the failure of Lessee to cure such Default within any applicable grace period: (a) The abandonment of the Premises; or the vacating of the Premises without providing a commercially reasonable level of security, or where the coverage of the property insurance described in Paragraph 8.3 is jeopardized as a result thereof, or without providing reasonable assurances to minimize potential vandalism. (b) The failure of Lessee to make any payment of Rent or any Security Deposit required to be made by Lessee hereunder, whether to Lessor or to a third party, when due, to provide reasonable evidence of insurance or surety bond, or to fulfill any obligation under this Lease which endangers or threatens life or property, where such failure continues for a period of three (3) business days following written notice to Lessee. (c) The failure by Lessee to provide (i) reasonable written evidence of compliance with Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized assignment or subletting, (iv) a Tenancy Statement, (v) a requested subordination, (vi) evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 42 (easements), or (viii) any other documentation or information which Lessor may reasonably require of Lessee under the terms of this Lease, where any such failure continues for a period of ten (10) days following written notice to Lessee. (d) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or of the rules adopted under Paragraph 40 hereof, other than those described in subparagraphs 13.1(a), (b) or (c), above, where such Default continues for a period of thirty (30) days after written notice; provided, however, that if the nature of Lessee's Default is such that more than thirty (30) days are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee commences such cure within said thirty (30) day period and thereafter diligently prosecutes such cure to completion. (e) The occurrence of any of the following events: (i) the making of any general arrangement or assignment for the benefit of creditors; (ii) becoming a "debtor" as defined in 11 U.S.C. § 101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within sixty (60) days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this Lease, where possession is not restored to Lessee within thirty (30) days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee's assets located at the Premises or of Lessee's interest in this Lease, where such seizure is not discharged within thirty (30) days; provided, however, in the event that any provision of this subparagraph (e) is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions. (f) The discovery that any financial statement of Lessee or of any Guarantor given to Lessor was materially false. (g) If the performance of Lessee's obligations under this Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor's liability with respect to this Lease other than in accordance with the terms of such guaranty, (iii) a Guarantor's becoming insolvent or the subject of a bankruptcy filing, (iv) a Guarantor's refusal to honor the guaranty, or (v) a Guarantor's breach of its guaranty obligation on an anticipatory basis, and Lessee's failure, within sixty (60) days following written notice of any such event, to provide written alternative assurance or security, which, when coupled with the then existing resources of Lessee, equals or exceeds the combined financial resources of Lessee and the Guarantors that existed at the time of execution of this Lease. �//,t._e,n (10) 13.2 Remedies. If Lessee fails to perform any of its affirmative duties or obligations, within 4days after written notice or in case of an emergency, without notice), Lessor may, at its option, perform such duty or obligation on Lessee's behalf, including but not limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. The costs and expenses of any such performance by Lessor shall be due and payable by Lessee upon receipt of invoice therefor. If any check given to Lessor by Lessee shall not be honored by the bank upon which it is drawn, Lessor, at its option, may require all future payments to be made by Lessee to be by cashier's check, In the event of a Breach, Lessor may, with or without further notice or demand, and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach: (a) Terminate Lessee's right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for all the detriment proximately caused by the Lessee's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys' fees, and that portion of any leasing commission paid by Lessor in connection with this Lease applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of the District within which the Premises are located at the time of award plus one percent (M). Efforts by Lessor to mitigate damages caused by Lessee's Breach of this Lease shall not waive Lessor's right to recover damages under Paragraph 12. If termination of this Lease is obtained through the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all or any part thereof in a separate suit. If a notice and grace period required under Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Lessee under the unlawful detainer statute shall also constitute the notice required by Paragraph 13.1. In such case, the applicable'grace period required by Paragraph 13.1 and the unlawful detainer statute shall run concurrently, and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach of this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute. (b) Continue the Lease and Lessee's right to possession and recover the Rent as it becomes due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and/or the appointment of a receiver to protect the Lessors interests, shall not constitute a termination of the Lessee's right to possession. (c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of the state wherein the Premises are located. The expiration or termination of this Lease and/or the termination of Lessee's right to possession shall not relieve Lessee from liability * of Lessee's failure to pay rent or other amounts PAGES Initials payable by Lessee hereunder, or thirty (30) days FOORR'T204N-R-2/97 after written notice of Lessee's failure to perform / �/ any other obligation hereunder. �(� under any indemnity provisions of this Lease as to matters occurring or accruing during the term hereof or by reason of Lessee's occupancy of the Premises. 13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, or for the giving or paying by Lessor to or for Lessee of any cash or other bonus, inducement or consideration for Lessee's entering into this Lease, all of which concessions are hereinafter referred to as "Inducement Provisions;'• shall be deemed conditioned upon Lessee's full and faithful performance of all of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any such Inducement Provision shall automatically be deemed deleted from this Lease and of no further force or effect, and any rent, other charge, bonus, inducement or consideration theretofore abated, given or paid by Lessor under such an Inducement Provision shall be immediately due and payable by Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so stated in writing by Lessor at the time of such acceptance. ten (10) 13.4 Late Charges. Les a hereby acknowledges that late payment by Lessee of Rent will cause Lessor to incur costs not contemplated by this Lease, t exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting c rges, and late charges which maybe imposed upon Lessor by any Lender. Accordingly, if any Rent shall not be received by Lessor within ' days after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a one-time late charge equal to five percent(5*of each such overdue amount. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of such late payment. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee's Default or Breach with respect to such overdue amount, nor prevent the exercise of any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for three (3) consecutive installments of Base Rent, then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessor's option, become due and payable quarterly in advance. 13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when due as to scheduled payments (such as Base Rent) or within thirty (30) days following the date on which it was due for non-scheduled payment, shall bear interest from the date when due, as to scheduled payments, or the thirty-first (31st) day after it was due as to non-scheduled payments. The interest ("Interest") charged shall be equal to the prime rate reported in the Wall Street Journal as published closest prior to the date when due plus fou, ver— but shall not exceed the maximum rate allowed by law. Interest is payable in addition to the potential late charge provided for in Paragraph 13.4, the greater of two percent (2%) or the incremental default rate under any first mortgage loan 13.6 Breach by Lessor. on the Premises. (a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an obligation required to be performed by Lessor. For purposes of this Paragraph, a reasonable time shall in no event be less than thirty (30) days after receipt by Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for such purpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however, that if the nature of Lessor's obligation is such that more than thirty (30) days are reasonably required for its performance, then Lessor shall not be in breach if performance is commenced within such thirty (30) day period and thereafter diligently pursued to completion. (b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender cures said breach within thirty (30) days after receipt of said notice, or if having commenced said cure they do not diligently pursue it to completion, then Lessee may elect to cure said breach at Lessee's expense and offset from Rent an amount equal to the greater of one month's Base Rent or the Security Deposit, and to pay an excess of such expense under protest, reserving Lessee's right to reimbursement from Lessor. Lessee shall document the cost of said cure and supply said documentation to Lessor. 14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (collectively "Condemnation"), this Lease shall terminate as to the part taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than ten percent (10%) of any building portion of the premises, or more than twenty- five percent (25%) of the land area portion of the premises not occupied by any building, is taken by Condemnation, Lessee may, at Lessee's option, to be exercised in writing within ten (10) days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within ten (10) days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such Condemnation. Condemnation awards and/or payments shall be the property of Lessor, whether such award shall be made as compensation for diminution in value of the leasehold, the value of the part taken, or for severance damages; provided, however, that Lessee shall be entitled to any compensation for Lessee's relocation expenses, loss of business goodwill and/or Trade Fixtures, without regard to whether or not this Lease is terminated pursuant to the provisions of this Paragraph. All Alterations and Utility Installations made to the Premises by Lessee, for purposes of Condemnation only, shall be considered the property of the Lessee and Lessee shall be entitled to any and all compensation which is payable therefor. In the event that this Lease is not terminated by reason of the Condemnation, Lessor shall repair any damage to the Premises caused by such Condemnation. 15. Brokers' Fee. . 46.4 Additional G .. ......... *991en. im addillam !a Hie pay iienis owed twouam! te Paragraph i. 4 0 above, and unless 6@ssef and the Bfekefs -M-14—S owned by Lessor and located within the same Project, if any, within which the Premises is located, (c) if Lessee remains in Sion of the Pre with the consent of Lessor, after the expiration of this Lease, or (d) if Base Rent is increased, whether by a r ¢fffor operation of an escalation c rein, then, Lessor shall pay Brokers a fee in accordance with the schedule of said Brok fect at the time of the execution of this Lease. 15.2 Assumption of Obligation buyer or transferee of Lessor's interest in this shall be deemed to have assumed Lessor's obligation hereunder. Each Broker shall be a thl beneficiary of the provision aragraphs 1.10, 15, 22 and 31. If Lessor fails to pay to a Broker any amounts due as and for commissions per to this Le en due, then such amounts shall accrue Interest. In addition, if Lessor fails to pay any amounts to Lessee's Broker when due, L Broker may send written notice to Lessor and Lessee of such failure and if Lessor fails to pay such amounts within ten (10) da ft said notice, sccPP��e shall pay said monies to its Broker and offset such amounts against Rent. In addition, Lessee's Broker shall mad to be a third party bene i f any commission agreement entered into by and/or between Lessor and Lessor's Broker. 15.3 Representatlo Indemnities of Broker Relationships. Lessee and Lessor each rep and warrant to the other that it has had no dealpi any person, firm, broker or finder (other than the Brokers, if any) in connection with this and that no one other than said Brokers is entitled to any commission or finder's fee in connection herewith. Lessee and Lessor do ea eby agree to i i , protect, defend and hold the other harmless from and against liability for compensation or charges which maybe claimed such 16. Estoppel Certificates. (a) Each Party (as "Responding Party") shall within ten (10) days after written notice from the other Party (the "Requesting Party") execute, acknowledge and deliver to the Requesting Party a statement in writing in form similar to the then most current "Estoppel Certificate" form published by the American Industrial Real Estate Association, plus such additional information, confirmation and/or statements as may be reasonably requested by the Requesting Party. (b) If the Responding Party shall fail to execute or deliver the Estoppel Certificate within such ten day period, the Requesting Party may execute an Estoppel Certificate stating that: (i) the Lease is in full force and effect without modification except as may be represented by the Requesting Party, (ii) there are no uncured defaults in the Requesting Party's performance, and (iii) if Lessor is the Requesting Party, not more than one month's rent has been paid in advance. Prospective purchasers and encumbrancers may rely upon the Reques Parry's Estoppel Certificate, and the Responding Party shall be estopped from denying the truth of the facts contained in said Certificate. n (� ''plus an additional five percent (5%) if not paid within ten (10) days GI V�\`�- after Lessor give Lessee written notice of the overdue amount PAGE 9 Initials FORM 04N -R-2/97 (c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee and all Guarantors shall deliver to any potential lender or purchaser designated by Lessor such financial statements as may be reasonably required by such lender or purchaser, including but not limited to Lessee's financial statements for the past three (3) years. All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth. 17. Definition of Lessor. The term "Lessor" as used herein shall mean the owner or owners at the time in question of the fee title to the Premises, or, if this is a sublease, of the Lessee's interest in the prior lease. In the event of a transfer of Lessor's title or interest in the Premises or this Lease, Lessor shall deliver to the transferee or assignee (in cash or by credit) any unused Security Deposit held by Lessor. Except as provided in Paragraph 15, upon such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor. Subject to the foregoing, the obligations and/or covenants in this Lease to, be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined. Notwithstanding the above, and subject to the provisions of Paragaph 20 below, the original Lessor under this Lease, and all subsequent holders of the Lessor's interest in this Lease shall remain liable and responsible with regard to the potential duties and liabilities of Lessor pertaining to Hazardous Substances as outlined in Paragraph 6 above. 18. Severability. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof. 19. Days. Unless otherwise specifically indicated to the contrary, the word "days" as used in this Lease shall mean and refer to calendar days. 20. Limitation on Liability. Subject to the provisions of Paragraph 17 above, the obligations of Lessor under this Lease shall not constitute personal obligations of Lessor, the individual partners of Lessor or its or their individual partners, directors, officers or shareholders, and Lessee shall look to the Premises, and to no other assets of Lessor, for the satisfaction of any liability of Lessor with respect to this Lease, and shall not seek recourse against the individual partners of Lessor, or its or their individual partners, directors, officers or shareholders, or any of their personal assets for such satisfaction. 21. Time of Essence. Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Lease. 22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective. Lessor and Lessee each represents and warrants to the Brokers that it has made, and is relying solely upon, its own investigation as to the nature, quality, character and financial responsibility of the other Party to this Lease and as to the nature, quality and character of the Premises. Brokers have no responsibility with respect thereto or with respect to any default or breach hereof by either Party. The liability (including court costs and Attorneysfees), of any Broker with respect to negotiation, execution, delivery or performance by either Lessor or Lessee under this Lease or any amendment or modification hereto shall be limited to an amount up to the fee received by such Broker pursuant to this Lease; provided, however, that the foregoing limitation on each Broker's liability shall not be applicable to any gross negligence or willful misconduct of such Broker. 23. Notices. 23.1 Notice Requirements. All notices required or permitted by this Lease shall be in writing and may be delivered in person (by hand or by courier) or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease shall be that Party's address for delivery or mailing of notices. Either Party may by written notice to the other specify a different address for notice, except that upon Lessee's taking possession of the Premises, the Premises shall constitute Lessee's address for notice. A copy of all notices to Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate in writing. 23.2 Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed given forty-eight (48) hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantee next day delivery shall be deemed given twenty-four (24) hours after delivery of the same to the Postal Service or courier. Notices transmitted by facsimile transmission or similar means shall be deemed delivered upon telephone confirmation of receipt, provided a copy is also delivered via delivery or mail. If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next business day. 24. Waivers. No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition hereof. Lessor's consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessor's consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Lease requiring such consent. The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment. 25'. Recording. Either Lessor or Lessee shall, upon request of the other, execute, acknowledge and deliver to the other a short form memorandum of this Lease for recording purposes. The Party requesting recordation shall be responsible for payment of any fees applicable thereto. 26. No Right To Holdover. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over, then the Base Rent shall be increased to one hundred fifty percent (150%) of the Base Rent applicable during the month immediately preceding the expiration or termination. Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee. 27. Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. 28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions. In construing this Lease, all headings and titles are for the convenience of the parties only and shall not be considered a part of this Lease. Whenever required by the context, the singular shall include the plural and vice versa. This Lease shall not be construed as if prepared by one of the parties, but rather according to its fair meaning as a whole, as if both parties had prepared it. 29. Binding Effect; Choice of Law. This Lease shall be binding upon the parties, their personal representatives, successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located. 30. Subordination; Attornment; Non -Disturbance. 30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any ground lease, mortgage, deed of trust, or other hypothecation or security device (collectively, "Security Device"), now or hereafter placed upon the Premises, to any and all advances made on the security thereof, and to all renewals, modifications, and extensions thereof. Lessee agrees that the holders of any such Security Devices (in this Lease together referred to as "Lessor's Lender") shall have no liability or obligation to perform any of the obligations of Lessor under this Lease* Any Lender may elect to have this Lease and/or any Option granted hereby superior to the lien of its Security Device by giving written notice thereof to Lessee, whereupon this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or recordation thereof. 30.2 Attornment. Subject to the non -disturbance provisions of Paragraph 30.3, Lessee agrees to attorn to a Lender or any other party who acquires ownership of the Premises by reason of a foreclosure of a Security Device, and that in the event of such foreclos , such npw, PAGE 10 Initials _2w, ' unless and then only for so long as any Lessor's FORM o4N-R-2/97 Lender holds fee title to the Premises. ox Y' owner shall not: (i) be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership; (ii) be subject to any offsets or defenses which Lessee might have against any prior lessor, or (iii) be bound by prepayment of more than one (1) month's rent. 30.3 Non -Disturbance. With respect to Security Devices entered into by Lessor after the execution of this Lease, Lessee's subordination of this Lease shall be subject to receiving a commercially reasonable non -disturbance agreement (a "Non -Disturbance Agreement") from the Lender which Non -Disturbance Agreement provides that Lessee's possession of the Premises, and this Lease, including any options to extend the term hereof, will not be disturbed so long as Lessee is not in Breach hereof and attorns to the record owner of the Premises. Further, within sixty (60) days after the execution of this Lease, Lessor shall use its commercially reasonable efforts to obtain a Non - Disturbance Agreement from the holder of any pre-existing Security Device which is secured by the Premises. In the event that Lessor is unable to provide the Non -Disturbance Agreement within said sixty (60) days, then Lessee may, at Lessee's option, directly contact Lessor's lender and attempt to negotiate for the execution and delivery of a Non -Disturbance Agreement. 30.4 Self -Executing. The agreements contained in this Paragraph 30 shall be effective without the execution of any further documents; provided, however, that, upon written request from Lessor or a Lender in connection with a sale, financing or refinancing of the Premises, Lessee and Lessor shall execute such further writings as may be reasonably required to separately document any subordination, attornment and/or Non - Disturbance Agreement provided for herein. See also 959 of Addendum. 31. Attorneys' Fees. If any Party or Broker brings an action or proceeding involving the Premises to enforce the terms hereof or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, "Prevailing Party" shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys' fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees reasonably incurred. In addition, Lessor shall be entitled to attorneys' fees, costs and expenses incurred in the preparation and service of notices of Default and consultations in connection therewith, whether or not a legal action is subsequently commenced in connection with such Default or resulting Breach. upon at least forty-eight (48) hours advance notice 32. Lessor's Access; Showing Premises; Re�a'ns Lessor and Lessor's agents shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise for the purpose of showing the same to prospective purchasers, lenders, or lessees, and making such alterations, repairs, improvements or additions to the Premises as Lessor may deem necessant All such activities shall be without abatement of rent or liability to Lessee. Lessor may at any time place on the Premises any ordinary "For Sale" signs and Lessor may during the last six (6) months of the term hereof place on the Premises any ordinary "For Lease" signs. Lessee may at any time place on or about the Premises any ordinary "For Sublease" sign. 33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction upon the Premises without Lessor's prior written consent. Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to permit an auction. 34. Signs. Except for ordinary "For Sublease" signs, Lessee shall not place any sign upon the Premises without Lessor's prior written consent. All signs must comply with all Applicable Requirements. See also 954 of Addendum. 35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all existing subtenancies. Lessor's failure within ten (10) days following any such event to elect to the contrary by written notice to the holder of any such lesser interest, shall constitute Lessor's election to have such event constitute the termination of such interest. 36. Consents. Except as otherwise provided herein, wherever in this Lease the consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheld or delayed. Lessor's actual reasonable costs and expenses (including but not limited to architects', attorneys', engineers' and other consultants' fees) incurred in the consideration of, or response to, a request by Lessee for any Lessor consent, including but not limited to consents to an assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentation therefor. Lessor's consent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated in writing by Lessor at the time of such consent. The failure to specify herein any particular condition to Lessor's consent shall not preclude the imposition by Lessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. In the event that either Party disagrees with any determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall furnish its reasons in writing and in reasonable detail within ten (10) business days following such request. 37. Guarantor. 37.1 Execution. The Guarantors, if any, shall each execute a guaranty in the form most recently published by the American Industrial Real Estate Association, and each such Guarantor shall have the same obligations as Lessee under this Lease. 37.2 Default. It shall constitute a Default of the Lessee if any Guarantor fails or refuses, upon request to provide: (a) evidence of the execution of the guaranty, including the authority of the party signing on Guarantor's behalf to obligate Guarantor, and in the case of a corporate Guarantor, a certified copy of a resolution of its board of directors authorizing the making of such guaranty, (b) current financial statements, (c) a Tenancy Statement, or (d) written confirmation that the guaranty is still in effect. 38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the covenants, conditions and provisions on Lessee's part to be observed and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term hereof. 39. Options. Lessee has no options to renew this Lease. 09. 4 901IM111614. flellem" shall Pmeem! (a) !he righ! to eitte tel Ilia lef 44 all or ranew this 6eaeo or is eidend of Felgew aR5 lease 11hat 6easse hase or the right of first refusal to purchase the Premises or other property of Lessor. 991L,Qptions Personal To Original Lessee. Each Option granted to Lessee in this Lease is personal to the original e, and cannot be assigned or sed by anyone other than said original Lessee and only while the original Lessee is in full posses ' of the Premises and, if requested by Lessor-,V14essee certifying that Lessee has no intention of thereafter assigning or sublettin 39.3 Multiple Optlons.71n4W event that Lessee has any multiple Options to extend or r is Lease, a later Option cannot be exercised unless the prior Options have validly exercised. 39.4 Effect of Default on Options. (a) Lessee shall have no right to exercise an (i) durin period commencing with the giving of any notice of Default and continuing until said Default is cured, (it) during the period of time nt is unpaid (without regard to whether notice thereof is given Lessee), (iii) during the time Lessee is in Breach of this Lease, or ' ' he even Lessee has been given three (3) or more notices of separate Default, whether or not the Defaults are cured, durin twelve (12) month pan iftFi ediately preceding the exercise of the Option. (b) The period of time within w ' an Option may be exercised shall not be ed or enlarged by reason of Lessee's inability to exercise an Option because of the ions of Paragraph 39.4(a). (c) An Optio terminate and be of no further force or effect, notwithstanding Lessee's du timely exercise of the Option, if, after such exerci d prior to the commencement of the extended term, (i) Lessee fails to pay Rent for a perio (30) days after such Rent beco ue (without any necessity of Lessor to give notice thereof), (ii) Lessor gives to Lessee three (3) or mor as of separate Def ring any twelve (12) month period, whether or not the Defaults are cured, or (iii) if Lessee commits a Breach of this Le ARARRAWA "AA AA *and shall be conducted so as not to unreasonably interfere with \`'� Lessee's business. PAGE 11 Initials 41. Security Measures. Lessee hereby acknowledges that the rental payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties. 42. Reservations. Lessor reserves to itself the right, from time to time, to grant, without the consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary, and to cause the recordation of parcel maps and restrictions, so long as such easements, rights, dedications, maps and restrictions do not unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such easement rights, dedication, map or restrictions. 43. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment "under protest" and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay. 44. Authority. If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on its behalf. Each party shall, within thirty (30) days after request, deliver to the other party satisfactory evidence of such authority. 45. Conflict. Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions. 46. Offer. Preparation of this Lease by either Party or their agent and submission of same to the other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended to be binding until executed and delivered by all Parties hereto. 47. Amendments. This Lease may be modified only in writing, signed by the Parties in interest at the time of the modification. As long as they do not materially change Lessee's obligations hereunder, Lessee agrees to make such reasonable non -monetary modifications to this Lease as may be reasonably required by a Lender in connection with the obtaining of normal financing or refinancing of the Premises. 48. Multiple Parties. If more than one person or entity is named herein as either Lessor or Lessee, such multiple Parties shall have joint and several responsibility to comply with the terms of this Lease. 49. Mediation and Arbitration of Disputes. An Addendum requiring the Mediation and/or the Arbitration of all disputes between the Parties and/or Brokers arising out of this Lease ❑ is CJI is not attached to this Lease. LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OFTHIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES. ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BYTHE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER ASTOTHE LEGAL SUFFICIENCY, LEGAL EFFECT, ORTAX CONSEQUENCES OFTHIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGEDTO: 1. SEEK ADVICE OF COUNSEL ASTOTHE LEGAL ANDTAX CONSEQUENCES OFTHIS LEASE. 2. RETAIN APPROPRIATE CONSULTANTSTO REVIEW AND INVESTIGATETHE CONDITION OFTHE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITEDTO:THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES,THE ZONING OFTHE PREMISES,THE STRUCTURAL INTEGRrry,THE CONDITION OFTHE ROOF AND OPERATING SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE. WARNING: IF THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OFTHE STATE IN WHICH THE PREMISES IS LOCATED. The parties hereto have executed this Lease at the place and on the dates specified above their respective signatures Executed at: Irvine. California Executed at: Irvine. California Sl1M1Nt� lr Ti�,L�t It IGlQ9 on: IgC19 on: By LESSOR: SIBLING ASSOCIATFS T. a California By LESSEE: COCO'S RESTAURANTS INC. -a California rnrnnratinn Name 'nted: Mai W_ Rav Name Printed: rlqV VO Title: ng PartnAr Title: By: By: Name Printed: Michael D. Ray Name Printed: Title: Manatti q Partnpr Title: Address: 2699 Whitp Rnad, Cnitp 15n Address: see below* AUMN98MMM Trvinp, CA 92614 Telephone: ( 949 ) 222-5775 Facsimile:( 949) 660-R068 Federal ID No. 02-3 V) Telephone: ( 949 ) 260-6745 Facsimile: ( ) see below* Federal ID No. 96-- /�5 �1'� % NOTE: These forms are often modified to meet changing requirements of law and industry needs. Always write or call to make sure you are utilizing the most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 So. Flower Street, Suite 600, Los Angeles, California 90017. (213) 687-8777. Fax No. (213) 687-8616 * Routine correspondence shall be sent to Lessee only -at: COCO's Restaurants, Inc., 3355 Michelson Dr., Ste. 350, Irvine, CA 92612, Attn: Real Estate Dept., Fax #(949) 251-5235. Correspondence having legal significance shall also be sent to the same address, Attn: Legal Dept., Fax #(949) 251-5201. PAGE 12 ©Copyright 1997 — By American Industrial Real Estate Association. All rights reserved. No part of these works may be reproduced in any form without permission In writing. ra FORM 204N -R-2/97 EXHIBIT A LEGAL DESCRIPTION OF PREMISES AND DEPICTION OF PREMISES Legal description: LOTS 4 AND 5 IN BLOCK T OF TRACT NO. 323 AS SHOWN ON A MAP RECORDED IN BOOK 14, PAGES 40 AND 41 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. LOTS 1 AND 3 OF BLOCK 440 OF CORONA DEL MAR TRACT AS SHOWN ON A MAP RECORDED IN BOOK 3, PAGES 41 AND 42 OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. __j ALLEY �. So' 65' q (4 58' I N 90' LJ qp� � I 35' z G1 o Z4.3B, 40.82' POR. ABAND. ST. TR. NO. 323 EAST PARKING COAST AREA A \ HIGHWAY n V C so' 93,5@, O @G o N v� o A u So' So' So' g w 8, 11 14 o EXHIBIT A ra THIS ADDENDUM is incorporated by reference in and made a part of the attached Standard Industrial/Commercial Single -Tenant Lease -Net dated June 1, 1999, between SIBLING ASSOCIATES I, a California general partnership, as Lessor, and COCO'S RESTAURANTS, INC., a California corporation, as Lessee. In the event of any conflicting provisions in this Addendum and the printed form of this Lease, the provisions of this Addendum shall control. NOW, THEREFORE, the parties agree as follows: 50. Parking. Lessee shall have the exclusive use of Parking Area A and Parking Area B as shown on Exhibit "A". Lessor shall have no obligation to monitor, police or enforce parking. Lessee has no other parking rights pursuant to this Lease. Lessee shall cause its employees to park off site and use Parking Areas A and B for customer parking. In addition, Lessee agrees not to permit its employees, customers, delivery trucks, suppliers, or other persons visiting the Premises to park behind the building adjacent to the Premises. Deliveries shall be made at such times and in such a manner as not to disturb occupants of adjacent or nearby property. 51. Prior Lease. Lessee is currently occupying the front portion of the Building pursuant to a Lease dated May 2, 1977, as modified by that certain Modification of Lease dated March 17, 1988 (the "Prior Lease"). The term of the Prior Lease expires June 30, 1999. The Prior Lease has one five (5) year option to renew. Lessee has elected not to exercise such option and instead the parties have elected to enter into this Lease for the entire Premises. Although the Prior Lease will terminate June 30, 1999, all obligations of Lessee under the Prior lease or applicable law that would survive the expiration of the Prior Lease if this Lease were not executed shall survive such termination. The back portion of the Building is currently being occupied by C'est Si Bon on a month to month lease. Lessor intends to give C'est Si Bon ninety (90) days notice to vacate the Premises or such other reasonable time as Lessor may deem necessary. In the event C'est Si Bon has not vacated the back portion of the Building on or before July 1, 1999, until such time as it does vacate the Building, monthly Base Rent to Lessee hereunder shall be $8,900 (pro rated for partial months based on the number of days in the month). Lessee understands and agrees that Lessee may not be able to take possession of the C'est Si Bon space on July 1, 1999 and will only be able to do so after C'est Si Bon vacates, but that this Lease shall commence July 1, 1999, subject to the rental abatement as set forth above. 52. Rent Schedule. 52.1 Base Rent. The monthly Base Rent payable for the first thirty (30) months hereunder commencing from the Commencement Date is $16,145.00 based upon an estimated square footage of 5871 of leaseable space times $2.75 per leased square foot. Rent for the Premises will be paid monthly, in advance, on the first day of each calendar month during the term of the Lease. As soon as possible after the completion of Lessee's renovation of the Building, the leaseable square footage of the Building shall be determined by Lessee's architect using standard industry practices. Such determination shall be subject to Lessor's verification if Lessor desires. Base Rent shall be adjusted to an amount equal to the actual leaseable square footage of the Building times $2.75 for monthly periods commencing on the first day of the calendar month after the actual leaseable square footage is finally determined subject to further adjustment as provided herein. FACORP\516\10815038%AddendunO.doc -1- Initials• 52.2 Cost of Living Adjustment in Base Rent. At the start of each thirty (30) month period during the term hereof, Base Rent shall increase (but not decrease) by the same proportionate increase, if any, in the Consumer Price index (the "CPI") as defined below. (The start of each thirty (30) month period is referred to herein as an "Adjustment Date".) Such increase shall be made by multiplying the Base Rent then being paid, by a fraction, the numerator of which is the CPI for the calendar month three (3) months preceding such Adjustment Date and the denominator of which is the CPI for the calendar month thirty three (33) months preceding such Adjustment Date. In no event, however, shall the Base Rent at the start of each Adjustment Date be increased by less than seven and one-half percent (7-1/2%) or by more than twelve percent (12%) from the Base Rent being paid immediately prior to such Adjustment Date no matter what the increase (or decrease) has been in the CPI for such 30 month period. The CPI is defined as the Consumer Price Index, all Urban Consumers (all Items), for the Los Angeles - Anaheim -Riverside Metropolitan Area, published by the United States Department of Labor, Bureau of Labor Statistics (1982- 184=100). If the 1982-184 base is changed, then the new base shall be converted to the 1982-184 base and the base so converted shall be used. In the event the Bureau ceases to publish the CPI, then the successor or most nearly comparable index thereto shall be used. 52.3 Percentage Rent. (i) In addition to the Base Rent, Lessee shall pay to Lessor at the time and in the manner herein specified as additional rent (sometimes referred to herein as "Percentage Rent") a sum equal to the difference between (A) six percent (6%) times the amount of Lessee's Gross Sales made in, upon, or from the Premises during each month of the term hereof, less (B) the amount of the Base Rent previously paid by Lessee for such month. (ii) Within twenty (20) days after the end of each calendar month (or if Lessee utilizes a 4-4-5 week reporting system, after the end of each 4 -week or 5 -week reporting period) of the term hereof, commencing with the twentieth (20t ) day of the month foltRwing the Commencement Date, and ending with the twentieth (20 ) day of the month next succeeding the last month of the Lease term, Lessee shall furnish to Lessor a statement in writing, certified by Lessee to be correct, showing the total Gross Sales made in, upon, or from the Premises during the preceding calendar month and shall accompany each such statement with a payment to Lessor equal to six percent (6%) of the total monthly Gross Sales made in, upon, or from the Premises during such calendar month, less the Base Rent for such calendar month), if previously paid. On or before March 1 in each calendar year included in the Lease Term and within sixty (60) days after the end of the Lease Term, Lessee shall furnish Lessor a statement, (the "Annual Statement"), certified by an authorized officer of Lessee or an independent certified public accountant approved by Lessor, of Lessee's Gross Sales during the preceding Lease year. If the Annual Statement indicates that Gross Sales for the Lease Year were greater than the aggregate of Gross Sales reported monthly for the Lease Year, Lessee shall pay Lessor the additional Percentage Rent due concurrently with furnishing the Annual Statement. If the Annual Statement indicates that Gross Sales for the Lease Year were less than the aggregate of Gross Sales reported monthly for the Lease Year, Lessee shall be credited against subsequent month's Percentage Rent payment(s) for the amount of the overpayment. (iii) "Gross Sales" is defined to be the selling price of all goods and services sold at the Premises by Lessee, its assignees, sublessees, licensees, franchisees or concessionaires, whether upon credit or for cash, including receipts or commissions from any coin or operating vending machines, but excluding therefrom any food or services to employees, rebates and/or refunds to customers, food or services -2- Initials: \\SERVER I \DATATORM516\10815038\Addcndum3.doc given for promotional purposes or in replacement of any goods or services already sold, and the amount of any sales taxes. (iv) Lessee shall keep at its corporate offices (and shall require any permitted subtenant, licensee, franchisee or concessionaire, to keep at the Premises) full, complete and proper books, records and accounts of its daily Gross Sales, both for cash and on credit, of each separate department and concessionaire at any time operated in the Premises. Lessor and its agents and employees shall have the right at any and all times, during regular business hours at Lessee's corporate offices, to examine and inspect all of the books and records of Lessee pertaining to the restaurant located on the Premises, including any sales tax reports pertaining to the business of Lessee conducted in, upon, or from the Premises, for the purpose of investigating and verifying the accuracy of any statement of Gross Sales and to cause an audit of the business of Lessee to be made by a certified public accountant of Lessor's selection. If any statement of Gross Sales previously made to Lessor shall be found to be inaccurate, then and in that event, there shall be an adjustment and one party shall pay to the other on demand such sums as may be necessary to settle in full the accurate amount of Percentage Rent that should have been paid to Lessor for the period or periods covered by such inaccurate statement or statements together with interest on such amount from the applicable due date to the date of actual payment at the rate of ten percent (10%) per annum. If said audit shall disclose an inaccuracy of greater than three percent (3%) error with respect to the amount of Gross Sales reported by Lessee for the period of said report, then Lessee shall immediately pay to Lessor the cost of such audit; otherwise, the cost of such audit shall be paid by Lessor. If such audit shall disclose an intentional under- reporting of Gross Sales of more than five percent (5%) with respect to the amount of Gross Sales reported by Lessee for the period covered by such report or a consistent (three times or more) under -reporting of Gross Sales, such discrepancy or under- reporting shall be deemed conclusively a material breach of this Lease and shall entitle Lessor to all of the remedies provided in Paraaraph 13 hereof, including the right to terminate this Lease. Lessor shall audit Lessee's Gross Sales no more than once each calendar year during the term of this Lease. Lessor agrees to keep all information relating to Lessee's Gross Sales confidential except where such disclosure is necessary or relevant for Lessor's business or legal reasons. 52.4 Triple Net Lease. Except as expressly provided to the contrary herein, it is the intention of Lessor and Lessee that the rent herein specified shall be "triple net" to Lessor, and that all costs, expenses and obligations of every kind relating to the Premises or the use, operation, management or occupancy thereof, whether or not now customary or within the contemplation of the parties hereto, which may arise or become due during the term of this Lease, shall be paid by Lessee. Such amounts shall be deemed to be additional rental hereunder. 52.5 Accord and Satisfaction. No payment by Lessee or receipt by Lessor of a lesser amount than the monthly Base Rent herein stipulated shall be deemed to be other than on account of the earliest stipulated Base Rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction, and Lessor may accept such check or payment without prejudice to Lessor's right to recover the balance of such rent or pursue any other remedy in this Lease provided. 53. Additional Provisions Regarding Use of Premises. 53.1 Lessee's Use. Lessee shall use the Premises as a retail bakery and sit down restaurant serving breakfast, lunch and dinner and for no other use without the prior written consent of Lessor which may be granted or denied in Lessor's sole discretion without any regard to reasonableness. The restaurant —3— Initials \\S ERV ER I \DATA\CORP\516\ 10815038W ddendumMoc shall be operated either: (1) as a restaurant and a retail bakery under the trade name "Coco's Bakery and Restaurant", (2) "Coco's Caf6 & Bakery", or (3) under a new restaurant concept and trade name developed by Lessee and approved by Lessor. In either case, the restaurant shall be operated similarly to and offer the same menu as other restaurants operated under the same trade name by Lessee in Southern California. 53.2 Lessor's Right to Cancel For Failure of Lessee to Operate. If Lessee terminates or suspends its operations (including the termination or suspension of operations for breakfast, lunch and/or dinner service) without Lessor's prior written consent (which Lessor may refuse to grant for any reason or for no reason without regard to reasonableness) for a period of 60 days or longer (excluding suspension of operations during periods of renovation), but continues to pay all rent and all other amounts owing by Lessee and performs all of its other obligations hereunder, such failure to operate is not, in and of itself, a default or breach of this Lease. In such event, however, Lessor may terminate this Lease at any time after the expiration of such 60 day period by delivering written notice of such termination (the "Termination Notice") to Lessee without providing Lessee any notice period to cure and resume its operations. Notwithstanding the foregoing, if Lessee resumes its full operations prior to Lessor giving the Termination Notice, Lessor shall have no right to terminate for Lessee's prior failure to operate. Lessor's Termination Notice shall specify a termination date for the Lease of not less than thirty (30) days nor longer than one hundred and eighty (180) days from the date of the Termination Notice. Until the termination date as set forth in the Termination Notice, Lessee shall continue to be obligated to pay all rent and other amounts payable by Lessee hereunder and perform all of its other covenants and obligations hereunder. After the termination date, this Lease shall be cancelled and Lessee shall have no further obligation or liability hereunder provided that Lessee has paid all rent and other amounts in a timely manner and has performed its other covenants as required by the Lease to the termination date. 54. Renovation of Premises. Lessee accepts the Premises in "as is" condition. Lessee shall at Lessee's sole cost and expense, completely renovate, remodel and upgrade the Premises. As soon as possible but in any event on or before July 1, 1999, Lessee shall have submitted to Lessor a detailed plan and schedule (the "Renovation Plan") for the planning and construction of the renovation of the Premises which shall include an executive summary, preliminary architectural plans, working drawings, construction schedule and such other relevant information Lessee may have and shall be subject to Lessor's approval. Lessee may submit to Lessor major elements of the Renovation Plan as they become available. For example, Lessee may submit preliminary architectural plans to Lessor for approval prior to completion of working drawings. After the Renovation Plan or any major element thereof has been finally approved by Lessor, it shall become a part of this Lease and may not be altered in any material respect without Lessor's approval. The parties understand and agree that they intend that the Premises be upgraded and modernized in a manner that is consistent with the trend toward up -scale development along Coast Highway in Corona del Mar, California. Lessor shall have thirty (30) days from the date it receives any plans for which its approval is required to approve or disapprove such plans. Any disapproval shall specify the reasons. If Lessor does not respond in such thirty (30) day period, such plans shall be deemed approved by Lessor. Lessee shall provide to Lessor for Lessor's review and approval all plans, City applications and conditions of approval of such plans. Lessee will also provide to Lessor one set of "as -built" plans for the construction. Lessee shall obtain an infestation report on the Premises and shall provide Lessor with —4— Initials: \\SERVER I\DATA\CORP\516\ 10815038Wddendum1doc � a copy thereof as well as a copy of any other reports of inspections of the Premises. Commencement of construction of the Renovation Plan shall begin as soon as practicable. Lessee shall be responsible for all improvements to the Premises and the installation of all furnishings, fixtures and equipment ("FF&E") in the Premises. All improvements, both interior and exterior shall be designed by a licensed architect, shall be subject to Lessor's reasonable approval, shall comply with all applicable laws and regulations including the Americans with Disabilities Act and all laws of the State of California governing access and use by handicapped persons and shall be constructed by a licensed general contractor pursuant to duly issued building permits. If Lessee proposes to reuse any of its existing FF&E, the same shall be refurbished and all exposed finishes shall be renewed. All Lessee improvements and all FF&E must be approved in writing by Lessor prior to construction or installation. Lessee shall, at Lessee's expense, replace its existing signage so as to be integral and consistent with the renovated Premises. All signage must comply with applicable codes and the Lease and shall not exceed the signage allowable to the Premises. Lessor shall not provide any tenant improvement allowance and Lessee shall be solely responsible for all costs and expenses incurred in connection with the Renovation Plan. If requested by Lessee, Lessor agrees to consent to Lessee granting a UCC security interest in Lessee's FF&E and to execute a commercially reasonable landlord waiver and consent regarding Lessee's financing of any of its FF&E. Lessor shall cooperate in assisting Lessee (at no cost to Lessor) in obtaining any necessary governmental approvals for the Renovation Plan, including variances, if necessary, and shall throughout the term, take no action that might result in a change in governmental approvals without Lessee's prior written consent.. If Lessee engages a third party consultant to process or expedite governmental approvals, such consultant shall be subject to Lessor's reasonable approval. Lessor has made no inquiry into the availability of such governmental approvals and, accordingly, makes no representation or warranty regarding same. In connection with the construction of the Renovation Plan, Lessee shall: (a) Cause all improvements to be constructed in a good and workmanlike manner by duly licensed contractors and in accordance with all applicable laws, building codes and approved plans and specifications. Without limiting the foregoing, all improvements shall comply with the Americans with Disabilities Act and all other local, state and federal laws governing barriers to access to public facilities. (b) Timely pay all costs of constructing the improvements and keep the Premises, Building and Center free of any mechanics' liens or other encumbrances. Any such mechanics' liens or other encumbrances shall be released by paying or bonding the same not later than ten.(10) days after written recordation thereof. Lessor shall send Lessee a copy of any mechanic's liens pursuant to this provision upon Lessor's receipt thereof. (c) Indemnify, defend and hold harmless Lessor and any lender holding a mortgage or deed of trust on the Premises, for, from and in any action, suit, loss, liability or damages or any lien or other encumbrance not caused by any act or r• omission of Lessor. (d) Obtain and pay for all necessary permits, licenses and other approvals required for the Renovation Plan and the construction thereof. -5- MERVERI \DATA\CORP\516\ 10815038\Addendum3.doc iA Initials: (e) Cause a minimum of interference with the occupants of property adjacent to the Premises. In this regard, Lessee shall not use the parking areas adjacent to the Premises as a construction storage or dumping site and workers working on the construction shall not park in the parking areas adjacent to the Premises. 55. Future Capital Improvements. Lessee agrees that Lessee shall make or cause to be made future capital improvements (the "Future Improvements"), including fixturization to the public areas of the restaurant for an amount of not less than Seventy -Five Thousand Dollars ($75,000.00) during each of the following periods: (a) July 1, 2004 to June 30, 2009 and (b) July 1, 2009 to June 30, 2014. Such Future Improvements shall be in addition to Lessee's obligations to provide maintenance and repair of the Premises. Notwithstanding the fact that Future Improvements are permitted to be constructed over such five (5) year periods, Lessee shall not unreasonably delay construction of any Future Improvements which are necessary for the orderly operation of the Premises. Any changes to the kitchen equipment or modifications to areas other than the public areas of the restaurant shall not qualify as Future Improvements required by this Paragraph. 56. PCH Tree Replacement. Lessee is aware that the City is replacing all trees along Pacific Coast Highway, including those in front of the Premises. Lessee and Lessor shall agree with the City that the City (or a municipal district) may tie into the water line serving the Premises in order to irrigate the trees in front of the Premises, and Lessee hereby agrees to bear the cost of the water to irrigate the trees. 57. Additional Provisions Regarding Real Property Taxes. If Lessee's intended improvements to the Premises result in a reassessment of Real Property Taxes for the Building and/or the Premises, Lessee shall pay the entire increase in Real Property Taxes. If and to the extent that the Premises comprise a separate tax parcel or are separately assessed, Lessee shall pay the Real Property Taxes directly to the taxing authority or if the Real Property Taxes on the Premises are part of a larger tax parcel, Lessee shall pay its share to Lessor within thirty (30) days of billing accompanied by a copy of the tax bill. If Lessor acquires fee title to Parking Area A (which is presently ground leased to Lessor), Lessee shall pay its share of any resulting increase in Real Property Taxes. If Real Property Taxes increase as a result of a change in ownership of the Premises or Building during the first three years of the term hereof (excluding Lessor's acquisition of fee title to Parking Area A), Lessee shall not be responsible for any portion of such increase for the two Lease years following the year in which such change of ownership occurs. Otherwise, Lessee shall be responsible for its share of any increase in Real Property Taxes due to a change in ownership. The parties acknowledge that Real Property Taxes on the Premises for 1998-1999 fiscal year are approximately $2,600. 58. Profit on Assignment or Subletting. In addition to the provisions of Paragraph 12 and notwithstanding anything to the contrary contained in this Lease, if Lessee shall assign (as defined in Paragraph 12.1) this Lease or sublet any portion of the Premises (regardless of whether or not Lessor's consent is required under Paragraphs 12.1 or 12.2), Lessee shall pay to Lessor as additional rent as and when received by Lessee: (a) In the case of an assignment, an amount equal to 100% of all consideration paid to Lessee by the assignee for Lessee's interest in the Lease or the Premises, whether paid in a lump sum or over time, excluding any payment for business goodwill, fixtures, inventory, customer lists, tenant improvements or use of Lessee's name; (b) In the case of a sublease, an amount equal to 100% of the amount by which the sublease rent and any other -6- Initials: M \\SERVER I\DATATORP\ WI0815038\Addendumldoc consideration paid to Lessee for the sublease or sublet premises, whether paid in a lump sum or over time, excluding any payment for business goodwill, fixtures, inventory, customer lists, tenant improvements or use of Lessee's name, exceeds the rents payable which are proportionately allocable to the sublet premises based on the ratio of the area of the sublet premises to the area of the entire Premises. (c) Lessee may assign this Lease or sublet all or any portion of the Premises only with Lessor's prior written consent; provided, however, Lessee may assign this Lease or sublet all or any portion of the Premises without Lessor's consent to (a) any entity controlled by or controlling Lessee ("Affiliates"), (b) any entity into which or with which Lessee or any Affiliate may merge or otherwise combine, or (c) any entity acquiring all or substantially all of Lessee's assets. In all cases (i) Lessee shall give Lessor written notice of such assignment and subletting, and (ii) Lessee shall remain liable for the performance of all terms, covenants and conditions of the Lease. 59. Subordination Agreements. Lessee further agrees to execute such commercially reasonable subordination, attornment and/or nondisturbance agreements as may be requested by Lessor's lender. 60. Additional Insurance Provisions. Notwithstanding the provisions of Paragraph 8, Lessee shall have the right to comply with its obligations under Paragraphs 8.1-8.6 by means of: (a) self-insurance to the extent of all or any part of insurance required under these paragraphs so long as all lenders of Lessor permit or consent to self insurance and Lessee shall have a net worth, either according to its last published report or as audited by an independent certified public accounting firm (not more than one year prior to such date), of at least Forty Million Dollars ($40,000,000.00), or if such self-insurance plan is furnished through an affiliate, subsidiary or parent corporation of Lessee, only if such affiliate, subsidiary or parent corporation shall have a net worth, either according to its last published report or as audited by an independent certified public accounting firm, of at least Forty Million Dollars ($40,000,000.00) and shall advise Lessor upon request that it is providing self-insurance; and/or (b) any so called blanket policy or policies of insurance covering this and other liability and locations of Lessee, or an affiliate, subsidiary or parent corporation of Lessee, provided that the Premises are separately scheduled and such policy or policies by the terms thereof shall allocate to the Premises and the liabilities to be insured hereunder any amount not less than the amount of insurance required to be carried pursuant to this Paragraph 8 so that the proceeds from such insurance will be an amount no less than the amount of proceeds that would be available if Lessee was insured under a unitary policy. SIBLING ASSOCIATES I, COCO'S RESTAURANTS, INC., a California general partnership a California corporation 8y:By: ,6��gjAct__a J as W. Ray I s. ManagingUrtner Its: David . DevO r• I "Lessee" By: �/ �. Michael D. Ray Its: Managing Partner "Lessor" i —7— Initials• \\SERVERI\DATA\CORP\516\10815038\Addendum3.doe \ \° #411AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION GUARANTY OF LEASE WHEREAS, SIBLING ASSOCIATES I, a California general partnership hereinafter "Lessor", and COCO's RESTAURANTS INC. a California corporation hereinafter "Lessee", are about to execute a document entitled "Lease" dated , 199%oncerning the premises commonly known as 3446 East Coast Highway Corona del Mar, California 92625 wherein Lessor will lease the premises to Lessee, and WHEREAS, FRD ACQUISITION CO a Delaware corporation hereinafter "Guarantors" have a financial interest in Lessee, and WHEREAS, Lessor would not execute the Lease if Guarantors did not execute and deliver to Lessor this Guarantee of Lease. NOW THEREFORE, in consideration of the execution of the foregoing Lease by Lessor and as a material inducement to Lessor to execute said Lease, Guarantors hereby jointly, severally, unconditionally and irrevocably guarantee the prompt payment by Lessee of all rents and all other sums payable by Lessee under said Lease and the faithful and prompt performance by Lessee of each and every one of the terms, conditions and covenants of said Lease to be kept and performed by Lessee. It is specifically agreed that the terms of the foregoing Lease may be modified by agreement between Lessor and Lessee, or by a course of conduct, and said Lease may be assigned by Lessor or any assignee of Lessor without consent or notice to Guarantors and that this Guaranty shall guarantee the performance of said Lease as so modified. This Guaranty shall not be released, modified or affected by the failure or delay on the part of Lessor to enforce any of the rights or remedies of the Lessor under said Lease, whether pursuant to the terms thereof or at law or in equity. No notice of default need be given to Guarantors, it being specifically agreed that the guarantee of the undersigned is a continuing guarantee under which Lessor may proceed immediately against Lessee and/or against Guarantors following any breach or default by Lessee or for the enforcement of any rights which Lessor may have as against Lessee under the terms of the Lease or at law or in equity. Lessor shall have the right to proceed against Guarantors hereunder following any breach or default by Lessee without first proceeding against Lessee and without previous notice to or demand upon either Lessee or Guarantors. Guarantors hereby waive (a) notice of acceptance of this Guaranty, (b) demand of payment, presentation and protest, (c) all right to assert or plead any statute of limitations relating to this Guaranty or the Lease, (d) any right to require the Lessor to proceed against the Lessee or any other Guarantor or any other person or entity liable to Lessor, (e) any right to require Lessor to apply to any default, any security deposit or other security it may hold under the Lease, (f) any right to require Lessor to proceed under any other remedy Lessor may have before proceeding against Guarantors, (g) any right of subrogation. The obligations of Lessee under the Lease to execute and deliver estoppel statements and financial statements, as therein provided, shall be deemed to also require the Guarantors hereunder to do and provide the same. The term "Lessor" refers to and means the Lessor named in the Lease and also Lessor's successors and assigns. So long as Lessor's interest in the Lease, the leased premises or the rents, issues and profits therefrom, are subject to any mortgage or deed of trust or assignment for security, no acquisition by Guarantors of the Lessor's interest shall affect the continuing obligation of Guarantors under this Guaranty which shall nevertheless continue in full force and effect for the benefit of the mortgagee, beneficiary, trustee or assignee under such mortgage, deed of trust or assignment and their successors and assigns. The term "Lessee" refers to and means the Lessee named in the Lease and also Lessee's successors and assigns. In the event any action be brought by said Lessor against Guarantors hereunder to enforce the obligation of Guarantors hereunder, the unsuccessful party in such action shall pay to the prevailing party therein a reasonable attorney's fee which shall be fixed by the court. If this Form has been filled in, it has been prepared for submission to your attorney for his approval. No representation or recommendation is made by the American Industrial Real Estate Association, the real estate broker or its agents or employees as to the legal sufficiency, legal effect, or tax consequences of this Form or the transaction relating thereto. Executed at on Address 3355 Michplson privy Suitp 35n Irvine, CA 92612 FRD ACQUISITION CO., a Delaware corporatio By:(4— rl� ---1 �( itsi David O. Devoy Vice Pre-ident "GUARANTORS" Nothwithstanding anything to the contrary herein Guarantor's liability hereunder shall be limited in the aggregate to an amount equal to the aggregate of (a) an amount equal to the Base Rent payable during the 24 months following the termination of the Lease due to Lessee's Breach or rejection in bankruptcy and (b) an amount equal to two times the Percentage Rent paid by Lessee during the last year for which Lessee provided an Annual Statement of Gross Sales Initials: For this form, write: American Industrial Real Estate Association, 700 S. Flower Street, Suite 600, Los Angeles, Calif. 9001' Standard Industrial/Commercial Single Tenant Lease -Net Table of Contents 1. BASIC PROVISIONS (a) Definitions; Consent Required ............ 4 ,,. (b) Consent..............................................4 1.1 Parties......................................................... 1 (c) Indemnification ................................... 4 1.2 Premises ..................................................... 1 7.4 Ownership; Removal; Surrender; and . 1.3 Term.............................................:............. 1 Restoration .................................................. 4 1.4 Early Possession.........................................1 (a) Ownership .......................................... 4 1.5 Base Rent ................................................... 1 (b) Removal ............................................. 4 1.6 Base Rent Paid Upon Execution ................. 1 (c) Surrender/Restoration ........................ 4 1.7 Security Deposit .......................................... 1 1.8 Agreed Use ................................................. 1 8. INSURANCE; INDEMNITY . 1.9 Insuring Party .............................................. 1 1.10 Real Estate Brokers .................................... 1 8.1 Payment for Insurance ................................ 5 ' 1.11 Guarantor .................................................... 1 8.2 Liability Insurance ....................................... 5 1.12 Addenda and Exhibits ................................. 1 (a) Carried by Lessee .............................. 5 (b) Carried by Lessor ............................... 5 2. PREMISES 8.3 Property Insurance -Building, Improvements and Rental Value ......................................... 5 2.1 Letting......................................................... 1 (a) Building And Improvements ................ 5 2.2 Condition..................................................... 1 (b) Rental Value ....................................... 5 2.3 Compliance ................................................. 1 (c) Adjacent Premises.............................. 5 2.4 Acknowledgements ..................................... 2 8.4 Lessee's Property/Business Interruption 2.5 Lessee as Prior Owner/Occupant................ 2 Insurance .................................................... 5 (a) Property Damage ............................... 5 3. TERM (b) Business Interruption .......................... 5 (c) No Representation of Adequate 3.1 Term........................................................... 2 Coverage ............................................ 5 3.2 Early Possession ......................................... 2 8.5 Insurance Policies ....................................... 5 3.3 Delay in Possession .................................... 2 8.6 Waiver of Subrogation ................................. 5 3.4 Lessee Compliance ..................................... 2 8.7 Indemnity .................................................... 5 8.8 Exemption of Lessor from Liability ............... 5 4. RENT 9. DAMAGE OR DESTRUCTION 4.1 Rent Defined ............................................... 2 4.2 Payment ...................................................... 2 9.1 Definitions................................................... 5 (a) Premises Partial Damage ................... 5 5. SECURITY DEPOSIT ................................. 2 (b) Premises Total Destruction................. 6 (c) Insured Loss ....................................... 6 6. USE (d) Replacement Cost .............................. 6 (e) Hazardous Substance Condition ........ 6 6.1 Use........................................................... 3 9.2 Partial Damage -Insured Loss ...................... 6 6.2 Hazardous Substances ............................... 3 9.3 Partial Damage -Uninsured Loss.................. 6 (a) Reportable Uses Require Consent ..... 3 9.4 Total Destruction ......................................... 6 (b) Duty to Inform Lessor ......................... 3 9.5 Damage Near End of Term ......................... 6 (c) Lessee Remediation ........................... 3 9.6 Abatement of Rent; Lessee's Remedies ..... 6 (d) Lessee Indemnification ....................... 3 (a) Abatement.......................................... 6 (e) Lessor Indemnification ........................ 3 (b) Remedies ........................................... 6 (f) Investigations and Remediations ........ 3 9.7 Termination -Advance Payments ................. 6 (g) Lessor Termination Option ................. 3 9.8 Waive Statutes............................................ 6 6.3 Lessee's Compliance with Applicable r• Requirements .............................................. 3 10. REAL PROPERTY TAXES 6.4 Inspection; Compliance ............................... 3 10.1 Definition of "Real Property Taxes" ............. 6 7. MAINTENANCE; REPAIRS; UTILITY 10.2 (a) Payment of Taxes ............................... 7 ` INSTALLATIONS; TRADE FIXTURES AND (b) Advance Payment .............................. 7 ALTERATIONS 10.3 Joint Assessment........................................7 10.4 Personal Property Taxes .............................7 7.1 Lessee's Obligations ................................... 4 (a) In General .......................................... 4 11. UTILITIES ................................................... 7 (b) Service Contracts ............................... 4 (c) Replacement ...................................... 4 7.2 Lessor's Obligations .................................... 4 7.3 Utility Installations; Trade Fixtures; ♦`�� Alterations................................................... 4 1- STN -6-2/97 12. ASSIGNMENT AND SUBLETTING 12.1 Lessor's Consent Required ......................... 7 12.2 Terms and Conditions Applicable to Assignment and Subletting .......................... 7 12.3 Additional Terms and Conditions Applicable to Subletting ................................................ 7 13. DEFAULT; BREACH; REMEDIES 13.1 Default; Breach ........................................... 8 13.2 Remedies....................................................8 13.3 Inducement Recapture ................................ 9 13.4 Late Charges .............................................. 9 13.5 Interest........................................................ 9 13.6 Breach by lessor ......................................... 9 (a) Notice of Breach ................................. 9 (b) Performance by Lessee on Behalf of Lessor................................................ 9 14. CONDEMNATION.......................................9 15. BROKER'S FEES 15.1 Additional Commission ................................ 9 15.2 Assumption of Obligations ........................... 9 15.3 Representations and Indemnities of Broker Relationships .............................................. 9 16. ESTOPPEL CERTIFICATES ....................... 9 17. DEFINITION OF LESSOR .......................... 10 18. SEVERABILITY...........................................10 19. DAYS.......................................................... 10 20. LIMITATION ON LIABILITY ........................ 10 21. TIME OF ESSENCE ................................... 10 22. NO PRIOR OR OTHER AGREEMENTS; BROKER DISCLAIMER .............................. 10 23. NOTICES 23.1 Notice Requirements ................................... 10 23.2 Date of Notice ............................................. 10 24. WAIVERS ................................................... 10 25. RECORDING .............................................. 10 26. NO RIGHT TO HOLDOVER ........................ 10 27. CUMULATIVE REMEDIES .......................... 10 28. COVENANTS AND CONDITIONS; CONSTRUCTION OF AGREEMENT .......... 10 29, BINDING EFFECT; CHOICE OF LAW ........ 10 30. SUBORDINATION; ATTORNMENT; NON -DISTURBANCE ................................. 10 30.1 30.2 Subordination .............................................. Attornment.................................................. 10 10 ya 30.3 Non -Disturbance ......................................... 11 30.4 Self -Executing ............................................. 11 31. ATTORNEYS' FEES .............................:..... 11 32. LESSORS' ACCESS; SHOWING PREMISES; REPAIRS ................................ 11 33. AUCTIONS ................................................. 11 34. SIGNS.........................................................11 35. TERMINATION; MERGER .......................... 11 36. CONSENTS ...............:................................ 11 37. GUARANTOR 37.1 Execution .................................................... 11 37.2 Default........................................................ 11 38. QUIET POSSESSION ................................. 11 39. OPTIONS 39.1 Definition..................................................... 11 39.2 Options Personal to Original Lessee ........... 11 39.3 Multiple Options .......................................... 11 39.4 Effect of Default on Options ........................ 11 40. MULTIPLE BUILDINGS .............................. 11 41. SECURITY MEASURES ............................. 12 42. RESERVATIONS ......................................... 12 43. PERFORMANCE UNDER PROTEST ......... 12 44. AUTHORITY ............................................... 12 45. CONFLICT..................................................12 46. OFFER ........................................................ 12 47. AMENDMENTS...........................................12 48. MULTIPLE PARTIES .................................. 12 49. MEDIATION AND ARBITRATION OF DISPUTES .................................................. 12 001 .STN -6-2/97 (Continuation of TABLE OF CONTENTS) ADDENDOM 50. Parking 51. Prior Lease 52. Rent Schedule 52.1 Base Rent 52.2 Cost of Living Adjustment in Base Rent 52.3 Percentage Rent 52.4 Triple Net Lease 52.5 Accord and Satisfaction 53. _Additional Provisions Regarding Use of Premises 53.1 Lessee's Use 53.2 Lessor's Right to Cancel For Failure of Lessee to Operate 54. Renovation of Premises 55. Future Capital Improvements 56. PCH Tree Replacement 57. Additional Provisions Regarding Real Property Taxes 58. Profit on Assignment or Subletting 59. Subordination Agreements 60. Additional Insurance Provisions -3- F:\CORP\516\ 10815038 W ddend u m3.doc