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Exhibit 10.6
FIRST AMENDMENT TO SHOPPING CENTER LEASE
This First Amendment to Shopping Center Lease ("Amendment") is made and
entered into on this sixth day of March, 1992, by and between (1) ARTHUR R.
GREBLER doing business as WRAM DEVELOPMENT COMPANY ("Lessor") and (2) SOLLEY'S,
INC., a California corporation ("Lessee").
RECITALS
WHEREAS, on or about April 2, 1984, Lessor and Lessee entered into a
shopping center lease (the "Lease") for that certain premises located at 4578
Van Nuys Boulevard, Sherman Oaks, California 91403 (the "Deli");
WHEREAS, Lessor desires to lease to Lessee, and Lessee agrees to lease
from Lessor, subject to the terms and conditions of this Amendment, the
additional space located adjacent to the Deli, which consists of approximately
3,280 square feet and is commonly referred to as 4580 Van Nuys boulevard,
Sherman Oaks, California 91403 (the "Bakery") and is more particularly
described on Exhibit "A" attached hereto and incorporated herein by reference.
TERMS OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals, the terms
and conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. Incorporation of Lease.
All defined terms used in the Lease shall have the same meaning
when used in this Amendment. In addition, all terms and conditions of the Lease
shall continue to apply to the Deli except as expressly modified herein.
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2. Definition of Premises.
Effective as of the date of execution of this Amendment, the
Premises (as defined in the Lease) shall be expanded to include both the Deli
and the Bakery.
3. Lease Term.
So as to clarify any uncertainty that may exist, the term of the
Lease is and shall be for the period commencing November 1, 1984, through and
including October 31, 1994 (the "Initial Term").
4. Options to Extend the Term.
(a) Lessor hereby grants to Lessee two separate options to extend
the term of the Lease. The First Option period shall be for the period November
1, 1994, through October 31, 2004 (the "First Option"). The Second Option
period shall be for the period commencing November 1, 2004, through and
including June 30, 2014 (the "Second Option").
(b) Both the First Option and Second Option shall be exercisable
by Lessee by giving to Lessor written notice of Lessee's intent to exercise the
option not more than 12 months nor less than 6 months before the expiration of
the previous term (either upon expiration of the Initial Term or First Option
as the case may be).
(c) Lessee may exercise the options granted in this paragraph with
respect to either the Deli or the Bakery (in which event this Lease shall again
be amended to account for the reduction in size of the Premises) or both the
Deli and the Bakery.
5. Rent Payable for Bakery.
In addition to the rent payable for the Deli provided in the Lease,
Lessee shall pay to Lessor, as rental for the Bakery, the aggregate of the
following:
(a) An annual fixed minimum rent of $78,720.00 subject to
adjustment as provided in Paragraph 5 of the Lease payable in 12 equal monthly
installments of $6,560.00 each payable in advance on the first day of each month
throughout the Term, beginning on the Bakery Rent Commencement Date (as
hereinafter defined).
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Should the Bakery Rent Commencement Date occur on a day other than the first
day of the month, the first monthly installment of fixed minimum rent for the
Bakery shall be prorated on a basis of a 30-day month and shall be paid on the
Bakery Rent Commencement Date.
(b) Monthly percentage rent as provided in Paragraphs 4B and 6 of
the Lease, except that the amount of percentage rent with respect to the
Bakery, shall be 8 percent of gross sales. Notwithstanding anything to the
contrary in the Lease (and specifically Paragraph 6 thereof), gross sales with
respect to the Bakery shall not include any sales for the transfer of any
merchandise by the Bakery to the Deli or to any other restaurants owned or
managed exclusively by Sol Zide provided said merchandise is not sold at
wholesale by the deli or other restaurants to third parties.
(c) Additional rent as provided in Paragraph 4C of the Lease,
except that Lessee's total aggregate share of such expenses with respect to the
Bakery shall be determined by dividing the square footage of the Bakery by the
total square footage of the shopping center. Based on information provided by
Lessor, this shall be 3280/31,606.55 or 10.37 percent.
(d) Fixed minimum rent with respect to the Bakery shall be
adjusted pursuant to the formula set forth in Paragraph 5 of the Lease.
As used herein, the term "Bakery Rent Commencement Date" shall mean (i) the
date when the Bakery first opens for business with the permission of all
governmental authorities and has retail customers who actually purchase bakery
items or (ii) 90 days after Lessor has provided the power to the Bakery as
herein required and 90 days has elapsed from the issuance of the building
permit, whichever shall first occur.
6. Prior Deli Improvements and Related Expenses by Lessee.
Lessor hereby acknowledges, approves and consents to the design of
any and all improvements made by Lessee to the Deli including, but not limited
to, the patio area outside the Deli. Lessee shall be responsible, at its sole
cost and expense, for complying with any and all governmental statutes,
ordinances, rules, and requirements (including obtaining all necessary permits)
in connection therewith.
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7. Deli and Bakery Improvements.
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(a) As soon as possible after execution of this Amendment, Lessee, at
its sole cost and expense, shall have the final plans and specifications
(including electrical plans) for the modifications to the exterior of the Bakery
desired by Lessee, plus the installation of sufficient electric power to the
Bakery to meet Lessee's anticipated usage (the "Modification Improvements"),
prepared for approval by Lessor. Additionally, Lessor shall deliver the Bakery
to Lessee in broom-clean condition including, but not limited to, removal of the
tile, carpet, and linoleum floor (so that the entire floor is returned to its
original concrete condition except that Lessor shall not be responsible for any
patching of the concrete), removal of the metal gates covering the front windows
and back door, including the tracks for the gates, removal of the walls that
hide the retractable gates on both the south and west walls, removal of all
shelving, tables, counters, and the like on the north and west walls, removal of
the facade wall on the north and west portion of the Bakery so that the drywall
is removed, and removal of the mini blinds and all holders for the blinds.
Lessor shall not be responsible for drywall patching or structural removal.
Lessor shall provide sufficient additional power to the Premises to provide
Lessee with adequate power to operate all equipment utilized by the Bakery and
Deli. All of the items set forth herein shall be provided at Lessor's sole cost
and expense.
(b) For a period of five business days following receipt of the final
plans and specifications from Lessee, Lessor shall have the right to accept and
approve said final plans and specifications, as delivered, or to reject them.
Such right of rejection or approval by Lessor must be exercised reasonably.
Acceptance or rejection of said final plans and specifications shall be
signified by Lessor delivering to Lessee, within said five-business day period,
said final plans and specifications with each page marked "Approved" or
"Rejected," as the case may be, and signed by Lessor. If Lessor shall not have
delivered said final plans and specifications marked "Approved" or "Rejected,"
as the case may be, to Lessee within said period of time, Lessor shall be deemed
to have accepted them.
(c) If the final plans and specifications are approved by Lessor, then
Lessee shall, at its sole cost and expense (except to those expenses designated
herein to be paid by
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Lessor), construct the Modification Improvements in accordance with the
approved plans and specifications and all applicable requirements of the
appropriate governmental authority.
(d) Lessee shall obtain the necessary building permits to construct the
Modification Improvements as soon as possible after they are approved, and
Lessor shall use its best efforts to complete construction of Lessor's portion
of the Modification Improvements on or before the date (the "Estimated
Completion Date").
(e) In the event Lessor's portion of the Modification Improvements are
not completed by the Estimated Completion Date, Lessor shall complete the
Modification Improvements as soon thereafter as is possible. Lessor shall not be
responsible to Lessee for any damages due to delays beyond Lessor's control.
(f) Lessor shall remove from the exterior of the Bakery all signs,
decals, insignias, and other items which refer to Music Plus, the prior tenant
in the Bakery.
(g) If Lessor fails to accept the final plans and specifications or if
Lessor rejects the final plans and specifications, Lessee shall have the right
to do the following:
(i) Within five business days of receipt of Lessor's
non-acceptance or rejection, terminate the portion of the Lease which relates to
the Bakery. In such event, Lessee shall have no obligation to pay any amounts to
Lessor for the Bakery;
(ii) Modify the plans and specifications so that they meet with
Lessor's approval. If after resubmission of the revised plans and specifications
to Lessor they are still not approved or are rejected, the provisions of this
Paragraph 7(h)(i) shall apply so as to afford Lessee the opportunity to
terminate the portion of the Lease which relates to the Bakery.
(h) To the extent all or any portion of the Premises, which is Lessor's
responsibility, does not meet with the applicable building code, ordinances or
any other rules, regulations, laws or statutes, Lessor agrees to do such work as
required, at Lessor's sole cost and expense, to bring the Premises into
compliance. Said work includes, but is not limited to, the "landing" or loading
area at the rear entrance to the Premises. Lessor also agrees to pay one-half
the cost to replace and properly secure the glass in the front of the Premises.
Lessee shall submit to Lessor the proposed changes and/or corrections to the
glass for Lessor's approval, which approval shall not be unreasonably withheld.
Lessee shall be
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responsible for supervising the glass replacement and shall submit to Lessor a
copy of the invoice therefor. Lessor shall reimburse Lessee one-half the cost
thereof within 10 days of receipt of the invoice. Lessee shall deduct Lessor's
portion from the next payment of fixed minimum rent.
8. Damage and Destruction.
Paragraph 14 of the Lease is hereby supplemented as follows:
"Lessee shall carry business interruption insurance sufficient to
cover the rent and other charges arising under the Lease during any
period when Lessee is unable to fully operate the Deli and/or the
Bakery. Lessor shall at all times carry sufficient insurance to pay for
the replacement cost of the Premises, and Lessee shall carry sufficient
insurance to pay for the replacement cost of the equipment.
"Except as otherwise provided in this Amendment, if at any time
during the term of this Lease or any extended term or option granted
herein, the Premises is damaged or destroyed by any cause, Lessor shall
promptly repair, rebuild, or restore the Building in which the Premises
is located ("Building") to substantially the same condition as the
Building was delivered to Lessee at the commencement of this Amendment
(i.e., exclusive of Lessee fixtures and equipment) and shall be entitled
for that purpose to any and all insurance proceeds. Lessor shall have
the obligation to repair, rebuild, or restore the Building whether or
not the insurance proceeds paid to Lessor are sufficient to cover the
total cost of repair, restoration, or rebuilding. Lessor shall commence
repair, restoration, or rebuilding, as appropriate, as soon as
reasonably practical, but not later than 30 days after issuance of a
building permit, shall apply for the permit within 15 days of the
destruction, and shall cause construction to be completed as soon as
possible, but not later than 180 days after occurrence of the event
causing damage or destruction.
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Lessor's obligation to commence and complete construction within the time
periods described in this section shall not be extended by the fact that Lessor
may not yet have been paid the insurance proceeds. In the event Lessor does not
commence or complete construction within the time periods described in this
section, Lessee shall have the right, but not the obligation, to terminate this
Lease by giving Lessor written notice within ten days after expiration of any
time period set forth herein, in addition to any other rights which Lessee may
have by law.
"Notwithstanding anything contained herein, Lessor shall have the right to
terminate this Lease and shall have no obligation to repair, restore, or rebuild
the Premises or Building under any of the following circumstances:
(a) Damage or destruction from a casualty when the damage or
destruction cannot reasonably be repaired, restored, or rebuilt within a period
of 180 days exclusive of any application, approval, or permit that may be
required;
(b) Damage or destruction from a casualty occurring during the last 24
months of any extended term of this Lease, unless Lessee has exercised an option
to extend the term of this Lease, and in such event within 24 months of the
expiration of the last extended term (Second Option). If Lessor elects to
terminate this Lease as herein provided, Lessor shall give written notice to
Lessee not later than 60 days after the occurrence of the casualty."
The second and third paragraphs of Section 14 of the Lease are hereby deleted,
are of no further force or effect, and are superceded by the terms contained
herein.
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9. Eminent Domain.
The last paragraph of Article 15 of the Lease is deleted in its
entirety, which paragraph relates to the allocation of the award or
compensation in an eminent domain proceeding. In its place, the following is
substituted:
Allocation of Condemnation Award.
"In the event of such a condemnation of the whole or part
of the Premises or Bakery, Lessor shall have the unqualified
right to pursue its remedies against the condemnor for the full
value of Lessor's fees interest and other property interests in
and to the Premises and Bakery. Similarly, Lessee shall have the
unqualified right to pursue its remedies against the condemnor
for the full value of Lessee's leasehold interest and other
property in and to the Premises and Bakery. If the laws of the
State in which the Premises and Bakery are located allow or
require the recovery from the condemnor to be paid into a common
fund or to be paid to Lessor only and, if such recovery is so
paid into such common fund or to lessor only, then in that event,
the recovery so paid shall be apportioned between Lessor and
Lessee according to the value of their respective property
interests as they existed on the date of such condemnation.
The provisions of this Article shall survive any termination of
this Lease."
10. Use.
The first four lines of Paragraph 7 of the Lease shall be deleted,
and in its place, the following replacement language shall be added:
"Lessee shall occupy and use the leased premises only for the
operation of a restaurant, delicatessen, bakery, or for any other
purpose permitted by law provided said use does not compete with any
other use in the shopping center and does not adversely affect the
tenant mix
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based upon an objective determination, and for no other purpose
whatsoever without the prior written consent of Lessor."
11. Prohibition Against Competition.
The following language shall be added as Paragraph 29 to the Lease:
"Lessor's Covenant.
"Lessor agrees for itself, its agents, successors, and assigns that
during the term or any extended term of this Lease, it will not permit,
lease, allow, or use (either by itself or any other tenant, directly or
indirectly, in any portion of the Shopping Center to be used during the
term of this Lease for a restaurant, delicatessen, or a Bakery that
would directly compete with Lessee's restaurant operations in the Deli
and Bakery. The foregoing covenants shall not apply, for example, to a
yogurt store or a pizza parlor, or other establishment that is not
substantially similar to and directly competing with Lessee, nor shall
any of the business done by the tenants existing on the date of this
Amendment be considered to compete with the business done by Lessee for
purposes of this paragraph. The covenants of Lessor contained herein
will continue only for so long as Lessee, its assignees, or subtenants,
operate the restaurant, delicatessen, and bakery businesses in the Deli
and Bakery."
12. Remedy for Breach.
The covenants of Lessor and Lessee contained in Paragraph 12 of
this Amendment are a material inducement for each party to enter into this
Lease and upon any breach by either party of said covenants, which breach is
not cured within 15 days after written notice thereof by the other party, said
latter party shall have the right to pursue all of its rights available at law
or in equity, including cancellation of this Lease, a suit for damages and/or a
suit for injunctive relief (it being understood that the enumeration of the
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foregoing rights and remedies shall not preclude the exercise of any other
rights or remedies which might be available at law or in equity).
13. Incorporation Into Short Form of Lease.
The provisions of this Article shall be incorporated into a short form
of this Lease or restrictive covenant in recordable form by Lessee.
14. Modifications to Exhibits and Addenda.
(a) Exhibit "C" of the Lease, having been performed, is hereby deleted.
(b) Addendum Paragraph 3 of the Lease is hereby deleted and replaced
with the following:
"3. The terms of the Master Lease (under which Lessor is
designated as 'Lessee' of the underlying ground) provide for a periodic
reappraisal of the value of the land. The next reappraisal is scheduled
to occur within 30 days after June 30, 2004. If Lessor's rent is
increased as a result of such reappraisal or for any other reason,
Lessee's rent for the Deli shall be increased by Lessee's proportionate
share of such increase or $500.00, whichever is the lesser, and Lessee's
rent for the Bakery (to the extent it has not already been increased by
Lessee's occupation of the Bakery) shall be increased by Lessee's
proportionate share of such increase, which increase shall not exceed
10.4 percent of the fixed minimum rent on the date of execution of this
Agreement. It being the intent of the parties that the rent payable by
Lessee, as a result of its occupation of the space where the Bakery is
located, shall be apportioned such that the increase in the Bakery rent
will be in the same proportion that the Deli rent is increased based
upon the square footage that the Bakery bears to the entire square
footage of the Shopping Center."
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(c) Addendum Paragraph 10 of the Lease is hereby deleted.
(d) Addendum Paragraph 12 of the Lease is inapplicable to
the Bakery.
(e) Addendum Paragraph 14 applies for one year after occupancy of
the Bakery. To the extent there are any roof repairs or structural repairs by
Lessor within one year after occupancy of the Bakery, no such costs or expenses
shall be the responsibility of Lessee, and Lessor may not pass through or
charge Lessee for these expenses as part of any expenses which Lessee is
obligated to pay under the Lease, including what are commonly referred to as
triple net expenses, except for charges incurred in connection with the repair
of leaks caused by the failure of Lessee to have the approved shopping center
roofer make any patch required after penetration of the roof by Lessee.
(f) Addendum Paragraph 17 is deleted and replaced with the
following:
"17. The term of this Lease with respect to the Deli
commenced on November 1, 1984, and shall expire on October 31, 1994, (the
"Expiration Date"). The term of the Lease with respect to the Bakery shall
commence upon execution hereof and shall expire on the Expiration Date."
(g) Addendum Paragraph 18 of the Lease is hereby deleted.
(h) Addendum Paragraph 19 of the Lease is hereby deleted and
replaced with the following:
"19. Notwithstanding anything to the contrary in Paragraph 14
of the Lease, if the Deli, the Bakery (exclusive of improvements installed by
Lessee) is/are damaged or destroyed (with regard to the extent thereof) at any
time prior to the last one year of the term of this Lease (unless Lessee has an
option to extend the term of the Lease and either has exercised same or does so
within ten days after such damages or destruction), then the Lessor shall
rebuild and restore the damaged or
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destroyed portions of the Premises, and this Lease shall continue in
full force and effect."
(i) Addendum Paragraph 22 of the Lease is hereby deleted and
replaced with the following:
"22. Lessor has no knowledge of any eminent domain
proceedings pending or contemplated with respect to the Shopping
Center."
(j) Addendum Paragraph 23 of the Lease is hereby supplemented as
follows:
"Lessor shall perform all of its obligations under the
reciprocal parking agreement with Hughes Market and as to the Bakery
shall use its best efforts to keep the reciprocal parking agreement (or
any successor agreement thereto) in force during the term of this Lease,
as same may be extended. This shall not change any of Lessor's
obligations which are set forth in Addendum Paragraph 23 of the Lease."
(k) Addendum Paragraph 24 of the Lease is hereby deleted.
15. Reaffirmation and Warranty of Authority.
Except as expressly set forth herein, the Lease is hereby
reaffirmed and ratified by the parties in its entirety. Except as expressly set
forth herein, the use of the word "Premises" in the Lease shall refer to both
the Deli and the Bakery. Lessor and Lessee hereby warrant and represent that
each has the right, power, legal capacity, and authority to enter into and
perform each of the obligations specified under this Agreement, and that no
further approval or consent of any person, board of directors, or entities is
necessary for him to enter into and perform each of the obligations of Lessor
under this Amendment.
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IN WITNESS WHEREOF, this Agreement has hereunto been duly executed by
the parties hereto the day and year first above-written.
"LESSOR"
WRAM DEVELOPMENT COMPANY
By: /S./ Arthur R. Grebler
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Arthur R. Grebler
"LESSEE"
SOLLEY'S, INC.
A California Corporation
By: /s/ Sol Zide
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Sol Zide, President
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EXHIBIT "A"
[Diagram showing the locations of Solley's Deli and Solley's Bakery spaces at
the Sherman Oaks Center]