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Exhibit 10.7
LANDLORD CONSENT AND AMENDMENT TO LEASE
THIS LANDLORD CONSENT AND AMENDMENT TO LEASE ("Amendment") is made and
entered into as of the ____ day of May, 1996, by and among WRAM DEVELOPMENT
COMPANY, a California limited partnership ("Landlord"), SOLLEY'S, INC., a
California corporation ("Lessee"), and JERRY'S FAMOUS DELI, INC., a California
corporation ("JFD").
RECITALS
A. Lessee is the lessee pursuant to that certain Shopping Center Lease,
dated as of April 2, 1984, as amended by that certain First Amendment to
Shopping Center Lease (the "First Amendment"), dated March 6, 1992
(collectively, the "Lease"), by and between Landlord and Lessee, pursuant to
which Lessee leased from Landlord commercial space commonly known as 4578 Van
Nuys Boulevard, Sherman Oaks, California (the "Deli") and 4580 Van Nuys
Boulevard, Sherman Oaks, California (the "Bakery"), as such Deli and Bakery
(collectively, the "Premises") are more particularly described in the Lease.
B. Lessee currently owns and operates the Deli and Bakery under the
name "Solley's" on the Premises (the "Acquired Restaurant").
C. JFD is in the business of owning and operating 24-hour restaurants
("JFD Restaurants") under the name "Jerry's Famous Deli."
D. JFD and Lessee propose to enter into an Asset Purchase Agreement
(the "Asset Purchase Agreement") pursuant to which the Lessee will sell and
assign to JFD, and JFD will purchase from Lessee, Lessee's interest in the
Acquired Restaurant, including all of Lessee's right, title and interest in and
to the Lease.
E. As a condition to the consummation of transactions contemplated by
the Asset Purchase Agreement (the "Sale Transaction"), JFD has requested and
Landlord has agreed, to consent to the Sale Transaction (including the
assignment of the Lease to JFD) and, effective upon consummation of the Sale
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Transaction, to modify the Lease in accordance with the terms set forth below.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Consent to Assignment of Lease. Landlord hereby acknowledges and
consents to the assignment of the Lease to JFD by Lessee, contingent upon the
express assumption by JFD of all of Lessee's obligations under the Lease in
connection with the Sale Transaction and agrees to use its best efforts to
obtain any and all requisite ground lessor or other third party approvals to
such assignment.
2. Certifications of Landlord. Landlord hereby certifies to JFD that:
a. Pursuant to the Lease, Lessee has leased the Premises and has
paid to Landlord an original security deposit of $25,000 which has been reduced
to $10,000 in accordance with the terms of the Lease. The term of the Lease
commenced on November 1, 1984 and the original expiration date of the Lease was
October 31, 1994. Lessee has exercised an option to extend the expiration date
of the Lease to October 31, 2004 and has an option to extend the term of the
option for an additional ten years in accordance with the terms of the Lease.
The Deli consists of approximately 5,390 square feet of leased space. The
current minimum annual rental for the Deli is $142,269.72 against a percentage
rental of 6% of Lessee's gross sales, as set forth in the Lease. The Bakery
consists of approximately 3,280 square feet of leased space. The current minimum
annual rent for the Bakery is $81,252 against a percentage rental of 8%, as set
forth in the Lease. No adjustment in percentage rental shall be made as a result
of JFD obtaining a full or partial liquor license for the Deli and/or Bakery.
b. To Landlord's actual knowledge there are no breaches or
defaults and no conditions have occurred that, with the giving of notice or the
passage of time, or both, would constitute a breach or default, by Landlord or
by Lessee under the Lease or any ground lease of the Premises by Landlord.
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c. Neither the Premises nor the shopping center
of which the Premises are a part (the "Shopping Center") are currently
encumbered by any material mortgage or security interests other than those
created by any ground lessor or the leasehold interests of tenants of the
Shopping Center.
d. JFD has received copies of and reviewed (i) the Parking Lot
Agreement, dated March 9, 1960, between Hughes Markets, Inc., Flora Masciotra
and WM. Grebler & Sons, (ii) a letter dated March 30, 1984, from Hughes Markets,
Inc. to Arthur Grebler, and (iii) a letter dated April 1, 1993 from Hughes
Markets, Inc. to Arthur Grebler.
3. Use of Premises. Landlord acknowledges and agrees as follows:
a. Landlord is familiar with the style, operations and menus (a
copy of which current menus are attached hereto and incorporated herein as
Exhibit A) of JFD Restaurants and acknowledges and agrees that JFD may modify
its menus periodically consistent with the broad style of menu attached as
Exhibit A. Upon consummation of the Sale Transaction, Landlord consents to the
operation of the Premises as a JFD Restaurant (which shall include dining
on-site as well as catering, take-out and delivery services), take-out market
and bakery for retail sales and supply of other JFD Restaurants. However, at
JFD's option, JFD may continue to operate under the name "Solley's" or a
combination of "Solley's" and the JFD trade name and with elements of either the
JFD or Solley's operations.
b. Notwithstanding anything to the contrary contained in the
Lease, Landlord consents to and shall approve and reasonably cooperate with any
reasonable attempts by JFD to (i) obtain and/or maintain a full or partial
liquor license for the JFD Restaurant to be operated on the Premises or (ii)
cause the transfer to JFD of any liquor license utilized by the Lessee in
connection with the operation of the Acquired Restaurant; provided, however,
that JFD shall promptly reimburse Landlord for all reasonable out-of-pocket
costs and expenses incurred by Landlord, including reasonable attorney's fees,
in providing such cooperation or approval.
4. Alterations.
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a. JFD agrees that it shall not make any alterations, additions,
modifications or signage changes to the Premises without first obtaining
Lessor's written approval of specific construction/renovation plans to be
provided to Landlord by JFD. Landlord will not unreasonably withhold or delay
its consent to any construction/renovation or signage plans that JFD may
reasonably request for the Premises to be converted into and operated as a JFD
Restaurant and bakery; provided, however that any such construction, renovations
and/or signage shall comply with all applicable government laws, rules and
regulations and will be done at JFD's sole cost and expense and that rent will
continue to be charged through any renovation period.
b. Both prior and subsequent to the closing of the Sale
Transaction, Landlord shall reasonably cooperate with JFD in connection with any
and all reasonable efforts by JFD to obtain all permits and approvals
(including, without limitation, any requisite approvals of the ground lessor
pursuant to any ground lease to which Landlord is a party) required to commence
and complete the construction and renovations approved by Landlord and
referenced in subsection 4 a.; provided, however that JFD shall promptly
reimburse Landlord for all reasonable out-of-pocket costs and expenses,
including reasonable attorney's fees, incurred by Landlord in providing such
cooperation or approval.
5. Hours of Business.
a. Landlord hereby acknowledges and agrees that the business
hours for the JFD Restaurant to be operated on the Premises may be 24 hours a
day, 7 days a week (but JFD shall be under no obligation to operate on such
basis). Landlord shall reasonably cooperate with JFD in connection with any and
all efforts by JFD to obtain a conditional use permit and/or any other permits
required in order to operate the Premises on a 24 hour a day, 7 days a week
basis; provided, however, that JFD shall promptly reimburse Landlord for all
reasonably out-of-pocket expenses (including reasonable attorney's fees)
incurred by Landlord in providing such cooperation or approval. Subject to the
foregoing, nothing herein shall be deemed to change, alter or amend the
affirmative covenant contained in Section 7(B) of the Lease relating to the
hours of operation of the Premises.
b. Notwithstanding anything to the contrary
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contained in the Lease, Landlord acknowledges and agrees that common area
charges payable by JFD under the Lease will not be increased in the event the
JFD operates the Premises as a 24 hours a day restaurant; provided, however,
that if JFD does operate the restaurant on a 24 hours a day basis, JFD will
arrange, at JFD's sole cost and expense, for (i) a security guard to be present
at the Premises during the hours in which the Shopping Center would otherwise be
closed, (ii) additional cleaning of the parking area and sidewalk as
necessitated by the additional hours of operation and (iii) any other costs
specifically and directly attributable to the 24 hour operation.
6. Adjustment for Inflation. Section 5 of the Lease is hereby amended
to provide that, notwithstanding anything to the contrary contained in the
Lease, any annual inflation adjustment to the Fixed Minimum Rent (during the
original term of the Lease or any extension thereof) shall be limited to a
maximum of five percent (5%) and a minimum of two percent (2%) of the then
current Fixed Minimum Rent; provided, however, that (i) no adjustments to the
Fixed Minimum Rent shall be made subsequent to the period ended October 31,
2009, and (ii) the combined Fixed Minimum Rent for the Deli and the Bakery,
considered as a whole, during the original term of the Lease or any extension
thereof shall not exceed $350,000 per year.
7. Real Estate Taxes. Section 11 of the Lease is hereby amended to
provide that JFD shall not be responsible for the payment of all or any portion
of any increase in taxes triggered as a result of the sale, refinancing, or
other change in ownership or assignment of all or any portion of Landlord's
leasehold or ownership interest in either the Premises or the buildings or
improvements of which the Premises are a part. Nothing herein shall prevent the
pass through of increases caused by other events or changes not specified herein
pursuant to the Lease.
8. Roof Repairs. Notwithstanding anything to the contrary contained in
the Lease, upon closing of the Sale Transaction, the Lease shall be amended to
provide that the Lessee shall be solely responsible for, and shall pay all costs
and expenses relating to, repair and maintenance of the roof of the Premises and
equipment maintained on the roof of the Premises (including, without limitation,
all heating, ventilating, air conditioning, exhaust systems, fans and ducts, and
sheet metal
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maintained on the roof of the Premises for use in connection with the operation
of the Premises) for the benefit of the Premises and that Landlord will not
charge JFD any portion of common area or other charges related to the expense of
repairing and maintaining any portion of the roof of the Shopping Center. The
remainder of the common area charges under Section 12 of the Lease are allocated
to Lessee on a pro rata basis equal to the proportion that the number of square
feet of gross floor area leased by Lessee (as stated in the Lease) bears to the
total square footage of the Shopping Center (as stated in the Lease).
9. Rent Payable for Bakery. Notwithstanding anything to the contrary
contained in the Lease (and specifically Section 6 thereof and Section 5 b. of
the First Amendment), gross sales with respect to the Bakery shall not include
any sales to or transfers of merchandise to the Deli or any other restaurant
locations which are listed on Exhibit B hereto.
10. Extension of Lease Term. Upon completion of the Sale Transaction
and the related assignment to and assumption of the Lease by JFD, JFD shall
automatically be deemed to have exercised the Second Option (as defined in
Section 4 of the First Amendment) with respect to both the Deli and the Bakery
and, as a result, the expiration date of the lease shall be automatically
extended to June 30, 2014 (which is the expiration date of the ground lease for
the Premises).
11. Prohibition Against Competition.
a. Notwithstanding anything to the contrary contained in the
Lease, the negative covenant contained in Section 7 I. of the Lease restricting
the ability of Lessee or its assigns to own, operate or have any interest in the
ownership or operation of similar businesses within three miles of the Premises
is deleted and of no further force and effect and Paragraph 29 of the Lease
shall be amended to read as follows:
"Covenants Regarding Competition. 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, use (either by itself or any
other tenant), or allow to be used, directly or indirectly, any portion
of the Shopping
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Center to be used during the term of this Lease for a Jewish
delicatessen-style casual dining restaurant.
"Lessee agrees for itself, its agents, successors, and assigns that
during the term or any extended term of this Lease, that, aside from
any restaurants owned or operated by Lessee on the date of the closing
of the Sale Transaction, it will not own or operate another Jewish
delicatessen-style casual dining restaurant within 2.5 miles of the
Shopping Center; provided, however, any location listed on Exhibit B to
that certain Landlord Consent and Amendment to Lease, dated May __,
1996, which may be within the 2.5 miles is specifically exempted from
this restriction."
12. Subordination and Financing. The fourth full paragraph of Section
21 of the Lease pertaining to termination of the lease in connection with a
Landlord financing transaction, is hereby deleted and replaced with the
following:
"This Lease is subject and subordinate to all mortgages (a "Mortgage")
now or hereafter placed upon the property of which the leased premises
are a part (the "Property"), and all other encumbrances and matters of
public record applicable to such Property, including, without
limitation, any reciprocal easement or operating agreements, covenants,
conditions and restrictions, and Lessee shall not act or permit the
leased premises to be operated in violation thereof. If any foreclosure
or power of sale proceedings are instituted by any lender or a deed in
lieu is granted (or if any ground lease is terminated), Lessee agrees,
upon written request of any such lender or any purchaser at such
foreclosure sale, to attorn and pay rent to such party and to execute
and deliver any instruments necessary or appropriate to evidence or
effectuate such attornment. In the event of attornment, no lender shall
be : (i) liable for any act or omission of Lessor, or subject to any
offsets or defenses which Lessee might have against Lessor (prior to
such lender becoming lessor under such attornment), (ii) liable for any
security deposit or bound by any prepaid rent not actually received by
such lender, or (iii) bound
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by any future modification of this Lease not consented to by such
lender. Any lender may elect to make this Lease prior to the lien of
its Mortgage, and if the lender under any prior Mortgage shall require,
this Lease shall be prior to any subordinate Mortgage; such elections
shall be effective upon written notice to Lessee. Lessee agrees to give
any lender by certified mail, return receipt requested, a copy of any
notice of default served by Lessee upon Lessor; provided that prior to
such notice Lessee has been notified in writing (by way of service on
Lessee of a copy of an assignment of leases, or otherwise) of the name
and address of such lender. Lessee further agrees that if Lessor shall
have failed to cure such default within the time permitted Lessor for
cure under the Lease, any such lender whose address has been so
provided to Lessee shall have an additional period of 30 days in which
to cure (or such additional time as may be required due to causes
beyond such lender's control, including time to obtain possession of
the Property by power of sale or judicial action or deed in lieu of
foreclosure). The provisions of this Article shall be self operative;
however, Lessee shall execute such documentation as Lessor or any
lender may reasonably request from time to time in order to confirm the
matters set forth in this Paragraph in recordable form. To the extent
not expressly prohibited by applicable law, Lessee waives the
provisions of any applicable law now or hereafter adopted which may
give or purport to give Lessee any right or election to terminate or
otherwise adversely affect this Lease or Lessee's obligations hereunder
if such foreclosure or power of sale proceedings are initiated
prosecuted or completed."
13. Non-Disturbance Agreement. Landlord agrees that it will reasonably
cooperate with JFD and/or Solley's in any reasonable attempt by JFD or Solley's
to obtain a Non-Disturbance Agreement (in form and substance reasonably
satisfactory to Landlord, JFD and such lender or ground or master lessor) from
each lender having a security interest in the Premises or the property on which
all or any portion of the Premises are located as well as from each and every
ground or master lessor of the property on which all or any portion of the
Premises are located; provided, however, that JFD shall promptly reimburse
Landlord for all
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reasonable out-of-pocket costs and expenses incurred by Landlord, including
reasonable attorney's fees, in obtaining such Non-Disturbance Agreement.
14. Valet Parking. JFD agrees that, upon completion of the Sale
Transaction and assignment to and assumption of the Lease by JFD, JFD will
arrange for valet parking (directly or through a contractor, on a fee charged
basis) at the Premises to its customers and customers of other tenants of the
Shopping Center as needed at peak restaurant hours; provided, however, that (i)
in no event shall JFD be obligated to provide valet parking to customers of
other tenants of the Shopping Center in the event that it is not providing valet
parking to JFD customers, and (ii) JFD's obligation to provide valet parking
shall only be effective if, when and so long as Landlord makes arrangements (at
Landlord's sole cost and expense) to provide JFD access to sufficient parking
spaces in the parking lot behind the Premises or such other reasonable location,
in its reasonable discretion, deems to be adequate for valet parking purposes.
JFD shall pay rental for the spaces utilized for the valet parking, if
necessary, in a reasonable amount not to exceed $500 per month. Landlord shall
be named as an additional insured under JFD's general liability policy covering
the Premises for this activity. Notwithstanding anything to the contrary
contained in this Section 14, Landlord may cancel any financial obligations it
has with respect to any such valet parking arrangements if Landlord or JFD
determines that the costs to Landlord or JFD, as the case may be, of maintaining
such arrangements are excessive or if adequate parking is not available.
15. Effectiveness of Lease Amendments. Any amendments to the terms and
provisions of the Lease provided for in this Amendment shall be effective only
upon assignment of the Lease to and assumption of the Lease by JFD in connection
with the Sale Transaction.
16. Further Assurances. In addition to the obligations required to be
performed under the Lease, as amended hereby, Landlord, JFD and Lessee shall
perform such other acts, and shall execute, acknowledge and/or deliver such
other instruments, documents and other materials, as may be reasonably required
in order to accomplish the intent and purposes of the Lease, as hereby amended.
17. Authority. Each party hereto represents and
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warrants to the other parties that it has the due power and authority to enter
into this Amendment and to be bound by the terms hereof.
18. Binding Effect. This Amendment shall be binding upon and inure to
the benefit of Landlord, JFD, Lessee, and their respective approved successors
and assigns.
19. Attorneys' Fees. Should any party initiate a legal proceeding
against any other party, including an arbitration, then the prevailing party
shall be entitled to receive reasonable attorneys' fees and costs incurred in
connection with such legal proceeding.
20. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument.
21. No Other Amendment. Except as modified by this Amendment, the
provisions of the Lease and all amendments thereto shall remain unaffected and
in full force and effect. To the extent that any terms or provisions of this
Amendment are specifically contradictory of any terms or provisions of the
Lease, the terms and provisions of this Amendment shall control.
IN WITNESS WHEREOF, this Amendment is executed as of the day and year
aforesaid.
LANDLORD: WRAM DEVELOPMENT COMPANY, a
California limited partnership
By:_____________________________
Arthur R. Grebler, General
Partner
JFD: JERRY'S FAMOUS DELI, INC.
By:_______________________________
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Name:
Title:
LESSEE: SOLLEY'S INC., a California
corporation
By:_________________________________
Sol Zide, President
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EXHIBIT A
JFD Menus
See menus of "Jerry's Famous Deli" restaurants attached hereto and
incorporated herein by this reference.
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EXHIBIT B
Excluded Locations
1. 12655 Ventura Boulevard, Studio City, California
2. 16650 Ventura Boulevard, Encino, California
3. 13181 Mindanao Way, Marina Del Rey, California
4. 8701 Beverly Boulevard, West Hollywood, California
5. 3210 Park Center Drive, Costa Mesa, California
6. Corner of Harmon Avenue and Paradise Road, Las Vegas, Nevada
7. 42 South Delacey Street, Pasadena, California
8. 10925 Weyburn Avenue, Los Angeles (Westwood), California
9. Del Amo Mall, Torrance, California
10. 21845, 21847, 21851, 21853, and 21857 Ventura Boulevard, Woodland
Hills, California
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