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EXHIBIT 10.45
QUICK FOOD LICENSE AGREEMENT
This Quick Food License Agreement ("Agreement") is made and entered as of
this 3rd day of September, 1999, by and between UNIVERSAL STUDIOS CITYWALK
HOLLYWOOD, a division of Universal Studios, Inc. ("Universal"), and JERRY'S
FAMOUS DELI, INC., a California corporation, ("JFD") with reference to the
following:
A. Universal represents that it owns the following described property,
located in Universal City, California: Space number V201 in the food-court area
("Food Court") of the CityWalk project ("CityWalk") as shown on the plan
attached hereto as Exhibit A and incorporated fully herein by this reference
("Premises"), upon which Universal intends to develop, construct, operate,
manage and own a quick food restaurant to be known during the Term (defined
below) of this Agreement as "Jerry's Famous Deli" ("Restaurant"). The Premises
contains approximately 1,300 square feet of gross leasable space and is located
on the second floor of CityWalk.
B. JFD represents that JFD and the personnel of JFD possess skills,
knowledge and expertise in the planning and development of restaurant
operations of a type and nature characteristic of a sit-down version of the
Restaurant.
C. Universal is desirous of engaging JFD to provide consulting and
technical services to Universal in connection with the planning, development,
construction, furnishing and equipping of the Restaurant, and JFD is desirous
of being so engaged.
D. JFD represents that it possesses the rights necessary to license: (i)
the name "Jerry's Famous Deli"; (ii) the name "Jerry's Famous Deli," with
type-face, logo, and coloring, all as such is attached hereto on Exhibit B and
incorporated fully herein by this reference (the "JFD Logo"); and (iii) any of
the current JFD related trade dress to be utilized in the operations of and in
connection with the Restaurant. The name "Jerry's Famous Deli," the JFD Logo
and the trade dress utilized in the operations of and in connection with the
Restaurant shall collectively referred to hereinafter as the "Intangible
Properties."
E. Universal represents that it is has the skill, knowledge and
expertise in restaurant operations of the type required for operation of a
quick food restaurant.
F. Universal desires to use the Intangible Properties to advertise,
operate and merchandise the Restaurant, and JFD desires to license to Universal
the use of the Intangible Properties in advertising, operations and
merchandising of the Restaurant, under the terms and conditions set forth
herein.
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G. Universal represents that it has had, within the seven years before
the date of this Agreement, at least twenty-four (24) months experience being
responsible for the financial and operational aspects of one or more
restaurants.
NOW, THEREFORE, in reliance upon and in consideration of the above facts
and the terms and conditions set forth below, the parties agree as follows:
ARTICLE 1
DEVELOPMENT AND CONSTRUCTION
A. Development/Construction. Universal will develop, design and construct
the Restaurant. Universal shall make all improvements to the Premises so that
it is a fully operational restaurant facility, including without limitation,
the design, construction, installation of the storefronts, signage, interior
finishes, furnishings and equipment (the "Improvements").
1. Design Firm. A design firm ("Design Firm") to oversee all
aspects of the Improvements shall be selected by Universal.
2. Schematic Design. JFD shall consult and work with Universal and
the Design Firm in developing an approved final schematic design for the
Restaurant based on the Budget (defined below), which will be approved by
Universal.
B. Universal's Sole Cost. The Improvements and all other costs to make
the Restaurant fully operational shall be at the sole cost and expense of
Universal. Universal shall establish an all-in budget for the Improvements (the
"Budget"), and in this regard Universal intends such Budget to be approximately
but no more than $350,000. JFD shall exercise all of its approvals and render
its consulting services in a manner generally consistent with the Budget.
C. Opening Date. The "Opening Date" is the date the Restaurant opens to
the public. Subject to the provisions of Article 4, B, below, Universal shall
endeavor to cause the Opening Date to occur on or about February 1, 2000,
subject to extension for Force Majeure Events (defined below).
ARTICLE 2
JFD'S CONSULTING SERVICES
Upon and subject to the terms and conditions hereinafter set forth,
Universal does hereby engage and retain JFD, and JFD does hereby agree to be
engaged
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and retained by Universal, to provide the consulting services hereafter
described. JFD will assist Universal in the development of the Restaurant,
including, without limitation, using its best professional efforts to help
develop the Restaurant profitably in full compliance with all applicable laws,
codes, ordinances and regulations imposed by governmental authorities and in a
manner consistent with the Budget; provided, however, JFD shall not be required
to engage in any activity requiring a professional license or registration.
During the planning, construction, development and pre-opening of the
Restaurant (i.e. from the date of execution of this Agreement by JFD until the
Opening Date), JFD shall consult with Universal's management team in the
following areas:
1. JFD will diligently assist Universal in the design of the
Restaurant so that Universal will have the benefit of JFD's expertise in
planning, designing and laying out the Restaurant, from an operational point of
view and in a manner consistent with other Jerry's Famous Deli restaurants.
2. JFD will cooperate in advising and assisting Universal in
developing budgets for furniture, fixtures and equipment, kitchen equipment,
telephone and communications equipment and other individual categories of
furniture, fixtures and equipment, and advise and assist Universal and the
Architect in developing an overall budget for the Restaurant project for both
prior to the Opening Date and thereafter.
3. JFD will assist Universal in conducting such inspections and
reviews from time to time as may be reasonably necessary to perform JFD's
duties hereunder and as Universal may request with regard to such matters as
Universal reasonably determines may be useful to Universal in Universal's
overall supervision of the Restaurant project. JFD is not, however, an expert
in building codes, or technical matters, such as electrical or mechanical
matters.
4. JFD will assist Universal in selecting and establishing menus,
pricing, uniforms and similar items and matters so as to ensure conformity with
other Jerry's Famous Deli restaurants. Menu and pricing restrictions are
further addressed in Article 5, B, 2.
5. JFD will consult with Universal regarding establishing staffing
needs, employment timetables, hiring and training guidelines for employees and
other programs relating to staffing of the Restaurant.
6. JFD will consult with Universal on all pre-opening activities.
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7. JFD shall meet in person with Universal weekly or more frequently
as reasonably requested by Universal in order to discuss all matters relating to
the planning, construction, development and pre-opening of the Restaurant,
including without limitation, the ongoing design, operation and/or management of
the Restaurant. In general, JFD, to the best of JFD's professional ability, will
consult with Universal in all activities necessary or reasonably required to
open the Restaurant for business and to see that there is in place, prior to
opening, a coordinated program for drawing customers to the Restaurant and, with
Universal's cooperation, to ensure creative and operational conformity with
other Jerry's Famous Deli restaurants.
ARTICLE 3
LICENSE OF INTANGIBLE PROPERTIES
A. License. JFD hereby grants to Universal the non-exclusive right,
license and privilege to use the Intangible Properties in connection with
Universal's operation of the Restaurant, pursuant to the terms hereof. JFD
expressly reserves the unqualified right to use, license, sublicense or
otherwise exploit, in any manner whatsoever and at all times, the Intangible
Properties or any variation or combination thereof, except as otherwise
provided in this Agreement. This license of Intangible Properties to Universal
includes not only elements which existed on the effective date of this
Agreement but also additional elements created, developed or acquired or
licensed in the future to the extent such additional elements are made
accessible to all other Jerry's Famous Deli restaurants and to the extent such
elements are the property of JFD to license. JFD also grants to Universal the
right to use any other materials that JFD uses in connection with its
restaurants to the extent JFD believes it has the rights to allow Universal to
use such materials.
B. Permitted Use. Universal shall have the right to utilize the
Intangible Properties in connection with the Restaurant, including without
limitation, the marketing thereof, in a manner consistent with the Quality
Standards (defined below). It is understood that all products, merchandise and
services utilizing or bearing the Intangible Properties shall be sold at the
Premises in accordance with the terms hereof, it being understood that
Universal shall have the right to sell products, merchandise and services
utilizing or bearing the Intangible Properties from the Premises to anywhere on
the property now or hereafter owned or controlled Universal and its Affiliates
generally known as Universal City, California. Universal shall have the right
to modify the JFD Logo, subject to JFD's consent; provided that JFD shall own
all right, title and interest to such JFD Logo.
C. Scope of License. Universal acknowledges that all rights, title and
interest in and to the Intangible Properties are and shall remain vested solely
in JFD and that all use of the Intangible Properties by Universal shall inure
to the benefit of JFD. Universal disclaims any right or interest therein or the
good will derived therefrom.
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D. Quality Controls and Approvals.
1. Quality Control. The term "Quality Standards" shall mean those
quality standards established by JFD with respect to the operation of other
Jerry's Famous Deli restaurants as of the date of this Agreement, as adjusted
to reflect the fact that there are differences between a full service, broad
menu, mid-market, sit-down restaurant and a typical, self-serve fast food
operation.
Universal shall use commercially reasonable efforts to comply with
the Quality Standards in connection with the use of the Intangible Properties
and the operation of the Restaurant and complying with such obligation in a
material way is necessary to the image and success of the Restaurant. JFD shall
have the right to inspect and examine the Restaurant, it being understood that
such rights of inspection and examination shall be continuing throughout the
term of the Agreement and may be undertaken at any times mutually agreed to by
the parties, provided they shall be conducted so as not to interfere
unreasonably with Universal's business operations. JFD may, however, make spot
visits ("Spot Visits") unilaterally once per quarter at any convenient time
during business hours with reasonable advance notice, provided such Spot Visits
shall be conducted so as not to interfere unreasonably with Universal's
business operations and provided further that Spot Visits in any part of the
"back of the house" will only be performed between the hours of 1:30 p.m. and
5:30 p.m. If during a Spot Visit it is determined that Universal has not
complied with its material obligations pursuant to the first sentence of this
grammatical paragraph, JFD may conduct more than one Spot Visit per quarter
until it is determined that Universal has complied with such obligations in a
material way. Universal shall use commercially reasonable efforts to ensure
that all food products, merchandise or services bearing or utilizing the
Intangible Properties offered or sold is of a high standard for a quick food
restaurant and in no way reflects adversely upon the Intangible Properties.
JFD agrees to use its commercially reasonable efforts to cause all
other Jerry's Famous Deli restaurants to be operated and to ensure that all
food products, merchandise or services bearing or utilizing the Intangible
Properties offered or sold is of the highest standard and in no way reflects
adversely upon the Intangible Properties.
If the quality standards with respect to all other sit-down Jerry's
Famous Deli restaurants and any new sit-down restaurants do not maintain at
least the same quality standards as exist as of the date of this Agreement, and
with respect to any new quick food restaurants, the Quality Standards (i.e. the
standard applicable to the Restaurant) are not maintained, Universal shall have
the right (but not the obligation) to terminate this Agreement effective on
ninety (90) days notice; provided however if Universal terminates this Agreement
pursuant to this grammatical paragraph, Universal shall not be able to obtain
damages.
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Notwithstanding anything to the contrary contained in this Article
3,D,1 if the operator or licensee of any JFD restaurant is treated more
favorably (from its standpoint) with respect to any matter and/or restriction
specified in this Article 3,D,1 then the matter and/or restriction specified in
this Article 3,D,1 shall be modified so that Universal is treated in the same
manner.
E. Materials.
1. JFD shall make available to Universal at JFD's expense all
photographic material and artwork with respect to the Intangible Properties
including any logo which JFD has available and which Universal may require to
fulfill its obligations hereunder.
2. Unless Universal (in its sole and absolute discretion) requests
otherwise, no materials used by Universal in connection with the Restaurant
shall make any reference to any other restaurant operated or licensed by JFD.
3. JFD shall be permitted to include the Restaurant in lists and
menus where other JFD restaurants are listed as "Jerry's Famous Deli at
Universal CityWalk." All other advertising, marketing or promotion of the
Restaurant shall be subject to Universal's approval.
ARTICLE 4
TERM OF AGREEMENT
A. Term. This Agreement shall have a term ("Term") which shall commence
immediately upon the date of this Agreement ("Commencement Date") and shall
terminate (unless extended pursuant to Article 4,A,1 and Article 4,A,2 below)
upon the last day of the 120th month following the last day of the calendar
month in which the Opening Date occurred, unless the Opening Date is the first
day of a calendar month in which case this 120 month period shall run from the
last day of the previous calendar month.
1. Initial Option to Extend. Except if Universal is in default and
has not cured such default (as more fully described in Article 11), if the
annual average "Gross Sales" (as defined below) for the last 24 months prior to
the notice next mentioned is equal to or greater than $1,000,000 (subject to an
equitable reduction for Events of Force Majeure, defined below), Universal
shall have the option ("Initial Option") to renew this Agreement for an
additional five (5) years ("Initial Option Term") by giving JFD notice of at
least 180 days before the expiration of the Term, provided that Universal pays
JFD $40,000 ("Initial Option Payment") upon the commencement of
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the Initial Option Term, which Initial Option Payment shall be applicable
against any future License Fees accruing and owing to JFD.
2. Second Option To Extend. Except if Universal is in default and
has not cured such default (as more fully described in Article 11), if the
annual average "Gross Sales" (as defined below) for the last 24 months prior to
the notice next mentioned is equal to or greater than $1,000,000 (subject to
an equitable reduction for Events of Force Majeure, defined below), Universal
shall have a second option ("Second Option") to renew this Agreement for
another five (5) years ("Second Option Term") by giving JFD notice of at least
180 days before the expiration of the Initial Option Term, provided that
Universal pays JFD $40,000 ("Second Option Payment") upon the commencement of
the Second Option Term, which Second Option Payment shall be applicable against
any future License Fees accruing and owing to JFD.
Except for a default by JFD, JFD shall not forfeit any portion of the
Initial Option Payment and/or Second Option Payment as a result of an early
termination of this Agreement by Universal.
B. Right to Terminate.
1. If construction of the Restaurant has not commenced by June 1,
2000 (subject to extension for Events of Force Majeure, defined below) or,
despite the parties acting in good faith, if the Restaurant's Opening Date is
not before December 31, 2000, then either party shall have the sole remedy of
terminating this Agreement effective on notice to the other party given within
twelve (12) days therewith.
2. Except if Universal is in default and has not cured such default
(as more fully described in Article 11), Universal shall have the right (but
not the obligation) to terminate this Agreement effective upon ninety (90) days
notice to JFD given within one (1) year following the 12-month period next
mentioned, if during any consecutive 12-month period during the Term, one of
the following criteria is met: (i) Gross Sales (as defined below) fall below
the sum of $750,000 (as adjusted for each calendar year per CPI/LA), or (ii)
the Restaurant's EBITDA (as defined below) is negative. Except if JFD is in
default and has not cured such default (as more fully described in Article 11),
if the Agreement is terminated by Universal pursuant to this Article 4.B.2
within twenty four (24) months following the Opening Date, Universal shall
guarantee that JFD receives the Fixed License Fee (defined below) for the first
two years of the Term. If Universal has the right to terminate under this
Article 4, B, 2 and also has the right to terminate under Article 4, B, 3
below, the provisions of this Article 4, B, 2 shall apply.
3. Except if Universal is in default and has not cured such default
(as more fully described in Article 11), Universal shall have the right to
terminate this
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Agreement for any reason effective on notice to JFD any time following forty
eight (48) months from the Opening Date, provided that Universal does not within
24 months of such notice to terminate (i) replace the Restaurant with an
alternative quick food "Deli-Restaurant" (defined below) or (ii) permit the
operation of a sit-down "Deli-Restaurant" in CityWalk. Except if JFD is in
default and has not cured such default (as more fully described in Article 11),
and except if a termination under Article 4, B, 2 is applicable, if the
Agreement is terminated by Universal pursuant to this Article 4, B, 3 (as
distinguished from Article 4, B, 2), then Universal's notice of termination of
JFD shall be accompanied by a termination fee ("Termination Fee") in an amount
equal to four percent (4%) of the average annual "Gross Sales" (defined below)
during the 24 months prior to such notice to terminate, which Termination Fee
shall be no less than $50,000 and no greater than $100,000.
4. If any third party is successful after appeals are exhausted or
if JFD fails to fully defend, indemnify and hold harmless Universal pursuant to
Article 12,A in connection with a claim against Universal and/or its Affiliates
regarding Universal's use of the Intangible Properties in connection with the
Restaurant pursuant to the terms of this Agreement, Universal shall have the
right (but not the obligation) to terminate this Agreement effective on notice
to JFD. Notwithstanding any such termination, and in the event of the filing of
such court action, JFD shall indemnify Universal pursuant to Article 12, A.
Furthermore, if Universal is precluded from using the "Jerry's Famous Deli" name
in connection with the Restaurant, JFD will reimburse Universal for either of
the following, as determined by Universal in its sole discretion: (i) the
unamortized, original cost of the Improvements (i.e. complying with Article 1,
A); or (ii) the costs (other than license fees or similar fees, such as
franchise fees) incurred in connection with removing any Intangible Properties
and replacing such with new other names, trade dress, logos and similar type
intellectual property for use in connection with a new restaurant or store, the
installation costs of which shall be generally consistent (with appropriate
CPI/LA adjustment) with the costs of installing the Intangible Properties under
this Agreement.
5. Universal or JFD shall have the right to terminate this Agreement
as expressly provided elsewhere in the Agreement.
C. Upon Termination/Expiration. Upon termination or expiration of this
Agreement: (i) the provisions of Article 11, A, 5 shall govern; and (ii)
Universal shall not use any mark or design which is the same or confusingly
similar to the Intangible Properties. Notwithstanding anything to the contrary
contained in this Agreement, Universal is not and shall not waive any rights
that it would have in the absence of this Agreement as a member of the public.
ARTICLE 5
OWNERSHIP AND OPERATION OF RESTAURANT
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A. Ownership. Universal shall own all assets of any kind in and to the
Restaurant and all Improvements, including without limitation, signage, except
only the name "Jerry's Famous Deli," the Restaurant design concept and the
Intangible Properties; however, Universal shall have the right to use the name
"Jerry's Famous Deli," the Restaurant design and the Intangible Properties (all
of which are exclusively owned by JFD) as expressly provided in this Agreement.
JFD shall own and is hereby assigned the Restaurant's trade-dress and the
design of the Restaurant's store-front ("Design Concept") which Universal
develops with respect to the Restaurant and JFD will have the right to use such
Design Concept at any time in any other location (subject to the restrictions
contained in Article 7). If JFD and Universal enter into future license deals on
other project(s) owned, operated or licensed by Universal and/or its Affiliates
and if JFD and Universal agree to use the same or substantially similar Design
Concept created by Universal pursuant to this Agreement, JFD shall not directly
or indirectly charge any design fees for the same or substantially similar
Design Concept to be used at such other project(s). Notwithstanding anything to
the contrary contained herein, Universal is not and shall not waive any rights
that it would have in the absence of this Agreement as a member of the public.
Furthermore and notwithstanding anything to the contrary contained herein,
Universal shall have the right to use the Design Concept (except for the name
"Jerry's Famous Deli," JFD Logo, any photographs provided to Universal by JFD
for use in connection with the Restaurant, or the distinctive JFD design
enhancements to the menu board structure) in connection with any other store or
restaurant on the Premises. For example, if the Agreement is terminated or
expires, Universal shall have the right to use the Design Concept (except for
the name "Jerry's Famous Deli," JFD Logo, any photographs provided to Universal
by JFD for use in connection with the Restaurant, or the distinctive JFD design
enhancements to the menu board structure) in connection with another restaurant
or store on the Premises.
B. Operation. Universal shall be solely responsible for the management
and operation of the Restaurant and, except as provided elsewhere in this
Agreement, shall have approval over all aspects thereof. JFD shall neither have
nor exercise any control over Universal's method of operating the Restaurant,
and Universal is under no obligation to adhere to any specified scheme or plan
for operating the Restaurant, except that Universal shall use commercially
reasonable efforts to operate the Restaurant in a manner consistent with the
Quality Standards, all as more fully set forth in Article 2, D.
The following obligations shall also apply during Universal's operation of
the Restaurant:
1. Signage. Universal shall install signage for the Restaurant
(i) on the facade of the Restaurant; and (ii) in the common area of the CityWalk
so that such
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signage is within reasonable proximity to the Food Court and is visible from the
area by the main entrance to the motion picture cinemas on the first floor of
CityWalk.
2. Menu and Pricing. Universal and JFD have pre-approved the
initial menu for such menu items in the manner set forth in Exhibit C, attached
hereto and incorporated herein by this reference, with designations referred to
as primary products (items that must at all times be offered by the Restaurant)
("Primary Products") and secondary products (all other items offered by the
Restaurant) ("Secondary Products"). Notwithstanding the foregoing (and except
with respect to beverage and snack food items for which Universal has absolute
flexibility in adding or deleting from the menu without JFD's approval, provided
such items are generally consistent with the initial concept of the Restaurant
as a "Deli-Restaurant," as such term is defined in Article 7), Universal shall
be permitted flexibility in adding or deleting Secondary Products to the menu
without JFD's approval provided the following criteria are satisfied with
respect to newly added items: (i) the menu item appears on the sit-down
restaurant menu at the Jerry's Famous Deli in Studio City, California or at
JFD's highest grossing Jerry's Famous Deli restaurant if the Jerry Famous Deli
in Studio City, California is no longer operating ("Reference Restaurant"); (ii)
Universal uses commercially reasonable efforts to comply with the Quality
Standards; and (iii) the initial concept of the Restaurant as a "Deli
Restaurant" (as such is defined in Article 7 below) is not materially affected
by the addition of the menu item. Universal shall have the right (in its sole
and absolute discretion) to delete Secondary Products from the menu without
JFD's approval. Universal shall also be permitted flexibility in making changes
to the price of any menu item without JFD's approval, provided the following
criteria are satisfied with respect to price changes for Primary Products: (i)
the price for such item cannot be higher than the price for such item at the
Reference Restaurant; and (ii) the price change is not for the purpose of
offering promotional pricing. Furthermore, notwithstanding anything to the
contrary contained herein, the parties can mutually agree on any price or menu
modifications.
Notwithstanding anything to the contrary contained in this Article 5, B,
2, if the operator or licensee of any JFD restaurant is treated more favorably
(from its standpoint) with respect to any matter and/or restriction specified in
Article 5, B, 2 then the matter and/or restriction specified in this Article 5,
B, 2 shall be modified so that Universal is treated in the same manner.
3. Products. It is expressly understood that Universal will
buy food products directly from suppliers, none of which shall be JFD. Unless
otherwise agreed to by the parties, Universal shall utilize recipes and
suppliers from JFD only for the specified items listed on Exhibit D, attached
hereto and incorporated herein by this reference; provided that Universal
obtains the specified items from such supplier at the same price (including
without limitation rebates) that JFD pays for such items. All other recipes and
suppliers (except as specified in the last sentence of this grammatical
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paragraph) shall be determined by Universal in its sole and absolute discretion,
provided Universal maintains the Quality Standards. Any newly added menu item
which is not on the initial menu, attached hereto as Exhibit C and incorporated
herein, shall have the following restrictions: (i) if such newly added item is
created entirely at the Reference Restaurant, then Universal shall use the same
recipe used by JFD at such restaurant for such newly added item; and (ii) to the
extent such newly added item contains any ingredient listed on Exhibit D,
Universal shall utilize the supplier that JFD uses for such ingredient. Unless
otherwise agreed to by the parties: (i) Universal shall use round rye bread
which is supplied from the same supplier that JFD uses, from Brown's or as
otherwise mutually agreed to by the parties; (ii) the mustard and soup base
shall be supplied by the same supplier that JFD uses; and (iii) Universal shall
use a supplier for pre-cooked turkey which is subject to JFD's and Universal's
approval.
Notwithstanding anything to the contrary contained in this Article 5, B,
3 if the operator or licensee of any JFD restaurant is treated more favorably
(from its standpoint) with respect to any matter and/or restriction specified in
Article 5, B, 3 then the matter and/or restriction specified in this Article 5,
B, 3 shall be modified so that Universal is treated in the same manner.
4. Seating. Throughout the Term, Universal shall provide a
seating area in the Food Court for customers purchasing items from all
restaurants in the Food Court, it being agreed that Universal shall use
commercially reasonable efforts to ensure a minimum of approximately 6 seats per
100 square feet of leasable Food Court restaurant space.
5. Health Standards. Universal shall use its commercially
reasonable efforts to rectify any condition which causes the Restaurant to
receive a County of Los Angeles, Department of Health Services Environmental
Health Grade of less than "A."
Notwithstanding anything to the contrary contained in this Article 5, B,
5 if the operator or licensee of any JFD restaurant is treated more favorably
(from its standpoint) with respect to any matter and/or restriction specified in
Article 5, B, 5 then the matter and/or restriction specified in this Article 5,
B, 5 shall be modified so that Universal is treated in the same manner.
C. JFD's Obligations.
1. It is the express understanding that this is the first
quick food unit to be operated under the JFD name. As such the Quality Standards
and profitability of the Restaurant will be different than with respect to other
Jerry's Famous Deli sit-down restaurants. Based on the performance of the
Restaurant, JFD may open other quick food units elsewhere ("Expansion Sites"),
subject to Article 7. With respect to such Expansion Sites, JFD shall provide
Universal on a quarterly basis, without charge, a written summary of any and all
material innovations and/or operational information
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which JFD derives from any such Expansion Sites and which may have some
conceivable value to Universal ("Expansion Innovations/Information") so that
the operation and financial results of the Restaurant may be improved.
Universal shall have the following remedies if JFD fails to provide Expansion
Innovations/Information to Universal and JFD has not cured such default (as
more fully described in Article 11): (i) if such failure is intentional and has
a material adverse impact on the Restaurant's EBITBA, then Universal shall be
entitled to all available remedies under this Agreement, including without
limitation, damages and termination of this Agreement; (ii) if such failure is
not intentional and has a material adverse impact on the Restaurant's EBITBA,
Universal may only seek damages and may not terminate this Agreement; and (iii)
if such failure does not fall under items (i) or (ii) above, then JFD shall
prospectively cure such breach and provide Universal with the Expansion
Innovations/Information.
D. Expenses of JFD. Except for its own expenses, costs and overhead in
rendering its inspection and consulting services as set forth in Article 2,
providing materials as set forth in Article 3 and costs and expenses incurred
without Universal's consent, JFD shall bear no expense in connection with
Universal's operation of the Restaurant. If Universal requests that JFD render
services beyond the scope set forth herein or incur any out-of-pocket expenses
beyond the scope set forth herein, Universal shall promptly pay JFD reasonable
fees for such services and reimburse JFD for any such expenses; provided
however, JFD shall notify Universal of reasonable estimates of any such costs
and expenses prior to incurring any costs or expenses so that Universal may
elect not to have JFD incur such costs and/or expenses.
ARTICLE 6
FEES
A. Consulting Fee. In consideration of the consulting services provided
by JFD, and provided further that JFD is not in default hereunder, JFD shall be
entitled to a one-time fee (the "Consulting Fee") from Universal to be earned
and payable as follows:
1. Ten Thousand Dollars ($10,000) shall be earned if this Agreement
is signed and delivered to Universal within ten (10) business days following
September 13, 1999, provided however, if and to the extent the delay in signing
this Agreement would not have occurred but for some action or inaction on
Universal's part and which does not solely arise out of or is not caused by any
action or inaction on JFD's part, then JFD shall be entitled to an additional
day for each such day of delay in signing by JFD of this Agreement;
2. Twenty Thousand Dollars ($20,000) shall be earned upon the
issuance of a building permit to commence construction of the Improvements; and
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3. Twenty Thousand Dollars ($20,000) shall be earned on the Opening
Date.
The Consulting Fee shall be paid by Universal to JFD on the first day of
the first month following six (6) full calendar months of continuous operation
of the Restaurant.
B. License Fee. For licensing the Intangible Properties hereunder, and
provided JFD is not in default hereunder, JFD shall earn from Universal a
license fee (the "License Fee") as follows:
1. During First Two Years After Opening Date. During the first two
years following the Opening Date only (and not for any subsequent years), Ten
Thousand Dollars ($10,000) at the conclusion of each three month period
following the Opening Date ("Fixed License Fee"), for a total Fixed License Fee
of $80,000. In addition to the foregoing Fixed License Fee, if four percent
(4%) of the "Gross Sales" (as defined below) exceeds the sum of $40,000 during
either one or both of the first two years following the Opening Date, JFD shall
be entitled to an additional fee equal to such excess for each such year in
which such excess occurs.
2. During All Subsequent Years. During the third and all subsequent
years following the Opening Date (and not for the first two years following the
Opening Date), an amount equal to the four percent (4%) of the "Gross Sales"
(as defined below) of the Restaurant.
C. Payments. The License Fee (other than the Fixed License Fee) shall be
earned by JFD on a quarterly basis within 45 days after the end of Universal's
fiscal quarter, and calculated for such preceding quarter; provided that any
earned portion of the License Fee and Fixed License Fee payment shall not be
paid until the first day of the first month following six (6) full calendar
months of continuous operation of the Restaurant and all payments shall be made
as earned thereafter. All payments shall be made payable to JFD at the address
set forth in Article 15, or to such persons and at such addresses as JFD may
designate in writing from time to time. If Universal shall fail to make any
payment required hereunder on the date when the same is due and Universal has
been notified of such failure, and such payment is not made to JFD within ten
(10) days following such notice, Universal shall pay interest on any such
overdue amount at a rate equal to the Prime Rate plus two hundred basis points.
If Universal shall fail to make any payment required hereunder on the date when
the same is due more than two times during any calendar year, then Universal
shall also be assessed a late fee of $150 for each such further late payment
within the same calendar year (i.e. the late fee shall be charged on all late
payments after the first two late payments). The term "Prime Rate" shall mean
the monthly rate of interest publicly announced from time to time by Bank of
America, National Trust and Savings Association in San Francisco.
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California (or such other bank as Universal may from time to time specify) as
its "reference rate" or its "prime rate" unless such rate exceeds the maximum
lawful rate under usury or similar law in the state of California, in which
case it shall be deemed to mean the maximum lawful rate.
D. Gross Sales Definition. The term "Gross Sales" as used in this
Agreement is defined to be the gross selling price of all merchandise or
services sold in or from, and any other gross sales (including cover charges
and fees paid by third parties for sponsorships or celebrity appearances or
other promotional considerations) generated on or from, the Premises by
Universal, whether for cash, credit or barter; provided, however, that with
respect to any vending or other machines, telephones or other third party
equipment or businesses on the Premises, only the net receipts received by
Universal from such activity shall be included in Gross Sales. Gross Sales
shall be adjusted only by excluding or deducting the following:
1. The selling price of all merchandise returned by customers and
accepted for full credit or the amount of discounts and allowances made thereon;
2. Goods returned to sources or transferred to another store or
warehouse owned by or affiliated with Universal;
3. Sums and credits received in the settlement of claims for loss
of or damage to merchandise;
4. The price allowed on all merchandise traded in by customers for
credit to the extent the credit given is in excess of the value of the
merchandise traded in;
5. Cash refunds made to customers in the ordinary course of
business;
6. Receipts from any public telephones, stamp machines or public
toilet locks installed with Universal's approval in areas not open to the
public;
7. Sales taxes, so-called luxury taxes, consumers' excise taxes,
gross receipts taxes and other similar taxes now or hereafter imposed upon the
sale of merchandise or services;
8. Sales of fixtures, equipment or property which are not
Universal's stock in trade;
9. Sales cancelled, but only to the extent of the purchase price
not retained by Universal;
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10. Interest, service or sales carrying charges paid by customers
for extension of credit on sales, and where not included in the merchandise
sales price;
11. Bad debts and bad checks;
12. The discounted portion of employee discount sales or free food
given to employees (collectively, "Employee Discounts") to the extent the
Employee Discounts shall have been given in accordance with the policy on
Employee Discounts established by the Restaurant in accordance with the
provisions of this Agreement, provided that in no event shall Employee Discounts
exceed five percent (5%) of Gross Sales without JFD's consent;
13. Tips received from customers of the Restaurant for the benefit
of employees and for which the Restaurant accounts to such employees;
14. The sale price of any capital assets;
15. Capital contributions to Universal by shareholders;
16. Loans of any type to or on behalf of Universal;
17. Any costs and fees incurred in connection with credit card
charges, including, without limitation, commissions to selling agents; and
18. Income generated from insurance proceeds, condemnation
proceeds and transactions not in the ordinary course of business.
The accounting for pre-sold tickets, coupons, gift certificates and like
vouchers (collectively, "Pre-sales") and for merchandise and/or services
exchanged for such Pre-sales will be handled and accounted for as part of Gross
Sales in such manner as Universal may from time to time specify from one of the
two following options: (i) the selling price of any Pre-sales sold in or from
the Premises shall be included in Gross Sales and the redemption of Pre-sales at
the Premises shall be excluded form Gross Sales; or (ii) the redemption of
Pre-sales at the Premises shall in be included in Gross Sales and the selling
price of any Pre-sales sold in or from the Premises shall be excluded from Gross
Sales. Unless and until Universal notifies JFD otherwise, item (i) shall apply
and shall continue to apply until a subsequent notification of a change.
All sales originating at the Premises or orders secured or received at the
Premises (whether by mail, telephone, facsimile transmission, telegraph or
otherwise) shall be considered as made and completed therein, even though
bookkeeping, payment or collection of the account may take place elsewhere, and
even though actual filling of the
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sale or service order and actual delivery of the merchandise may be made from a
place other than the Premises. Each sale upon installments or credit shall be
treated as a sale for the full cash price at the time of sale.
The term "merchandise" as used in this Agreement is defined as any goods
and commodities, including without limitation food and beverages and novelty
items (i.e., coffee mugs, t-shirts and hats), sold or offered for sale, unless
the context of the use of such term requires a different meaning.
ARTICLE 7
NON-COMPETITION
A. During the Term, neither JFD nor any Affiliate (defined below) shall
own, operate, manage, license or otherwise directly or indirectly engage in the
operation of any quick food Deli- Restaurant (as defined below) within any of
the following: (i) the "Hollywood and Highland" project, as set forth in
Exhibit E attached hereto and incorporated herein by this reference; or (ii)
the "Media Center Area" in Burbank as set forth in Exhibit F attached hereto
and incorporated herein by this reference.
Notwithstanding the foregoing, if the Gross Sales fail to reach $350,000.00
for any consecutive 12-month period during the Term (excluding from such period,
any time when the Restaurant operation is closed or significantly curtailed
because of Events of Force Majeure (defined below)), the restriction set forth
in this Article 7, A will be void and of no force and effect.
B. During the Term, Universal shall not permit the operation of any
"Deli-Restaurant" in CityWalk. The term "Deli-Restaurant" shall mean a
Jewish-style delicatessen restaurant which features corned beef and pastrami
sandwiches and chicken noodle soup; examples of such restaurants in the Los
Angeles area include Jerry's Famous Deli, Nate n' Al, Factors, Juniors,
Canters, Art's, The Stage, Wall Street Deli, Brent's Deli and Langers.
Without intending to expand the foregoing prohibition, during the Term,
Universal shall be permitted to operate a bagel shop, such as Manhattan Bagel
or Noah's Bagels, in CityWalk without JFD's consent; provided such bagel shop
does not offer for sale the Primary Products (except for cheesecake and soup).
ARTICLE 8
PROTECTION OF INTANGIBLE PROPERTIES
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A. Universal shall notify JFD promptly of: (i) any use of tradenames,
trademarks or other intellectual property which Universal believes infringes on
Universal's right to use the Intangible Properties or which Universal believes
is confusingly similar to the Intangible Properties; or (ii) any claims made by
third parties that such third party has the right to use the Intangible
Properties or the right to use items confusingly similar to the Intangible
Properties. (If a claim is made against Universal, the rights and obligations of
the parties shall be governed by Articles 4, B, 4 and 12 below). If JFD decides
that action should be taken against any third party, it may take such action in
its own name, in which case all expenses shall be borne by it and all damages
which may be recovered shall be for the account of JFD. Alternatively, if JFD
does not initiate such action, without limiting Universal's other remedies,
Universal shall have the right to initiate and prosecute such action in its name
and, in such event, in which case all expenses shall be borne by it and all
damages which may be recovered shall be for the account of Universal. In either
event, the parties agree to fully cooperate with each other in any proceeding
against a third party infringer of the Intangible Properties; provided however
the party whose cooperation is sought (i.e. the party not bringing the action
against the third party) shall not be required to incur any expenses in the
course of providing such cooperation.
Furthermore, JFD shall take all steps reasonably required to prevent any
third party's use of the name "Jerry's Famous Deli" within the "Hollywood and
Highland" project and/or the "Media Center Area" which are confusingly similar
to the Intangible Properties, including without limitation, bringing and
pursuing at least through the trial court level a proceeding seeking injunctive
relief. Without limiting Universal's other remedies under this Agreement, if JFD
fails to take such action Universal shall have the right (but not the
obligation): (i) to initiate and prosecute such action in its name and Universal
shall be permitted to off-set its costs and expenses incurred in such action
against money owed to JFD pursuant to this Agreement; and/or (ii) terminate the
Agreement effective on notice to JFD and recover from JFD one of the following,
as determined by Universal in its sole discretion: (aa) the unamortized,
original cost of the Improvements (i.e. complying with Article 1, A); or (bb)
the costs (other than license fees or similar fees, such as franchise fees)
incurred in connection with removing any Intangible Properties and replacing
such with other names, trade dress, logos and similar type intellectual property
for use in connection with a new restaurant or store, the installation costs of
which shall be generally consistent (with appropriate CPI/LA adjustment) with
the costs of installing the Intangible Properties under this Agreement. If JFD
or Universal loses any action referenced in this grammatical paragraph,
Universal shall have the right (but not the obligation) to terminate the
Agreement effective on notice to JFD and recover from JFD either of the amounts
specified in (aa) or (bb), as set forth in the prior grammatical sentence, as
determined by Universal in its sole discretion.
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B. Each party agrees at the request of the other party to execute any
and all documents reasonably necessary to put this Agreement into effect or to
implement same.
C. Universal shall cause to be imprinted on all advertising and other
material such legends, markings and notices as may be necessary or required in
order to give appropriate notice of any trademark, trade name or other rights
therein or pertaining thereto, and/or the appropriate copyright notice.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES
A. JFD's Representations. JFD represents, warrants and covenants to the
following: (i) JFD has the rights necessary to license the Intangible Properties
for use at the Restaurant; (ii) neither the Intangible Properties nor the
exercise by Universal of the rights granted herein with respect to the
Intangible Properties does or will infringe upon the rights of any third party
under (aa) any contract or agreement, or (bb) any rights of or laws governing
copyrights, trademarks, privacy, libel or slander, or (cc) any other literary,
artistic or property right; (iii) the Intangible Properties and all rights,
licenses and privileges granted to Universal hereunder are free and clear of all
liens, charges or encumbrances of any kind (except JFD's blanket pledge to one
bank lender - BankBoston, N.A.); (iv) JFD has the right and power to enter into
this Agreement and grant all of the rights, services, licenses and privileges
granted to Universal hereunder; (v) to the best of JFD's knowledge, there are no
litigation proceedings or claims pending or threatened against JFD, JFD's
predecessors-in-interest or any other party which may adversely affect the
rights, licenses and privileges granted to Universal hereunder; (vi) neither JFD
nor its predecessors-in-interest has done anything heretofore, nor will any such
party do anything hereafter, that is inconsistent with or in derogation of the
obligations of JFD hereunder or any of the rights, services, licenses and
privileges granted to Universal hereunder; (vii) recitals B and D are true and
accurate; and (viii) JFD is a corporation duly organized, validly existing, in
good standing under the laws of California.
B. Universal's Representations. Universal represents, warrants and
covenants to the following: (i) it shall use commercially reasonable efforts to
operate the Restaurant during the term of this Agreement in compliance with the
Quality Standards; (ii) it shall not use the Intangible Properties, other than
pursuant to and in accordance with the terms of this Agreement or as otherwise
agreed to in writing by the parties; (iii) Universal has the right and power to
enter into this Agreement; (iv) Universal is a corporation duly organized,
validly existing, in good standing under the laws of the state of Delaware; and
(v) recitals A, E and G are true and accurate.
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ARTICLE 10
RECORD KEEPING AND ACCOUNTING
Universal shall maintain and preserve accurate books and records for the
Restaurant. No later than the twentieth day following each calendar month during
the Term, Universal shall furnish to JFD complete and accurate statement showing
the Gross Receipts for the Restaurant during the preceding calendar month
("Monthly Statements"). At any time upon 15 days prior notice, JFD may request
that Universal furnish to JFD a detailed statement for the preceding twelve (12)
months, certified by an independent certified public accountant chosen by JFD,
showing in sufficient detail the elements included in the calculation of Gross
Receipts (the "Gross Receipts Statement"), provided, however, if there is no
Material Discrepancy (defined below) found in the prior audit, JFD may not
exercise the foregoing audit rights more frequently than once annually. The
expenses attributable to the preparation and certification of such Gross
Receipts Statement shall be borne by JFD, unless the reported total Gross
Receipts for any period shown on such Gross Receipts Statement vary, in the
aggregate, by five percent (5%) or more from the total Gross Receipts reported
to JFD in the Monthly Statements for such period ("Material Discrepancy"). In
the event of a Material Discrepancy, all expenses attributable to the
preparation and certification of the Gross Receipts Statement shall be borne by
Universal. Any underpayment disclosed by either an audit and examination or the
Gross Receipts Statement shall be paid (with interest at the Prime Rate plus two
hundred basis points) within thirty (30) days of presentment of the audit report
or Gross Receipts Statement. Any overpayment disclosed by such an audit shall be
credited to subsequent License Fees due to JFD hereunder or, if this Agreement
has then expired or been terminated, shall be paid in cash (with interest at the
Prime Rate) within thirty (30) days following presentment of audit report.
ARTICLE 11
DEFAULT
A. Either party ("Terminating Party") may terminate this Agreement at
any time upon thirty (30) days notice to the other party ("Non-Terminating
Party") upon the occurrence of any of the following:
1. If the Non-Terminating Party breaches any term or condition of
this Agreement and, except as provided in Article 11, A, 4 below, such breach is
not cured within the foregoing thirty (30) day notice period; provided, however,
that if the nature of such breach is curable but cannot be cured within said
time period, the Non-Terminating Party shall be deemed to have cured such breach
if the Non-Terminating Party commences cure of the breach within said time
period, and thereafter diligently and in good faith continues with and actually
completes said cure.
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2. If at any time the Non-Terminating Party shall generally not pay
the Non-Terminating Party's debts as they become due or shall admit in writing
the Non-Terminating Party's inability to pay the Non-Terminating Party's debts,
or shall make a general assignment for the benefit of creditors; or
3. If the Non-Terminating Party shall commence any case, proceeding
or other actions seeking to have an order to relief entered on the
Non-Terminating Party's behalf as debtor or to adjudicate the Non-Terminating
party as bankrupt or insolvent, or seeking the reorganization, arrangement,
adjustment, liquidation, dissolution, or composition of the Non-Terminating
Party or the Non-Terminating Party's debts under any law relating to
bankruptcy, insolvency, reorganization, or relief of debtors or seeking
appointment of a receiver, trustee, custodian, or other similar official for
the Non-Terminating party, and such case, proceeding, or other action (aa)
results in the entry of an order for relief against the Non-Terminating Party
which is not fully stayed within thirty (30) business days after entry thereof,
or (bb) shall remain undismissed for a period of ninety (90) calendar days.
4. JFD, in JFD's sole discretion, may terminate this Agreement at
any time upon any default by Universal in the payment of any amounts owing JFD
under this Agreement, if such payment default is not cured within the ten (10)
day period following the date on which JFD gives notice to Universal of its
delinquency; provided, however, if Universal in good faith disputes JFD's claim
that money is owed, this ten (10) day period shall toll until ten (10) days
after final resolution of the amount owed.
5. Upon the expiration or termination of this Agreement, Universal
shall immediately discontinue the use of the Intangible Properties, which
actions shall include, without limitation, removal of all signs and other items
displaying the Intangible Properties and the discontinuance of all use of the
Intangible Properties in all advertising, promotional and marketing materials
and activities. Notwithstanding the foregoing, Universal shall be entitled to
continue to use supplies then on hand displaying the Intangible Properties for
"in house" corporate purposes only for a period not to exceed sixty (60) days
after the date of expiration or termination of this Agreement, but shall not
order new quantities of such supplies after such expiration or termination.
6. Termination of this Agreement by either party shall not act as a
waiver of any prior breaches of this Agreement and shall not act as a release
of either party from any liability for prior breaches of this Agreement.
ARTICLE 12
INDEMNITY
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A. JFD shall indemnify, hold harmless, protect and defend Universal, its
Affiliates (as such term is defined below), and the officers, directors,
employees and agents of each of them from and against any and all claims,
demands, actions, fines, penalties, liabilities, losses, taxes, damages,
injuries and expenses (including, without limitation, reasonable attorneys' fees
and costs at the pretrial, trial, and appellate levels) (collectively,
"Damages") in any manner related to, arising out of or resulting from the
following: (i) the breach of any of JFD's representations, warranties and
covenants hereunder; (ii) the breach by JFD of any of its other obligations
under this Agreement; (iii) any third party claim or threatened claim that
Universal's use of the Intangible Properties in connection with the Restaurant
violates such third party's rights; and (iv) any third party claim or threatened
claim that Universal's use of any materials provided by JFD to Universal for use
in connection with the Restaurant violates such third party's rights; provided
that such Damages under items (i), (ii), (iii) and (iv) do not arise out of
Universal's gross negligence or willful misconduct or breach of Universal's
representations, warranties or covenants hereunder.
B. Universal shall indemnify, hold harmless, protect and defend JFD and
its officers, directors, employees and agents of each of them from and against
any and all Damages in any manner related to, arising out of or resulting from
the following: (i) the breach of any of Universal's representations, warranties
and covenants hereunder; (ii) the breach by Universal of any of its other
obligations under this Agreement; and (iii) Universal's development and
operation of the Restaurant; provided that such Damages under items (i), (ii)
and (iii) do not arise out of JFD's gross negligence or willful misconduct
and/or breach of JFD's representations, warranties or covenants hereunder and/or
any third party claim or threatened claim that Universal's use of the Intangible
Properties in connection with the Restaurant pursuant to the terms of this
Agreement violates such third party's rights and/or any third party claim or
threatened claim that Universal's use of any materials provided by JFD to
Universal for use in connection with the Restaurant violates such third party's
rights.
C. The rights and obligations of indemnity described in this Article
shall not be exclusive and shall be in addition to such other rights and
obligations as may be otherwise available to either party at law or in equity
and shall survive the expiration, termination or cancellation of this Agreement.
ARTICLE 13
ASSIGNMENT
A. Universal may not assign this Agreement except to any Affiliate
(defined below) without the prior consent of JFD, unless Universal in good
faith determines the assignment transaction meets both of the following tests:
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1. The then-current revenue stream of the Restaurant is less than
20% of the revenue stream of all assets involved in this same transaction; or
the estimated asset value of the Restaurant is less than 20% of the estimated
asset value of all assets involved in this same transaction; or the fairly
allocated price received by Universal for the Restaurant is less than 20% of the
total price received in this same transaction; and
2. Such assignee is a financially responsible party that has, or has
acquired or is acquiring at a time proximately concurrent with such assignment
of this Agreement from Universal, the skill, knowledge and expertise in
restaurant operations of the type required for operation of a quick food
restaurant.
If Universal assigns this Agreement, Universal shall be relieved of any
obligation or liability to JFD in connection with this Agreement for events,
acts or omissions after the effective date of such assignment; provided that the
assignee assumes the obligations of Universal hereunder in writing and such
assignee includes JFD as an additional insured on its comprehensive general
liability insurance and business automobile liability insurance policies in
connection with the Restaurant (subject to the terms and conditions of such
policy); and provided further such insurance policy, if required, is issued by a
company with a Best's Insurance Guide rating of a "A-VI" or greater, the
comprehensive general liability insurance and/or excess umbrella liability has a
combined single limit of not less than $2,000,000 each occurrence and business
automobile liability insurance and/or excess umbrella liability insurance for
all owned, hired, or non-owned vehicles utilized by JFD with a combined single
limit or not less than $1,000,000 each accident. If Universal assigns this
Agreement to a party who is not an Affiliate prior to the Opening Date, JFD
shall have the right to approve the Design Firm, the Schematic Design and the
final construction documents. Notwithstanding the foregoing, the assignee
(unless an Affiliate) may not exercise any previously unexercised option without
JFD's approval.
B. JFD may assign this Agreement without the consent of Universal;
provided that if such assignment is prior to the Opening Date, Universal shall
have the right (but not the obligation) to terminate this Agreement within 120
days of such assignment, effective on ten (10) days notice to JFD, if Universal
determines (in its sole and absolute discretion) that such assignee does not
possess the skills, knowledge and expertise in connection with the planning and
development of restaurant operations of the type and nature characteristic of a
sit-down version of the Restaurant and/or cannot provide the services set forth
in Articles 1 and 2.
ARTICLE 14
DEFINITIONS
A. Affiliates. For purposes of this Agreement, the term "Affiliate(s)"
and "affiliate(s)" shall mean, with respect to any Person (as defined below),
any other Person
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which, directly or indirectly, controls, is controlled by, or is under common
control with, such Person (and, for purposes of this definition, "control"
(including the terms "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities or by contract or otherwise). "Person" shall mean
(i) an individual, corporation, partnership, joint venture, limited liability
company, limited liability partnership, estate, trust, unincorporated,
associated or other entity capable of contracting, (ii) any Federal, State,
County, or municipal government or any bureau, department, political subdivision
or agency thereof and (iii) a fiduciary acting in such capacity on behalf on any
of the foregoing.
B. Force Majeure. The occurrence of any of the following events ("Force
Majeure Events") shall excuse such obligations of Universal or JFD as impossible
or reasonably impracticable for so long as such event continues: lockouts; labor
disputes; acts of God; inability to obtain labor, materials, or reasonable
substitutes therefor; governmental restrictions, regulations or controls;
judicial orders; enemy or hostile governmental action; civil commotion; fire or
other casualty; earthquakes and other causes beyond the reasonable control of
the party to perform.
C. CPI/LA. For purposes of this Agreement, the term "CPI/LA" shall mean
the Consumer Price Index for all Urban Consumers, Los Angeles-Anaheim-Riverside,
California, Sub Group All Groups (1982-84 equals 100). Whenever a particular
dollar amount is stated as being subject to an adjustment for or by CPI/LA,
unless otherwise stated, the base index used in the particular adjustment shall
be the CPI/LA for the month of December 1998, and the comparison index shall be
the CPI/LA for the month of December of the calendar year immediately preceding
the calendar year for which the adjustment is applicable. The adjustment shall
be made by increasing the dollar amount subject to adjustment by the percentage
equal to the percentage increase in the base index when compared to the
comparison index.
D. Business Day. For purposes of this Agreement, the term "business
day(s)" shall mean any day of the week which is not a Saturday, Sunday or
national holiday.
E. EBITDA. For purposes of this Agreement, the term "EBITDA" shall mean
earnings on a generally applied accounting practices ("GAAP") basis before
interest, taxes, depreciation and amortization, provided that (i) rent (which
includes all common area extras) is calculated at a rate of $10 per square foot
of the Premises per month for the first twelve (12) months following the Opening
Date and thereafter at the aforementioned rate as adjusted annually per CPI/LA,
provided that the CPI/LA increase for the months in any given calendar year
shall not exceed 3% of the monthly rent being charged during the calendar year
immediately preceding the year at issue (for clarification, the increase for
months immediately following the first 12 months
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from the Opening Date will affect those months in the calendar year starting
from the anniversary of the Opening Date); and (ii) charges for Universal
supplied and/or prepared food costs shall be at reasonably estimated costs but
not greater than the prevailing charges imposed by Universal at other
restaurants in CityWalk. For example, if the Opening Date were February 1,
2000, then the first CPI/LA adjusted would occur on February 1, 2001 (with
December 31, 2000 being the comparison index) and the next CPI/LA adjusted
would be effective January 1, 2002 (with December 31, 2001 being the comparison
index) and successive adjustments being on January 1 of each successive year.
It is further agreed that for purposes of EBITDA, only costs which are fully
and directly chargeable to the Restaurant shall be included in costs to the
Restaurant. Furthermore, for purposes of EBITDA the following shall apply: (i)
salaries of supervisors and managers of the Restaurant and hourly labor shall
be comparable with the reasonable salaries and hourly rate for such personnel
in the quick food restaurant business in Los Angeles County; and (ii) any cost
to the Restaurant that Universal fully controls and for which Universal is
responsible shall be at a commercially reasonable rate.
ARTICLE 15
MISCELLANEOUS
A. Notices. All notices or other communications required or desired to
be sent to either party hereto shall be in writing and shall be sent by
Registered or Certified Mail, postage prepaid, return receipt requested, or
overnight mail with proof of receipt. All notices, samples, reports and
payments under this Agreement shall be sent as follows:
If to JFD: Jerry's Famous Deli, Inc.
12711 Ventura Blvd., Suite 400
Studio City, CA 91604
Attention: President
With copies to: Jeffer, Mangels, Butler & Marmaro, LLP
2121 Avenue of the Stars, 10th Floor
Los Angeles, CA 90067
Attention: Steven J. Insel, Esq.
If to Universal: Universal Studios CityWalk Hollywood
100 Universal City Plaza
Suite 2000
Universal City, California 91608
Attention Legal Affairs
With copies to: Rosenfeld, Meyer and Susman, LLP
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9601 Wilshire Blvd., Fourth Floor
Beverly Hills, CA 90210
Attention: Jeffrey L. Nagin, Esq.
Either party may change such address by notice in writing to the other party.
B. Consents and Approvals: Any consent, request or approval which either
party is requested to make pursuant to this Agreement shall be in writing and,
unless expressly provided herein to the contrary, not be unreasonably withheld,
delayed or conditioned. Such approvals and consents may be signed in
counterparts.
C. Relationship of the Parties. This Agreement does not constitute either
party the agent of the other, or create a partnership or joint venture between
the parties with respect to the subject matter hereof.
D. Governing Law. The laws of the State of California shall govern the
interpretation, validity, performance and enforceability of this Agreement
(without regard to choice of law principles). If any provision of this
Agreement shall be held to be invalid or unenforceable, the validity and
enforceability of the remaining provisions of this Agreement shall not be
affected thereby.
E. Mediation/Jurisdiction. With regard to any material disputes which may
arise out of or relate to this Agreement, Universal and JFD agree to the benefit
of each other to work together in good faith to resolve all disputes promptly.
Either party may demand in writing that each party's management representatives
meet at such place as the parties may mutually designate in Los Angeles County
to resolve the dispute. Upon receipt of this demand, each party will promptly
comply and will negotiate in good faith to resolve the dispute. If the parties
do not resolve the dispute within fourteen (14) days of the date of the first
meeting between the management representatives, Universal and JFD agree to
mediate the dispute with a mutually agreed upon mediator. If the parties cannot
agree upon the selection of a mediator, each party will select one mediator and
both such mediators shall, in cooperation with each other, designate one
mediator to resolve the dispute, provide that if the mediators cannot agree upon
the selection of one mediator to resolve the dispute within ten (10) days, then
the mediator will be chosen pursuant to California Civil Procedure Section
1281.6 from a list of retired judges (which contains the names of at least 15
judges) designated by Universal. The Parties agree to share the cost of any
independent mediator engaged to assist the parties in resolving their
differences.
If the claim, dispute or other issue is not resolved through mediation,
either party may institute litigation to resolve the issues. If litigation is
initiated, the parties to this Agreement agree that venue and jurisdiction of
any litigation between them will be vested solely in a court of competent
jurisdiction sitting in Los Angeles County,
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California and agree to accept service of process outside the State of
California in any matter to be submitted to any court pursuant to this
Agreement. The parties expressly agree to waive trial by jury in any such legal
proceeding.
F. Captions. The captions used in connection with the paragraphs and
subparagraphs of this Agreement are inserted only for the purpose of reference.
Such captions shall not be deemed to govern, limit, modify, or in any manner
affect the scope, meaning or intent of the provisions of this Agreement or any
part thereof, nor shall such captions otherwise be given any legal effect.
G. No Waiver/Right of Action. No waiver by either party of a breach or a
default hereunder shall be deemed a waiver by such party of a subsequent breach
or default of like or similar nature. Unless otherwise stated to the contrary,
whenever either party has a right to take any action or not take action
pursuant to the terms of this Agreement, such party shall not have the
obligation to do so.
H. No Third Party Beneficiary. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and permitted assigns, any
rights or remedies under or by reason of this Agreement.
I. Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to its subject matter, and no agreement shall
be effective to change, modify or terminate this Agreement, in whole or in
part, unless such agreement is in writing and duly signed by the party against
whom enforcement of such change, modification or termination is sought. Such
modification or amendment may be signed in counterparts. This Agreement shall
not be construed more strictly against one party than against the other merely
by virtue of the fact that this Agreement may have been physically prepared
by one of the parties, or such party's counsel, it being agreed that both
parties and their respective counsel have mutually participated in the
negotiation and preparation of this Agreement.
J. Partial Invalidity. Should any part of this Agreement for any reason
be declared invalid, void or unenforceable by a court or governmental agency of
competent jurisdiction, such decision shall not affect the validity of any
remaining portion hereof and the parties hereby acknowledge and agree that they
would have executed the remaining portion hereof without including the part so
declared invalid, void or unenforceable.
K. Attorney's Fees. If Universal or JFD institutes any action or
proceeding against the other relating to the provisions of this Agreement, the
non-prevailing party in such action or proceeding shall reimburse the
prevailing party for the reasonable
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expenses of attorney's fees and all costs and disbursements incurred therein by
the prevailing party, including any such fees, costs or disbursements incurred
on any appeal from such action or proceedings. The prevailing party shall also
be entitled to recover from the non-prevailing party reasonable attorney's fees
and costs incurred in enforcing any judgment against the non-prevailing party.
This provision is intended to be severable from all other provisions of this
Agreement, and to survive any judgment against the non-prevailing party and
shall not be deemed merged in any such judgment.
L. Confidentiality. Except and only to the extent as may be required by
law, statute, governmental authority, financial accounting practices of the
parties, appraisals of the Restaurant, or mutual agreement of the parties, JFD
and Universal shall not disclose the terms of this Agreement or any Gross Sales
information relating to the Restaurant to any third party except to the extent
necessary to permit a party (or parties) involved in the planning, development,
construction and operation of the Restaurant to perform its (or their)
responsibilities or as such disclosure may be appropriate in connection with any
mediation, arbitration or litigation between the parties. This confidentiality
provision shall survive termination of the Agreement.
M. Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall be deemed one original.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the 3rd
day of September, 1999.
JERRY'S FAMOUS DELI, INC. UNIVERSAL STUDIOS
CITYWALK HOLLYWOOD, a division
of Universal Studios, Inc.
By: /s/ [Signature Illegible] By: /s/ [Signature Illegible]
--------------------------------- ---------------------------------
Its: Chairman of the Board Its: VP
Dated: 9-14-99 Dated: 9-14-99
------------------------------ ------------------------------
By: /s/ [Signature Illegible]
---------------------------------
Its: Secretary
Dated: 9-14-99
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