Complaint Unlimited Fee AppliesCal. Super. - 6th Dist.April 29, 2021E-FILED 4/29/2021 11:58 AM Clerk of Court Superior Court of CA, County of Santa Clara 21CV381300 Reviewed By: M Vu 21CV381300 UD-1 00 ATTORNEY OR PARTY WITHOUT A'I'I'ORNEY STATE BAR NUMBER: FOR COURT USE ONLY NAME; Gregory M. Bordo (SBN 156147); Christopher J. Petersen (SBN 251439) FIRM NAME: BLANK ROME LLP STREET ADDRESS: 2029 Century Park East, 6th FIOOI’ CITY: Los Angeles STATE: CA ZIP CODE: 90067 TELEPHONE No.: 424.239.3400 FAX N0; 424.239.3434 EMAILADDRESS; GBordo@BlankRome.com; CJPetersen@BlankRome.com ATTORNEY FOR (name); Plaintiff Weingarten Realty Investors SUPERIOR COURT 0F CALIFORNIA, COUNTY 0F SANTA CLARA STREET ADDRESS: 191 N. First Street MAILING ADDRESS: 191 N. First Street CITY AND ZIP CODE: San Jose, CA 951 1 3 BRANCH NAME: Downtown Superior Court PLAINTIFF: Weingarten Realty Investors, a Texas real estate investment trust DEFENDANT: Supercuts, lnc., a Delaware corporation g DOES 1 To 1o COMPLAINT-UNLAWFUL DETAINER* CASE NUMBER: COMPLAINT D AMENDED COMPLAINT(Amendment Number): Jurisdiction (check aII that apply): D ACTION Is A LIMITED CIVIL CASE Amount demanded D does not exceed $10,000. D exceeds $10,000 but does not exceed $25,000. E ACTION IS AN UNLIMITED CIVIL CASE (amount demanded exceeds $25,000) D ACTION IS RECLASSIFIED by this amended complaint or cross-complaint (check all that apply): D from unlawful detainer to general unlimited civil (possession not in issue). D from limited to unlimited. D from unlawful detainer to general limited civil (possession not in issue). D from unlimited to limited. 1. PLAINTIFF (name each): Weingarten Realty Investors, a Texas real estate investment trust alleges causes of action against DEFENDANT (name each): Supercuts, lnc., a Delaware corporation. and DOES 1-10 2. a Plaintiff is (1) U an individual over the age of 18 years. (4) D a partnership. (2) D a public agency. (5) D a corporation. (3) E other (specify): real estate investment trust b. D Plaintiff has complied with the fictitious business name laws and is doing business under the fictitious name of (specify): 3. a. The venue is the court named above because defendant named above is in possession of the premises located at (street address, apt. no., city, zip code, and county): 5138 Stevens Creek Boulevard, San Jose, California 95129, County of Santa Clara b. The premises in 3a are (check one) (1) X within the city limits of (name of city): San Jose (2) D within the unincorporated area of (name of county): c. The premises in 3a were constructed in (appmximate year):1973 4. Plaintiff's interest in the premises is E as owner D other (specify): 5. The true names and capacities of defendants sued as Does are unknown to plaintiff. * NOTE: Do not use this form for evictions after sale (Code Civ. Proc., § 1161a). Form Approved for Optional Use ch 1 n‘l 4 Civil Code. § 1940 et seq; Code of Civil Procedure, §§ 425.12. 1166 flfifiifibffii'v‘é'sifiam'fifif 2020] COMPLAINT-UNLAWFUL DETAINER mmflmgov 141 979.00609/1 25763700v.2 UD-1 00 PLAINTIFF: Weingarten Realty Investors CASE NUMBER: DEFENDANT: Supercuts, lnc., and DOES 1-10 6. a. On or about (date): January 25, 2001 defendant (name each): Supercuts, Inc. (1) agreed to rent the premises as a D month-to-month tenancy g other tenancy (specify): 5 year fixed-term tenancy 3,458.00, subject to increase per payable g monthly D other (specify frequency): (2) agreed to pay rent of $ Lease (attached as Ex. 1) (3) agreed to pay renton the g firstofthe month D other day (specify): b. This E written D oral agreementwas made with (1) E plaintiff. (3) D plaintiff's predecessorin interest. (2) D plaintiffs agent. (4) D Other (specify): c. E The defendants not named in item 6a are (1) D subtenants. (2) D assignees. E Other (specify): Unknown d. The agreement was later changed as follows (specify): First Lease Amendment dated July 20, 2006; Exercise of Option dated January 31, 2006; Second Amendment to Lease dated May 6, 2011; Change in Ownership dated November 8, 2019. e. E A copy of the written agreement, including any addenda or attachments that form the basis of this complaint. is attached and labeled Exhibit 1. (Required for residential property, unless item 6fis checked. See Code Civ. Proc., § 1166.) f. D (For residential propen‘y) A copy of the written agreement is not attached because (specify reason): (1) D the written agreement is not in the possession of the landlord or the landlord’s employees or agents. (2) D this action is solely for nonpayment of rent (Code Civ. Proc., § 1161(2)). 7. The tenancy described in 6 (complete (a) or (b)) a. g is not subject to the Tenant Protection Act of 2019 (Civil Code § 1946. 2). The specific subpart supporting why tenancy is exempt is(specify). (a) b. D is subject to the Tenant Protection Act of 2019. 8. (Complete only if item 7b is checked. Check all applicable boxes.) a. D The tenancy was terminated for at-faultjust cause (Civil Code, § 1946.2(b)(1)). b. D The tenancy was terminated for no-fault just cause (Civil Code, § 1946.2(b)(2)) and the plaintiff (check one) (1) D waived the payment of rent for the final month of the tenancy, before the rent came due. under section 1946.2(d)(2) in the amount of $ (2) D provided a direct payment of one month's rent under section 1946.2(d)(3) equaling $ to (name each defendant and amount given to each): c. D Because defendant failed to vacate, plaintiff is seeking to recover the total amount in 8b as damages in this action. 9. a. g Defendant(name each): Supercuts, Inc. was served the following notice on the same date and in the same manner: (1) g 3-day notice to pay rent or quit (5) D 3-day notice to perform covenants or quit (2) D 30_day notice t0 quit (not applicable if item 7b checked) (3) D 60_da notice t0 uit (6) D 3-day notice to quit under Civil Code, § 1946.2(c) (4) D 3 d y f t qit Prior required notice to perform covenants served (date): - ay no Ice o quu (7) D Other (specify): UD-100[Rev. September 1. 2020] COMPLAINT-UNLAWFUL DETAINER ”9:“ 2°“ 141 979.00609/1 25763700v2 American LegalNel. Inc. www l-‘ormsz kl’low com UD-1 00 PLAINTIFF: Weingarten Realty Investors CASE NUMBER: DEFENDANT: Supercuts, |nc., and DOES 1-10 9. b. (1) On (date): April 16. 2021 the period stated in the notice checked in 9a expired at the end ofthe day. (2) Defendants failed to comply with the requirements of the notice by that date. c. All facts stated in the notice are true. g The notice included an eIection of forfeiture. e. g A copy of the notice is attached and labeled Exhibit 2. (Required for residential propen‘y. See Code Civ. Proc., § 1166. When Civil Code, § 1946.2(0), applies and two notices are required, provide copies of both.) f. D One or more defendants were served (1) with the prior required notice under Civil Code, § 1946.2(0). (2) with a different notice, (3) on a different date, or (4) in a different manner, as stated in Attachment 100. (Check item 100 and attach a statement providing the information required by items 9a-e and 10 for each defendant and notice.) 10. a. E The notice in item 9a was served on the defendant named in item 9a as follows: (1) D By personally handing a copy to defendant on (date): (2) D By leaving a copy with (name or description): . a person of suitable age and discretion, on (date): at defendant's D residence D business AND mailing a copy to defendant at defendant's place of residence on (date): because defendant cannot be found at defendant's residence or usual place of business. (3) g By posting a copy on the premises on (date): April 13, 2021 g AND giving a copy to a person found residing at the premises AND mailing a copy to defendant at the premises on (date): April 13, 2021 per Cal. Civ. Proc. Code § 1162(b)(3) (a) D because defendant's residence and usual place of business cannot be ascertained OR (b) D because no person of suitable age or discretion can be found there. (4) D (Not for 3-day notice; see Civil Code, § 1946, before using) By sending a copy by certified or registered mail addressed to defendant on (date): (5) D (Not for residential tenancies; see Civil Code, § 1953, before using) In the manner specified in a written commercial lease between the parties b. D (Name).- was served on behalf of all defendants who signed a joint written rental agreement. c. D Information about service of notice on the defendants alleged in item 9fis stated in Attachment 100. d. E Proof of service of the notice in item 98 is attached and labeled Exhibit 3. 11. D Plaintiff demands possession from each defendant because of expiration of a fixed-term lease. 12. E At the time the 3-day notice to pay rent or quit was sen/ed, the amount of rent due was $ 90,221 .78 13. E The fair rental value of the premises is $ 288. 1 7 per day. 14. D Defendant's continued possession is malicious, and plaintiff is entitled to statutory damages under Code of Civil Procedure section 1174(b). (State specific facts supporting a claim up to $600 in Attachment 14.) 15. g A written agreement between the parties provides for attorney fees. 16. D Defendant's tenancy is subject to the local rent control or eviction control ordinance of (city or county, title of ordinance, and date ofpassage): Plaintiff has met all applicable requirements of the ordinances. 17. D Other allegations are stated in Attachment 17. 18. Plaintiff accepts the jurisdictional limit, if any, ofthe court. UD-1oo [Rev September 1, 2020] COMPLAINT-UNLAWFUL DETAINER Page 3 0” 141 979.00609/1 25763700v.2 April 29, 2021 PLAINTIFF: Weingarten Realty Investors, |nc.. CAsE NUMBER; DEFENDANT: Supercuts, |nc., and DOES 1-10 19. PLAINTIFF REQUESTS a- posseSSiO” °fthe premises f. D damages in the amount of waived rent or relocation assistance costs incurred in this proceeding: as stated in item 8: $ E past-due rent of $ 90,221 .78 g. E damages at the rate stated in item 13 from b c d. E reasonable attorney fees. date'IApr” 16' 2021 e g forfeiture °fthe agreement for each day that defendants remain in possession through entry ofjudgment. h. D statutory damages up to $600 for the conduct alleged in item 14. D other (specify): 20. E Numberof pages attached (specify): 83 UNLAWFUL DETAINER ASSISTANT (Bus. & Prof. Code, §§ 6400-6415) 21. fl (Completein a/Icases.)An unlawfuldetainerassistant E did not D did for compensation give advice or assistance with this form. (/f declarant has received any help or advice forpay from an unlawful detainer assistant, complete a-f.) a. Assistant's name: c. Telephone no.: b. Street address, Clty, and le code: d. County of registration: e. Registration no.: f. Expires on (date): Date: , %Christopher J. Petersen . (TYPE OR PRINT NAME) (SIGNATURE 0F PLAINTIFF 0R ATTORNEY) VERIFICATION (Use a different verification form if the verification is by an attorney or for a corporation or partnership.) | am the plaintiff in this proceeding and have read this complaint. | declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Date: Angela Acquistapace (TYPE 0R PRINT NAME) Macmwa? PLAINTIFF) UD-1oo [Rev. September 1. 2020] COMPLAINT-UNLAWFUL DETAINER Page 4 “4 141 979.00609/1 25763700V.2 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 VERIFICATION (Standard) CCP '§§ 446 and 2015.§ I declare that: I am an employee 0f Plaintiff Weingarten Realty Investors, in the action entitled Weingarten Realty Investors v. Supercuts, Inc., andDOES 1 -1 0. I have read the foregoing COMPLAINT -UNLAWFUL DETAINER and know the contents thereof; the same is true ofmy own knowledge, except as t0 those matters which are therein stated upon my information 0r belief, and as to those matters I believe them t0 be true. I declare under penalty 0f perjury under the laws 0f the State 0f California that the foregoing is true and correct. Executed this _26_ day of April, 2021 at Roseville, California. Angelawyfipace \ VERIFICATION l4 l 979.00609/125749763V.l Exhibit 1 STEVENS CREEK SHOPPING CENTER LEASE Landlord: Stevens Creek, Inc., a New Hampshire corporation and Tenant: Supercuts, Inc., a Dela'ware corporation GRAY CARY\PA\1006026S.3 1191396-901500 01/30/01 02765500 6102/5/21 CREEK SHOP ING CENTER andlord: Cre k, Inc., a New Hampshire corporation and Tenant: Supercuts, Inc., a Delaware corporation ARNA\1006 2 5.3 I I91 396-901 500 / 0/01 TABLE OF CONTENTS Page 1. Premises, Term; Use and Construction of Improvements 7 2. Rental; Security Deposit 10 3. Taxes 13 4. Common Areas , 16 5. Utility Services 19 6. Additional Construction 21 7. Subordination and Attomment 22 8. Repairs and Maintenance 23 9. Alterations 24 10. Fixtures and Personal Property 25 11. Laws and Ordinances 26 12. Insurance 27 13. Indemnification; Waiver 28 14. Damage to Premises 29 15. Eminent Domain 30 16. Assignment and Subletting 30 17. Access to Premises 34 18. Defaults by Tenant 34 19. Surrender of Premises 37 20. Tenant's Conduct of Business 37 21. Rules and Regulations 38 22. Employee Parking .39 23. Attorneys' Fees 39 24. Sale of Premises by Landlord 39 GrayCaiy\PA\10060265.3 1191396-901500 01/30/01 TABLE OF CONTENTS 25. Notices 39 26. Remedies 40 27. Successors and Assigns 40 28. Representations 40 29. Waiver :....40 30. Holding Over 40 31. Interpretation 41 32. Covenant of Title 41 33. Waiver of Redemption 41 34. Fees 41 35. Lease Status 41 36. Recording 42 37. Force Majeure 42 38. Construction of Lease 42 39. Captions 42 40. Severability 42 41. Objection to Statements 42 42. Liability of Landlord 43 43. Effectiveness of Lease 43 44. Execution of Documents 43 45. Corporate or Partnership Tenant 43 46. Entire Agreement 43 47. Time of Essence 44 4 8. Goveming Law 44 49. Joint and Several Liability 44 Gray CaiyVPA\10060265.3 1191396-901500 01/30/01 TABLE OF CONTENTS Page 50. No Light, Au- or Access Rights 44 51. Financial Statements 44 52. Survival 44 53. Substitution of Premises 44 EXHIBITA SITE PLAN, AND RELOCATION AREAS EXHIBIT B LIST OF USE RESTRICTIONS EXHIBITC WORK LETTER Gray Caty\PA\100«)26S.3 1191396-901500 01/30/01 STEVENS CREEK SHOPPING CENTER LEASE THIS LEASE is entered into by and between the landlord and tenant specified in the Basic Lease Information (hereinafter "Landlord" and "Tenant," respectively). Date: Landlord: Tenant: Tenant's Trade Name: Shopping Center: Area of Premises BASIC LEASE INFORMATION January 25,2001 Stevens Creek, Inc., a New Hampshire corporation Supercuts, Inc., a Delaware corporation "Supercuts", or such other Trade Name used by the majority of Tenant's Supercuts-type operations in the Greater San Francisco Bay Area Stevens Creek Shopping Center San Jose, Califomia Approximately 1,330 square feet, a demised portion of existing Suite 5136 Term Commencement Date: The Initial Term (as defined below under the heading "Term Expiration Date") shall commence on the date ("Term Commencement Date") that is the earliest to occur of (i) the ninetieth (90th) day after the date of Landlord's written notice evidencing delivery of possession of the Premises to Tenant with Landlord having achieved Landlord's Substantial Completion (pursuant to Section 1(c) of Exhibit C attached hereto, which exhibit is hereby incorporated into the Lease by this reference), or (ii) the day on which Tenant achieves Tenant's Substantial Completion of installation and construction of Tenant's Alterations (pursuant to Section 3(c) of Exhibit C. or (iii) the day on which Tenant first opens for business to the public. For the purposes of this Lease, "Landlord's delivery of possession of the premises to Tenant" shalLbe deemed to have taken place on the first day that both of the following have occurred: (i) Landlord and Tenant each have received a copy of the Lease signed by both parties, and (ii) Landlord has made a key to the Premises available to Tenant to give Tenant access thereto. GRAY CARY\PA\10060265.3 1191396-901500 01/30/01 The period commencing on Landlord's delivery of possession ofthe Premises to Tenant and ending on the day immediately prior to the Term Commencement Date is hereafter referred to as the "Early Occupancy Period." Tenant shall be entitled to enter the Premises during the Early Occupancy Period to construct and install Alterations in accordance with Section 9 of this Lease and Exhibit C attached hereto, and to receive and install its retail inventory, provided that all such activities shall comply, without limitation, with the provisions of Section 6 of Exhibit C attached hereto. Term Expiration Date: The last day of-the month of the fifth (5th) anniversary of the term Commencement Date, the period beginning on the Term Commencement Date and ending on the Term Expiration Date shall be referred to as the "Initial Term." Option to Extend: One (1) five (5) year option to extend the Lease, as fiirther described in the Lease. This option to extend is personal to Tenant and is not assignable or transferable, whether by sublease, assignment, or otherwise, except (i) to a Permitted Franchisee Assignee (see Section 16(c) of the Lease), or (ii) upon Landlord's prior written approval, which approval shall be in Landlord's sole discretion. Use: Unisex hairstyling and haircutting services and other services customarily performed at hair salons, including manicuring services, and incidental sales of merchandise customarily sold in such establishments, and for no other use. Exclusive Use Clause: Landlord agrees that commencing on the date and year first listed above and for the period through and including the date that is the earlier of (i) the Term Expiration Date as the same may be extended by Tenant's exercise of the Option hereunder or (ii) the date of termination of this Lease pursuant to its terms, and provided that an Event of Default does not occur. Landlord shall not lease space within the Shopping Center to any other tenant whose tenancy use clause would expressly permit the operation of a unisex discount haircutter (the "Direct Competitor"), including, but not limited to. Direct Competitors doing such business under the trade names American Hair Force, Fantastic Sams, Great Clips, Pro Cuts, Pro Kutz, Haircuttery, Bo Rics, Cost Cutters, Schroeder's, Super Styles, or Perfect Look (the foregoing are collectively referred to as "Landlord's Exclusive Use Covenant"). Landlord's Exclusive Use Covenant shall not apply to, and specifically excludes, a lease of space in the Shopping Center for a "fiill service" hair salon, which in addition to hair cutting provides ancillary styling services such as hair coloring, permanent GRAY CARY\PA\10060265.3 1191396-901500 01/30/01 waving, manicures, and the like, and whose customers typically make appointments to receive such services. Breach of Landlord's Exclusive Use Covenant: In the event that Landlord breaches Landlord's Exclusive Use Covenant, then as Tenant's sole and exclusive remedv therefor. Tenant shall have the right at its sole option to terminate this Lease at any time within one hundred eighty (180) days after a Direct Competitor opens for business to the public at the Shopping Center, which termination shall be effective (the "Termination Effective Date") on the date that is thirty (30) days after the date that Tenant notifies Landlord of such termination ("Tenant's Tennination Notice"). Upon Tenant's delivery to Landlord of such Tenant's Termination Notice, Landlord shall pay Tenant an amount equal to the remaining, unamortized portion of Tenant's Net Alterations Costs as such term is defined below (the "Alterations Reimbursement Payment"), within thirty (30) days after the Termination Effective Date. For the purposes of calculating such Alterations Reimbursement Payment, Tenant shall be deemed to be amortizing its Net Alterations Costs on a straight-line basis over a period of five (5) years commencing on the Term Commencement Date. Upon the Tennination Effective Date, this Lease shall terminate and the parties hereto shall have no fiarther rights or obligations hereunder, except as to the Alterations Reimbursement Payment, and except as to such other rights, obligations and provisions in this Lease which are expressly stated to survive termination or expiration of this Lease. GRAY CARY\PA\I0O6O26S.3 1191396-901500 01/30/01 As a condition to Tenant's right to receive the Alterations Reimbursement Payment, Tenant shall deliver to Landlord within sixty (60) days after the Term Commencement Date an Improvements Schedule (defined below) together with copies of invoices and other pertinent documentation that reasonably support the Net Alterations Costs listed in the Improvements Schedule. If Tenant fails to so deliver the Improvements Schedule and such supporting materials to Landlord within such time period. Tenant shall be deemed to have waived any right to receive an Alterations Reimbursement Payment. As used herein, the term "Improvements Schedule" means a schedule listing in reasonable detail the Tenant's Alterations and the net out-of-pocket costs (the "Net Alterations Costs") incurred by Tenant therefor pursuant to Exhibit C attached hereto, provided however, and without limitation, that (i) the Tenant's Alterations listed in the Improvements Schedule shall not include any of Tenant's trade fixtures (including, but not limited to, hair washing sinks), furnishings (including, but not limited to, stylists' chairs to seat customers), equipment, supplies, inventory, or other personal property, and the Net Alterations Costs shall not include any costs thereof, (ii) Net Alterations Costs shall not include any surcharges, fees or penalty amounts paid by Tenant due to its failure to perform under any contract pertaining to Tenant's Alterations, and (iii) the Net Alterations Costs shall not include costs paid for by the Tenant Improvement Allowance paid to Tenant by Landlord pursuant to Exhibit C. Minimum Annual Rental During Initial Term: The term "Minimum Annual Rental" means, for any given Term Year (defined below under "Percentage Rental"), the total amount of the twelve (12) monthly installments of Minimum Rent (as set forth below) due in such Term Year pursuant to the terms of the Lease, as may be amended. Monthlv Installments of "Minimum Rent" for Months I- 30 of Initial Term: Three Thousand Four Hundred Fifty Eight and 00/100 Dollars ($3,458.00) per month, pursuant to Section 2(a) of the Lease (based on $2.60 per square foot per month). Monthlv Installments of "Minimum Rent" for Months 31- 60 of Initial Term: Three Thousand Seven Hundred Thirty-Seven and 30/100 Dollars ($3,737.30) per month, pursuant to Section 2(a) (based on $2.81 per square foot per month). The Minimum Annual Rental for the Initial Term shall commence on the date that is the earliest to occur of (i) the ninetieth (90"') day after the date of Landlord's delivery of possession of the Premises to Tenant, or (ii) the date on which Tenant first opens for business to die public. GRAY CARY\PA\10060265.3 1191396-901500 01/30/01 Tenant's responsibility to pay all fees, charges and other costs (collectively, the "Tenant's Net Charges") required ofTenant under this Lease (including, but not limited to. Common Area Costs, and reimbursement of taxes and insurance), shall begin as of the Term Commencement Date, except with respect to the temporary abatement of Minimum Annual Rental During Option Term, If Exercised: Percentage Rental: the Minimum Annual Rental as govemed by the immediately preceding paragraph. The Minimum Annual Rental for the Option Term, if exercised pursuant to Section 1(c) of the Lease, shall be the Fair Market Value as defined and determined in Sections 1(c) and 1(d) of the Lease. Commencing on the first day of die thirty-first (31 st) month of the Option Term, die Minimum Annual Rental in effect in the thirtieth (30th) montii of the Option Term shall be increased by the amount of eight percent (8%). Calculated as five percent (5 %) of Tenant's Gross Sales for each "Term Year" ofthe "Term" (the "Percentage Rental Sum"). The first "Term Year" shall commence on the Term Commencement Date and shall end on, and shall include, the last day of the month of the first anniversary date of the Term Commencement Date (the "Last Day of the First Term Year"). Each Term Year thereafter shall commence on the next calendar day following the Last Day of the First Term Year, and shall end on and include the day preceding the next such anniversary date. These Percentage Rental provisions are applicable to each Term Year of both the Initial Term and the 5-year option term, if any (collectively, "Term"). For each Term Year, Tenant shall be obligated to pay Landlord, in addition to the monthly installments of the Minimum Annual Rental then in effect, the amount (the "Percentage Rental Excess Amount"), if any, by which the Percentage Rental Sum for that Term Year exceeds the Minimum Annual Rental for that Term Year. In the event this Lease is terminated or cancelled in accordance with its terms prior to the completion of the Term, and if the last Term Year of such tenninated or cancelled Lease is not a fiill Tenn Year, the foregoing calculations shall be prorated as Landlord reasonably deems appropriate. The Percentage Rental Excess Amount shall be due and payable to the Landlord within thirty (30) days following the end of each Term Year. Provided however, that in the final Term Year of the Term, as may be extended by Tenant's exercise of its option, the Percentage Rental Excess Amount, if any, for that final Term Year shall be due and payable to the Landlord not later than forty (40) days prior to the expiration date of the Term. At that GRAY CARY\PA\10060265.3 1191396-901500 01/30/01 time. Tenant shall calculate the Percentage Rental Sum by estimating the amount of Tenant's Gross Sales for the final two (2) months of the Term. Such estimate shall be derived for each such month by averaging the actual Gross Sales for the same month in the immediately preceding two (2) Term Years. Within forty-five (45) days following the expiration of the Term, based on the actual Gross Sales for each of the final two months of the Term, Landlord shall refimd to Tenant any overpayment, if any, by Tenant of the Percentage Rental Excess Payment for the final Term Year, and, altematively, Tenant shall pay Landlord any shortfall owed to Landlord. Tenant's Proportionate Share; Minimum Liability Insurance Required: Tenant's Telephone Numbers: Tenant's Address for Notices: Landlord's Address for Notices: Landlord's Broker: Tenant's Broker: Tenant shall report Gross Sales to Landlord on a monthly basis, in accordance with Section 2(c) ofthe Lease. Sixty-Eight Hundredths of One Percent (0.68 %) Two Million Dollars ($2,000,000.00) During Business hours: ( ) After Business hours: ( ) Supercuts, Inc. 7201 Mefro Boulevard Minneapolis, MN 55439 Attn: Legal Department Stevens Creek, Inc. c/o Shelter Bay Retail Group 655 Redwood Highway, #177 Mill Valley, CA 94941 Atm: Stevens Creek Shopping Center Property Manager Comish & Carey Commercial Epsteen & Associates Security Deposit: Advance Minimum Rent: None. Three Thousand Four Hundred Fifty-Eight and 00/100 Dollars ($3,458.00), due upon signing of the Lease. GRAY CARY\PA\1006O26S.3 1191396-901500 01/30/01 Landlord's Additional Administrative Fee on "Taxes" (Section 3 of Lease): None. This Basic Lease Information is a part of this Lease; provided, however, in the event ofany conflict between this Basic Lease Information and the other terms ofthis Lease, the other terms of this Lease shall confrol. 1. Premises. Term: Use and Construction of Improvements. (a) (i) Landlord leases to Tenant and Tenant leases from Landlord the premises (the "Premises") shown cross hatched on the site plan attached hereto and incorporated herein by reference as Exhibit A. located in the Stevens Creek Shopping Center (the "Shopping Center") in the City of San Jose, County of Santa Clara and State of Califomia, as shown on Exhibit A. The area contained in the Premises is set forth in the Basic Lease Information. Exhibit A is for informational purposes only, and is not a warranty, representation or agreement on the part of Landlord that the Shopping Center, retail store buildings and/or any additional retail store buildings will be exactly as indicated on such exhibits, will be continuously occupied throughout the Term or that the other tenants or occupants of the Shopping Center, including, without limitation, any department stores, which now occupy space in the Shopping Center will remain occupants of the Shopping Center throughout the Term. On the date of Landlord's delivery of possession of the Premises to Tenant (as such phrase is defined in the Basic Lease Infonnation), the then-existing roof, electrical, plumbing, HVAC, mechanical, and fire protection systems of the Premises (collectively, the "Premises Systems") shall be in reasonably good working order and repair. Subject to the inunediately preceding sentence. Tenant shall accept the Premises and the Premises Systems in their "as is," "where is" condition. It is Tenant's obligation to determine whether the Premises comply with those govemmental laws and regulations applicable to Tenant's intended use of the Premises. Landlord makes no warranty as to the Premises' suitability for any particular use. (ii) Reasonably soon after Landlord's delivery of possession of the Premises to Tenant, Landlord, at its sole option, may cause its space analyst to compute the rentable area ("Rentable Area") of the Premises using the "as built" plans for the Premises, and in that event shall inform Tenant of the Rentable Area of the Premises. The Rentable Area of the Premises shall be computed to the exterior of exterior walls and to the center of interior, dividing and common walls. Landlord's space analyst's computation of the Rentable Area of the Premises shall be binding on Tenant. If Landlord elects to perform such space computation, once the Rentable Area of the Premises has been finally determined. Landlord and Tenant shall confirm the size of the Premises and the Minimum Annual Rental and/or Minimum Rental installments by supplemental instrument memorializing such matters. (b) The term of this Lease (the "Term") shall commence upon the Term Commencement Date set forth in the Basic Lease Information and shall end on the Term Expiration Date specified in the Basic Lease Information, unless extended as set forth herein or sooner terminated as set forth herein. As soon as the Term Commencement Date has been determined, the parties shall execute a supplemental mstrument memorializing both the Term Commencement Date and Term Expiration Date. (c) Tenant is given the option to extend the Term hereof for one (1) additional consecutive five (5) year period ("Option Term") following expiration ofthe Initial Term stated in GRAY CARYy>A\l 0060265.3 7 1191396-901500 I 01/30/01 I the Basic Lease Information (the "Initial Term"), by giving written notice of exercise of such option (the "Option Notice") to Landlord not less than six (6) but not more than twelve (12) months before the expiration of the Initial Term. Notwithstanding the foregoing, if (a) an Event of Default exists on the date of giving an Option Notice, or (b) Tenant's interest in this Lease has been succeeded to in whole or in part by another party, or assigned, sublet, or otherwise transferred in whole or in part (not including a Permitted Franchisee Assignee, as defined in Section 16 hereof). Tenant shall have no right to extend the Term and this Lease shall expire at the end of the Initial Term. If an Event of Default exists on the date the Option Term is to commence, the Option Term shall not commence. The Minimum Annual Rental for the first year ofthe Option Term shall be the fair market rental ("Fair Market Rental" as hereinafter defined) ofthe Premises at the commencement of the Option Term (the "Option Term Adjustment Date"), but in no event less than the Minimum Annual Rental payable for the twelve (12) months immediately preceding the month in which the Option Term Adjustment Date (as hereinafter defined) occurs. (d) (i) "Fair Market Rental" shall mean the rental rate being charged to retail tenants renewing existing leases for comparable space in similar shopping centers in the County of Santa Clara, Califomia, with similar amenhies, taking into consideration only the following: size, location, proposed term ofthe lease, extent of services to be provided and the time that the particular rate under consideration became or is to become effective. In determining the "Fair Market Rental," no consideration shall be given to payment of leasing commissions, tenant improvement allowances, "free rent" or any other terms or conditions of leases of comparable space. Fair Market Rental shall be fixed for the furst year ofthe Option Term. The Minimum Annual Rental for each subsequent year during the Option Term, commencing on the first anniversary ofthe Option Term, shall be increased in accordance with the Annual Rental Adjustment Provisions, as set forth under the heading "Minimum Annual Rental During Option Term, if Exercised" in the Basic Lease Information. Fair Market Rental as of the Option Term Adjustment Date shall be determined by Landlord with written notice (the "Notice") given to Tenant not later than thirty (30) days after receipt ofthe Option Notice, subject to Tenant's right to arbitration as hereinafter provided. Failure on the part ofTenant to demand arbitration within thirty (30) days after receipt of the Notice fi'om Landlord shall bind Tenant to the Fair Market Rental as determined by Landlord. Should Tenant elect to arbitrate and should the arbitration not have been concluded prior to the Option Term Adjustment Date, Tenant shall pay the Minimum Annual Rental to Landlord after the Option Term Adjustment Date, adjusted to reflect the Fair Market Rental as Landlord has so determined. If the amount ofthe Fair Market Rental as determined by arbifration is greater than or less than Landlord's determination, then any adjustment required to adjust the amount previously paid shall be made by payment by die appropriate party within ten (10) days after such determination of Fair Market Rental. (ii) If Tenant disputes the amount claimed by Landlord as Fair Market Rental, Tenant may require that Landlord submit the dispute to arbifration. The arbitration shall be conducted and determined in the Santa Clara County, Califomia in accordance with the then prevailing mles of the American Arbifration Association or its successor for ariiifration of commercial disputes, except that the procedures mandated by such mles shall be modified as follows: (A) Tenant shall make demand for arbifration in writing within thirty (30) days after service ofthe Notice, specifying therein the name and address of the person to act as the arbifrator on Tenant's behalf The arbifrator shall be a real estate appraiser with at least five (5) years full-time commercial appraisal experience who is familiar with die Fair Market Rental of retail space in shopping centers in the County of Santa Clara, Califomia. Failure on the part of GRAY CARY\PAM 0060265.3 8 1191396-901500 01/30/01 Tenant to make the timely and proper demand for such arbitration shall constimte a waiver of the right thereto. Within ten (10) business days after the service of the demand for arbifration. Landlord shall give notice to Tenant specifying the name and address ofthe person designated by Landlord to act as arbitrator on its behalf, which arbifrator shall be similarly qualified. If Landlord falls to notify Tenant of the appointment of its arbifrator, within or by the time specified, then the arbifrator appointed by Tenant shall be the arbifrator to determine the Fair Market Rental for the Premises. (B) If two arbitrators are chosen pursuant to Paragraph 1 (d)(ii)(A) above, the arbitrators so chosen shall meet within ten (10) business days after the second arbitrator is appointed and shall appoint a third arbitrator, who shall be a competent and impartial person with qualifications similar to those required of the first two arbitrators pursuant to Paragraph 1 (d)(ii)(A) above. If they are unable to agree upon such appointment within five (5) business days after expiration of such ten (10) day period, the third arbitrator shall be selected by the parties themselves. If the parties do not so agree, then either party, on behalf of both, may request appointment of such a qualified person by the then president of the San Jose Real Estate Board. The three arbifrators shall decide the dispute, if it has not been previously resolved, by following the procedures set forth in Paragraph (d)(ii)(C) below. (C) The Fair Market Rental shall be fixed by the three arbifrators in accordance with the following procedures. Each of the arbitrators selected by the parties shall state, in writing, his determination of the Fair Market Rental supported by the reasons therefor, pursuant to the definition of Fair Market Rental set forth in Paragraph l(d)(i). Each arbitrator shall make counterpart copies of his stated determination and supporting reasons for each of the other arbitrators. The arbitrators shall arrange for a simultaneous exchange of such proposed resolutions. The role of the third arbitrator shall be to select which ofthe two proposed resolutions most closely approximates his determination of Fair Market Rental. The third arbifrator shall have no right to propose a middle ground or any modification of either of the two proposed resolutions. The resolution he chooses as that most closely approximating his determination of the Fair Market Rental shall constitute the decision of the arbitrators and shall be final and binding upon the parties. (D) In the event of a failure, refusal or inability of any arbitrator to act, his successor shall be appointed by him, but in the case of the third arbitrator, his successor shall be appointed in the same manner as that set forth herein with respect to the appointment of the original third arbitrator. The arbitrators shall attempt to decide the issue within ten (10) business days after the appointment of the third arbitrator. Any decision in which the arbitrator appointed by Landlord and the arbifrator appointed by Tenant concur shall be binding and conclusive upon the parties, except that such arbifrators shall not attempt by themselves to mutually ascertain the Fair Market Rental and any such determination, in a manner other than that provided for in Paragraph 1 (d)(ii)(C) hereof, shall not be binding on the parties. Each party shall pay the fees and expenses of its respective arbitrator and both shall share the fees and expenses of the third arbifrator. Attorneys' fees and expenses of counsel and of wimesses for the respective parties shall be paid by the respective party engaging such counsel or calling such wimesses. (E) The arbitrators shall have the right to consult experts and competent authorities for factual information or evidence pertaining to a determination of Fair Market Rental, but any such consultation shall be made in the presence of both parties witii full right on their part to cross-examine. The arbifrators shall render the decision and award in writing with counterpart copies to each party. The arbifrators shall have no power to modify the provisions of diis Lease. GRAY CARY\PA\10060265 J 9 1191396-901500 01/30/01 (F) In no event shall the Fair Market Rental, as determined pursuant to Section 1(d) hereof, be less than the Minimum Annual Rental payable for the twelve (12) months immediately preceding the month in which the Option Term Adjustment Date (as hereinafter defined) occurs, and the parties shall inform any arbitrator of this requirement prior to such arbifrator commencing his tasks hereunder. (e) The Premises shall be used and occupied only for the purpose and under the frade name specified in the Basic Lease Information and for no other purpose and under no other frade name whatsoever. Under no circumstances whatsoever shall the Premises be used in contravention of the "List of Exclusions or Use Restrictions" set forth on Exhibit B. which exhibit is hereby incorporated into this Lease by this reference, and which list may be amended from time to time, in Landlord's sole and absolute discretion. (f) Tenant shall be solely responsible for making, and for the costs of, all repairs, alterations, remodeling, and renovations of the Premises which are necessary to make the Premises fit forthe use set forth in the Basic Lease Information, and in accordance with Tenant's obligations under, and the requirements of. Exhibit C. The specifics of any alteration, remodeling and renovation of the Premises shall be subject to the prior written approval of the Landlord, all as set forth in Exhibit C. 2. Rental. (a) Tenant shall pay as rental for the use and occupancy of the Premises, at the times and in the manner hereinafter provided, without deduction or set-off of any kind, the Minimum Annual Rental, as set forth in the Basic Lease Information. Minimum Aimual Rental shall be payable in twelve (12) monthly installments, in advance, upon the first day of each month during the Term, in accordance with the Minimum Rent terms set forth in the Basic Lease Information. If die commencement date for the payment of Minimum Annual Rental during the Initial Term, as provided in the Basic Lease Information, is a day other than the first day of a month, then the monthly installment of the Minimum Annual Rental for the period from such commencement date until the first day of the month next following shall be prorated and paid on such commencement date. All rentals and other sums due hereunder shall be paid or mailed to Landlord's address for notices set forth in the Basic Lease Information or to such other payee or address as Landlord may designate, in writing, to Tenant. No rental or other sums due hereunder shall be deemed paid until actually received by Landlord. ° (b) Upon execution of this Lease, Tenant shall pay to Landlord the sum specified in the Basic Lease Information as "Advance Rent." The Advance Rent shall be applied to Tenant's obligation to pay Minimum Annual Rental for the first month or months for which Minimum Annual Rental is due. (c) During the Term, by the twentiedi (20th) day of the month following the conclusion of the previous calendar month. Tenant shall deliver to Landlord internally generated financial statements including balance sheet and income statement, signed arid certified by a financial manager ofTenant, setting fortii the total amount of Tenant's "Gross Sales" (as hereinbelow defined) made during the preceding calendar month. (i) "Gross Sales" shall mean and include (as of the date of the transaction) the sales price of all merchandise sold, leased, rented or licensed (including gift and GRAYCARY\PA\1006026SJ 10 1191396-901500 01/30/01 merchandise certificates, which shall be included in Gross Sales as of the earlier ofthe date redeemed or one (I) year after the date issued) and charges for all services and all other receipts from the business conducted by Tenant or any other person, firm or corporation selling merchandise or services in, upon or from any part of the Premises, whether (wholly or partially) for cash or on credit, and shall include gross sales ftom vending machines (excluding vending machines maintained by Tenant for the exclusive use of Tenant's employees); mail, catalog or telephone orders received or filled at the Premises (including, without limitation, orders accepted or transmitted by means of any electronic or other technology based system, whether existing as ofthe date hereof or developed during the Term, regardless of whether such orders are accepted or filled by Tenant, its parent, subsidiary, or affiliate); equipment leased to others; charge account purchases; all deposits not refunded to purchasers; all monies or other things of value which Tenant is entitied to receive from its operations; but deducting or excluding, as the case may be, the following: (a) refunds to customers; (b) the amount of all sales, use, excise, retailer's, occupation or similar taxes imposed in a specific amount or percentage on, or determined by, the amount of retails sales made from the Premises; (c) interest, service, finance or sales carrying charges paid by customers for extension of credit on sales where not included in the merchandise sales price; (d) retums to shippers and manufacturers; (e) the amount of sales, not in the ordinary course of Tenant's business, of fixtures, machinery or equipment which Tenant has the right to remove from the Premises after use thereof in the conduct of Tenant's business in the Premises; (f) the value ofany exchange or fransfer of merchandise between stores ofTenant where such exchange or transfer is made solely for the convenient operation of Tenant's business and not for the purpose of consummating a sale made in, at, or from the Premises; (g) sales to bona fide employees ofTenant at a discount amount in accordance with Tenant's standard employee discount plan, to the extent the aggregate of such sales does not exceed two percent (2%) of Gross Sales in the subject calendar year; (h) the selling price of all merchandise retumed by customers and accepted for full credit or the amount of discounts or allowances made thereon (not to exceed 2% of Gross Sales for any month); (i) goods retumed to sources or transferred to another store or warehouse owned by or affiliated with Tenant; (j) sums and credits received in the settlement of claims for loss of or damage to merchandise, to the extent previously reported as Gross Sales; (k) the price allowed on all allowances made in lieu of acceptance thereof; (m) receipts from public telephones, stamp machines, public toilet locks, or vending machines installed solely for the use of Tenant's employees and not operated for a profit; (n) bad checks or bad debts to the extent such bad debt does not exceed 2% of Gross Sales for any month; (o) sales of promotional items not sold at a profit to the extent such sales do not exceed 2% of Gross Sales for any month; (p) alteration and delivery charges; (q) gift certificates, or like vouchers, until such time as the same shall have been converted into a sale by redemption; and (r) Tenant's sales by means of catalog, intemet (or other computer or elecfronic sales systems), or mail order, provided that such sales are performed nowhere on the Premises or Shopping Center, including, but not limited to, no billing, administering, servicing, filling, inventorying, shipping, completion, or m any other way conducting any ofsuch sales, in whole or in part, on or in connection with die Premises or Shopping Center. (ii) Tenant shall install, and shall cause each of its subtenants, licensees, concessionaires and any other person, firm or corporation selling merchandise or services in, upon or from the Premises to install a cash register system in which all Gross Sales are recorded and imprinted. Said records (properiy totaled) shall be preserved by Tenant for a period of tiiree (3) years after the end of each calendar year (however, if any audit shall be commenced by Landlord or if there shall arise a dispute conceming Tenant's Gross Sales, Tenant's records shall be preserved and retained by Tenant until a final resolution of such dispute), during which period Landlord shall be entitled to inspect the same. As an altemative to the foregoing requirements. Tenant may install and GRAY CARY\PA\I 0060265.3 11 1191396-901500 01/30/01 operate on the Premises computerized accounting systems, upon providing to Landlord satisfactory assurance that such computerized system will provide the information to which Landlord is entitied to verify Tenant's Gross Sales and that such computerized system may be inspected, copied and audited by Landlord as provided herein. Tenant shall maintain daily records of all orders accepted at the Premises by means of elecfronic or other technology based system. (iii) Tenant shall keep and maintain, in accordance with generally accepted accounting practices (showing all of its sales separate from any of its other stores), full, complete and appropriate books of account and records of all Gross Sales, which records, together with all sales and income tax reports relating exclusively to sales at the Premises, shall be preserved by Tenant for three (3) years at the Tenant's headquarters offices and Landlord may inspect the same at such location upon five (5) days' notice. Such original records shall include, but not be limited to, sales documents and/or tapes of cash register or other approved devices, sales retums and allowance detail, cash receipts, accounts receivable, disbursement joumals, bank statements, deposit slips, inventory records, purchase orders, receiving records, sales joumals or daily sales reports, orders accepted by means of elecfronic, telephonic, video, computer or other electronic or technology based system, state sales and use tax retums, and a complete general ledger. Documentation of specific sales exclusions must also be maintained. Copies of all sales and other excise tax reports that Tenant may be required to fumish to any governmental agency shall be fumished to Landlord within fourteen (14) days after written request therefor; provided, however. Tenant shall not be required to fumish such reports if such reports include sales from other stores ofTenant. (iv) Landlord or its designated agent may, at Landlord's expense and upon five (5) business days advanced written notice, audit Tenant's books and records relating to Gross Sales made during the period covered by any Tenant statement regarding Gross Sales. Tenant shall make available to Landlord's auditor at Tenant's headquarters offices all ofthe books, source documents, accounts, records and sales tax reports ofTenant and any other documents which such auditor deems reasonably necessary applying generally accepted auditmg principles to verify Tenant's Gross Sales. (v) If Tenant fails to fumish to Landlord within five (5) days after request therefor any Gross Sales statement more than once in any calendar year, then Landlord shall have the right, upon five (5) days' notice, to conduct an audit as provided by this Section 2 and any and all reasonable charges incurred by Landlord by reason thereof shall be reimbursed by Tenant within ten (10) days of receipt of invoice therefor. If Tenant does not fiimish the sales documentation referred to above or otherwise impedes Landlord's audit of Tenant's Gross Sales, Landlord shall be entitled, in addition to Landlord's other rights and remedies, to estimate Tenant's annual Gross Sales as equal to the highest Gross Sales of any tenant of the Shopping Center in the same lease category as Tenant, and bill Tenant for any Percentage Rental which is due based upon such estimated Gross Sales. (vi) Landlord shall keep confidential all information gained from any such audit except where required by law or govemmental agency, in connection with litigation proceedings or in connection with the sale or financing of the Shopping Center. (d) [Intentionally omitted.] GRAY CARY«'A\10060265.3 12 1191396-901500 01/30/01 3. Taxes. (a) Tenant shall pay Tenant's Proportionate Share (as set forth in the Basic Lease Information) of all taxes, levies, assessments and charges, general and special without deduction or set-off of any kind, including the cost of any contest of an assessment by Landlord pursuant to Section 3(c) hereof, which may be levied or assessed against the Shopping Center during the Term (regardless of whether such taxes are payable during the Term) (hereinafter, individually and collectively, "Taxes"). Taxes shall include any form of tax or assessment, license fee, license tax, tax or excise on rent, or any other levy, charge, or similar imposition imposed by any federal, state, coimty or city authority having jurisdiction, or any political subdivision thereof, or any school, agriculmral, lighting, drainage or other improvement or special assessment district thereof, on any interest of Landlord and/or Tenant in the Premises or in the remainder of die Shopping Center and/or the underlying realty, including but not limited to: (i) any excise, transaction, sales, rental or privilege tax on account of, attributed to, or measured by Tenant's payment of rental or other charges payable by Tenant; (ii) any impositions in substitution, partially or totally, for any impositions now included within Taxes; (iii) any impositions allocable to or measured by the area of the Premises or any rental payable hereunder, or by reason of Landlord's development of income with respect to this Lease or ownership or operation of the Premises and/or the Shopping Center, including, without limitation, any rental receipts tax or excise tax levied by federal, state, county, or city govemment, or any political subdivision thereof, with respect to the receipt of such rent, or upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or any portion thereof; (iv) any water and sewer tax imposed upon real estate owners; (v) any charges for any easement maintained for the benefit of the Shopping Center; and (vi) any impositions upon this Lease or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises. Taxes shall not include any portion of any net income, net franchise, documentary transfer, estate or gift taxes imposed on or payable by Landlord, unless such tax is expressly in substitution for or an enhancement of real estate taxes. In no event shall Tenant be obligated to pay any portion of any penalty resuhing from the late payment of taxes unless the withholding of tax payments is a necessary or desirable precondition to contesting the amount or validity of any such taxes. Notwithstanding anything to the contrary contained herein, if at any time the methods of taxation prevailing on the Term Commencement Date shall be altered so that in lieu of or as a substitute for the whole or any part of the Taxes now levied or assessed, there shall be levied or assessed an income or other tax of whatever nature (whether or not evidenced by documentary stamps or the like), then the same shall be included in the computation of Taxes hereunder. In the event that Landlord receives a refund of Taxes for which Tenant had paid its Proportionate Share, Tenant shall receive a pro rata refund or credit respecting such refund as calculated according to GRAY CARY\PA\100602653 13 1191396-901S0O OWO/01 Tenant's Proportionate Share, provided that Tenant is still occupying the Premises when Landlord receives the refund. (b) Tenant's Proportionate Share of all Taxes shall be paid in equal monthly installments in an amount reasonably estimated by Landlord based on the taxes for the previous year plus Landlord's reasonable estimate of the annual increase in such taxes (or, if impounding is required by a deed of tmst or mortgage recorded against all or a portion of the real property comprising the Shopping Center and Landlord so elects, based on the amount required to be escrowed). Upon confirmation of all Tax bills atfributed to any calendar year during the Term, Landlord shall fumish Tenant with a written statement of the actual amount of Tenant's Proportionate Share of the Taxes for such year. If the total amount paid by Tenant under this Section 3 for any calendar year during the Term is less than the actual amount due from Tenant for such year, as shown on such statement. Tenant shall pay to Landlord the deficiency within thirty (30) days after receipt of invoice therefor; and if the total amount paid by Tenant for any such calendar year exceeds the amount due from Tenant for such calendar year. Tenant shall receive a credit against Taxes next thereafter becoming due and at the expiration ofthe Term any overpayment shall be promptly refunded to Tenant. For the calendar years in which this Lease commences and terminates, the provisions ofthis Section 3 shall apply, and Tenant's liability for its proportionate share of any Taxes for any such year shall be subject to a pro rata adjustment based on the number of days of such year falling within die Term. Prior to or at the commencement of the Term, and from time to time thereafter throughout the Term, Landlord shall notify Tenant in writing of Landlord's estimate of Tenant's monthly installments due hereunder. Provided Tenant has made payment in frill of the Taxes as estimated by Landlord pursuant to this Section 3, Tenant may raise any objection to any such computation, in writing, within ninety (90) days after Landlord has provided such computation to Tenant. If Tenant does not deliver an objection to Landlord within such ninety (90) day period, or if Tenant has not made payment in full of its estimated share of Taxes prior to raising any such objection, the computation made by Landlord shall be deemed conclusive. If Tenant so objects in writing within such ninety (90) day period. Landlord's independent certified public accountant shall make the determination of Tenant's liability using the best information available and such accountant's determination shall be deemed prima facie correct. Landlord's and Tenant's obligations under this Section 3 shall survive the expiration of the Term. Upon written request for a specific bill. Landlord shall fumish a copy of the subject Tax bill to Tenant. (c) If Landlord employs a property tax consultant and/or endeavors at any time to contest or negotiate any Tax against the Shopping Center, to limit the increase of any Tax assessment, maintain the same assessment or obtain a reduction in the assessed valuation of the Shopping Center forthe purpose of reducing any Tax assessment. Tenant shall pay Tenant's Proportionate Share of any appraisal costs and of Landlord's reasonable expenses of employing such consultant and/or in contesting and/or negotiating the amount of any Tax assessment. Tenant's Proportionate Share to be determined and paid in the same manner as set forth in this Section 3 for Taxes and to include, but not be limited to, legal, consultant and appraisal fees and costs. Tenant shall not have the right to withhold any payments to Landlord pursuant to this Section 3 or any other Section or Section of this Lease, nor shall Landlord have any obligation to withhold the payment of GRAYCARY\PA\10060265.3 14 1191396-901500 01/30/01 any Taxes. If Tenant pays an amount in excess of Tenant's Proportionate Share of Taxes for any year as a result of a subsequent reduction in total Taxes for such year, such excess shall be refiinded by Landlord to Tenant after all refunds to which Landlord is entitled from the taxing authority have been received by Landlord. (d) The term "Floor Area" shall, for all purposes ofthis Lease, mean the actual number of gross leasable square feet of floor space within the exterior face of the exterior walls (except party walls, in which case the center thereof shall be used and except with respect to all enfrances and exits as to which the exterior building line shall be used). No deductions shall be made from "Floor Area" computed under the foregoing defmition by reasons of interior walls, columns, stairs, escalators, elevators, conveyors or other interior constmction or equipment The term "Floor Area" shall not include: (i) Parapets, clerestory stmctures, or penthouses or other similar stmctures located upon roofs serving to shelter, enclose and/or, conceal mechanical and operating equipment; exterior walls; (ii) Surface finishes of and/or architectural ornamentation applied to such (Iii) Roof overhangs and canopy overhangs; (iv) Utility and/or mechanical equipment vaults, rooms, penthouses or areas (including, without limitation, any rooftop areas), mezzanine area(s) and vaults, whether located within or partially or wholly outside ofsuch exterior walls); (v) Any service delivery facilities, including docks and/or canopies, located outside of exterior walls; (vi) Exterior stairways and ramps; (vii) Floor space of buildings used exclusively for the maintenance of die Common Areas; (viii) Floor space occupied by any tmck tunnels and ramps, or tmck loading and unloading, tmck parking or tmck tumaround facilities; (ix) Meeting and banquet rooms and other areas not available for exclusive lease to tenants; and (x) Storage mezzanines erected by tenants in their premises. (e) Tenant shall pay before delinquency all taxes, assessments, license fees and public charges levied, assessed or imposed upon its business operation in the Premises as well as upon its trade fixtures, improvements, merchandise and other personal property in, on or upon the Premises. If any such items of property are assessed with property of Landlord, then such assessment shall be equitably divided by Landlord so that Tenant pays its equitable portion ofsuch assessment. Landlord's reasonable proration of any such assessments shall be binding upon Tenant. GRAYCARYy»A\10060265.3 15 119I396-9O1500 01/30/01 4. Common Areas. (a) The "Common Areas" shall consist of all parking areas, sfreets, sidewalks, malls, driveways, loading platforms, canopies, elevators, washrooms, lounges, shelters, telecommunications facilities and other facilities available for joint use, all as they may from time to time exist and be available to all the tenants in the Shopping Center, their employees, agents, customers, licensees and invitees. (b) Subject to the provisions of this Section 4, Landlord grants to Tenant, its subtenants, licensees, concessionanes, suppliers, business invitees, customers, agents, representatives and employees, but only during the Term, the nonexclusive right, but not an easement, in common with others duly authorized by Landlord, to use the Common Areas as they exist from time to time and the various portions thereof, respectively, for the uses and purposes permitted by Landlord. It shall be the duty ofTenant to keep the Common Areas free and clear of any obstmctions, barricades or barriers placed or created by Tenant or resulting fh)m Tenant's operations or use of the Premises. (c) The Common Areas shall be subject to the exclusive management and confrol of Landlord. Landlord shall have the right fixim time to time to designate, relocate and limit the use of particular areas or portions ofthe Common Areas, to add to and delete areas therefrom and to establish, promulgate and enforce such reasonable and nondiscriminatory mles and regulations conceming the Common Areas as it may reasonably deem necessary or advisable for the proper and efficient management, operation, maintenance and use thereof, and Tenant shall comply with the same. Landlord shall have the right to close all or any portion of the Common Areas, including, without limitation, the parking areas, parking facilities, approaches, exits, entrances, roadways and all other common and public facilities to such extent as may, in the sole discretion of Landlord, be necessary to prevent a dedication thereof or the accmal of any rights in any person. (d) As used in this Lease, die term "Conunon Area Costs" means the total cost of all items of expense relating to operating, owning, managing, equipping, policing and protecting, lighting, repairing, replacing and maintaining die Shopping Center. Such costs and expenses shall include, but not be limited to: (i) Management fees, wages, salaries and other compensation and benefits, as well as any adjustment thereto, for employees, independent contractors and agents of Landlord performing work or fumishing services to or in connection with the operation of the Shopping Center, but excluding executive compensation for employees located offsite and not involved in the day-to-day management of the Shopping Center and partnership expenses. (ii) Operating, cleaning, sweeping, resfriping, repairing, sealing and resurfacing the parking and driveway areas, sidewalks and stairways; telecommunications facilities; maintenance and replanting of plantings and landscaping; repair and replacement of landscape sprinkler systems, parking bumpers, directional signs and other signs and markers, fire protection systems, lights and light standards (including bulb replacement), drainage systems and utility systems which do not exclusively serve a particular tenant; janitorial services; operation and maintenance of Shopping Center signs; operation, maintenance and repair of public address systems, music systems, and security and alarm systems, including, widiout limitation, the expenses atfributable to the hning of security and fraffic supervisory personnel; and pest extermination services. GRAY CARY\PA\10060265.3 16 1191396-90)500 01/30/01 (iii) Repainting, replacing, maintaining and repairing all Shopping Center roofs, mechanical, plumbing, electrical, sprinkler systems, ceilings, floors, walls, lighting, fixtures and equipment. Such costs shall include reasonable reserves for replacement of all Shopping Center roofs. The maximum amount which Landlord may include in the roof reserve shall not exceed an amount equal to Landlord's reasonable determination of the cost of replacing all Shopping Center roofs amortized over ten (10) years, plus interest on the unamortized balance at the higher of ten percent (10%) per annum or the interest rate then being charged Landlord for short term unsecured loans. (iv) Elecfricity, water, sewer, telecommunication and other utility services servicing the Common Areas. (v) Sales, use and excise taxes on goods and services purchased by Landlord for use in the operation of the Shopping Center. (vi) License, permit and inspection fees. (vii) Reasonable attorneys' and accountants' fees, excluding attorneys' and accountants' fees incurred in connection with negotiations or disputes with present or prospective tenants or odier occupants or associated with the enforcement of any leases. (viii) Rental of space outside the boundaries of the Shopping Center, if needed, for use as storage and/or maintenance of equipment, supplies and other items used in connection with the operation, repair and maintenance of the Conunon Areas; and rental or depreciation of motor vehicles for use in the operation, repair and maintenance ofthe Shopping Center. (ix) Service, maintenance and inspection contracts for escalator, elevator, plumbing, electrical, heating, ventilating and air-conditioning and mechanical equipment; and purchasing or renting mechanical equipment, supplies, tools, materials, and uniforms. (x) Reasonable fees and expenses for consultants retained, from time to time, by die Landlord for the purposes of energy conservation, insurance and for the allocation of various costs and expenses among tenants of the Shopping Center. (xi) Obtaining emeî ency medical assistance for persons in the Shopping Center. (xii) Any capital improvements, equipment or devices installed or paid for by Landlord in order to (A) conform with any laws, mles, regulations or requirements of any govemmental or quasi-govemmental authority having jurisdiction including, but not limited to, the Americans With Disabilities Act, or of the board of fire underwriters or similar insurance body or, (B) effect a labor saving, energy saving or other economy, amortized over the lesser of (1) ten (10) years, (2) the "pay back period" or (3) the usefiil life ofsuch capital improvement, equipment or device (as reasonably determined by Landlord), as well as interest on the unamortized balance at the Specified Rate or such other rate as may have been paid by Landlord on borrowed funds. The "pay back period" shall be the period within which the anticipated savings from the use ofsuch capital improvement, equipment or device, as reasonably determined by Landlord, will equal the cost of die subject capital improvement, equipment or device, GRAY CARY\PA\10060265JJ 17 1191396-901500 01/30/01 (xiii) Depreciation or amortization of the costs of materials, tools, supplies and equipment purchased by Landlord to enable Landlord to supply services to the Shopping Center which Landlord might otherwise contract for with a third party where such depreciation and amortization would otherwise have been included in the charge for such third party's services. (xiv) Compliance with air, water and noise quality and/or confrol statutes, laws, codes, mles and regulations, including, without limitation, statutes, laws, codes, mles and regulations relating to toxic substances and/or hazardous wastes. (xv) Assessments and/or charges for maintaining parking spaces for employees, customers and other parties using Shopping Center facilities, mass transit taxes, fees and charges, and business and/or rent taxes, fees and charges. (xvi) Premiums, deductibles, self insurance, costs of adjustment and all other insurance costs incurred by Landlord. (xvii) An adminisfration fee equal to ten percent (10%) of the total Common Area Costs. (e) Notwithstanding the foregoing. Common Area Costs shall not include, or shall have deducted from them, as the case may be: (i) Costs incurred in connection with installation of tenant alterations or improvements inside the premises of other tenants ofthe Shopping Center that do not provide a benefit in common for Tenant; (ii) Rent paid or payable under any ground lease or underlying lease to which this Lease is subject, including rent paid to any ground Landlord under a ground lease; (iii) Legal fees, space planner's fees, broker's leasing commissions or other compensation payable to brokers incurred with respect to leasing tenant space in the Shopping Center; and (iv) Costs for which Landlord has been actually reimbursed by an insurance carrier. (f) Effective on the Term Commencement Date, Tenant shall pay to Landlord, upon demand, but not more often than once a month, a share ofthe Common Area Costs (based on Landlord's estimates and subject to adjustment from time to time, as hereinafter provided), which share shall be equal to the product which results by multiplying Common Area Costs by die percentage that the Floor Area of the Premises is of the Floor Area of all Shopping Center stores constmcted and available for lease in the Shopping Center from time to time (the vacancy of a particular suite that is constmcted and available for lease at die Shopping Center shall not result in an upward adjustment of such share of die Common Area Costs) including die Floor Area of tiiose stores which are occupied under a ground lease and/or which are wholly or partially responsible for their own costs on a self-contained basis, with respect to those cost items for which such stores are independently responsible ("Tenant's Common Area Cost Proportionate Share"). Tenant's Common Area Cost Proportionate Share is subject to change from time to time proportional to changes in the square footage of the Shopping Center. GRAYCARY«'A\10060265.3 18 1191395-901500 01/30/01 (g) At least oiice a year, concurrently with the fumishing of such statement to the other tenants of the Shopping Center, Landlord shall fumish to Tenant a reasonably detailed statement showing the total Common Area Costs forthe calendar year just expired, the amount of Tenant's Proportionate Share ofthe Common Area Costs and payments made by Tenant during such calendar year. Landlord's failure to deliver any such statement shall not constitute a waiver of Landlord's right to later either bill Tenant for any balance due or, in lieu thereof, to subsequently adjust Tenant's Common Area Cost Proportionate Share in order to recoup die entire amount owed to Landlord for any particular year. If Tenant's Common Area Cost Proportionate Share for such calendar year exceeds Tenant's payments. Tenant shall pay the deficiency to Landlord within thirty (30) days after receipt of such statement. If Tenant's payments exceed Tenant's Common Area Cost Proportionate Share, as shown on such statement. Tenant shall receive a credit against rental payments next thereafter becoming due under this Lease and if the Term has expired the excess shall promptly be refunded to Tenant. (h) The annual determination and statement of Common Area Costs shall be made by or verified by an accounting or auditing officer of Landlord. Within six (6) months after receipt of the statement Tenant shall be entitied, provided full payment on account thereof has been made, upon ten (10) days prior written notice and during normal business hours at Landlord's office or such other place as Landlord shall designate, to inspect and examine those books and records of Landlord relating to the determination of Common Area Costs for the immediately preceding calendar year. If, after inspection and examination of such books and records, Tenant disputes the amounts of Common Area Costs charged by Landlord, Tenant may, by written notice to Landlord, request an independent audit of such books and records. The independent audit of the books and records shall be conducted by a certified public accountant ("CPA") acceptable to both Landlord and Tenant. If, within thirty (30) days after Landlord's receipt of Tenant's notice requesting an audit. Landlord and Tenant are unable to agree on the CPA to conduct such audit, then Landlord may designate a nationally recognized accounting firm not then employed by Landlord or Tenant to conduct such audit. The audit shall be limited to the determination of the amount of Common Area Costs for the subject calendar year. If the audit discloses that the amount of Common Area Costs billed to Tenant was incorrect, the appropriate party shall pay to the other party the deficiency or overpayment, as applicable. All costs and expenses of the audit shall be paid by Tenant unless the audit shows that Landlord overstated Common Area Costs for the subject calendar year by more than five percent (5%), in which case Landlord shall pay all reasonable costs and expenses of die audit. Tenant shall keep any information gained from such audit confidential and shall not disclose it to any other party except in connection with litigation between the parties or in response to a valid subpoena. The exercise by Tenant of its audit rights hereunder shall not relieve Tenant of its obligation to timely pay all sums due hereunder, including, without limitation, die disputed Common Area Costs. (i) Notwithstanding the availability of the Common Areas as they may from time to time exist and be available for the common benefit of all the tenants in the Shopping Center, Landlord shall have the right to permit entertainment events, the placement of kiosks, carts, advertising and other displays in the Common Areas, and to convert die Common Areas into retail areas; such activities and uses may be of a temporary and/or permanent namre. 5. Utilitv Services. (a) Landlord has caused mains, conduits and other facilities to be brought to the leaseline of the Premises to supply water, sewer and electricity to the Premises. Landlord shall GRAY CARY\PA\10060265.3 19 1191396-901500 01/30/01 fumish to Tenant water through the plumbing systems which have been constmcted within the Premises. Any and all heating, ventilation and air conditioning unit or units that service the Premises, together with all related equipment, without regard to when installed or by whom, and whether installed on the rooftop or otherwise, are hereafter referred to as the "HVAC System." (b) Tenant shall install, at Tenant's sole expense, a water check meter located in the water feeder line at the location where the water feeder line enters the Premises. Tenant shall pay Landlord for Tenant's actual monthly water usage, subject to Landlord's verification, in accordance with Section 5(c) hereof. (c) In addition to the Minimum Annual Rental, Tenant shall pay as additional rental, without deduction or set-off of any kind, within ten (10) days after receipt of an invoice for a charge for Tenant's water usage ("Water Cost") or an invoice for "Sewer Cost." As used in this Lease, the term Sewer Cost means the product which results by multiplying the total costs for sewer services for all unmetered tenants by the percentage that the gross square footage of the Premises is of the gross square footage of all unmetered stores or store spaces in the Shopping Center which are occupied and producing rent, including the Premises. As of the date of execution of this Lease, the Water Cost and the Sewer Cost is billed monthly in arrears. Landlord may elect to estimate the Water Cost and Sewer Cost and to bill Tenant for such charges monthly in advance. If Landlord does so, after the end of each calendar year, Landlord shall fumish to Tenant a statement or statements showing the total Water Cost and the total Sewer Cost for such calendar year, the amount owed by Tenant and payments made by Tenant during such calendar year. If actual amounts due from Tenant for such calendar year exceeds Tenant's payments. Tenant shall pay to Landlord the deficiency within twenty (20) days after receipt of Landlord's statement If Tenant's payments exceed actual amounts due firom Tenant as shown on such statement, Tenant shall be entitied to a credit against the next sums accming hereunder or, if such overpayment occurs during the last year of the Term, the amount of the overpayment shall be promptly refunded to Tenant. Tenant is responsible for connecting its elecfrical and, if applicable, natural gas systems to the appropriate public utility(ies), and shall contract directly with such public utility(ies) for delivery of, and the cost of, electricity and natural gas to the Premises by means of separate metering and billing of the Premises. (d) Landlord shall not be liable to Tenant in damages or otherwise, if utilities are intermpted or terminated because of repairs, installations or improvements to the Common Areas, or any other cause. No such intermption or termination shall constitute or be constmed as a constmctive or other eviction ofTenant, nor shall such intermption or termination entitle Tenant to terminate this Lease, or relieve Tenant of any obligation under tiiis Lease, including, without limitation, the obligation to pay any of the sums due under this Lease. (e) If any govemmental entity promulgates or revises any statute, ordinance or building, fire or other code, or imposes mandatory or voluntary confrols or guidelines on Landlord or the Shopping Center or any part thereof, relating to the use or conservation of energy, water, light, telecommunications services or electricity or the provision of any other utility or service provided with respect to this Lease, or if Landlord is required or elects to make alterations to the Shopping Center in order to comply with such mandatory or voluntary confrols or guidelines. Landlord may, in its sole discretion, comply with such mandatory or voluntary controls or guidelines, or make such alterations to the Shopping Center. Neither such compliance nor the making of such alterations shall in any event entitle Tenant to terminate this Lease, receive any damages, or relieve Tenant of any GRAY CARYU»A\10060265.3 20 1191396-901500 01/30/01 obligation under this Lease, including but not limited to, the obligation to pay any of the sums due under this Lease, or constitute or be constmed as a constmctive or other eviction of Tenant. (f) Tenant shall be responsible, including the costs thereof, for all other utilities and services utilized by Tenant including, without limitation, telecommunications. Tenant shall, on a daily basis, remove all trash and garbage from the Premises to dumpsters designated by Landlord. Landlord shall contract for the regular removal of trash from the Shopping Center, and shall bill Tenant monthly for Tenant's share of the cost of frash removal, which share shall be equal to a fraction, the numerator of which is the number of square feet in the Premises, and the denominator of which is the sum ofthe square footages of all premises for which Landlord confracts for frash removal. Tenant shall ensure that all of its trash is collected in dumpsters and not strewn on the ground adjacent thereto. 6. Additional Constmction. Landlord shall have the right (as long as there is no material obstmction of access by Tenant's customers into Tenant's customer doors), at all times and from time to time throughout the Term, to: (i) alter the boundaries, change the area, size, level, location and/or arrangement of the Shopping Center or any part thereof, including, without limitation. Common Areas and the entrances to and exits from the Common Areas; (ii) constmct other buildings, stmctures or improvements in the Common Areas and the Shopping Center (including, without limitation, kiosks) and make alterations and additions thereto, or re-arrangements thereof, demolish parts thereof, build additional stories on any building in the Shopping Center (and for such purposes to constract and erect columns and support facilities in any building), and constmct additional buildings or facilities adjoining or proximate to the Shopping Center; (iii) constmct multiple deck, elevated or underground parking facilities, and expand, reduce or alter the same in any manner whatsoever; (iv) relocate or rearrange the various buildings, parking areas and other parts of the Shopping Center; (v) make changes and additions to the pipes, conduits and ducts or other structural and nonstmctural installations in the Premises where desirable to serve the Common Areas and other Premises in the Shopping Center or to facilitate expansion or alteration of the Shopping Center (including, without limitation, die constmction and erection of columns and support facilities), but shall not unreasonably interfere with the use and enjoyment of the Premises beyond the extent necessarily incidental to such changes, additions and installations, and shall repair any damage to the Premises arising in the course of such changes and additions; (vi) add additional real property to the Shopping Center or remove real property therefrom; GRAY CARY\PA\10060265.3 21 1191396-901500 01/30/01 (vii) temporarily obstruct or close off the Common Areas or any parts thereof for the purpose of maintenance, repair, constmction or the expansion of the Shopping Center; and (viii) grant easements in, on or across the Shopping Center. 7. Subordination and Attomment. (a) This Lease shall be subject to and subordinated at all times to: (i) all ground or underlying leases which are now or may hereafter be executed affecting the Shopping Center, and (ii) the lien of all mortgages and deeds of tmst in any amount or amounts whatsoever now or hereafter placed on or against all or a portion of the Shopping Center or Landlord's interest or estate therein, and all ground or underlying leases, all without the necessity of having further instmments executed on the part ofTenant to effectuate such subordination. Notwithstanding such subordination. Tenant's right to quiet possession of the Premises shall not be disturbed so long as an Event of Default does not then exist with resjwct to the payment of rental or other sums, or an Event of Default does not otherwise then exist under the terms of this Lease, unless this Lease is otherwise terminated pursuant to its terms. Notwithstanding the foregoing: (A) in the event of termination for any reason whatsoever of any ground or underlying lease, and if such ground or underlying lease so provides, then this Lease shall not be barred, terminated, cut off or foreclosed, nor shall the rights and possession ofTenant hereunder be disturbed if an Event of Default does not then exist with respect to die payment of rental or other sums or an Event of Default does not otherwise then exist under the terms of this Lease, and Tenant shall attom to the landlord of any such ground or underlying lease, or, if requested, enter into a new lease with such landlord for the balance of the Term then remaining, upon the same terms and provisions as are contained in this Lease; (B) in the event of a foreclosure ofany such mortgage or deed of trust or of any other action or proceeding for the enforcement thereof, or of any sale thereunder, and if such mortgage or deed of frust so provides, this Lease shall not be barred, terminated, out off or foreclosed, nor shall the rights and possession ofTenant hereunder be disturbed if an Event of Default does not then exist with respect to the payment of rental or other sums or an Event of Default does not otherwise then exist under the terms ofthis Lease, and Tenant shall attom to the purchaser at such foreclosure sale or other action or proceeding, or, if requested, enter into a new lease with such purchaser for the balance of the Term then remaining, upon the same terms and provisions as are contained in this Lease; and (C) Tenant shall execute and deliver within twenty (20) days after demand such further documents or instmments evidencing the subordination of this Lease to such ground or underlying leases and to the lien ofany such mortgages or deeds of tmst as may reasonably be required by landlord or by any lender. Anything in this Section 7(a) to the contrary notwithstanding, upon written request by Tenant Landlord shall ask any ground lessor under a ground lease, mortgagees under a mortgage, or beneficiary under a deed of tmst affecting the Shopping Center to execute a nondisturbance agreement in favor ofTenant, provided. Landlord's failure to obtain such agreement shall not constitute a condition to die effectiveness of tiiis Lease, nor a default hereunder, nor shall such failure relieve Tenant of the obligation to fully and timely perform its obligations hereunder. The successor in interest to Landlord following foreclosure, sale or deed in lieu diereof shall not be (a) liable for any act or omission ofany prior lessor or with respect to events occurring prior to acquisition of ownership; (b) subject to any offsets or defenses which Tenant might have against any prior lessor; or (c) bound by prepayment of more than one (1) month's Rent. Tenant agrees to acknowledge in writmg to any lender of Landlord that die successor in interest to Landlord following foreclosures shall not be responsible for the items set forth in the immediately preceding sentence. GRAY CARY\PA\10060265.3 22 1191396-901500 01/30/01 (b) Notwithstanding anything to the contrary set forth above, any beneficiary under any deed of tmst or mortgagee under any mortgage may at any time subordinate its deed of tmst or mortgage to this Lease in whole or in part, without any need to obtain Tenant's consent, by execution of a written document subordinating such deed of tmst or mortgage to this Lease to the extent set forth in such document and tiiereupon this Lease shall be deemed prior to such deed of trust or mortgage to the extent set forth in such docuraent without regard to their respective dates of execution, delivery and/or recording. In that event, to the extent set forth in such document, the beneficiary under such deed of tmst or the mortgagee under such mortgage shall have the same rights with respect to this Lease as would have existed if this Lease had been executed and a memorandum thereof recorded prior to the execution, delivery and recording of the deed of tmst or mortgage. 8. Repairs and Maintenance. (a) Except as set forth in Section 8(b) below. Landlord shall repair and maintain the foundations, roofs, parking areas, common utility lines, sprinkler mains, if any, and stmctural portions ofthe Shopping Center, but Landlord shall not be liable to Tenant for any damage caused by the same being or becoming in need of repair or maintenance until Landlord has had a reasonable opportunity to repair the same after being notified in writing of the need of same. Tenant's reimbursement to Landlord of the cost of such work shall be govemed by the provisions of Sections 4 and 5. Landlord shall not be liable to Tenant for any death or injury to any person or damage to merchandise, trade fixtures or personal property in the Premises caused by water leakage from the roof, water lines, sanitary sewer or storm drain, sprinkler or heating and air conditioning equipment. (b) Tenant shall, at Tenant's expense, keep all parts of the Premises, including the HVAC System, other utility lines within, and exclusively serving, the Premises, and all eqiiipment fixtures, floor coverings and plate glass in good order and repair and in a clean, sanitary and safe condition and in accordance with all applicable laws, ordinances, orders, mles, regulations and requirements of (i) federal, state, county, municipal and other govemmental agencies having or claiming jurisdiction; (ii) the insurance underwriting board or insurance inspection bureau having or claiming jurisdiction; and (iii) all insurance companies insuring all or any part of the Premises or improvements or both. Tenant shall, at Tenant's expense, maintain a contract for die regular repair and maintenance of the HVAC System with a confractor designated by Landlord in its sole discretion; and provided that Tenant fulfills such obligation, and subject to Section 4(d)(xii) hereof, Landlord shall not bill Tenant for similar regular maintenance and repair of such HVAC System as part of Common Area Costs. Without limiting the generality ofthe foregoing Tenant shall perform each and every obligation set forth in clauses (I) through (4) of section 1941.2(a) ofthe Califomia Civil Code, any amendment thereof or any law of similar import that may hereafter be enacted. (c) If Tenant refuses or neglects to make repairs and/or maintain the Premises, or any part thereof, in a first class condition. Landlord shall have the right upon ten (10) days' written notice of its election to do so, if Tenant does not commence to make such repairs and/or perform such maintenance during such ten (10) day period, or if Tenant after commencing same fails to diligentiy prosecute the same to completion, to make such repairs or perform such maintenance on behalf of or for the account ofTenant. In such event, such work shall be paid for by Tenant as additional rental within twenty (20) days of receipt of an invoice therefor. In addition. Tenant shall reimburse Landlord, within twenty (20) days after receipt of invoice therefor, for the cost of any and all mechanical system, telecommunications facilities and/or stmctural repairs or replacements necessitated or occasioned by the acts, omissions or negligence ofTenant or any person claiming through or under Tenant, or any of its servants, employees, contractors, agents, visitors or licensees, GRAY CARY\PA\10060255.3 23 1191396-901500 01/30/01 or by the use or occupancy or manner of use or occupancy of the Premises by Tenant or any such person less any insurance proceeds actually received by Landlord for such repairs or replacements. Any sums due Landlord which are not paid within twenty (20) days following receipt by Tenant of an invoice therefor shall bear interest at the Specified Rate from the date of the invoice until paid. Landlord shall not be liable for, and there shall be no abatement of rent on account of, any interference with Tenant's business arising from any repairs, maintenance, alteration or improvement in or to any portion of the Premises, the Common Areas or the Shopping Center or in or to the fixtures, appurtenances or equipment therein. (d) Tenant hereby expressly waives the right to make repairs at Landlord's expense as provided for in section 1942 of the Califomia Civil Code, any amendment thereof or any law of similar import that may hereafter be enacted. 9. Alterations. (a) Without the prior written consent of Landlord, which consent may be withheld in Landlord's sole discretion. Tenant shall not make any installation of fixtures, alterations, remodeling, renovation, modifications or improvements (collectively, "Alterations") affecting the elecfrical or mechanical systems, telecommunications facilities, stmctural integrity of the Shopping Center, or the Premises storefront. All other Alterations to the Premises shall not be made without the prior written consent of Landlord, which consent shall not be unreasonably withheld; excluding Tenant's initial Alterations which are govemed by the requirements of Exhibit C hereof. Landlord's consent shall be deemed given for all other Alterations to the Premises which cost in the aggregate, Ten Thousand Dollars ($10,000) or less. All Alterations shall become the property of Landlord and shall be surrendered with the Premises upon the expiration or sooner termination of the Term. When applying for Landlord's consent (and, at least ten [10] days prior to commencing any woric in the case of Alterations to the Premises which cost, in the aggregate. Ten Thousand Dollars [$10,000] or less, and as to which Landlord's consent is deemed given). Tenant shall fumish to Landlord complete plans and specifications for the desired Alterations. Prior to commencement of constmction of any and all Alterations, Tenant shall deliver to Landlord any required building permit and other govemmental authorization covering the Alterations. Any and all Alterations shall be made by Tenant at Tenant's sole cost and expense. Tenant shall give Landlord at least ten (10) days notice prior to commencing any and all Alterations to allow Landlord time to post notice of non- responsibility. (b) Tenant shall require its confractor to maintain insurance in amounts and in such form as Landlord may reasonably require. Without limitation, such insurance shall include Builder's Risk Insurance with limits sufficient to cover all property placed at risk by the work to be performed. Landlord and its property manager shall be named as additional insureds in the required policies by means of endorsements to said policies. Copies of said endorsements and copies of the declarations pages from such policies showing the insurer, insured, insurance policy number(s) and date(s), and types and limits of coverage, shall be provided to Landlord prior to commencement of any Alterations by Tenant or its confractor. Any Alterations undertaken by or on behalf of Tenant in connection with the Premises shall be completed in accordance with the applicable plans and specifications, and as approved by Landlord, shall be carried out in a good, workmanlike and prompt manner, shall comply with all applicable statutes, laws, ordinances, regulations, mles, orders and requirements ofthe authorities having jurisdiction thereof, and shall be subject to monitoring and inspection by Landlord or its employees, agents or confractors. Tenant shall not use any portion of GRAYCARY\PA\10060255.3 24 1191396-901SOO 01/30/01 the Common Areas, including service corridors, in connection with the making of any Alterations, nor shall Tenant store any materials in the Common Areas or service corridors. (c) If any Alterations which Tenant desires to constmct would result in Landlord being required to make any alterations and/or improvements to other portions ofthe Shopping Center in order to comply with any applicable statutes, laws, ordinances, regulations, mles, orders or requirements (e.g., ordinances intended to provide full access to handicapped persons), then Tenant shall be precluded from making such Alterations. (d) Should constraction of any Alterations by Tenant interfere with the harmonious labor relations in existence in the Shopping Center, all such work shall be halted inimediately by Tenant until such time as constmction can proceed without any such interference. (e) Tenant shall pay promptiy for any work done by Tenant (or material furnished therefor) in, on or about the Premises. Tenant shall promptly give Landlord written notice of the recording of any lien against the Premises and/or the Shopping Center in connection with any woric done by or at the direction ofTenant. Tenant shall, within ten (10), days after becoming aware of the filing of any lien against the Premises, cause the same to be discharged of record by payment deposit, or bond in the amount required by a court of competent jurisdiction (in order to contest same), and immediately thereafter shall deliver to Landlord written evidence that such discharge has been accomplished. If Tenant fails to cause such lien to be so discharged, then Landlord, in addhion to any other rights or remedies, may, but shall not he obligated to, upon five (5) days' notice to Tenant discharge the same by paying the amount claimed to be due or by procuring the discharge of such lien by deposit or by bonding proceedings and in any such event Landlord shall be entitled, if Landlord so elects, to defend any such prosecution of an action for foreclosure of such lien by the lienor and to pay the amount of any judgment in favor of such lienor (plus interest, costs and allowances). Any amount paid by Landlord together with interest thereon at the Specified Rate and all costs and expenses, including reasonable attorneys' fees incurred by Landlord in connection therewith, shall be paid by Tenant to Landlord on demand. Tenant's obligation to observe and perform any ofthe provisions of this Section 9 shall survive die expiration of die Term or the eariier termination of this Lease. 10. Fixtures and Personal Propertv. (a) Any trade fixtures, signs and other personal property of Tenant not permanently affixed to the Premises shall remain die property ofTenant and Tenant shall have the right, at any time during the Term, and from time to time, to remove any and all of its trade fixttu-es, signs and other personal property which it may have stored or installed in the Premises, including but not limited to counters, shelving, showcases, mirrors and odier movable personal property. Tenant at its expense shall immediately repair any damage caused to the Premises by reason of the removal of any such trade fixtures, signs, and other personal property. (b) Tenant at its sole expense, shall install on the Premises appropriate signage in conformity with Landlord's sign criteria as approved by the City of San Jose. Tenant shall not affix any other sign on the Premises or in the Shopping Center, without Landlord's prior written consent, which consent shall not be unreasonably withheld. Tenant shall not place any pylon signage about the Premises or in the Shopping Center. GRAY CARY\PA\I 0060265.3 25 1191396-901500 01/30/01 11. Laws and Ordinances. (a) Tenant shall comply with all laws, ordinances, orders and regulations affecting the use and occupancy of the Premises and the cleanliness, safety and operation thereof Tenant shall comply with the regulations and requirements of any insurance underwriter, inspection bureau or similar agency with respect to the Premises. Tenant shall permit Landlord to comply with such recommendations and requu-ements to the extent compliance is Landlord's obligation hereunder or pursuant to the subject recommendation or requirement. (b) Tenant shall not: (i) permit any immoral, improper or objectionable practice to occur or be committed on the Premises; (ii) make use of or allow the Premises to be used for any purposes other than those permitted under Section 1 hereof or that might invalidate or increase the rate of insurance therefor; (iii) keep, use or permit to be kept or used on the Premises any flammable fluids, toxic or hazardous materials (other than reasonable amounts of such materials necessary for the operation of Tenant's business in the Premises) or explosives without the prior written permission of Landlord or engage in hazardous activities; (iv) use the Premises for any purpose whatsoever which creates a nuisance or obstmcts or interferes with the rights of other tenants ofthe Shopping Center; (v) deface or injure the building or the Premises; (vi) commit or suffer any waste; or (vii) install any elecfrical equipment that overloads lines. (c) Landlord and Tenant shall comply with all laws now in force or enacted during the Term relating to the presence of asbestos and all other hazardous materials in the Shopping Center. (d) Tenant shall not cause or permit the escape, disposal or release of any biologically or chemically active or other hazardous substances or materials. Tenant shall not allow the storage or use of such substances or materials in any manner not sanctioned by law or by the highest standards prevailing in the industry for the storage and use ofsuch substances or materials, nor allow to be brought into the Shopping Center any such materials or substances except to use in the ordinary course of Tenant's business, and then only after written notice is given to Landlord of the identity of such substances or materials. Without limitation, hazardous substances and materials shall include those described in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act, as amended 42 U.S.C. Section 6901 et seq,, any applicable state or local laws and the regulations adopted under these acts. Without limitation, if any lender or governmental agency requires testing to ascertain whether there has been any release of hazardous materials, then the reasonable costs thereof shall be reimbursed by Tenant to Landlord upon demand as additional charges if the results of such testing reasonably indicate that (i) a release of hazardous materials first originated at the Premises during Tenant's possession thereof, and (ii) such release was not caused by Landlord or any contractors, agents or representatives of Landlord. In addition Tenant shall execute affidavits, representations and the like from time to time at Landlord's request concemmg Tenant's best knowledge and belief regarding the presence of hazardous substances or materials on the Premises. In all events, Tenant shall indemnify Landlord in the manner elsewhere provided in this Lease from any release of hazardous materials on the Premises occurring while Tenant is in possession, or elsewhere if caused by Tenant or persons acting under Tenant Notwithstanding any other provision of this Lease, Tenant shall not have any obligation to remediate any Hazardous Materials present at the Premises on the Term Commencement Date, except: (i) if Tenant or its employees, agents, representatives, confractors or invitees infroduced such Hazardous Materials to the Premises (the "Tenant Parties"); or (b) to the extent the negligence or intentional misconduct of GRAY CARY\PA\1006026S.3 26 1191396-901500 01/30/01 die Tenant Parties materially and adversely affects the nature, condition, location, or environmental or public health threat posed by such Hazardous Materials. The covenants contained herein shall survive the expiration or eariier termination of the Lease. 12. Insurance. (a) Landlord shall maintain, or cause to be maintained during the Term, workers' compensation insurance, employer's liability insurance and comprehensive general liability insurance on the Common Areas, with a minimum combined single limit of coverage of not less than Two Million Dollars ($2,000,000.00). Landlord may, at its election, also maintain all risk and extended coverage, rental abatement vandalism and malicious mischief and such other insurance as Landlord may elect (including, without limitation, earthquake and flood insurance if Landlord deems it pmdent or desirable to maintain such insurance) insuring the improvements located on Landlord's property in the Shopping Center, including the Premises and all appurtenances tiiereto (excluding Tenant's merchandise, trade fixtures, fiimishings, equipment personal property and leasehold improvements). (b) Tenant shall maintain during the Early Occupancy Period and during the entire Term, as may be extended, woricers' compensation insurance, employer's liability insurance and comprehensive general liability insurance on the Premises. Tenant shall name Landlord, its property manager, and, if Landlord elects, any lender designated by Landlord, as additional insured(s) on Tenant's comprehensive general liability insurance, by means of policy endorsements, which insurance shall be with companies licensed to do business in the State of Califomia and reasonably satisfactory to Landlord, with a minimum combined single limit of coverage of not less than Two Million Dollars ($2,000,000.00) and containing contractual liability and severability of interests endorsements. Copies of all such endorsements shall be delivered to Landlord prior to Tenant's first entry to the Premises. Such policy shall contain a provision diat Landlord will be given a minimum of thirty (30) days written notice prior to cancellation, termination or change in such insurance. Tenant shall also maintain "all risk" insurance, including sprinkler leakage coverage, for not less than ninety percent (90%) replacement value, without deduction for depreciation, covering all Tenant's goods and merchandise, trade fixtures, fumiture, signs, decorations, fumishings, wall covering, floor covering, draperies, equipment, leasehold improvements and other items and personal property ofTenant located on or within the Premises. A deductible of not more than One Thousand Dollars ($1,000.00) will be permitted for such "all risk" insurance. Tenant shall provide Landlord with copies ofthe insurance policies, endorsements, and certificates mentioned above in this Section 12(b), and evidencing that such insurance is in full force and effect and stating the terms thereof. (c) Tenant shall obtain and deliver to Landlord certificates of insurance and declarations pages from applicable policies evidencing comprehensive general liability insurance, including completed operations, and workers' compensation insurance and employer's liability insurance from any contractor or subconfractor engaged for repairs or maintenance during the Term. Such insurance shall be in forms and amounts and with companies reasonably satisfactory to Landlord. (d) Landlord and Tenant each hereby mutually waive any claim against the other for injury to person or loss or damage to any of their property located on or about die Premises or the Shopping Center that is caused by or results from perils covered by insurance carried by the respective parties as required by this Lease, to the extent of the proceeds ofsuch insurance actually GRAYCARY\PA\I0060265.3 27 1191396-901500 01/30/01 received with respect to such mjury, loss or damage, whether or not due to the negligence of the other party or its agents. Tenant and Landlord each shall give notice to its respective insurance carriers that the foregoing waiver of subrogation is contained in this Lease, and each such party shall obtain from such insurance carriers an appropriate clause in, or an appropriate endorsement to its insurance policies, pursuant to which such insurance carriers waive subrogation, or permit the insured, prior to any loss, to agree with a third party to waive any claims it might have against such third party. Nothing in this Section 12(d) shall relieve a party of liability to the other for failure to carry insurance required by this Lease. (e) All Tenant policies provided for herein shall be issued by insurance companies with a Best's Rating of A:X or better. Evidence ofinsurance must be on file with Landlord before Tenant takes possession of the Premises and must be kept current at all times. 13, Indemnification: Waiver. (a) Tenant shall indemnify, protect hold harmless and defend Landlord, its property manager and their agents and employees from and against any and all losses, damages, claims, or liability for any damage to any property or injury, illness or death of any person: (i) occurring in or on the Premises, arising at any time and from any cause whatsoever; and (ii) occurring in, on, or about any part of the Shopping Center other than the Premises, when such damage, injury, illness or death shall be caused in whole or in part by the negligence or willful misconduct ofTenant its agents, servants, contractors, employees or licensees, except where the aforementioned such losses, damages, claims, or liability are caused by the sole active negligence of Landlord or its property manager or their respective agents or employees. The provisions of this Section 13 shall survive the termination of this Lease with respect to any damage, injuty, illness or death caused by an event, action or failure to act occurring prior to such termination. (b) Landlord shall not be liable or responsible in any way for, and Tenant waives all claims against Landlord and assumes all risk with respect to or arising out of (i) any damages for which Tenant is required to insure; (ii) any death or any injury of any nature whatsoever that may be suffered or sustained by Tenant or any employee, licensee, invitees, guest agent or customer of Tenant or any other person, from any causes whatsoever except if caused solely by the active negligence or willful misconduct of Landlord, its agents or employees; and (iii) any loss, damage or injury to any property belonging to Tenant or its employees, agents, customers, licensees, invitees, guests or any other person except if caused solely by the active negligence or willful misconduct of Landlord, its agents or employees. Without limiting the generality of the foregoing, and notwithstanding any other provision of this Lease, Landlord shall not be liable for any damage or damages ofany nature whatsoever including, without limitation, consequential damages or loss of profit or business opportunity caused by explosion, fire, theft or breakage, by the sprinkler, drainage or plumbmg systems, by the failure for any reason to supply adequate drainage, by the intermption of any public utility or service, by steam, gas, water, rain or other substances leaking, issuing or flowing into any part of the Premises, by natural occurrence, acts of the public enemy, riot sfrike, insurrection, war, court order, requisition or order of govemmental body or authority, or for any damage or inconvenience which may arise as a result of repair, maintenance or alteration of any part of the Shopping Center, or by anything done or omitted to be done by any tenant, occupant or person in the Shopping Center. GRAY CARVVPAM 0060265 J 28 1191396-901500 01/30/01 14. Damage to Premises. In the event of a fire or other casualty in the Premises, Tenant shall immediately give notice thereof to Landlord. The following provisions shall apply to fire or other casualty occurring in the Premises and/or the Shopping Center: (a) If the damage is limited solely to the Premises and the Premises can be made tenantable with all damage repaired within six (6) months of the date of the damage or destmction, then Landlord shall be obligated to rebuild the same and shall proceed diligently to do so; provided, however, that Landlord shall have no obligation to repair or restore improvements installed in the Premises by Tenant except to the extent, and until such time, that Landlord (i) actually realizes insurance proceeds, if any, sufficient for such purposes and for all other restoration and repair purposes, and (ii) obtains all necessary or appropriate govemmental permits in connection therewith. (b) If portions of the Shopping Center outside the boundaries of the Premises are damaged or desfroyed (whether or not the Premises are also damaged or desfroyed) and the Premises and the Shopping Center can both be made tenantable with all damage repaired within sbc (6) months of the date of the damage or destruction, and provided Landlord determines it is economically feasible to do so, then Landlord shall be obligated to do so; provided, however, that Landlord shall have no obligation to repair or restore improvements installed in the Premises by Tenant except to the extent that Landlord actually realizes insurance proceeds, if any, sufficient for such purpose and for all other restoration and repair purposes. (c) If neither paragraph (a) nor (b) above applies. Landlord shall notify Tenant within sixty (60) days after the date of such damage or destmction and either Tenant or Landlord may terminate this Lease by giving written notice to the other within thirty (30) days after the date of such notice (such termination to be effective on the thirtieth [30th] day after delivery of such termination notice); provided, however, that Landlord shall have the right to elect to reconstmct the Shopping Center and the Premises, in which event Landlord shall notify Tenant within such sixty (60) day period and Tenant shall thereupon have no right to terminate tiiis Lease and, provided further, Tenant shall have no right to terminate this Lease if the damage or destmction resulted in whole or in part from the negligence or willful acts ofTenant its agents or employees. Nothing herein, however, shall obligate Landlord to perform any repairs or reconstmction except as set forth in Section 14(a) or 14(b). (d) During any period when Tenant's use of the Premises is significantly affected by damage or destruction, rent and all other charges payable by Tenant hereunder shall abate proportionately beginning on the sixth (6th) day following the event causing the subject damage or destraction, as reasonably determined by Landlord, until such time as the Premises are made tenantable, and no portion ofthe rent so abated shall be subject to subsequent recapture; provided, however, that there shall be no such abatement if the damage or destraction resulted in whole or in part from the negligence or willful acts ofTenant its agents or employees. (e) The proceeds from any insurance paid by reason of damage to or destraction ofthe Shopping Center or any part thereof, which is insured by Landlord, shall belong to and be paid to Landlord subject to the rights ofany mortgagee or beneficiary under the terms of any mortgage or deed of trust which constitutes an encumbrance on the Shopping Center or the relevant part thereof GRAY CARY\PA\10060265 J 29 U91396-901500 01/30/01 (f) If this Lease is not terminated as provided above, and Landlord repairs or rebuilds the Premises, then Tenant shall repair and replace its merchandise, trade fixtures, fumishings and equipment in a manner and to a condhion at least equal to that which existed prior to its damage or destmction. Except as herein expressly provided to the confrary, this Lease shall not tenninate nor shall there be any abatement of rent or other charges or items of additional rent as the result of a fire or other casualty. Lessor and Tenant waive the provisions of Califomia Civil Code Sections 1932(2) and 1933(4), and any similar or successor laws or statutes relating to tennination of leases in the event of damage or destraction of the leased property, and agree tiiat the rights and obligations ofthe parties in such event shall be solely govemed by the terms ofthis Lease. 15, Eminent Domain. (a) If all or a portion ofthe Premises are taken under the power of eminent domain by any public or quasi-public authority, or if all or any part of the Premises is sold or transferred in lieu thereof, this Lease shall terminate and expire as to the part so taken as ofthe date of such taking, and, in the case of a partial taking, either Landlord or Tenant may terminate this Lease as to the balance of the Premises by giving notice to the other, in writing, within thirty (30) days after the date ofsuch taking, provided, however, that a condition to the exercise of such right to terminate by Tenant shall be that the portion of the Premises shall be of such extent and nature as substantially to handicap, impede and impair Tenant's use of the balance of the Premises for the purposes permitted by this Lease. If a material part ofthe Shopping Center is condenmed or taken or if substantial alteration or reconstmction of the Shopping Center is, in Landlord's opinion, necessary or desirable as a result of a condemnation or taking, whether or not any portion of the Premises is condemned or taken. Landlord may terminate this Lease by written notice to Tenant within thirty (30) days after the date of taking. Landlord shall be entitied to any and all compensation, damages, income, rent, awards, or any interest therein whatsoever which may be paid or made in connection with a taking, and Tenant shall have no claim against Landlord for the value of any unexpired Term or otherwise. Tenant shall be entitied to initiate a separate action against the condemnor for its relocation costs, and loss of Tenant's improvements and trade fixtures installed at Tenant's cost, provided any award to Tenant in such action does not reduce the award which would otherwise accme to Landlord. In the event of a partial taking of the Premises which does not result in a termination of this Lease, the Minimum Annual Rental and all other charges payable by Tenant hereunder thereafter to be paid shall be equitably reduced by Landlord. Each party waives the provisions of any applicable statute allowing either party to petition the court of competent jurisdiction to tenninate this Lease in the event of a partial taking of the Premises. 16. Assignment and Subletting. (a) Except as otherwise expressly permitted herein. Tenant shall not transfer, assign, sublet, enter into license or concession agreements, change ownership or hypothecate this Lease or the Tenant's interest in and to the Premises (individually and collectively, a "Transfer") without first procuring the written consent of Landlord, which consent may be withheld in its sole discretion. Any attempted Transfer without the Landlord's written consent shall be void. The prohibitions ofthis Section 16 shall apply to a Transfer when such transfer occurs by operation of law, legal process, receivership, bankmptcy or otherwise. GRAY CARY\PA\10060265.3 30 1191396-901500 01/30/01 (b) If Tenant is a corporation, any dissolution, merger, consolidation or other reorganization of Tenant (excluding a reorganization where Tenant remains the controlling party), or the sale or other fransfer of a controlling percentage of the capital stock ofTenant (other than in a public offering) or the sale of fifty percent (50%) or more of the value ofthe assets ofTenant, shall be deemed a voluntary assignment of this Lease by Tenant. The phrase "controlling percentage" shall mean the ownership of, and the right to vote, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of Tenant's capital stock issued, outstanding, and entitled to vote for the election of directors. The preceding two sentences shall not apply to corporations the stock of which is traded though an exchange or over the counter. If Tenant is a partnership or a limited liability company, a withdrawal or change, voluntary, involuntary, or by operation of law of any partner or partners (or member or members in the case of a limited liability company) owning a total of fifty percent (50%) or more of the partnership or limited liability company, or the dissolution of the partnership or the limited liability company, shall be deemed a voluntary assignment of this lease by Tenant. If Tenant consists of more than one person, a purported assignment, voluntary, involuntary, or by operation of law, by any one of the persons executing this Lease shall be deemed a voluntary assignment of this Lease by Tenant. (c) Notwithstanding any other provision ofthis Lease, Tenant (but not any assignee or sublessee ofTenant) may assign the entirety of the Lease or sublet the entirety of the Premises (including the Option to Extend, as set forth in the Basic Lease Information) to a Supercuts franchisee operating under the trade name "Supercuts" (the "Permitted Franchisee Assignee"), without prior consent of Landlord, but upon thirty (30) days prior written notice to Landlord ("Permitted Franchisee Notice"). The Permitted Franchisee Notice shall be signed by authorized representatives of both Tenant and the Permitted Franchisee Assignee, and shall set forth (i) the effective date, the commencement date, and term of such assignment or sublease, (ii) the legal name of the Permitted Franchisee Assignee, (iii) the name(s) of the authorized contact person(s) for the Permitted Franchisee Assignee, together with contact information including mailing address, and phone numbers (during business hours and after business hours), (iv) a representation from each of the persons signing such notice on behalf of the Tenant and Permitted Franchisee Assignee, respectively, that such person is authorized by such entity to do so and to bind such entity, (v) a statement as to the Rent and other economic consideration to be paid to Tenant by the Permitted Franchisee Assignee, in such reasonable detail that will allow Landlord to make the determination of the sums due Landlord, if any, pursuant to Section 16(h) hereof (and subject to the applicable exclusions set forth in Section 16(h)), and (vi) the Permitted Franchisee Assignee shall expressly agree in the Permitted Franchisee Notice for the benefit of Landlord to assume and be bound by, the terms, covenants, and conditions of this Lease to be perfonned by Tenant. Tenant shall concurrently deliver to Landlord, together with the Permitted Franchisee Notice, documentation evidencing that all insurance required ofTenant under this Lease has been obtained by the Permitted Franchisee Assignee, including, but not limited to, the documentation required by Section 12(c) hereof Landlord's recapture right pursuant to Section 16(f) hereof (clause "(iii)" therein) shall not apply to any proposed assignment or sublease to a Permitted Franchisee Assignee. Any attempted Transfer to a Permitted Franchisee Assignee shall be void and of no effect if (i) on the date of Landlord's receipt ofthe Permitted Franchisee Notice, or on the intended effective date of the assignment or sublease to the Permitted Franchisee Assignee, the Tenant is in material breach ofthis Lease or an Event of Default has occurred, or (ii) Tenant or the Permitted Franchisee Assignee fails to comply with any provision of this Section 16(c). (d) The consent by Landlord to any Transfer shall not constitute a waiver of the necessity for such consent to any subsequent Transfer. In no event shall any assignee or subtenant of GRAYCARY\PA\1006026S.3 31 1191396-901500 01/30/01 Tenant or any subsequent assignee or subtenant (including, but not limited to, a Permitted Franchisee Assignee) be permitted to fransfer, assign, sublet enter into license or concession agreements, change ownership or hypothecate this Lease or its interest in and to the Premises or this Lease in whole or in part, or otherwise permit occupancy of all or any part thereof by anyone with, through or under it without first procuring the written consent of Landlord. (e) Each Transfer to which there has been consent shall be by instmment in writing, in form reasonably satisfactory to Landlord, and shall be executed by Tenant and the fransferee, assignee, sublessee, licensee, concessionaire or mortgagee which shall agree in writing for the benefit of the Landlord to assume and be bound by, the terms, covenants and conditions of this Lease to be performed by Tenant. One executed copy of such written instmment shall be delivered to Landlord within ten (10) days ofthe date of execution. (f) If Tenant intends to effect a Transfer other than a hypothecation of this Lease, Tenant shall give prior written notice of such intent specifying therein the proposed assignee, sublessee, licensee or concessionaire and providing such information with respect thereto including, without limitation, information conceming the principals thereof and such credit financial and business experience information relating to the proposed assignee, sublessee, licensee or concessionaire as Landlord requires. Landlord shall within thirty (30) days after receipt of such notice and infonnation elect in writing to (i) consent to the proposed Transfer; (ii) refuse to consent to the proposed Transfer; or (iii) cancel this Lease. If Landlord elects to cancel this Lease, Tenant shall notify Landlord within fifteen (15) days thereafter in writing of Tenant's intention either to refrain from such proposed Transfer or to accept the cancellation of this Lease. If Tenant falls to deliver such notice to Landlord within such fifteen (15) day period, this Lease shall terminate thirty (30) days after the expiration of such fifteen (15) day period. If Tenant advises Landlord it intends to refrain from such Transfer then Landlord's election to terminate this Lease shall be of no further force and effect. The period of time within which Landlord must respond to a request by Tenant for consent to an assignment of this Lease shall not begin to mn until Tenant has provided to Landlord all ofthe information to which Landlord is reasonably entitied in order to evaluate the proposed fransaction. (g) Tenant shall pay Landlord an amount equal to Five Hundred Dollars ($500.00) to reimburse Landlord for Landlord's reasonable attomey's fees and adminisfrative expenses incurred in connection with the review, processing and/or preparation ofany documentation of any Transfer requiring Landlord's consent (h) If Landlord consents to a Transfer, or in the case of a Transfer to a Permitted Franchisee Assignee, then fifty percent (50%) of any sums or other economic consideration received by Tenant as a result of such Transfer (except [i] reasonable leasing commissions and rental or other payments received which are attributable to die amortization of the cost ofTenant improvements made to the subject space by Tenant, at Tenant's cost [ii] any fees, costs and charges payable by a Permitted Franchisee Assignee to Tenant in connection with the granting or operation of a Supercuts franchise, and [iii] consideration payable for a Permitted Franchisee Assignee to Tenant for Tenant's frade fixtures, client profiles, training fees, or such other good will, provided that such other good will does not constitute disguised rent) whether denominated rent or otherwise, which exceed, in the aggregate, the total sums which Tenant is obligated to pay Landlord under this Lease (prorated as to any sublease, license or concession agreement to reflect obligations allocable to that portion oftiie Premises subject to such sublease, license or concession agreement) shall be payable to Landlord as additional rent under this Lease, without affecting or reducing any other obligation ofTenant GRAYCARY\PA\I0060265.3 32 1191396-901500 01/30/01 hereunder. Tenant shall deliver to Landlord a statement within thirty (30) days after the end of each calendar year, and within thirty (30) days after the expiration or earlier termination of the Term, specifying with respect to the prior calendar year, (i) each sublease, assignment, licensing and/or concession agreement which was in effect during any portion of the year covered by such statement and (ii) a computation in reasonable detail showing the amounts (if any) paid and payable by Tenant to Landlord pursuant to this subsection and applicable to (A) die year covered by such statement and (B) prior years. (i) No Transfer (including, but not limited to, a Transfer to a Permitted Franchisee Assignee) shall release Tenant from any of its obligations under this Lease, or alter the primary liability ofTenant to pay the rental hereunder. The acceptance of rental by Landlord from any other person shall not be deemed to be a waiver by Landlord of any provision hereof If any transferee (including, but not limited to, a Permitted Franchisee Assignee) defaults in the performance of any of the terms hereof. Landlord may proceed directly against Tenant without the necessity of exhausting hs remedies against such transferee. Landlord may consent to subsequent transfers ofthis Lease or amendments or modifications to this Lease whh transferees ofTenant, without obtaining Tenant's consent thereto, and such action shall not relieve Tenant of its liability under this Lease. (j) If a petition is filed by or against Tenant for relief under the United States Bankmptcy Code, as amended (the "Bankmptcy Code"), and Tenant (including for purposes of this section Tenant's successor in bankruptcy, whether a tinistee or Tenant as debtor in possession) assumes and proposes to assign, or proposes to assume and assign, this Lease pursuant to the provisions of the Bankruptcy Code to any person or entity who has made or accepted a bona fide offer to accept an assignment of this Lease on terms acceptable to Tenant, then notice of the proposed assignment setting forth (i) the name and address of the proposed assignee, (ii) all of the terms and conditions of the offer and proposed assignment, and (iii) the adequate assurance of future performance of the Lease to be fumished by die proposed assignee, shall be given to Landlord by Tenant no later than twenty (20) days after Tenant has made or received such offer, but m no event later than ten (10) days prior to the date on which Tenant applies to a court of competent jurisdiction for authority and approval to effect the proposed assignment. The description of the adequate assurance of the proposed assignee's future performance in such notice shall include such financial and other information as is necessary to demonsfrate that the financial condition and operating perfonnance of the proposed assignee and its guarantors, if any, is similar to the financial condition and operating performance ofTenant and its guarantors, if any, as of the time Tenant became the Tenant under the Lease. Landlord shall have the prior right and option, to be exercised by notice to Tenant given at any time prior to the date on which the court order authorizing such assignment becomes final and non- appealable, to receive an assignment ofthis Lease upon the same terms and conditions, and for the same consideration, if any, as the proposed assignee, less any brokerage commissions which may otherwise be payable out of the consideration to be paid by the proposed assignee for the assignment of this Lease. If this Lease is assigned pursuant to the provisions of the Bankmptcy Code, Landlord: (A) may, in addition to its right to adequate assurance of future performance, require firom the assignee a deposit or other security for the performance of its obligations under the Lease in an amount substantially the same as would have been required by Landlord upon the initial leasing to a tenant similar to the assignee; and (B) shall receive, as additional rent, the sums and economic consideration described in Section 3. Any person or entity to whom this GRAY CARYyAM 0060265.3 33 1191396-901500 01/30/01 Lease is assigned pursuant to the provisions of the Bankmptcy Code shall be deemed without fiuther act or documentation to have assumed all of Tenant's obligations arising under this Lease on and after the date of such assignment. Any such assignee shall, upon demand, execute and deliver to Landlord an instrument confirming such assumption. No provision ofthis Lease shall be deemed a waiver of Landlord's rights or remedies under the Banknq)tcy Code to oppose any assumption and/or assignment of this Lease, to require tunely performance of Tenant's obligations under this Lease, or to regain possession of the Premises if this Lease has neither been assumed nor rejected within sixty (60) days after the date of entry of the bankmptcy court's order for relief or within such additional time as a court of competent jurisdiction may have fixed. In connection with any Bankmptcy proceeding. Landlord shall be entitled to recover any and all reasonable attorneys' fees incurred in such Bankmptcy proceeding or arising out of or in connection with any such proceeding. Notwithstanding anything in this Lease to the contrary, all amounts payable by Tenant to or on behalf of Landlord under this Lease, whether or not expressly denominated as such, shall constitute "rent" for the purposes of Section 502(b)(6) of the Bankraptcy Code. 17. Access to Premises. Upon twenty-four (24) hours telephonic notice to Tenant's on-site manager or other designated representative (except in an emergency, when no notice shall be required). Landlord, its agents, employees and any person authorized by Landlord, may enter the Premises at reasonable hours for the purpose of: (a) inspecting the condition of same; (b) making such repairs, additions or improvements thereto, or to the building of which they are a part, as Landlord may elect or be required to make; (c) exhibiting the same to confractors, prospective purchasers, lenders or, during the last twelve (12) months ofthe Term, tenants of the building in which the Premises are contained; (d) determining whether Tenant is complying with its obligations hereunder; (e) supplying any service to be provided by Landlord to Tenant or to any other tenant of the Shopping Center; and (f) placing notices, including, without limitation, notices of non-responsibility. Neither Tenant nor any person within Tenant's confrol shall interfere with such notices. Except as otherwise provided in this Lease and in cases of emergency. Landlord shall not unreasonably disturb Tenant's conduct of jSusiness. Tenant hereby waives any claim for damages for any injury or inconvenience to or interference with Tenant's business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned by such entty. Because Tenant has not provided Landlord with keys to the Premises, if entry is desired by Landlord (in non-emergency circumstances), Landlord shall so notify Tenant telephonically at the telephone numbers set forth in the Basic Lease Information and after attempting to give or giving such telephonic notice, if the Premises are not made fully available for entty Landlord may (but shall not be obligated to) enter the Premises in any way necessaty and Tenant shall indemnify, defend and hold Landlord harmless from and against any loss, liability, or claim occasioned by Tenant's failure to provide access to the Premises to Landlord. Landlord shall have the right to use any and all means which Landlord may deem proper to enter the Premises in an emergency, and no such entty by Landlord shall under any circumstance be constmed or deemed to be a forcible or unlawfiil entty into, or a detainer of, the Premises or an eviction, actual or constmctive, ofTenant from the Premises, or any portion thereof. 18. Defaults bv Tenant. (a) The following shall be deemed to be events of default ("Events of Default") under this Lease: GRAYCARY\PA\I0060265.3 34 119I396-90I500 O1/30/01 (i) Tenant's failure to pay when due any Minimum Annual Rent Common Area Costs, insurance reimbursement or tax reimbursement; provided, the first two (2) times in any consecutive twelve (12) month period that such a failure occurs, such failure shall not constitute an Event of Default unless Tenant has failed to pay the overdue sums in full within ten (10) days after Tenant has been given written notice that such payment is overdue; or (ii) Tenant's failure to pay any other sum when the same becomes due and payable if such failure continues for more than five (5) days after written notice thereof from Landlord; or (iii) Tenant's failure to perform or observe any other obligations ofTenant hereunder, or to comply with the mles and regulations, if such failure continues for more than thirty (30) days after written notice thereof from Landlord, unless such default cannot be reasonably cured within such thirty (30) day period and Tenant has withm such period commenced and is pursuing the curing of such default with due diligence; or (iv) Tenant's abandonment or vacation of a substantial portion of the Premises, or Tenant's failure to conduct its business in the manner prescribed herein for a continuous period in excess of five (5) business days; or (v) Tenant's failure to vacate the Premises immediately upon termination, cancellation, or expiration of this Lease; or (vi) The leasehold interest of Tenant is levied upon under execution or is attached by process of law or Tenant's failure to contest diligentiy the validity of any lien or claimed lien or to give sufficient security to Landlord to insure payment thereof or failure to satisfy any judgment rendered thereon and having the same released, and such default continues for ten (10) days after written notice to Tenant; or (vii) Tenant's becoming insolvent admitting in writing its inability to pay its debts generally as they become due, filing a petition in bankmptcy or a petition to take advantage ofany insolvency statute, making an assignment for the benefit of creditors, making a fraudulent transfer, applying for or consenting to the appointment of a receiver of itself or of the whole or any substantial part of its property, or filing or answering a petition seeking reorganization under the federal bankraptcy laws, as now in effect or hereafter amended, or any other applicable law or statute of the United States or any state thereof; or (viii) A court of competent jurisdiction entering an order, judgment or decree adjudicating Tenant a bankrupt, or appointing a receiver ofTenant or ofthe whole or any substantial part of its property without the consent ofTenant or approving a petition filed against Tenant seeking reorganization or arrangement ofTenant under any applicable federal or state bankraptcy laws, as now in effect or hereafter amended, if such order, judgment or decree is not vacated, set aside or stayed within thirty (30) days from the date of entiy thereof. (b) Upon the occurrence of an Event of Default Landlord, at any time tiiereafter, may give a written tennination notice to Tenant and on the date specified in such notice (which shall be not less than three (3) days after die giving of such notice), Tenant's right to possession shall terminate and this Lease shall tenninate, unless on or before such date all arrears of rent and all other sums payable by Tenant under tiiis Lease (togetiier with interest thereon at the Specified Rate) and all GRAYCARY\PA\10060265J 35 1191396-901500 01/30/01 costs and expenses incurred by or on behalf of Landlord hereunder shall have been paid by Tenant and all other breaches of this Lease by Tenant at the time existing shall have been fUlly remedied to the satisfaction of Landlord. Upon such termination, in addition to any other rights and remedies to which Landlord may be entitied under applicable law. Landlord may recover from Tenant: (i) the worth at the time of award of the unpaid rent which had been earned at the time of tennination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been eamed after termination until the time of award exceeds the amount of such rent loss that Tenant proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the Term of this Lease after the time of award exceeds the amount of such rent loss that Tenant proves could be reasonably avoided; and (iv) any other amount necessaty to compensate Landlord for all the defriment proximately caused by Tenant's failure to perform its obligations under this Lease or which in the ordinaty course of things would be likely to result therefrom. Landlord shall not be entitied to recover lost opportunity costs or lost profits (except as computed pursuant to subparagraph (iii)). The "wortii at the time of award" of the amounts referred to in clauses (i) and (ii) above shall be computed by allowing interest at the Specified Rate. The worth at the time of award of the amount referred to in clause (iii) above shall be computed by discounting such amount at a rate equal to the discount rate of the Federal Reserve Board of San Francisco at the time of award. (c) Any and all property owned by or in the custody of Tenant may be removed from the Premises by Landlord and stored at the direction of Landlord at the risk, cost and expense of Tenant, and Landlord shall in no event be responsible for the value or preservation thereof Tenant shall pay to Landlord, upon demand, any and all expenses incurred in such removal and all storage charges against such property. Any such property ofTenant not retaken by Tenant from storage within thirty (30) days after removal shall, at Landlord's option, be deemed conveyed by Tenant to Landlord under this Lease as by a bill of sale without further payment or credit by Landlord to Tenant. (d) No act or thing done by Landlord or its agents during die Term shall be deemed a termination of this Lease or an acceptance of the surrender of the Premises, and no agreement to terminate this Lease or accept a surrender of the Premises shall be valid unless in writing signed by Landlord. Landlord's acceptance of any payments hereunder after the occurrence of an Event of Default shall not be constmed as an accord and satisfaction, compromise or waiver of such default unless Landlord so notifies Tenant in writing. (e) All delinquent rentals and/or other sums due Landlord under the terms of this Lease shall bear interest from the date due until paid, at the rate equal to the "Prime Rate" plus two percent (2%), not to exceed, however, the maximum rate permitted by law (the "Specified Rate"). "Prime Rate" shall mean the "reference rate" announced by Bank of America NT & SA (the "Bank of America") (whether or not such rate has actually been charged by Bank of America). If Bank of America discontinues the practice of announcing a "reference rate" then the term "Prime Rate" shall mean the prime rate (or base rate) reported in the Money Rates column or section of The Wall Street Joumal as being the base rate on corporate loans at large U.S. money center commercial banks (whether or not such rate has actually been charged by any such baidc). If The Wall Sfreet Joumal ceases publication of the prime rate, the "Prime Rate" shall mean the highest rate charged by Bank of America on short term, unsecured, loans to its most creditwordiy large coiporate borrowers. If The Wall Sfreet Joumal (1) publishes more than one prime rate or base rate, the higher or highest ofsuch rates shall apply, or (ii) publishes a refraction or correction of any such rate, the rate reported in such retraction or correction shall apply. GRAYCARY\PA\10060265.3 36 1191396-901500 01/30/01 (f) Tenant acknowledges that late payment by Tenant to Landlord of Minimum Annual Rental, Common Area Costs, tax reimbursement, insurance reimbursement, utility charges, operating costs or any other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of such costs being exfremely difficult and impracticable to fix. Such costs include, without limitation, processing and accounting charges, and late charges that may be imposed on Landlord by the terms of any encumbrance and note secured by any encumbrance covering the Premises. Therefore, and subject to the immediately following sentence, if any installment of Minimum Annual Rental, Common Area Costs, insurance or tax reimbursement or any other sum due from Tenant is not received by Landlord when due. Tenant shall pay to Landlord on demand an additional sum equal to five percent (5%) of the overdue amount as a late chaise. Notwithstanding the foregoing. Landlord acknowledges that Tenant has advised Landlord that Tenant is responsible for the adminisfration of monthly rental payments for more than five thousand (5,000) hair salons world-wide; as an accommodation to Tenant Landlord agrees not to impose such a late charge unless or until the second occurrence of a late payment by Tenant in any Term Year, The parties agree that this late charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of such late payment by Tenant Acceptance of any late charge shall not constitute a waiver of Tenant's default with respect to the overdue amount or prevent Landlord fix>m exercising any of the other rights and remedies available to Landlord. (g) Even though Tenant has breached this Lease and abandoned the Premises, this Lease shall continue in effect for so long as Landlord does not termmate Tenant's right to possession, and Landlord may enforce all its rights and remedies under this Lease, including the right to recover the rent as it becomes due under this Lease, Acts of maintenance or preservation or efforts to relet the Premises or the appointment of a receiver upon initiative of Landlord to protect Landlord's interest under this Lease shall not constitute a termination of Tenant's right to possession. No re-entty or taking possession of the Premises by Landlord shall be considered as an election to terminate this Lease, nor shall it cause a forfeiture of rent or other charges remaining to be paid during the balance of the Term hereof unless a written notice of such intent is given to Tenant or unless the termination hereof is decreed by a court of competent jurisdiction. Notwithstanding any reletting without termination by Landlord because of any default by Tenant, Landlord may at any time after such reletting elect to terminate this Lease for any such default. 19. Surrender of Premises. At the end of the Term or upon sooner termination of this Lease, Tenant shall peaceably deliver up to Landlord possession of the Premises, together with all buildings, apparatus and equipment then upon the Premises, all improvements in the same condition as received, or first installed, reasonable wear and tear and damage due to earthquake, fire or other casualty excepted. Tenant may, upon expiration or sooner termination of this Lease, remove all counters, signs and other trade fixtures installed by Tenant provided Tenant repairs any damage caused by such ' removal. Any property not so removed shall be deemed abandoned by Tenant and title to the same shall thereupon pass to Landlord, or at Landlord's election shall be removed by Landlord, at Tenant's sole cost and expense. 20. Tenant's Conduct of Business. (a) Tenant shall operate Tenant's business in the Premises so as to maximize the Gross Sales produced by such operation and shall maintain an adequate staff of employees and cany GRAYCARY\PA\10060265.3 37 1191396-901500 01/30/01 in the Premises at all times a stock of merchandise of such variety, size, character, selection, and quality as is reasonably designed to maximize Gross Sales. (b) Each and evety week during the Term, Tenant shall (i) be continuously open for business during Shopping Center hours, in accordance with Tenant's use ofthe Premises as described in the Basic Lease Infonnation, and as established by Landlord from time to time in Landlord's sole and absolute discretion (the "Shopping Center Hours"), and (ii) have its display windows, signs and advertising displays adequately illuminated continuously during the Shopping Center Hours and one-half (1/2) hour before and one-half (1/2) hour after Shopping Center Hours, provided that, in no event shall Tenant be obligated to be open (A) before 11:00 a.m. Pacific Time on Monday through Saturday or before 12:00 p.m. Pacific Time on Sunday, or (B) after 9:00 p.m. Pacific Time. Unless caused by events of casualty or condemnation or necessary repairs or aherations required and/or made by Landlord (except to the extent such aherations or repairs are necessitated by the acts or omissions ofTenant), on the second (2nd) and each subsequent occasion during any consecutive twelve (12) month period on which (i) for up to four (4) hours during any day Tenant is not open and conducting business during the Shopping Center Hours, then Tenant shall pay, in addition to the Minimum Annual Rental, and all other sums due hereunder, an amount equal to the per diem Minimum Annual Rental then in effect, calculated on the basis of a 30-day month; and (ii) for more than four (4) hours during any day Tenant is not open and conducting business as required hereunder during the Shopping Center Hours, then, at Landlord's option. Tenant shall pay, in addition to Minimum Annual Rental, and all other sums due hereunder, an amount equal to one hundred fifty percent (150%) of the per diem Minimum Annual Rental then in effect calculated on the basis of a 30-day month. Tenant acknowledges that failure to open and conduct business during Shopping Center Hours will be defrimental to the image of the Shopping Center; and resuh in decreased traffic in the Shopping Center, thereby potentially decreasing the sales volume of other tenants of the Shopping Center. The exact amount of the damages caused by Tenant's failure to be open during Shopping Center Hours is exfremely difficult and impracticable to fix; therefore, the parties agree that the above-described sums represent fair and reasonable estimates of such damages. (c) If at any time during the Term of this Lease, Tenant closes for a period as reasonably required with respect to a remodeling or renovation by Tenant on its own behalf, or for Tenant's assignee or sublessee of all or part of the Premises, or arising as a resuh of a casualty or temporaty taking, if Tenant reopens for business as soon as reasonably possible, and with respect to a remodeling and renovation, in no event later than thirty (30) days after the initial closure and not more than once during the Initial Term, the same shall not be deemed a vacation, abandonment or surrender. Nothing contained in this Section 20 shall otherwise limit Landlord's remedies if an Event of Default occurs, as set forth in Section 18 hereof. 21. Rules and Regulations. Tenant shall comply with die mles and regulations established by Landlord from time to time for the operation of the Shopping Center. Landlord shall, for the enforcement of the mles and regulations, have all remedies in this Lease provided for breach of the provisions hereof Tenant shall not incur a charge nor shall this Lease be terminated widi respect to the first two (2) violations of the rales and regulations occuning during any twelve (12) consecutive mondi period (Tenant shall have received written notice of any mles violations). With regard to the third and each subsequent violation ofthe mles and regulations occunmg during any twelve (12) consecutive month period of which Tenant receives written notice, Tenant shall pay Landlord as additional rental, in addition to GRAY CARY\PA\10060265.3 38 1191396-901500 01/30/01 and not in lieu of Landlord's other remedies, upon demand. One Hundred Dollars ($100.00) per violation. 22. Emplovee Parking. Landlord has designated an employee parking area for use by all employees in the Shopping Center, which employee parking area is identified on the site plan attached to this Lease as Exhibit "A," Tenant's employees shall utilize die employee parking area and shall not park in areas not so designated. 23. Attomevs' Fees. (a) The prevailing party in any action or proceeding by either party against the other under this Lease shall be entitled to recover court costs and the fees of its attomeys in such action or proceeding (whether at the adminisfrative, frial and appellate levels) in such amount as the court or adminisfrative body may adjudge reasonable, plus all costs and expenses incuned for title and lien searches, deposition costs and all other reasonable costs and expenses reasonably incuned by the prevailing party in connection with the subject proceeding. (b) For purposes hereof, the giving of any notice of default by Landlord shall be deemed to constitute part of an action or proceeding thereby entitling Landlord to reimbursement of its attorneys' fees and disbursements even if an action or proceeding Is not commenced; provided, in the absence of litigation. Tenant shall not be required to pay Landlord's attorneys' fees ifTenant, within the applicable notice period, takes conective action or notifies Landlord in writing of a legitimate dispute with regard to such claimed default. All sums due under this Section 23 shall be deemed addhional rental. Tenant's obligations hereunder shall survive the expiration and/or termination of this Lease. 24. Sale of Premises bv Landlord. If the Shopping Center is sold or otherwise transfened by Landlord, Landlord shall be released from any liability accruing after the sale or transfer upon any of the agreements, obligations, covenants or conditions, express or implied, herein contained in favor ofTenant, and in such event Tenant shall look solely to the successor in interest of Landlord for performance hereunder. This Lease shall not be affected by any such sale or fransfer, however, and Tenant's right to quiet possession of the Premises shall not be disturbed so long as an Event of Defauh has not occuned with respect to the payment of rental or other sums or an Event of Default has not otherwise occurred under the terms of this Lease, unless this Lease is otherwise terminated pursuant to its terms. Tenant shall attom to the purchaser or assignee, such attornment to be effective and self-operative without the execution of any further Instmments on the part ofany of the parties to this Lease. 25. Notices. Whenever in this Lease it is required or permitted that notice or demand be given or served by Landlord or Tenant to or on the odier, such notice or demand shall be in writing and shall be given or served by personal service, mail or reputable ovemight air courier service which provides written evidence of delivery. Notices or demands served by mail shall be deemed to be given or served at the time of delivety or attempted delivety when sent via certified or registered mail, postage prepaid, if to Landlord, addressed to Landlord and to Tenant at the addresses set forth in the Basic Lease GRAY CARYNPAM 0060265.3 39 1191396-901500 01/30/01 Information. If a notice or demand is served by a reputable ovemight air courier service, then it shall be deemed to be given or served at the time of delivety to the subject ovemight air courier service prepaid and addressed as provided above. Either party may change its address for notices or demands by written notice delivered as set forth above. Upon Landlord's request Tenant shall deliver a copy of all notices given by Tenant under this Lease to Landlord's lender. 26. Remedies. All rights and remedies of Landlord and Tenant herein created or otherwise existing at law or in equity are cumulative, and the exercise of one or more rights or remedies shall not be taken to exclude or waive the right to the exercise of any other. All such rights and remedies may be exercised and enforced concunently and whenever and as often as deemed desirable, 27. Successors and Assigns. All covenants, promises, conditions, representations and agreements herein contained shall be binding upon and inure to the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns (subject to the limitations on Transfers set forth in Section 16 hereof). 28. Representations. Neither Landlord, Landlord's agent nor any representative of Landlord, including any leasing agent acting on behalf of Landlord, has made any representation, promise or assurance with respect to the Shopping Center (including the manner in which the same shall be operated, managed and maintained), the Premises, the making of this Lease, Tenant's projected or likely sales volume, customer traffic or profitability, and no claim or liability, or cause for termmation, shall be asserted by Tenant against Landlord for, and Landlord shall not be liable by reason of, the breach of any representations, promises or assurances not expressly stated in this Lease. 29. Waiver. The failure of Landlord or Tenant to insist upon sfrict performance by the other party of any of the covenants, conditions and agreements of this Lease shall not be deemed a waiver of any of Landlord's or Tenant's rights or remedies and shall not be deemed a waiver of any subsequent breach or defauh by the other party of any of the covenants, conditions and agreements of this Lease. 30. Holding Over. IfTenant remains in possession of the Premises after the expiration or sooner termination of this Lease, all ofthe terms, covenants and agreements hereof shall continue to apply and bind Tenant so long as Tenant remains in possession insofar as the same are applicable, except that Tenant shall be deemed a tenant at sufferance and the Minimum Annual Rental shall be one and one-half (1 '/z) times die sum of the Minimum Annual Rental payable durmg the last twelve (12) months of die Term, prorated on a daily basis for each day that Tenant remains in possession, and Tenant shall indemnify Landlord against any and all claims, losses and liabilities for damages resuhing from Tenant's failure to timely surrender possession, including, without limitation, any claims made by any succeeding tenant. GRAYCARY\PA\10060265.3 40 1191396-901500 01/30/01 31. Interpretation. It is the parties' intention to create only the relationship of landlord and tenant and no provision hereof, or act of either party hereunder, shall be constmed as creating the relationship of principal and agent, partnership, joint venture or enterprise. 32. Covenant of Titie. Landlord warrants and represents that it has full right, power and authority to enter into this Lease, and that Tenant or any permitted assignee or sublessee ofTenant upon the payment of the rentals and performance of the covenants upon Tenant's part to be performed hereunder, shall and may peaceably and quietly have, hold and enjoy the Premises during the Term, subject to all of the terms and conditions contamed herein. 33. Waiver of Redemption. Tenant expressly waives any and all rights of redemption granted by or under any present or future laws ifTenant is evicted or dispossessed for any cause, or if Landlord obtains possession of the Premises by reason of the violation by Tenant of any ofthe covenants and conditions of this Lease or otherwise. The rights given to Landlord herein are in addition to any rights that may be given to Landlord by any statute or otherwise. 34. Fees. Landlord and Tenant wanant and represent that they have not had negotiations with or dealt with any realtor, broker, agent or other person or entity in connection with the negotiation and execution ofthis Lease, except Landlord's Broker, as set forth in the Basic Lease Information, as agent for Landlord, and Tenant's Broker, as set forth in the Basic Lease Infonnation, as agent for Tenant, and each shall pay and hold the other harmless from any cost expense or liability (including cost of suh and reasonable attomey's fees) for any compensation, commissions or charges claimed by any other realtor, broker, agent or other person or entity with respect to this Lease and the negotiation thereof and arising out of the actions of the indenmifying party. 35. Lease Status. (a) Tenant shall, at any time and from time to time, upon twenty (20) days prior written request by Landlord, execute, acknowledge and deliver to Landlord a certificate certifying: (a) that Tenant has accepted the Premises (or, ifTenant has not done so, diat Tenant has not accepted the Premises, and specifying the reasons therefor); (b) the Term Commencement Date, Rent Commencement Date and Term Expiration Date; (c) whether diere are then existing any defaults by Landlord in the perfonnance of its obligations under this Lease (and, if so, specifying the same); (d) that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in fiiU force and effect, as modified, and stating the date and nature of each modification); (e) the capacity of the person executing such certificate, and that such person is duly autiiorized to execute the same on behalf ofTenant (0 the date to which Minimum Annual Rental, Common Area Costs and other sums payable hereunder have been paid; (g) that no notice has been received by Tenant of any default which has not been cured, except as to defaults specified in the certificate; (h) the amount ofany security deposit and/or prepaid rent; and (i) such other matters as may be reasonably requested by Landlord. Any such certificate may be relied on by any prospective GRAY CARY\PA\1006026S.3 41 1191396-901500 01/30/01 purchaser, mortgagee or beneficiary under any deed of tmst affecting the Shopping Center or any part thereof 36. Recording. This Lease shall not be recorded. 37- Force Maieure. If either party is delayed or hindered in or prevented from the performance of any act required hereunder by reason of sfrikes, lockouts, labor troubles, inability to procure materials, failure of power, restrictive govemmental laws or regulations, riots, insunection, war or other reason of a like nature not the fauh of or within the reasonable control of the party so delayed, hindered or prevented from performing, then performance of such act shall be excused for the period of delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay. The provisions ofthis Section 37 shall not operate to excuse Tenant from the prompt payment of Minimum Annual Rental or any other payments as and when required by the terms of this Lease. 38. Constmction of Lease. Tenant has read and understands all parts of this Lease. In the constmction and interpretation of the terms of this Lease, the mle of constraction that a document is to be constraed most strictly against the party who prepared the same shall not be applied, it being agreed that both parties hereto have participated in the preparation of the final form of this Lease. 39. Captions. Captions used herein are for convenience and reference only, and shall in no way be deemed to explain, modify, amplify or aid in the interpretation, constmction or meaning of the provisions of this Lease. The use of the terms "hereof," "hereunder," and "herein" shall refer to this Lease as a whole, inclusive ofthe exhibits, except when noted otherwise. The use of the masculine or neuter genders herein shall include the masculine, feminine and neuter genders. The singular form shall include the plural when the context so requires. 40. Severability. If any provision ofthis Lease or any term, paragraph, sentence, clause, phrase or word appearing herein (collectively, a "provision") is judicially or adminisfratively held to be invalid or unenforceable for any reason, such holding shall not be deemed to affect, alter, modify or impair in any manner any other provision appearing herem and this Lease shall remain in full force and effect without the invalid or unenforceable provision. All charges, fees and other payments are deemed "additional rental" herein for the purpose of enforcing Landlord's remedies, and shall not be consfrued as "rent" in the event of imposition of rent confrols. 41. Objection to Statements. Tenant's failure to object to any statement, invoice or billing rendered by Landlord within a period of six (6) months after receipt thereof shall constitute Tenant's acquiescence with respect GRAY CARY\PA\10060265 J 42 1191396-901500 01/30/01 thereto and shall render such statement, invoice or billing an account stated between Landlord and Tenant. 42. Liabilitv of Landlord. All liability of Landlord under this Lease shall be limited to its mterest in the Shopping Center and any judgments rendered against Landlord shall be satisfied solely out of the proceeds of sale of its interest in the Shopping Center and/or proceeds of insurance which have been actually received by Landlord. No personal judgment shall lie against Landlord upon extinguishment of its interest in the Shopping Center and no judgment so rendered shall give rise to any right of execution or levy against Landlord's assets. The provisions hereof shall inure to Landlord's successors and assigns. The foregoing provisions are not designed to relieve Landlord from the performance ofany of Landlord's obligations under this Lease, but only to limit the personal liability of Landlord in case of recovety of a judgment against Landlord; nor shall the foregoing be deemed to lunit Tenant's rights to obtain injunctive relief or specific performance or to avail itself of any other right or remedy at law or under this Lease. 43. Effectiveness of Lease. The submission ofthis Lease for examination does not constitute a reservation of or option for the Premises or any other space within the Shopping Center, and shall vest no right in Tenant. | This Lease shall become effective as a Lease only upon execution and delivety thereof by all parties. i I 44. Execution of Documents. 1 (a) Tenant's failure or refusal to execute and deliver to Landlord any document or instrument as and when required under the terms of this Lease, or within ten business (10) days after Landlord's written request therefor in the event a delivery deadline is not expressly set forth herein, and after Landlord has given Tenant in wrhing another ten (10) days within which to execute and deliver the same shall constitute an Event of Default hereunder. (b) Tenant shall pay Landlord a reasonable fee of not more than Five Hundred Dollars ($500.00) to reimburse Landlord for administrative and legal expense associated with each separate request for consent of Landlord to a proposed Transfer pursuant to Section 16 of this Lease, 45. Corporate or Parmership Tenant. IfTenant is or will be a corporation, parmership, or limited liability company, each of die persons executing this Lease on behalf ofTenant hereby covenants and warrants that Tenant is a duly authorized and existing entity, that Tenant is authorized to do busmess m the State of Califomia; that Tenant has full power and authority to enter into this Lease; and that each and all of the persons executing this Lease on behalf ofTenant is duly authorized to do so. Upon Landlord's request Tenant shall provide Landlord with evidence reasonably satisfactoty to Landlord confirming the foregoing covenants and wananties. 46. Entire Agreement. This Lease and the exhibits attached hereto constitute the entire agreement between the parties with respect to the Premises. No amendment, modification of or supplement to this Lease shall be effective unless in writing and executed by Landlord and Tenant. GRAY CARYVPAM 0060265 J 43 1191396-901500 01/30/01 47. Time of Essence. Time is of die essence of this Lease and of all provisions hereof, except with respect to the delivety of possession of the Premises at the commencement of the Term. 48. Goveming Law. This Lease shall be constmed and enforced in accordance with the laws of the State of Califomia, without regard to its conflicts of laws principles. 49. Joint and Several Liabilitv. IfTenant consists of more than one person, partnership or corporation, then all such persons, partnerships and/or corporations shall be jointiy and severally liable as Tenant hereunder. 50. No Light. Air or Access Rights, \ \ Nothing herein contained shall be constmed to grant to or create in Tenant any easements of light, air or access. Tenant's rights being limited to the use and occupancy of the Premises and the license to use the Common Areas as thê may exist from time to time, all subject to the terms, covenants and conditions of this Lease. 51. Financial Statements. Tenant wanants that it has provided Landlofd-witii a tme, complete and accurate financial statement and Tenant acknowledges that Landlord has relied on such financial statement in entering into this Lease. Any breach of Tenant's warranty shall constitute a material default hereunder, 52. Survival. Tenant's obligation to pay Minimum Annual Rental, Taxes, Conunon Area Costs, insurance and all other charges due hereunder and applicable to the Term and all indemnities contained herein shall survive the expiration ofthis Lease. 53. Substitution of Premises. Landlord shall have a one-time right during the Term hereof, upon giving Tenant at least one hundred twenty (120) days written notice, to move Tenant to reasonably comparable space of approximately the same size as the Premises in one of the two areas (such space in such area to be selected by Landlord) shown by "cross hatching" on the site plan labeled "Relocation Areas" attached hereto at Exhibit A. Should Tenant refiise to permit Landlord to move Tenant to such new space as specified by Landlord in accordance with this Section 53, then Landlord shall have the right to terminate this Lease, effective thirty (30) days from the date of Landlord's delivety to Tenant of notice of such termination, and Landlord shall have no furtiier obligation or liability thereunder. If Landlord moves Tenant to such new space, then: (i) Landlord shall pay all reasonable moving expenses ofTenant directly atfributable to such substitution of space; (ii) prior to relocating Tenant, Landlord at its expense shall constmct utilities service (including plumbing connections and elecfrical outlets) and improvements in the new space which are at least comparable in type, quantity and quality to those dien existing at die current space; (iii) Landlord at its expense shall relocate to the new space Tenant's signs, trade fixmres, fumishings, equipment, supplies, inventory and other GRAY CARY\PA\1006026S J 44 1191396-901500 01/30/01 personal property (collectively, "Tenant's FF&E"); (iv) Landlord shall cause such relocation of Tenant's FF&E to be done at times that minimize material dismption to Tenant's business operations to the extent commercially reasonable; (v) Tenant shall receive abatement of Minimum Annual Rental on a daily pro-rated basis for each day, if any, that Tenant is unable to operate its business during Landlord's relocation of Tenant's FF&E; (vi) Landlord and Tenant shall each reasonably cooperate with the other to implement the move to the new space in an expedited manner in accordance with the terms of this Section 53; (vii) Landlord shall pay all incidental costs incurred by Tenant as a result of relocation, including costs incuned in changing addresses on stationety, business cards, directories, advertising, and other such items, so long as the sum of such incidental costs in the aggregate do not exceed the amount of Three Thousand and 00/100 Dollars ($3,000.00); (viii) this Lease and all of its terms, covenants and conditions shall remain in fiill force and effect and shall be deemed applicable to such new space, except that the site plan in Exhibit A hereto shall be modified to show the location of the new space; and (ix) such new space shall thereafter be deemed to be the "Premises," Notwithstanding the foregoing, if such new space is larger or smaller than the Premises, the Minimum Annual Rental and Tenant's Proportionate Share shall be adjusted GRAY CARY\PA\10060265.3 45 1191396-901500 01/30/01 proportionately, based upon the difference in square footage between the new space and the existing Premises. IN WITNESS WHEREOF the parties hereto have executed this Lease agreement on the date and year first above mentioned, the corporate party or parties by its or theh proper officers duly authorized hereunder. LANDLORD STEVENS CREEK, INC., a New Hampshire corporation Bv: '^a^C^ >;^OW\i e !>c>.oilCiV Its: SgMtng. Vic^ BLi»:.<.ip>E>«yr By: , Its: TENANT SUPERCUTS, INC., a Delaware corporation By: Bert M. Gross Its: Senior Vice President By: Its: GRAY C ARY\PA\10060265.3 46 119I396-90I500 01/30/01 EXHIBIT "A" SITE PLAN, AND RELOCATION AREAS [to be attached] Gray Cary\PA\10060265.3 1191396-901500 01/30/01 0LV65500 6102/5/21 r mpmmosozass | I 6- o: soo / / I “A” N, o a ] r > e 7Q rn z O m m X "u S T E V E N S C R E E K B O U L E V A R D Depic t ion of Premises i s f o r general i l l u s t r a t i o n only . Location and size Premises shown are appro:Z L Omm_ O> Em Om Z> S T E V’E N 5 (3f? E K1 5 CDU L E‘ . i?I Locationi eral u a io only. imations. Depiction of i i w x HIBI "A" L A U J R E N C E E X P U J T ; n STEVENS CREEK CENTRAL SAN JOSE, CALIFORNiA Q < > UJ _ j ID' Q Ui UJ QL O z m > m I - 0 m m 4 3 0 m y u m m o 0 2 h m ‘ I l lx n u l b l ln i l ) l EXPuJTJE SAN JOSE. CALIFORNIA D RNDA z" LLOMA IHN\w\N®Hw |®®wmwhuN EXHIBIT "B" LIST OF USE RESTRICTIONS No illegal, offensive, noisy or dangerous trade, business, activity or occupation. No outdoor selling of merchandise. No use which is incompatible with the operation of a ffrSt class retail and commercial shopping center. No use which physically interferes with the business conducted by any tenant No entertainment or recreational facility or fraining or educational facility is permitted. "Entertainment or recreational facility" includes, widiout limitation, a theater, camival, bowling alley, skating rink, amusement center, meeting hall, amusement park, sporting event or sports facility auditorium (or like place of public assembly), electronic or mechanical games arcade, pool or billiard hall, betting parlor, bingo parlor, health or aerobic spa or studio, gym, massage parlor, pomographic shop, adult bookstore, nightclub, "disco," dance hall, tavem, cocktail lounge, any facility for the on- premises consumption of alcoholic beverages except as an incidental part of the operation of a fiill service restaurant, or other place of public or private amusement. "Training or educational facility" includes, without limitation, a beauty school, barber college, place of instmction or any other operation catering primarily to students or trainees rather than to customers. No manufacturing operation, factoty, indusfrial usage, warehouse (otherthan retail warehouse), processing or rendering plant, establishment for selling cars (new or used), tmcks, trailers, mobile homes, flea market or "off track betting" operation. No use of more than 10,000 square feet of sales and display area for sale at discount prices of brand name apparel for the entire family. During the period when Safeway or any of its assignees or subtenants operates at the Shopping Center as a grocety supermarket there shall be no use of more than 1,500 square feet of sales area (including aisle space adjacent thereto) within any other store at the Shopping Center for the sale of food for off-premises consumption. The restriction of the immediately preceding sentence shall not apply to the sale of food by a restaurant (fast food or sit down), subject to the following conditions: (a) Except as permitted in clause "(b)" below, there shall be no use as a restaurant or food service operation, including, but not limited to, any take-out, fast-food, cafeteria, coffee shop, donut or bagel shop, yogurt shop, ice cream shop, deli or full service sit-down restaurant (collectively "Restaurant") within 300 feet of any wall defining the limh of Safeway's premises; (b) up to a total of 8,000 square feet of ground floor area of the portion of the Shopping Center designated by Landlord as "Building Area No. 2" may be used for the operation of Restaurants, provided that (i) no single Restaurant in Building Area No. 2 may exceed 4,000 square feet of ground floor area, (ii) each of the Restaurants within Building Area No. 2 shall only be single stoty, (iii) diere shall be no more than one Restaurant within the southeriy 122 feet of Building Area No. 2 (designated by Landlord as "Shops C-7 through C-11," inclusive, and refened to herein as die "Soutiiem Restaurant Area"), and such Restaurant shall not exceed 1,500 square feet of ground floor building area, and (iv) there shall be no more than a total of 3,000 square feet of ground floor building area withui the northerly 98 feet ofthe soutiieriy 220 feet of Building Area No. 2 (designated by Landlord as "Shops C-3 through C- 6," inclusive, and refened to herein as the "Middle Restaurant Area") used for the operation of Restaurants, and no single Restaurant in the Middle Restaurant Area shall exceed 2,000 square feet of ground floor building area; and (c) outdoor seating for Restaurants shall be permitted only withm Gray Cary\PA\l 0060265.3 1191396-901500 01/30/01 outdoor areas designated by Landlord pursuant to Exhibit A of the Safeway Lease (the square footage ofany outside seating area for Restaurants shall not be included within the foregoing square footage resfrictions), provided that (i) the total outdoor seating capacity shall not exceed 32 seats, and (ii) no more than 16 outdoor seats will be pennitted whhin the outdoor seating area adjacent to the Southem Restaurant Area. No restaurants or their successors doing business as the following: Burger King, Carl's Jr., Checker's, Chubby's, Del Taco, Foster Freeze, Hot n' Now, Hardees, In and Out Burgers, Jack-in- the Box, Rally's, Roy Rogers, Taco Bell, Wendy's, or White Castie. No use of more than 1,000 square feet of retail sales area for the sale or display of linens, bedding, towels, bath items, small appliances, china (except fine china), flatware, table top items and/or utensils. No dty cleaning business. No use as a taqueria, Mexican or chicken restaurant. No use as a restaurant if 15% or more of such restaurant's Gross Sales or menu items consist of "Asian Foods" or foods prepared with a wok. For the purpose of this restriction, the term "Asian Foods" includes, but is not limited to, Mongolian, Chinese, Viemamese, Thai, Hawaiian and Korean foods; provided however. "Asian Foods" does not include Japanese foods. No use for the sale or lease of wireless two-way telephones and services or products and services related thereto (but not one-way or two-way pagers). No use as a copy center offering full and self-serve copying, duplicating and imaging services, computer and typewriter rental, and graphic design services, including desktop publishing, bindety and finishing services, and the incidental sale of related fax services and office supplies, but excluding (i) an office supply tenant that leases 20,000 square feet or more at die Shopping Center, and/or (ii) the use of copiers, duplicating or imaging equipment or services, computers, typewriters, graphic design equipment or services, desktop publishing, bindety and finishing operations or equipment and/or the sale or use of fax services and office supplies that occur as operations that are incidental to the primaty businesses of other tenants of the Shopping Center, No use as a temporaty employment agency or personnel services business for placing accounting, legal, financial, information technology, data processing or general office clerical personnel in temporaty or permanent positions (whether confract or employee positions). No use of more than 10 percent (not to exceed 5,000 square feet) of leasable square footage of a tenant's leased premises to sell toys, and no use of more dian 20 percent (not to exceed 5,000 square feet) of leasable square footage of a tenant's leased premises to sell video games or stuffed anunals. The preceding use restrictions shall not apply (i) to die use of up to 1,500 square feet of leasable square feet of a tenant's leased premises to sell games and hobby supplies, or (ii) if KB Toyworks is not currently selling the particular toy, video game, or stuffed animal. No use as an airline city ticket office. No use for the sale of (a) freshly ground or whole coffee beans, (b) espresso or espresso- based coffee drinks or coffee-based drinks, or (c) gounnet, brand-identified brewed coffee and tea. Gray Caiy\PA\1006026S.3 1191396-901500 01/30/01 This restriction shall also apply to kiosks and carts in the Shopping Center. Notwithstanding the foregoing, (i) other tenants located in the Shopping Center may sell brewed coffee that is gourmet or brand-identified as long as such coffee is not advertised as such in signage or otherwise visible to the general public (other than on menus) and (ii) any tenant of the Shopping Center occupying more than 10,000 square feet and any full service, sit-down restaurants located in the Shoppmg Center may sell items (b) and (c) above, as long as the gross sales thereof in any calendar mondi do not exceed 10% ofsuch tenant's gross sales in such month. Gray Caiy\P.A\l 0060265.3 1191396-901500 ointuoi EXHIBIT "C" WORK LETTER Landlord's Work. (a) Landlord shall cause to be constmcted, pursuant to Landlord's design and plans, at Landlord's sole expense using a confractor designated by Landlord, the following initial improvements ("Landlord's Work") in die Premises following Landlord's approval plans and specifications therefor and acceptance of a contractor's final bid, in Landlord's sole discretion: (i) HVAC System: One (1) existing four (4)-ton unit per Landlord's design and distiibuted throughout the Premises in conformance to applicable codes of the City of San Jose and County of Santa Clara; (ii) Restroom: One (1) resfroom, which shall meet applicable requirements of the federal Americans with Disabilities Act, located in an area ofthe Premises to be designated by Landlord, and outfitted with one (1) toilet one (1) lavatoty, one (1) exhaust fan, one (1) standard light fixture, and one (1) electrical wall duplex outiet; (iii) Storefront: Pursuant to Landlord's design, one (1) customer entrance door shall be installed in the storefront of the Premises; (iv) Electrical Service Panel: Existing one hundred (100) amp, three (3)- phase electrical service panel; (v) Utilities Meters: Existing metering for the utilities to be supplied by Landlord pursuant to the Lease; (vi) Demising Wali(s): Sheefrock wall(s) to demise existing Suite 5136 into two (2) portions, to create the space for Premises in one of such portions, such wall(s) to be taped, patched and repaired as necessary, and ready for finish by Tenant; (vii) Floor: Existing; vinyl tile to remain; (viii) Ceiling and Lighting: Existing ceiling and lighting, subject to Tenant's inspection upon Landlord's completion of demising ofthe Premises, to confirm that such ceiling and lightmg is in good condition and repair; (ix) Fire Sprinklers: Fire sprinklers shall conform to applicable codes of the City of San Jose and County of Santa Clara, for Tenant's permitted use; (x) Rear Access to Premises: Existing; (xi) Plumbing in Premises Related to Prior Salon Use Thereat: Shall remain "as is, where is," subject to Tenant's inspection upon Landlord's completion of demising of the Premises, to confirm that such plumbing is in good condition and repair, and (xii) Sign Junction Box with Timer: Existing. Gray Cary^AM 0060265.3 1191396-901500 01/30/01 (b) Landlord's new constmction of Landlord's Work shall be performed in a good and workmanlike manner, and shall comply with requirements of applicable law, including, but not limited to, the requirements of applicable building codes, regulations and ordinances of the City of San Jose and the County of Santa Clara. (c) Landlord shall use commercially reasonable efforts to expeditiously cause constmction of Landlord's Work to achieve Landlord's Substantial Completion, subject to Tenant's Delay (defined in Section 7 of this Exhibit C) and Force Majeure. As used herein, the term "Landlord's Substantial Completion" means that die Landlord's Work shall have been substantially completed, as reasonably determined by Landlord, in conformance to the requirements of Section 1 hereof and any change orders of Landlord regarding the Landlord's Woric, except for minor "Punch List" items that reasonably need to be corrected. Upon receipt of notice from Landlord that Landlord's Substantial Completion has occuned. Tenant and Landlord shall promptly anange a date and time to meet and walk the Premises to prepare a Punch List regarding the Landlord's Work. Landlord shall use commercially reasonable efforts to resolve the Punch List items at its expense within thirty (30) days or as soon thereafter as may reasonably be needed to achieve such resolution. (d) Tenant shall have no obligation to remove, or to pay for the removal of, the demising wall installed by Landlord as part of Landlord's Work, at the end of the Term or upon sooner termination of the Lease. 2. Tenant's Alterations. (a) It shall be Tenant's obligation to pay for at its sole expense and to cause installation and constmction of all of Tenant's Alterations, in accordance with Section 9 ofthe Lease. Tenant's Alterations shall include, but are not limited to, the following: (i) All trade fixtures and improvements to be placed in or affixed to the Premises which may reasonably be required for die conduct of Tenant's business within the Premises; (ii) All interior wall coverings, and all wall paint; (iii) All floor coverings; (iv) Any special electrical, telecommunications, and/or plumbing requirements, including but not limited to hot water heater(s) that have the prior written approval of Landlord; (v) Tenant's signs, which shall comply with the Landlord's sign criteria and any applicable City of San Jose ordinances; (vi) A water check meter pursuant to Section 5(b) of the Lease; and (vii) All interior and exterior signing in accordance with Landlord's Sign Criteria, including time clocks. (b) Tenant hereby agrees that without limitation, if any of Tenant's Alterations require repairs, changes in, alterations to, or additions to the Shopping Center roof. Shopping Center fire protection systems. Shopping Center telecommunications systems. Shopping Center plumbing, GrayCary\PA\10060265J 1191396-901500 01/30/01 electrical or other utility-related systems, or Shopping Center HVAC systems ("Shoppmg Center Changes"), only Landlord's designated contractor shall be used for any such services. Tenant shall be solely responsible to pay any and all costs of any Shopping Center Changes that are made due to Tenant's Alterations. (c) Tenant hereby agrees to permit Landlord, without any charge to Landlord or any other tenant ofthe Shopping Center, to provide plumbing, electrical and other utility-related, and telecommunications mns from and to the other stores and facilities in the Shopping Center to pass through concealed areas of the Premises. (d) Constmction of the Tenant's Alterations shall be performed in a good and workmanlike manner, and shall comply with applicable laws, including, but not limited to, .the requirements of applicable building codes, regulations and ordinances of the City of San Jose and the County of Santa Clara. (e) Tenant, or Tenant's general contractor, at its expense shall carty Builder's Risk Insurance throughout the entire duration of constmction or installation of Tenant's Alterations. Such insurance shall name the Landlord as an additional insured by endorsement to the policy, a copy of which policy and endorsement shall be delivered to Landlord prior to commencement of any Alterations. Such insurance shall have limits reasonably sufficient to cover the replacement cost of all property placed at risk by the Alterations. 3. Approval of Plans. (a) On or before the thirtieth (30*) day after die Lease is fully signed by Landlord and Tenant, Tenant shall prepare and deliver to Landlord for Landlord's approval plans and specifications ("Tenant's Plans") for constmction and installation of Tenant's Alterations. (b) Within ten (10) business days after receipt of Tenant's Plans, Landlord shall approve same or deliver its specific written objections thereto. Landlord shall not unreasonably withhold approval of Tenant's Plans submitted by Tenant. If Landlord so disapproves Tenant's Plans, in whole or in part, then the parties shall confer and negotiate in good faith as expeditiously as possible to reach agreement. As may be required by such agreement between the parties. Tenant shall revise Tenant's Plans. Tenant thereafter shall submit Tenant's Plans to govemment authorities, as may be required by law or regulation, to obtain govemmental approval of same. Immediately after all such govemmental approvals have been obtained, four (4) copies of Tenant's Plans, as may have been revised and approved by Landlord, shall be inhialed and dated by Landlord and Tenant. Tenant's Plans, and all Change Orders to Tenant's Plans specifically permitted pursuant to Section 5 below, shall be refened to herein as the "Approved Plans." Tenant shall deliver to Landlord a copy of the Approved Plans within five (5) calendar days after receipt of all necessary govemmental approvals. (c) Tenant shall use commercially reasonable efforts to cause constmction and installation of Tenant's Alterations to be substantially completed (in conformance with the requirements of Section 2 hereof, the Approved Plans, governmental sign-offs and any Change Orders), excluding conection of minor "Punch List" items (collectively, "Tenant's Substantial Completion"), on or before the nmetieth (90"') day after the date of Landlord's delivety of possession of the Premises to Tenant (as such phrase is defined in the Basic Lease Information under die heading "Term Commencement Date"). Tenant shall immediately provide written notice to Landlord Gray Cary\PA\10060265.3 1191396-901500 01/30/01 when Tenant's Substantial Completion has been achieved, except for minor "Punch List" items, and Landlord, upon receipt of such notice and at Landlord's option, may schedule a date and time to meet and walk the Premises with Tenant to prepare a Punch List with respect to Tenant's Alterations. Even if Landlord elects not to participate in such walk, Tenant shall prepare a thorough Punch List and shall promptly deliver a copy of same to Landlord. Tenant shall use commercially reasonable efforts to resolve all of the Punch List items as soon as reasonably possible, and in no event later than twenty-one (21) days after the date of Tenant's Substantial Completion. 4. Tenant Improvement Allowance. Landlord shall provide Tenant with a "Tenant Improvement Allowance" for Alterations (not including Tenant's fixtures, fumishings, equipment, inventoty, supplies or other personal property) constmcted by Tenant at the Premises pursuant to the Approved Plans, in an amount equal to the lesser of: (i) the cost of Tenant's Alterations pursuant to the Approved Plans; or (ii) the sum of Seven Thousand Nine Hundred Eighty and 00/100 Dollars ($7,980.00, based on Six and 00/100 Dollars [$6.00] per square foot). Notwitiistanding any odier provision ofthis Exhibit C. the Tenant Improvement Allowance shall be increased by the additional amount of Two Thousand Six Hundred Sixty and 00/100 Dollars ($2,660.00, based on Two and 00/100 Dollars [$2.00] per square foot the aggregate maximum total of the Tenant Improvement Allowance in such a case would be Ten Thousand Six Hundred Forty and 00/100 Dollars [$10,640.00]), with such addhional amount to be applied to Tenant's constmction of a second bathroom at the Premises in accordance with this Exhibh C (including, but not limited to. Tenant's compliance with requirements of the federal Americans with DisabiHties Act applicable to such bathroom), ifTenant provides Landlord with reasonable written evidence establishing that the City of San Jose requires a second bathroom at the Premises in order for Tenant to use the Premises for the permitted use described in the Basic Lease Information. The Tenant Improvement Allowance shall be paid by Landlord on a reimbursement basis only, following Tenant's Substantial Completion of the Alterations and following delivety to Landlord of copies of pertinent billing statements, invoices, and executed unconditional waivers and releases of lien rights upon final payment from all contractors, subcontractors and materialmen providing services or materials for the Alterations (in the form provided by Cal. Civil Code Section 3262(d)(4), as may be amended), 5. Change Orders. IfTenant shall require changes ("Change Orders") to Tenant's Plans as previously approved by Landlord and Tenant, Tenant shall deliver to the Landlord a written request for Landlord's approval of same. If Landlord does not approve of same. Landlord shall advise Tenant of die revisions required. Tenant shall revise and redeliver die plans and specifications to Landlord within five (5) calendar days of receipt of Landlord's disapproval and advice, or Tenant shall be deemed to have abandoned its request for such Change Order. Such revisions of the plans and specifications by Tenant must conform to Landlord's specified revisions, or they shall be deemed rejected by Landlord. Tenant shall pay for all preparation and revision of plans, specifications, working drawings, govemmental approvals, and constmction of Change Orders. 6. Access Bv Tenant During the Earlv Occupancv Period. (a) Tenant its agents, representatives, contractors, workmen, mechanics and suppliers (the "Tenant Parties") shall be allowed to enter the Premises during the Early Occupancy Period to prepare the Premises for Tenant's use and occupancy, subject to the terms and conditions of this Section 6 and Exhibit C. Such authority to enter, however, shall constitute a revocable license only, and shall be conditioned upon Tenant's: Gray Cary\PA\10060265.3 1191395-901500 01/30/01 (i) working in harmony with Landlord and Landlord's agents, representatives, contractors, workmen, mechanics and suppliers, and with govemmental authorities with jurisdiction over the Premises and the Shopping Center, and with other tenants, occupants, customers, suppliers, vendors, and invitees of the Shopping Center; (ii) dopooiting with Landlord in advaiite uf any wmk byllie Tmiaiit' Batties-security'̂ atisfactoty-to-fcandloFd for the coniplctioii tiiciLuf, and (iii) fumishing to Landlord's reasonable satisfaction evidence of the existence of insurance coverage, mcluding copies of policies and endorsements, obtained at no expense to Landlord, in amounts and types satisfactoty to secure against liabilities and claims which may arise out of such entty and work, including but not limited to (A) issuance of a certificate of insurance and a policy endorsement naming Landlord as an additional insured for public liability insurance coverage, and (B) satisfying the Builder's Risk Insurance requirements of Section 2(e) hereof Such insurance requirements as set forth in this Section 6(a)(iii) shall apply to Tenant's Alterations for the duration of the work, irrespective of whether Tenant requests entry during the Early Occupancy Period. (b) Tenant agrees that Landlord shall not be liable in any way for any injuty, loss or damage which may occur to any of Tenant's property, installations in or constmction at the Premises, or to any other property or person, and which are related to or arise from any activity, act or omission of a Tenant Party. Tenant shall reimburse, indenmify, defend, and hold harmless Landlord from all liabilities, losses, costs, damages, fees and expenses arising out of the activities, acts or omissions of any ofthe Tenant Parties in or about the Premises or the Shopping Center with respect to Tenant's Alterations, which obligation ofTenant shall survive indefinitely. 7. Tenant's Delav. The following shall constitute "Tenant's Delay": (a) Tenant's request for a deviation in Landlord's Work from that provided in Section 1(a) hereof; or (b) Interference by Tenant, its agents, or contractors or any persons employed by them with Landlord's performance of the Landlord's Work; or (c) Any other act or omission by Tenant its agents, or confractors or persons employed by them which materially delays performance of Landlord's Work. 8. Miscellaneous. (a) Terms used in this Exhibit C shall have the meanings assigned to them in the Lease. (b) As used in tiiis Exhibit C. the term "business day" shall mean Monday through Friday, not including any holiday officially recognized by die governments ofthe State of Califomia or the United States. In die event a deadline or due date falls on a Saturday, Sunday, or such holiday, the date shall be extended to the next business day. Gray Cary\PA\10060265.3 1191396-901500 01/30/01 FIRST LEASE AMENDMENT THIS FIRST LEASE AMENDMENT (tiiis "Amendment") dated as of tiiis ̂ -Q^day of '̂v»V̂ J May, 2006, by and between STEVENS CREEK, INC., a New Hampshire corporation ("Landlord"), and SUPERCUTS, INC., a Delaware corporation ("Tenant"), widi regard to that certain Stevens Creek Shopping Center Lease dated as of Januaty 25,2001 between Landlord and Tenant (the "Lease"), for the premises (the "Premises") within the shopping center commonly known as Stevens Creek Shopping Center (the "Shopping Center") located at 5128 Stevens Creek Boulevard, San Jose, Califomia, as more particularly described m the Lease. RECITALS A. The Premises currently consists of space at the Shoppmg Center containing approximately 1,330 square feet, a demised portion of existing suite 5136. B. Tenant has exercised the option in Article 1(c) of the Lease to extend the Term for an additional five (5) years ("Option"). C. In cormection with Tenant's exercise of the Option, Landlord and Tenant deske to amend the Lease pursuant to thie terms and conditions below. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and in the Lease and intending to be legally bound hereby, the parties agree to amend the Lease as follows: AGREEMENT 1. Exercise of Option. The parties acknowledge and agree that Tenant ahready exercised the Option by providing Landlord with the letter dated Januaty 31,2006 and attached hereto as Exhibit A 2. Option Term. The Terra of the Lease is hereby extended and shall expire on July 31,2011 ("Option Term Expiration Date"), unless sooner terminated in accordance with the terms ofthe Lease. That portion ofthe Term commencmg August 1,2006 ("Extension Date") and ending on the Option Term Expiration Date shall be referred to herein as the "Option Term". 3. Rent for the Option Term. As of the Extension Date, the schedule of Minimum Annual Rental payable widi respect to die Premises during the Option Term is the following: Period Annual Rate Annual Monthly Per Rentable Base Rent Base Rent Square Foot Mos. 1-12 $36.60 $48,678.00 $4,056.50 Mos. 13-24 $37.88 $50,380.40 $4,198.37 Mos. 25-36 $39.21 $52,149.30 $4,345.78 Mos. 37-48 $40.58 $53,971.40 $4,497.62 Mos. 49-60 S42.00 $55,860.00 $4,655.00 PA\10458257.I 347803-901500 Tenant shall pay such monthly instalhnents of Minimum Aimual Rental in accordance with the terms of the Lease. 4. No finther Options to Extend. Tenant has exercised its option to extend the Term ofthe Lease, as provided in Article 1(c) ofthe Lease and has no fifrther rights to extend the term of the Lease. 5. Defined Terms. Except as expressly set forth herein to the confraty, all defined terms used in this Amendment shall have the same meanings as attributed to such terms in the Lease. 6. Ratification, Except as modified hereby, the Lease is hereby ratified and affirmed by Landlord and Tenant and remains in fiill force and effect. 7. Brokers. Landlord and Tenant each represent and warrant to the other that they have had no deahngs witii any real estate broker, agent or finder in connection with the negotiation or execution of this Amendment. Each party hereto shall indemnify and hold hannless the other party from any claims, includmg reasonable attorneys' fees, by a broker, agent or finder for any leasing commission which may be claimed as a result of the actions of the indemnifying party. 8. Counterparts. This Amendment may be executed in any nmnber of coimterparts, each of which shall be deemed to be an original and all of which togetiier shall be deemed one and the same instrument. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] -2- PA\I0458257.I 347803-901500 IN WITNESS WHEREOF, Landlord and Tenant have caused tiiis Amendment to be executed as of the day and year furst above written. LANDLORD: STEVENS G a New TENANT: SUPERCUTS, INC., a Delaware corporation Z 7 Name: /Scott-SuHtvan Its: Assistant Secretary PA\I0458257.1 347803-901500 EXHIBIT A See attached PA\I0458257.I 347803-901500 58765500 6102/5/21 \l 58257.l - I HI I ach sinm:uTs FEB - 1 2006 7201 METRO BOULEVARD •MINNEAPOLIS, MINNESOTA 55439 • (952) 947-'7777 • FAX (952) 947-7301 VIA OVERNIGHT DEUVERY January 31,2006 Stevens Creek, Inc. c/o Shelter Bay Retail Group 655 Redwood Highway, Ste. 177 Mill Valley, CA 94941 RE: Supercuts - Store No. 80003 Stevens Creek Shopping Center - San Jose, Califomia Dear Sir/Madam: Our Lease forthe above-referenced location is due to expire on July 31,2006. Pursuant to the request of our Franchisee/Sublessee, Thomas Meehan, this letter shall constitute formal written notice that Supercuts, Inc. elects to exercise its five (5) year option period which option period shall commence on August 1,2006, and continue through July 31, 2011, in accordance with the terms and provisions of Paragraph 1 (c) of the Lease Agreement If there should be any questions or concerns, I can be reached at (952) 947-7215. Sincerely, SUPERCUTS, INC. Rea L. Saucedo Senior Paralegal RLS Fr80003.optn cc: Thomas Meehan (Via Facsimile Only) Eric Bakken Josh Gardner Pete Lavanger Lori Haskamp SECOND AMENDMENT TO LEASE THIS SECOND AMENDMENT TO LEASE (this "Amendment") dated this 6tii day of May, 2011, is by and between CPT STEVENS C R E E K CENTRAL, LLC, a Delaware limited liability company ("Landlord"), as successor in interest to Stevens Creek, Inc., a New Hampshire corporation ("Prior Owner"), and SUPERCUTS, INC., a Delaware corporation ("Tenant"). RECITALS A. Prior Owner and Tenant entered into that certain Stevens Creek Shopping Center Lease dated Januaty 25,2001, as amended by that certain First Lease Amendment dated July 20, 2006 (collectively, the "Lease"), for those certain premises containing approximately 1,330 square feet ("Premises") in the Stevens Creek Shopping Center, San Jose, California, as more particularly described in the Lease. B. Landlord acquired the Stevens Creek Shopping Center on October 14, 2009 and the Lease was assigned from Prior Owner to Landlord pursuant to that certain Assignment of Lessor's Interest in Leases dated October 14, 2009. C. Landlord and Tenant now desire to modify the Lease upon the terms and conditions hereinafter provided. NOW, THEREFORE, in consideration of the covenants set forth in this Amendment and other valuable consideration, the receipt and adequacy of which is hereby acknowledged. Landlord and Tenant hereby agree to amend the Lease as follows: AGREEMENT 1. Definitions. Except as otherwise set forth in this Amendment the terms not defmed herein shall have the meaning set forth in the Lease. 2. Extension of Term. The Term of the Lease is hereby extended for ten (10) years commencing on August 1, 2011 and expiring on July 31, 2021 (the "Extended Term"), unless sooner terminated in accordance with the provisions of the Lease. The Extended Term shall be on all ofthe same terms and conditions ofthe existing Lease, except the Minimum Annual Rental shall be adjusted as set forth below in Paragraph 3. EAS™44I1539.5 210407-000136 3. Minimum Annual Rental. The Minimum Annual Rental during the Extended Term shall be as follows: Time Period Minimum Annual Rental per Annum Dollars per Square Foot per Annum Monthly Payment of Minimum Annual Rental August 1, 2011 to January 31, 2014 $55,860.00 $42.00 $4,655.00 Februaty 1, 2014 to July 31, 2016 $59,770.20 $44.94 $4,980.85 August 1,2016 to January 31,2019 $63,954.11 $48.09 $5,329.51 . Febmaty 1, 2019 to July 31, 2021 68,430.90 51.45 $5,702.58 4. Minimum Liability Insurance Required bv Tenant The Minimum Liability Insurance Required for Tenant set forth in the Basic Lease Information and Section 12(b) of the Lease is hereby increased to Three Million Dollars ($3,000,000) and Tenant shall provide Landlord with a certificate of insurance indicating this increased amount within thirty (30) days of the date of this Amendment. 5. Right to Self-Insure Personal Propertv. Notwithstanding the terms and provisions ofthe Lease to the contrary, Tenant may self-insure for any loss or damage of the type covered by a standard "All-Risk" policy with respect to Tenant's property, provided that Tenant's net worth individually exceeds $10,000,000.00. IfTenant elects to self-insure Tenant's property. Tenant's waiver in Section 12(d) of the Lease shall not be limited to the extent of the proceeds received from insurance and Tenant's waiver of Landlord from loss or damage to Tenant's property located on or about the Premises or the Shopping Center shall be absolute. 6. Roof Rights. Notwithstanding the terms and provisions of the Lease to the contrary, ifTenant requires the use of telecommunication services solely for the purpose of its own operations within the Premises, including without limitation satellite service, Internet access, credit card verification or other data transmission. Tenant may place telecommunication equipment or other related items ("Equipment") on the roof or elsewhere outside the Premises, in a location approved by Landlord in its sole discretion, provided that the cost of installation and removal of all such Equipment shall be borne solely by Tenant and provided further that Tenant repairs any damage caused by the installation or removal of all such Equipment. Tenant's installation ofany such Equipment shall be in conformance with all of the terms and conditions of Article 9 ofthe Lease and Tenant shall be required to remove such Equipment upon the expiration or earlier tennination of the Lease. IfTenant needs to make any penetration of the roof in order to install the Equipment then Tenant must obtain Landlord's prior approval to the contractor making such penetration of the roof and Landlord shall have the right to require that Tenant use Landlord's roof contractor for any penetration of the roof Tenant shall use the EAST\44411539.5 210407-000136 Equipment so as not to cause any interference to other tenants in the Shopping Center or with any other tenant's communication equipment and not to damage any portion of the Shopping Center or interfere with the normal operation of the Shopping Center and Tenant hereby agrees to indemnify, defend and hold Landlord harmless from and against any and all claims, costs, damages, expenses and liabilities (including attorneys' fees) arising out of Tenant's failure to comply with the provisions of this Paragraph 6, except to the extent same is caused by the negligence or willful misconduct of Landlord. Should any interference occur, Tenant shall take all necessary steps as soon as reasonably possible and no later than three (3) calendar days following such occunence to correct such interference. If such interference continues after such three (3) day period. Tenant shall inimediately cease operating such Equipment until such interference is conected or remedied to Landlord's satisfaction. Tenant acknowledges that Landlord has granted and/or may grant telecommunication rights to other tenants and occupants ofthe Shopping Center and to telecommunication service providers and in no event shall Landlord be liable to Tenant for any interference of the same with such Equipment. Landlord makes no representation that the Equipment will be able to receive or transmit communication signals without interference or disturbance. Tenant shall (a) be solely responsible for any damage caused as a result of the Equipment, (b) promptly pay any tax, license or permit fees charged pursuant to any laws or regulations in connection with the installation, maintenance or use ofthe Equipment and comply with all precautions and safeguards recommended by all govemmental authorities, (c) pay for all necessary repairs, replacements to or maintenance of the Equipment and (d) be responsible for any modifications, additions or repairs to building systems or infrasfructure which are required by reason of the installation or operation of the Equipment. . 7. Landlord's Address for Notices, are hereby changed to the following: Landlord's addresses for notices under the Lease Landlord's Address for Notices: CPT Stevens Creek Cenfral, LLC c/o AEW Capital Management Two Seaport Lane Boston, MA 02210 Attn: Asset Management Landlord's Property Manager: CB Richard Ellis 225 W. Santa Clara Street Suite 1050 San Jose, CA95113 Attn:Sandy Izumi, Senior Real Estate Manager Phone: (408)453-7483 Email: sandy.izumi@cbre.com 8. Brokers. Landlord and Tenant acknowledge that CB Richard Ellis ("Broker") is acting as the broker for Landlord in tiiis transaction, and that Landlord agrees to pay Broker a commission pursuant to a separate written agreement between Landlord and Broker. Except for Broker, each party represents that it has not engaged any other broker, finder or other agent in connection with this Amendment. Each of the parties hereto shall each indemnify, defend and hold the other harmless from and against any and all claims for brokerage commissions, fees or EAS'n44411539.5 210407-000136 other compensation arising out of or resulting from any breach of the foregoing covenants, wananties and representations. 9. Ratification. Except as modified this Amendment the Lease is hereby ratified and affinned by Landlord and Tenant and remains in full force and effect. 10. Counterparts. This Amendment may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which taken together shall be deemed one and the same instmment. LANDLORD TENANT CPT STEVENS CREEK CENTRAL, LLC, SUPERCUTS, INC., a Delaware corporation a Delaware limited liability company By: Title: DanielJ. Bradley ' Authorized bignaiory Title: Scott Sullivan Vice President, Law EASTV44411539.5 210407-000136 WEINGARTEN REALTY INVESTORS POST OFFICE BOX 924133 HOUSTON, TEXAS 77292-4133 MAIN: (713) 866-6000 • TOLL FREE: (800) 688-8865 CERTIFIED MAIL RETURN RECEIPT REQUESTED November 2019 Supercuts, Inc. Attn: Legal Department 7201 Metro Blvd. Minneapolis, MN 55439 RE: Supercuts at Stevens Creek Central Shopping Center, San Jose, Califomia Dear Tenant: You are hereby notified that as of the date hereof, CPT Stevens Creek Central, LLC (the "Former Owner"), transferred, assigned, sold and conveyed all of its interest in the referenced retail shopping center to Wemgarten Realty Investors (the "New Owner"). Effective as of the date above, all lease payments and other charges due under your lease (including any past due rent payments) are to be paid to the New Owner at the following address: WEINGARTEN REALTY INVESTORS P. O. Box 301074 DALLAS, TX 75303-1074 The on-site management ofthe property will be handled by Weingarten Realty Investors. Any notices relating to operational matters at the shopping center should be sent to Weingarten Realty Investors, P. O. Box 924133, Houston, Texas 77292-4133, Attention: Property Management. All legal notices to the Landlord should be sent to Weingarten Realty Investors, P. O. Box 924133, Houston, Texas 77292-4133, Attention: General Counsel. The New Owner acknowledges that it is now responsible for your security deposit, in the amount of $0.00. Stevens Creek Central Tenant Notice Letter Page I If under your present lease agreement you are required to fumish a certificate of liability insurance to the landlord, please obtain such certificate promptly, Weingarten Realty Investors as insured, and send the required certificates to Weingarten Realty hivestors at the above address. Sincerely, NEW OWNER: WEINGARTEN REALTY INVESTORS, a Texas real estate investment tmst Bv: ' ^ - ^ A A v e . 4 ^ Marc A. Kasner Vice President/Associate General Counsel Stevens Creek Central Tenant Notice Letter Page 2 FORMER OWNER: CPT STEVENS CREEK CENTRAL, LLC, a Delaware limited liability company Bv: Name: ^-^ ^ Daitt̂ l J. Bradley Title: Authorized SignatA^orized Signatory Stevens Creek Central Tenant Notice Letter Page 3 96765500 6102/5/21 NER: RAL, C, el ar mi e a il pa y Name: v V DaIfiQlJ.Bradley Title: Authorized SignatAnythorized Signatory re entral enant Notice Let er Page 3 a ru ru Ln m m r- m m • • a o r^ a IT HI CD r- U.S. Postal Service™ CERTIFIED MAIL® RECEIPT Domestic Mail Only For delivery informalion, visit our website at wwvi/.usps.com CeitiRett Extras* Q Retum Receipt (hairicopy) 3_ • Rotum Receipt (electTonlc) S. • Certined Mall Rcstrtcied OoDvciy $. Q Adult Signature Required $ n Adult Signature Restricted DeUvery $. fAfmHRISTINE ANDERSON. esappfopriatei} Postage , Supercuts, inc. •Postmark Here Total F ... - Attn: Legal Departmient - ' " • \- §5^7,7201 Metro Blvd. ...... Minneapolis, MN 55439 ^'i.i.i„i.r..i.,i..ii.i.i.,.i„ii MAK/Stevens Creek/22740 PS F o r m 3 8 0 0 , A p r i l 2015 PSN 7530 02 000-9047 See Reverse for Instructions SENDER: COMPLETE THIS SECTION Complete items 1,2, and 3. Print your name and address on the reverse so that we can return the card to you. Attach this card to the back of the mailpiece, or on the front if space permits. 1 Artir:lfi Arlrlressed to: Supercuts, Inc. Attn: Legal Departinent 720! Metro Blvd. Minneapolis, MN 5.5439 lil>lMl.r„l,.l„llrl.l.Ml..ll MA K/Stevcns Crcek/22740 llllillllll 9590 9402 5304 9154 1556 31 2. Article Number (Transfer from service label) v a n D7DD DDDE S733 COMPLETE THIS SECTION ON DELIVERY B. Received bv (Printed Name) H ^ e n t • Addressee C. Date of Delivery ii-/z-/^ D. Is delivery address different from item 17 • Yes If YES, enter delivery address below: • No 3. Service Type • Adult Signature • Adult Signature Restricted Deliveiy KCertified Mall® • Certified Mail Restricted Ilellveiy • Collect on Delivery O Collect on Delivery Restricted Delivery SEED -il II Restricted Delivery • Priority Mail Express® O Registered Mail™ • Registered Mail Restricted Belivery iRefum Receipt tor Merchandise • signature Confirmation™ • Signature Confimiation Restricted Delivery PS Form 3 8 1 1 , July 2015 PSN 7530-02-000-9053 Domestic Return Receipt Exhibit 2 THREE (3) DAY NOTICE TO PAY RENT OR QUIT AND SURRENDER POSSESSION OF PREMISES TO: Supercuts, Inc. d/b/a Supercuts 5138 Stevens Creek Boulevard San Jose, CA 95129 TO: Supercuts, Inc. 7201 Metro Blvd. Minneapolis, MN 55439 Attn: Legal Department TO: All Other Persons and Entities in Possession 0f the Premises 0r Who May Claim a Right t0 Possession 0f the Premises SUBJECT: Lease Contract dated January 25, 2001, as amended (“Lease”), by and between Supercuts, Inc. (“Tenant”), and Weingarten Realty Investors (“Landlord”), for the Premises located at 5138 Stevens Creek Boulevard, San Jose, CA 95129 (“Premises”) YOU ARE HEREBY NOTIFIED that Within three (3) days after service upon you 0f this Notice (excluding Saturdays, Sundays, and other judicial holidays), as required under the written Lease described above, you must pay to the Landlord, Weingarten Realty Investors, the sum 0f $90,221.78, as and for base rent and additional rent payments due to present under the Lease, including rent, unpaid charges and late charges as provided for under the terms of the Lease (the “Delinquent Amount”). The Delinquent Amount is a good faith estimate by Landlord of the amount due and owing under the Lease for the last twelve (12) months, as itemized in the attached account summary. Within three (3) days after service 0f this notice upon you (excluding Saturdays, Sundays, and other judicial holidays), payment 0f the Delinquent Account must be made by certified funds, payable and delivered t0 Weingarten Realty Investors, Attn: Litigation Division, 2600 Citadel Plaza Dr., Suite 125, Houston, TX 77008. It will be conclusively presumed that the rent is deemed received 0n the date it is posted in the mail t0 the foregoing specified name and address, provided Tenants can show proof 0f mailing to that name and address. Please direct any questions about payment of the Delinquent Amount t0 Landlord’s attorney, Nicole N. Wentworth, Esq. of Blank Rome LLP, 2029 Century Park East, 6th Floor, Los Angeles, CA 90067, (424) 239-3484, NWentworth@B1ankRome.com. YOU ARE FURTHER NOTIFIED that in the event you do not cure the above- referenced breaches of the Lease and pay the Delinquent Amount now due 1 141 791 .0061 4/1 25709448V.1 within three (3) days after service upon you 0f this Notice (excluding Saturdays, Sundays, and other judicial holidays), then you will be required to deliver up possession 0f the Premises t0 the Landlord Within such three (3) day period; otherwise, the Landlord Will institute legal proceedings against you t0 declare a forfeiture of your Lease, recover possession of the Premises, seek judgment for the rent owed under the Lease through the expiration 0f this Notice, as well as all other statutory and other damages, attorneys’ fees and court costs. FURTHER NOTICE IS HEREBY GIVEN that the Landlord elects to and does hereby declare forfeited the Lease under which you hold possession 0f the Premises, including any rights 0f exclusivity and/or any options to extend the term 0f the Lease, if you fail t0 pay the above-stated Delinquent Amount due within the three (3) day period specified above or to surrender possession of the Premises Within the three (3) day period specified above. FURTHER NOTICE IS HEREBY GIVEN that Landlord’s acceptance of any partial rent or other payment under the Lease after service 0f this Notice upon you 0r after commencement 0f a civil action predicated upon this Notice shall not constitute a waiver 0f any rights or remedies by the Landlord, including without limitation any rights that the Landlord may have to recover possession of the Premises. FURTHER NOTICE IS HEREBY GIVEN that Landlord hereby withdraws any previously issued Three (3) Day Notice t0 Pay Rent or Quit regarding the Premises. Tenant is obligated to comply with this Notice, and Tenant cannot defend against this Notice by arguing that any prior notice was deficient 0r ineffective. Nothing in this Notice constitutes (a) a waiver by Landlord of any default or breach by Tenant under the Lease in addition to the defaults or breaches by Tenant specified in this Notice; or (b) a waiver by Landlord 0f any 0r all 0f its rights and remedies in connection with the Lease 0r otherwise, all of Which are expressly reserved by Landlord. Date: April 12, 2021 BLANK ROVME LLP Nicole N. Wentworth, Esq. Attorneys for Landlord Weingarten Realty Investors 141791 .00614/125709448v.1 Tenant: 135784 Supercuts, Inc. Base Rent: $ 5,702.58 12/01/19 - 07/31/21 WEINGARTENREALTY Leas”: 505450 Real Estatefnr Everyday Retail Lease Term: 07/31/21 www.weinganenmm Location: 22740 Stevens Creek Central SC Rentable Are 1,330 Sq.Ft. City, State: San Jose, CA d/b/a: Supercuts Rent & Recoveries: Payment Amount Cumulativeu CA_M |n_ m Adiustments Other Total Billed w % w Outstanding m Notes Current Amount Due: Dec-19 (0.69) 0.69 0.00 0.00 0.00 YE Billing Dec-19 (735.35) (735.35) (735.35) (735.35) YE Billing Jan-20 5,702.58 1,086.94 92.48 571 .73 7,453.73 (7,453.73) 01/1 0/20 CK-41 60314 - (735.35) Feb-20 5,702.58 1,086.94 92.48 571 .73 7,453.73 (7,453.73) 02/07/20 CK-41 62549 - (735.35) Mar-20 5,702.58 1,086.94 92.48 571 .73 7,453.73 (7,453.73) 03/03/20 CK-41 64306 - (735.35) Apr-20 5,702.58 1,086.94 92.48 571 .73 7,453.73 7,453.73 6,71 8.38 May-20 5,702.58 1,086.94 92.48 571 .73 7,453.73 7,453.73 14,1 72.11 Jun-20 5,702.58 1,086.94 92.48 571 .73 7,453.73 7,453.73 21 ,625.84 Jun-20 (964.16) (964.16) (964.16) 20,661 .68 YE Billing JuI-20 5,702.58 1,086.94 92.48 571 .73 7,453.73 7,453.73 28,1 15.41 Aug-20 5,702.58 1,086.94 92.48 571 .73 7,453.73 7,453.73 35,569.14 Sep-20 5,702.58 1,086.94 92.48 571 .73 7,453.73 7,453.73 43,022.87 Oct-20 5,702.58 1,086.94 92.48 571 .73 7,453.73 7,453.73 50,476.60 Nov-20 5,702.58 1,086.94 92.48 571 .73 7,453.73 7,453.73 57,930.33 Dec-20 5,702.58 1,086.94 92.48 571 .73 7,453.73 (5,702.58) 01/04/21 CK-4721 1,751 .1 5 59,681 .48 Dec-20 (258.75) (258.75) (258.75) 59,422.73 YE Billing Jan-21 5,702.58 1,086.94 92.48 571 .73 7,453.73 7,453.73 66,876.46 Jan-21 2,054.03 2,054.03 2,054.03 68,930.49 YE Billing Feb-21 5,702.58 1,086.94 92.48 571 .73 7,453.73 7,453.73 76,384.22 Feb-21 (1 ,069.90) (1 ,069.90) (1 ,069.90) 75,314.32 YE Billing Mar-21 5,702.58 1,086.94 92.48 571 .73 7,453.73 7,453.73 82,768.05 Apr-21 5,702.58 1,086.94 92.48 571 .73 7,453.73 7,453.73 90,221 .78 Current Account Balance $ 90,221 .78 EXHIBIT A Page 1 of 1 Exhibit 3 Attorney or Party without Attorney: For Court Use Only Nicole N. Wentworth, Esq. BLANK ROME LLP 2029 Century Park East, 6th Floor Los Angeles, CA 90067 Telephone No: (424) 239-3400 ”WW La”d'°“‘ ??1g3'9°’9§§97)°‘ WRI Southern Industrial Pool LLC ' Insert name of Court, andjudicia/ District and Branch Court: Defendant: P/aintifif' pR0O F o F s E RV|cE Hearing Date: Tim e: Dept/Div: Case Num ber: At the time of service lwas at least 18 years of age and not a party to this action. Iserved copies of the THREE (3) DAY NOTICE TO PAY RENT OR QUIT AND SURRENDER POSSESSION OF PREMISES a. Party served: Supercuts, Inc. d/b/a Supercuts Address where the party was served: 51 38 Stevens Creek Blvd, Sanjose, CA 951 29 [served the party: b. bysubstituted service. On: Tue, Apr 13 2021 at: 04:39 PM | left the documents listed in item 2 with or in the presence of: "Jane Doe", Person in charge (Age: 58; Ethnicity: Asian; Gender: Female; Weight: 1 50; Height: 5 '7"; Hair: Brown; Eyes: Brown) (1) m (business) a person at least 18 years of age apparently in charge at the office or usual place of business of the person to be served. I informed him or her of the general nature of the papers. (2) E (home) a competent member of the household (at least 18 years of age) at the dwelling house or usual place of abode of the party. I informed him or her of the general nature of the papers. (3) A declaration of mailing is attached. Recoverable cost Per CCP 1033.5(a)(4)(B) 6. Person Who Served Papers: a. Ellenor Rios (P50984, Santa Clara) d. The Feefor Service was: b. FIRST LEGAL e. | am: Not a Registered California Process Server 1517 W. Beverly Boulevard LOS ANGELES, CA 90026 c. (213) 250-1 1 11 7. I declare under penalty ofperjury under the laws of the State of California that theforegoing is true and correct. z ‘ \W 04/1 4/2021 (Date) (Signature) Judicial Council Form PROOF OF 5562752 Rule 2.1 50.(a)&(b) Rev January 1, 2007 SERVICE (4628310) >|RSTLEGAL Attorney or Party without Attorney: For Court Use Only Nicole N. Wentworth, Esq. BLANK ROME LLP 2029 Century Park East, 6th Floor Los Angeles, CA 90067 Telephone No: (424) 239-3400 Attorney For: La ndlord :e4fi1N3. or File No.: WRI Southern Industrial Pool LLC 9 9'99990 Insert name of Court, andjudicia/ District and Branch Court: Defendant: P/aintifif' pR00 F 0F S E RV| C E Hearing Date: Tim e: Dept/Div: Case Num ber: By Mail lam over the age of 1 8 and not a party to this action. lam employed in the county Where the mailing occurred. Iserved copies of the THREE (3) DAY NOTICE TO PAY RENT OR QUIT AND SURRENDER POSSESSION OF PREMISES By placing a true copy of each document in the United States mail, in a sealed envelope by First Class mail with postage prepaid as follows: a. Date of Mailing: Wed, Apr 14, 2021 b. Place of Mailing: LOS ANGELES, CA c. Addressed as follows: Supercuts, Inc. d/b/a Supercuts 51 38 Stevens Creek Blvd, SanJose, CA 95129 lam readilyfamiliar With the business practice for collection and processing of correspondence as deposited with the U.S. Postal Service on Wed, Apr 14, 2021 in the ordinary course of business. Recoverable cost Per CCP 1033.5(a)(4)(B) 5. Person Serving: a. Ellenor Rios (P50984, Santa Clara) d. The Feefor Service was: b. FIRST LEGAL e. | am: Not a Registered California Process Server 1517 W. Beverly Boulevard LOS ANGELES, CA 90026 C. (21 3) 250-1 1 11 6. I declare under penalty ofperjury under the laws of the State of California that the foregoing is true and correct. 4 ‘ 1% 04/1 4/2021 (Date) (Signature) judicial Council Form PROOF 0F SERVICE 5562752 Rule 2.1 50.(a)&(b) Rev January 'I, 2007 BY MAIL (4628310) >|RSTLEGAL
