EX-10 4 exhibit10x17.txt EXHIBIT 10X17 HOLLISTER LEASE EXHIBIT 10.17 SUBLEASE Kmart Corporation, Sublessor Central Coast Bancorp, Sublessee (Community Bank of Central California) KMART NO. 3 748 491 Tres Pinos Road Hollister, CA 95023 (Unit 103) SUBLEASE - TABLE OF CONTENTS ARTICLE I GRANT AND TERM Section 1.1 Demised Premises Section 1.2 Length of Term Section 1.3 Construction of Demised Premises Section 1.4 Intentionally Deleted Section 1.5 When Demised Premises are Ready for Possession Section 1.6 Sublessee's Work Section 1.7 Intentionally Deleted ARTICLE II RENT TAXES AND INSURANCE Section 2.1 Rent, Place of Payment Section 2.2 Annual Minimum Rent Section 2.3 Percentage Rent Section 2.4 Gross Sales Defined Section 2.5 Radius Restriction Section 2.6 Real Estate Taxes Section 2.7 Other Taxes Section 2.8 Insurance Section 2.9 Sublessee's Payment of Taxes, Insurance and Common Area Expenses; Sublessee's Proportionate Share Section 2.10 Additional Rent ARTICLE III RECORDS AND REPORTS Section 3.1 Reports by Sublessee Section 3.2 Sublessee's Records Section 3.3 Sublessor's Right to Audit ARTICLE IV OPERATION AND MAINTENANCE OF COMMON AREAS Section 4.1 Designation of Common Areas Section 4.2 Construction of Common Areas Section 4.3 Common Areas to Remain Private Property Section 4.4 Sublessee's Proportionate Share of Common Area Expense ARTICLE V USE OF PREMISES Section 5.1 Use of Premises Section 5.2 Change of Name Section 5.3 Storage, Office Space Section 5.4 Care of Premises Section 5.5 Sublessee's Obligation to Light Display Windows ARTICLE VI UTILITY SERVICES Section 6.1 Sublessor's Obligation to Install Utility Services and Option to Supply Such Services Section 6.2 Sublessee's Obligation for Payment ARTICLE VIIMAINTENANCE OF DEMISED PREMISES Section 7.1 Sublessor's Obligations for Repair and Maintenance Section 7.2 Sublessee's Obligations for Repair and Maintenance Section 7.3 Abuse of Plumbing Walls, Etc. Section 7.4 Surrender of Premises ARTICLE VIII SIGNS Section 8.1 Signs ARTICLE IX FIXTURES AND ALTERATIONS Section 9.1 Sublessee's Fixtures and Alterations Section 9.2 Sublessor's Changes and Additions ARTICLE X INSURANCE AND INDEMNITY Section 10.1 Indemnification Section 10.2 Increase in Fire Insurance Premium Section 10.3 Sublessee's Obligation to Carry Property, Public Liability and Worker's Compensation Insurance Section 10.4 Environmental Covenants and Indemnification ARTICLE XI RECEIVING DELIVERY AND SUBLESSEE PARKING Section 11.1 Receiving and Delivery of Sublessee's Merchandise and Disposition of Refuse Section 11.2 Sublessee and Employee Parking ARTICLE XII ASSIGNMENT AND SUBLETTING Section 12.1 Assignment and Subletting Section 12.2 By Sublessor ARTICLE XIII ACCESS TO PREMISES Section 13.1 Right of Entry by Sublessor Section 13.2 Sublessor's Right to Exhibit Premises ARTICLE XIV EMINENT DOMAIN Section 14.1 Total Condemnation Section 14.2 Partial Condemnation Section 14.3 Sublessor's and Sublessee's Damages ARTICLE XV DESTRUCTION OR DAMAGE TO DEMISED PREMISES Section 15.1 Reconstruction of Damaged Premises Section 15.2 Waiver of Subrogation ARTICLE XVI BANKRUPTCY AND INSOLVENCY Section 16.1 Continuation of Obligations Under This Sublease After Institution of Bankruptcy Proceedings Section 16.2 Conditions to the Assumption and Assignment of this Sublease in Proceedings Under Chapter 7, 11 or 13 of the Bankruptcy Code Section 16.3 Conditions to the Assignment of the Sublease in Bankruptcy Proceedings Section 16.4 Sublessor's Option to Terminate Upon Subsequent Bankruptcy Proceedings of Sublessee Section 16.5 Use and Occupancy Charges Section 16.6 Sublessee's Interest Not Transferable By Virtue of State Insolvency Law Without Sublessor's Consent Section 16.7 Sublessor's Option to Terminate Upon Insolvency of Sublessee or Guarantor Under State Law or Upon Insolvency of Guarantor Under Federal Bankruptcy Act ARTICLE XVII DEFAULT OF THE SUBLESSEE Section17.1 Right to Re-enter Section17.2 Right to Relet Section17.3 Legal Expenses Section 17.4 Waiver of Rights of Redemption Section 17.5 Sublessee's Failure to Operate Continuously ARTICLE XVIII WAIVER OF LIABILITY Section 18.1 Waiver of Liability ARTICLE XIX Section 19.1 Intentionally Deleted ARTICLE XX HOLDING OVER SUCCESSORS Section 20.1 Holding Over Section 20.2 Successors ARTICLE XXI SECURITY DEPOSIT Section 21.1 Security Deposit ARTICLE XXII MISCELLANEOUS Section 22.1 Non-Waiver Section 22.2 Subordination Section 22.3 Notices Section 22.4 No Partnership Section 22.5 No Liability for Loss and Damage Section 22.6 Sublessor's Use of Common Areas Section 22.7 Gender Section 22.8 Sublessee's Acknowledgement of Acceptance of Premises; Estoppel Certificate Section 22.9 Accord and Satisfaction Section 22.10 Captions and Section Numbers Section 22.11 Partial Invalidity Section 22.12 No Option Section 22.13 Recording Section 22.14 Liens Section 22.15 Brokers Commission Section 22.16 Force Majeure Section 22.17 Entire Agreement Section 22.18 Late Charges and Interest Section 22.19 Cumulative Remedies Section 22.20 Rules and Regulations Section 22.21 Time Section 22.22 Attornment Section 22.23 Merchants Association/Promotional Fund Section 22.24 Waiver of Trial by Jury; Injunction Section 22.25 Attachments: Exhibit "A", Legal Description Exhibit "B", Site Plan Exhibit "C", Construction Work Exhibit "D", Sign Design Criteria Exhibit "E", Space Layout Exhibit "F", Commencement Letter Exhibit "G", Guaranty Exhibit "H", Incorporated Sublease Terms, Rents and Conditions SUBLEASE THIS SUBLEASE AGREEMENT, made and entered into on July 17, 2000, by and between KMART CORPORATION, a Michigan corporation, (hereinafter "Sublessor"), whose office address is 3100 West Big Beaver Road, Troy, Michigan 48084, Attention: Vice President -Real Estate and Central Coast Bancorp, a California corporation, (hereinafter "Sublessee"), whose principal address is 301 Main Street, Salinas, California 93901, doing business as Community Bank of Central California. WITNESSETH: ARTICLE I GRANT AND TERM Section 1.1 Demised Premises. Sublessor, in consideration of the rent to be paid and the covenants to be performed by Sublessee, does hereby demise and subleases unto Sublessee, and Sublessee hereby takes and subleases from Sublessor, that certain building area having a frontage, measuring from center of partition to center of partition, and a depth, measuring from outside of wall to outside of wall, altogether totaling approximately the square feet as set forth within Exhibit H, incorporated herein, the boundaries and location which are shown by cross hatching and designated by the name set forth in Section 5.2 and on Exhibit "E" which is attached hereto, signed or initialed by Sublessor and Sublessee and incorporated herein by reference (hereinafter the "Demised Premises"). The Demised Premises are now or hereafter to be erected within the shopping center development commonly known and located as set forth within Exhibit H, incorporated herein, which is more fully described on Exhibit "A" attached hereto and made a part hereof (hereinafter the "Shopping Center"). Exhibit "B" sets forth the general layout of the Shopping Center and shall not be deemed to be a warranty, representation or agreement on the part of the Sublessor that said Shopping Center will be constructed exactly as indicated on said Exhibits. Sublessor may increase, reduce or change the number, dimensions or locations of the walks, buildings and parking areas (in any manner whatsoever) as Sublessor shall in its sole discretion deem proper and Sublessor reserves the right to make alterations or additions to, and to build additional stories on the building in which the Demised Premises are contained and to modify or add buildings and/or floors adjoining the same or elsewhere in the Shopping Center. The exterior walls and roof of the Demised Premises and the area beneath the Demised Premises are not demised hereunder, and the use thereof, together with the right to install, maintain, use, repair, and replace pipes, ducts, conduits, wires and structural elements leading through the Demised Premises are hereby reserved unto Sublessor. Sublessor's interest in the Demised Premises arises from a Lease, dated as set forth within Exhibit H, and incorporated herein, and Sublessee takes expressly subject to the provisions, as amended, of said "Master Lease", any mortgage, indenture, permitted exceptions, declarations, operating agreements, restrictions, easements, other agreements, and matters of record. Notwithstanding, Sublessee's interest in the Demised Premises shall also be subject to and subordinate to any existing or subsequent mortgage and/or financing in any form on the Demised Premises and/or the Shopping Center and/or any portion thereof, even if the same shall be modified, replaced, amended, renewed, extended, consolidated or supplemented from time to time. Section 1.2a Term. The primary term of this Sublease shall commence on the date as set forth in Exhibit H, incorporated herein, (hereinafter the "Commencement Date"), and shall expire on the date as set forth in Exhibit H, incorporated herein, or unless sooner terminated as hereinafter provided. Promptly after the Commencement Date has occurred, the parties shall execute and attach hereto an agreement in the form of Exhibit F hereto setting forth the dates upon which the term commenced and shall expire. As used herein, the term "Sublease Year" shall mean the twelve (12) consecutive calendar months commencing with the Commencement Date and each succeeding anniversary of such date thereafter. Any rent or other Sublessee payment due hereunder which is based on an annual (twelve months) charge shall be prorated to reflect any fractional Sublease Year. If the Commencement Date is not on the first day of a calendar month, then the first payment of rent for the period between the Commencement Date and the first day of the first full calendar month shall be prorated on a daily basis for such period prior to the first full calendar month and shall be due and payable on the Rent Commencement Date, as hereinafter defined. During the period following Sublessor's notice to Sublessee that the Demised Premises are ready for Sublessee's possession under this Section and prior to the Rent Commencement Date, all of the provisions of this Sublease shall be binding upon Sublessee (other than the duty to pay Annual Minimum Rent), including but not limited to, construction, hold harmless, alterations and additions, property and liability insurance, liens, real estate taxes and common area maintenance. Section l.2b Option to Extend Term. Provided Sublessor is in control of the Demised Premises and has exercised its option to extend its term, as applicable, Sublessee may, at its option, extend the term of this Sublease for a period as set forth within Exhibit H, incorporated herein, by giving written notice of such extension to Sublessor at least NINE (9) months, but no more than TWELVE (12) months prior to the expiration of the then current term. No exercise of any option herein granted shall be effective if Sublessee is in default in any material respect hereunder at the time of exercise or defaults in any material respect prior to the commencement of the extended term. Any extended term of this Sublease shall be on the same terms and conditions as contained in this Sublease except that the rent shall be increased as provided in Article II hereof, and except that Sublessee shall not have any options to extend beyond the period set forth within Exhibit H, or beyond Sublessor's term, whichever terminates. earlier. The extended term shall commence on the date of expiration of the primary term or the immediate preceding extended term, as applicable. Section 1.3 Construction of Demised Premises. The parties acknowledge that Sublessor has prior to the Commencement Date constructed on the site of the Shopping Center the Demised Premises in approximately the location as shown on Exhibit "B". Sublessee shall be permitted to install its trade fixtures so long as such activities do not interfere with other construction work. Sublessor shall have no responsibility or liability whatsoever for any loss of or damage to any fixtures or other equipment so installed or left upon the Demised Premises. Section 1.4 Sublessor Not Liable For Delays Right of Cancellation. Intentionally Omitted. Section 1.5 When Demised Premises are Ready for Possession. THE DEMISED PREMISES ARE NOW READY FOR OCCUPANCY BY SUBLESSEE AND, BY EXECUTION OF THIS SUBLEASE, SUBLESSEE ACKNOWLEDGES AND AGREES THAT IT HAS INSPECTED AND SHALL ACCEPT THE DEMISED PREMISES, THE COMMON AREAS AND THE SHOPPING CENTER ON THE COMMENCEMENT DATE IN THEIR THEN 'AS IS" AND "WHERE IS" PHYSICAL AND ENVIRONMENTAL CONDITION. SUBLESSEE ACKNOWLEDGES AND AGREES THAT NEITHER SUBLESSOR NOR ITS AGENTS OR EMPLOYEES HAS MADE ANY EXPRESS WARRANTY OR REPRESENTATION REGARDING THE PHYSICAL CONDITION OF OR ANY ENVIRONMENTAL CONDITION ON THE DEMISED PREMISES OR THE SHOPPING CENTER, THE QUALITY OF MATERIAL OR WORKMANSHIP OF THE DEMISED PREMISES, LATENT OR PATENT, OR THE FITNESS OF THE DEMISED PREMISES FOR ANY PARTICULAR USE OR PURPOSE, AND THAT NO SUCH REPRESENTATION OR WARRANTY SHALL BE IMPLIED BY LAW, IT BEING AGREED THAT ALL SUCH RISKS ARE TO BE BORNE BY SUBLESSEE. Section 1.6 Sublessee's Work. Sublessee shall at its sole cost and expense perform the construction obligations with respect to the Demised Premises described in this Sublease, including those obligations set forth in Section 9 herein and Exhibit C attached hereto, fixture, stock and staff the Demised Premises and open for business to the general public. Section 1.7 Late Opening. Intentionally Deleted. ARTICLE II RENT, TAXES AND INSURANCE Section 2.1 Rent Place of Payment. Sublessee shall pay to Sublessor during the term hereof, as rental for the Demised Premises, at the times designated, all of the amounts designated herein as Annual Minimum Rent, Percentage Rent, additional rent, and any other amount, money or charge required to be paid. pursuant to the terms of this Sublease whether or not the same may be designated by any such label or term. All amounts required to be paid by Sublessee under this Sublease shall, unless otherwise specifically stated, be paid without any prior demand therefore and without any deduction or set-off whatsoever at Sublessor's address set forth on page 1 of this Sublease or such other place as the Sublessor may designate. Should Sublessor, in anyone or more instances, accept any payment that is late, such acceptance shall not be deemed a waiver of any of Sublessor's rights or any of Sublessee's obligations including, but not limited to, the obligation to pay all amounts due under this Sublease on or before the date designated herein for payment thereof. Section 2.2 Annual Minimum Rent. Sublessee shall pay in advance to Sublessor for the original term of this Sublease an aggregate minimum rental of at least the amount set forth within Exhibit H, incorporated herein, (hereinafter "Minimum Rent"). Sublessee's obligation to pay Annual Minimum Rent shall begin on the date as set forth in Exhibit H, incorporated herein, ("Rent Commencement Date"). For so long as Sublessee shall not default in the payment of any sums due under this Sublease and shall not default under any of the other provisions of this Sublease, the Minimum Rent may be paid under the schedule set forth within Exhibit H, incorporated herein, (all amounts, unless otherwise provided, shall be paid in monthly installments, in advance on or before the first day of each calendar month). Notwithstanding the foregoing Rent Commencement Date, Sublessee's obligation to pay all other charges under this Sublease, including but not limited to common area maintenance charges, taxes, insurance, shall in no way be waived. Sublessee shall pay for such charges in advance on or before the first day of each calendar month throughout the Sublease Term including any extended or hold-over period. All Gross Sales during this period shall be added to the Gross Sales of the first Sublease Year for the purposes of calculating Percentage Rent or reporting Gross Sales, as applicable. In the event Sublessee exercises its option to extend Sublessee's term as provided in Section 1.2(b), Sublessee shall pay in advance to Sublessor for the option term of this Sublease an aggregate minimum rental of at least the amount(s) as set forth in Exhibit H, incorporated herein, (hereinafter "Minimum Rent"). For so long as Sublessee shall not default in the payment of any sums due under this Sublease and shall not default under any of the other provisions of this Sublease, the Minimum Rent may be paid under the schedule as set forth in Exhibit H, incorporated herein, (all amounts, unless otherwise provided, shall be paid in monthly installments, in advance on or before the first day of each calendar month). Section 2.3 Percentage Rent. The Percentage Rent, if any, shall be as set forth within Exhibit H, incorporated herein. Notwithstanding, Sublessee shall be required to report Gross Sales (as herein defined) pursuant to this Sublease upon Sublessor's request. Section 2.4 Gross Sales Defined. The term "Gross Sales" as used herein shall mean the total amount in dollars of the actual sales price, whether for cash or otherwise, of all sales of merchandise, service and other receipts whatsoever of all business conducted in or from the Demised Premises, including mail or telephone orders received or filled at the Demised Premises, and including all deposits not refunded to customers, orders taken, although said orders may be filled elsewhere, and sales or service by Sublessee and any sublessee, assignee, concessionaire or licensee or otherwise in the Demised Premises; provided, however, that nothing herein shall prevent Sublessor from requiring an additional or different percentage rental as a condition to approval of any sublessee, assignee, concessionaire or licensee of Sublessee hereunder. Gross Sales shall also include (i) sales from vending machines, pay telephones and video games at the Demised Premises, except that Gross Sales shall include only the net amount received by Sublessee in the event of vending machines installed by other than Sublessee, its subtenant(s), assignee(s), concessionaire(s) or licensee(s) and (ii) rent or fees received by the Sublessee from any subtenant, assignee, licensee or other occupant of the Demised Premises (but only if any such subtenant, assignee, licensee or other occupant does not have sales or services which are included in Gross Sales). No deduction shall be allowed for uncollected or uncollectible credit accounts. Gross Sales shall not include, (i) any sums collected and paid out for any sales or excise tax imposed by any duly constituted governmental authority, (ii) the exchange of merchandise between the stores of Sublessee, if any, where such exchanges of goods or merchandise are made solely for the convenient operation of the business of Sublessee and not for the purpose of consummating a sale which has theretofore been made at, in, from or upon the Demised Premises, and/or for the purpose of depriving Sublessor of the benefit of a sale which otherwise would be made at, in, from or upon the Demised Premises, (iii) the amount of returns to shippers or manufacturers, (iv) the amount of any cash or credit refund made upon any sale where the merchandise sold, or some part thereof, is thereafter returned by the customer and accepted by Sublessee, or (v) the sale of fixtures after their use in the conduct of business in the Demised Premises. Section 2.5 Radius Restriction.During the term of this Sublease, neither Sublessee nor any person, firm nor corporation who or which controls or is controlled by Sublessee directly or indirectly, either individually or as a partner r stockholder, or otherwise, shall own, operate or become financially interested in any similar or competing business located within a radius of four (4) miles from the outside boundary of the Shopping Center. Section 2.6 Real Estate Taxes. During the term of this Sublease and any renewals or extensions thereof, Sublessee agrees to pay, as additional rent, its Proportionate Share (as hereinafter defined) of all real estate taxes and assessments, general and special, and all interest and penalties thereon which may be levied or imposed or assessed during the term of this Sublease, or any extensions or renewals thereof, against the land described in Exhibit 'A' and the improvements located thereon, excluding, however any commercial outparcels which are separately assessed. In the event that separate real estate taxes and assessments are secured for the Demised Premises and the land beneath the same, Sublessee shall pay said taxes plus Sublessee's Proportionate Share of any additional taxes assessed against the land described in Exhibit 'A' and the buildings and common areas located thereon. Sublessee shall furnish receipts for the payment of any such taxes to Sublessor upon demand. Sublessee shall itself pay one hundred (100%) percent of all real property taxes assessed upon or attributable to any alterations, additions, installations, improvements, fixtures, machinery, or equipment placed, used, constructed or installed in, on, or about the Demised Premises, by Sublessee or by Sublessor at the expense of Sublessee, regardless of whether same become a part of the real property and regardless of whether or not title thereto becomes vested in the Sublessor. If for any reason any such taxes are assessed against the Sublessor, then the Sublessee shall, upon demand, fully reimburse the Sublessor therefor. Should Sublessor elect to initiate an appeal regarding real estate taxes and assessments the Sublessee shall fully cooperate with Sublessor as requested by Sublessor. Sublessee may, at its own expense, contest any liens, claims, or charges of any kind with respect to the Demised Premises which Sublessee reasonably believes are unlawful or excessive; provided, however, if Sublessee's activities increase the valuation of the entire Shopping Center, Sublessee shall be solely liable for any such increase and Sublessee shall, if Sublessor requires the same, furnish reasonable security for the payment of any and all liability, cost and expense which may arise from such activities prior to commencing same. Should any governmental authority having jurisdiction thereover impose a tax or surcharge of any kind or nature upon, against or with respect to the parking areas or the number of parking spaces in the Shopping Center, such tax or surcharge shall likewise be deemed to constitute a tax and/or assessment against such land and such buildings for the purpose of this Section and Sublessee shall be obligated to pay its proportionate share thereof as provided herein. The Proportionate Share to be paid by Sublessee shall also include Sublessee's Proportionate Share of any costs, expenses and attorneys' fees incurred by Sublessor in connection with the negotiation for reduction in the assessed valuation of land, buildings and improvements comprising the Shopping Center and any protest or contest of real estate taxes and/or assessments. Section 2.7 Other Taxes. Sublessee shall reimburse Sublessor upon demand for the following taxes, assessments, levies and charges, foreseen and unforeseen: (a) all taxes which are, at any time, imposed or levied upon or assessed against (i) any Annual Minimum Rent, Percentage Rent or any additional rent reserved or payable hereunder or any other sums payable by Sublessee hereunder, (ii) this Sublease or the leasehold estate hereby created or which arise in respect of the operation, possession, occupancy or use of the Demised Premises; (b) any gross receipts or similar taxes imposed or levied upon, assessed against or measured by any Annual Minimum Rent, Percentage Rent, additional rent or such other sums payable by Sublessee hereunder; (c) all sales and use taxes which may be levied or assessed against or payable by Sublessor or Sublessee on account of the acquisition, leasing, subleasing, or use of the Demised Premises or any portion thereof, or on account of any Annual Minimum Rent, Percentage Rent or additional rent reserved or payable hereunder or any other sums payable by Sublessee hereunder. Sublessee shall pay before delinquency all: (i) municipal, county, and state taxes, foreseen and unforeseen, assessed during the term of this Sublease against any leasehold interest or personal property of any kind, owned by or placed in, upon or about the Demised Premises by the Sublessee; and (ii) sales, use, excise, luxury and other taxes, foreseen and unforeseen, upon Sublessee's business or upon any sales made on or from the Demised Premises. Notwithstanding the foregoing provisions of this Section, Sublessee shall not be required to reimburse Sublessor for any franchise or income taxes of Sublessor (other than any gross receipts or similar taxes imposed or levied upon, assessed against or measured by Annual Minimum Rent, Percentage Rent, additional rent or any other sums payable by Sublessee hereunder), unless any such tax or charge is imposed upon or levied or assessed against Sublessor in substitution for or in place or reduction of any other tax, assessment, charge or levy referred to in this Article, in which case Sublessee shall reimburse Sublessor therefor; all such taxes, if any, to be reimbursed by Sublessee to Sublessor shall be determined as if the Demised Premises were the only property of Sublessor and the receipts from the Demised Premises were the only receipts of Sublessor. Section 2.8 Insurance. The Sublessee shall also pay to Sublessor, as additional rent, its Proportionate Share of any premiums payable by Sublessor for Property Insurance covering the buildings and improvements situated within the Shopping Center and Liability Insurance covering Sublessor's legal liabilities. Sublessor's "Property Insurance" (or similar term used herein) shall mean the insurance carried by Sublessor from time to time covering risk of damage to or destruction of the buildings and improvements situated within the Shopping Center and/or loss of rentals caused thereby, including, but not limited to, any of the following to the extent required under the Master Lease or deemed advisable by Sublessor in its sole determination: fire, tornado, flood, other perils, vandalism, malicious mischief, and all risk. Sublessor's "Liability Insurance" (or similar term used herein) shall mean insurance carried by Sublessor from time to time insuring against cost, loss, damage or expense, incurred by reason of any claim, suit, liability or demand for bodily injury, death or property damage arising out of, pertaining to or involving Sublessor's maintenance and repair of the Common Areas. Notwithstanding any provisions of this Sublease to the contrary, Sublessor shall have the right to self-insure, in whole or part, providing its net worth is maintained in excess of ONE HUNDRED MILLION AND NO/lOO ($100,000,000.00) Dollars. In the event Sublessor elects to self-insure then Sublessee shall also pay its Proportionate Share of an estimated premium which would be due under a standard property and/or liability insurance policy. Sublessor will provide Sublessee with specific information describing the basis for an estimated cost attributed to a self-insurance. Should there be a dispute as to the estimated premium provided by Sublessor, Sublessee shall have the right, at its sole expense, to review same with no more than three insurance companies rated as A + according to Best's Insurance Reports, (hereinafter "Consulting Insurers"), as to the reasonableness of Sublessor's premium assessment in light of factors including, but not limited to, the shopping center location and size, demographics, and the physical characteristics of the Shopping Center's improvements. Should the Consulting Insurers find Sublessor's estimated premium to be either unreasonably higher or lower in light of all the circumstances than the local prevailing market rate then Sublessor and Sublessee shall agree on an adjusted premium which shall then take effect on a non-retroactive basis. Section 2.9 Sublessee's Payment of Taxes Insurance and Common Area Expenses: Proportionate Share. Sublessee's Proportionate Share shall mean and be equal to a fraction, the numerator of which shall be the number of square feet of floor area in the Demised Premises, and the denominator of which shall be the total number of square feet of then constructed gross leasable floor area in the Shopping Center. Sublessee's Proportionate Share of all of the aforesaid taxes and assessments, insurance premiums, and common area expenses (as provided in Article IV) levied or assessed for or during the term hereof, and all other charges to be paid by Sublessee on a proportionate basis under this Sublease shall be paid to Sublessor in monthly installments on or before the first day of each calendar month, in advance, in an amount estimated by Sublessor or Sublessor may elect, at its sole option, to bill such amounts in arrears; provided, that in the event Sublessor is required under any mortgage covering the Shopping Center to escrow real estate taxes and insurance, Sublessor may, but shall not be obligated to, use the amount required to be so escrowed as a basis for its estimate of the monthly installments due from Sublessee hereunder. Upon receipt of all bills for taxes, assessments, insurance and Common Area expenses, attributable to any calendar year during the term hereof, Sublessor shall furnish Sublessee with a written statement of the actual amount of Sublessee's Proportionate Share thereof. In the event no tax bill or insurance bill is available, Sublessor will compute the amount of such tax and insurance. If the total amount paid by Sublessee under this Section for any calendar year during the term of this Sublease shall be less than the actual amount due from Sublessee for such year, as shown on such statement, Sublessee shall pay to Sublessor the difference between the amount paid by Sublessee and the actual amount due, such deficiency to be paid within ten (10) days after Sublessor's delivery of such. statement; and if the total amount paid by, Sublessee hereunder for any such calendar year shall exceed such actual amount due from Sublessee for such calendar year, such excess shall be credited against the next installment of taxes and assessments and insurance due from Sublessee to Sublessor hereunder. All amounts due hereunder shall be payable to Sublessor at the place where the Annual Minimum Rent is payable. For the calendar years in which the Sublease Term commences and terminates, the provisions of these Sections shall apply, and Sublessee's liability for its Proportionate Share of any taxes and assessments and insurance for such year shall be subject to a pro rata adjustment based on the number of days of said calendar year during which the term of this Sublease is in effect. A copy of a tax bill or assessment or insurance bill submitted by Sublessor to Sublessee (or Sublessor's good faith calculation if no such bill is available) shall at all times be sufficient evidence of the amount of taxes and/or assessments and insurance assessed or levied against the property to which such bill relates. Prior to or at the commencement of the term of this Sublease and from time to time thereafter throughout the term hereof, Sublessor shall notify Sublessee in writing of Sublessor's estimate of Sublessee's monthly installments due hereunder. Sublessor's and Sublessee's obligations under this Section shall survive the expiration of the term of this Sublease. Section 2.10 Additional Rent. The Sublessee shall also pay, as additional rent, any other money and charges required to be paid pursuant to the terms of this Sublease, whether or not the same may be designated "additional rent". If such amounts or charges are not paid at the time provided in this Sublease, such amounts shall be collectible as additional rent with the next installment of rent thereafter falling due hereunder, but nothing herein contained shall be deemed to suspend or delay the payment of any amount of money or charge at the time the same becomes due and payable hereunder, or limit any other remedy of the Sublessor. All such payments shall be made by Sublessee to Sublessor at the place where the Annual Minimum Rent is payable, and without any deductions or set off whatsoever. ARTICLE III RECORDS AND REPORTS Section 3.1 Reports by Sublessee. Within fifteen (15) days after the end of each Three (3) calendar months, or any portion thereof, during the Sublease Term, Sublessee shall furnish to Sublessor a statement signed and verified by Sublessee (or by an authorized officer if Sublessee be a corporation) of the Sublessee's Gross Sales during such Three (3) month period or portion thereof. Within sixty (60) days after the close of each Sublease Year, Sublessee shall deliver to Sublessor a statement of Gross Sales for each such Sublease Year showing the Gross Sales made during such Sublease Year, certified by a duly qualified officer of Sublessee as being true, complete and correct, and signed by an independent certified public accountant employed by Sublessee, to the effect that nothing came to their attention during their review of the schedules supporting Sublessee's computation of Gross Sales which would cause them to believe such computation was inaccurate or that any Gross Sales were not included therein. Sublessee shall deliver the statements referred to herein to Sublessor at the same address where Rent is then being paid. Section 3.2 Sublessee's Records. Sublessee shall keep in the Demised Premises or in some other location within the metropolitan area in which the Demised Premises are located, a permanent, accurate and complete set of books and records, in accordance with generally accepted accounting methods and principles, of all sales of merchandise and services and all revenue derived from any business conducted in the Demised Premises, whether included in Gross Sales or not, during each day of the term hereof, together with all supporting records. Sublessee further agrees that it and its subtenants shall keep, retain and preserve these records for at least two (2) years after the expiration of each Sublease Year. Section 3.3 Sublessor's Right to Audit. Sublessor shall have the right, after five (5) days written notice, to have its employees, mortgagees or outside auditors conduct a special audit of Sublessee's and its subtenant's books and records pertaining to sales, services, and business conducted on, in or from the Demised Premises. If such audit shall disclose a discrepancy of more than one percent (1%) of Gross Sales, Sublessee shall promptly pay to Sublessor twice the cost of said audit or $500.00, whichever is greater, in addition to the deficiency in Percentage Rent, which amount shall be payable in any event If such discrepancy is more than three percent (3%) of Gross Sales, or if Sublessee shall fail to permit inspection and/or audit of its records, Sublessor shall have the further remedy by not less than ten (10) days notice to Sublessee to declare this Sublease terminated on account of Sublessee's failure to properly report its Gross Sales. Sublessor shall have the right to audit Sublessee's books and records for a period of two (2) years after the close of each Sublease Year. ARTICLE IV OPERATION AND MAINTENANCE OF COMMON AREAS Section 4.1 Designation of Common Areas. The "Common Areas" shall include the parking areas, access roads and facilities which may be furnished by Sublessor within the Shopping Center, the employee parking areas, the truckway or ways, driveways, pedestrian sidewalks, ramps, landscaping and planting areas, fences, retaining walls, retention ponds, if any, and all other areas, buildings and improvements which may be provided by the Sublessor for the general use in common of the tenants of the Shopping Center, their officers, agents, employees and customers and all lighting and drainage facilities incident thereto. Section 4.2 Construction of Common Areas. Sublessor shall hard-surface, properly drain, landscape and light the parking area or parking areas, together with the necessary access roads within the limits of the Shopping Center. The use arid occupancy by the Sublessee of the Demised Premises shall include the use of the Common Areas during the term hereof, in common with all others to whom Sublessor has granted or hereinafter may grant rights to use same. Sublessor shall operate, manage and maintain the Common Areas during the term of the Sublease. The manner in which the Common Areas shall be used, maintained and operated, and the expenditures therefor shall be at the sole discretion of Sublessor and the use of such areas shall be subject to such regulations as Sublessor, in its sole discretion, shall make from time to time. Sublessor may at any time temporarily close any Common Area to make repairs or changes in such area or to discourage non-customer parking. Section 4.3 Common Areas to Remain Private Property. In order to establish that the Shopping Center, and any portion thereof; are and shall continue to remain private property, Sublessor shall have the unrestricted right in the Sublessor's sole discretion, with respect to the entire Shopping Center and/or any portion thereof controlled by the Sublessor, to close the same to the general public for at least one (1) day in each calendar year, and in connection therewith to seal off all entrances to the Shopping Center or any portion thereof. Section 4.4 Sublessee's Proportionate Share of Common Area Expenses. Sublessee shall pay, in addition to the rental, additional rental and other charges set forth in Article II of this Sublease, Sublessee's Proportionate Share of all costs and expenses of every kind and nature paid or incurred by Sublessor in operating, managing, equipping, policing, lighting, draining, repairing, replacing and maintaining the Common Areas and providing security therefor. Such costs and expenses shall include, but not be limited to: illumination and maintenance of the Shopping Center and its signs, whether the signs are located on or off the Shopping Center site; cleaning, lighting and snow removal from, and all repair and replacements of, parking areas and driveways; removal of excessive accumulations of snow, ice or water from the roof surfaces; management fees paid parties other than Sublessor; line painting, and landscaping; premiums for liability, property damage and workmen's compensation insurance, wages, personal property taxes, supplies; and the reasonable depreciation of equipment used in the operation of the Common Areas (but there shall be excluded the original cost of such equipment and original cost of constructing the Common Areas); and an amount equal to ten 10%) percent of the total of all of the foregoing costs and expenses to cover Sublessor's administrative costs. The Proportionate Share to be paid by Sublessee shall be computed and paid in the same manner as taxes and insurance as provided in Article II of this Sublease. ARTICLE V USE OF PREMISES Section 5.1 Use of Premises. Sublessee shall use and occupy the Demised Premises during the continuance of this Sublease solely for the purpose as set forth within Exhibit H, incorporated herein, and for no other purposes without the written consent of Sublessor. If any governmental license or permit shall be required for the proper and lawful conduct of Sublessee's business or other activity carried on in the Demised Premises or if a failure to procure such a license or permit might or would, in any way, affect Sublessor or the Shopping Center, then Sublessee, at Sublessee's expense, shall duly procure and thereafter maintain such license or permit and submit the same for inspection by Sublessor. Sublessee, at Sublessee's expense, shall at all times comply with the requirements of each such license or permit. Sublessee shall continuously operate one hundred (100%) percent of the Demised Premises during the entire term of this Sublease for the purpose stated in this Sublease, conducting Sublessee's business diligently, energetically, and in a high class and reputable manner. Sublessee shall maintain on the Demised Premises a substantial stock of goods, wares and merchandise and equipment adequate to assure successful operation of Sublessee's business. Sublessee shall keep the Demised Premises open and available for business activity therein during all usual days and hours for such type business in the vicinity so long as same does not conflict with the Shopping Center hours of operation hereinafter stated or such periods and hours as may be set by the Sublessor at its option during the term of this Sublease. Sublessee shall include the address and identity of its business activity in the Demised Premises in all advertisements made by Sublessee in which the address and identity of any other local business activity of like character conducted by Sublessee shall be mentioned, and shall not divert elsewhere any trade, commerce or business which ordinarily would be transacted by Sublessee in or from the Demised Premises. No auction, liquidation, going out of business, fire or bankruptcy sales may be conducted in the Demised Premises. Sublessee shall have absolute freedom to determine its own selling prices and sales practices. Sublessee shall not do any act tending to injure the reputation of the Shopping Center as determined by Sublessor. Sublessee shall at all times operate its business in a lawful manner and in compliance with all applicable laws, statutes, ordinances, regulations, codes and orders. Sublessee shall not: (i) use the Common Areas for its own business purposes; or (ii) solicit business in the Common Areas; or (iii) distribute or place any handbills or other advertising matter in or on automobiles parked in the parking area or in other Common Areas. Sublessee will be required to maintain normal business operations pursuant to the following schedule: Monday -9:00 a.m. to 5:00 p.m. (Other Hours Optional) Tuesday -9:00 a.m. to 5:00 p.m. (Other Hours Optional) Wednesday- 9:00 a.m. to 5:00 p.m. (Other Hours Optional) Thursday -9:00 a.m. to 5:00 p.m. (Other Hours Optional) Friday -9:00 a.m. to 6:00 p.m. (Other Hours Optional) Saturday -All Hours Optional Sunday -All Hours Optional Section 5.2 Change of Name. Sublessee's advertised name, as used by Sublessee for identification of the business operated in the Demised Premises, shall be as set forth within Exhibit H, incorporated herein. Sublessee shall not change such advertised name of the business operated in the Demised Premises without the written consent of the Sublessor. Section 5.3 Storage Office Space. Sublessee shall warehouse, store and/or stock in the Demised Premises only such goods, wares and merchandise as Sublessee intends to offer for sale at retail, at, in, from or upon the Demised Premises. This shall not preclude occasional emergency transfers of merchandise to the other stores of Sublessee, if any, not located in the Shopping Center. Sublessee shall use for office, clerical or other non-selling purposes only such space in the Demised Premises as is from time to time reasonably required for Sublessee's business in the Demised Premises. Section 5.4 Care of Premises. (a) Sublessee shall not perform any acts or carry on any practices which may injure the building or be a nuisance or menace to other tenants in the Shopping Center and shall keep the premises under its control, including the show windows, sidewalks, service corridors and receiving and loading areas adjacent to the Demised Premises, orderly, neat, safe, clean and free from rubbish, dirt, snow and ice at all times. Sublessee shall store all trash and garbage within the Demised Premises and arrange for the regular pick-up of such trash and garbage at Sublessee's expense. In the event Sublessor shall provide any service or facilities for such pickup, then Sublessee shall be obligated and shall pay a Proportionate Share of the actual cost thereof. Sublessee shall not burn any trash or garbage of any kind within the Demised Premises or Shopping Center. In the event Sublessee fails to keep the Demised Premises in the condition called for above, Sublessor may enter upon the Demised Premises and have all rubbish, dirt, trash and garbage removed and the sidewalks cleaned, in which event Sublessee agrees to pay all charges incurred by Sublessor therefor. Said charges shall be paid to the Sublessor by Sublessee as soon as a bill is presented to it and the Sublessor shall have the same remedy as is provided in Article XVII of this Sublease in the event of Sublessee's failure to pay said charges within ten (10) days after being billed therefor. (b) Sublessee shall not keep or display any merchandise or signs on or otherwise obstruct the sidewalks or areaways adjacent to the Demised Premises. Sublessee shall not use, permit, or allow the use of any portion of the Demised Premises as sleeping apartments, lodging rooms, or for any immoral or unlawful purposes. Sublessee shall maintain the show windows and signs in neat and clean condition. Sublessee shall not permit noise or odors in the Demised Premises which are objected to by Sublessor or any tenant or occupant of the Shopping Center, and upon written notice from Sublessor, Sublessee shall immediately cease and desist from causing such noise or odor. No radio, television, loudspeakers, phonographs, sound amplifiers or other similar device shall be installed exterior to the Demised Premises and no aerial shall be erected on the roof or exterior walls of the building in which the Demised Premises are located. Sublessor may direct the use of all pest extermination and scavenger contractors at such intervals as Sublessor may require. Section 5.5 Sublessee's Obligation to Light Display Windows. If requested by Sublessor, Sublessee shall keep the display windows in the Demised Premises well lighted from dusk until 11:00 P.M., or such other reasonable time as determined by Sublessor, during each and every day of the term of this Sublease, unless prevented by causes beyond the control of Sublessee. ARTICLE VI UTILITY SERVICES Section 6.1 Sublessor's Obligation to Install Utility Services and Option to Supply Such Services. Sublessor shall cause to be installed the necessary mains and conduits in order that water and sewer facilities and electricity may be available to the Demised Premises. Sublessor is not obligated to supply facilities to make gas available to the Demised Premises. If Sublessee shall use water, gas and/or electricity for any purpose in the Demised Premises and Sublessor shall elect to supply the water, gas and/or electricity, Sublessee shall accept and use the same as tendered by Sublessor and pay therefor at the applicable rates filed with the proper regulating authority and in effect from time to time covering such services. Section 6.2 Sublessee's Obligation for Payment. Sublessee shall be solely responsible for and promptly pay all charges, when due, for water, gas, electricity, heat, sewer, and any other utility used upon or furnished to the Demised Premises, including but not limited to such amounts as Sublessor has expended for service tap-in fees, metering fees and other fees of a similar nature pertaining to the Demised Premises. Payment for any and all water, gas and electricity used by Sublessee, if furnished by Sublessor, shall be made monthly and within ten (10) days of the presentation by Sublessor to Sublessee of bills therefor. Sublessor shall have the right to cut off and discontinue, without notice to Sublessee, said water, gas and electricity, or any other service (regardless of whether or not furnished by Sublessor) whenever and during any period for which bills for the same or rent or any other obligations under this Sublease are not promptly paid by Sublessee. The obligation of Sublessee to pay for such utilities as provided in this Sublease shall commence as of the date on which possession of the Demised Premises is delivered to Sublessee, notwithstanding any other provision of this Sublease. ARTICLE VII MAINTENANCE OF DEMISED PREMISES Section 7.1 Sublessor's Obligations for Repair and Maintenance. Sublessor, after receiving written notice from the Sublessee and having reasonable opportunity thereafter to obtain the necessary workmen therefor, shall keep in good order and repair the foundation, roof and outer walls of the Demised Premises but not the exterior entrances, doors, door frames, closure devices, window glass, window casings or moldings, window frames, windows or any of the hardware or appliances or appurtenances of said entrances, doors or window casings, window frames and windows, or any attachment thereto or attachments to the Demised Premises used in connection therewith; provided, however, that Sublessor shall not be called on to make any repairs to areas for which Sublessor is responsible if the repairs are made necessary by the act, negligence or omission of Sublessee, its subtenants, assignees, concessionaires or their respective agents, employees, invitees or licensees, and the Sublessee shall make all repairs resulting therefrom. Sublessor's obligation with respect to repairs to and maintenance of the Demised Premises shall be only as expressly set forth in this Section. Notwithstanding anything to the contrary contained herein, Sublessee shall be obligated, at its own expense, to repair any damage to the roof or outer walls of the Demised Premises caused by a breaking and entering of the Demised Premises; said repairs shall be coordinated with Sublessor to prevent Sublessor's roof warranty, if any, from being canceled and/or the breach of Sublessor's lease, if any. Section 7.2 Sublessee's Obligations for Repair and Maintenance. Except as specifically otherwise provided in the immediately preceding Section, the Sublessee shall at its own expense at all times take good care of and keep the Demised Premises and every part thereof, including, but without limitation, all walls, floors, ceilings, partitions, additions, alterations, doors, closure devices, windows, fixtures, hardware, equipment and appurtenances thereof (including lighting, sprinkling, heating, plumbing, and air conditioning systems, in good order, condition and repair, and Sublessee shall replace such systems, accessories, appurtenances and related equipment as necessary (including reasonably periodic interior painting and replacement of floor coverings as determined by Sublessor). If Sublessee refuses or neglects to repair and maintain the Demised Premises as required under this Sublease, and to the satisfaction of the Sublessor, as soon as possible after written demand therefore, Sublessor may make any such repairs and perform any such maintenance without liability to Sublessee for any loss or damage that may accrue to Sublessee's merchandise, fixtures, or other property or to Sublessee's business by reason thereof, and upon completion thereof Sublessee shall pay as additional rent, upon presentation of bill therefor, Sublessor's costs for making such repairs and maintenance plus twenty (20%) percent thereof for overhead. Sublessee further covenants that throughout the Sublease Term, it shall at its own expense: (1) make all repairs and replacements in and about the Demised Premises necessary to preserve them in good order and condition (except those specifically required of Sublessor in this Sublease), which repairs and replacements shall be at least equal in quality to the original work and to promptly pay the expenses of such repairs and replacements; (2) suffer no waste or injury to the Demised Premises; (3) give prompt notice to the Sublessor of any damage that may occur to the Demised Premises; (4) keep and maintain the Demised Premises in clean, sanitary and safe condition in accordance with the laws of the state wherein the Demised Premises is located and in accordance with all directions, rules and regulations of the health officer, fire marshal, building inspector, or other proper officials of the governmental agencies having jurisdiction and to execute and comply with all laws, rules, orders, ordinances and regulations at any time issued or in force, applicable to the Demised Premises or to the Sublessee's use and occupancy thereof of the Municipal, City, County, State and Federal governments and each and every department, bureau and official thereof and of the Board of Fire Underwriters having jurisdiction thereof, including installation and maintenance of fire extinguishers and other fire protection devices as may be required from time to time by any agency having jurisdiction thereof or the insurance underwriters insuring the building in which the Demised Premises are located. Sublessee agrees to keep the plate glass insured with a responsible Insurance Company in the name of the Sublessor and to deliver the policy or policies to Sublessor, and upon its failure to do so, Sublessor may place such insurance and charge the same to the Sublessee; provided, however, the failure on the part of the Sublessor to place such insurance does not release the Sublessee of liability for any damage to such plate glass. Section 7.3 Abuse of Plumbing Walls. The plumbing facilities shall not be used for any other purpose than that for which they are constructed, and Sublessee shall not permit or suffer any foreign substance of any kind to be thrown therein, and the cost of repair or replacement necessitated by any breakage, stoppage, or damage (whether on or off the Demised Premises) resulting from a violation of this provision shall be home by Sublessee. The Sublessee, its employees or agents, shall not alter or deface any walls, ceilings, partitions, floors, wood, stone, or iron work without the Sublessor's prior written consent. Section 7.4 Surrender of Premises. At the expiration of the tenancy hereby created, Sublessee shall surrender the Demised Premises in the same condition as the Demised Premises were in upon delivery of possession thereof to Sublessee, reasonable wear and tear excepted, and shall surrender all keys for the Demised Premises to Sublessor at the place then fixed for the payment of rent and shall inform Sublessor of all combinations on locks, safes and vaults, if any, located in the Demised Premises. Sublessee shall fully comply with the provisions of Article IX of this Sublease prior to surrendering the Demised Premises to Sublessor. Sublessee's obligation to observe or perform this covenant shall survive the expiration or other termination of the term of this Sublease. Sublessee shall further leave the Demised Premises in a broom clean condition with all trash and debris removed from the Shopping Center and shall remove all of Sublessee's signs from both the interior and exterior of the Demised Premises in such a manner so as to not cause damage to the walls or other areas. ARTICLE VIII SIGNS Section 8.1 Signs. Sublessee shall not erect or install any exterior signs, exterior or interior window or door signs or advertising media, or window or door lettering or placards without the prior written consent of Sublessor. Sublessee shall not install any exterior lighting or plumbing fixtures, shades or awnings, or any exterior decorations or painting, or build any fences or make any changes to the storefront without the previous written consent of Sublessor. Within 60 days of opening Sublessee shall erect one exterior sign in accordance with the criteria described in Exhibit "D", Sign Control, which is attached and incorporated herein, and as outlined in Sublessor's prior written approval of Sublessee's design. Sublessor's review and approval of Sublessee's sign design and/or package shall not imply that the design and/or legal requirements have been met and Sublessee warrants that it will rely solely upon its own employees, agents, contractors, and consultants in connection with such compliance. Sublessee shall be solely responsible for complying with all legal requirements and for obtaining all permits and any violations thereof. ARTICLE IX FIXTURES AND ALTERATIONS Section 9.1 Sublessee's Fixtures and Alterations. Sublessee shall not modify or alter the exterior of the Demised Premises nor make any structural alterations to the Demised Premises. Sublessee shall not make any significant modification to the interior of the Demised Premises including, but not limited to the mechanical, electrical, plumbing or architectural systems, or any part thereof without the prior written consent of Sublessor. Sublessee shall present to the Sublessor detailed plans and specifications for any modifications desired by Sublessee at the time such approval is sought. Any damage caused to the Demised Premises and/or the common areas of the Shopping Center, or the facilities serving the same, by virtue of any alteration, addition or improvement installed by Sublessee, whether authorized or unauthorized by Sublessor, shall be the responsibility of Sublessee and Sublessee shall be liable for any necessary repairs. Sublessee shall not commence any work until detailed plans and specifications for such work are submitted by Sublessee within the time requirements of Exhibits C and D to Sublessor and are approved in writing by Sublessor, in its sole discretion, with Sublessor reserving the right to inspect during and after Sublessee's buildout and improvements. Sublessor's consent and review of Sublessee's plans and specifications and inspection of Sublessee's buildout and improvements shall not imply that Sublessor has ascertained that such use, plans and specifications, and buildout and/or improvements comply with the requirements of any local, state or federal law, rule or regulation; and Sublessee warrants that it will rely solely upon its own employees, agents, contractors, and consultants in connection with such compliance. Sublessor shall have no responsibility or liability whatsoever for any loss of, or damage to, any improvements, fixtures or other equipment so installed or left upon the Demised Premises. All alterations, decorations, additions, improvements and fixtures, other than trade fixtures, which shall be made or installed by the Sublessee upon the Demised Premises and which in any manner are attached to the floors, walls or ceilings, shall remain the property of the Sublessee for the term of this Sublease; provided, however, that such alterations, decorations, additions, improvements and fixtures shall not be removed from the Demised Premises without the prior consent in writing from the Sublessor. Upon the termination or expiration of this Sublease the Sublessee shall at its own expense remove such alterations, decorations, additions, improvements and fixtures as the Sublessor shall designate in writing for removal, and the Sublessee shall restore the Demised Premises as provided in Article VII of this Sublease. In the event the Sublessee fails to remove such alterations, decorations, additions, improvements and fixtures designated for removal by the Sublessor and so restore the Demised Premises, then upon the expiration of this Sublease, the Sublessor shall have the right to remove any such alterations, decorations, additions, improvements and fixtures at the expense of the Sublessee, and the Sublessee shall upon demand reimburse the Sublessor for the cost of removing same and for restoring the Demised Premises to such condition. Sublessee shall leave upon and surrender with the Demised Premises, as a part thereof, without disturbance or molestation or injury, such of the alterations, decorations, additions, improvements and fixtures that the Sublessor designates for retention by the Sublessor, and such items shall automatically become the property of the Sublessor without any payment to the Sublessee therefor. Any linoleum or other floor covering of similar character which may be cemented or otherwise adhesively affixed to the floor of the Demised Premises shall upon expiration of the Sublease term be and become the property of the Sublessor. However, in the event Sublessee alters the floor surface or attaches or cements any material or substance to the floor which serves Sublessee's trade use, but is "nonstandard" for other potential sublessees, such as, but not limited to, a "pebbled floor", Sublessee shall, at Sublessee's expense remove and repair the floor to its original condition, excepting reasonable wear and tear, upon Sublessor's request. The terms of this provision shall survive the termination and expiration of this Sublease. Section 9.2 Sublessor's Changes and Additions. Sublessor hereby reserves the right at any time, and from time to time, to make alterations or additions to, and to build additional stories on the building in which the Demised Premises are located and to build adjoining the same. Sublessor also reserves the right at any time, and from time to time, to demolish or construct other buildings and improvements in the Shopping Center, and to enlarge the Shopping Center, and to make alterations therein or additions thereto, and to build additional stories on any building or buildings within the Shopping Center, and to build adjoining thereto and to construct decks or elevated parking facilities and free-standing, single story buildings within the parking lot areas of the Shopping Center. Sublessor reserves the right to relocate, at any time, the various buildings, parking areas and other common areas shown on Exhibit B; Sublessee acknowledges that the said Exhibit B creates no easement rights in common areas shown thereon, but only the right to use said areas in common with all other tenants and occupants of the Shopping Center, and to such others to whom Sublessor has granted, or may hereafter grant rights to use the same, as said common areas may exist from time to time during the term of this Sublease. ARTICLE X INSURANCE AND INDEMNITY Section 10.1 Indemnification. Sublessee agrees to indemnify Sublessor, and save it harmless from and against any and all claims, actions, damages, liability and expense, including attorneys fees, in connection with loss of life, personal injury and/or damage to property arising from out of any occurrence in, upon or at the Demised Premises or the occupancy or use by Sublessee of the Demised Premises or any part thdreof, including, but not limited to the sidewalks immediately adjoining the Demised Premises and the loading platform area, if any, allocated to the use of Sublessee, or arising from or out of Sublessee's failure to comply with any of Sublessee's obligations hereunder, or arising from any inaccuracy in Sublessee's representations and warranties contained herein, or occasioned wholly or in part by any act or omission by Sublessee, its agents, contractors, employees, servants, customers, subtenants, assignees, concessionaires or licensees. In case Sublessor shall, without fault on its part, be made a party to any litigation commenced by or against Sublessee, then Sublessee shall protect and hold it harmless and shall pay all costs, expenses and reasonable attorneys' fees incurred or paid by Sublessor in connection with such litigation. Sublessee shall also pay all Sublessor's costs, expenses and reasonable attorneys' fees that may be incurred by Sublessor in enforcing the Sublessee's covenant and agreements in this Sublease. Section 10.2 Increase in Fire Insurance Premium. Sublessee shall not carry any stock of goods or do anything in or about the Demised Premises which will in any way tend to increase the insurance rates on said premises or the building of which they are a part. Sublessee shall pay as additional rental the entire amount of any increase in premiums for insurance against loss by fire that may be charged during the term of this Sublease on the amount of insurance at any time carried by Sublessor on said premises and/or the building of which they are a part, resulting from the business carried on in the Demised Premises by Sublessee, whether or not Sublessor has consented to the same. The obligations of Sublessee under this Section are in addition to its obligations contained elsewhere in this Sublease concerning insurance. If Sublessee installs any electrical equipment that overloads the lines in the Demised Premises, Sublessee shall at its own expense make whatever changes are necessary to comply with the requirements of the Insurance Underwriters and governmental authorities having jurisdiction thereof. Section 10.3 Sublessee's Obligation to Carry Property Commercial General Liability and Workers Compensation Insurance. Sublessee shall maintain, at its own expense, from the date of delivery of possession to it of the Demised Premises through the expiration of the Sublease Term, insurance of the following character: (i) Insurance against fire, vandalism, malicious mischief and such other perils as are from time to time included in a standard extended coverage endorsement, insuring Sublessee's merchandise, trade fixtures, furnishings, windows, plate glass, equipment and all items of personal property of Sublessee located on or within the Demised Premises, in an amount not less than the full amount of the actual replacement cost thereof; (ii) Commercial general liability insurance, and if necessary, Commercial Umbrella Liability Insurance, against claims for bodily injury, death, property damage or other loss occurring on, in or about the Demised Premises and adjoining sidewalks and passageways, or arising from the acts of Sublessee or its agents, employees or invitees on, in or about the Shopping Center, such insurance to afford protection to Sublessor and such other parties as Sublessor shall designate, with a limit of not less than $2,000,000 for each occurrence. If such commercial general liability insurance contains a general aggregate limit, it shall apply separately to the Demised Premises (iii) Workers' compensation insurance covering all persons employed in connection with any work done on or about the Demised Premises with respect to which claims for death or bodily injury could be asserted against Sublessor, Sublessee or the Demised Premises; and (iv) At any time when the Demised Premises are being altered, maintained or repaired on behalf of Sublessee, or its subtenants, assigns, concessionaires or licensees, commercial general liability insurance for each contractor in the amounts set forth in Section 10.3 (ii), and builder's risk insurance (in completed value non-reporting form) in the amount of the full replacement cost of the improvements on the Demised Premises, exclusive of foundations, including the value of the alterations thereto and the materials and supplies therefor. All insurance policies required hereunder shall be issued by companies of recognized financial standing, duly licensed to do business under the laws of the state wherein the Demised Premises are located, and given an "A" rating by Best's Insurance Guide, or upon Sublessee's request, as required by Sublessor's Lease and mortgage, and shall name Sublessor and any other parties in interest designated by Sublessor as additional named insureds, including a mortgagee clause in favor of any mortgagee of the Demised Premises or the Shopping Center or any portion thereof. Each such policy shall contain an agreement by the insurer that it will not cancel or materially modify such policy except after thirty (30) days prior written notice to Sublessor. Sublessee shall deliver to Sublessor, upon delivery of possession of the Demised Premises, the original or duplicate policies or certificates of the insurers, evidencing all the insurance which is required to be maintained by Sublessee hereunder and Sublessee shall, within thirty (30) days prior to the expiration of any such insurance, deliver other original or duplicate policies or other certificates of the insurers evidencing the renewal of such insurance. Should Sublessee fail to effect, maintain or renew any insurance provided for in this Section, or to pay the premium therefor, or to deliver to Sublessor any of such policies or certificates, then and in any of said events Sublessor may, at its option but without obligation so to do, upon five (5) days notice to Sublessee, procure such insurance. Any sums expended by Sublessor to procure such insurance shall be additional rent hereunder and shall be paid by Sublessee immediately after delivery to Sublessee of a statement therefor. Section 10.4 Environmental Covenants and Indemnification. Sublessee represents and covenants that it shall comply in all material respects with the requirements of any applicable federal and state environmental law, regulation, rule or local governmental ordinance ('Environmental Law") relating to the Demised Premises including obtaining required air permits, and shall notify Sublessor promptly and provide copies to Sublessor of any order, notice, permit application or other communication received by Sublessee with respect to the Demised Premises from any governmental agency in connection with the alleged violation of any such Environmental Law. Sublessee further represents that to the best of its knowledge, it is not aware of any toxic or hazardous waste, substance or material (as such are or may be defined under any applicable Environmental Law) which shall or may be used, released, generated, stored, treated, drained, or disposed of from, on, or about the Demised Premises or Shopping Center in violation of any applicable Environmental Law. Sublessee covenants and agrees that it, its employees, agents, representatives, assigns, or successors shall not use, release, generate, store, treat, drain, or dispose of any toxic or hazardous waste(s) upon, from, or about the Demised Premises or Shopping Center not in accordance with the Environmental Laws. Sublessee shall indemnify, defend and hold Sublessor and Master Landlord, if any, harmless from and against all loss, liability, damage, fine, penalty, cost and expense, whatsoever, including attorneys' fees, hereafter incurred by Sublessor or Master Landlord, if any, as a result of Sublessee's violation of any applicable Environmental Law relating to the Demised Premises or Shopping Center. Indemnification under this section shall survive the expiration or termination of this Sublease. ARTICLE XI RECEIVING, DELIVERY AND TENANT PARKING Section 11.1 Receiving and Delivery of Sublessee's Merchandise and Disposition of Refuse. All receiving and delivery of goods and merchandise and all removal of merchandise, supplies, equipment, garbage and refuse shall be made only by way of the rear of the Demised Premises or at any other location designated by Sublessor, and only at such time designated for such purpose by Sublessor. Section 11.2 Sublessee dnd Employee Parking. Notwithstanding any other provision of this Sublease, Sublessee and its employees shall park their automobiles only in areas specifically designated for that purpose from time to time by Sublessor. Sublessee shall, within five (5) days after written notice from Sublessor, furnish to Sublessor the automobile license numbers assigned to its automobiles and the automobiles of all of its employees. Sublessee shall be responsible for its employees and any violation hereof by its employees. In the event that Sublessee or its employees fail tpark their automobiles in designated parking areas, then Sublessor may, at its option, charge the Sublessee and Sublessee shall pay to Sublessor as additional rent Ten ($10.00) Dollars per day per automobile parked in any area other than those designated for Sublessee and employee parking. ARTICLE XII ASSIGNMENT AND SUBLETTING Section 12.1 Assignment and Subletting. Sublessee shall not sell, assign, hypothecate, pledge, or in any manner transfer this Sublease or any estate or interest therein by operation of law or otherwise, nor sublet the Demised Premises or any part thereof, nor allow anyone to conduct business at, upon or from the Demised Premises, without the prior written consent of Sublessor. Consent by Sublessor to one or more assignments of this Sublease or to one or more sublettings of the Demised Premises or the collection of rent by Sublessor from any subtenant or assignee of Sublessee shall not constitute a waiver hereof ot operate to exhaust any of the Sublessor's rights under this Article. The sale, issuance, or transfer of any voting capital stock of Sublessee or Sublessee's Guarantor, if any, (if Sublessee or Sublessee's Guarantor, if any, be a non-public corporation the stock of which is not traded on any exchange or over the counter), which directly or indirectly results in a change in the voting control of Sublessee or Sublessee's Guarantor, if any, shall be deemed to be an assignment of this Sublease within the meaning of this Section. Any such transfer either voluntarily or involuntarily or by operation of law or otherwise, without the consent of Sublessor shall at Sublessor's option terminate this Sublease, in addition to any remedies it may have under Article XVII of this Sublease or at law, and any purported such transfer shall be null and void. If the Sublessee's interest in and to this Sublease is assigned, the Sublessee's liability for performance of any terms, conditions, covenants and agreements contained herein to be performed by Sublessee shall remain in full force and effect, notwithstanding the fact that Sublessor may have consented to such assignment. Sublessor has entered into this Sublease with Sublessee in order to obtain for the benefit of the entire Shopping Center the unique attraction of Sublessee's trade name and the unique merchandising mix and product line associated with Sublessee's business, and the foregoing prohibition on assignment or subletting or the like is expressly agreed to by the Sublessee as an inducement to Sublessor to sublease to Sublessee. If Sublessee's interest in and to this Sublease is transferred, the Percentage Rent payable by Sublessee's transferee hereunder shall continue to be computed as provided in Section 2.3 hereof, but in no event shall such Percentage Rent be less than the average Percentage Rent paid by Sublessee to Sublessor for the two Sublease Years preceding Sublessee's transfer of interest in and to this Sublease. Section 12.2 By Sublessor. Sublessor shall have the right to transfer, assign and convey in whole or in part, any and all rights, obligations and interests of Sublessor under this Sublease. ARTICLE XIII ACCESS TO PREMISES Section 13.1 Right of Entry by Sublessor. Sublessor shall have the right to enter upon the Demised Premises at all reasonable hours for the purpose of inspecting the same, or of making repairs, additions or alterations to the Demised Premises or any property owned or controlled by Sublessor, without the same constituting an eviction of Sublessee in whole or in part, and the rent reserved shall in no way abate while said repairs, alterations, improvements, or additions are being made, by reason of loss or interruption of business of Sublessee, or otherwise so long as the foregoing do not result in any substantial interference with Sublessee's business. Section 13.2 Sublessor's Right to Exhibit. Premises For a period commencing ninety (90) days prior to the expiration of this Sublease, Sublessor may have reasonable access to the Demised Premises for the purpose of exhibiting the same to prospective tenants. ARTICLE XIV EMINENT DOMAIN Section 14.1 Total Condemnation If the whole of the Demised Premises shall be taken by any public authority under the power of eminent domain then the term of this Sublease shall cease as of the day possession shall be taken by such public authority and the rent shall be paid up to that day with a proportionate refund by Sublessor of such rent as may have been paid in advance for a period subsequent to the date of the taking. Section 14.2 Partial Condemnation If less than the whole, but more than twenty (20%) percent of the Demised Premises are taken under the power of eminent domain, Sublessor and Sublessee shall each have the right to terminate this Sublease upon ten (10) days prior written notice to the other and in such event, such termination shall be effective upon the day possession of the Demised Premises shall be acquired for public use. Such notice shall be given within thirty (30) days after such taking. In the event (i) neither party hereto shall elect to terminate this Sublease or (ii) less than twenty (20%) percent of the Demised Premises are so taken, the Sublease Term shall cease only on the part so taken as of the day possession shall be taken by such public authority and Sublessee shall pay rent up to that day, with appropriate refund by Sublessor of such rent as may have been paid in advance for a period subsequent to the date of the taking, and thereafter all the terms herein provided shall continue in effect, except that the Annual Minimum Rent shall be reduced in proportion to the amount of the Demised Premises taken and the breakpoint above which Percentage Rent, if any, is computed and payable shall likewise be proportionately reduced and Sublessor shall, at its own cost and expense, make all necessary repairs or alterations to the basic building as originally installed by Sublessor, so as to constitute the remaining Demised Premises a complete architectural unit. If more than twenty (20%) percent of the building in which the Demised Premises are located or more than ten (10%) percent of the Common Area shall be taken under power of eminent domain, Sublessor may, by written notice to Sublessee delivered within thirty (30) days after the date of surrendering possession to the public authority, terminate this Sublease. Notwithstanding the foregoing, if the Master Lease terminates as a result of condemnation or taking by eminent domain, this Sublease shall also simultaneously terminate. Section 14.3 Sublessor's and Sublessee's Damages. All damages awarded for such taking under the power of eminent domain, whether for the whole or a part of the Demised Premises, shall belong to and be the property of Sublessor whether such damages shall be awarded as compensation for diminution in value to the leasehold or to the fee of the Demised Premises; provided, however, that Sublessor shall not be entitled to any separate and additional award made to Sublessee for loss of business, or for depreciation to, and cost of removal of, stock and trade fixtures. ARTICLE XV DESTRUCTION OR DAMAGE TO DEMISED PREMISES Section 15.1 Reconstruction of Damaged Premises. In the event the Demised Premises shall be partially or totally destroyed by fire or other casualty insured under the Property Insurance carried by Sublessor so as to become partially or totally untenantable, then the damage to the Demised Premises shall be promptly repaired, to the extent, of any proceeds received from such insurance, unless Sublessor shall elect not to rebuild as hereinafter provided. If Sublessor elects to cause such repairs to be made, the obligation of Sublessor hereunder shall be limited to the Sublessor's Work covered by Exhibit "C" hereof. In no event shall Sublessor be required to repair or replace Sublessee's merchandise, trade fixtures, furnishings or equipment. If more than thirtyfive (35%) percent of the floor area of the building in which the Demised Premises are located shall be damaged or destroyed by fire or other casualty, or if during the last three (3) years of the term hereof more than twenty-five (25%) percent of the Demised Premises or of the floor area of the building in which the Demised Premises are located shall be damaged or destroyed by fire or other casualty, then Sublessor may elect either that the building and/or Demised Premises, as the case may be, be repaired or rebuilt or, at its sole option, terminate this Sublease by giving written notice to Sublessee of its election to so terminate, such notice to be given within ninety (90) days after the occurrence of such damage or destruction. If Sublessor elects to repair or rebuild the Demised Premises, it shall, within ninety (90) days after the occurrence of such damage or destruction give Sublessee notice of its intention to repair or rebuild the Demised Premises and then proceed to repair or rebuild same with reasonable dispatch, subject, however, to delays of the type referred to in the Force Majeure Section of this Sublease. If Sublessor is required or elects to repair or rebuild the Demised Premises as herein provided, Sublessee shall repair or replace its merchandise, trade fixtures, furnishings and equipment in a manner and to at least a condition equal to that prior to its damage or destruction, and if closed, promptly reopen for business. Section 15.2 Waiver of Subrogation. Each party does hereby remise, release and discharge the other party hereto and any officer, agent, employee or representative of such party, of and from any liability whatsoever hereafter arising from loss, damage or injury caused by fire or other casualty for which insurance, permitting the foregoing release of liability and waiving the insurer's right of subrogation (but not self-insurance), is carried by such party at the time of such loss, damage or injury to the extent of recovery by such party under such insurance. Each insurance policy required to be carried by Sublessor or Sublessee under this Sublease shall include a clause or endorsement to the effect that the release contained in this Section will not adversely affect or impair such policy or prejudice the right of the insured to recover under such policy, and each such policy shall permit this waiver of liability and contain a waiver of subrogation by the insurer. ARTICLE XVI BANKRUPTCY AND INSOLVENCY Section 16.1 Continuation of Obligations Under This Sublease After Institution of Bankruptcy Proceedings. In the event that a petition concerning Sublessee is filed under Chapter 7, 11, or 13 of the Bankruptcy Code, Sublessee, Sublessee as Debtor-in-Possession or the Trustee shall, until such time as this Sublease is either assumed or rejected by Sublessee, Sublessee as Debtor-in-Possession or the Trustee pursuant to this Article, or otherwise, shall perform in a timely manner all the obligations of Sublessee arising under this Sublease, including, without limitation, the payment of rent as required by this Sublease. Acceptance of such performance by Sublessor shall not constitute a waiver or relinquishment of any of Sublessor's rights arising under this Sublease, the Bankruptcy Code or otherwise. Section 16.2 Conditions to the Assumption of the Sublease in Proceedings Under Chapter 7 11 or 13 of the Bankruptcy Code. In the event that a Petition for discharge, reorganization or adjustment of debts is filed concerning Sublessee under Chapter 7, 11 or 13 of the Bankruptcy Code, or a proceeding is filed under Chapter 7 of the Bankruptcy Code and is transferred or converted to Chapter 11 or 13, the Trustee, Sublessee, or Sublessee as Debtor-in-Possession, must elect to assume this Sublease within sixty (60) days from the date of the filing or transferring of the Petition under Chapter 11 or 13, or the Trustee, Sublessee or Sublessee as Debtor-in-Possession, shall be deemed to have rejected this Sublease and Sublessor thereupon shall be entitled immediately to possession of the Demised Premises without further obligation to the Trustee, Sublessee or Sublessee as Debtor-in-Possession; provided, however, Sublessor's right to be compensated for damages shall survive such rejection. No election by the Trustee, Sublessee, or Sublessee as Debtor-in-Possession to assume this Sublease, whether under Chapter 7, 11, or 13 and whether for the purpose of assigning the same or otherwise, shall be effective unless each of the following conditions (which Sublessor and Sublessee acknowledge are commercially reasonable in the context of a bankruptcy proceeding of Sublessee) have been satisfied, and Sublessor has so acknowledged in writing that: (1) Sublessee, Sublessee as Debtor-in-Possession, or the Trustee shall comply with all requirements of the Bankruptcy Code with regard to curing or giving adequate assurance of curing of all monetary and non-monetary defaults, compensation for pecuniary loss and providing adequate assurance of future performance. (2) The obligations imposed upon the Trustee, Sublessee, or Sublessee as Debtor-in-Possession, shall continue with respect to Sublessee or any assignee of this Sublease after the completion of bankruptcy proceedings. (3) The assumption of the Sublease will not: (a) Breach any provision, including without limitation provisions such as radius, location, use or exclusivity provisions, in any other lease, mortgage, financing agreement or other agreement by which Sublessor is bound relating to the Shopping Center; or (b) Disrupt, in Sublessor's sole judgment, the Sublessee mix of the Shopping Center or any other attempt by Sublessor to provide a specific variety of retail stores in the Shopping Center which, in Sublessor's sole judgment, would be most beneficial to all of the tenants of the Shopping Center and would enhance the image, reputation, and profitability of the Shopping Center; or (4) This Sublease has not been previously terminated by Sublessor as provided herein. For the purpose of this Section 16.2, Sublessor and Sublessee acknowledge, in the context of a bankruptcy proceeding of Sublessee, that a minimum "adequate assurance of curing all defaults" shall mean: (a) The Trustee, Sublessee or Sublessee as Debtor-in-Possession, has and will continue to have sufficient unencumbered assets after the payment of all secured obligations and administrative expenses to assure Sublessor that the Trustee, Sublessee or Sublessee as Debtor-in-Possession, will have sufficient funds to fulfill the obligations of Sublessee under this Sublease, and to keep the Demised Premises stocked with merchandise and properly staffed with sufficient employees to conduct a fully-operational, actively promoted business on the Demised Premises; and (b) The Bankruptcy Court shall have entered an Order segregating sufficient cash payable to Sublessor and/or the Trustee, Sublessee or Sublessee as Debtor-in-Possession, to cure the monetary and/or non-monetary defaults under this Sublease within the time periods set forth above and granting a valid and perfected first lien and security interest and/or mortgage in property of the Trustee, Sublessee or Sublessee as Debtor-in-Possession, acceptable as to value and kind to Sublessor, to secure to Sublessor the obligation of the Trustee, Sublessee or Sublessee as Debtor-in-Possession. For the purpose of this Section 16.2, Sublessor and Sublessee acknowledge that, in the context of a bankruptcy proceeding of Sublessee, at a minimum "adequate assurance of future performance" shall include that: (a) The trustee, Sublessee or Sublessee as Debtor-in-Possession, shall also deposit with Sublessor, as security for the timely payment of rent, an amount equal to three (3) months base rent in accordance with Section referring to annual minimum rent hereof and other monetary charges accruing under this Sublease; and (b) If not otherwise required by the terms of this Sublease, the Trustee, Sublessee or Sublessee as Debtor-in-Possession, shall also pay in advance on each date that Annual Minimum Rent is payable an amount equal to 1/12th of Sublessee's annual obligations under this Sublease, for maintenance, common area charges, real estate taxes, Merchants Association or Sublessor's Promotional Fund dues, insurance and similar charges, as estimated by Sublessor in accordance with the provisions of this Sublease, and subject to adjustment by Sublessor in further accordance with the provisions of this Sublease. Section 16.3 Conditions to the Assignment of the Sublease in Bankruptcy Proceedings. If the Trustee, Sublessee or Sublessee as Debtor-in-Possession, has assumed the Sublease pursuant to the terms and provision of Sections 16.2 hereof, for the purpose of assigning (or elects to assign) Sublessee's interest under this Sulease or the estate created thereby, to any other person, such interest or estate may be so assigned only if all the conditions set forth in Section 16.2 hereof are satisfied both before and after such assignment and Sublessor shall acknowledge in writing that the intended assignee has provided adequate assurance as defined in this Section, of future performance of all of the terms, covenants and conditions of this Sublease to be performed by Sublessee. For purposes of this Section, Sublessor and Sublessee acknowledge that, in the context of a bankruptcy proceeding of Sublessee, at a minimum "adequate assurance of future performance" in connection with an assignment of this Sublease shall mean that each of the following conditions (which Sublessor and Sublessee acknowledge are commercially reasonable) have been satisfied, and Sublessor has so acknowledged in writing: (a) The assignee has submitted a current financial statement audited by a Certified Public Accountant which shows a net worth and working capital in amounts determined to be sufficient by Sublessor to assure the future performance by such assignee of the Sublessee's obligation under this Sublease; (b) The assignee, if requested by Sublessor, shall have obtained guarantees in form and substance satisfactory to Sublessor from one or more persons who satisfy Sublessor's standards of creditworthiness; (c) The assignee has submitted in writing evidence, satisfactory to Sublessor, of substantial retailing experience in shopping centers of comparable size to the Shopping Center and in the sale of merchandise and services permitted under this Sublease; (d) The Sublessor has obtained all consents or waivers from any third party required under any lease, mortgage, financing arrangement or other agreement by which Sublessor is bound to permit Sublessor to consent to such assignment; and (e) The assignee has submitted in writing evidence, satisfactory to Sublessor, that the operating and financial performance of the assignee, and any guarantors, and the net worth and working capital of the assignee, and any guarantors, are at least equal to that of Sublessee as of the date Sublessee executed this Sublease. Section 16.4 Sublessor's Option to Terminate Upon Subsequent Bankruptcy Proceedings of Sublessee. In the event that this Sublease is assumed by a Trustee appointed for Sublessee, by Sublessee or by Sublessee as Debtor-in-Possession, under the provisions of Section 16.2 or otherwise hereof and thereafter Sublessee is liquidated or files or has filed against it a subsequent Petition for reorganization or adjustment of debts under Chapter 7, 11 or 13 of the Bankruptcy Code, then, in any of such events, Sublessor may, at its option, terminate this Sublease and all rights of Sublessee hereunder, by giving Sublessee written notice of its election to so terminate, by no later than thirty (30) days after the occurrence of any such event. Section 16.5 Use and Occupancy Charges. When, pursuant to the Bankruptcy Code, the Trustee, Sublessee or Sublessee as Debtor-in-Possession, shall be obligated to pay reasonable use and occupancy charges for the use of the Demised Premises or any portion thereof, such charges shall not be less than the Annual Minimum Rent provided under Section 2.2 of this Sublease and other monetary obligations of Sublessee for the payment of maintenance, common area charges, real estate taxes, Merchants Association or Sublessor's Promotional Fund dues, insurance and similar charges. The acceptance of such rent and other charges by Sublessor and the acceptance of performance by the Trustee, Sublessee or Sublessee as Debtor-in-Possession, by Sublessor shall not constitute a waiver or relinquishment of any of ublessor's rights arising under this Sublease, the Bankruptcy Code or otherwise. Section 16.6 Sublessee's Interest Not Transferable By Virtue of State Insolvency Law Without Sublessor's Consent. Neither Sblessee's interest in the Sublease, nor any lesser interest of Sublessee herein, nor any estate of Sublessee hereby created, shall pass to any trustee, receiver, assignee for the benefit of creditors, or any other person or entity, or otherwise by operation of law under the laws of any state having jurisdiction of the person or property of the Sublessee (hereinafter referred to as the "state law") unless Sublessor shall consent to such transfer in writing. No acceptance by Sublssor of rent or any other payments from any such trustee, receiver, assignee, person or other entity shall be deemed to have waived, nor shall it waive the requirement to obtain Sublessor's consent of Sublessor's right to terminate this Sublease for any transfer of Sublessee's interest under this Sublease withouisuch consent. Section 16.7 Sublessor's Option to Terminate Upon Insolvency of Sublessee or Guarantor Under State Law or Upon Insolvency of Guarantor Under Federal Bankruptcy Act. In the event the estate of Sublessee created hereby shall be taken in execution or by other process of law, or if Sublessee or any guarantor of Sublesee's obligations hereunder (hereinafter referred to as the "guarantor") shall be adjudicated insolvent pursuant to the provisions of any present or future insolvency law under state law, or if any proceedings are filed by or against the guarantor under the Bankruptcy Code, or any similar provisions of any future federal bankruptcy law, or if a Receiver or Trustee of the property of Sublessee or the guarantor shall be appointed under state law by reason of Sublessee's or the guarantor's insolvency or inability to pay its debts as they become due or otherwise, or if any assignment shall be made of Sublessee's or the guarantor's property for the benefit of creditors under state law, then and in such event Sublessor may, at its option, terminate this Sublease and all rights of Sublessee hereunder by giving Sublessee written notice of termination within thirty (30) days after the occurrence of such event. ARTICLE XVII DEFAULT OF THE TENANT Section 17.1 Right to Re-enter. In the event Sublessee shall: (i) fail to pay any Annual Minimum Rent, additional rent or other amounts payable and due hereunder as and when each such payment shall be due; or (ii) fail to move into the Demised Premises and to conduct its business as required by the provisions of this Sublease; or (iii) fail to use the Demised Premises in the manner set forth in Section 5.) hereof entitled Use of Premises or (iv) fail to perform any other of the terms, conditions or covenants of this Sublease to be observed or performed by Sublessee for more than thirty (30) days after written notice of such default shall have been mailed to Sublessee; or (v) if Sublessee shall abandon said premises, or permit this Sublease to be taken under any writ of execution, then the Sublessor, in addition to any other rights or remedies it may have, shall have the right to declare this Sublease terminated and the term ended (in which event, this Sublease and the term hereof shall expire, cease and terminate with the same force and effect as though the date set forth in said notice were the date originally set forth herein and fixed for the expiration of the term and Sublessee shall vacate and surrender the premises but shall remain liable as hereafter provided), and/or Sublessor shall have the immediate right to possession of the Demised Premises and of reentry and may, without notice, re-enter the Demised Premises either by force or otherwise, and dispossess, Sublessee and the legal representative of Sublessee or other occupant of the Demised Premises and remove their effects and hold the Demised Premises as if this Sublease had not been made, and Sublessee hereby waives service of notice of intention to re-enter or to institute legal proceedings to that end, in the event of re-entry by Sublessor, Sublessor may remove all persons and property from the Demised Premises and such property may be removed and stored in a public warehouse or elsewhere at the cost of, and for the account of Sublessee, without notice or resort to legal process and without being deemed guilty of trespass, or becoming liable for any loss or damage which may be occasioned thereby. Section 17.2 Right to Relet. Should Sublessor elect to re-enter, as herein provided, or should it take possession pursuant to legal proceedings or pursuant to any notice provided for by law, it may either terminate this Sublease or it may from time to time without terminating this Sublease, make such alterations and repairs as may be necessary in order to relet the Demised Premises, and relet said premises or any part thereof for such term or terms (which may be for a term extending beyond the term of this Sublease) and at such rental or rentals and upon such other terms and conditions as Sublessor in its sole discretion may deem advisable. Upon each such reletting all rentals and other sums received by Sublessor from such reletting shall be applied, first, to the payment of any indebtedness other than rent due hereunder from Sublessee to Sublessor; second, to the payment of any costs and expenses of such reletting, including reasonable brokerage fees and attorney's fees and of costs of such alterations and repairs; third, to the payment of rent and other charges due and unpaid hereunder, and the residue, if any, shall be held by Sublessor and applied in payment of future rent as the same may become due and payable hereunder. If such rentals and other sums received from such reletting during any month be less than that to be paid during that month by Sublessee hereunder, Sublessee shall pay such deficiency to Sublessor, and if such rentals and sums shall be greater, Sublessor shall retain the excess. Such deficiency shall be calculated and paid monthly. No such re-entry or taking possession of said premises by Sublessor shall be construed as an election on its part to terminate this Sublease unless a written notice of such intention be given to Sublessee or unless the termination thereof be decreed by a court of competent jurisdiction. Notwithstanding any such reletting without termination, Sublessor may at any time thereafter elect to terminate this Sublease for such previous breach. Should Sublessor at any time terminate this Sublease for any breach, in addition to any remedies it may have, it may recover from Sublessee all damages it may incur by reason of such breach, including the cost of recovering the Demised Premises, reasonable attorney's fees and the worth at the time of such termination of the excess, if any, of the amount of rent and charges reserved in this Sublease for the remainder of the stated term over the then reasonable rental value of the Demised Premises for the remainder of the stated term, all of which amounts shall be immediately due and payable from Sublessee to Sublessor. In determining the rent which would be payable by Sublessee hereunder subsequent to default, the annual rent for each year of the unexpired term shall be equal to the Annual Minimum Rent set forth in Section 2.2 hereof, plus an amount equal to the average Annual Percentage Rent paid by Sublessee from the commencement of the term to the time of default, or during the preceding three full calendar years, whichever period is shorter. The failure or refusal of Sublessor to relet the Demised Premises shall not affect Sublessee's liability hereunder. The terms "entry" and "re-entry" are not limited to their technical meanings. Section 17.3 Legal Expenses. If suit shall be brought for recovery of possession of the Demised Premises, for the recovery of rent or any other amount due under the provisions of this Sublease, or because of the breach of any other covenant herein contained on the part of Sublessee to be kept and performed, and a breach shall be established, Sublessee shall pay to Sublessor all expenses incurred therefor, including a reasonable attorney's fee. Section 17.4 Waiver of Rights of Redemption. Sublessee hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Sublessee being evicted or dispossessed for any cause, or in the event of Sublessor obtaining possession of the Demised Premises, by reason of the violation by Sublessee of any of the covenants or conditions of this Sublease, or otherwise. Section 17.5 Sublessee's Failure to Operate Continuously. The parties covenant and agree that because of the difficulty or impossibility of determining Sublessor's damages by way of loss of the anticipated Percentage Rent, if any, from the Sublessee or other tenants or occupants in the Shopping Center, or by way of loss of value in the property because of adverse publicity or appearances by Sublessee's action, should Sublessee at any time during the term: (a) vacate, abandon, or desert the Demised Premises; or (b) cease operating its business therein for any reason other than damage or destruction as provided in Article XV, then, in any such event, if Sublessor elects not to terminate this Sublease as set forth in this Article, then, in addition to any other rights and remedies available to Sublessor under the terms of this Sublease, Sublessee shall pay to Sublessor (in addition to Minimum Annual Rent and all other charges due under this Sublease) an amount equal to 1-30th of the monthly installment of the Annual Minimum Rent then due for each day the Demised Premises and Sublessee's business therein are not continuously and uninterruptedly operated by Sublessee. ARTICLE XVIII WAIVER OF LIABILITY Section 18.1 Waiver of Liability. Anything in this Sublease to the contrary notwithstanding, Sublessee agrees that it shall look solely to the estate and property of the Sublessor in the land and buildings comprising the Shopping Center of which the Demised Premises are a part or in the underlying lease, as the case may be, subject to prior rights of any mortgagee of the premises or underlying lessor, for the collection of any judgment (or other judicial process) requiring the payment of money by Sublessor in the event of any default or breach by Sublessor with respect to any of the terms, covenants and conditions of this Sublease, and no other assets of the Sublessor shall be subject to levy, garnishment, attachment, execution or other procedures for the satisfaction of Sublessee's remedies. In the event the Sublessor named on this Sublease transfers this Sublease, except as collateral security for a loan, upon such transfer such Sublessor will be released from all liability arid obligations hereunder, provided that the Transferee assumes the obligations of this Sublease thereafter accruing. ARTICLE XIX Section 19.1 Intentionally Deleted. ARTICLE XX HOLDING OVER, SUCCESSORS Section 20.1 Holding Over. Any holding over after the expiration of the term hereof with or without the consent of the Sublessor, shall be construed to be a tenancy from month to month at double the Annual Minimum Rent herein specified for said period of holdover plus double the annual percentage rent for Percentage Rent as payable hereunder for the three Sublease Years immediately preceding, or the entire portion of the Sublease Term, if less than three Sublease Years, and shall otherwise be on the same terms and conditions herein specified so far as applicable. Section 20.2 Successors. Except as otherwise expressly provided in this Sublease, all rights and liabilities herein given to, or imposed upon, the respective parties hereto shall extend to and bind the several respective heirs, executors, administrators, successors, and assigns of the said parties; and if there shall be more than one Sublessee, they shall all be bound jointly and severally by the terms, covenants and agreements herein. No rights, however, shall inure to the benefit of any assignee of Sublessee unless the assignment to such assignee has been approved by Sublessor in writing as provided in the Assignment and Subletting Section hereof. ARTICLE XXI SECURITY DEPOSIT Section 21.1 Security Deposit. Sublessee shall deposit with Sublessor a certified check in the amount as set forth in Exhibit H, incorporated herein. Said deposit shall be held by Sublessor without liability for interest as security for the faithful performance by Sublessee of all the terms and provisions of this Sublease by Sublessee to be observed and performed. The security deposit shall not be mortgaged, assigned, transferred or encumbered by Sublessee, without the written consent of Sublessor, and any such act on the part of the Sublessee shall be without force and effect and shall not be binding upon Sublessor. If any of the rents herein reserved or any other sum payable by Sublessee to Sublessor shall be overdue and unpaid or should Sublessor make payments on behalf of the Sublessee, or Sublessee shall fail to perform any of the provisions or terms of this Sublease, the Sublessor may, at its option and without prejudice to any other remedy which Sublessor may have on account thereof, appropriate and apply said entire deposit or so much thereof as may be necessary to compensate Sublessor toward the payment of Annual Minimum Rent, Percentage Rent or additional rent or loss or damage sustained by Sublessor due to such breach by Sublessee, and Sublessee shall forthwith upon demand restore said security to the original sum deposited. Should- Sublessee duly comply with all of said terms and provisions of this Sublease and promptly pay all of the rentals as they fall due and all other sums payable by Sublessee to Sublessor, then said deposit shall be returned in full to Sublessee at the end of the term but in no event is the said security to be returned until the Sublessee has vacated the Demised Premises and delivered possession satisfactorily to the Sublessor. Sublessor's right to the possession of the Demised Premises for non-payment of rent or for any other reason shall not in any event be affected by reason of the fact that he Sublessor holds this security. In the event of bankruptcy or other credit-debtor proceedings against Sublessee, all securities shall be deemed to be applied first to the payment of rent and other charges due Sublessor for all periods prior to the filing of such proceedings. The Sublessor shall not be obliged to keep the said security as a separate fund, but may mix the said security with its own funds. In the event of a sale of the Demised Premises or lease of the land on which it stands subject to this Sublease, the Sublessor shall have the right, at its option, to transfer this security to the vendee or lessor and the Sublessor shall thereupon be considered released by the Sublessee from all liability for the return of such security and the Sublessee shall look solely to the new Sublessor for the return of said security. In the event of any rightful and permitted assignment of this Sublease by Sublessee, the said security deposit shall be deemed to be held by Sublessor as a deposit made by the assignee and Sublessor shall have no further liability with respect to the return of said security deposit to the assignor. Any mortgagee of Sublessor shall be relieved and released from any obligation to return such security in the event such mortgagee comes into possession of the Demised Premises and/or the Shopping Center by reason of foreclosure of its security interest or any proceeding in lieu thereof. ARTICLE XXII MISCELLANEOUS Section 22.1 Non-Waiver. The failure of the Sublessor to insist, in any one or more instances, upon a strict performance of any of the covenants of this Sublease, or to exercise any option herein contained, shall not be construed as a waiver or a relinquishment for the future of such covenant or option, but the same shall continue and remain in full force and effect. The receipt by the Sublessor of rent, with knowledge of the breach of any covenant hereof, shall not be deemed a waiver of such breach and no waiver by the Sublessor of any provision hereof shall be deemed to have been made unless expressed in writing and signed by the Sublessor. Section 22.2 Subordination. This Sublease shall be subject and subordinate at all times to the lien of any mortgage or mortgages now on or hereafter placed on the Demised Premises or the Shopping Center or any part thereof, and to all advances made or hereafter to be made upon the security thereof, and also subject and subordinate to any lease or other arrangement or right to possession under which Sublessor is, or may hereafter be, in control of the Demised Premises or the Shopping Center or any part thereof. The Sublessee shall execute and deliver such further instrument or instruments subordinating this Sublease to the lien of any such mortgage or mortgages or underlying lease or leases as shall be desired by any mortgagee or proposed mortgagee or lessor or proposed lessor, and the Sublessee hereby irrevocably appoints the Sublessor as the attorney-in-fact of the Sublessee to execute and deliver any such instrument or instruments for and in the name of the Sublessee. Sublessee also agrees that any mortgagee or trustee may elect to have this Sublease a prior lien to its mortgage or deed of trust, and in the event of such election and upon notification by such mortgagee or trustee to Sublessee to that effect, this Sublease shall be deemed prior in lien to the said mortgage or deed of trust, whether this Sublease is dated prior to or subsequent to the date of said mortgage or deed of trust. Failure of the Sublessee to execute any statement or instruments necessary or desirable to effectuate the foregoing provisions of this Section regarding Subordination, or other provisions of this Sublease regarding Attornment and Estoppel Certificates within ten (10) days following written request so to do by Sublessor, shall constitute a breach of this Sublease and the Sublessor shall have the right by not less than ten (10) days notice to Sublessee to declare this Sublease terminated and the term ended, in which event, this Sublease shall cease and terminate on the date specified on such notice with the same force and effect as though the date set forth in such notice were the date originally set forth herein and fixed for the expiration of the term, and Sublessee shall vacate and surrender the Demised Premises but shall remain liable as provided in this Sublease. Further, Sublessee hereby irrevocably appoints Sublessor as attorney-in-fact for the Sublessee with full power and authority to execute and deliver in the name of the Sublessee any such statements or instruments necessary to effectuate such provisions of this Sublease. Section 22.3 Notices. Any notice, demand, request or other instrument which is required to be given under this Sublease shall be delivered in person or sent by United States Certified, Registered Mail, return receipt requested, postage prepaid or Express Mail, and shall be addressed (a) if to the Sublessor, at the address set forth on page 1; and (b) if to Sublessee, at the Demised Premises. Either party may designate such other address as shall be given by written notice, provided, however, that in all events any notice to Sublessee addressed to the Demised Premises shall be deemed served as of the date of mailing. Notice need be sent to only one Sublessee or Sublessor where Sublessee or Sublessor consists of more than one person or party. Section 22.4 No Partnership Nothing contained herein shall be deemed or construed by the parties hereto, nor by any third party, as creating the relationship of principal and agent or of partnership or of joint venture between the parties hereto, it being understood and agreed that neither the method of computation of rent, nor any other provision contained herein, nor any acts of the parties herein, shall be deemed to create any relationship between the parties hereto other than the relationship of Sublessor and Sublessee. Section 22.5 No Liability for Loss and Damage Sublessor shall not be under any responsibility or liability in any way whatsoever for the quality, quantity, impairment, interruption, stoppage, or other interference with service involving water, heat, gas, electric current for light and power, telephone, or any other service of whatsoever kind or nature. Sublessor shall not be liable for any damage to property of Sublessee or of others located on the Demised Premises, nor for the loss of or damage to any property of Sublessee or of others by theft, burglary or otherwise. Sublessor shall not be liable for any injury or damage to persons or property resulting from (but not limited to) fire, explosion, falling plaster, steam, gas, electricity, water, rain, snow or leaks from any part of the Demised Premises, or from the pipes, appliances or plumbing works, or by dampness or by any other cause of whatsoever nature. Sublessor shall not be liable for any such damage caused by other tenants or persons in the Demised Premises, occupants of adjacent property, of the Shopping Center, or the public, or caused by operations in construction of any private, public or quasi-public work. All property of Sublessee kept or stored on the Demised Premises shall be so kept or stored at the risk of Sublessee only and Sublessee shall hold Sublessor harmless from any claims arising out of damage to the same, including subrogation claims by Sublessee's insurance carriers. Section 22.6 Sublessor's Use of Common Areas. Sublessor reserves the right, from time to time, to utilize portions of the common areas for carnival type shows, rides and entertainment, outdoor shows, displays, automobile and other product shows, the leasing of kiosks, or such other uses which in Sublessor's judgment tend to attract the public. Further, Sublessor reserves the right to utilize the lighting standards and other areas in the parking lot for advertising purposes. Section 22.7 Gender. In this Sublease the use of gender references is not intended to be a limitation, and the use of a particular gender shall be interpreted to include the other of masculine, feminine and neuter where the situation so demands; similarly, the use of the singular shall be interpreted to include the plural where the situation so demands, and vice versa; and references to "heirs, devisees, executors and administrators" also includes "successors and assigns" where the situation so demands, and vice versa. Section 22.8 Sublessee's Acknowledgment of Acceptance of Premises Estoppel Certificate. Sublessee shall furnish Sublessor, upon request at any time after Sublessee has opened its doors for business in the Demised Premises, a letter and/or Estoppel Certificate addressed to the mortgagee or proposed mortgagee. or financial institution or such other party designated by Sublessor, providing the following information: 1) that the emised Premises have been, satisfactorily completed as of the date of such letter and that Sublessee has accepted possession, subject to the terms of the Sublease; 2) the Commencement Date of the Sublease and the expiration date of the Sublease; 3) the date when rent commenced; 4) that Sublessee has opened for business within the Demised Premises; 5) that Sublessee has no claim, set-off or recoupment against Sublessor (and if Sublessee does have such a claim it shall be stated in specific detail); and 6) such other information as Sublessor shall request. Upon failure of Sublessee to provide Sublessor at, the request of such mortgagee or financial institution a letter or certificate as above described Sublessor shall have the right, in addition to its other remedies, to cancel this Sublease and Sublessee shall remain liable to the Sublessor for any damages sustained by the Sublessor as a result of such failure by Sublessee. Section 22.9 Accord and Satisfaction. No payment by Sublessee or receipt by Sublessor of a lesser amount than the monthly rent herein stipulated shall be deemed to be other than on account of the earliest stipulated rent, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as rent be deemed an accord and satisfaction, and Sublessor may accept such check or payment without prejudice to Sublessor's right to recover the balance of such rent or pursue any other remedy provided in this Sublease or at law. Section 22.10 Captions and Section Numbers. The captions, section numbers, article numbers and index appearing in this Sublease are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or intent of such sections or articles of this Sublease nor in any way affect this Sublease. Section 22.11 Partial Invalidity. If any term, covenant or condition of this Sublease or the application thereof to any person or circumstance shall, to any extent, be determined by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Sublease, or the application of such term, covenant or condition to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term, covenant or condition of this Sublease shall be valid and be enforced to the fullest extent permitted by law. This Sublease shall be governed by and construed in accordance with the laws of the State in which the Shopping Center is located. Section 22.12 No Option. The submission of this Sublease for examination does not constitute a reservation of or option for the Demised Premises, and this Sublease becomes effective as a Sublease only upon execution and delivery thereof by Sublessor and Sublessee. Section 22.13 Recording. Sublessee shall not record this Sublease without the written consent of Sublessor. Sublessor and Sublessee shall each, at the request of the other, execute a short form sublease in recordable form, containing such information as shall be satisfactory to Sublessor, which short form sublease may be recorded; provided, however, Sublessee shall not record any such short form sublease or any other reference to this Sublease until the term of this Sublease has commenced. Section 22.14 Liens. The Sublessee shall have no power to do any act or make any contract which may create or be the foundation for any lien, mortgage or other encumbrance upon the estate of the Sublessor or of any interest of the Sublessor in the Demised Premises, or upon or in the building or buildings or improvements thereon or hereafter erected or placed thereon, it being agreed that should the Sublessee cause any improvements, alterations or repairs to be made to the Demised Premises, or material furnished or labor performed therein, or thereon, neither the Sublessor nor the Demised Premises not, any improvements shall under any circumstances be liable for the payment of any expense incurred or for the value of any work done or material furnished to the Demised Premises or any part thereof. All such improvements, alterations, repairs, materials and labor shall be done at the Sublessee's expense and the Sublessee shall be solely and wholly responsible to contractors, laborers and materialmen furnishing labor and material to said premises and building or buildings and improvements or any part thereof and all such laborers, materialmen and contractors are hereby charged with notice that they must look solely and wholly to the Sublessee and the Sublessee's interest in the Demised Premises to secure the payment of any bills for work done and materials furnished. In the event a mechanic's lien shall be filed against the Demised Premises or Sublessee's interest therein or against the Shopping Center or any part thereof as the result of any repairs, fixturing, alterations or other work undertaken by the Sublessee, Sublessee shall, within ten (10) days after receiving notice of such lien, discharge such lien either by payment of the indebtedness due or by filing a bond (as provided by statute) as security therefor. In the event Sublessee shall fail to discharge such lien, Sublessor may, but shall not be obligated to, in addition to its remedies as provided in the Section of this Sublease entitled "Default of the Sublessee", have the right to procure such discharge by filing such bond and Sublessee shall pay the cost of such bond to Sublessor as additional rent upon the first day that rent shall be due thereafter. Section 22.15 Broker's Commissions. Sublessee represents and warrants that there are no claims for brokerage commissions or finder's fees in connection with the execution of this Sublease and agrees to indemnify Sublessor against and hold it harmless from all liabilities arising from any such claim, including the cost of reasonable attorney fees. Section 22.16 Force Majeure. In the event that either party hereto shall be delayed or hindered in or prevented from the performance of any act required hereunder by reason of strikes, lockouts, labor troubles, inability to procure materials, failure of power, restrictive governmental laws or regulations, riots, insurrection, war or other reason of a like nature not the fault of the party delayed in performing the work or doing acts required under the term of this Sublease, then performance of such act shall be excused for the period of the delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay; provided, however, that such delay and extended period shall in no event exceed ninety (90) days. The party entitled to such extension hereunder shall give written notice as soon as possible to the other party hereto of its claim of right to such extension and the reason(s) therefor. Should any such delay or extended period required hereunder exceed ninety (90) days, Sublessor may, at its option, terminate this Sublease, and Sublessor's and Sublessee's obligations and liabilities hereunder shall be of no further force and effect. The provisions of this Section shall not operate to excuse Sublessee from the prompt payment of rent, Percentage Rent, if any, or any other payments required by the terms of this Sublease or the obligations of Sublessee to surrender the Demised Premises pursuant to this Sublease. Section 22.17 Entire Agreement. This Sublease and the Exhibits, Riders and/or Addenda, if any are attached and signed by the parties, set forth the entire agreement between the parties. Any prior conversations or writings are merged herein and extinguished. No subsequent amendment to this Sublease shall be binding upon Sublessor or Sublessee unless reduced to writing and signed by both parties. Section 22.18 Late Charges and Interest. Any sums to be paid by Sublessee to Sublessor and paid after the date same are due shall bear interest at eighteen (18%) per annum or the maximum allowable rate by law, whichever is lesser, from the date same initially became due through the date of full payment of such indebtedness. The payment of such interest shall not excuse or cure any default of Sublessee under the Sublease. Sublessee acknowledges that any late payment by Sublessee to Sublessor of rent or other charges payable by Sublessee under this Sublease or late reporting of Gross Sales as required in this Sublease will cause Sublessor to incur costs not contemplated by this Sublease, the exact amount of such costs being extremely difficult and impracticable to determine. Such costs include, without limitation, processing and accounting charges. Therefore, if any installment of rent or other charges due from Sublessee is not received by Sublessor when due, then Sublessee shall reimburse to Sublessor an additional sum of any cost incurred, including attorney fees. The parties agree that the charges do not constitute a late penalty as set forth above since the charges shall be reimbursement of the costs incurred by Sublessor rather than a late fee penalty. Acceptance of any late charges or reimbursement of costs shall not constitute a waiver of Sublessee's default with respect to the overdue rent or other charges or requirement to report Gross Sales nor prevent Sublessor from exercising any of the other rights and remedies available to Sublessor. Section 22.19 Cumulative Remedies. Each and every one of the rights, remedies and benefits provided by this Sublease to Sublessor shall be cumulative and shall not be exclusive of any other such rights, remedies and benefits allowed by law. Section 22.20 Rules and Regulations. Sublessor reserves the right to promulgate rules and regulations from time to time pertaining to the Demised Premises arid the Shopping Center. All such rules and regulations shall apply substantially uniformly to all of Sublessor's tenants in the Shopping Center. Sublessee agrees to comply with and observe all such rules and regulations. Failure by Sublessee to keep and observe such rules and regulations shall constitute a breach of this Sublease as if same were contained herein as covenants of Sublessee. Section 22.21 Time. Time of performance by Sublessee of its obligations under this Sublease is of the essence. Section 22.22 Attormnent. In the event of the sale or assignment (except as collateral security for a loan) of Sublessor's interest under this Sublease, Sublessee shall attorn to the purchaser or assignee and recognize such purchaser or assignee as Sublessor under this Sublease, and in such event Kmart Corporation shall be released from all obligations and liabilities arising as Sublessor under this Sublease. Section 22.23 Merchants Association. The Sublessor may create a Merchants Association comprised of merchants doing business in the Shopping Center and such other parties, if any, as shall be permitted to join the Merchants Association. The bylaws, charter, rules and regulations of such association will be in substantially the same form as those which are used by other Merchants Associations in shopping centers of comparable size and quality and approved by the parties hereto. Should Sublessor create such association, or if such an association exists at the time Sublessee takes possession of the Demised Premises, Sublessee agrees to become a member and to remain a member so long as it is doing business at the Demised Premises. Sublessee agrees to pay minimum dues to said association in the initial amount to be determined payable in advance on the first day of each month. Said minimum dues shall be subject to annual adjustments as approved by a majority vote of the members of the association, or as provided in the bylaws of the association. Sublessor reserves the right to create a Promotional Fund instead of a Merchants Association, which Promotional Fund shall be managed and controlled by Sublessor. Sublessor shall use such Promotional Fund to provide promotional services for the benefit of the Shopping Center. Sublessor agrees that Sublessee shall have the right, upon written request, to audit the books and records of any such Promotional Fund. At the option of Sublessor, the minimum dues payable by Sublessee for the Promotional Fund may be increased annually, effective at the commencement of each Sublease Year after the first, by an amount equal: i) to the annual percentage increase in the Consumer Price Index (CPI) published in the second month preceding the commencement of each such Sublease Year over and above the CPI index for the same month in the previous year or, ii) by the amount of 10%. Each subsequent increase shall be applied to the then current minimum dues. Sublessee will, during the term of this Sublease, to the fullest extent possible, participate in all coordinated advertising and promotion programs outlined by Sublessor under either the Promotional Fund or under the Auspices of the Merchants Association. The failure of any other Sublessee in the Shopping Center to contribute to the Promotional Fund or become a member of the Merchants Association shall in no way release Sublessee from Sublessee's obligations hereunder. Sublessee further acknowledges that Sublessor retains the right to discontinue the activities of any Merchants Association established at any time and, at Sublessor's option, substitute a Promotional Fund. Section 22.24 Waiver of Trial by Jury. Injunction Sublessor and Sublessee each hereby waive trial by jury of any dispute arising under this Sublease. In addition to all other remedies, Sublessor is entitled to the restraint by injunction of all violations by Sublessee, whether actual, attempted or threatened, of any covenant, condition or provision of this Sublease. Section 22.25 Attachments. Attached hereto and incorporated herein by reference are the following: Exhibit "A", Legal Description; Exhibit "B", Site Plan; Exhibit "C", Construction Work; Exhibit "D", Sign Design Criteria; Exhibit "E", Space Layout Exhibit "F", Commencement Letter; Exhibit "G", Guaranty Exhibit "H", Incorporated Sublease Terms, Rents, and Conditions IN WITNESS WHEREOF, Sublessor and Sublessee have signed their names and affixed their seals on the day and year first above written. IN THE PRESENCE OF: SUBLESSOR: KMART CORPORATION By: /s/ LORRENCE T KELLER ------------------------ Lorrence T. Kellar Its: Vice President of Real Estate SUBLESSEE: CENTRAL COAST BANCORP (d/b/a Community Bank of Central California) By: /s/ HARRY WARDWELL ----------------------- Harry Wardwell Its: Senior Vice President, Branch Manager EXHIBIT A LEGAL DESCRIPTION Parcel A: Parcel 4 as said Parcel is shown on that certain Parcel Map filed for record June 28, 1991 in Book 8 of Parcel Maps, at page 34, San Benito County Records. Parcel B: A non-exclusive Easement for ingress and egress as described in the Reciprocal Easement and Operation Agreement executed by and between Kmart, a Michigan Corporation and K & S Market, Inc., a California Corporation, Recorded June 14, 1989 as Document No. 8905249, Records of San Benito County, California. Hoilister, CA Kmart Store #3748 Ground Lease Property February 24, 1997 Page 1 of 1 [Picture Omitted] EXHIBIT "C" CONSTRUCTION WORK DIVISION I - TENANT'S/SUBTENANT'S WORK (Minimum Requirements) The Tenant/Subtenant acknowledges that the Demised Premises are accepted "AS IS". This work will be performed by the Tenant/Subtenant at the Tenant's/Subtenant's own cost and expense in accordance with the Tenant's/Subtenant's Plans and Specifications previously approved in writing by the Landlord/Lessor. Tenant's/Subtenant's contractor(s) shall secure and pay for all necessary permits, Certificate of Occupancy and/or fees required by public authorities and/or utility companies with respect to Tenant's/Subtenant's work. A. General Requirements 1. All work installed by the Tenant/Subtenant shall be coordinated with and completed so as not to interfere with the Landlord's/Lessor's construction schedule, business operations, nor any other Tenant's/Subtenant's activities. 2. All contractors employed by either the Landlord/Lessor or the Tenant/Subtenant shall allow other contractors, even of the same trade, to work on the Demised Premises without interference. 3. The Tenant/Subtenant and Tenant's/Subtenant's contractors shall provide all insurances required by the Landlord/Lessor, prior to the start of any construction work within the Demised Premises. The Landlord/Lessor, Kmart Corporation, shall be named as an additional insured. 4. The Tenant/Subtenant shall at all times, keep the Demised Premises and the surrounding area free from accumulations of waste materials and/or rubbish caused by his employees or workers. The Tenant/Subtenant or his contractor shall provide dumpsters and maintenance of said dumpsters during the construction period. B. Interior Partitions All partitions will be furnished and installed by the Tenant/Subtenant. C. Interior Finishes All wallboard, trim, painting, staining, enameling and any wall coverings or decor shall be provided and installed by the Tenant/Subtenant. D. Flooring Tenant/Subtenant shall provide carpet or resilient tile flooring on all concrete floors. E. Cabinets Shelving Counters etc. Cabinets, shelving, counters, etc., are to be furnished and installed complete by Tenant/Subtenant, including connections to utilities. CONSTRUCTION WORK (continued) F. Plumbing Any plumbing facilities in excess of existing facilities provided by the Landlord/Lessor, such as kitchen equipment, toilet facilities, janitor's sink, hose bibbs, laboratory sinks, special fixturing or outlets, will be provided and installed and connected by Tenant/Subtenant. The Tenant/Subtenant will provide fire extinguishers as required by building code and insurance underwriters; see also "H'. G. Heating, Cooling and Ventilating Exhaust air vent systems as required for hoods, etc., including outlets or connections thereto will be provided by Tenant/Subtenant. Heating and cooling required will be by the Tenant/Subtenant. All vents and hoods shall comply with local governing agencies. Tenant/Subtenant will submit HVAC unit manufacturer, data and shop drawings for Kmart approval. Upon approval, maintenance brochures and 5-year warranty (HVAC unit - 1 year and compressor - 4 year) shall be forwarded to Kmart Corporation. H. Fire Protection Sprinklers The Tenant/Subtenant shall pay for and supply any items required in excess of the existing sprinkler system. Tenant/Subtenant will provide a sprinkler layout and calculations for Governing Authorities and Landlord/Lessor's approval. If the Tenant/Subtenant is required to have a dry chemical fire extinguisher system, it shall be provided, installed and maintained by the Tenant/Subtenant; see also "F". I. Electrical Power and Lighting Tenant/Subtenant will furnish and install the electrical work in excess of that provided by Landlord/Lessor. Such items may include, but not limited to, lighting, special outlets, high voltage outlets, exit light, telephone, communication and music systems, burglar alarms and/or warning systems, emergency generator, Tenant's/Subtenant's store signs and controlling time clocks. If Tenant/Subtenant furnished its own light fixtures, the same will be installed at the Tenant's/Subtenant's expense including the cost of additional outlets. J. Storefronts Changes to the storefront design shall only be initiated upon approval of the Landlord/Lessor. K. Tenant/Subtenant Signs - (See Exhibit "D") The Tenant/Subtenant shall furnish, install and connect all identification signs at locations provided at the canopy or building fascia at the Tenant's/Subtenant's expense. All outside signs shall be submitted to Landlord/Lessor for approval before installation. Canopy or building fascia sign design, lighting and sign copy color shall be subject to Landlord's/Lessor's approval. Said sign shall be in conformance with the detailed sign criteria, as prepared by Landlord's/Lessor's architect and attached as Exhibit "D". Prior to fabrication, three (3) copies of sign detail and copy must be submitted to Landlord/Lessor for Landlord's/Lessor's approval. L. Roof Openings Except as provided by Landlord/Lessor, pursuant to J above, the Tenant/Subtenant will furnish all curbs, lintels, flashings, counter flashings, pipes, ducts, vent caps, air inlets, exhaust hoods, louvers, etc., as necessary for Tenant's/Subtenant's equipment requiring openings through roof and/or exterior walls. Any cutting, patching, or flashing of the roof for the Tenant's/Subtenant's equipment must be performed by the Landlord's/Lessor's roofing contractor responsible for the roof guarantee. All such work will be done at the Tenant's/Subtenant's expense. DIVISION II CONSTRUCTION PROCEDURES A. Upon execution of the Lease/Sublease the Tenant/Subtenant will have thirty (30) working days to provide to the Landlord/Lessor, a Preliminary Floor Plan and Storefront Elevation for review and preliminary approval. When submitting Construction Plans and Specifications (preliminary or completed) Tenant/Subtenant shall send five (5) sets of prints and specifications. The approval of said "Preliminary Floor Plan and Storefront Elevation" will require fifteen (15) working days. B. The Tenant/Subtenant can elect to contract with an "outside" architect of its choosing for the preparation of the "Construction Plans and Specifications". The "outside" architect shall prepare detailed construction drawings for the Demised Premises, incorporating the improvements desired by the Tenant/Subtenant (to the extent such improvements are acceptable to the Sublessor). Such drawings will be forwarded to the Tenant/Subtenant for its approval. C. All contractors engaged by the' Tenant/Subtenant as permitted by the Landlord/Lessor shall-be bondable, licensed contractors, possessing good labor relations capable of performing quality workmanship and working in harmony with any contractor hired by Landlord/Lessor. All work shall be coordinated with the general project work. D. Construction shall comply in all respects with applicable Federal, State, County, Township and City Statutes, ordinances, regulations, laws and codes. E. The Tenant/Subtenant shall not permit any mechanic's liens to attach to the Demised Premises or the shopping center development in which the Demised Premises are located on account of any labor or materials furnished or supplied to the Demised Premises in connection with Tenant's/Subtenant's work. In the event that such a lien is attached, Tenant/Subtenant shall forthwith cause the same to be discharged or in lieu thereof furnish a bond for the benefit of Landlord/Lessor issued by a duly licensed surety company authorized to do business in the State wherein the Demised Premises is located, acceptable to Landlord/Lessor, which by its terms indemnifies and holds the Landlord/Lessor harmless from the effects of such lien. F. The Landlord/Lessor, Landlord's/Lessor's agent, an independent contractor, or an authorized utility company as the case may be, shall have the right, subject to the Landlord's/Lessor's written approval, to run utility lines, pipes, conduits or duct work, where necessary or desirable, through attic space, or other parts of the Demised Premises and to repair, alter, replace or remove the same, all in a manner which does not interfere unnecessarily with the Tenant's/Subtenant's use thereof. CONSTRUCTION WORK (continued) G. Construction Coordinator Assistant Manager of Design Division Kmart Corporation 3100 West Big Beaver Road Troy, MI 48084-3163 (248) 643-1224 H. Real Estate Coordination Shopping Centers Asset Manager Real Estate Department, West Annex Suite 400 Kmart Corporation 3100 West Big Beaver Road Troy, MI 48084-3163 (248) 637-0714 (248) 637-9305 (fax) THE USE OF "TENANT/SUBTENANT" AND "LANDLORD/LESSOR" THROUGHOUT THIS EXHIBIT SHALL ALSO BE INTERPRETED TO INCLUDE "TENANT/ LESSEE/SUBLESSEE" AND "LANDLORD/SUBLESSOR", RESPECTWELY, AS APPLICABLE. EXHIBIT "D" SIGN DESIGN CRITERIA NO SIGN INSTALLATION IS TO COMMENCE UNTIL WRITTEN APPROVAL IS RECEIVED FROM THE REAL ESTATE DEPARTMENT OF KMART CORPORATION. REQUIREMENTS FOR SUBMITTAL OF TENANT/SUBTENANT SIGNING PROPOSALS Building Sign: 1) Complete written description of tenant's/subtenant's sign to include: Colors. Construction. Method of illumination. Dimensioned scale drawing showing exact size and location of sign on building. Section and details of sign. Detail showing attachment to building. Amperage and voltage requirements (assume 480 volt) 2) Color photograph of tenant's/subtenant's storefront, minimum of 3" x 5". 3) Color photograph of the front of the entire building including Kmart and tenant's/subtenant's Demised Premises, minimum of 3" x 5". Pylon Sign: 1) Complete written description of tenant's/subtenant's sign to include: .Colors .Construction .Method of illumination .Dimensioned scale drawing .Section and details of sign .Detail showing attachment to pylon .Amperage and voltage requirements (assume 480 volt) 2) Color photograph of Kmart pylon with: .Overall height dimension .Height dimension of letter K panel 3) Site plan indicating location of Kmart pylon. NOTE: Tenants/Subtenants proposing the installation of an individual pylon sign must indicate the proposed location of the new sign on the site plan. TENANT/SUBTENANT BUILDING SIGN DESIGN CRITERIA A. Length (1) May not exceed 50% of the building width. (2) Length may vary in the instance of a lengthy name or because the building architecture may justify a larger or smaller sign for aesthetic reasons. (3) Shall comply with local sign ordinances. B. Height (1) May not exceed 5'-O". (2) Shall comply with local sign ordinances. C. Location (1) Should always be on the (front) building facade. (2) Sign must be located to comply with local sign ordinances. (3) May not project above roof and/or parapet. D. Construction (1) Internally illuminated plastic faced letters. (2) Individual internally illuminated plastic faced cabinet letters. (3) One single internally illuminated plastic faced cabinet sign. (4) Absolutely no exposed conduits, wiring, neon tubing, or spotlighted signing. (5) All wiring shall be "UL' rated. (6) Moving or blinking lights will not be approved. E. Maintenance (1) When an existing sign is removed for the installation of a new sign, it is the responsibility of the tenant/subtenant to restore the building facade in the event any damage is incurred. This includes repairing chips, cracks and holes and repainting faded areas to match existing color. NOTE All signing outlined above is subject to the written approval of Kmart's Design Division. Tenant/Subtenant must also obtain the approval of the appropriate governmental agencies and conform to all applicable regulatory codes. Tenant/Subtenant must submit sign drawings of all proposed signing for each location. Absolutely no reader boards or attraction boards will be approved for installation on the building. The entire installation must be done in a neat and workmanlike fashion; the quality and workmanship shall be equivalent to that of Kmart Corporation. TENANT/SUBTENANT CORPORATE LOGO BUILDING SIGN DESIGN CRITERIA A. Corporate Logo Approval (1) Permitted only when absolutely pertinent to the tenants/subtenant's identity. B. Size (1) Should not exceed 5'-O" x 8'-O". C. Location (1) Approximately 5'-O" to 10'-0" from building end. (2) Should be at least 12'-O" above sidewalk. D. Construction and Maintenance (1) All construction and maintenance guidelines for building signs shall apply to corporate logo signs. NOTE Absolutely no reader boards or attraction boards will be approved for installation on the building. All signing outlined above is subject to the approval of Kmart's Design Division. Tenant/Subtenant must also obtain the approval of the appropriate governmental agencies and conform to all applicable regulatory codes. Tenant/Subtenant must submit sign drawings of all proposed signing for each location. The entire installation must be done in a neat and workmanlike fashion; the quality and workmanship shall be equivalent to that of Kmart Corporation. TENANT/SUBTENANT PYLON SIGN PANEL DESIGN CRITERIA A. Size (1) Shall not be larger in width than the clear space between column supports and a maximum height of 6'-O". B. Location (1) Installed a minimum of 5'-O" below the Kmart panel. C. Design (1) Simple and straightforward, in keeping with the Kmart signing. D. Construction (1) Sign must be double-faced and internally illuminated. (2) Moving or blinking lights will not be approved. E. Absolutely no reader boards will be approved for installation on the Kmart pylon. F. Maintenance (1) We will expect any damage incurred to the Kmart pylon during the installation or removal of any signs to be repaired by the tenant/subtenant. This includes removal of any existing reader boards. G. Fees (I) A one-time fee for the use of the Kmart pylon must be negotiated with the Real Estate Department at Kmart Corporation International Headquarters, Troy, Michigan 48084. (2) The tenant/subtenant will be responsible for the cost of all electricity consumed by its sign. NOTE All dimensions above are based on a sign installation on a standard Kmart pylon. In the event Kmart Corporation installs a pylon smaller than the standard pylon, all dimensions above will be proportionately reduced. All signing outlined above is subject to the approval of Kmart's Design Division. Tenant/Subtenant must also obtain the approval of the appropriate governmental agencies and conform to all applicable regulatory codes. Tenant/Subtenant must submit sign drawings of all proposed signing for each location. The entire installation must be done in a neat and workmanlike fashion; the quality arid workmanship shah be equivalent to that of Kmart Corporation. THE ABOVE CRITERIA ARE SUBJECT TO REVISION AT THE SOLE DISCRETION OF KMART CORPORATION. THE USE OF "TENANT/SUBTENANT" AND "LANDLORD/LESSOR" THROUGHOUT THIS EXHIBIT SHALL ALSO BE INTERPRETED TO INCLUDE "TENANT/ LESSEE! SUBLESSEE" AND "LANDLORD/SUBLESSOR", RESPECTIVELY, AS APPLICABLE. [Picture Omitted] EXHIBIT "F" COMMENCEMENT LETTER August 1, 2000 Mr. Harry Wardwell Senior Vice President, Branch Manager Central Coast Bancorp. 301 Main Street Salinas, CA 93901 Re: Kmart No. 3748- Hollister, CA 491 Tres Pinos Road, Unit 103 Hollister, CA 95023 Dear Mr. Wardwell: Central Coast Bancorp has entered into a sublease with Kmart Corporation for premises at the referenced location. This letter will outline procedures regarding payments and clarify questions you may have relative to administration of the sublease. The commencement date of your sublease is August 1, 2000. The expiration date of your initial primary term is July 31, 2003. Unless otherwise noted, your liability for all payments is effective as of the commencement date. MINIMUM RENT $1,890.00 per month commencing November 1, 2000. If your sublease provides for periodic rent increases it is your responsibility to initiate the require change at the proper time. PERCENTAGE RENT Not applicable. ADDITIONAL RENT 1.5061% of Kmart's costs for [real estate taxes, common area maintenance, exterior repairs, parking lot lighting and building fire insurance]; payable by monthly escrow payments with an annual reconciliation of costs and payments. Real Estate Taxes: Monthly escrow payment $97.00. Common Area Maintenance: Monthly escrow payment $102.00. Repairs Parking Lot Lighting: Monthly escrow payment is included in CAM. Building Fire Insurance: Monthly escrow payment $12.00. LATE PENALTY Please note that a late fee as set forth in your sublease will be charged on all late payments. Therefore, it is necessary that your payments are received on or before the first of each calendar month. UTILITIES Electricity, gas and water, is directly metered to your store, therefore you should immediately establish an account with the local utility company. IT IS IMPERATIVE THAT YOU MAKE ARRANGEMENTS WITH THE APPROPRIATE UTILITY COMPANIES TO ESTABLISH ACCOUNTS IN YOUR NAME, AS KMART CORPORATION WILL ARRANGE FINAL READINGS TO CLOSE OUR ACCOUNT ON JULY 31, 2000. ESCROW PAYMENTS Your initial escrow rates have been based on estimated costs. At the end of each sublease year, scheduled payments will be reconciled with actual costs and you will be invoiced for any additional amount owed or issued a refund, whichever is applicable. New escrow rates are established annually based on costs over the previous year. Occasionally an escrow rate is adjusted during the year if it appears that costs will significantly exceed your scheduled payments.
SUMMARY OF MONTHLY PAYMENTS: Minimum Rent $1,890.00 Real Estate Taxes $ 97.00 CAM [/Repairs] $ 102.00 Parking Lot lighting Included in CAM Building Fire Insurance $ 12.00 ----------- TOTAL MONTHLY PAYMENT $2,101.00
ADDRESS FOR PAYMENTS Rent and escrow payments are due, in advance on the first day of each month. Payment for invoiced items is due ten (10) days following the date of the invoice. Checks must be payable to "Kmart Corporation" and should be mailed to the address below in time to be received on or before the date they are due. Kmart #3748 Department G P.O. Box 4771G Carol Stream, IL 60197- 4771 Please identify your payments with the Kmart location number (No. 3748), your tenant identification number (No. 103), and a notation of what you are paying, i.e. rent, utilities, etc. NOTE: The street address in Troy Michigan should be used for all correspondence going to Kmart Corporation All correspondence must include the Kmart location number (No 3748 and the city and state wherein your demised premises is located. ADDRESS FOR CORRESPONDENCE Shopping Centers Asset Manager Real Estate Department Kmart Corporation 3100 West Big Beaver Road Troy, MI 48084 (248-637-0714) (Fax No. 248-637-9305) A carbon copy is to be sent to the Property Management Company: PM Realty Group 225 W. Wacker Drive Suite 2200 Chicago, IL 60606 Attn: Retail Division Inquiries regarding your sublease or administrative matters, including those related to your account, should be directed to PM Realty Group's property manager, Kathy Douglas at 415.288.9559. Unless otherwise advised, we will mail all correspondence, invoices and statements to the address used on this letter. If you would like us to use an alternate address, please advise the writer, with a carbon copy to Kmart Corporation, Shopping Centers Asset Manager. PROOF OF INSURANCE You are required to provide proof of insurance as referred to in Article X of your sublease. MAINTENANCE AND REPAIRS Requests for maintenance and repairs, other than those for which you are responsible, are to be directed to the property management company of the Kmart shopping center. If repairs are not completed within a reasonable period of time, you should advise the Shopping Centers Asset Manager, Judy M. Chambers, listed above. We acknowledge receipt of your security deposit in the amount of $2,101.00. This letter is not intended to modify the captioned sublease. In the event of error or discrepancy between the sublease and this letter, the sublease will prevail. Sincerely, PM Realty Group Susan M. Ahlert Vice President-Retail Leasing cc: S. Bartos, Real Estate Accounting D. Hurley, Real Estate Accounting Shopping Centers Asset Manager, Real Estate Department EXHIBIT "G" GUARANTY INTENTIONALLY DELETED. EXHIBIT H INCORPORATED SUBLEASE TERMS, RENTS, AND CONDITIONS (Sublease, dated July 17, 2000, between Kmart Corporation, Sublessor, and Central Coast Bancorp, Sublessee, doing business as Community Bank of Central California) The terms, rent(s), and conditions listed below are incorporated within the specific sections of the Sublease, as defined therein, and are as follows: Section 1.1 Demised Premises The approximate dimensions of the Demised Premises (Unit 103) are twenty (20) feet (frontage) and seventy (70) feet (depth) totaling approximately One Thousand Four Hundred (1,400) square feet of space within the Kmart No. 3648, Hollister, California Shopping Center located at 491 Tres Pinos Road, Hollister, California 95023. Sublessor Master Lease Dated: March 4, 1997; Ground Lease Dated: November 2, 1988 Section 1.2(a) Term: Sublease Primary Term "Commencement Date": August 1, 2000 Sublease Primary Term Expiration Date: July 31, 2003, or unless sooner terminated as provided within the Sublease. Section 1.2 (b) Option to Extend Term: Two (2) three (3) year options not beyond July 31, 2009. Section 2.2 Annual Minimum Rent Primary Term Aggregate Minimum Rent of at least SIXTY FOUR THOUSAND EIGHT HUNDRED NINETY AND 00/100 DOLLARS ($64,890.00): A. Commencing November 1, 2000, ("Rent Commencement Date", as defined within the Sublease) for the period from August 1, 2000, through July 31, 2001, SEVENTEEN THOUSAND TEN AND 00/100 DOLLARS ($17,010.00), payable in equal monthly installments of ONE THOUSAND EIGHT HUNDRED NINETY AND 00/100 DOLLARS ($1,890.00); B. From August 1, 2001, through July 31, 2002, TWENTY THREE THOUSAND FIVE HUNDRED TWENTY AND 00/100 DOLLARS ($23,520.00) per Sublease Year, payable in equal monthly installments of ONE THOUSAND NINE HUNDRED SIXTY AND 00/100 DOLLARS ($1,960.00); and C. From August 1, 2002, through July 31, 2003, TWENTY FOUR THOUSAND THREE HUNDRED SIXTY AND 00/100 DOLLARS ($24,360.00) per Sublease Year, payable in equal monthly installments of TWO THOUSAND THIRTY AND 00/100 DOLLARS ($2,030.00)). The third (3rd) Sublease Year shall terminate on July 31, 2003, whether or not that period shall be for twelve (12) calendar months or some other number of calendar months more or less than that and in such event the Annual Minimum Rent shall be adjusted so that the sum of TWO THOUSAND THIRTY AND 00/100 DOLLARS ($2,030.00) shall be paid for every calendar month of the Sublease Year. Likewise, any other amounts due under this Sublease shall be adjusted higher or lower on a proportional basis to reflect the actual number of calendar months in the Sublease Year. First Option Term Aggregate Minimum Rent of at least SEVENTY EIGHT THOUSAND ONE HUNDRED TWENTY AND 00/loo DOLLARS ($78,120.00): D. From August 1, 2003, through July 31, 2004, TWENTY FIVE THOUSAND TWO HUNDRED AND 00/100 DOLLARS ($25,200.00) per Sublease Year, payable in equal monthly installments of TWO THOUSAND ONE HUNDRED AND 00/100 DOLLARS ($2,100.00); E. From August 1, 2004, through July 31, 2005, TWENTY SIX THOUSAND FORTY AND 00/loo DOLLARS ($26,040.00) per Sublease Year, payable in equal monthly installments of TWO THOUSAND ONE HUNDRED SEVENTY AND 00/100 DOLLARS ($2,170.00); and F. From August 1, 2005, through July 31, 2006, TWENTY SIX THOUSAND EIGHT HUNDRED EIGHTY AND 00/100 DOLLARS ($26,880.00) per Sublease Year, payable in equal monthly installments of TWO THOUSAND TWO HUNDRED FORTY AND 00/100 DOLLARS ($2,240.00). The sixth (6th) Sublease Year shall terminate on July 31, 2006, whether or not that period shall be for twelve (12) calendar months or some other number of calendar months more or less than that and in such event the Annual Minimum Rent shall be adjusted so that the sum of TWO THOUSAND TWO HUNDRED FORTY AND 00/100 DOLLARS ($2,240.00) shall be paid for every calendar month of the Sublease Year. Likewise, any other amounts due under this Sublease shall be adjusted higher or lower on a proportional basis to reflect the actual number of calendar months in the Sublease Year. Second Option Term Aggregate Minimum Rent of at least EIGHTY FIVE THOUSAND SIX HUNDRED EIGHTY AND 00/100 DOLLARS ($85,680.00): G. From August 1, 2006, through July 31, 2007, TWENTY SEVEN THOUSAND SEVEN HUNDRED TWENTY AND 00/100 DOLLARS ($27,720.00) per Sublease Year, payable in equal monthly installments of TWO THOUSAND THREE HUNDRED TEN AND 00/loo DOLLARS ($2,310.00); H. From August 1, 2007, through July 31, 2008, TWENTY EIGHT THOUSAND FIVE HUNDRED SIXTY AND 00/100 DOLLARS ($28,560.00) per Sublease Year, payable in equal monthly installments of TWO THOUSAND THREE HUNDRED EIGHTY AND 00/100 DOLLARS ($2,380.00); and I. From August 1, 2008, through July 31, 2009, TWENTY NINE THOUSAND FOUR HUNDRED AND 00/100 DOLLARS ($29,400.00) per Sublease Year, payable in equal monthly installments of TWO THOUSAND FOUR HUNDRED FIFTY AND 00/100 DOLLARS ($2,450.00). The ninth (9th) Sublease Year shall terminate on July 31, 2009, whether or not that period shall be for twelve (12) calendar months or some other number of calendar months more or less than that and in such event the Annual Minimum Rent shall be adjusted so that the sum of TWO THOUSAND FOUR HUNDRED FIFTY AND 00/100 DOLLARS ($2,450.00) shall be paid for every calendar month of the Sublease Year. Likewise, any other amounts due under this Sublease shall be adjusted higher or lower on a proportional basis to reflect the actual number of calendar months in the Sublease Year. Section 2.3 Percentage Rent All references to Percentage Rent within the Sublease shall be deleted if in reference to payment of Percentage Rent since Sublessee does not pay Percentage Rent. Sublessee shall, however, be required to report Gross Sales (as defined within the Sublease pursuant to this Sublease. Section 5.1 Use Of Premises Purpose: Bank facility to the general public. Section 5.2 Change of Name Business Name: Community Bank of Central California Section 21.1 Security Deposit TWO THOUSAND ONE HUNDRED ONE AND 00/l00 DOLLARS ($2,101.00). FIRST AMENDMENT TO SUBLEASE This First Amendment to Sublease (hereinafter "First Amendment") is made and entered into on October 11, 2000, between Kmart Corporation, a Michigan corporation, having its principal office at 3100 West Big Beaver Road, Troy, Michigan 48084 (hereinafter referred to as "Sublessor") and Central Coast Bancorp, a California corporation, having its principal office at 301 Main Street, Salinas, California 93901 doing business as Community Bank of Central California (hereinafter referred to as "Sublessee"). WHEREAS, Sublessor and Sublessee entered into a Sublease, dated July 17, 2000, (hereinafter referred to as "Sublease"); and 'WHEREAS, Sublessor and Sublessee seek to amend the terms of said Sublease as hereinafter provided; NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties agree to the following: 1. ATM Definition. As used herein, the term "ATM" shall mean an electronic fund transfer terminal consisting of any automated teller machine, together with the fixtures, access lines, equipment, and furnishings (hereinafter "ATM") necessary to, or, which will facilitate the operation of the automated teller machine in the performance of certain banking services and/or the dispensing of cash to Sublessee's customers. 2. ATM Installation/Taxes/Security/Indemnification/ Insurance/Legal Compliance. The provisions of the Sublease and master leases and agreements shall apply to the installation of the ATM, including, without limitation, repair of any damage caused thereof and subsequent removal. The installed ATM will for all purposes be and remain Sublessee's personal property and shall not become a fixture or real property. During the Sublease Term, Sublessee shall pay any and all excise, privilege, sales, use, or other taxes levied against or upon the ATM or upon any or all associated fixtures and equipment. Sublessor, in its sole discretion, may upon thirty (30) days prior written notice require Sublessee, at Sublessee's expense, to remove or relocate the ATM and to restore the area to as good or better condition which existed prior to the installation of the ATM thereof, and Sublessee agrees to the same. In the event Sublessee fails to perform as contemplated herein, Sublessor is authorized by Sublessee to remove the ATM, in Sublessor's sole discretion, without incurring any liability to Sublessee or any third party. In such event, Sublessee shall pay to Sublessor upon demand all costs for removal, repair, and restoration and indemnify, hold harmless, and defend Sublessor from and against any liablity or claims arising thereof. Sublessee shall submit to Sublessor its plans and specifications for its ATM installation and signage and performed such work pursuant to the Sublease and its exhibits. Sublessee shall not commence any work until the same is approved in writing by Sublessor, in its sole discretion, its Landlord, its Ground Lessor, and its/their mortgagee(s), as applicable. Sublessee shall pay all expenses incurred by Sublessor to obtain any consent(s) associated with the ATM. Sublessee, at its sole expense, shall provide, without limitation, all necessary heating, ventilation air-conditioning, and electrical power support at the ATM location and will further pay all utility usage charges applicable to the operation of the ATM, including, without limitation, all costs of access and connection to the designated electrical junction box and/or panel. Servicing and other operational functions shall be performed by Sublessee only during pre-opening and post-closing facility hours with the prior approval of Sublessor. Notwithstanding any provisions to the contrary within the Sublease, Sublessee shall provide its own security and indemnify, hold harmless, and defend Sublessor, with counsel acceptable to Sublessor, from any and all claims, costs, including attorneys' fees, expenses, causes of action, lawsuits, demands, and liabilities arising, directly or indirectly, from, without limitation, the installation, existence, use, operation, maintenance, repair, and removal, of the ATM, including, without limitation, the insertion of explosive devices and any resulting claims or damage caused thereof. Sublessee shall provide sufficient and adequate insurance, satisfactory to Sublessor, for and against the foregoing. Such claims shall also include, without limitation, third party assertions that any ATM or its equipment infringes any patent, copyright, trademark or other proprietary right or constitutes a misuse of any trade secret information. Sublessee shall pay all costs, attorney fees, settlement payments, and damages arising in connection with any such claims. Sublessee also agrees to reimburse, indemnify, and hold harmless Sublessor from and against all claims, costs, including attorney fees, expenses, causes of action, lawsuits, demands, and liabilities against Sublessor due to Sublessee's business activities, including, without limitation, the negligent or intentional acts, or omissions, of Sublessee's, without limitation, agents, employees, customers, contractors, or invitees. Sublessee shall comply with all applicable laws and regulations pertaining to the ATM, including without limitation, the regulations of the Federal Reserve Board. 3. Reciprocal Easement and Operation Agreement. Sublessee shall be responsible to comply with the provisions of the Reciprocal Easement and Operation Agreement (hereinafter "REOA"), dated June 13, 1989, between Sublessor and K & S Market, Inc. and to obtain, at Sublessee's sole expense, any consent(s) which may be required. A copy of the REOA is attached hereto and and incorporated herein as Exhibit I to the Sublease. 5. No Agency Partnership or Joint Venture. Nothing contained within the Sublease or this First Amendment shall be construed as creating a relationship of principle and agent, or a partnership, or joint venture between Sublessee and Sublessor and Sublessee shall at all times conduct its activities independently thereof. 6. Entire Agreement. This First Amendment contains the entire agreement of Sublessee and Sublessor with respect to the subject matter hereof and the same shall not be modified unless in writing and signed by the parties. 7. Captions and Section Numbers. The captions and section numbers appearing in this First Amendment are inserted only as a matter of convenience and in no way define, limit, construe or describe the scope or intent of such sections of this First Amendment in any way affect the same. 8. Contingency. This First Amendment is contingent upon Sublessee submitting to Sublessor detailed plans and specifications of the modifications of the Demised Premises, including, but not limited to, to proposed signage, and obtaining Sublessor, its Landlord, its Ground Lessor, and its/their mortagee's(s'), as applicable, prior written approval(s) prior to any work being commenced. Any such modifications shall be completed in accordance with the Sublease and its exhibits. This First Amendment shall become binding upon the respective parties, their successors, heirs, and assigns. Except for the modifications herein stated, all provisions of the Sublease shall continue in full force and effect. IN WITNESS WHEREOF, Sublessor and Sublessee have cause this First Amendment to be executed in quadruplicate as of the day and year first above written. WITNESSES: SUBLESSOR: KMART CORPORATION By: /s/ LORRENCE T. KELLER ----------------------- Lorrence T. Kellar Its: Vice President of Real Estate SUBLESSEE: CENTRAL COAST BANCORP (d/b/a Community Bank of Central California) By: /s/ HARRY WARDWELL ----------------------- Harry Wardwell Its: Senior Vice President, Branch Manager Kmart #3748 - Hollister, CA Central Coast Bancorp (Community Bank of Central California) First Amendment - Exhibit I RECIPROCAL EASEMENT AND AGREEMENT Hollister, CA TABLE OF CONTENTS I. DEFINITION 1.01 Arby's Parcel 1.02 Base Parcel 1.03 Building Areas 1.04 Common Areas 1.05 Developer 1.06 Developer Parcel 1.07 Floor Area 1.08 K mart 1.09 K mart Building 1.10 K mart Parcel 1.11 Mortgage 1.12 Mortgagee 1.13 Owner 1.14 Parcel 1.15 Person 1.16 Responsible Owner 1.17 Shopping Center 1.18 State II. LAND USE 2.01 No interference with Common Areas 2.02 Conformity to Size Plan III. COMMON AREAS 3.01 Parking Areas 3.02 Unimproved Building Area as Common Area 3.03 Rules for Use of Common Areas 3.04 Grant and Declaration of Reciprocal Easement 3.05 Temporary Use of Common Areas During. Construction and For Maintenance and Repair 3.06 Barriers and Traffic Control 3.07 Easement for Minor Encroachments 3.08 No Easements Beyond Shopping Center IV. OPERATION AND MAINTENANCE OF COMMON AREAS 4.01 Responsibility for Maintenance 4.02 Taxes 4.03 Common Area Liability Insurance V. UTILITY EASEMENT 5.01 Separate Utility Lines 5.02 Common Utility Lines 5.03 Location of Easements 5.04 Installation, Maintenance and Repair 5.05 Relocation 5.06 Master Storm Drain Easement VI. BUILDING DESIGN AND CONSTRUCTION [Intentionally Omitted] VII SIGNS 7.01 Permitted Signs 7.02 Pylon Signs VII EMINENT DOMAIN IX. MORTGAG SUBORDINATE TO AGREEMENTES X. NATURE OF AGREEMENT 10.01 Obligations of Agreement 10.02 No Dedication to Public 10.03 Amendment, Modification or Termination 10.04 Term of Agreement XI. APPROVALS XII. REMEDIES 12.01 Default of Owner 12.02 Other Remedies 12.03 Liens 12.04 No Waiver 12.05 No Termination for Breach XIII. MISCELLANEOUS 13.01 Severability 13.02 Estoppel Certificate 13.03 Governing Law 13.04 Headings 13.05 No Partnership 13.06 Notices 13.07 Mechanics' Liens RECIPROCAL EASEMENT AND OPERATION AGREEMENT AGREEMENT made as of this 13th day of June, 1989 by and between K MART CORPORATION, a Michigan corporation, having its principal address at 3100 West Big Beaver Road, Troy, Michigan 48084 ("K mart') and K & S MARKET, INC., a California corporation, having an address at. 591 Tres Pinos Road, Hollister, California 95023 ("Developer'). WITNESSETH: WHEREAS, Developer is the owner of a certain parcel of real property containing approximately 6.91 acres located in Hollister, California, which real property is more particularly described on Exhibit "A-1" attached hereto and incorporated herein by reference (hereinafter referred to as the "Developer Parcel"); and WHEREAS, K mart is the owner of a certain parcel of real property containing approximately 7.67 acres located in Hollister, California, which real property adjoins and is contiguous with the Developer Parcel and is more particularly described on Exhibit "A-2" attached hereto and incorporated herein by reference (hereinafter referred to as the "K mart: Parcel"); and WHEREAS, K mart and Developer have agreed to develop the Developer Parcel and the K mart Parcel (the combined legal description of which Parcels is set forth on Exhibit A attached hereto) as an integrated shopping center (hereinafter referred to as the "Shopping Center') substantially in accordance with the site plan shown on Exhibit '3' attached hereto and incorporated herein by reference; and WHEREAS, the parties desire to subject the K mart Parcel and the Developer Parcel to the covenants, conditions and restrictions hereinafter set forth, to establish the easements hereinafter described, and to provide for the maintenance and operation of the Common Areas, as hereinafter defined, for the mutual benefit of the parties hereto and their respective heirs, executors, successors, assigns, employees, mortgagees, tenants, customers and invitees. NOW, THEREFORE, in consideration of the mutual covenants and agreements herein set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by each party hereto, the parties agree as follows: ARTICLE 1 DEFINITIONS For purposes of this Agreement, the following terms shall, unless otherwise indicated, have the following meanings and the use of the singular shall include the plural: 1.01 Arby's Parcel: That certain parcel of land depicted as 'Arby's" on Exhibit B hereto. 1.02 Base Parcel The K mart Parcel and the Developer Parcel and any other Parcel resulting from a subdivision of the Developer Parcel which other Parcel contains a building designed for a single user having a ground Floor Area plan of at. least 25,000 square feet. 1.03 Building Areas Those areas marked on Exhibit B as K mart, Garden Shop, Retail, New Office/Retail, Existing Office/Retail, Taco Bell and Pad. 1.04 Common Areas All public and common facilities erected on the Shopping Center intended for common use, including but not limited to entrances, exits, driveways, access roads, parking areas, walks, service drives, directional signs, lighting facilities, utility services, drainage and retention pond facilities, landscaped areas and other facilities and areas intended for common use, as the same may exist from time to time in the Shopping Center, but not including any buildings erected on the Building Areas. 1.05 Developer K & S Market, Inc., a California corporation, its successors and assigns, so long as it is the Responsible Owner of the Developer Parcel, otherwise the Responsible Owner of the Developer Parcel. 1.06 Developer Parcel That certain parcel of land described in Exhibit A-1 attached hereto and made a part hereof. 1.07 Floor Area Floor area measured from exterior surface of exterior walls and from the center of common walls or interior demising partitions, but shall exclude mezzanines, if any. 1.08 K mart K mart Corporation, a Michigan corporation, its successors and assigns, so long as it is the Responsible Owner of the K mart Parcel, otherwise the Responsible Owner of the K mart Parcel. 1.09 K mart Building The K mart retail store building plus adjacent retail space and garden shop as the same is shorn on Exhibit 3. 1.10 K mart Parcel That certain parcel of land described in Exhibit A-2 attached hereto and made a part hereof. 1.11 Mortgage Any mortgage or deed of trust or any leasehold mortgage. 1.12 Mortgagee The mortgagee under any mortgage, the beneficiary under any deed of trust and the leasehold mortgagee under any leasehold mortgage. 1.13 Owner Any person who or which is the record owner of fee simple title to a Parcel or any portion thereof which is part of the Shopping Center; provided, however, in the event of the sale by an owner of all or a portion of a Parcel and a simultaneous leaseback of the Parcel or portions thereof (a "sale/leaseback"), the seller/lessee under such sale/leaseback shall be deemed to be the "Owner" of such Parcel or portion thereof for the purposes of this Agreement so long as it is designated in the lease as the "Owner" for the purposes of this Agreement, and provided further, the lessee of a Parcel or a portion of a Parcel under a ground lease or other lease having an initial term of twenty-five (25) years or longer shall be deemed to be an "Owner" of such Parcel or a portion thereof for the purposes of this Agreement so long as it is designated in the ground lease or other lease as the "Owner" for the purposes of this Agreement. 1.14 Parcel The K mart Parcel, the Developer Parcel, and all parcels resulting from the subdivision thereof. 1.15 Person An individual, partnership, firm, association, corporation, or other form of business or government entity. 1.16 Responsible Owner The Owner of a Base Parcel, provided, however, that if any such Owner shall transfer, convey or ground lease its interest in any portion of a Base Parcel in such a manner as to create multiple Owners of the Base Parcel, then such multiple Owners shall designate one of their number to act on behalf of all such Owners in the performance of the provisions of this Agreement, which Owner so designated shall be herein referred to as the "Responsible Owner". Any such designation shall be in writing, duly executed and acknowledged by all multiple Owners of a Base Parcel (including the Owner so designated), and recorded with the Office of the County Recorder of the County in which the Shopping Center is located. A copy of such designation shall be sent to each other Responsible Owner in the Shopping Center. In the absence of any such written, recorded and mailed designation, the Owner of the largest subparcel of any such divided Base Parcel shall be the Responsible Owner, provided however that for so long as K mart is the Owner of any portion of the K mart Parcel it shall be deemed to be the Responsible Owner of the K mart Parcel. 1.17 Shopping Center The K mart Parcel and the Developer Parcel. 1.18 State: The State of California. ARTICLE 2 LAND USE 2.01 No Interference With Common Areas. No use of the Shopping Center shall be made which shall interfere with the use of the Common Areas within the Shopping Center for the purposes for which they were intended as provided in this Agreement or impede the free flow of vehicular or pedestrian traffic thereon. 2.02 Conformity to Site Plan. The parties hereto agree to develop their respective Base Parcels in the manner shown in the site plan attached hereto as Exhibit 3. Subject to Section 3.02, any changes to the Exhibit 3 site plan may be made only with the prior written consent of the Responsible Owners, provided however, minor modifications of an immaterial nature to the Common Areas may be made by a Responsible Owner on such Responsible Owner's Parcel without such consent if such changes do not alter traffic flow, visibility, or parking arrangements upon or access with respect to the Shopping Center. ARTICLE 3 C0MMON AREAS 3.01 Parking Areas There shall at all times be maintained on Developer Parcel and the K mart Parcel respectively parking spaces for a: least 4 automobiles for each 1,000 square feet of gross square footage of Floor Area of all buildings constructed on the Developer Parcel and the K mart Parcel. There shall be no change in parking layout or pattern of traffic flow within the Shopping Center from that depicted on Exhibit 3 without the prior written consent of the Responsible Owners. 3.02 Unimproved Building Areas as Common Area Any portion of the Building Areas from time to time not occupied by a building or buildings or otherwise exclusively appropriated to the use of the Owner of a particular Parcel (or to the use of a tenant(s) of such Owner), shall, until such time as construction is commenced thereon, be deemed "Common Areas", provided the Owner of such vacant Building Area shall be solely responsible for paying taxes and assessments on and the costs of. maintaining such vacant Building Areas. Nothing contained in this Section 3.02 shall be deemed to prohibit any Owner from building on any Building Area, even though such Building Area may have previously been included within the Common Areas. 3.03 Rules for Use of Common Areas The Responsible Owners shall adopt reasonable rules and regulations restricting the time, manner and place of political and charitable activities in the Common Areas of the Shopping Center. No merchandise may be stored on the Common Areas. No business may be conducted or performed in or on the Common Areas or merchandise sold therefrom except for one day" Shopping Center wide sales conducted on any one or more of the Base Parcels. Such sales shall be located only on the sidewalks and walkways adjoining the buildings to be constructed in the Shopping Center. No more than two (2) such sales may be conducted in any calendar year without the prior written approval of all the Responsible Owners, which approval shall not be unreasonably withheld. Anything hereinabove to the contrary notwithstanding, K mart shall have the right for so long as it operates a K mart retail store on the K mart Parcel to use the Common Areas within the K mart Parcel and Developer shall have the right for so long as it operates retail stores on the Developer Parcel to use the Common Areas within the Developer Parcel for special promotional events, including truck and trailer sales, provided, however, that such use by K mart or Developer, as the case may be, does not unreasonably interfere with the operations of the Shopping Center. There shall be no distribution of flyers, circulars or advertisements in, on or from the Common Areas. The Responsible Owners shall each have the right to obtain restraining orders, injunctions, or other legal process in order to enjoin any such activities not approved or consented to as hereinabove set forth. 3.04 Grant and Declaration of Reciprocal Easements Developer and K mart, each as grantor, hereby reserves to itself and grants to the other for the benefit of the other and the others respective successors, assigns, mortgagees, lessees, sub-lessees, employees, agents, customers, licensees and invitees, and each declare for the benefit of each of the respective Parcels within the Shopping Center permanent, mutual, reciprocal and nonexclusive easements and rights to use the Common Areas for the purposes for which they are provided and intended, including, but not. limited to, ingress, egress, access, and parking for vehicular or pedestrian traffic, upon or across the parking areas, entrances, exits, driveways, walks or service drives located within the Common Areas and the use of storm drainage and retention facilities, landscaping, public rest rooms and other public facilities, direction signs and other areas intended for common use. 3.05 Temporary Use of Common Areas During Construction and For Maintenance and Repair. In connection with work performed within any Building Area, incidental encroachments upon the Common Areas as a result of the use of ladders, scaffolding, storefront barricades, and similar facilities resulting in temporary obstruction of portions of the Common Areas shall be permitted hereunder so long as their use is kept within reasonable requirements of construction or maintenance repair work expeditiously pursued. Common Areas may be utilized for ingress and egress of vehicles transporting construction materials, equipment, and persons employed in connection with any work provided for herein and temporary storage of material and vehicles being utilized in connection with such construction, subject to all of the other terms of this Agreement. 3.06 Barriers and Traffic Control Except as provided in Section 3.05 above, no walls, fences, or barriers of any sort or kind shall be constructed or maintained in the Common Areas of the Shopping Center, or any portion thereof, which shall prevent or impair the use or exercise of any of the easements granted herein, or the free access and movement, including without limitation, pedestrian and vehicular traffic, between the various Parcels; provided, however, reasonable traffic controls as may be necessary to guide and control the orderly flow of traffic may be installed so long as access driveways to the parking area in the Shopping Center are not closed or blocked and the traffic circulation pattern of the Common Areas, as depicted on Exhibit 3, is not changed or affected in any way, unless the prior written approval of the Responsible Owners is first obtained. 3.07 Easement for Minor Encroachments. Each of the parties hereby grants to the other the non-exclusive right (a) to install, maintain and repair footings and underground supports which extend not more than three (3) feet beyond the boundaries of the respective Building Areas and (b) to maintain such minor encroachments as are shown on the final exterior plans of any party where such encroachments have been approved by Developer and K mart, provided such encroachments do not extend more than three (3) feet beyond the boundaries of the respective Building Areas. 3.08 No Easements Beyond Shopping Center. No Owner shall grant an easement or easements of the type set forth in this Article III for the benefit of any property not within the Shopping Center (except for easements for ingress and egress for the benefit of the Arby's Parcel) without the prior written consent of each other Owner, which consent may be granted or withheld in the sole discretion of such other Owner. ARTICLE 4 OPERATION AND MAINTENANCE OF COMMON AREAS 4.01 Responsibility for Maintenance. Upon completion of construction of the improvements on the Common Areas or any portion thereof, the Responsible Owner shall, during the term of this Agreement, at its sole cost and expense, operate, maintain and repair or cause to be operated, maintained and repaired all Common Areas within its respective Parcel and shall keep the same, or cause the same to be continuously kept, in good condition and repair, in a safe and sound condition, and clean and free of rubbish, debris, and other hazards to Persons using the same. Such maintenance, operation and repair shall include, but not be limited to, the following: (a) The care and replacement of all shrubbery, plantings, and other landscaping; (b) Maintenance, repair and replacement of concrete and asphalt paving and other surface materials used on drives, parking areas and walkways using, to the extent reasonably possible, the same type of material originally installed, to the end that drives, parking areas and walkways are at all times kept in a level, smooth and substantially uniform condition; (c) Adequate marking, striping and directional signing of all parking areas; (d) Maintenance, repair and replacement of all common electrical and other common utility equipment and facilities so that the same are at all times in good operating condition, including lighting in the Common Areas, and electric light replacements; (e) Payment of all electrical, water and other utility charges or fees for services furnished to the Common Areas; and, (f) Snow removal, when and if necessary, and sweeping and removal of rubbish and debris at least two (2.) times per week. 4.02 Taxes Developer and K mart shall cooperate in undertaking to obtain separate tax assessments for each Parcel within the Shopping Center. Each Responsible Owner shall pay or cause to be paid all Taxes levied against that Responsible Owner's Base Parcel and the buildings and improvements thereon. 4.03 Common Area Liability Insurance Each Responsible Owner shall, at all times, maintain, or cause to be maintained, general public liability insurance against claims for personal injury or death and property damage occasioned by accident occurring upon, in or on the Common Areas on its Base Parcel, such insurance in each case to afford protection to the limit of not less than $1,000,000 in respect to injury or death to any one person and to a limit of not less than $3,000,000 in respect of the injury or death to any number of persons arising out of any one accident, such insurance against property damage to afford protection to the limit of not less than $1,000,000 in respect to any instances of property damage. Such insurance shall be written by companies of nationally recognized financial standing legally qualified to issue such insurance and shall name each Responsible Owner as an insured, as its interest may appear. Anything contained in this- Section 4.03 to the contrary notwithstanding, any and all insurance which any. Responsible Party is obligated to carry hereunder may be carried pursuant to a prudent selfinsurance program so long as such Party maintains a tangible net worth, determined in accordance with generally accepted accounting principles consistently applied, of at least $100,000,000. Upon request, any Responsible Party shall deliver to the other Responsible Parties and any mortgagee thereof duplicate policies or certificates of insurance evidencing the existence of all insurance required to be maintained hereunder. ARTICLE 5 UTILITY EASEMENTS 5.01 Separate Utility Lines Each Responsible Owner hereby reserves to itself and grants to each other Responsible Owner, respectively, nonexclusive easements in, to, over, under and across the Common Areas of the respective parcels for the installation, operation, flow and passage, use, maintenance, repair, relocation and removal of sanitary sewers, storm drains, water and gas mains, electrical power lines, telephone lines and other utility lines, all of such sewers, drains, mains and lines to be underground, serving the respective Parcels of each of the Responsible Owners. 5.02 Common Utility Lines Each Responsible Owner hereby reserves to itself and grants to each other Responsible Owner, respectively, nonexclusive easements in, to, over, under and across the Common Areas of the respective Parcels for the installation, operation, flow and passage, use, maintenance, repair, relocation and removal of sanitary sewers, storm drains, water and gas mains, electrical power lines, cable T.V., telephone lines and other utility lines, all of such sewers, drains, mains and lines to be underground, for the service of Common Areas and for use in common with other parties. Each such Responsible Owner further reserves to itself the right to grant such easements in, to, over, under and across its respective Parcels, for the purposes hereinabove enumerated, to such other Persons as may from time to time be entitled thereto. 5.03 Location of Easements The location of all easements of the character described in this Article V shall be subject to the prior written approval of the Owner in, to, over and under whose Parcel the same is to be located. If requested by any utility company or an Owner upon completion of construction of such utility facilities the Owners of Parcels affected thereby shall join in the execution of an agreement, in recordable form, appropriately identifying the type and location of such respective utility facility. 5.04 Installation Maintenance and Repair. The grantee of any of the utility easements referred to in this Article V shall be responsible as between the grantor and the grantee thereof for the installation, maintenance and repair of all sanitary sewers, storm drains, pipes and conduits, mains and lines and related equipment installed pursuant to such grant. Any such maintenance and repair shall be performed only after two (2) weeks notice to the grantor of the grantee's intention to do such work, except in the case of emergency, and any such work shall be done without cost or expense to the grantor, and in such manner as to cause as little disturbance in the use of the Common Area as may be practicable under the circumstances. 5.05 Relocation At any time the grantor of any of the utility easements granted pursuant to said Article V shall have the right to relocate on the land of the grantor any such sewers, drains, mains and lines and related equipment then located on the land of the grantor provided that such relocation shall be performed only after thirty (30) days notice of the grantor's intention to so relocate shall be given to the grantee, and such relocation: (a) shall not interfere with or diminish the utility services to the grantee; (b) shall not reduce or unreasonably impair the usefulness or function of such utility; and (c) shall be performed without cost or expense to grantee. Notwithstanding such relocation, maintenance shall be the obligation of the grantee; provided that if there shall be any material increase in such cost as a result of any such relocation, the grantor shall bear such excess. 5.06 Master Storm Drain Easement Developer and K mart hereby grant to and for the benefit of the other and, if so required by the City of Hollister, agree to grant to the City of Hollister, a thirty (30') foot storm drainage easement along the south boundary of the Shopping Center as depicted on Exhibit B hereto. Developer further hereby grants to K mart corporation a twenty (20') foot storm drainage easement along the west boundary of the Shopping Center, which easement shall terminate upon the earlier to occur of the termination of K mart's Ground Lease of the Premises or the extension of the thirty (30') foot storm drain on the southerly boundary of the Shopping Center to hook up on to a public drain on the west boundary of the Shopping Center. K mart shall have the right to enter the Developer Parcel to install and maintain, at its sole cost and expense, such storm drain within the boundaries of the easement. K mart shall use its best efforts to minimize any disruption to business activity caused by such entry. ARTICLE 6 [INTENTIONALLY OMITTED] ARTICLE 7 SIGNS 7.01 Permitted Signs The following signs shall be permitted in the Shopping Center: (a) directional signs for guidance upon the parking and driveway areas, (b) exterior building identification signs of any single occupant of the Building Areas of the Shopping Center, so long as such signs are similar to the standard identification signs from time to time being used by any such occupant in its other stores in similar shopping centers in the State or so long as the Responsible Owner of the Parcel on which the sign is to be located shall approve such sign; (c) a temporary sign identifying the lender(s) providing construction and/or permanent financing for any improvement to be located in the Shopping Center, (d) a sign or signs identifying an automated teller machine(s) or similar financial equipment operated on any of the Building Areas, so long as similar to other such signs in first-class shopping centers in the State, and (e) one (1) pylon (monument) sign at the approximate location depicted on Exhibit B hereto and one (1) pylon sign (monument) sign at the western entrance to the Shopping Center if and when such a sign is approved by municipal authorities. No other signs shall be erected or maintained upon the Common Areas or Building Areas of the Shopping Center without the prior written approval of the Responsible Owners, which approval shall not be unreasonably withheld. In no event shall any sign be installed on the roof of a building or which projects above the to? of any parapet wall or roof line if it is to be affixed to the side of a building not having a parapet wall unless such sign is of a design which is customary and commonly used by the occupant of the K mart Building. Each building identification sign located in the Shopping Center and which identifies a single Shopping Center occupant shall be maintained in good condition and repair by the Shopping Center occupant identified on such building identification sign. 7.02 Pylon Signs All pylon signs and the identification panels thereon shall be maintained in good condition and repair (or caused to be so maintained) by the Responsible Party on whose Parcel the pylon sign is located. ARTICLE 8 EMINENT DOMAIN In the event any part of the Shopping Center shall be taken by eminent domain or any other similar exercise of governmental authority, the entire award for value of the land and improvements so taken shall belong to the Owner of the property so taken or to any Mortgagee or tenant of such Owner, as their respective interests may appear, and no other Owner, Mortgagee or tenant in the Shopping Center shall claim any portion of such award by virtue of any interest created by this Agreement. In the event that (a) all of a Parcel or (b) such portion thereof as shall render the continued use of the remainder thereof impracticable, shall be taken by eminent domain or by other similar authority of law, then the Owner of such Parcel may by written notice given to the then Owners of all Parcels comprising the Shopping Center and thereafter duly recorded in the office of the County Recorder of the County in which the Shopping Center is located, terminate, for itself, its successors and assigns, all of its rights and obligations under this Agreement as to the Parcel so taken. Any taking in eminent domain of parking areas of a Parcel below 80% of the ratio required to be maintained under Section 3.01, shall permit any Owner to terminate this Agreement as to such Parcel. The right of termination herein provided shall be exercised only by thirty (30) days written notice by an Owner to all other Owners and the holders of recorded first Mortgagee on the Shopping Center and thereafter duly recorded in the office of the County Recorder in the County in which the Shopping Center is located. Nothing hereinabove shall be deemed to affect the rights of Developer and K mart under that certain Ground Lease dated November 2, 1988, with respect to a taking of the K mart Parcel. ARTICLE 9 MORTGAGES SUBORDINATE TO AGREEMENT Any Mortgage affecting any portion of the Shopping Center shall at all times be subject and subordinate to the terms of this Agreement and any Person foreclosing any such Mortgage or acquiring title by reason of a deed in lieu of foreclosure shall acquire title to the premises affected thereby subject to all of the terms of this Agreement. ARTICLE 10 NATURE OF AGREEMENT 10.01 Obligations of Agreement. Except as otherwise herein provided, each and every covenant, undertaking, condition, easement, right, privilege, and restriction (herein referred to -as "Obligations of this Agreement") made, granted or assumed, as the case may be, by any party to this Agreement, is made by such party for the personal benefit of the other parties hereto, and also as Owner and Owners of a portion of the Shopping Center, and shall be an equitable servitude on the portion of the Shopping Center owned by such party appurtenant to or for the benefit of the other portions of the Shopping Center. Every Obligation of this Agreement shall run with the land, and shall be binding upon the party making or assuming the several Obligations of this Agreement, and such party's successors, assigns, Mortgagees, tenants, customers and invitees and shall inure to the benefit of all other parties to this Agreement and to their respective successors, assigns, Mortgagees, tenants, customers and invitees. Any transferee of any part of the Shopping Center shall automatically be deemed, by acceptance of title to such Parcel to have assumed all the Obligations of this Agreement relating thereto, but only to the extent such Obligations of this Agreement accrue after the effective date of such transfer of title, and to have agreed with the Owner or Owners of all other portions of the Shopping Center to- execute any and all instruments and do any and all things reasonably required to carry out the intention of this Agreement. Any transferor shall upon the consummation of such transfer be relieved of all further liability under this Agreement. except such liability as may have arisen during his (its) period of ownership of the portion of the Shopping Center so conveyed and which remains unsatisfied, unless such transferor remains an Owner hereunder. 10.02 No Dedication to Public Nothing contained in this Agreement shall be deemed to be a gift or dedication of any portion of the Shopping Center to the general public or for any public use or purpose whatsoever, it being the intention of the parties hereto that this Agreement is for the exclusive benefit of all Owners of any portion of the Shopping Center and their successors, assigns, Mortgagees, tenants, customers and invitees, and that nothing in this Agreement, express or implied, shall confer upon any Person, other than such Owners, and their successors, assigns, Mortgagees, tenants, customers and invitees any rights or remedies under or by reason of this Agreement. The Owners of all Parcels comprising the Shopping Center shall have the right from time to time to close all or any portion of the Shopping Center to such extent as may be necessary to prevent a dedication thereof to the public or the accrual of any rights in any Person, not expressly granted rights hereunder. 10.03 Amendment Modification or Termination This Agreement may be amended or modified at any time by a declaration in writing mutually agreed to, executed and acknowledged by all the Responsible Owners of any Base Parcel and thereafter duly recorded in the Office of the County Recorder of the County in which the Shopping Center is located, provided this Agreement shall not be terminated during the term hereof or amended or modified without the prior written consent of all Owners whose interests would be adversely affected by such amendment or modification. This Agreement shall not be terminated, amended, altered or modified in any way without the prior written consent of each first Mortgagee then encumbering the Shopping Center, or any Parcel thereof. 10.04 Term of Agreement This Agreement shall be effective as of the date of recording hereof in the Office of the County Recorder of San Benito County and shall continue in full force and effect until 11:59 p.m. on December 31, 2065; provided, however, that in the event that no portion of the Shopping Center is utilized for retail purposes for a continuous period of two (2) years (excluding any period during which an Owner is prevented from engaging in such use by reason of strikes, lockouts or other labor difficulties, the elements or act of God, the requirements of any governmental act, law, rule or regulation, fire or other casualty, condemnation, war, riot, or insurrection), then this Agreement and the restrictions and easements hereunder shall terminate and be of no further force or effect. ARTICLE 11 APPROVALS Upon receipt by an Owner of a request for approval or consent hereunder, such Owner shall, within thirty (30) days after receipt of such request, notify in writing the Person making such request of any objections thereto (such objections to be specifically stated) and such Person may within fifteen (15) days thereafter resubmit its request for approval rectifying any such objections to the appropriate Owner. The Owner shall then have an additional fifteen (15) days after receipt of said revisions to approve or disapprove same. Failure to give any written notice of disapproval within the periods provided for above shall constitute approval thereof by such Owner. Whenever in this Agreement an Owner is given the right to approve or disapprove in its sole discretion, it may disapprove without specifying the reason therefor. ARTICLE 12 REMEDIES 12.01 Default of Owner. In the event a Responsible Owner shall fail to perform its obligations under this Agreement, the Responsible Owners of the other Parcels or any of them may send notice to the Responsible Owner who failed to perform setting forth the obligation which the Responsible Owner has failed to perform. In the event such obligation is not performed within thirty (30) days after receipt of such notice (unless the Responsible Owner shall have commenced to perform the same within such period and shall be diligently proceeding to perform the same), then the other Responsible Owners or any one of them upon ten (10) days prior written notice to the Responsible Owner who failed to perform, shall have the right to perform the same. A Responsible Owner shall not be deemed to have failed to perform its obligations hereunder for so long as such delay is prevented due to strikes, lockouts, inability to procure materials, power failure, acts of God, governmental restrictions, enemy action, civil commotion, fire, unavoidable casualty or other causes beyond the control of the Responsible Owner, provided that lack of funds shall not be deemed a cause beyond the control of the Responsible Owner. In the event failure to perform any repair or maintenance causes an emergency, or performance of such repair or maintenance is necessary to prevent or relieve an emergency, then the notice required to be given hereunder need only be such reasonable notice, if any, as is warranted by the nature of the specific condition involved. If appropriate action is not timely taken by the Responsible Owner failing to perform, the other Responsible Owners or any of them shall be entitled immediately to perform such repair or maintenance. In the event a Responsible Owner performs any of the obligations of a Responsible Owner who fails to perform as aforesaid, the Responsible Owner so performing, in addition to any, other remedies it may have, shall be reimbursed by the defaulting Responsible Owner within thirty (30) days of presentation of the appropriate statement therefor, failing which, in addition to any other remedies it may have, the Responsible Owner so performing shall have a lien against real property and improvements of the defaulting Responsible Owner for the unpaid amount together with interest thereon from the date said reimbursement was due at the rate of 15% per annum or the highest rate permitted by law, whichever is lower. Such lien shall be subordinate to the interest of any mortgagee, lessee or sublessee of the affected property, irrespective of when their interest attached, and may be enforced and foreclosed in a suit or action brought in any court of competent jurisdiction. 12.02 Other Remedies In addition to the foregoing, if any Owner defaults in the performance of any other material provision of this Agreement, which default continues for a period of thirty (30) days following receipt of written notice specifying the particulars of such default, any other Owner may institute legal action against the defaulting Owner for specific performance, declaratory relief, damages or other suitable legal or equitable remedy. In addition to the recovery of damages and of any sums expended on behalf of the defaulting Owner, the prevailing party in the action shall be entitled to receive from the other party its actual attorneys' fees and costs for services rendered to the prevailing party in any such action (including any appeal thereof). The remedies and liens provided in this Article XII and the enforcement thereof as herein provided shall be in addition to and not in substitution for or exclusion of any other rights and remedies which the parties may have under this Agreement or at law or-in equity. 12.03 Liens. The lien provided for in Section 12.01 shall only be effective when filed for record by the curing party as a claim of lien against the defaulting Owner in the Office of the County Recorder of the County in which the Shopping Center is located, signed and verified, which claim of lien shall contain the following as well as any other information required by law in order to make the lien effective. (i)A statement of the unpaid amount of costs and expenses; (ii) A description sufficient for identification of that portion of the property of the defaulting Owner which is the subject of the lien; (iii) The last known name and address of the owner or reputed Owner of the property which is the subject of the alleged lien; and (iv)The name and address of the lien claimant. The lien, when so established against the real property described in the lien, shall be prior and superior to any right, title, interest, lien or claim which may be or has been acquired or attached to such real property after the time of filing of the lien. The lien shall be for the use and benefit of the person curing the default of the defaulting Owner, and may be enforced by any remedies afforded lien claimants under applicable law or otherwise, including, without limitation, causing a Notice of Default, to be recorded against the defaulting Owner's Parcel and thereafter causing the Parcel to be sold in the manner provided by applicable law. Any such sale shall be held as promptly as possible. The curing party shall have the power to bid on the Parcel of the defaulting Owner at such foreclosure sale and thereafter to hold, lease, mortgage and convey the same. Upon payment in full (prior to such a foreclosure) of the Delinquent Assessment together with all applicable interest due thereon, the curing party shall promptly cause to be recorded a further notice stating the satisfaction and release of the lien against the defaulting Owner's Parcel. 12.04 No Waiver. No delay or omission of any Owner in the exercise of any right accruing upon any default of any other Owner shall impair any such right or be construed to be a waiver thereof, and every such right maybe exercised at any time during the continuance of such default. A waiver by any Owner of a breach or a default of any of the terms and conditions of this Agreement by any other Owner shall not be construed to be a waiver of any subsequent breach or default of the same or any other provision of this Agreement. Except as otherwise specifically provided in this Agreement, no remedy provided in this Agreement shall be exclusive, but each shall be cumulative with all other remedies provided in this Agreement and at law or in equity. 12.05 No Termination For Breach It is expressly agreed that no breach, whether or not material, of the provisions of this Agreement shall entitle any Owner to cancel, rescind or otherwise terminate this Agreement, but such limitation shall not affect, in any manner, any other rights or remedies which any Owner may have hereunder by reason of any breach of the provisions of this Agreement. ARTICLE 13 MISCELLANEOUS 13.01 Severability. If any provision, or a portion thereof, of this Agreement, or the application thereof to any person or circumstances shall, to any extent, be held invalid, inoperative or unenforceable, the remainder of this Agreement, or the application of such provision, or portion thereof, to any other persons or circumstances shall not be affected thereby; the remainder of this Agreement shall be given effect as if such invalid, inoperative or unenforceable portion has not been included; such invalid, inoperative or unenforceable provision, or portion thereof, or the application thereof to any person or circumstances, shall not be given effect; it shall not be deemed that any such invalid, inoperative or unenforceable provision affects the consideration for this Agreement; and each provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 13.02 Estooel Certificate At any time, and from time to time, within thirty (30) days after notice or request by the holder of any actual or proposed first Mortgage or ground lease affecting or intended to affect any portion of the Shopping Center, or any actual or proposed purchaser of any portion of the Shopping Center, the then Owners of all Parcels comprising the Shopping Center shall execute and deliver to such Mortgagee, ground lessee or purchaser a statement certifying that this Agreement is unmodified and in full force and effect or if there have been modifications, that it is in full force and effect as modified in the manner specified in the statement, and that to the knowledge of such Owner there exists no default under this Agreement or circumstances which with the passage of time would result in the existence of such a default, other than as specified therein. 13.03 Governing Law. This Agreement shall be construed in accordance with the laws of the State of California. 13.04 Headings The section headings in this Agreement are for convenience only, shall in no way define or limit the scope or content of this Agreement and shall not be considered in any construction or interpretation of this Agreement or any part thereof. 13.05 No Partnership Nothing in this Agreement shall be construed to make the Owners partners or joint venturers or render any of said Owners liable for the debts or obligations of the others. 13.06 Notices Any notice, demand, request, consent, approval, designation, or other communication made pursuant to this Agreement by one Owner to any other Owner shall be in writing and shall be given or made or communicated by personal delivery or by United States registered or certified mail, return receipt requested, addressed, in the case of Developer, to: K & S Market, Inc. 591 Tres Pinos Road Hollister, California 95023 and addressed, in the case of K mart to: K mart Corporation 3100 W. Big Beaver Road Troy, Michigan 48084 Attention: Vice President -- Real Estate subject to the rights of any Owner to designate a different address by notice similarly given. No party other than K mart Corporation or K & S Market, Inc. shall be entitled to notice as a Responsible Owner unless such party shall have recorded a notice of its designation as Responsible Owner as provided in this Agreement with a description of the Parcel with respect to which it is Responsible Owner with the County Records for the County in which the Shopping Center is located. Any notice, demand, request, consent, approval, designation or other communication so sent shall be deemed to have been given, made or communicated, as the case may be, on the date the same was personally delivered or delivered by the United States mail as registered or certified matter, with postage thereon fully prepaid. 13.07 Mechanic's Liens If because of any act or omission (or alleged act or omission) of an Owner, its employees, agents, contractors or subcontractors, any mechanic's or other lien, charge or order for the payment of money or other encumbrance shall be filed against the Parcel of another Owner or Owners, the first Owner shall, at its own cost and expense, cause the same to be discharged of record or bonded within ten (10) days after notice to said Owner of the filing thereof; provided however, if the first Owner has a net worth in excess of One Hundred Million Dollars ($100,000,000) it need not furnish the bond otherwise required hereunder. In any event said Owner shall indemnify and save harmless the other Owner(s) from and against all costs, liabilities, expenses, suits, penalties, claims and demands (including actual attorneys fees and costs incurred) resulting therefrom. If the first Owner fails to comply with the foregoing provisions, the other Owner(s) shall have the option of discharging or bonding any such lien, charge, order or encumbrance, and the first Owner agrees to reimburse the other Owner(s) for all costs, expenses and other sums of money expended in connection therewith. IN WITNESS WHEREOF, the parties hereto have hereunto set their respective authorized signatures as of the day and year first above written. WITNESSED: SUBLESSOR: K & S MARKET, INC By: /s/ FRANK KLANER ------------------------- Frank Klaner Its: Secretary/ Treasurer K MART CORPORATION, a Michigan corporation By: /s/ M.L. SKILES ------------------------ M.L. Skiles Its: Vice President EXHIBIT A Legal Description - Shopping Center Parcel 2 and Parcel 3 of Parcel Map of a portion of Homestead Lot 40 San Justo Rancho, in the City of Hollister, County of San Benito, State of California, according to the map thereof, recorded in Book 6 of Parcel Maps at Page 23, San Benito County Records. EXHIBIT A-1 Legal Description - Developer Parcel All of Parcel 2 of Parcel Map of a portion of Homestead Lot 40 San Justo Rancho, in the City of Hollister, County of San Benito, State of California, according to the map thereof, recorded in Book 6 of Parcel Maps at Page 23, San Benito County Records. EXCEPTING THEREFROM being more particularly described as follows: BEGINNING at the Southeast corner of said Parcel 2; thence North 87 degrees 13 minutes 30 seconds West along the South line of said Parcel 2, a distance of 578.00 feet; thence leaving the South line of said Parcel 2 North 02 degrees 46 minutes 30 seconds East, a distance of 170.00 feet; thence North 87 degrees 13 minutes 30 seconds West parallel with the. South line of said Parcel 2, a distance of 55.00 feet; thence North 02 degrees 46 minutes 30 seconds East, a distance of 136.00 feet; thence North 87 degrees 13 minutes 30 seconds West parallel with the South line of said Parcel 2, a distance of 104.00 feet; thence North 02 degrees 46 minutes 30 seconds East, a distance of 156.12 feet to the point of intersection with the Northwesterly prolongation of the South line of that unrecorded lease dated September 18, 1987 between K & S Market, Inc. and Gary A. Laabs and Betty H. Laabs, husband and wife, disclosed by that memorandum of lease recorded September 23, 1987, Instrument No. 8707041; thence South 75 degrees 03 minutes 55 seconds East along the Northwesterly prolongation of the South line of said unrecorded lease, a distance of 62.38 feet to the Southwest corner of said unrecorded lease; thence South 75 degrees 03 minutes 55 seconds East along said South line, a distance of 185.15 feet to a point on the West line of Parcel 4 of said Parcel Map; thence South 02 degrees 46 minutes 30 seconds West along the West line of said Parcel 4, a distance of 4.00 feet to the Southwest corner of said Parcel 4; thence South 87 degrees 13 minutes 30 seconds East along the South line of said Parcel 4, a distance of 140.00 feet to the Southeast corner of said Parcel 4; thence North 02 degrees 46 minutes 30 seconds East along the East line of said Parcel 4, a distance of 200.00 feet to the Northeast corner of said Parcel 4; thence South 87 degrees 13 minutes 30 seconds East along the North line of Parcel 2 of said Parcel Map, a distance of 210.00 feet to the Northwest corner of Parcel 3 of said Parcel Map; thence South 02 degrees 46 minutes 30 seconds West along the West line of said Parcel 3, a distance of 200.00 feet to the Southwest corner of said Parcel 3; thence South 87 degrees 13 minutes 30 seconds East along the South line of said Parcel 3, a distance of 141.42 feet to the Southeast corner of said Parcel 3; thence South 02 degrees 16 minutes 00 seconds West along the East line of Parcel 2 of said Parcel Map, a distance of 406.00 feet to the TRUE POINT OF BEGINNING. Containing 6.91 acres more or less. EXHIBIT A-2 Legal Description - K mart Parcel All of Parcel 3 and a portion of Parcel 2 of Parcel Map of a portion of Homestead Lot 40 San Justo Rancho, in the City of Hollister, County of San Benito, State of California, according to the map thereof, recorded in Book 6 of Parcel Maps at Page 23, San Benito County Records and being more particularly described as follows: BEGINNING at the Southeast corner of said Parcel 2; thence North 87 degrees 13 minutes 30 seconds West along the South line of said Parcel 2, a distance of 578.00 feet; thence leaving the South line of said Parcel 2 North 02 degrees 46 minutes 30 seconds East, a distance of 170.00 feet; thence North 87 degrees 13 minutes 30 seconds West parallel with the South line of said Parcel 2, a distance of 55.00 feet; thence North 02 degrees 46 minutes 30 seconds East a distance of 136.00 feet; thence North 87 degrees 13 minutes 30 seconds West parallel with the South line of said Parcel 2, a distance of 104.00 feet; thence North 02 degrees 46 minutes 30 seconds East, a distance of 156.12 feet to the point of intersection with the Northwesterly prolongation of the South line of that unrecorded lease dated September 18, 1987 between K & S Market, Inc. and Gary A. Laabs and Betty H. Laabs, husband and wife disclosed by that memorandum of lease recorded September 23, 1987, Instrument No. 8707041; thence South 75 degrees 03 minutes 55 seconds East along the Northwesterly prolongation of the South line of said unrecorded lease, a distance of 62.38 feet to the Southwest corner of said unrecorded lease; thence South 75 degrees 03 minutes 53 seconds East along said South line, a distance of 185.15 feet to a point on the West line of Parcel 4 of said. Parcel Map; thence South 02 degrees .6 minutes 30 seconds West along the West line of said Parcel 4, a distance of 4.00 feet to the Southwest corner of said Parcel 4; thence South 87 degrees 13 minutes 30 seconds East along the South line of said Parcel 4, a distance of 140.00 feet to the Southeast corner of said Parcel 4; thence North 02 degrees 46 minutes 30 seconds East along the East line of said Parcel 4, a distance of 200.00 feet to the Northeast corner of said Parcel 4; thence South 87 degrees 13 minutes 30 seconds East along the North line of Parcel 2 of said Parcel Map, a distance of 210.00 feet to the Northwest corner of Parcel 3 of said Parcel Map; thence South 02 degrees 46 minutes 30 seconds West along the West line of said Parcel 3, a distance of 200.00 feet to the Southwest corner of said Parcel 3; thence South 87 degrees 13 minutes 30 seconds East along the South line of said Parcel 3, a distance of 141.42 feet to the Southeast corner of said Parcel 3; thence South 02 degrees 16 minutes 00 seconds West along the East line of Parcel 2 of said Parcel Map, a distance of 406.00 feet to the POINT OF BEGINNING. Containing 7.67 acres, ore or less. EXHIBIT B Shopping Center Site Plan SECOND AMENDMENT TO SUBLEASE This Second Amendment to Sublease (hereinafter "Second Amendment") is made and entered into on October 11, 2000, between Kmart Corporation, a Michigan corporation, having its principal office at 3100 West Big Beaver Road, Troy, Michigan 48084 (hereinafter referred to as "Sublessor") and Central Coast Bancorp, a California corporation, having its principal office at 301 Main Street, Salinas, California 93901 doing business as Community Bank of Central California (hereinafter referred to as "Sublessee"). WHEREAS, Sublessor and Sublessee entered into a Sublease, dated July 17, 2000, (hereinafter referred to as "Sublease"); and WHEREAS, Sublessor and Sublessee entered into a First Amendment to Sublease, dated October 11, 2000; WHEREAS, Sublessor and Sublessee seek to amend the terms of said Sublease as hereinafter provided; NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties agree to the following: 1. Section 1.2a of the Sublease and Exhibit H is amended by deleting the Commencement Date of the Primary Sublease Term, "August 1, 2000," and inserting in lieu thereof the Commencement Date of "September 15, 2000," said date being applicable pursuant to Section 2.2 of the Sublease regarding all other charges other than Minimum Rent; 2. Section 2.2 of the Sublease and Exhibit H is amended by deleting the Rent Commencement Date, "November 1, 2000", and inserting in lieu thereof the Rent Commencement Date of "December 15, 2000"; 3. Section 2.2 of the Sublease and Exhibit H is further amended by denoting that the Aggregate Minimum Rent for the Primary Term, September 15, 2000, through July 31, 2003, shall be at least SIXTY TWO THOUSAND ONE HUNDRED FORTY SIX AND 45/100 DOLLARS ($62,146.45) rather than SIXTY FOUR THOUSAND EIGHT HUNDRED NINETY AND 00/100 DOLLARS ($64,890.00); 4. Section 2.2 A of Exhibit H is amended by deleting this paragraph in its entirety and inserting in lieu thereof the following: A. Commencing December 15, 2000, ("Rent Commencement Date", as defined within the Sublease) for the period from September 15, 2000, through July 31, 2001, FOURTEEN THOUSAND TWO HUNDRED SIXTY SIX AND 45/lOO DOLLARS ($14,266.45), payable in the first payment of ONE THOUSAND THIRTY SIX AND 45/100 DOLLARS ($1,036.45) and equal monthly installments thereafter through said period of ONE THOUSAND EIGHT HUNDRED NINETY AND 00/100 DOLLARS ($1,890.00); and This Second Amendment shall become binding upon the respective parties, their successors, heirs, and assigns. Except for the modifications herein stated, all provisions of the Sublease shall continue in full force and effect. IN WITNESS WHEREOF, Sublessor and Sublessee have cause this Second Amendment to be executed in quadruplicate as of the day and year first above written. WITNESSES: SUBLESSOR: KMART CORPORATION By: /s/ LORRENCE T. KELLAR ----------------------- Lorrence T. Kellar Its: Vice President of Real Estate SUBLESSEE: CENTRAL COAST BANCORP By: /s/ HARRY WARDWELL ---------------------- Harry Wardwell Its: Senior Vice President, Branch Manager THIRD AMENDMENT TO SUBLEASE This Third Amendment to Sublease ("Third Amendment") is entered into on November 27, 2001, between Kmart Corporation, a Michigan corporation, having its principal office at 3100 West Big Beaver Road, Troy, Michigan 48084 (hereinafter referred to as "Sublessor") and Central Coast Bancorp, a California corporation, (hereinafter referred to as "Sublessee"), whose address is 301 Main Street, Salinas, California 93901. WHEREAS, Sublessor and Tuan Anh Ngo ("Original Sublessee:) entered into a sublease, dated September 22, 1994, ("Sublease"); WHEREAS, Original Sublessee assigned its interest in the Sublease to Thong Ngoc Mai ("First Assignee") on or around June 16, 1995; WHEREAS, First Assignee assigned his/her interest in the Sublease to Phuong Linh Vu and Tu Tuan Cao on or around December 18, 1998; WHEREAS, Phuong Linh Vu and Tu Tuan Cao ("Assignor") assigned his interest in the Sublease to Sublessee on or around January 1, 2002. WHEREAS, Sublessor and Sublessee seek to amend the Sublease as hereinafter provided; NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties agree to the following: 1. Section 5.1 of the Sublease is amended by deleting the following, "conducting the business of a nail salon offering nail and facial services and other incidental, related products and services", and inserting in lieu thereof the following, "operating a bank facility opened to the general public"; 2. Section 5.2 of the Sublease is amended by deleting the name, "Fancy Nails", and inserting in lieu the name, "Community Bank of Central California"; 4. This Third Amendment is contingent upon Assignor's interest in the Sublease being assigned to Sublessee as contemplated within the Consent to Assignment, dated November 1, 2001, and the same being fully executed; This Third Amendment shall become binding upon the respective parties, their successors, heirs, and assigns. This Third Amendment constitutes the entire agreement of Sublessor and Sublessee with respect to the subject matter thereof. Except for the modifications herein stated, all provisions of the Sublease shall continue in full force and effect. IN WITNESS WHEREOF, Sublessor and Sublessee have cause this Third Amendment to Sublease to be executed in quadruplicate as of the day and year first above written. WITNESSES: SUBLESSOR: KMART CORPORATION By: /s/ LORRENCE T. KELLAR ------------------------ Lorrence T. Kellar Its: Vice President of Real Estate SUBLESSEE: CENTRAL COAST BANCORP By: /s/ HARRY WARDWELL ------------------------ Harry Wardwell Its: Senior Vice President, Branch Manager ASSIGNOR: Phuong Linh Vu and Tu Tuan Cao, jointly and severally, as Assignor, by signing below agree that they were aware of the contemplated change of use when they assigned their interest in the Sublease to Assignee and approve the same. WITNESSES: By: /s/ PHUONG LINH VU --------------------- Phuong Linh Vu By: /s/ TU TUAN CAO --------------------- Tu Tuan Cao FOURTH AMENDMENT TO SUBLEASE This Fourth Amendment to Sublease ("Fourth Amendment") is entered into on November 27, 2001, between Kmart Corporation, a Michigan corporation, having its principal office at 3100 West Big Beaver Road, Troy, Michigan 48084 (hereinafter referred to as "Sublessor") and Central Coast Bancorp, a California corporation, whose address is 301 Main Street, Salinas, California 93901 (hereinafter referred to as "Sublessee"). WHEREAS, Sublessor and Tuan Anh Ngo ("Original Sublessee") entered into a Sublease, dated September 22, 1994, for Demised Premises (Unit 491C, formerly Unit 102) as more fully described therein; WHEREAS, the Original Tenant assigned its interest in the Sublease to Thong Ngoc Mai ("First Assignee") on or about June 16, 1995; WHEREAS, First Assignee assigned his/her interest in the Sublease to Phuong Linh Vu and Tu Tuan Cao ("Assignor") on or around December 18, 1998; WHEREAS, Sublessor and Assignor entered into a First Amendment to Sublease, dated June 9, 1999; WHEREAS, Sublessor and Assignor entered into a Second Amendment to Sublease, dated October 10, 2000; WHEREAS, Assignor assigned its interest in the Sublease to Sublessee on or around November 1, 2001; WHEREAS, Sublessor and Sublessee entered into a Third Amendment to Sublease ("Third Amendment"), dated November 27, 2001; said Third Amendment modifying this September 22, 1994, Sublease and being a separate Third Amendment than the Third Amendment to the July 17, 2000, sublease as described below; WHEREAS, Sublessor and Sublessee seek to cancel this Sublease, effective the same date that the Third Amendment to the Sublease is fully executed; said sublease being a separate sublease, dated July 17, 2000, and defined below; WHEREAS, Sublessor and Sublessee entered into a separate Sublease, dated July 17, 2000, as amended, ("July 17, 2000, Sublease") between Sublessor and Sublessee and desire that this July 17, 2000, sublease replace this September 22, 1994, Sublease in its entirety which is the subject of this Fourth Amendment; NOW THEREFORE, in consideration of the mutual covenants herein contained, the parties agree to the following: 1. Upon the Third Amendment to Sublease for the July 17, 2000, sublease between Sublessor and Sublessee being fully executed, this September 22, 1994, Sublease shall be canceled and of no force and effect and the July 17, 2000, sublease shall govern the relationship between Sublessor and Sublessee for the Demised Premises; This Fourth Amendment shall become binding upon the respective parties, their successors, heirs, and assigns; This Fourth Amendment constitutes the entire agreement of Sublessor and Sublessee with respect to the subject matter thereof; and IN WITNESS WHEREOF, Sublessor and Sublessee have cause this Fourth Amendment to Sublease to be executed in quadruplicate as of the day and year first above written. WITNESSES: SUBLESSOR: KMART CORPORATION By: /s/ LORRENCE T. KELLAR ----------------------- Lorrence T. Kellar Its: Vice President of Real Estate SUBLESSEE: CENTRAL COAST BANCORP By: /s/ HARRY WARDWELL ------------------------- Harry Wardwell Its: Senior Vice President, Branch Manager