LEASE AGREEMENT THIS LEASE AGREEMENT, made effective the 1st day of September, 1997, by and between, LESLIE G. RUDD ("Landlord") and DEAN & DELUCA BRANDS, INC., a Delaware corporation ("Tenant"). WITNESSETH: WHEREAS, Landlord is the owner of certain real property, as described below, upon which has been constructed a building containing approximately 32,100 square feet of office and warehouse space as shown on the detailed plans and specifications set forth on Exhibit "A" (the "Building") for lease to Tenant; and WHEREAS, Landlord desires to lease to Tenant and Tenant desires to lease from Landlord the entire real property including the Building. NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties do hereby agree as follows: ARTICLE 1 DEMISED PREMISES - TERM OF LEASE Section 1.01. DESCRIPTION OF THE DEMISED PREMISES - Landlord hereby demises and leases to Tenant, and Tenant hereby hires and leases from Landlord, the property located at 2526 East 36th Street North Circle, Wichita, Kansas 67209, more particularly described as: Lot 1, Block B, Northridge Industrial Park, City of Wichita, Sedgwick County, Kansas together with the exclusive right to use all buildings, parking areas, driveways, sidewalks, walkways, and other improvements and facilities located on and at the property, together with all the right, title and interest, if any, of Landlord in and to any easements or other rights in adjoining property enuring to Landlord by reason of ownership of said property (collectively the "Demised Premises"). Section 1.02. INITIAL TERM - The initial term of this Lease ("Initial Term") shall commence on September 1, 1997 (the "Commencement Date"), and unless sooner terminated or renewed in accordance with this Lease, shall expire twenty (20) years after the Commencement Date (the "Expiration Date"). - 1 - ARTICLE 2 RENT Section 2.01. BASE RENTAL AMOUNT - Commencing on the Commencement Date and continuing through the full term of this Lease, Tenant shall pay to Landlord in the manner and at the address specified in Section 2.03 hereof, or such other place as designated in writing by Landlord during the term hereof, a net annual rent, hereinafter called "Net Rent" over and above the other payments to be made by Tenant as hereinafter provided, in the amount of One Hundred Thirty-Seven Thousand Four Hundred Sixty-Seven Dollars and Sixty Five Cents ($137,467.75), calculated at ten percent (10%) of $1,374,677.52, which amount represents the total cost of the following items: (a) the aggregate consideration paid by Landlord to acquire the Demised Premises, including, without limitation, any mortgage registration taxes and recording charges, legal fees, charges for title searches, title insurance, survey costs, and all other out-of-pocket costs directly related to the acquisition; and (b) the aggregate construction cost of the Building on the Demised Premises, including, without limitation, interest, contractor's charges and fees, architect's fees, insurance costs, legal fees and all other out-of-pocket costs directly related to the construction. The Net Rent shall be payable in equal monthly installments ("Monthly Rent") in the amount of Eleven Thousand Four Hundred Fifty-Five Dollars and Sixty-Five Cents ($11,455.65) (or such increased amount as herein provided) each. The first Monthly Rent shall be payable in advance on or before the first day of the first full calendar month of the Lease term and continuing on or before the same day of each successive calendar month thereafter during the term of this Lease, except that the Monthly Rent for the period, if any, between the Commencement Date and the first full calendar month shall be paid on or before the Commencement Date. The Monthly Rent for any period during the term of this Lease which is for less than one (1) month shall be prorated based on a thirty (30) day month. Section 2.02. ADJUSTMENT TO MONTHLY RENT - The Monthly Rent provided in Section 2.01 shall be adjusted as follows: (a) The Monthly Rent shall be adjusted on the third (3rd) calendar anniversary of the Commencement Date and on the same date every three (3) years thereafter for the remaining term of this Lease, in proportion to the increase in the Index (as defined below) which has occurred between the month immediately preceding the month in which the Commencement Date occurs (the "Base CPI Month") and the month immediately preceding the month in which the Monthly Rent is to be increased (a "Comparison CPI Month"). Landlord shall notify Tenant of each increase by delivering a written statement setting forth the Index for the Base CPI Month, the Index for the applicable Comparison CPI Month, the percentage increase between those two Indices, and the new Monthly Rent payable by Tenant. The Monthly Rent shall not be reduced from the last previous adjusted Monthly Rent by reason of any decrease in the Index. If Landlord's notice is given after the effective date of an increase, Tenant shall nevertheless be obligated to pay the new Monthly Rent from its effective date until the next periodic increase. In such event, within ten (10) days of Landlord's notice, Tenant shall pay Landlord the additional Monthly Rent for the period between the effective date of the increase and Landlord's notice, and thereafter shall pay the new Monthly Rent on or before the first day of each month as provided in Section 2.01. (b) The term "Index" means the United States Department of Labor, Bureau of Labor Statistics, Consumer Price Index - Urban Consumers (U.S. City Average) on the basis of 1982-84 = 100. If the format or components of the Index are materially changed after the execution of this Lease, Landlord shall substitute an index which is published by the Bureau of Labor Statistics, or a similar agency, and which in Landlord's judgment, is equivalent to the Index in effect on the date of this Lease. Landlord shall notify Tenant of the substituted index, which shall be used to calculate the increase in the Monthly Rent. - 2 - Section 2.03. PLACE OF PAYMENT - Until Tenant shall have been given notice otherwise by Landlord under the provisions of Article 17 hereof, Tenant shall pay the Net Rent to Landlord at c/o LRICO, 314 South Galena, Aspen, Colorado 81611. Section 2.04 LATE CHARGE - The Monthly Rent shall be past due on the tenth (10th) day of each successive month. If the Tenant should fail to pay the Landlord when due any installment of rental or other sum to be paid hereunder, Tenant shall pay Landlord on demand a late charge of five percent (5%) thereof. Failure to pay such late charge upon demand therefor shall be an event of default hereunder. Provisions for such late charge shall be in addition to all other rights and remedies available to Landlord hereunder or at law or in equity and shall not be construed as liquidated damages or limiting Landlord's remedies in any manner; further provided that such late charge shall automatically accrue notwithstanding whether Landlord shall have given Tenant written notice of any such delay in payment. Section 2.05. NET RENT - It is the purpose and intent of Landlord and Tenant that this is a net lease and that the Net Rent shall, except as herein otherwise provided, be absolutely net to Landlord, the Net Rent specified in Section 2.01 hereof in each year during the term of this Lease, and that all costs, expenses and obligations of every kind and nature whatsoever relating to the Demised Premises, except as herein otherwise provided, which may arise or become due during or out of the term of this Lease shall be paid by Tenant, and that Landlord shall be indemnified and saved harmless by Tenant from and against the same. Section 2.06. NO SET-OFF - The Net Rent, together with any additional rents, all other sums, impositions (as defined in this document), costs, expenses and other payments which Tenant assumes and agrees to pay in any of the provisions of this Lease, shall be paid to the Landlord without notice, demand, abatement, deduction or set-off. In the event of any nonpayment thereof, the Landlord shall have (in addition to all other rights and remedies) all of the rights and remedies provided for herein or by law in the case of nonpayment of the Net Rent. Section 2.07. ACCORD AND SATISFACTION - No payment by Tenant or receipt by Landlord of a lesser amount then the Monthly Rent or any other charge or fee stipulated in this Lease shall be deemed to be other than on account of the earliest stipulated rent, fee or other charge, nor shall any endorsement or statement on any check or any letter accompanying any check or payment be deemed as creating an accord and satisfaction, and Landlord may accept such a check or payment without prejudice to Landlord's right to recover the balance of the rent, fee or charge or pursue any other remedy provide for in this Lease. Section 2.08. CONTINGENT RENT - Notwithstanding anything herein to the contrary, in addition to the annual Net Rent provided above, beginning on the Commencement Date and continuing through the full term of this Lease, an additional contingent rent equal to twenty percent (20%) of the Monthly Rent shall accrue for the benefit of Landlord (the "Contingent Rent"). The Contingent Rent shall bear simple interest (computed on the basis of a 360-day year, 30 day month) on the accumulated balance thereof, at a rate of seven percent (7%) per annum. In the event of an initial public offering of Tenant's common stock (the "D&D Common Stock"), Landlord shall be paid in cash or cash equivalents, the Contingent Rent and the interest accrued thereon to the date of such public offering, within five (5) days thereof, or at Landlord's option, Landlord shall have a right to convert the Contingent Rent and the interest accrued thereon to the date of such public offering into D&D Common Stock. The Contingent Rent shall continue to accrue after the date of the public offering during the remainder of the full term of this Lease and be payable to Landlord in cash at the same time and in the same manner as the Net Rent. Tenant shall give Landlord written notice of its intent to make an initial public offering of the D&D Common Stock at least sixty (60) days prior to such public offering. Landlord shall notify Tenant in writing of his intent to accept cash or exercise said conversion right within thirty (30) days after receipt of such notice from Tenant. The conversion shall take place on such date as is mutually agreeable to both parties after considering applicable securities laws and regulations, but in no event shall the date of conversion be more than one hundred eighty (180) days after such initial public offering of the D&D Common Stock unless an extension of time is granted by Landlord, in his sole discretion. The conversion price per share shall be the initial offering price on the date of the initial public offering - 3 - of the D&D Common Stock. If at any time during the term of this Lease the Tenant sells all or substantially all of its assets or dissolves, liquidates or winds up its affairs, merges, reorganizes, consolidates, or combines its assets with those of another unrelated or unaffiliated corporation, or if the holders of substantially all of the D&D Common Stock exchange such stock for stock or securities or property of another unrelated or unaffiliated corporation, the Landlord shall be entitled to receive immediately the Contingent Rent and interest accrued thereon to the date of such event as described herein, in cash or cash equivalents; provided, however, if at the expiration of the Lease including any renewal terms, Tenant has not made an initial public offering of D&D Common Stock, and none of the events described herein have occurred, then Tenant shall not be obligated to pay to Landlord the Contingent Rent or the interest thereon. Section 2.09. RIGHT TO SELL THE DEMISED PREMISES - Notwithstanding anything herein to the contrary, in addition to the annual Net Rent and Contingent Rent provided above, beginning on the Commencement Date and continuing each month thereafter until such time, if any, as Tenant makes an initial public offering of its common stock ("D&D Common Stock"), Landlord shall have a right, but not the obligation, to sell the Demised Premises to the Tenant at its fair market value, as determined by an independent appraiser, on the date of such public offering. In the event of any dispute as to the determination of said fair market value that cannot be resolved by the parties, such dispute shall be resolved by arbitration, with Landlord or Landlord's legal representative, appointing one independent arbitrator, Tenant appointing one independent arbitrator, and these two arbitrators appointing a third independent arbitrator, and with the decision of the majority of such arbitrators to be binding on all parties hereto. Tenant shall give Landlord written notice of its intent to make an initial public offering of the D&D Common Stock at least sixty (60) days prior to such public offering. Landlord shall notify Tenant in writing of his intent to exercise said right to sell the Demised Premises within two hundred forty (240) days after receipt of such notice from Tenant. The close on the sale shall take place on such date as is mutually agreeable to both parties after considering applicable securities laws and regulations, but in no event shall the date of close be more than one hundred eighty (180) days after such initial public offering of the D&D Common Stock unless an extension of time is agreed to by the parties. The purchase price shall be paid in cash or D&D Common Stock at the sole option of the Landlord. In the event the Landlord elects to receive D&D Common Stock, the price per share shall be the initial offering price on the date of the initial public offering of the D&D Common Stock. If at any time during the term of this Lease the Tenant sells all or substantially all of its assets or dissolves, liquidates or winds up its affairs, merges, reorganizes, consolidates, or combines its assets with those of another unrelated or unaffiliated corporation, or if the holders of substantially all of the D&D Common Stock exchange such stock for stock or securities or property of another unrelated or unaffiliated corporation, the Landlord shall be entitled to immediately sell the property to Tenant or its successor in interest, for cash or cash equivalents; provided, however, if at the expiration of the Lease including any renewal terms, Tenant has not made an initial public offering of D&D Common Stock, and none of the events described herein have occurred, then Tenant shall not be obligated to purchase the Demised Premises. ARTICLE 3 PAYMENT OF TAXES, ASSESSMENTS, IMPOSITIONS, ETC. Section 3.01. TENANT'S OBLIGATIONS - Tenant shall pay or cause to be paid before any fine, penalty, interest or cost may be added thereto for the nonpayment thereof, all taxes, assessments, water and sewer rents, rates and charges, levies, license and permit fees and other governmental impositions, duties and charges, general and special, ordinary and extraordinary, foreseen and unforeseen, of any kind and nature whatsoever, which at any time during the term of this Lease may be assessed, levied, confirmed, imposed upon, or grow or become due and payable out of or in respect of, or become a lien on, the Demised Premises, or any part thereof or any appurtenance thereto (all such taxes, assessments, water and sewer rents, rates and charges, levies, license and permit fees and other governmental charges being hereinafter referred to as "Impositions," and any of the same being hereinafter referred to as an "Imposition"); provided, however, that: (a) If, by law, any Imposition may at the option of the payer be paid in installments, Tenant may pay the same in such installments. Tenant shall pay only such installments as shall become due during the term of this Lease; and - 4 - (b) All Impositions for the fiscal or tax years in which the term of this Lease shall begin and end shall be apportioned so that Tenant shall pay only those portions thereof which correspond with the portion of said years as are within the terms hereby demised. The obligation of the Tenant attributable to the Demised Premises shall apply whether any tax, charge or any other Imposition referred to above is imposed, during the Lease term or any extension of the term, by virtue of any present or future laws, rules requirements, orders, directions, ordinances or regulations of the United States of America, or of the State of Kansas, or of the county, city government, any other municipal or lawful authority wherein the Demised Premises is located. Section 3.02. LANDLORD'S OBLIGATIONS - Nothing herein contained shall require Tenant to pay municipal, state or federal income taxes assessed against Landlord, municipal, state or federal capital levy, or transfer taxes of Landlord or corporation excess profits or franchise taxes imposed upon any corporate owner of the fee of the Demised Premises, or any income, profits or revenue tax, assessment or charge imposed upon rent as such, payable by Tenant under this Lease. Section 3.03. EVIDENCE OF PAYMENT - Tenant shall furnish to Landlord or, if required by Landlord, to any fee mortgagee, within thirty (30) days after the date when any Imposition would become delinquent, official receipts of the appropriate taxing authority or other evidence satisfactory to Landlord or such mortgagee evidencing the payment thereof. Section 3.04. TENANT'S RIGHT TO SEEK REDUCTION - Tenant shall be privileged to seek a reduction in the valuation of the Demised Premises for tax purposes and to contest in good faith by appropriate proceedings, at Tenant's expense, the amount or validity in whole or in part of any Imposition. Section 3.05. LANDLORD'S RIGHT TO SEEK REDUCTION - Landlord shall have a right to seek a reduction in the valuation of the Demised Premises assessed for tax purposes and to prosecute any action or proceeding theretofore commenced by Tenant, if such assessed valuation or valuations shall in whole or in part relate and pertain to any period of time subsequent to the expiration or termination of this Lease. To the extent to which any tax refund payable as a result of any proceeding in the nature of certiorari which Landlord or Tenant may institute, or payable by reason of compromise or settlement of any such proceeding, may be based upon a payment made by anyone other than Landlord and shall not relate to a period as to which apportionment thereof has been made with Landlord, Tenant shall be authorized to collect the same subject, however, to Tenant's obligation to reimburse Landlord forthwith for any expense incurred by Landlord in connection therewith. Section 3.06. LANDLORD'S JOINDER - Landlord shall not be required to join in any proceedings referred to in Section 3.04 hereof unless the provisions of any law, rule or regulation at the time in effect shall require that such proceedings be brought by or in the name of Landlord or any owner of the Demised Premises, in which event Landlord shall join in such proceedings or permit the same to be brought in his name. Landlord shall not ultimately be subjected to any liability for the payment of any costs or expenses in connection with any such proceedings, and Tenant shall indemnify and save harmless Landlord from any such costs and expenses. Tenant shall be entitled to any refund of any Imposition and penalties or interest thereon received by Landlord which have been paid by Tenant, or which have been paid by Landlord but previously reimbursed in full by Tenant. Section 3.07. PROOF OF PAYMENT - The certificate, advice, receipt or bill of the appropriate official designated by law to make or issue the same or to receive payment of any Imposition, or nonpayment of such Imposition, shall be prima facie evidence that such Imposition is due and unpaid or has been paid at the time of the making or issuance of such certificate, advice, receipt or bill. Section 3.08. ATTORNEY-IN-FACT - Landlord appoints Tenant the attorney-in-fact of Landlord for the purpose of making all payments to be made by Tenant pursuant to any of the provisions of this Lease to persons or entities other than Landlord. In case any person or entity to whom any sum is directly payable by Tenant under any - 5 - of the provisions of this Lease shall refuse to accept payment of such sum from Tenant, Tenant shall thereupon give written notice of such fact to Landlord and shall pay such sum directly to Landlord, and Landlord shall thereupon pay such sum to such person or entity. Section 3.09. UTILITIES - Tenant shall procure for its own account, and shall pay when due, the cost of all water, sewer, gas, electrical power, heat, fuel, telephone and other services consumed in or at the Demised Premises. ARTICLE 4 SURRENDER Section 4.01. SURRENDER - Except as herein otherwise provided, Tenant shall on the last day of the term or upon any earlier termination of this Lease well and truly surrender and deliver up the Demised Premises to the possession and use of Landlord without fraud or delay, free and clear of all lettings and occupancies, and free and clear of all liens and encumbrances, other than those, if any, presently existing, and in the same physical condition as existing at the Commencement Date, reasonable wear and tear excepted. Title to all leasehold improvements on the Demised Premises shall remain in the Tenant until expiration or termination of this Lease, at which time all such improvements shall become the property of Landlord. Section 4.02. FIXTURES - Where furnished by or at the expense of Tenant or any subtenant, furniture, trade fixtures and business equipment may be removed by Tenant at or prior to the termination of this Lease or by such subtenant at or prior to the termination of its sublease; provided, however, that the removal thereof will not injure the Demised Premises or necessitate changes in or repairs to the same. Tenant shall pay or cause to be paid to Landlord the cost of repairing any damage arising from such removal and restoration of the Demised Premises to their condition prior to such removal. Section 4.03. PERSONAL PROPERTY - Any personal property of Tenant or any subtenant which shall remain in the Demised Premises after the termination of this Lease and the removal of Tenant or such subtenant from the Demised Premises, may, at the option of Landlord, be deemed to have been abandoned by Tenant or such subtenant, and either may be retained by Landlord as his property or be disposed of, without accountability, in such manner as Landlord may see fit; or if Landlord shall give written notice to Tenant to such effect, such property shall be removed by Tenant at Tenant's sole cost and expense. If this Lease shall terminate pursuant to Article 15 hereof, then, notwithstanding Sections 4.02 and 4.03 hereof, Tenant or any subtenant shall have a reasonable time thereafter to remove any property which it shall be entitled to remove pursuant to Section 4.02 hereof. Section 4.04. HOLDING OVER - In the event Tenant continues to occupy the Demised Premises after the last day of the term or any extended term of this Lease, and the Landlord elects to accept rent thereafter, a tenancy from month to month only shall be created and not for any longer period. Such tenancy shall be upon the same terms and conditions as set forth in this Lease as would be applicable thereto and the rent shall be at the same rate as the rent for the last month of the term of this Lease. Nothing is this Article 4 shall be deemed to permit Tenant to retain possession of the Demised Premises after the expiration or sooner termination of the Lease. Section 4.05. LANDLORD'S RIGHT TO ENTRY - Landlord, and those persons authorized by Landlord shall have the right to enter the Demised Premises at all reasonable times and upon reasonable notice for the purpose of showing the same to prospective purchasers and/or mortgagees. Further, during the last six (6) months of the Initial Term or of the Renewal Term, Landlord and those persons authorized shall have the right at reasonable times and upon reasonable notice to show the Demised Premises to prospective tenants. Landlord's entry to the Demised Premises shall not, under any circumstances, be deemed to be a forcible or unlawful entry into, or a detainer of, the Demised Premises, or an eviction of Tenant from the Premises or any portion thereof. Section 4.06. SURVIVAL - The provisions of this Article 4 shall survive any termination of this Lease. - 6 - ARTICLE 5 INSURANCE Section 5.01. HAZARD INSURANCE - At all times during the term of this Lease, Tenant, at its sole cost and expense, shall maintain in effect a policy or policies of insurance on the improvements on the Demised Premises with responsible insurers satisfactory to Landlord, on an "all risk" or "special form" basis, insuring the improvements in an amount equal to 100% of the replacement cost thereof, excluding land, foundations, footing and underground installations. During the term hereof, Tenant further agrees that it will suffer nothing to remain on or about the Demised Premises which may invalidate such insurance on any part thereof. Section 5.02. OTHER INSURANCE - At all times during the term of this Lease, Tenant, at its sole cost and expense, shall maintain for the mutual benefit of Landlord and Tenant, general public liability insurance, against claims for bodily injury, death or property damage occurring upon, in or about the Demised Premises and on, in or about the adjoining sidewalks and passageways (including, without limitation, personal injury, death or property damage resulting directly or indirectly from any change, alteration, improvements or repair thereof) with a combined single limit equal to One Million Dollars ($1,000,000.00). Said amounts to be periodically adjusted at least every two (2) years to reflect any necessary coverage changes to comport with inflationary or deflationary trends. Section 5.03. EVIDENCE OF INSURANCE - All insurance provided for in this Article 5 shall be effected under valid and enforceable policies issued by insurers of recognized responsibility and satisfactory to Landlord. Upon the execution of this Lease and thereafter not less than fifteen (15) days prior to the expiration dates of the expiring policies theretofore furnished pursuant to this Article 5, originals of the policies (or, in the case of general public liability insurance, certificates of the insurers) bearing notations evidencing the payment of premiums or accompanied by other evidence satisfactory to Landlord of such payment, shall be delivered by Tenant to Landlord. Section 5.04. NO OTHER INSURANCE - Except with respect to the insurance required by Section 5.02 hereof, neither Landlord nor Tenant shall take out separate insurance concurrent in form or contributing in the event of loss with that required in this Article 5 to be furnished by, or which may reasonably be required to be furnished by Tenant unless Landlord and Tenant are included therein as the insured, with loss payable as in this Lease provided. Each party shall immediately notify the other of the placing of any such separate insurance and shall cause the same to be delivered as in Section 5.03 hereof required. Section 5.05. ADJUSTMENT OF LOSSES - All policies of insurance provided for in Sections 5.01 and 5.02 hereof shall name Landlord and any mortgagee, when requested, as the interest of any such mortgagee may appear, by standard mortgagee clause, if obtainable. In case of any particular casualty resulting in damage or destruction not exceeding Ten Thousand Dollars ($10,000.00) in the aggregate, the loss under such policies shall be adjusted by Tenant and the insurance companies and shall be payable to Tenant. In case of such damage or destruction in excess of Ten Thousand Dollars ($10,000.00), the loss shall be adjusted with the insurance companies by Tenant and Landlord, and the proceeds of any such insurance, as so adjusted, shall be payable to a bank or trust company in the city of Wichita, Kansas, selected by Tenant and Landlord, willing to act hereunder as a depository, which bank or trust company shall be authorized to disburse said insurance proceeds to Tenant as the work for the restoration of the Demised Premises progresses in accordance with Section 5.8 hereof. All such policies shall provide that the loss, if any, thereunder shall be adjusted and paid as herein above provided. Each such policy shall, to the extent obtainable, contain a provision that no act or omissions of Tenant or any sublessee shall affect or limit the obligation of the insurance company so to pay the amount of any loss sustained. Section 5.06. NOTICE TO LANDLORD AND MORTGAGEES - Each such policy or certificate therefor issued by the insurer shall, to the extent obtainable, contain an agreement by the insurer that such policy shall not be canceled without at least ten (10) days' prior written notice to Landlord and to any mortgagee named therein. Section 5.07. UNEARNED PREMIUMS - Upon the expiration of this Lease, the unearned premiums upon any such transferable insurance policies shall be apportioned if Tenant shall not then be in default in the performance of any of Tenant's agreements, terms, covenants and conditions in this Lease provided. - 7 - Section 5.08. RESTORATION - In the event any of the improvements on the Demised Premises are damaged or destroyed, Tenant shall restore the Demised Premises and the improvements, or shall cause the same to be restored, in accordance with the plans and specifications for the original improvements on the Demised Premises, subject to changes reasonably acceptable to Landlord. Such reconstruction shall be paid for with funds received from the insurers of the Demised Premises, and Tenant shall have no obligation to pay for any such restoration or reconstruction except by use of such funds received from such insurers. Tenant shall furnish to Landlord plans for reconstruction and repair of the improvements within sixty (60) days after the occurrence of any casualty and shall post a reasonable bond to ensure such restoration and commence the repair and reconstruction thereof within thirty (30) days thereafter in accordance with said plans with due diligence. In the event that any of the insurance monies paid by the insurance companies to either Landlord or a depository, with respect to the Demised Premises and improvements as herein above provided, shall remain after the completion of such restoration, the excess shall be retained by, or paid to, Tenant or as it may direct for it own account. Section 5.09. COOPERATION - Landlord and Tenant each agree that it will cooperate with the other, to such extent as such other party may reasonably require, in connection with the prosecution or defense of any action or proceeding arising out of, or for the collection of, the collection of any insurance money that may be due in the event of any loss or damage; and that it will execute and deliver to such other party such instruments as may be required to facilitate the recovery of any insurance monies, but the costs and expenses of all such actions and proceedings shall be paid by Tenant. Section 5.10. MORTGAGEES - All insurance maintained and required to be maintained by Tenant hereunder shall provide for Landlord's mortgagees' requirements as to amount, form, content and carrier. The term "mortgagees," as used in this Lease, shall include the trustee and beneficiary under any applicable deed of trust. Section 5.11. BLANKET INSURANCE - Any insurance required to be provided by Tenant pursuant to this Lease may be provided by blanket insurance covering the Demised Premises and other locations of Tenant provided such blanket insurance complies with all of the other requirements of this Lease with respect to the insurance involved. ARTICLE 6 LANDLORD'S RIGHTS TO PERFORM TENANT'S COVENANTS Section 6.01. LANDLORD'S RIGHTS - If Tenant shall at any time fail to pay any Imposition in accordance with the provisions of Article 3 hereof, or to take out, pay for, maintain or deliver any of the insurance policies or certificates therefor as provided for in Article 5 hereof, or shall fail to make any other payment or perform any other act on its part to be made or performed, then Landlord, after ten (10) days notice to Tenant (or without notice in case of an emergency) and without waiving or releasing Tenant from any obligation of Tenant contained in this Lease, or from any default by Tenant and without waiving Landlord's right to take such action as may be permissible under this Lease as a result of such default, may (but shall be under no obligation to): (a) Pay any Imposition payable by Tenant pursuant to the provisions of Article 3 hereof; or (b) Take out, pay for and maintain any of the insurance policies provided for in Article 5 hereof; or (c) Make any other payment or perform any other act on Tenant's part to be made or performed as in this Lease provided, and may enter upon the Demised Premises for any such purpose and take all such action thereon as may be necessary therefor. All sums so paid by Landlord and all costs and expenses incurred by Landlord in connection with the performance of any such act shall constitute additional rent payable by Tenant under this Lease and shall be paid by - 8 - Tenant to Landlord on demand, together with interest at fifteen percent (15%) per annum from the date of such advancement. ARTICLE 7 REPAIRS AND MAINTENANCE; WASTE; RIGHT OF INSPECTION Section 7.01. CONDITION OF DEMISED PREMISES - The Demised Premises shall be delivered to Tenant in an "as is" and "all faults" condition and Landlord shall have no obligation whatsoever to alter, remodel, improve, repair, decorate or paint the Demised Premises or any part thereof during the term of this Lease except to the extent expressly provided herein. By accepting possession of the Demised Premises, Tenant shall be deemed to have acknowledged that the Demised Premises are suitable for its purposes and in good condition and repair. Tenant acknowledges and agrees that it has inspected, or prior to the Commencement Date will inspect, the Demised Premises and that Tenant is not relying on any representations or warranties made by Landlord regarding the Demised Premises, except as may be expressly set forth herein. Section 7.02. REPAIRS AND MAINTENANCE - Throughout the term of this Lease, Tenant, at its sole cost and expense, shall take good care of the Demised Premises, all alleyways and passageways and the sidewalks adjoining the same, and shall keep the same in good order and condition, except for reasonable wear and tear, and make all necessary repairs thereto, interior and exterior, structural and nonstructural, ordinary and extraordinary, and foreseen and unforeseen. All repairs made by Tenant shall be at least equal in quality and class to the original work. Tenant shall do or cause others to do all necessary shoring of foundations and walls of any structures on the Demised Premises and every other act or thing for the safety and preservation thereof which may be necessary by reason of any excavation or other building operation upon any adjoining property or street, alleyway or passageway. Tenant shall put, keep and maintain all portions of the Demised Premises, the sidewalks, curbs, alleyways and passageways adjoining the same in a clean and orderly condition, free of dirt, rubbish, snow, ice and unlawful obstructions. Section 7.03. ALTERATIONS AND ADDITIONS - Tenant shall not make or permit to be made any alterations, additions or improvements (singularly and collectively "Alterations") to or of the Demised Premises or any part thereof without the prior written consent of Landlord in each instance. However, Landlord's consent shall not be required for minor decorations of the Demised Premises such as wall coverings and wall hangings, built-in cabinetry and moveable partitions, nor for the installation of furnishings. Any Alterations which Tenant shall make or permit to be made shall comply with all laws. Tenant, at its expense shall obtain all necessary permits and certificates for the commencement and performance of Alterations and for final approval thereof upon completion, and shall cause the Alterations to be performed in compliance therewith and with all applicable insurance requirements, and in good, first-class and workman like manner. Tenant, at its expense, shall diligently cause the cancellation or discharge of all notices of violation arising from or otherwise connected with Alterations, or any other work, labor, services or materials done for or supplied to Tenant, or by any person claiming through or under Tenant. Throughout the performance of the Alterations, Tenant, at its expense, shall carry, or cause to be carried, in addition to the insurance described in Article 5, Workers' Compensation insurance in statutory limits and such other insurance as Landlord may reasonably require, with insurers reasonably satisfactory to Landlord. Tenant shall furnish Landlord with satisfactory evidence that such insurance is in effect at or before the commencement of the Alterations and, upon request, at reasonable intervals thereafter until completion of the Alterations. Section 7.04. NO WASTE - Tenant shall not do or suffer any waste or damage, disfigurement or injury to the Demised Premises, or any part thereof, but this shall not be deemed to prevent demolition or alteration pursuant to other provisions of this Lease. Section 7.05. RIGHT OF INSPECTION - Tenant shall permit Landlord and his authorized representatives to enter the Demised Premises at all reasonable times for the purposes of: (a) Inspecting the same; and - 9 - (b) Making all necessary repairs thereto and performing any work therein that may be necessary by any reason of Tenant's failure to make any such repairs, or perform any such work, or to commence the same ten (10) days after written notice from Landlord (or without notice in the case of emergency). Nothing herein shall imply any duty upon the part of Landlord to do any such work, and performance thereof by Landlord shall not constitute a waiver of Tenant's default in failing to perform the same. Landlord's entry to the Demised Premises shall not, under any circumstances, be deemed to be a forcible or unlawful entry into, or a detainer of, the Demised Premises, or an eviction of Tenant from the Demised Premises or any portion thereof. ARTICLE 8 COMPLIANCE WITH LAWS, USE OF PROPERTY Section 8.01. COMPLIANCE WITH LAWS - Tenant shall not use, or allow the use, or allow the Demised Premises to be used for any unlawful purpose, or in violation of any certificate of occupancy covering or affecting the use of the Demised Premises, or any part thereof, which may, in law, constitute a nuisance, public or private, or which may make void or voidable any insurance then in force with respect thereto. Tenant shall have the right to contest, by appropriate legal proceedings, without cost or expense to Landlord, the validity of any law, ordinance, order, rule, regulation or requirement affecting the Demised Premises and to postpone compliance with the same; provided, such contest shall be promptly and diligently prosecuted by and at the expense of Tenant, that Landlord shall not thereby suffer any civil or be subject to any criminal penalties or sanctions, and that Tenant shall properly protect and save harmless Landlord against any liability and claims for any such noncompliance. Section 8.02. LANDLORD'S TITLE - Tenant shall not suffer or permit the Demised Premises, or any portion thereof, to be used by the public, as such, without restriction or in such manner as might reasonably tend to impair Landlord's title to the Demised Premises, or any portion thereof, or in such manner as might reasonably make possible a claim or claims of adverse usage, adverse possession or prescription by the public, as such or of implied dedication, of the Demised Premises, or any portion thereof. Tenant hereby acknowledges that Landlord does not hereby consent, expressly or by implication, to the unrestricted use or possession of the whole or any portion of the Demised Premises by the public, as such. Section 8.03. SIGNS - Tenant shall have the right to install, maintain and replace, in, on or over, or in front of the Demised Premises, such signs and advertising matter as Tenant may desire, and Tenant shall comply with all the applicable requirements of governmental authorities having jurisdiction thereof and shall obtain any and all necessary permits for such purposes. As used herein, the word "sign" shall be construed to include any placard, light or other advertising symbol or object, irrespective of whether the same is temporary or permanent. ARTICLE 9 OPTION TO RENEW LEASE Section 9.01. OPTION TO RENEW INITIAL TERM - At the expiration of the Initial Term of this Lease, provided that Tenant is not in default hereunder, Tenant shall have the right and option to renew this Lease for one (1) additional consecutive period of five (5) years (the "Renewal Term"). Such Renewal Term shall commence as of the end of the Initial Term of this Lease. If Tenant shall desire to exercise its right and option with respect to the Renewal Term, it shall give Landlord notice of the intent to renew in writing not less than twelve (12) months prior to the expiration of the Initial Term. Upon such exercise, the Term of the Lease shall automatically be extended for the Renewal Term without the execution of any further instrument by the parties; provided that Landlord and Tenant shall, if requested by either party, execute and acknowledge an instrument confirming the exercise of the Renewal Term. The failure of the Tenant to give such notice to Landlord in writing during the time period, shall be conclusively deemed as an election by the Tenant not to renew and extend the Term of this Lease. Any and all reference herein to the term of the Lease shall include any renewal period exercised hereunder. - 10 - ARTICLE 10 DISCHARGE OF LIENS Section 10.01. DISCHARGE - Tenant shall not create or permit to be created or to remain, and shall discharge any mechanic's, laborer's or materialman's lien, or any conditional sale, title retention agreement, or chattel mortgage which might be or become a lien, encumbrance or charge upon the Demised Premises, or any part thereof, having any priority or preference over or ranking on a parity with the estate, rights and interest of Landlord in the Demised Premises, or any part thereof. Section 10.02. RIGHT TO CONTEST - If any mechanic's, laborer's or materialman's lien shall at any time be filed against the Demised Premises, or any part thereof, Tenant, within sixty (60) days after notice of the filing thereof, shall cause the same to be discharged of record by payment, deposit, bond, order of a court of competent jurisdiction or otherwise; provided, however, nothing herein shall be construed as preventing Tenant from contesting the validity thereof, and it shall not be deemed to be an event of default hereunder so long as Tenant is in the process of good faith negotiations or litigation so contesting such validity. Section 10.03. NO CONTEST - Nothing contained in this Lease shall be deemed or construed in any way as constituting the consent or request of Landlord, express or implied by inference or otherwise, to any contractor, subcontractor, laborer or materialman for the performance of any labor or the furnishing of any material for any specific improvement, alteration to or repair of the Demised Premises, or any part thereof. ARTICLE 11 ENVIRONMENTAL Section 11.01. PRESENCE AND USE OF HAZARDOUS SUBSTANCES - Tenant shall not, without Landlord's prior written consent, keep on or around the Demised Premises for use, disposal, treatment, generation, storage or sale, any substances designated as, or containing components designated as hazardous, dangerous, toxic or harmful (collectively referred to as "Hazardous Substances"), and/or any substance that is subject to regulation by and then current federal, state or local law, statute or ordinance and the rules and regulations implementing them, including, but not limited to, the Resources Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.); the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. ss. 9601 et seq.); the Clean Water Act (33 U.S.C. ss. 1251 et seq.); the Clean Air Act (42 U.S.C. ss. 7401 et seq.); the Toxic Substance Control Act (15 U.S.C. ss. 2601 et seq.); and the Hazardous Material Transportation Act (49 U.S.C. ss. 1801 et seq.). With respect to such Hazardous Substance, Tenant shall: (a) Comply promptly, timely and in all material respects with all governmental requirements for reporting keeping and submitting manifests, and obtaining and keeping current identification numbers, and submit to Landlord true and correct copies of all reports, manifests and identification numbers at the same time as thereby are required to be and/or are submitted to the appropriate governmental authorities; and (b) Within ten (10) days of Landlord's request, submit written reports to Landlord regarding Tenant's use, storage, treatment, transportation, generation, disposal or sale of Hazardous Substances and provide evidence satisfactory to Landlord of Tenant's compliance with the applicable government regulations; and (c) Allow Landlord or Landlord's agent or representative to come on the Demised Premises at all reasonable times and after reasonable notice to check Tenant's compliance with all applicable governmental regulations regarding Hazardous Substances; and (d) Comply with minimum levels, standards or other performance standards or requirements which may be set forth or established for certain Hazardous Substances (if minimum standards or levels are applicable to Hazardous Substances present on the Demised Premises, such levels or standards shall be - 11 - established by an on-site inspection by the appropriate governmental authorities and shall be set forth in an addendum to the Lease; and (e) Comply with all applicable governmental rules, regulations and requirements regarding the proper and lawful use, sale, transportation, generation, treatment and disposal of Hazardous Substances; and (f) Pay to Landlord upon demand as additional rent any and all costs reasonably incurred by Landlord and associated with Landlord's inspection of the Demised Premises pursuant to this Section and Landlord's monitoring of Tenant's compliance with this Article 11, including, but not limited to, Landlord's reasonable attorneys' fees and costs, payment of which expenses shall only be due if incurred by Landlord after Landlord's having reasonable belief that Tenant is not in compliance with this Article 11 and Landlord's having communicated notice of noncompliance to Tenant with Tenant having failed to comply, or commence compliance within ten (10) days of receipt of such notice from Landlord. Section 11.02. UNAUTHORIZED RELEASE OF HAZARDOUS SUBSTANCES CLEANUP COSTS, DEFAULT AND INDEMNIFICATION - Tenant agrees as follows: (a) Tenant shall give immediate written notice to Landlord of any release, spill, discharge or threatened discharge of any Hazardous Substance at the Demised Premises or surrounding environment, in which said release was not made pursuant to or in conformance with the terms of any permit or license issued to Tenant by the appropriate governmental authority. This notice shall include a description of measures taken or proposed to be taken by Tenant to contain and/or remedy the release and any resultant damage to property, persons, the Demised Premises and/or the environment. Tenant shall also give immediate written notice to Landlord of any private or governmental investigation relating to Hazardous Material on or about the Demised Premises. (b) At Tenant's own expense, Tenant shall promptly take all steps necessary to contain and remedy any release of Hazardous Substances to or in the Demised Premises or surrounding environment, and all resultant damage or injury to property, person, and the environment. Landlord shall have the right, but not the obligation, to participate in and approve any environmental assessment or remedial cleanup plan for the Demised Premises. Tenant, its employees, agents and contractors shall fully cooperate with any and all federal, state and local governmental officials having jurisdiction over the Demised Premises in resolving any situation referring to the presence of Hazardous Substances on or about the Premises. (c) Tenant shall be fully and completely liable to Landlord for any and all cleanup costs, and any an all other charges, fees penalties (civil and criminal) imposed by any governmental authority with respect to Tenant's use, generation, handling, storage, containment, disposal, transportation, and/or sale of Hazardous Substances. (d) Tenant shall indemnify, defend and save Landlord harmless from any and all of the costs, fees, penalties and charges assessed against or imposed upon Landlord (as well as Landlord's attorneys' fees and costs) as a result of Tenant's use, generation, handling, storage, containment, disposal, transportation, and/or sale of Hazardous Substances. With regard to Sections 11.01 and 11.02, Tenant's obligations hereunder shall survive the expiration or earlier termination of this Lease. Upon Tenant's default under Sections 11.01 or 11.02, and in addition to the rights and remedies set forth elsewhere in this Lease, Landlord shall be entitled to the following rights and remedies: (i) at Landlord's option, to terminate this Lease immediately; and (ii) to recover any and all damages associated with the default, including, but not limited to cleanup costs and charges, civil and criminal penalties and fees, loss of business by Landlord, and any and all damages and claims asserted by third parties and Landlord's attorneys' fees and costs. - 12 - ARTICLE 12 INDEMNIFICATION OF LANDLORD 12.01. INDEMNIFICATION - Tenant shall defend, indemnify and save harmless Landlord against and from all liabilities, obligations, damages, penalties, claims, costs, charges and expenses, including, but not limited to, reasonable architects' and attorneys' fees, which may be imposed upon, or incurred by, or asserted against Landlord (except as the same may be incurred by reason of Landlord's negligence) by reason of any of the following occurrences during the term of this Lease: (a) Any work or thing done in, on or about the Demised Premises, or any part thereof, by Tenant or any party other than Landlord; (b) Any use, nonuse, possession, occupation, conditions, operation, maintenance or management of the Demised Premises, or any part thereof, or any alley, sidewalk, passageway or space adjacent thereto; (c) Any negligence on the part of Tenant or any of its agents, contractors, servants, employees, subtenants, licensees or invitees; (d) Any accident, injury or damage to any person or property occurring in, on or about the Demised Premises, or any part thereof, or any alley, sidewalk, curb, vault, passageway or space adjacent thereto; (e) Any failure on the part of Tenant to perform or comply with any of the covenants, agreements, terms, provisions, conditions or limitations contained in this Lease on its part to be performed or complied with. In case any action or proceeding is brought against Landlord by reason of any such claim, Tenant, upon written notice from Landlord, shall at Tenant's expense resist or defend such action or proceeding by counsel approved by Landlord in writing, which approval Landlord agrees not unreasonably to withhold. If Tenant has supplied Landlord with insurance policies covering any of the aforementioned risks, no claim shall be made against Tenant unless and until the insurer shall fail or refuse to defend and/or pay all or any part thereof. ARTICLE 13 CONDEMNATION This Article 13 shall apply if all or any part of the Demised Premises is taken or conveyed under appropriation proceedings or by any right of eminent domain, including a conveyance in lieu thereof. Section 13.01. TOTAL TAKING - If all of the Demised Premises is so taken or conveyed, then this Lease shall terminate as of the date that the authority exercising the right of eminent domain shall be entitled to take possession and subject to Section 13.04. The entire compensation or award paid shall be allocated as follows, notwithstanding any other allocation that might be made by the condemning authority: (a) To Landlord, the then fair market value of the land and improvements, subject to the terms of this Lease; and (b) To Tenant, the balance of the award. Section 13.02. PARTIAL TAKING - If only a part of the Demised Premises is so taken or conveyed, this Lease shall continue in full force and effect as to the portion of the Demised Premises remaining after such taking or conveyance and subject to Section 13.03, the entire compensation or award paid: (a) To Landlord, the then fair market value of the land and improvements, subject to the terms of this Lease; and - 13 - (b) To Tenant, the balance of the award. Section 13.03. RENTAL REDUCTION - If a partial taking or conveyance does not result in termination of this Lease, then the Net Rent shall be reduced by an amount which bears the same proportion the Net Rent immediately prior to the partial taking as the rental value of the part of the Demised Premises so taken bears to the rental value of the whole Demised Premises immediately prior to such taking. Section 13.04. RIGHT TO CONSENT - Tenant and Landlord may prosecute and defend any condemnation or appropriation proceedings for the adjudication of taking of the Demised Premises and compensation due therefor, in Landlord's name or in Tenant's name, or both if Landlord so desires. Tenant shall be entitled to prosecute and defend any condemnation or appropriation proceedings for the adjudication of taking of Tenant's property and to receive compensation in Landlord's name or in Tenant's own name, or both, and Tenant shall be entitled to retain, free and clear of any interest or claim of Landlord, the entire compensation or award allocable to Tenant and for the value of Tenant's business and for costs of removal or relocation thereof. The entire award received in connection with any condemnation or appropriation proceeding, including conveyance in lieu thereof, shall be distributed and applied: (a) To the costs of obtaining compensation, including attorneys' fees of Landlord and Tenant; (b) To Landlord for the value of Landlord's interest as herein above provided for; and (c) The balance to Tenant for the value of Tenant's interest as herein above provided for, including the value of Tenant's business and for costs of removal or relocation thereof. ARTICLE 14 ASSIGNMENTS, MORTGAGES AND SUBLEASES OF TENANT'S INTEREST Section 14.01. ASSIGNMENT - Tenant and its successors and assigns shall not have the right to assign this Lease without the prior written approval of Landlord, which approval shall not be unreasonably withheld. Section 14.02. SUBLETTING - Tenant and Tenant's successors and assigns shall have the right to sublet the Demised Premises, in whole or in part, subject to prior written approval of said subletting by Landlord, which approval shall not be unreasonably withheld, but only for the term or terms which shall expire prior to the expiration of the term hereby granted or a renewal thereof, insofar as such renewal shall have been exercised and provided that each such sublease shall be subject and subordinate to the rights of Landlord hereunder. Section 14.03. NON-DISTURBANCE - Subject to the further provisions of this Section, Landlord agrees to not unreasonably refuse to execute an agreement, hereinafter referred to as a "non-disturbance agreement," with such subtenants who shall first have executed the non-disturbance agreement. The term of any such sublease shall not extend beyond the then current or renewed term of this Lease. Section 14.04. NO RELEASE OF TENANT - Notwithstanding the granting of Landlord's consent, no sale, conveyance, mortgage, pledge, subletting, assignment or other transfer or encumbrance of this Lease or the Demised Premises shall release or alter Tenant's primary liability to pay rent and perform all of its other obligations hereunder. The acceptance of rent by Landlord from any person other than Tenant shall not be a waiver by Landlord of any provision hereof. Consent to one assignment or subletting shall not be deemed a consent to any subsequent assignment or subletting. If any assignee or successor of Tenant defaults in the performance of any of the terms hereof, Landlord may proceed directly against Tenant without proceeding against or exhausting his remedies against the assignee or successor. After any assignment, sublease or other transfer or encumbrance, Landlord may consent to subsequent assignments, subleases, transfers or encumbrances, or amendments to this Lease, without notifying Tenant or any other person, without obtaining consent thereto, and without relieving Tenant of liability under this Lease. - 14 - ARTICLE 15 CONDITIONAL LIMITATIONS - DEFAULT PROVISIONS Section 15.01. EVENTS OF DEFAULT - If of any one or more of the following events (herein sometimes called "events of default") shall happen: (a) If default shall be made in the due and punctual payment of any Net Rent or additional rent payable under this Lease, or any part thereof, when and as the same shall become due and payable, and such default shall continue for a period of ten (10) days after notice from Landlord to Tenant specifying the items in default, and shall continue thereafter for a further period of ten (10) days after a second notice from Landlord to Tenant which shall specify the items in default; or (b) If default shall be made by Tenant in the performance or compliance with any of the agreements, terms, covenants or conditions in the Lease provided other than those referred to in the foregoing paragraph (a) of this Section for a period of twenty (20 ) days after notice from Landlord to Tenant specifying the items in default and shall continue thereafter for a further period of ten (10) days after a second notice from Landlord to Tenant, or in the case of a default or a contingency which cannot with due diligence be cured within said last mentioned ten (10) day period granted to cure the same, Tenant shall fail to prosecute the curing of such default with due diligence (it being intended in connection with a default not susceptible of being cured with due diligence within said last mentioned ten (10) day period that the time of Tenant within which to cure the same shall be extended for such period as may be necessary to complete the same with all due diligence); (c) If, after the commencement of the term of this Lease: (i) the Tenant then having the title to the leasehold estate created hereunder shall, while having such title, be adjudicated a bankrupt or adjudged to be insolvent; (ii) a receiver or trustee shall be appointed for the aforesaid Tenant's property and affairs; (iii) the aforesaid Tenant shall make an assignment for the benefit of creditors or shall file a petition in bankruptcy or insolvency or for reorganization or shall make application for the appointment of a receiver; or (iv) any execution or attachment shall be issued against the aforesaid Tenant or any of the aforesaid Tenant's property, whereby the Demised Premises or any building or buildings to be taken or occupied by someone other than the aforesaid Tenant, except as may herein be permitted, and such adjudication, appointment, assignment, petition, execution or attachment shall not be set aside, vacated, discharged or bonded within ten (10) days after the issuance of the same; then Landlord at any time thereafter may give written notice to Tenant specifying such event of default or events of default and stating that this Lease and the term hereby demised shall expire and terminate on the date specified in such notice. Upon the date specified in such notice, this Lease and the term hereby demised and all rights of Tenant under this Lease, including any renewal privileges, whether or not exercised, shall expire and Tenant shall remain liable as hereinafter provided. Section 15.02. SURRENDER - Upon any such expiration or termination of this Lease, Tenant shall quit and peacefully surrender the Demised Premises to Landlord. Landlord, upon or at any time after any such expiration or termination, may without further notice enter upon and re-enter the Demised Premises and possess and repossess himself thereof by force, summary proceedings, ejectment or otherwise; and Landlord may dispossess Tenant and remove Tenant and all other persons and property from the Demised Premises and may have, hold and enjoy the Demised Premises and the right to receive all rental income of and from the same. Section 15.03. RELETTING - At any time or from time to time after any such expiration or termination, Landlord may relet the Demised Premises, or any part thereof, for such term or terms (which may be greater or less than the period which would otherwise have constituted the balance of the term of this Lease) and on such conditions (which may include concessions or free rent and alteration of the Demised Premises) as Landlord, in his uncontrolled discretion, may determine and may collect and receive the rents therefor. Landlord shall in no way be responsible or - 15 - liable for any failure to relet the Demised Premises, or any part thereof, or for any failure to collect any rent due upon such reletting. Section 15.04. NO WAIVER - No failure by Landlord to insist upon the strict performance of any agreement, term, covenant or condition hereof, or to exercise any right or remedy consequent upon a breach thereof, and no acceptance of full or partial rent during the continuance of any breach, shall constitute a waiver of any such breach of such agreement, term, covenant or condition. No agreement, term, covenant or condition hereof to be performed or complied with by Tenant, and a breach thereof, shall be waived, altered or modified, except by a written instrument executed by Landlord. No waiver of any breach shall affect or alter this Lease, but each and every agreement, term, covenant and condition hereof shall continue in full force and effect with respect to any other then existing or subsequent breach thereof. Section 15.05. RIGHTS CUMULATIVE - No expiration or termination of this Lease shall relieve Tenant of its liability and obligations under this Lease, and such liability and obligations shall survive any such expiration or termination. In the event of any expiration or termination, whether or not the Demised Premises or any part thereof shall have been relet, Tenant shall pay to Landlord the Net Rent and all other charges required to be paid by Tenant up to the time of such expiration or termination of this Lease and thereafter, Tenant, until the end of what would have been the term of this Lease in the absence of such expiration or termination, shall be liable to Landlord for, and shall pay to Landlord, damages for Tenant's default. Such damages may include the equivalent of the amount of the Net Rent and the other rent and charges which would be payable under this Lease by Tenant if this Lease were still in effect, less the net proceeds of any reletting effected pursuant to the provisions of Section 15.03 hereof, after deducting all Landlord's expenses in connection with such reletting, including, without limitation, all repossession costs, brokerage and management commissions, operating expenses, legal expenses, reasonable attorneys' fees, alteration costs and expenses of preparation for such reletting. Section 15.06. REMEDIES CUMULATIVE - Each right and remedy provided for in this Lease shall be cumulative and shall be in addition to every other right or remedy provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by Landlord or Tenant of any one or more of the rights or remedies provided for in this Lease or not or hereafter existing at law or in equity or by statute or otherwise shall not preclude the simultaneous or later exercise by the party in question of any or all other rights or remedies provided for in this Lease or now or hereafter existing at law or in equity or by statute or otherwise. - 16 - ARTICLE 16 INVALIDITY OF PARTICULAR PROVISIONS Section 16.01. SEVERABILITY - If any term or provision of this Lease or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Lease or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and be enforced to the fullest extent permitted by law. ARTICLE 17 NOTICES Section 17.01. NOTICES - Any and all notices, demands, requests, submissions, approvals, consents, disapprovals, objections, offers or other communications or documents required to be given, delivered or served or which may be given, delivered or served under or by the terms and provisions of this Lease or pursuant to law or otherwise, shall be in writing and shall be deemed to have been duly given, delivered or served if and when sent by registered mail with proper postage prepaid thereon and deposited with the United States Post Office, addressed to the Tenant at: Dean & DeLuca Brands, Inc. 560 Broadway New York, New York 10012 or to such other address as Tenant may from time to time designate by written notice to Landlord; or if to Landlord, addressed to the Landlord at: Leslie G. Rudd c/o LRICO 314 South Galena Aspen, Colorado 81611 or to such other agent or agents as may be designated by the parties. The date of deposit shall be deemed to be the date of such service. ARTICLE 18 QUIET ENJOYMENT Section 18.01. QUIET ENJOYMENT - Tenant, upon paying the Net Rent and all additional rent and other charges herein provided for and observing and keeping all covenants, agreements and conditions of this Lease on its part to be kept, shall quietly have and enjoy the Demised Premises during the term of this Lease without hindrance or molestation by anyone claiming by, through or under Landlord as such, subject, however, to the exceptions, reservations and conditions of this Lease. ARTICLE 19 ESTOPPEL CERTIFICATES Section 19.01. TENANT CERTIFICATE - Tenant shall, without charge, at any time and from time to time, within ten (10) days after request by Landlord, certify by written instrument, duly executed, acknowledged and delivered to Landlord, or any other person, firm or corporation specified by Landlord: (a) That this Lease is unmodified and in full force and effect, or, if there have been any modifications, that the same is in full force and effect as modified and stating the modifications; - 17 - (b) Whether or not there are then existing any set-offs or defenses against the enforcement of any of the agreements, terms, covenants or conditions hereof and any modification hereof upon the part of Tenant to be performed or complied with, and if so, specifying the same; (c) The dates, if any, to which the Net Rent, additional rent and other charges hereunder have been paid in advance; (d) The date of expiration of the current term; and (e) The Net Rent then payable under this Lease. Section 19.02. LANDLORD CERTIFICATE - Landlord shall, without charge, at any time and from time to time, within thirty (30) days after request by Tenant, certify by written instrument, duly executed, acknowledged and delivered, to the effect that this Lease is unmodified and in full force and effect (or if there shall have been modifications, that the same is in full force and effect as modified and stating the modifications) and the dates to which the Net Rent, additional rent and other charges have been paid, the date of expiration of the current term, the Net Rent then payable under this Lease, and stating whether or not, to the best knowledge of the officer executing such certificate on behalf of Landlord, Tenant is in default in the performance of any covenant, agreement or condition contained in this Lease and, if so, specifying each such default of which the person executing such certificate may have knowledge. - 18 - ARTICLE 20 APPROVALS NOT UNREASONABLY WITHHELD Section 20.01. CONSENT AND APPROVAL - Where any provision of this Lease requires the consent or approval of Landlord, Landlord agrees that it will not unreasonably withhold or delay such consent or approval. Where any provision of this Lease requires Tenant to do anything to the satisfaction of Landlord, Landlord agrees that Landlord will not unreasonably refuse to state Landlord's satisfaction of such action by Tenant. ARTICLE 21 NO ORAL MODIFICATION Section 21.01. ENTIRE AGREEMENT; MODIFICATION - All prior understandings and agreements between the parties are merged within this agreement, which alone fully and completely sets forth the understanding of the parties; and this Lease may not be changed or terminated orally or in any manner other than by an agreement in writing and signed by the party against whom enforcement of the change or termination is sought. ARTICLE 22 COVENANTS TO BIND AND BENEFIT RESPECTIVE PARTIES Section 22.01. BINDING EFFECT - The covenants and agreements herein contained shall bind and inure to the benefit of Landlord, his legal representatives, successors and assigns, and Tenant, its successors and assigns. ARTICLE 23 WAIVER OF SUBROGATION Section 23.01. WAIVER OF SUBROGATION - Landlord and Tenant shall each be released from any liability resulting from damage by fire or casualty (irrespective of the cause of such fire or casualty), provided only if policies of insurance carried by Landlord and Tenant so permit. ARTICLE 24 MEMORANDUM OF LEASE Section 24.01. MEMORANDUM OF LEASE - This Lease shall not be recorded, but upon written request of either party, a memorandum of lease describing the Demised Premises, giving the term of this Lease, and the name and address of the Landlord and Tenant, referring to this Lease and in form suitable under law as record notice, shall be properly executed, acknowledged and delivered by Landlord and Tenant, and such memorandum of Lease may be recorded by either party. ARTICLE 25 GENERAL PROVISIONS Section 25.01. CHOICE OF LAW - This Lease shall be interpreted under and governed by the laws of the State of Kansas. Section 25.02. FORCE MAJEURE - In the event that Landlord shall be delayed, hindered in or prevented from the performance of any act required hereunder by reason of strikes, lock-outs, labor troubles, inability to procure materials, failure of power, restrictive governmental laws or regulations, riots, insurrection, the act, failure to act or default of the other party, war or other reason beyond his control, then performance of such shall be excused for the period of the delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay. - 19 - Section 25.03. PRESUMPTIONS - This Lease shall be construed without regard to any presumption or other rule requiring construction against the party drafting the document. The Lease shall be construed neither for nor against Landlord or Tenant, but shall be give reasonable interpretation in accordance with the plain meaning of its terms and the intent of the parties. Section 25.04. HEADINGS - The titles to the Articles and Sections of this Lease are not a part of this Lease and shall have no effect on the construction or interpretation. Section 25.05. EXHIBITS - All exhibits and any riders annexed to this Lease are incorporated herein by this reference. Section 25.06. MEANING OF TERMS - Whenever required by the context of this Lease, the singular shall include the plural and the plural shall include the singular, and the masculine, feminine and neuter genders shall each include the others, and the word person shall include corporation, partnerships and other entities. Section 25.07. CONVEYANCE OF DEMISED PREMISES - As used herein the term "Landlord" means only the current owner or owners of the fee title to the Demised Premises. Upon each conveyance (whether voluntary or involuntary) of the Demised Premises, the conveying party shall be relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease or arising out of any act, occurrence or omission occurring after the date of such conveyance. Landlord may sell, assign, convey, encumber or otherwise transfer all or any potion of his interest in this Lease, the Demised Premises, the Building or the Land. Section 25.08. AUTHORITY - Each of the persons executing this Lease on behalf of Tenant warrant and represent that Tenant is a duly organized and validly existing corporation, that Tenant has full right and authority to enter into this Lease and that the persons signing on behalf of Tenant are authorized to do so and have the power to bind Tenant to this Lease. Tenant shall provide Landlord upon request with evidence reasonably satisfactory to Landlord confirming the foregoing representations. Section 25.09. COUNTERPARTS - This Lease may be executed in one or more counterparts, all of which, together, shall constitute but one and the same agreement. [Signature Page to Follow] - 20 - IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed effective as of the date first above written. "LANDLORD" /s/ Leslie G. Rudd ------------------------------------ Leslie G. Rudd "TENANT" DEAN & DELUCA BRANDS, INC. By: /s/ Dane J. Neller ----------------------------- Dane J. Neller, President EX-10.19 18 EXHIBIT 10.19 Exhibit 10.19 RETAIL LEASE between R & R LAND COMPANY, as "Lessor" and DEAN & DELUCA MARKETS, LLC as "Lessee" TABLE OF CONTENTS PAGE RECITALS.......................................................................1 1. PREMISES....................................................................1 2. TERM; POSSESSION............................................................1 2.1 Initial Term............................................................1 2.2 Extension Option........................................................2 3. RENT AND SECURITY DEPOSIT...................................................3 4. APPURTENANT RIGHTS IN COMMON AREA...........................................4 4.1 Additional Rights Granted to Lessee.....................................4 4.2 Parking And Access......................................................4 (a) Available Parking....................................................4 (b) Service Driveways....................................................5 4.3 Restrictions on Development.............................................5 5. USE.........................................................................5 6. IMPROVEMENTS AND ALTERATIONS................................................5 7. ABANDONMENT.................................................................6 8. REPAIRS.....................................................................6 9. LIENS.......................................................................7 10. SUBORDINATION; NON-DISTURBANCE AND ATTORNMENT..............................7 11. COMPLIANCE WITH GOVERNMENTAL REGULATIONS...................................8 12. INDEMNIFICATION; EXCULPATION AND INSURANCE.................................8 12.1 Lessee's Indemnification...............................................8 12.2 Lessor's Indemnification...............................................8 12.3 Exculpation............................................................9 12.4 General................................................................9 12.5 Fire and Casualty Insurance............................................9 12.6 Insurable Interest in Trade Fixtures and Improvements.................10 12.7 Waiver of Subrogation Rights..........................................10 12.8 Survival..............................................................10 13. ADVERTISEMENTS AND SIGNS..................................................11 14. UTILITIES.................................................................11 15. ENTRY BY LESSOR...........................................................12 16. DESTRUCTION OF PREMISES...................................................12 16.1 Lessor's Duty to Repair...............................................12 16.2 Lessor's Right to Terminate...........................................12 16.3 Lessee's Right to Terminate...........................................13 16.4 Waiver of Statutory Provisions........................................13 17. EMINENT DOMAIN............................................................13 17.1 Premises/Ingress and Egress...........................................13 17.2 Restoration of Premises...............................................14 18. ASSIGNMENT AND SUBLETTING.................................................14 19. INSOLVENCY OR BANKRUPTCY..................................................15 20. LESSOR'S REMEDIES.........................................................15 21. SURRENDER OF LEASE........................................................17 22. ATTORNEY'S FEES...........................................................17 23. NOTICE....................................................................17 24. WAIVER....................................................................17 25. HOLDING OVER..............................................................17 26. SUCCESSORS AND ASSIGNS....................................................17 27. TIME......................................................................17 28. LATE CHARGE...............................................................18 29. LESSOR'S RIGHT OF FIRST REFUSAL TO PURCHASE...............................18 30. QUIET ENJOYMENT...........................................................18 31. COVENANT OF TITLE.........................................................18 32. HAZARDOUS MATERIAL........................................................19 32.1 Lessor's Representations, Warranties and Covenant.....................19 32.2 Lessor's Indemnification Obligation...................................19 32.3 Lessee's Covenant and Indemnification Obligation......................19 32.4 Definition............................................................20 33. MEMORANDUM OF LEASE.......................................................21 34. BROKER'S REPRESENTATION...................................................21 35. FORCE MAJEURE.............................................................21 36. CONDITION OF PREMISES AT TERMINATION......................................21 37. CONSENTS AND APPROVALS....................................................22 38. AUTHORITY.................................................................22 38.1 Lessor's Representations..............................................22 38.2 Lessee's Representations..............................................22 39. ENTIRE AGREEMENT..........................................................22 40. LESSOR'S LIABILITY........................................................22 41. ESTOPPEL CERTIFICATES.....................................................22 42. MISCELLANEOUS.............................................................23 EXHIBIT A: Legal Description of the Land EXHIBIT B: Plot Plan EXHIBIT C: Existing Mortgages EXHIBIT D: Memorandum of Lease ii RETAIL LEASE THIS RETAIL LEASE ("Lease") is made and entered into this 18th day of March, 1999, by and between R & R LAND, LLC, a California limited liability company ("Lessor"), and DEAN & DELUCA MARKETS, LLC, a California limited liability company, ("Lessee"). RECITALS: A. Lessor is the owner of certain "Land" (defined below), upon which is constructed the "Building" (defined below). B. Lessor desires to lease to Lessee and Lessee desire to lease from Lessor the entire rentable area of the Building. NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, which the parties hereby acknowledge, Lessor and Lessee hereby agree as follows: 1. PREMISES. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, upon the terms and subject to the conditions of this Lease, the entire rentable area (the "Premises"), consisting of approximately 15,000 rentable square feet of retail space, in that building, and all appurtenances thereto, including the bakery use permits as they currently exist, located in St. Helena, County of Napa, State of California, known for U.S. Postal purposes as 607 St. Helena Highway South, St. Helena, California (the "Building"), which Building is located on the certain real property located in Napa County commonly known as Assessors Parcel No. 027-150-01 and more fully described in EXHIBIT A attached hereto (the "Land"). The location of the Building on the Land, the "Common Areas," the "Adjacent Building" (as those terms are defined below), entrances, exits, driveways, parking areas and service drives are depicted on the drawing attached hereto as EXHIBIT B. 2. TERM; POSSESSION. 2.1 INITIAL TERM. The initial term of this Lease ("Initial Term") shall commence on March 18, 1999, (the "Commencement Date") and, unless sooner terminated, shall expire nine (9) years after the Commencement Date (the "Expiration Date"). As used in this Lease, "Month" shall mean a calendar month, except that if the Term begins on a day other than the first day of a calendar month, the first "month" shall be the period from (and including) the Commencement Date through (and including) the last day of the calendar month in which the Commencement Date falls, and if the Term ends on a day other than the last day of a calendar month, the last "month" shall be the period from (and including) the first day of the calendar month in which the Term ends through (and including) the day on which the Term ends. The term "Lease Year" shall mean each twelve (12) month period from and after the Commencement Date and each anniversary thereof. If the Commencement Date occurs on a date other than the first day of a month, the first Lease Year shall include the partial month and the next twelve (12) full calendar months. 2.2 EXTENSION OPTION. Provided that Dean & Deluca Markets, LLC has not assigned this Lease, or sublet any or all of the Premises (it being intended that all rights pursuant to this provision are and shall be personal to the original Lessee under this Lease and shall not be transferable or exercisable for the benefit of any transferee), and provided that Lessee is not in default under this Lease, Lessee shall have options (each an "Extension Option") to extend the Term for up to four (4) additional consecutive periods of three (3) years and thereafter for up to two (2) additional consecutive periods of five (5) years (each an "Extension Period"), by giving written notice to Lessor of the exercise of any such Extension Option at least six (6) months, but not more than twelve (12) months, prior to the expiration of the Initial Term or the prior Extension Period, as the case may be. The exercise of any Extension Option by Lessee shall be irrevocable and shall cover the entire Premises leased by Lessee pursuant to this Lease. Upon such exercise, the Term of the Lease shall automatically be extended for the applicable Extension Period without the execution of any further instrument by the parties; provided that Lessor and Lessee shall, if requested by either party, execute and acknowledge an instrument confirming the exercise of the Extension Option. The failure of Lessee to exercise any Extension Option, or the expiration or termination of the Lease, shall terminate Lessee's right to exercise any subsequent Extension Option and Lessee shall have no further right to renew or extend this Lease. Any extension of the Term shall be upon all the terms and conditions set forth in this Lease and all Exhibits thereto, except that (i) Lessee shall have no further option to extend the Term of the Lease, other than as specifically set forth herein; and (ii) Rent for any such Extension Period shall be equal to the then Fair Market Rent (as defined below) for the Premises for the space and term involved, which shall be determined as set forth below. (a) "Fair Market Rent" shall mean the "fair market" Rent at the time or times in question for the applicable space, based on the prevailing rentals then being charged to tenants in other retail buildings in the general vicinity of the Building of comparable size, location, quality and age as the Building for leases with terms equal to the Extension Period, taking into account the creditworthiness and financial strength of the tenant, the financial guaranties provided by the tenant (if any), the value of market concessions (including the value of construction, renovation, moving and other allowances or rent credits), the desirability, location in the building, size and quality of the space, tenant finish allowance and/or tenant improvements, included services, operating expenses and tax and expense stops or other escalation clauses, and brokerage commissions, for the space in the Building for which Fair Market Rent is being determined and for comparable space in the buildings which are being used for comparison. Fair Market Rent shall also reflect the then prevailing rental structure for comparable retail buildings in the general vicinity of the Property, so that if, for example, at the time Fair Market Rent is being determined the prevailing rental structure for comparable space and for comparable lease terms includes periodic rental adjustments or escalations, Fair Market Rent shall reflect such rental structure. (b) Lessor and Lessee shall endeavor to agree upon the Fair Market Rent. If they are unable to so agree within thirty (30) days after receipt by Lessor of Lessee's notice of exercise of the Extension Option, Lessor and Lessee shall mutually select a licensed real estate broker who is active in the leasing of retail space in the general vicinity of the 2 Property. Lessor shall submit Lessor's determination of Fair Market Rent and Lessee shall submit Lessee's determination of Fair Market Rent to such broker, at such time or times and in such manner as Lessor and Lessee shall agree (or as directed by the broker if Lessor and Lessee do not promptly agree). The broker shall select either Lessor's or Lessee's determination as the Fair Market Rent, and such determination shall be binding on Lessor and Lessee. If Lessee's determination is selected as the Fair Market Rent, then Lessor shall bear all of the broker's cost and fees. If Lessor's determination is selected as the Fair Market Rent, then Lessee shall bear all of the broker's cost and fees. (c) In the event the Fair Market Rent for any Extension Period has not been determined at such time as Lessee is obligated to pay Rent for such Extension Period, Lessee shall pay as Rent pending such determination, the Rent in effect for such space immediately prior to the Extension Period; provided, that upon the determination of the applicable Fair Market Rent, any shortage of Rent paid, together with interest at the rate specified in the Lease, shall be paid to Lessor by Lessee. (d) In no event shall the Rent during any Extension Period be less than the Rent in effect immediately prior to such Extension Period. (e) The term of this Lease, whether consisting of the Initial Term alone or the Initial Term as extended by any Extension Period (if any Extension Option is exercised), is referred to in this Lease as the "Term." 3. RENT AND SECURITY DEPOSIT. During the Initial Term, Lessee agrees to pay to Lessor as monthly rent for the Premises the following amounts: LEASE YEARS: MONTHLY RENT 1-3 $11,000 4-6 $11,500 7-9 $12,000 The monthly rent for the Premises under either Subsections 3.1 is referred to herein as "Rent." Rent shall be payable in advance on the first day of each and every calendar month during the Term, except that Rent for any partial month at the beginning of the Term shall be paid on the Commencement Date. Rent for any partial month at the beginning or end of the Term shall be prorated based on the actual number of days in the month. Rent is payable in lawful money of the United States of America, which Lessee agrees to pay to Lessor, without deduction or offset, except as expressly provided herein, at such place as may be designated from time to time by Lessor. Lessee shall also pay to Lessor a sum equal to fifty percent (50%) of any real property taxes levied upon the Land (after taking into account any abatement or refund of taxes received by Lessor). Any such taxes during each succeeding taxable year shall be payable in twelve equal monthly installments to the Lessor, payable the first of each month commencing on the Commencement Date. The term "Additional Rent" shall mean all payments required to be made 3 by Lessee under this Lease for real property taxes, insurance, and Lessee's "Proportionate Share" (as defined below). There shall be no security deposit. 4. APPURTENANT RIGHTS IN COMMON AREA. 4.1 ADDITIONAL RIGHTS GRANTED TO LESSEE. The following rights are granted to Lessee as appurtenances to the Premises: (a) Lessee and Lessee's employees and customers shall have the non-exclusive easement and right to use, in common with Lessor and all other occupants of the "Property" (defined below) and all persons having business with Lessor and such other occupants, without charge, the parking areas in the Property owned by Lessor in which the Premises are located and all other areas and facilities of the Property designed or intended for common use, including without limitation "Common Areas" as defined below. The term "Common Areas" means all areas and facilities outside the Premises and within the exterior boundaries of the Property, but not including the Adjacent Building, that are provided and designated by Lessor for the general use and convenience of Lessee and of other tenants of the Property and their respective authorized representatives and invitees. Common Areas shall include, at a minimum, all pedestrian walkways, landscaped areas, sidewalks, service drives, parking areas, entrances, exits, driveways and roads, substantially as depicted on EXHIBIT B. (b) Lessor shall maintain the parking areas, landscaping and other Common Areas of the Property, for which Lessee shall reimburse Lessor fifty percent (50%) of the reasonable costs thereof ("CAM Charges"), except for those items expressly stated in this Lease as Lessor's responsibility. 4.2 PARKING AND ACCESS. (a) AVAILABLE PARKING. Lessee shall have access, during the Lease term, to the areas provided for the parking of automobiles upon the Land and intended for common use, as depicted on EXHIBIT B. All parking spaces must be maintained as non-exclusive "customer only" parking within a two hundred (200) foot radius of the front entrances to the Premises, and such parking spaces shall not be assigned for employee parking for this or any other tenant; provided, with respect to existing tenants of the Property (and their assignees and sublessees), Lessor shall only be required to use reasonable efforts to enforce this provision. In addition, Lessor shall enter into agreement ("Reciprocal Parking Agreement") prior to the Commencement Date, in a form reasonably acceptable to Lessee, with the owner of the adjacent legal parcel ("29 Joe's Parcel"), commonly known as 677 St. Helena Highway South (APN 027-150-015), which reciprocal parking Agreement shall provide for Reciprocal Parking and access rights (on a non-exclusive, "first-come, first-served" basis) for Lessee's customers and employees to park on the 29 Joe's Parcel and the customer's and employees of the 29 Joe's Parcel to park in the parking areas of the Common Area and which Reciprocal Parking Agreement shall remain in force during the Term. Lessee agrees to pay its proportionate share of the reasonable costs incurred to maintain and repair, but not construct, the parking area on the 29 Joe's Parcel, which proportionate share shall be agreed between the parties. 4 (b) SERVICE DRIVEWAYS. Lessor shall use reasonable efforts to maintain the ingress and egress that exists on the day that this Lease is executed, as shown on EXHIBIT B, from public streets to the front and rear entrances of the Premises for the purpose of receiving and delivering fixtures, merchandise and other property. 4.3 DEVELOPMENT AND REPAIR OF COMMON AREAS. Lessor hereby reserves the right to, at any time and from time to time, without liability to Lessee, and without constituting an eviction, constructive or otherwise, or entitling Lessee to any abatement of rent or to terminate this Lease or otherwise releasing Lessee from any of Lessee's obligations under this Lease: (a) To make alterations, additions, repairs, improvements to or in, all or any part of the Common Areas; (b) To install and maintain any and all signs on the exterior and interior of the Building; (c) To reduce, increase, enclose or otherwise change at any time and from time to time the size, number, location and nature of the Common Areas (including the parking facilities) and other tenancies and premises in the Property and to create additional rentable areas through the use or enclosure of common areas, except as otherwise provided herein; (d) If any governmental authority promulgate or revises any Law or imposes mandatory or voluntary controls or guidelines on Lessor or the Property relating to the use or conservation of energy or utilities or the reduction of automobile or other emissions or reduction or management of traffic or parking on the Property (collectively "Controls"), to comply with such Controls, whether mandatory or voluntary, or make any alterations to the Common Areas or Property related thereto. 5. USE. Lessee may use the Premises for a food market, delicatessen (with table seating, but not waiter service), food or beverage-related education and demonstration activities (for e.g., cooking demonstrations), olive oil, vinegar and mustard processing, espresso bar, sales of foods and beverages of any and all kinds, sales of kitchenware, food service center, bakery sales, retail wine sales, Wine Tasting, all related or ancillary uses and for related general office uses and all other uses ("Other Uses") permitted in accordance with local zoning regulations, provided, that Lessee shall first notify Lessor of such Other Uses and further provided that such Other Uses do not conflict with any exclusive uses that Lessor has granted to another tenant of the Property or any prospective tenant with whom Lessor is then negotiating to lease space at the Property. Lessee shall not do, bring, keep or sell anything in or about the Premises that will create an unreasonably dangerous condition at the Property, or is prohibited by, or that will cause a cancellation of or an increase in the premium for, any insurance policy covering the Premises, unless Lessee agrees to pay any such increase. 6. ALTERATIONS. Lessee may, at its own expense, and from time to time, make such alterations, additions or changes, structural or otherwise, in and to the Premises as it may 5 deem necessary or desirable; provided, however, Lessee shall obtain Lessor's prior written consent to drawings and specifications (including engineer's calculations) for exterior or structural alterations, additions or changes; and provided, further, that Lessor shall not withhold its consent to structural work if the structural integrity of the building in which the Premises is located will not be impaired by such work. Lessor agrees not to unreasonably withhold or delay its consent. In no event, however, will Lessee increase the "footprint" (which would not include changes to the total square footage of the Building that do not change the footprint, such as adding a mezzanine floor) of the Building beyond its existing square footage or reduce the footprint to less than 11,000 square feet without Lessor's consent, which may be withheld in Lessor's sole discretion. The term "structural changes" as used herein shall not include moving of non-load bearing partitions, relocation of building entry doors (provided no new openings are made in exterior walls), minor plumbing and electrical work, modification and rearrangement of fixtures or other minor changes. Lessor, at Lessee's sole cost, shall cooperate with Lessee in securing building and other permits or authorizations as may be required from time to time for any work permitted hereunder, but shall not be required to make any public appearance before any planning commission or other governmental authority. Notwithstanding the foregoing, Lessee shall have the right to install furnishings, counters, interior partitions and equipment (including without limitation, electric fixtures or air handling units) that are not a permanent part of the structure, whether the same shall be affixed or nailed to the Premises or not, or by Lessee, which shall at all times be regarded as "Trade Fixtures" and shall be separately assessed for real property tax purposes. Such Trade Fixtures may be removed by the Lessee at any time prior to the termination of this Lease or any renewals or extensions thereof at Lessee's own expense. If Lessee removes any of such Trade Fixtures as herein designated, Lessee shall do so in a way as not to injure the Building. 7. ABANDONMENT. Lessee shall not vacate or abandon the Premises at any time during the Term, except during a major renovation, and if Lessee shall abandon, vacate or surrender such Premises, or be disposed by process of law, or otherwise, any personal property belonging to Lessee and left on the Premises shall be deemed to be abandoned if the same is not claimed thirty (30) days after written notice, at the option of the Lessor, except such property as may be mortgaged to Lessor. 8. MAINTENANCE AND REPAIRS. By taking possession of the Premises Lessee agrees that the Premises are then in a good and tenantable condition. During the Term, Lessee shall, at its sole cost and expense, keep, repair and maintain the Premises, including all windows (interior and exterior), plate glass and glazing, plumbing and electrical systems located within the Premises, interior walls (excepting the structural portion of the walls forming the perimeter of the Premises), floors (except as covered by contractor's warranty, if any) and all interior improvements within the Premises and any septic system that Lessee installs for its own use, in a first class condition, and Lessee shall keep the Premises in a clean, safe and orderly condition. Lessor shall provide, without reimbursement from Lessee, (i) electrical and plumbing to the exterior wall of the Premises in a manner meeting all Applicable Laws (including, all current codes) for the existing usage and electrical and plumbing demands; (ii) all maintenance, replacement and repair to the foundation, roof, parapets, flashing, gutters, 6 downspouts, floor slab, outer walls and structural portions of the Building which shall be necessary to maintain the Premises in a safe, dry and tenantable condition and in good order and repair and the parking lot (repaving and restriping only), curbs, and sidewalks; (iii) all maintenance, replacement and repair of underground utility installations and underground electrical conduit and wire; including, but not limited to, repairs, maintenance and replacements which are occasioned by settlement of the Premises, or a portion thereof, or caused by soil conditions which are not due to change in use of the Premises by Lessee; and (iv) any repair, maintenance or restoration required as a result of the act or neglect of Lessor or its agents, employees, contractors, members or partners (collectively, "Representatives") or resulting from the failure of Lessor to perform in a timely manner its obligations under this Lease. Notwithstanding the foregoing, Lessee shall pay the cost of repairs for any damage occasioned by Lessee's use of the Premises or Property or any act or omission of Lessee or Lessee's representatives or visitors, to the extent (if any) not covered by Lessor's insurance. Lessee shall be also responsible for maintaining those portions of the roof and structure of the Building to the extent of any replacements or improvements made by Lessee. Lessee shall also be responsible for installing and maintaining any improvements to the electrical and plumbing (including septic systems) facilities to the Premises to the extent that such improvements are necessary due to Lessee's needs in the Premises. Lessee hereby waives all rights under and benefits of Subsection (1) of Civil Code Section 1932 and Sections 1941 and 1942 of the California Civil Code and under any similar law, statute or ordinance now or hereafter in effect. 9. LIENS. Lessee shall keep the Premises free from any liens arising out of work performed, materials furnished, or obligations incurred by Lessee. If Lessee elects to make improvements or additions to the Premises at its own expense, at least ten (10) days prior to the commencement of any construction involving expenditures for labor and materials in excess of $5,000.00, Lessee shall notify Lessor, in writing, of its intention to commence such construction and the scheduled date for the commencement of such construction. Lessor shall have the right to enter the Premises to post and keep posted any and all notices of non-responsibility, or other matters provided or permitted by law for the Lessor's protection, in connection with any such construction work. 10. SUBORDINATION; NON-DISTURBANCE AND ATTORNMENT. 10.1. Upon written request by Lessor, this Lease shall be subordinate to the lien of any first mortgage or deed of trust in any amount whatsoever now or hereafter placed on or against the land or improvements or either thereof, of which the Premises are a part, or on or against the Lessor's interest or estate therein (collectively, "Encumbrance"), without the necessity of the execution and delivery of any further instruments to effectuate such subordination; provided, however, that such subordination shall only be effective and be on the express condition that the holder of the Encumbrance executes and delivers to Lessee a Non-Disturbance Agreement in a form Reasonably acceptable to Lessee ("Non-Disturbance Agreement"), stating that this Lease shall survive the termination of the Encumbrance by lapse of 7 time, foreclosure or otherwise so long as Lessee is not in default under this Lease and that the holder of the Encumbrance will honor the rights of first refusal granted to Lessee pursuant to this Lease. If any mortgagee, trustee, or ground lessor shall elect to have this lease prior to the lien of its mortgage, deed of trust, or ground lease, and gives the Lessee written notice thereof, this Lease shall be deemed prior to such mortgage, deed of trust, or ground lease, whether it is dated prior or subsequent to the date of the mortgage, deed of trust or ground lease, or the recording thereof. 10.2 Within five (5) days from request, the Lessee agrees to execute and deliver without charge such further instruments evidencing the subordination of this Lease to such ground or underlying leases and to the lien of any such mortgages or deeds of trust as the Lessor may reasonably request; provided that a Non-Disturbance Agreement is executed contemporaneously therewith. 10.3 In the event of foreclosure or the exercise of the power of sale under any mortgage or deed of trust covering the Premises, the Lessee agrees to attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Lessor under this Lease, subject to such purchaser assuming the remaining obligations of Lessor under the Lease. 11. COMPLIANCE WITH GOVERNMENTAL REGULATIONS. Lessee shall observe and comply with all requirements, rules, orders and regulations of the federal, state and municipal governments or other duly constituted public authority affecting the Premises ("Applicable Laws"), including the making of nonstructural alterations, insofar as they are due to Lessee's occupancy; provided, however, that in the event such Applicable Laws shall either (a) require the removal of asbestos or other Hazardous Material not placed on the Premises by Lessee, (b) require structural changes, including but not limited to, the erection of fire escapes or exits, or (c) require nonstructural changes required of retail and/or commercial properties generally irrespective of the nature of the current tenancy, unless such changes were triggered by a remodeling or renovation of the Premises by Lessee (in which case Lessee shall be solely responsible for the changes), then the same shall be complied with by Lessor at its sole expense. 12. INDEMNIFICATION; EXCULPATION AND INSURANCE. 12.1 LESSEE'S INDEMNIFICATION. During the Term, Lessee shall indemnify, defend (with counsel reasonably acceptable to Lessor), and save Lessor and its Representatives, harmless against all loss, liability, penalties, claims or demands of whatsoever nature, including reasonable attorneys' fees and costs, arising from any occurrence in the Premises (including construction of Lessee's tenant improvements or Alterations), except to the extent resulting, in whole or in part, directly or indirectly from the default or negligence of Lessor and its Representative. Lessee will carry liability insurance with a deductible amount and company reasonably satisfactory to the Lessor in the sum of $2,000,000.00 in favor of Lessee and Lessor agrees to deliver a duplicate policy to the Lessor naming Lessor as an additional insured. Lessee shall also carry such worker's compensation insurance as is required by law. 12.2 LESSOR'S INDEMNIFICATION. During the Term, Lessor shall indemnify, defend (with counsel reasonably acceptable to Lessee), and save Lessee, its Representatives and 8 sublessees, harmless against all loss, liability, penalties, claims or demands of whatsoever nature, including reasonable attorneys' fees and costs, arising from any occurrence in any area of the Property other than the Premises, except those which shall result, in whole or in part, directly or indirectly from the default or negligence of Lessee, its Representatives, assignees or sublessees. Lessor will carry liability insurance with a deductible amount and company reasonably satisfactory to the Lessee in the sum of $2,000,000.00 and Lessor agrees to deliver a duplicate policy to the Lessee naming Lessee as an additional insured. 12.3 EXCULPATION. 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, air conditioning or lighting fixtures, or from any other cause, whether the such injury or damage results from conditions arising upon the Premises, or from other sources or places, and regardless of whether the cause of such damage or injury or the means of repairing the same is accessible or not, except that Lessor shall remain liable for any damages arising from any act or neglect of Lessor, or its Representatives or Lessor's breach of this Lease. 12.4 GENERAL. All insurance policies required under this Lease shall: (a) be issued by insurance companies authorized to do business in the State of California, with a financial rating of at least an A VII as rated in the most recent edition of Best's Key Rating Guide; (b) be issued as a primary policy; (c) contain an endorsement requiring thirty (30) days' written notice from the insurance company to both parties before cancellation or change in the coverage, scope, or amount of any policy; and (d) The parties shall increase the amount of liability insurance carried pursuant to Subsections 12.1 and 12.2 from time to time to the extent necessary to maintain commercially reasonable amounts of insurance and in any event no less than that carried by similar first-class properties. 12.5 FIRE AND CASUALTY INSURANCE. Lessor shall maintain in effect during the Term a policy or policies of insurance on the Building with responsible insurers, on an "all risk" or "special form" basis, insuring the Building, but not the Alterations or tenant improvements, in an amount equal to 100% of the replacement cost thereof, excluding land, foundations, footings and underground installations. Lessee shall pay fifty percent (50%) of such insurance. Lessor may carry such insurance under a blanket policy, provided that such policy provides coverage equivalent to a separate policy. Lessor may, but shall not be obligated to, carry insurance against additional perils and/or in greater amounts (for example, earthquake or flood insurance), but Lessee shall not be required to pay its 50% share thereof unless it has consented to such additional insurance. If 9 Lessee refuses to consent to such additional insurance, it shall not be entitled to the incremental benefit of such additional insurance. Lessee shall at all times maintain in effect with respect to its Trade Fixtures, Alterations, tenant improvements and personal property, commercial property insurance providing coverage, on an "all risk" or "special form" basis, in an amount equal to the full replacement cost of the covered property. Lessee may carry such insurance under a blanket policy, provided that such policy provides coverage equivalent to a separate policy. 12.6 INSURABLE INTEREST IN TRADE FIXTURES AND IMPROVEMENTS. Lessor hereby expressly acknowledges that Lessee shall have the sole insurable interest in the Trade Fixtures, leasehold improvements and Alterations installed in the Premises by Lessee, or at Lessee's direction, or at Lessee's expense, and that, in the event of any damage to or destruction of the Premises, Lessee shall be entitled to retain all insurance proceeds collected by Lessee with respect to such Trade Fixtures, leasehold improvements and Alterations. 12.7 WAIVER OF SUBROGATION RIGHTS. The parties release each other and their respective authorized representatives, from any claims for damage to any person or to the Premises and the Building and other improvements in which the Premises are located and to the fixtures, personal property, Lessee's improvements and alterations of either Lessor or Lessee in or on the Premises and the Building and other improvements in which the Premises are located that are caused by or result from any risk insured against under any insurance policies required under this Lease or actually carried by the parties and in force at the time of any such damage; provided, however, this waiver shall only extend to the limits of the insurance actually carried by the parties. Each party shall cause each insurance policy contained by it to provide that the insurance company waives all right of recovery by way of subrogation against either party in connection with any damage covered by any policy. Neither party shall be liable to the other for any damage caused by fire or any of the risks insured against under any insurance policy required by this Lease. If any insurance policy cannot be obtained which contains a waiver of subrogation or is obtainable only by the payment of an additional premium charge above that charge by insurance companies issuing policies without waiver of subrogation, the party undertaking to obtain the insurance shall notify the other party of this fact. The other party shall have a period of ten (10) days after receiving notice either to place the insurance with a company that is reasonably satisfactory to the other party and that will carry the insurance with a waiver of subrogation, or to agree to pay the additional premium of such if such a policy is obtainable at additional cost. If the party in whose favor a waiver of subrogation is desired refuses to pay the additional premium charge, the other party is relieved of the obligation to obtain a waiver of subrogation rights with respect to the particular insurance involved. 12.8 SURVIVAL. The indemnifications set forth in this Section shall survive the expiration, cancellation or termination of this Lease. 10 13. ADVERTISEMENTS AND SIGNS. Lessee shall have the right, at Lessee's expense, to install, mount, and erect, and repair and replace, its name sign in Lessee's standard lettering and such other signage as it may desire on the external facades of the Premises (including without limitation any projecting sign, marquee or awning on the Building), to the maximum extent permitted by applicable codes. Lessee shall also have the right, at Lessee's expense, to install, mount, and erect, and repair and replace such other signage in the Common Area in front of the Premises (from the dripline of the Building to the highway right of way) as Lessee in its reasonable business judgment determines is necessary or desirable in the operation of its business, provided that Lessee complies with all Applicable Laws and Lessee obtains Lessor's consent thereto, which shall not be unreasonably withheld. Lessor shall cooperate with Lessee in attempting to obtain maximum building signage rights. Subject to existing signage, Lessor shall not permit any other signs, billboards or posters to be displayed on any portion of the Property, nor shall Lessor erect, or allow any other tenant of the Property to erect, a pylon, monument or directional sign (collectively, "Freestanding Sign") without the consent of Lessee, which consent shall not be unreasonably withheld. Lessee shall have the right to first (1st) position on any Freestanding Sign erected on any portion of the Property after the Commencement Date, including without limitation the Freestanding Sign or signs identified on EXHIBIT B, if any. If Lessee elects to participate in a Freestanding Sign for the Property, then such Freestanding Sign shall be placed at a location mutually acceptable to Lessor and Lessee. Lessee will pay its share of the sign structure costs based upon the square footage of Lessee's sign as a percentage of total square footage of signage on the Freestanding Sign. Each user will bear the entire expense of the cost and installation of its individual sign panel on any pylon sign. Lessee's sign panel shall be wired directly to the Premises, if practicable. Subject to the approval of the appropriate governmental agencies, Lessee shall be permitted to illuminate its signs (and its panels on any pylon signs), from dusk to dawn on a daily basis. 14. UTILITIES. Lessor covenants and agrees that, as of the Commencement Date, the Premises shall be serviced with gas, electric, telephone, water, septic and other utilities. Lessor agrees, at its sole cost and expense, to cause the necessary mains, conduits and other facilities to be provided to make water, sewer, gas, telephone and electricity available to the Premises from and after the Commencement Date, including the payment of impact or tap fees and meter installation charges. Lessor shall also allow Lessee to connect its wastewater system to the additional leach field. Lessor further agrees, at its sole cost and expense, to expand the septic field to accommodate the current permitted flows from the bakery of two hundred (200) gallons per day. After installation, Lessee shall pay all charges for consumption of utility services furnished to the Premises during the Term. Lessor agrees to use reasonable efforts to maintain, and if possible, increase, the amount of water provided to the Premises. In the event of an interruption in or failure or inability to provide any services or utilities to the Premises or Building for any reason (a "Service Failure"), such Service Failure shall not, regardless of its duration, impose upon Lessor any liability whatsoever, constitute an eviction of Lessee, constructive or otherwise, entitle Lessee to an abatement of Rent or to terminate this Lease or otherwise release Lessee from any of Lessee's obligations under this Lease. Lessee hereby waives any benefits of any applicable existing or future Law, including the 11 provisions of California Civil Code Section 1932(1), permitting the termination of this Lease due to such interruption, failure or inability. 15. ENTRY BY LESSOR. Lessee shall permit Lessor and its Representatives to enter into and upon the Premises at all reasonable times upon reasonable notice (except in the case of an emergency) for the purpose of inspecting the Premises to determine if the Premises are in good condition and whether Lessee is complying with its obligations under the Lease, or for the purposes of maintaining the Building, including the erection and maintenance of such scaffolding, canopies, fences and props as may be required, for the purpose of showing the Premises for sale or in connection with any financing, or for the purpose of posting notices of non-responsibility for alterations, additions, or repairs, without any rebate of rent and without any liability to Lessee for any loss of occupation or quiet enjoyment of the Premises thereby occasioned; and shall permit Lessor, at any time within six (6) months prior to the expiration of this Lease, to place upon the Premises any usual or ordinary "to let" or "to lease" signs, provided that such signs are tasteful and in keeping with the first-class nature of Lessee's business. Lessor shall use reasonable efforts to conduct its activities under this Section in a manner that will minimize inconvenience to Lessee. 16. DESTRUCTION OF PREMISES. 16.1 LESSOR'S DUTY TO REPAIR. If all or a substantial portion of the Premises are rendered untenantable or inaccessible by damage to all or any part of the Premises or Common Area from fire or other casualty then, unless either party is entitled to and elects to terminate this Lease pursuant to Sections 16.2 or 16.3, Lessor shall, at its expense, use reasonable efforts to repair and restore the Premises to substantially its former condition as permitted by then applicable Laws; provided, however, that in no event shall Lessor have any obligation for repair or restoration beyond the extent of insurance proceeds received by Lessor for such repair or restoration and not required to be paid to any mortgagee. Lessor shall have no obligation to repair or replace any of Lessee's personal property, Trade Fixtures or Alterations. If Lessor is required or elects to repair damage to the Premises, this Lease shall continue in effect but the Rent and Additional Rent from the date of the casualty through the date of substantial completion of the repair shall be abated with regard to any portion of the Premises that Lessee is prevented from using by reason of such damage or its repair. The amount and period of rental abatement shall be mutually determined by the parties in the exercise of their good faith reasonable judgment. In no event shall Lessor be liable to Lessee by reason of any injury to or interference with Lessee's business or property arising from fire or other casualty or by reason of any repairs to any part of the Property necessitated by such casualty. 16.2 LESSOR'S RIGHT TO TERMINATE. Lessor may elect to terminate this Lease, effective as of the date of the casualty, under the following circumstances: (a) Where, in the reasonable judgment of Lessor, the damage cannot be substantially repaired and restored under Applicable Law within one (1) year from the date of the casualty; 12 (b) Where the Premises are damaged or destroyed to the extent that the cost to repair and restore the Premises exceeds the amount of available insurance proceeds (or that would have been available if Lessor had carried the insurance required under the Lease); (c) Where the Premises are damaged or destroyed to the extent that, in the reasonable judgment of the Lessor, the cost to repair and restore the Premises would exceed twenty-five percent (25%) of the full replacement cost of the Building, whether or not the Premises are at all damaged or destroyed; or (d) If the fire or casualty occurs in the last year of the Term, unless Lessee has extended, or agrees in advance to extend, the Term pursuant to its Extension Options. If any of the circumstances described in subparagraphs (a), (b), (c) or (d) of this subsection occur or arise, Lessor must notify Lessee in writing of that fact within one hundred and twenty (120) days after the date of the casualty and in such notice Lessor must also advise Lessee whether Lessor has elected to terminate this Lease as of the date of the casualty. 16.3 LESSEE'S RIGHT TO TERMINATE. If all or a substantial part of the Premises are rendered untenantable or inaccessible by damage to all or any part of the Premises from fire or other casualty, and Lessor does not elect to terminate as provided above, then Lessee may elect to terminate this Lease if Lessor's estimate of the time required to complete Lessor's repair obligations under this Lease is greater than one (1) year, in which event Lessee may elect to terminate this Lease by giving Lessor notice of such election to terminate within thirty (30) days after Lessor's notice to Lessee pursuant to Section 16.2 (Lessor's Right to Terminate). 16.4 WAIVER OF STATUTORY PROVISIONS. Lessor and Lessee each hereby waive the provisions of California Civil Code Sections 1932(2), 1933(4) and any other applicable existing or future law, ordinance or regulation with respect to damage or destruction of leased premises or with respect to the termination of a lease agreement in the event of such damage or destruction under any circumstances other than as provided in Sections 16.2 and 16.3 above. 17. CONDEMNATION. 17.1 EFFECT ON THE LEASE. Condemnation shall mean (i) a permanent taking (or a temporary taking extending beyond the end of the Term) pursuant to the exercise of power of condemnation or eminent domain by any public or quasi public authority, private corporation or individual having such power ("Condemnor"), whether by legal proceedings or otherwise, or (ii) a voluntary sale or transfer by Lessor to any such authority, whether under threat of condemnation or while legal proceedings for condemnation are pending. If the Premises are totally taken by Condemnation, this Lease shall terminate as of the date of that Condemnation. If a portion but not all of the Premises is taken by Condemnation, this Lease shall remain in effect; provided, however, that if the portion of the Premises remaining after the Condemnation is not reasonably suitable for Lessee's continued use, then upon notice to Lessor within thirty (30) days after Lessor notifies Lessee of the Condemnation, Lessee may terminate this Lease effective as of the date of the Condemnation. If 13 twenty-five percent (25%) of the Property or of the land on which the Building is situated or of the designated parking areas or of the floor area in the Building is taken by Condemnation, or if as a result of condemnation the Building is no longer reasonably suited for use as a retail building, whether or not any portion of the Premises is taken, Lessor may elect to terminate this Lease, effective as of the date of Condemnation, by notice to Lessee within thirty (30) days after the date of Condemnation. If all or a portion of the Premises is temporarily taken by a Condemnor for a period not extending beyond the Term, this Lease shall remain in full force and effect. 17.2 RESTORATION OF PREMISES. If this Lease is not terminated as provided in Section 17.1, Lessor shall, at it expense, diligently proceed to repair and restore the Premises to substantially its former condition (to the extent permitted by then applicable Laws) and/or repair and restore the Building to an architecturally complete retail building; provided, however, that Lessor's obligations to so repair and restore shall be limited to the amount of any award received by Lessor for the Condemnation and not required to be paid to any mortgagee. In no event shall Lessor have any obligation to repair or replace any improvements in the Premises beyond the amount of any reward received by Lessor for such repair or to repair or replace any of Lessee's personal property, Trade Fixtures or Alterations. If any portion of the Premises is taken in a Condemnation or is rendered untenantable by repairs necessitated by the Condemnation, and this Lease is not terminated, the Rent and Additional Rent shall be proportionately reduced as of the date of the Condemnation based upon the percentage of rentable square feet in the Premises so taken or rendered permanently untenantable. In addition, if this Lease remains in full force and effect following a Condemnation and Lessor proceeds to repair and restore the Premises, the Rent and Additional Rent payable under the Lease shall be abated during the period of such repair or restoration to the extent such repairs prevent Lessee's use of the Premises. Lessor and Lessee each hereby waive the provisions of California Code of Civil Procedure Section 1265.130 and any other applicable existing or future Law allowing either party to petition for a termination of this Lease upon a partial taking of the Premises and/or the Property. 18. ASSIGNMENT AND SUBLETTING. Lessee shall not assign this Lease, or any interest therein, and shall not sublet the Premises or any part thereof, or any right or privilege appurtenant thereto, or suffer any other person (the Representatives of Lessee excepted), including any corporation or other person or entity resulting from a merger or consolidation with Lessee, or to any person or entity which acquires substantially all the assets of Lessee as a going concern to occupy or use the Premises, or any portion thereof, without the prior written consent of Lessor, which shall not be unreasonably withheld; provided, however, Lessor's consent shall not be required with respect an assignment or sublet to any corporation or other person or entity which controls, is controlled by, or is under common control with Lessee (collectively, an "Affiliate"). A consent to one assignment, subletting, occupation or use by any other person, shall not be deemed to be a consent to any subsequent assignment, subletting, occupation or use by another persons. Any such assignment or subletting without such consent shall be void. This lease shall not, nor shall any interest therein, be assignable, as to the interest of Lessee, by operation of law, without the written consent of Lessor. 14 19. INSOLVENCY OR BANKRUPTCY. Lessee shall be in default under this Lease if (a) a petition of bankruptcy or reorganization is filed by Lessee or against Lessee and is not dismissed within ninety (90) days after such filing and Lessee becomes bankrupt, (b) Lessee makes a general assignment for the benefit of creditors, (c) in any proceeding based upon the insolvency of Lessee, a receiver or trustee of all of the property of Lessee is appointed and is not discharged within ninety (90) days after such appointment, or (d) a writ of attachment or execution is levied against all or substantially all of Lessee's assets and is not discharged within thirty (30) days after Lessee receives notice thereof; provided, however, neither bankruptcy, insolvency, reorganization, an assignment for the benefit of creditors nor the appointment of a receiver or trustee shall affect this Lease or permit its termination so long as the covenants on the part of Lessee to be performed shall be performed by Lessee, or someone claiming under it. 20. DEFAULTS AND REMEDIES. 20.1 Events of Default. The occurrence of any of the following shall constitute an "Event of Default" by Lessee: (a) Lessee fails to make any payment of rent when due, or any amount required to replenish the security deposit as provided in Section 3 above, if payment in full is not received by Lessee within three (3) days after written notice that it is due. (b) Lessee abandons the Premises. (c) Lessee fails timely to deliver any subordination document, estoppel certificate or financial statement requested by Lessee within the applicable time period specified in Section 41 below. (d) Lessee violates the restrictions on Transfer set forth in Section 18 - ASSIGNMENT AND SUBLETTING. (e) Lessee ceases doing business as a going concern; makes an assignment for the benefit of creditors; is adjudicated an insolvent, files a petition (or files an answer admitting the material allegations of a petition) seeking relief under any state or federal bankruptcy or other statute, law or regulation affecting creditors' rights; all or substantially all of Lessee's assets are subject to judicial seizure or attachment and are not released within 30 days, or Lessee consents to or acquiesces in the appointment of a trustee, receiver or liquidator for Lessee or for all or any substantial part of Lessee's assets. (f) Lessee fails, within ninety (90) days after the commencement of any proceedings against Lessee seeking relief under any state or federal bankruptcy or other statute, law or regulation affecting creditors' rights, to have such proceedings dismissed, or Lessee fails, within ninety (90) days after an appointment, without Lessee's consent or acquiescence, of any trustee, receiver or liquidator for Lessee or for all or any substantial part of Lessee's assets, to have such appointment vacated. 15 (g) Lessee fails to perform or comply with any provision of this Lease other than those described in (a) through (f) above, and does not fully cure such failure within fifteen (15) days after notice to Lessee or, if such failure cannot be cured within such fifteen (15)-day period, Lessee fails within such fifteen (15)-day period to commence, and thereafter diligently proceed with, all actions necessary to cure such failure as soon as reasonably possible but in all events within ninety (90) days of such notice; provided, however, that if Lessee in Lessee's reasonable judgment determines that such failure cannot or will not be cured by Lessee within such ninety (90) days, then such failure shall constitute an Event of Default immediately upon such notice to Lessee. 20.2 Remedies If Lessee is in default under any provision of this Lease, Lessor shall have the following remedies, which shall not be exclusive but shall be cumulative and shall be in addition to any other remedies now or hereafter allowed by law: (a) Lessor may terminate Lessee's right to possession of the Premises at any time by written notice to Lessee. Lessee expressly acknowledges that in the absence of such written notice from Lessor, no other act of Lessor, including re-entry into the Premises, efforts to relet the Premises, reletting the Premises for Lessee's account, storage of Lessee's personal property and Trade Fixtures, acceptance of keys to the Premises from Lessee or exercise of any other rights and remedies under this Section, shall constitute an acceptance of Lessee's surrender of the premises or constitute a termination of this Lease or of Lessee's right to possession of the Premises. Upon such termination in writing of Lessee's right to possession of the Premises, as herein provided, this Lease shall terminate and Lessor shall be entitled to recover damages from Lessee as provided in California Civil Code Section 1951.2 and any other applicable existing or future Law providing for recovery of damages for such breach, including the worth at the time of award of the amount by which rent which would be payable by Lessee hereunder for the remainder of the Term after the date of the award of damages, including Additional Rent as reasonably estimated by Lessor, exceeds the amount of such rental loss as Lessee proves could have been reasonably avoided, discounted at the discount rate published by the Federal reserve Bank of San Francisco for member banks at the time of the award plus one percent (1%). (b) Lessor shall have the remedy described in California Civil Code Section 1951.4 (Lessor may continue this Lease in effect after Lessee's breach and abandonment and recover rent as it becomes due, if Lessee has the right to sublet or assign, subject only to reasonable limitations). (c) Lessor may cure the default at Lessee's expense. If Lessor pays any sum or incurs any expense in curing the default, Lessee shall reimburse Lessor upon demand for the amount of such payment or expense with interest at the rate of fifteen percent (15%) per annum from the date the sum is paid or the expense is incurred until Lessor is reimbursed by Lessee. (d) Lessor may remove all Lessee's property from the Premises, and such property may be stored by Lessor in a public warehouse or elsewhere at the sole cost and for the account of Lessee. If Lessor does not elect to store any or all or Lessee's property left in the Premises, Lessee may consider such property in any manner deemed appropriate by Lessor. Any proceeds realized by Lessor on the disposal of any such property shall be applied first to offset all 16 expenses of storage and sale, then credited against Lessee's outstanding obligations to Lessor under this Lease, and any balance remaining after satisfaction of all obligations of Lessee under this Lease shall be delivered to Lessee. 21. SURRENDER OF LEASE. The voluntary or other surrender of this Lease by Lessee, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of Lessor, terminate all or any existing sublease or subtenancies, or may, at the option of Lessor, operate as an assignment to him of any or all such subleases or subtenancies. 22. ATTORNEY'S FEES. In the event of any litigation or arbitration regarding any rights and obligations under this Lease, the prevailing party shall be entitled to recover reasonable attorneys' fees and court costs in addition to any other relief which may be granted. The "prevailing party" shall be determined by the court or arbitrator before whom the action was brought based upon an assessment of which party's major arguments or positions taken in the suit or proceeding could fairly be said to have prevailed over the other party's major arguments or positions on major disputed issues in the court's or arbitrator's opinion. 23. NOTICE. Any notice, demand, request, consent or approval that either party desires or is required to give to the other party under this Lease shall be in writing and shall be served personally, delivered by messenger or courier service, or sent by U.S. certified mail, return receipt requested, postage prepaid, addressed to the other party at the party's address for notices provided in writing to the other party from time to time. The initial address for notices shall be the addresses set forth in the signature block to this Lease. Notices will be effective upon receipt (or refusal of delivery or receipt). Either party may change its address for notices hereunder by a notice to the other party complying with this Section. If Lessee sublets the Premises, notices from Lessor shall be effective on the subtenant when given to Lessee pursuant to this Section 24. WAIVER. No provisions of this Lease shall be deemed waived by either party unless such waiver is in a writing signed by the waiving party. The waiver of any breach of any provision of this Lease shall not be deemed a waiver of such provision or of any subsequent breach of the same or any other provision of this Lease. No delay or omission in the exercise of any right or remedy upon any default shall impair such right or remedy or be construed as a waiver. Either party's consent to or approval of any act requiring consent or approval shall not be deemed to waive or render unnecessary such consent to or approval of any subsequent act. 25. HOLDING OVER. Any holding over after the expiration of the said term, with the consent of Lessor, shall be construed to be a tenancy from month to month, at 125% of the current rent and on the terms and conditions herein specified, so far as applicable. 26. SUCCESSORS AND ASSIGNS. The covenants and conditions herein contained shall, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of all of the parties hereto; and all of the parties hereto shall be jointly and severally liable hereunder. 27. TIME. Time is of the essence of this Lease. 17 28. LATE CHARGE. If any payment of Rent is not received by Lessor within five (5) days after it is due, Lessee shall pay to Lessor on demand as a late charge an additional amount equal to five percent (5%) of the overdue payment. Lessee acknowledges that late payment of Rent will cause Lessor to incur costs which are difficult to ascertain, and the parties agree that the foregoing amount is a reasonable estimate of Lessor's expenses resulting from late payments and are not intended as a penalty. A late charge shall not be imposed more than once on any particular installment not paid when due, but imposition of a late charge on any payment not made when due does not eliminate or supersede late charges imposed on other payments not made when due or preclude imposition of a late charge on other installments or payments not made when due or waive any other default by Lessee. 29. LESSOR'S RIGHT OF FIRST REFUSAL TO PURCHASE. Lessee hereby grants to Lessor a continuing Right of First Refusal to purchase Lessee's leasehold interest in this Lease ("Leasehold Interest"), which shall continue during the Initial Term or Extension Period, as the case may be. Lessee shall not, at any time prior to the expiration of the Term of this Lease, or any extension thereof, sell the Leasehold Interest, except to an Affiliate of Lessee, without first giving written notice thereof to Lessor, which notice shall clearly state that Lessor has five (5) business days to respond and which notice is hereinafter referred to as "Notice of Sale." Provided that Lessor is not in default under this Lease which remains uncured after the expiration of the applicable cure period at the time it receives the Notice of Sale, for a period of five (5) business days after receipt by Lessor of the Notice of Sale, Lessor shall have the right to give written notice to Lessee of Lessor's exercise of Lessor's right to purchase the Leasehold Interest, on the same terms, price and conditions as set forth in the Notice of Sale. In the event that Lessor does not exercise the purchase right herein granted within such five (5) day period, there shall be a conclusive presumption that Lessor has elected not to exercise Lessor's right hereunder, and Lessee may sell the Leasehold Interest, on the same terms set forth in the Notice of Sale; provided, however, that if (a) Lessee proposes to sell the Leasehold Interest, at a purchase price that is less than ninety-five percent (95%) of the purchase price proposed to Lessor, or upon other terms which are substantially more favorable to the prospective purchaser, Lessee shall first re-offer such space to Lessor at such lower purchase price and/or more favorable terms or (b) Lessee proposes to sell the Leasehold Interest, more than six (6) months after Lessor's receipt of the Notice of Sale, Lessee shall first re-offer such space to Lessor, all in accordance with the provisions of this Section. The right under this Section is a continuing right and must be reoffered to Lessor each time this provision is triggered, whether or not Lessor has exercised its rights hereunder with respect to previous offers. 30. QUIET ENJOYMENT. Lessor covenants, represents and warrants that it has full right and power to execute and perform this Lease and to grant the estate demised herein and that Lessee, on payment of the rent and performance of the covenants and agreements hereof, shall peaceably and quietly have, hold and enjoy the Premises and all rights, easements, appurtenances and privileges belonging or in any way pertaining thereto during the Lease Term without molestation or hindrance of any person whomsoever. 31. COVENANT OF TITLE. Lessor further covenants, represents and warrants that it is seized of an indefeasible estate in fee simple and has good and marketable title to the Land 18 described in EXHIBIT A, free and clear of any liens, encumbrances, restrictions and violations (or claims or notices hereof), except the lien of the mortgage or mortgages specifically identified on the attached EXHIBIT C and public utility easements and covenants and restrictions of record not impairing Lessee's Intended Use of the Premises, and taxes not yet due and payable. 32. HAZARDOUS MATERIAL. 32.1 LESSOR'S REPRESENTATIONS, WARRANTIES AND COVENANT. Lessor represents that to the best of its knowledge, except as set forth in either of the ________________________________ and __________________________________ Environmental Reports for the Property, or as previously disclosed to Lessee, there are no "Hazardous Materials" (as defined below) existing on the Property as of the Commencement Date. Lessor's representations to Lessee under this Section shall survive the cancellation or termination of this Lease. 32.2 LESSOR'S INDEMNIFICATION OBLIGATION. Lessor hereby agrees to indemnify, defend, and hold harmless Lessee, its Representatives, assignees and Sublessees, and Lessee's guarantor, if any, from and against any penalty, loss, liability, claim or expenses including, without limitation, engineering and attorneys fees, arising out of a breach of the representations and warranties in Section 32.1 above, except to the extent such condition was caused by the breach of Lessee's covenant below. Lessor's representations and indemnity to Lessee under this Section shall survive the cancellation or termination of this Lease. 32.3 LESSEE'S COVENANT AND INDEMNIFICATION OBLIGATION. (a) LESSEE'S COVENANTS. No Hazardous Materials shall be Handled by Lessee at or about the Premises or Property without Lessor's prior written consent, which consent may be granted, denied, or conditioned upon compliance with Lessor's requirements, all in Lessor's absolute discretion. Notwithstanding the foregoing, normal quantities and use of those Hazardous Materials customarily used in the conduct of retail and general office activities, such as copier fluids and cleaning supplies ("Permitted Hazardous Materials"), may be used and stored at the Premises without Lessor's prior written consent, provided that Lessee's activities at or about the Premises and Property and the Handling by Lessee of all Hazardous Materials shall comply at all times with all Environmental Requirements. At the expiration or termination of the Lease, Lessee shall promptly remove from the Premises and Property all Hazardous Materials Handled by Lessee at the Premises or the Property. Lessee shall keep Lessor fully and promptly informed of all Handling by Lessee of Hazardous Materials other than Permitted Hazardous Materials. Lessee shall be responsible and liable for the compliance with all of the provisions of this Section by all of Lessee's Representatives and Visitors, and all of Lessee's obligations under this Section (including its indemnification obligations under paragraph (e) below) shall survive the expiration or termination of this Lease. (b) COMPLIANCE. Lessee shall at Lessee's expense promptly take all actions required by any governmental agency or entity in connection with or as a result of the Handling by Lessee of Hazardous Materials at or about the Premises or Property, including 19 inspection and testing, performing all cleanup, removal and remediation work required with respect to those Hazardous Materials, complying with all closure requirements and post-closure monitoring, and filing all required reports or plans. All of the foregoing work and all Handling by Lessee of all Hazardous Materials shall be performed in a good, safe and workmanlike manner by consultants qualified and licensed to undertake such work and in a manner that will not interfere with any other tenant's quiet enjoyment of the Property or Lessor's use, operation, leasing and sale of the Property. Lessee shall deliver to Lessor prior to delivery to any governmental agency, or promptly after receipt from any such agency, copies of all permits, manifests, closure or remedial action plans, notices, and all other documents relating to the Handling by Lessee of Hazardous Materials at or about the Premises or Property. If any lien attaches to the Premises or the Property in connection with or as a result of the Handling by Lessee of Hazardous Materials, and Lessee does not cause the same to be released, by payment, bonding or otherwise, within ten (10) days after the attachment thereof, Lessor shall have the right but not the obligation to cause the same to be released and any sums expended by Lessor (plus Lessor's administrative costs) in connection therewith shall be payable by Lessee on demand. (c) LESSOR'S RIGHTS. Lessor shall have the right, but not the obligation, to enter the Premises at any reasonable time (i) to confirm Lessee's compliance with the provisions of this Section, and (ii) to perform Lessee's obligations under this Section if Lessee has failed to do so after reasonable notice to Lessee. Lessor shall also have the right to engage qualified Hazardous Materials consultants to inspect the Premises and review the Handling by Lessee of Hazardous Materials, including review of all permits, reports, plans, and other documents regarding same. Lessee shall pay to Lessor on demand the costs of Lessor's consultants' fees and all costs incurred by Lessor in performing Lessee's obligations under this Section. Lessor shall use reasonable efforts to minimize any interference with Lessee's business caused by Lessor's entry into the Premises, but Lessor shall not be responsible for any interference caused thereby. 32.4 DEFINITION. (a) "Hazardous Materials" shall mean any substance: (A) that now or in the future is regulated or governed by, requires investigation or remediation under, or is defined as a hazardous waste, hazardous substance, pollutant or contaminant under any governmental statute, code, ordinance, regulation, rule or order, and any amendment thereto, including the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. ss.9601 eT Seq., and the Resource Conservation and Recovery Act, 42 U.S.C. ss.6901 ET seq., or (B) that is toxic, explosive, corrosive, flammable, radioactive, carcinogenic, dangerous or otherwise hazardous, including gasoline, diesel fuel, petroleum hydrocarbons, polychlorinated biphenyls (PCBs), asbestos, radon and urea formaldehyde foam insulation. (b) "Environmental Requirements" shall mean all present and future Laws, orders, permits, licenses, approvals, authorizations and other requirements of any kind applicable to Hazardous Materials. (c) "Handled by Lessee" and "Handling by Lessee" shall mean and refer to any installation, handling, generation, storage, use, disposal, discharge, release, abatement, 20 removal, transportation, or any other activity of any type by Lessee or its agents, employees, contractors, licensees, assignees, sublessees, transferees or representatives (collectively, "Representatives") or its guests, customers, invitees, or visitors (collectively, "Visitors"), at or about the Premises in connection with or involving Hazardous Materials. (d) "Environmental Losses" shall mean all costs and expenses of any kind, damages, including foreseeable and unforeseeable consequential damages, fines and penalties incurred in connection with any violation of and compliance with Environmental Requirements and all losses of any kind attributable to the diminution of value, loss of use or adverse effects on marketability or use of any portion of the Premises or Property. 33. MEMORANDUM OF LEASE. The parties hereto have simultaneously with the execution and delivery of this Lease, executed and delivered a Memorandum of Lease substantially in the form attached as EXHIBIT D to this Lease, which Lessor shall, at its sole expense, cause to be recorded within five (5) days following delivery of this Lease and returned to Lessee by Lessor within five (5) days thereafter. 34. BROKER'S REPRESENTATION. Each party represents that it dealt with no broker or brokers in connection with the negotiation, execution and delivery of this Lease. Lessor and Lessee shall, and do hereby, indemnify, defend, and save the other harmless from and against any losses, damages, penalties, claims or demands of whatsoever nature arising from a breach of its foregoing representation including, without limitation, reasonable attorneys' fees and expenses. The representations and indemnifications set forth in this Section shall survive the cancellation or termination of this Lease. 35. FORCE MAJEURE. Lessor and Lessee shall be excused for the period of any delay in performance of any obligations hereunder (except payment of Rent) by reason of the wrongful or negligent acts or omissions of the other party, or their Representatives, or by reason of labor disputes, civil disturbance, war, war-like operations, invasions, rebellion, hostilities, military or usurped power, sabotage, governmental regulations or controls, fires or other casualty, or acts of God (referred to collectively herein as "Force Majeure). 36. CONDITION OF PREMISES AT TERMINATION. At the expiration or earlier termination of the Term, Lessee shall surrender the Premises, together with all improvements installed by Lessee then a part thereof, in good order and condition, except for the following: (a) ordinary wear and tear, (b) repairs required to be made by Lessor, and (c) loss or damage by fire, the elements or other casualty. All furniture and Trade Fixtures installed in the Premises at the expense of Lessee, or other occupant, shall remain the property of Lessee, or such other occupant; provided, however, Lessee shall have the option, during the Term, to relinquish its property rights in such Trade Fixtures (including, but not limited to, air conditioning machinery and lighting fixtures, if owned by Lessee), which option shall be exercised by written notice of such relinquishment to Lessor and, from and after the exercise of said option, the property specified in said notice shall be the property of Lessor. 21 37. CONSENTS AND APPROVALS. Unless another consent standard is specifically provided under the terms of this Lease, whenever consent, satisfaction or approval of either party is required under this Lease, such consent, satisfaction or approval shall not be unreasonably withheld, conditioned or delayed. If and to the extent that any written request for consent, satisfaction or approval is not reasonably disapproved in writing (including a statement of the reasons for disapproval with reasonable particularity) within fifteen (15) days or such other time specifically set forth in the particular provision of the Lease, the consent, satisfaction or approval shall be deemed to have been given. 38. AUTHORITY. 38.1 LESSOR'S REPRESENTATIONS. Each of the persons executing this Lease on behalf of Lessor warrants and represents that Lessor is a duly organized and validly existing limited liability company, that Lessor has full right and authority to enter into this Lease and that the persons signing on behalf of Lessor are authorized to do so and have the power to bind Lessor to this Lease. Lessor shall provide Lessee upon request with evidence reasonably satisfactory to Lessee confirming the foregoing representations. 38.2 LESSEE'S REPRESENTATIONS. Each of the persons executing this Lease on behalf of Lessee warrants and represents that Lessee is a duly organized and validly existing limited liability company, that Lessee has full right and authority to enter into this Lease and that the persons signing on behalf of Lessee are authorized to do so and have the power to bind Lessee to this Lease. Lessee shall provide Lessor upon request with evidence reasonably satisfactory to Lessor confirming the foregoing representations. 39. ENTIRE AGREEMENT. This Lease, including the Exhibits and any Addenda attached hereto, and the documents referred to herein, if any, constitute the entire agreement between Lessor and Lessee with respect to the leasing of space by Lessee at the Property, and supersede all prior or contemporaneous agreements, understandings, proposals and other representations by or between Lessor and Lessee, whether written or oral. 40. LESSOR'S LIABILITY. The liability of Lessor for its obligations under this Lease is limited solely to the assets of Lessor, including without limitation Lessor's interest in the Property, and no personal liability shall at any time be asserted or enforceable against Lessor's partners on account of any of Lessor's obligations or actions under this Lease. 41. ESTOPPEL CERTIFICATES. Either Lessor or Lessee may request that the other party execute and deliver, within ten (10) days after written request therefor, in a form provided by or satisfactory to the requesting party, a certificate stating that this Lease is in full force and effect, describing any amendments or modifications hereto, acknowledging that this Lease is subordinate or prior, as the case may be, to any Encumbrance and stating any other information that the requesting party may reasonably request, including the Term, the monthly Rent, the date to which Rent has been paid, any claims or offsets, the amount of any prepaid rent, and whether either party hereto is in default under the terms of the Lease. Lessee irrevocably constitutes, appoints and authorizes Lessor as Lessee's special attorney-in-fact for such purpose to complete, execute and 22 deliver such certificate if Lessee fails timely to execute and deliver such certificate as provided above. Lessor irrevocably constitutes, appoints and authorizes Lessee as Lessor's special attorney-in-fact for such purpose to complete, execute and deliver such certificate if Lessor fails timely to execute and deliver such certificate as provided above. Any person or entity purchasing, acquiring an interest in or extending financing with respect to the Property shall be entitled to rely upon any such certificate. 42. MISCELLANEOUS. This Lease may not be amended or modified except by a writing signed by Lessor and Lessee. The determination that any provisions hereof may be void, invalid, illegal or unenforceable shall not impair any other provisions hereof and all such other provisions of this Lease shall remain in full force and effect. The unenforceability, invalidity or illegality of any provision of this Lease under particular circumstances shall not render unenforceable, invalid or illegal other provisions of this Lease, or the same provisions under other circumstances. This Lease shall be construed and interpreted in accordance with the laws of the State of California. The provisions of this Lease shall be construed in accordance with the fair meaning of the language used and shall not be strictly construed against either party. The captions contained in this Lease are for purposes of convenience only and are not to be used to interpret or construe this Lease. When required by the context of this Lease, the singular includes the plural. Wherever the term "including" is used in this Lease, it shall be interpreted as meaning "including, but not limited to" the matter or matters thereafter enumerated. [Signature Page Follows] 23 IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease the day and year first above written. LESSOR: R & R LAND, LLC, a California limited liability company, By: ------------------------ Pat Roney, Manager ADDRESS FOR NOTICES: 999 Adams Street, Suite 302 St. Helena, California 94574 LESSEE: DEAN & DELUCA MARKETS, LLC, a California limited liability company By: ------------------------- Pat Roney, Manager ADDRESS FOR NOTICES: 607 St. Helena Highway South St. Helena, California 94574 24 EXHIBIT A ATTACHED TO AND FORMING A PART OF RETAIL LEASE DATED AS OF MARCH 18, 1999 BETWEEN R & R LAND, LLC, AS LESSOR, AND DEAN & DELUCA MARKETS, LLC, AS LESSEE ("LEASE") LEGAL DESCRIPTION OF THE LAND (TO BE ATTACHED) 25 EXHIBIT B ATTACHED TO AND FORMING A PART OF RETAIL LEASE DATED AS OF MARCH 18, 1999 BETWEEN R & R LAND, LLC, AS LESSOR, AND DEAN & DELUCA MARKETS, LLC, AS LESSEE ("LEASE") PLOT PLAN (PARTIES TO DRAFT AND ATTACH) Needs to show: 1. Land and layout of Structures, identifying the "Premises" and the "Adjacent Building" 2. Parking 3. Driveways, entrances, sidewalks and exits 4. Existing signage 26 EXHIBIT C ATTACHED TO AND FORMING A PART OF RETAIL LEASE DATED AS OF MARCH 18, 1999 BETWEEN R & R LAND, LLC, AS LESSOR, AND DEAN & DELUCA MARKETS, LLC, AS LESSEE ("LEASE") EXISTING MORTGAGES None. 27 EXHIBIT D ATTACHED TO AND FORMING A PART OF RETAIL LEASE DATED AS OF MARCH 18, 1999 BETWEEN R & R LAND, LLC, AS LESSOR, AND DEAN & DELUCA MARKETS, LLC, AS LESSEE ("LEASE") MEMORANDUM OF LEASE Recording Requested By When Recorded Mail To Michael P. Burns Farella Braun & Martel LLP 235 Montgomery Street San Francisco, CA 94104 ------------------------------------------------ --------------------------- MEMORANDUM OF LEASE The Lease term is less than thirty-five (35) years and no transfer tax is due. THIS MEMORANDUM OF LEASE is made and entered into as of this ________ day of _______, 1999, by and between R & R Land, LLC, a California limited liability company ("Lessor"), and Dean & Deluca Markets, LLC, a California limited liability company ("Lessee"). In consideration of and upon all of the terms, conditions, and covenants set forth in that certain unrecorded Retail Lease of even date herewith between Lessor and Lessee (hereinafter, the "Lease"), Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the "Premises" (as described in the Lease), which Premises are located on the real property described in EXHIBIT A attached hereto and made a part hereof. The Lease and all its terms and provisions, are by this reference incorporated herein and made a part hereof. The Lease includes a right of first refusal to purchase the "Leasehold Interest (as defined in Paragraph 29 of the Lease). This Memorandum of Lease is executed for the sole purpose of giving notice of the existence and contents of the Lease to all interested parties, and shall in no way modify or affect the terms of such Lease or the obligations of the parties thereunder. 28 IN WITNESS WHEREOF, the parties have executed this Memorandum of Lease as of the date first above written. LESSOR: LESSEE:
2526 East 36th Street North Circle (Wichita, KS) Lease Agreement - Dean & DeLuca Brands Inc. and Leslie G. Rudd
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