-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DdKMyuCcOu3o3k+uUaMpkc93TsUQL6jWDAv7q63i3iql1RkmrjVRW5kKwNw84EoK 3fXeWmAr6nuWpTiDXdV8TA== 0000950148-96-001408.txt : 19960716 0000950148-96-001408.hdr.sgml : 19960716 ACCESSION NUMBER: 0000950148-96-001408 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19960630 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960715 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: JERRYS FAMOUS DELI INC CENTRAL INDEX KEY: 0000948308 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 953302338 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-26956 FILM NUMBER: 96594438 BUSINESS ADDRESS: STREET 1: 12711 VENTURA BLVD STREET 2: STE 400 CITY: STUDIO CITY STATE: CA ZIP: 91604 BUSINESS PHONE: 8187668311 MAIL ADDRESS: STREET 1: 12711 VENTURA BLVD STREET 2: STE 400 CITY: STUDIO CITY STATE: CA ZIP: 91604 8-K 1 FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) June 30, 1996 JERRY'S FAMOUS DELI, INC. (Exact name of registrant as specified in its charter) California 0-26956 95-3302338 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 12711 Ventura Boulevard, Suite 400 Studio City, California 91604 (Address of principal executive offices, including zip code) Registrant's telephone number, including area code: (818) 766-8311 2 Item 2. Acquisition or Disposition of Assets On June 30, 1996, Jerry's Famous Deli, Inc. (the "Company") completed the purchase of two delicatessen restaurants operated under the name "Solley's" and located in Woodland Hills, California and Sherman Oaks, California (collectively, the "Restaurants" and individually, a "Restaurant"). The purchase was completed pursuant to the terms of an Asset Purchase Agreement, dated June 11, 1996, among the Company, Solley's, Inc., a California corporation, and Sol Zide, the sole shareholder of Solley's, Inc. The Woodland Hills Restaurant consists of approximately 6,975 square feet of leased space at 21857 Ventura Boulevard in Woodland Hills, California. Concurrently with the closing, the Company extended the lease to approximately 1,625 contiguous square feet and obtained an option to lease additional contiguous spaces of approximately 800 and 1,200 square feet. The Sherman Oaks Restaurant which is located at 4578 Van Nuys Boulevard in Sherman Oaks, California, consists of approximately 5,400 square feet of restaurant space and a separate bakery consisting of approximately 3,280 square feet. The purchase price for the Restaurants and related assets was $2,325,000 and was paid in full at closing. Related assets acquired by the Company include restaurant equipment and fixtures, delivery vehicles and a limited five-year covenant not to compete from Sol Zide. The primary source of funds for the purchase was cash on hand as well as proceeds of loans made to the Company in May 1996 pursuant to a revolving line of credit with Bank of America which expired on June 1, 1996. The Company intends to continue to operate the acquired Restaurants as delicatessen-style restaurants. The Company intends to convert one of the acquired Restaurants into a Jerry's Famous Deli restaurant as soon as possible and may elect to change the name, menu, format and hours of operations of the remaining Restaurant to conform to the Jerry's Famous Deli restaurant style. The bakery attached to the Sherman Oaks Restaurant will continue as a retail bakery and it is intended that production will be expanded to supply other Company restaurants in Southern California with baked goods. For further information see the Asset Purchase Agreement and related lease documents filed herewith as Exhibits 10.1 through 10.7. 2 3 Item 7. Financial Statements and Exhibits (a) Financial Statements of Business Acquired. It is currently impracticable to provide financial statements of the acquired Restaurants. The Company's independent auditor is currently completing its audit of the financial statements of the acquired Restaurants and it is anticipated that the Company will file those audited financial statements no later than 60 days following the date by which this Form 8-K must be filed. (b) Pro Formal Financial Information. It is currently impracticable to provide pro forma financial statements of the acquired Restaurants. The Company's independent auditor is currently completing its audit of the financial statements of the acquired Restaurants and it is anticipated that the Company will file the pro forma financial statements no later than 60 days following the date by which this Form 8-K must be filed. (c) Exhibits. 10.1 Asset Purchase Agreement, dated June 11, 1996, among the Company, Solley's, Inc. and Sol Zide 10.2 Lease - Shopping Center Form, dated August 31, 1993, between Sol Zide and Plaza International 10.3 Amendment to Lease, dated April 4, 1996, between Sol Zide and Plaza International 10.4 Landlord Consent and Amendment to Lease, dated April 4, 1996, between the Company and Plaza International 10.5 Shopping Center Lease, dated April 2, 1984, between Solley's Inc. and WRAM Development Company 10.6 First Amendment to Shopping Center Lease, dated March 6, 1992, between Solley's, Inc. and WRAM Development Company 10.7 Landlord Consent and Amendment to Lease, dated May 6, 1996, among the Company, Solley's, Inc. and WRAM Development Company 3 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: July 11, 1996 JERRY'S FAMOUS DELI, INC. By: /s/ Isaac Starkman President and Chief Executive Officer 4 5 EXHIBIT INDEX
Exhibit Sequentially Numbered Number Description Page 10.1 Asset Purchase Agreement, dated June 11, 1996, among the Company, Solley's, Inc. and Sol Zide 10.2 Lease - Shopping Center Form, dated August 31, 1993, between Sol Zide and Plaza International 10.3 Amendment to Lease, dated April 4, 1996, between Sol Zide and Plaza International 10.4 Landlord Consent and Amendment to Lease, dated April 4, 1996, between the Company and Plaza International 10.5 Shopping Center Lease, dated April 2, 1984, between Solley's Inc. and WRAM Development Company 10.6 First Amendment to Shopping Center Lease, dated March 6, 1992, between Solley's, Inc. and WRAM Development Company 10.7 Landlord Consent and Amendment to Lease, dated May 6, 1996, among the Company, Solley's, Inc. and WRAM Development Company
EX-10.1 2 ASSET PURCHASE AGREEMENT, DATED JUNE 11, 1996 1 Exhibit 10.1 ASSET PURCHASE AGREEMENT This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into as of this 11th day of June, 1996, by and among JERRY'S FAMOUS DELI, INC., a California corporation ("Buyer"), SOLLEY'S INC., a California corporation ("Solley's"), and Sol Zide, an individual and sole shareholder of Solley's ("Zide"). Solley's and Zide are sometimes collectively referred to herein as "Sellers," and individually as a "Seller." RECITALS: A. Sellers are engaged in the business of owning and operating two delicatessen restaurants under the name "Solley's." B. Sellers and Buyer have entered into a letter of intent, dated as of April 9, 1996, pursuant to which Buyer has agreed in principal to acquire the Restaurants (as defined in this Agreement). C. Sellers desire to sell to Buyer the assets of the Restaurants and the assets related to the operation thereof, and Buyer desires to acquire such assets on the terms and conditions hereinafter set forth. AGREEMENTS: NOW, THEREFORE, in consideration of the premises and the mutual promises contained herein, the parties hereto covenant and agree as follows: Definitions. For purposes of this Agreement, the following terms shall have the following meanings: "ABC" means the California Department of Alcoholic Beverage Control. "Additional Security Deposits" shall have the meaning ascribed in Section 2 a. v. of this Agreement. "Assets" means the Restaurants and all assets utilized in connection with the operation of the Restaurants, including, without limitation, the Leasehold Estate (including the Security Deposits), the FF&E, the Personal Property, the Intangible Property, the Books and Records (only to the extent that copies of such Books and Records are requested by Buyer in accordance with Section 7(k) of this Agreement), and the Liquor Licenses; but does not include the Excluded Assets. "Assignment of Intangible Property" means the Assignment of Intangible Property, to be duly executed and delivered by Sellers in accordance with this Agreement, 2 assigning to Buyer all of Sellers' right, title and interest in and to the Intangible Property. The Assignment of Intangible Property shall be in the form of, and upon the terms contained in, Exhibit "A." "Bill of Sale" means the Bill of Sale, to be duly executed and delivered by Sellers in accordance with this Agreement, conveying to Buyer all of the FF&E and the Personal Property. The Bill of Sale shall be in the form of, and upon the terms contained in, Exhibit "B." "Books and Records" means copies of all menus, recipes, books, records and accounts, correspondence, customer or supplier lists, marketing information and any confidential information relating to the Assets or the Restaurants; provided, however, that such term shall not include copies of any employment records unless Buyer has obtained the written consent of the employee(s) with respect to which such employment information is to be provided. "Buyer Indemnitees" shall have the meaning ascribed in Section 9 a. of this Agreement. "Closing" means the closing of the transactions contemplated herein which closing shall occur on the Closing Date. "Closing Date," unless otherwise agreed to in writing by the parties hereto, means the date which is three (3) business days after all of the following have occurred: (i) the date that all applicable periods have run under applicable Bulk Sales Notice laws, and (iii) the date that all applicable periods have run and all actions necessary for the Liquor Licenses to be transferred to Buyer have been taken; provided, however, that subject to the satisfaction of all conditions to Closing set forth in Section 10 of this Agreement, the Closing Date shall occur no later than June 30, 1996. "Deposit" means the One Hundred Thousand and 00/100 Dollars ($100,000) deposited by Buyer into the Escrow pursuant to the terms of the Letter of Intent. "Escrow Holder " means Nettie Becker Escrow, Inc., 301 North Canon Drive, Beverly Hills, California 90210. "Escrow" means that certain escrow established with Escrow Holder for the purpose of completing the purchase and sale of the Liquor Licenses in accordance with Division 6 of the California Commercial Code and Sections 24071-24074 of the Business and Professions Code of California and in accordance with the terms and conditions of this Agreement. "Excluded Assets" means those assets of Sellers listed in Exhibit "C" of this Agreement. -2- 3 "FF&E" means all furniture, fixtures and equipment owned or leased by Sellers and used in connection with the operation of either Restaurant, including, without limitation, the items listed in Exhibit "D" hereto. "Holdback Claim" shall have the meaning ascribed in Section 3 of this Agreement. "Holdback Period" shall have the meaning ascribed in Section 3 of this Agreement. "Insurance Policies" shall have the meaning ascribed in Section 5 o. of this Agreement. "Intangible Property" means all of Sellers' right, title and interest in and to any and all intangible property now and through the Closing Date owned by either Seller and/or used in connection with the ownership, development, use and/or operation of the Restaurant, including, without limitation, Licenses and Permits, goodwill, and each and every tradename, trademark, service mark and other similar assets of Sellers existing on the Closing Date, including, without limitation, all of Sellers' right, title and interest in and to the name "Solley's" and the goodwill associated therewith. "Landlord Consents" means the Woodland Hills Consents and the Sherman Oaks Consent. "Leasehold Estate" means the leasehold estate created under the Restaurant Leases, including any and all right, title and interest of either Seller in and to the Security Deposits. "Letter of Intent" means that certain Letter of Intent, dated as of April 9, 1996, among Solley's, Zide and Buyer. "Licenses and Permits" means all of Sellers' right, title, interests, privileges, benefits and remedies in, to and under all authorizations, approvals, permits, licenses agreements, variances, plans and specifications and land use entitlement held by Sellers and/or relating to the construction, reconstruction, occupancy, operation or use of any part of the Restaurant (including, without limitation, all building permits, certificates of occupancy, business licenses and the Liquor License). "Liquor Licenses" means that (i) certain Liquor License Type 41-20662 used in connection with the operation of the Woodland Hills Restaurant, and (ii) that certain Liquor License Type 41-163916 used in connection with operation of the Sherman Oaks Restaurant. -3- 4 "Personal Property" means all personal property of Sellers located on or in or used in connection with the Restaurant, including, but not limited to, food and beverage inventory, all consumables, motor vehicles, cash registers, telephone systems, computer and related equipment and software, all furniture, fixtures, furnishings and equipment, ovens, stoves, refrigerators, chinaware, glassware, silverware, kitchen utensils, bars, bar fixtures and equipment, lamps, mirrors, heating and lighting fixtures and equipment, linens and other similar items of Sellers which exist on the date of this Agreement, subject to ordinary wear and tear and consumption between the date of this Agreement and the Closing Date, but excluding therefrom the Excluded Assets listed in Exhibit C of this Agreement. "Purchase Price" means Two Million Three Hundred Twenty Five Thousand and 00/100 Dollars ($2,325,000.00). "Restaurant Leases" means the Woodland Hills Lease and the Sherman Oaks Lease, as amended by the Woodland Hills Consents and the Sherman Oaks Consent, respectively. "Seller Indemnitees" shall have the meaning ascribed in Section 9 b. of this Agreement. "Service Contracts" means the maintenance contracts, equipment, leases and any other similar obligations, commitments or arrangements of either Seller, together with all supplements, amendments and modifications thereto, relating to the development, marketing, operation, maintenance or enjoyment of the Restaurant. "Security Deposits" shall mean the security deposits of Sellers identified in Exhibit "E" to this Agreement. "Sherman Oaks Consent" means that certain Landlord Consent and Amendment to Lease, dated as of May 6, 1996 among Solley's, Buyer and WRAM Development Company. "Sherman Oaks Lease" means that certain Shopping Center Lease, dated as of April 2, 1984, as amended by that certain First Amendment to Shopping Center Lease, dated March 6, 1992, by and between WRAM Development Company and Solley's with respect to the commercial space located at 4578 and 4580 Van Nuys Boulevard, Sherman Oaks, California, including any amendments thereto effected or to be effected by the Sherman Oaks Consent. "Sherman Oaks Restaurant" means the restaurant and related bakery owned and operated by Sellers at 4578 and 4580 Van Nuys Boulevard, Sherman Oaks, California. -4- 5 "Tax Clearance Certificates" means tax clearance certificates issued by the State Board of Equalization and the Employment Development Department certifying that all sales and use taxes and employment taxes, respectively, relating to the operation of the Restaurants through a date no earlier than five (5) business days prior to the Closing Date have been properly withheld and paid over to such governmental agencies in accordance with applicable laws. "Tradenames" shall have the meaning ascribed in Section 5 p. of this Agreement. "Woodland Hills Consents" means (i) that certain Landlord Consent and Amendment to Lease, dated as of April 4, 1996, between Buyer and Plaza International, and (ii) that certain Amendment to Lease, dated April 4, 1996, between Zide and Plaza International, together with any amendments to either such document through the Closing Date. "Woodland Hills Lease" means that certain Lease -- Shopping Center Form, dated as of August 31, 1993, by and between Plaza International and Zide with respect to the commercial space known as 21857 and 21845 Ventura Boulevard, Woodland Hills, California, including any amendments thereto effected or to be effected by the Woodland Hills Consents. "Woodland Hills Restaurant" means the restaurant owned and operated by Sellers at 21857 and 21845 Ventura Boulevard, Woodland Hills, California. 1. Purchase and Sale. a. Conveyance of Assets. On the terms and subject to the conditions set forth in this Agreement, on the Closing Date Sellers shall convey, transfer, assign, sell and deliver to Buyer, and Buyer shall acquire, accept and purchase, the Assets. b. Closing. The Closing shall, unless another date, time or place is agreed to in writing by the parties hereto, take place at the offices of Jeffer, Mangels, Butler & Marmaro LLP, at 10:00 a.m., Pacific time on the Closing Date. c. No Assumption of Liabilities. Except for post-Closing obligations of Sellers under the Restaurant Leases, Buyer shall not assume any of the liabilities of either Seller whatsoever, whether known or unknown, fixed or contingent, whether or not related to the Assets acquired, or arising or relating to events prior to the Closing Date, and Sellers shall jointly and severally indemnify Buyer in accordance with Section 9 of this Agreement. d. Allocation of Purchase Price. The parties hereto agree that, for purposes of calculating any tax obligation arising out of the sale of Assets, the Purchase Price shall be allocated as set forth in Exhibit "F" attached hereto. -5- 6 2. Deposit and Payment of Purchase Price and Other Closing Payments. a. Deposits. Funds shall be deposited into Escrow by Buyer as follows, at least three days prior to Closing unless otherwise specified: i. Prior to or simultaneously with the mutual execution of this Agreement by Buyer and Sellers, One Hundred Thousand and 00/100 Dollars ($100,000.00) will be delivered to the Escrow Holder by Buyer for deposit in the Escrow; ii. Two Million Two Hundred Twenty-Five Thousand and 00/100 Dollars ($2,225,000.00) shall be deposited by Buyer into Escrow at least two (2) days prior to the expiration of the thirty (30) day posting period required by the ABC, or the date this Agreement is executed if execution occurs after that date; iii. Fifty Thousand and 00/100 Dollars ($50,000.00), representing the portion of the brokerage fee payable by Buyer to Jerry Ackrich in connection with the sale of the Restaurants, shall be deposited into Escrow by Buyer at least one (1) business day prior to Closing; iv. Seventy-Five Thousand and 00/100 Dollars ($75,000.00), representing the dollar amount of the Security Deposits made by Sellers under the Restaurant Leases, shall be deposited into Escrow by Buyer at least one (1) business day prior to Closing; v. Thirty-Five Thousand and 00/100 Dollars ($35,000.00), representing the dollar amount of additional security deposits payable at Closing to the landlord pursuant to the terms of the Woodland Hills Lease (the "Additional Security Deposits"), shall be deposited into Escrow by Buyer at least one (1) business day prior to Closing; and vi. The amount of estimated sales tax liability ("Sales Tax Liability") arising from the amount allocated from the Purchase Price to items requiring the payment of sales tax ("Sales Tax Escrow Amount") shall be deposited into Escrow by Buyer at least one (1) business day prior to Closing. b. Payments at Closing. Subject to satisfaction of the conditions to closing set forth in Section 10 of this Agreement and the requirements of Section 24074 of the California Business and Professions Code, the following payments shall be made at Closing: i. Two Million Two Hundred Thousand and 00/100 Dollars ($2,200,000.00) shall be paid to Sellers out of Escrow by check or wire transfer; absent receipt by the Escrow Holder and Buyer of written instructions of the Sellers to the contrary the entire amount of such payment shall be made to Solley's to be allocated among Zide and Solley's as such parties may agree; -6- 7 ii. Seventy-Five Thousand and 00/100 ($75,000.00), representing the dollar amount of the Security Deposits made by Sellers under the Restaurant Leases, shall be paid to Sellers out of Escrow by check or wire transfer; absent receipt by the Escrow Holder and Buyer of written instructions of the Sellers to the contrary the entire amount of such payment shall be made to Solley's to be allocated among Zide and Solley's as such parties may agree; iii. One Hundred Thousand and 00/100 Dollars ($100,000.00), representing Buyer's and Sellers' combined portions of the broker fee payable to Jerry Ackrich in connection with the transactions contemplated by this Agreement, shall be paid to Jerry Ackrich out of Escrow by check or wire transfer; iv. Thirty-Five Thousand and 00/100 Dollars ($35,000.00), representing the Additional Security Deposits, shall be paid to Plaza International, the landlord under the Woodland Hills Lease, out of Escrow by check or wire transfer; and v. At or prior to the Closing, each party shall pay to the Escrow Holder one-half of all Escrow costs and expenses of Escrow Holder relating to establishment of Escrow which costs and expenses are expected to total $4,650.00. c. Payments after Closing. The Sales Tax Escrow Amount shall be released to either of Sellers upon proof of payment of the Sales Tax Liability or sooner, but if sooner only in the form of a check payable only to the State Board of Equalization. 3. Holdback. Notwithstanding anything to the contrary contained in Section 2 of this Agreement, Seventy-Five Thousand and 00/100 Dollars ($75,000.00) of the Purchase Price shall remain in Escrow for a period of sixty (60) days following the Closing Date (the "Holdback Period"), in order to provide funds for any prorations or adjustments pursuant to Section 11 of this Agreement as well as the payment of any accrued but unpaid taxes or any other liabilities incurred or charged to Buyer but arising out of events or actions taken prior to the Closing Date. In the event that any proration or adjustment is required or Buyer incurs any such liability prior to the expiration of the Holdback Period, Buyer shall deliver written notice (the "Holdback Claim") to the Escrow Holder and Sellers of the amount and nature of such adjustment or liability and supporting documentation, if any. Ten (10) days after receipt of the Holdback Claim, if no objection has been received by Escrow Holder from Sellers, Escrow Holder shall release funds to Buyer from Escrow equal to the lesser of (i) the amount of the Holdback Claim, or (ii) the amount of funds remaining in Escrow; provided, however, that Escrow Holder may make the release of such funds contingent upon receipt by Escrow Holder of an agreement by Buyer to indemnify Escrow Holder from and against any liabilities, costs or expenses (including reasonable attorneys fees and costs) resulting from the release of such funds to Buyer. If Sellers shall deliver notice that they dispute the claim, Escrow Holder shall hold said sums until Escrow Holder receives a final written notice of determination of arbitrator(s), a final judgement of a court or directions executed by both Buyer and Sellers as to the disbursement of such funds. Any dispute among Buyer and Sellers regarding the -7- 8 amount of the Holdback Claim shall be resolved by binding arbitration in accordance with Section 22 d. of this Agreement. Upon expiration of the Holdback Period, any remaining portion of the Purchase Price held in Escrow will be released to Sellers. 4. Deliveries At Closing. a. Deliveries by Sellers. At the Closing, Sellers shall deliver into Escrow the following original documents, duly executed by each Seller that is a party to such document: i. The Bill of Sale; ii. The Landlord Consents, duly executed by each landlord and, if applicable, Sellers; iii. The Assignment of Intangible Property; iv. Certificates of title, registration papers, bills of sales and any other documents that may be required by the Department of Motor Vehicles in order to effect the transfer of title to Buyer of any motor vehicles included in the Assets; v. Such resolutions, authorizations, certificates of good standing and/or other corporate or partnership documents relating to Zide and Solley's and its shareholders, officers and/or directors as are reasonably required by Buyer in connection with the transactions contemplated under this Agreement; and vi. Such further instruments of sale, transfer, conveyance, assignment or delivery covering the Assets or any part thereof as Buyer may reasonably require to assure the full and effective sale, transfer, conveyance, assignment or delivery to it of the Assets to be transferred to Buyer under this Agreement. b. Deliveries by Buyer. At the Closing, Buyer shall deliver into Escrow the following original documents, duly executed by Buyer: i. The Landlord Consents, duly executed by Buyer, to the extent that Buyer is a party thereto; and ii. Such resolutions, authorizations, certificates of good standing and/or other corporate documents relating to Buyer as are reasonably required by Sellers in connection with the transactions contemplated under this Agreement. c. By Buyer and Sellers. Buyer and Sellers will each deposit such other instruments consistent with this Agreement as are reasonably required to effectuate the transactions contemplated under this Agreement. -8- 9 5. Representations and Warranties of Sellers. Sellers jointly and severally represent and warrant to Buyer that: a. Organized and Good Standing. Solley's is a corporation duly organized, validly existing and in good standing under the laws of the State of California with full power to consummate the transactions contemplated herein. b. Authorization of Agreement. Each Seller has full legal right, power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. This Agreement and all other agreements and instruments to be executed by either Seller in connection herewith have been (or upon execution will have been) duly executed and delivered by such Seller, have been effectively authorized by all necessary action, corporate or otherwise, and constitute (or upon execution will constitute) legal, valid and binding obligations of such Seller. c. Ownership of Assets. Sellers, or either of them, is the lawful owner of and has the right to use and transfer to Buyer each of the Assets. Each of the Assets is owned by Sellers, or either one of them, free and clear of any and all liens, encumbrances, pledges, security interests, or claims of any kind or nature whatsoever other than those specifically disclosed in Schedule 5(c) of this Agreement. The delivery to Buyer of the instruments of transfer of ownership specifically contemplated by this Agreement will vest good and marketable title to the Assets in Buyer, free and clear of all liens, mortgages, pledges, security interests, restrictions, prior assignments, encumbrances and claims of any kind or nature whatsoever, except for any of the foregoing as may be specifically assumed by Buyer in accordance with the terms of this Agreement. d. Absence of Certain Changes. There is no event or condition of any character which would adversely affect the ability or right of Buyer to own and operate a restaurant on the sites where the Restaurants are currently operating. e. Restaurant Lease. Sellers, or either of them, are the holders of all leasehold estates purported to be granted by the Restaurant Leases. Each of the Restaurant Leases is in full force and effect and constitutes a legal, valid and binding obligation of each of the parties thereto, enforceable in accordance with its terms and grant the leasehold estates they purport to grant free and clear of all mortgages, liens or other encumbrances whatsoever. There are no existing or claimed defaults under the Restaurant Leases and there are no events which with notice or lapse of time or both would constitute such an event of default thereunder or would cause the acceleration of any obligation of any party thereto or the creation of a lien or encumbrance on any of the Assets. All structures, improvements and fixtures on the premises leased pursuant to the Restaurant Leases are in good operating condition and repair and conform to any and all applicable state and local laws, zoning, building, health and safety laws and/or ordinances. No notice from any governmental body has been served upon Sellers, or either of them, claiming any violation of any law or ordinance, or requiring any substantial -9- 10 or material work, repairs, construction, alterations or installation on or in connection with the premises that are the subject of the Restaurant Leases (including any notices regarding earthquake retrofitting). f. No Conflicts. Neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (i) conflict with or result in a violation of any provision of the Articles of Incorporation or Bylaws of Solley's, (ii) constitute or result in a breach of, or a default (or give rise to any rights to acquire any Assets of Sellers) under, any term or provision of any contract, agreement, indebtedness, lease, commitment, license, sublicense, franchise, permit, authorization or concession to which either Seller is a party or by which any of the Assets of such Seller are bound, (iii) constitute or result in a violation by either Seller of any statute, rule, regulation, ordinance, code, order, judgment, writ, injunction, decree or award, or (iv) result in an imposition of any encumbrance, restriction or charge on any of the Assets. g. Operating Condition. The tangible Assets are, to the best knowledge of Sellers, in good operating condition and repair except for reasonable wear and tear which is not such as to adversely affect the operation of either Restaurant. Exhibit "D" of this Agreement constitutes and, as of the Closing Date, will constitute, a complete and accurate list of all equipment (other than the Excluded Assets) owned or used by Sellers in the operation of the Restaurants as of the date of this Agreement and as of the Closing Date. h. Compliance with Laws. Sellers hold valid and effective certificates of occupancy, zoning, building, safety, fire and health approvals and all other permits and licenses required by applicable law relating to the operation of the Restaurants. Neither Seller has violated, and on the Closing Date will not be in violation of, in any material respect, any federal, state, local or foreign laws, regulations or orders (including, but not limited to, any of the foregoing relating to employment discrimination, occupational safety, environmental protection, conservation, or corrupt practices), relating to the operation of Restaurants or the ownership or operation of the Assets and neither Seller has received any notice of any such violation. i. Labor and Employment Matters. Sellers will terminate all employees of the Restaurants prior to or as of the Closing Date and comply in all respects with all applicable laws, rules and regulations with respect thereto including, but not limited to, filing any notices and paying all accrued but unpaid periodic compensation, vacation pay, sick pay and other employee benefits due and owing to such employees as of the Closing Date. There is no collective bargaining agreement or other labor agreement to which either Seller is a party or by which it is bound. j. Litigation. Except as specifically set forth in Schedule 5(j) attached hereto, there are no claims, disputes, actions, proceedings or investigations of any nature pending or, to the best knowledge of Sellers, threatened against or involving either Seller, or the Restaurants or any of the officers, directors, partners or employees of either Seller in -10- 11 connection with or arising out of the business conducted by the Sellers or the transactions contemplated by this Agreement. None of the items listed in Schedule 5(j) will (i) result in any claim against or liability of Buyer, or (ii) have a material adverse effect on the business, results of operations or financial condition of either Restaurant. k. Taxes. Sellers have complied in all respects with all applicable laws, rules and regulations relating to the payment and withholding of taxes and other sums as required by appropriate governmental authorities and has withheld and paid to the appropriate governmental authorities or is holding for payment not yet due to such authorities, all amounts required to be withheld from such employees of the Sellers for all periods through the Closing Date and is not liable for any arrears of wages, taxes, penalties or other sums for failure to comply with any of the foregoing. Sellers have filed with the appropriate governmental agencies all required all income, sales and use, employment and payroll, meal, franchise and other tax returns and tax reports with respect to the Assets and the operation of the Restaurants. Sellers have not executed any waiver(s) which would have the effect of extending any applicable statute of limitations in respect of its tax liabilities. Sellers have paid all sales taxes, assessments, fees, and other government charges levied upon its assets and income or otherwise relating or attributable to the Assets for all periods prior to the Closing Date. Neither Seller has knowledge of any unassessed tax deficiency that has been proposed or threatened against either of them by any taxing authority. No audits of any tax return are in progress, and there are not in force any agreements by either Seller for the extension of time for the assessment or payment of any tax. l. Regulatory Approvals. The Licenses and Permits constitute all approvals, authorizations, consents, licenses, orders and permits of all governmental agencies, whether federal, state or local, related to the operation of Restaurants, the absence of which would materially and adversely affect the Assets or Buyer's use or operation thereof in the manner in which such assets are being used or operated as of the date of this Agreement, and no circumstances exist which could prevent or interfere with the transfer of the Licenses and Permits to Buyer in connection with the transactions contemplated hereunder. Sellers have, at all times during which they have operated the Restaurants, or either of them, possessed all approvals, authorizations, consents, licenses, orders and permits necessary to operate the Restaurants in compliance with applicable state, federal or other laws or regulations. m. Insolvency. There are no attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings pending or threatened against either Seller, nor are any such proceedings contemplated by either Seller, nor will either Seller voluntarily file or permit a third party to file against either Seller any petition seeking protection under applicable bankruptcy laws. n. No Undisclosed Liabilities. Other than obligations arising after Closing under the Restaurant Leases, Sellers have no liabilities or obligations of any nature, whether absolute, accrued, contingent or otherwise, and whether due or to become due (including, without limitation, any liability for taxes and interest, penalties and other charges payable with -11- 12 respect to any such liability or obligation) which would affect Buyer or the Assets or become the obligation of Buyer after the Closing. o. Insurance. Sellers maintain insurance policies, including, without limitation, general liability, property and personal liability insurance, which insure the Sellers, their employees and such other persons to whom such entities may become liable against such losses and risks generally insured against by comparable businesses (collectively, the "Insurance Policies"). p. Intangible Property. To the best of Sellers' knowledge, Sellers own all trademarks, trade names, service marks, service names and copyrights which, individually or in the aggregate, used in connection with the operation of the Restaurant (the collectively, the "Tradenames"). No such Tradenames are in dispute or are in conflict with any right of any other person or entity. q. Other Information. All information provided and to be provided by Sellers to Buyer in this Agreement or pursuant to the terms thereof or in any other writing pursuant hereto does not and will not contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated herein or therein or necessary to make the statements and facts contained herein or therein, in light of the circumstances in which they are made, not false or misleading. Copies of all documents heretofore or hereafter delivered or made available to Buyer pursuant hereto were or will be complete and accurate records of such documents. Each Seller's representations and warranties set forth in this Section 7 shall be true and correct as of the date hereof and the Closing Date and shall survive the Closing. 6. Representations and Warranties of Buyer. Buyer represents and warrants to Sellers that: a. Organization and Authority. Buyer is duly organized, validly existing and in good standing under the laws of the State of California and has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. This Agreement and all other agreements herein contemplated to be executed in connection herewith have been (or upon execution will have been) duly executed and delivered by Buyer, have been effectively authorized by all necessary action, and constitute (or upon execution will constitute) legal, valid and binding obligations of Buyer. b. Agreement Not in Breach of Other Instruments. The execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under, or conflict with, any material agreement, indenture or other instrument to which Buyer is a party or by which it is bound, any judgment, decree, order or award of any court, governmental body or arbitrator, or any law, rule or regulation applicable -12- 13 to Buyer, except where such default or conflict would not have a material adverse effect on Seller or Buyer's ability to effect the transactions contemplated hereby. Each of Buyer's representation and warranties set forth above shall be true and correct as of the date hereof and the Closing Date and shall survive the Closing. 7. Sellers' Covenants. a. Operation Of Restaurant. Sellers shall operate the Restaurants substantially in accordance with prior practice and in the ordinary course of business, and, without limiting the generality of the foregoing, Sellers shall not (except with the prior written consent of Buyer): (i) enter into any transaction which would affect Buyer or the Assets after the Closing Date; (ii) sell or transfer any of the Assets, (iii) mortgage, pledge, or encumber any of the Assets; (iv) amend, modify, or terminate any material contract affecting the Restaurants; or (v) amend, modify or terminate in any respect any Restaurant Lease or any Landlord Consent. Buyer acknowledges that prior practice does not include wholesale baking for third parties which has already been terminated. b. Bulk Sales Notice and Tax Clearance Certificates. Sellers have (or will, immediately upon the execution of this Agreement) prepared, filed and published all documents and paid all fees and other amounts necessary to (i) comply with and to afford Buyer with all protection available under all laws applicable to the filing of bulk sale notices, and (ii) transfer the Liquor Licenses to Buyer. Escrow Holder is hereby authorized and instructed, at the Sellers' expense, to record and publish the bulk sale notices contemplated herein. If and when Sellers receive the Tax Clearance Certificates, Sellers shall deliver copies to Buyer as soon as possible. Sellers shall also deliver copies of the most recent pre-Closing and post-Closing sales tax return filings to Buyer as soon as they are available. c. Termination of Employees. Sellers will terminate all employees of the Restaurants prior to or as of the Closing Date and comply in all respects with all applicable laws, rules and regulations with respect thereto including, but not limited to, filing any notices and paying all accrued but unpaid periodic compensation, vacation pay, sick pay and other employee benefits due and owing to such employees. Sellers shall pay and shall indemnify Buyer against any and all costs or expenses arising out of the termination of such employees by Sellers. Buyer shall have no obligation to hire or otherwise employ any current employees of either Seller. d. Termination of all Service Contracts. Sellers will terminate all Service Contracts prior to or as of the Closing Date and comply in all respects with all applicable contractual provisions with respect thereto including, but not limited to, paying all unpaid amounts thereunder. -13- 14 e. Sellers' Execution, Delivery and Performance. Sellers will, both before and after the Closing Date, execute all documents and take all steps deemed necessary or desirable by Buyer to give effect to the terms and conditions of this Agreement. f. Cooperation With Representatives. Sellers shall cooperate with Buyer and its accountants, counsel and/or other representatives in providing information and materials pertaining to the operation of the Assets, including access to the Assets. Without limiting the generality of the foregoing, from and after the execution and delivery of this Agreement, Sellers shall allow a representative or representatives of Buyer access to the Assets for the purpose of (i) inspecting the Assets, (ii) meeting with and interviewing employees of the Restaurants, which employees shall be made available for such interviewing process, and (iii) performing such other due diligence as Buyer may reasonably require. In addition, Sellers shall permit a representative or employee of Buyer to (i) remain on-site at each of the Restaurants in order to observe the operations and business of each Restaurant, and (ii) to have access to the Restaurants at reasonable times after normal business hours in order to conduct inspections and to facilitate the preparation of architectural or other plans, applications or specifications by Buyer or its representatives. g. Cooperation in Audit and Permitting. Both prior to and after the Closing Date, Sellers shall fully cooperate with Buyer and its representatives, agents, attorneys and accountants in connection with (i) the performance and completion of any audits, in form and substance to be determined by Buyer, in its sole discretion, of the financial statements for the Restaurants, and (ii) the application and prosecution of any permit applications, including any construction, zoning or other permits deemed by Buyer to be necessary or appropriate for its operation of the Restaurants as "Solley's" or "Jerry's Famous Deli" restaurants, and all remodeling and/or redesign of the Restaurants as deemed by Buyer to be necessary or appropriate. Nothing herein shall be deemed to be a guaranty by either Sellers that Buyer will be successful in obtaining any such permits subsequent to the date of this Agreement. Requirements pursuant to this subparagraph post closing requiring cooperation of third party professionals shall be at the expense of Buyer. h. Insurance. Sellers shall maintain in full force and effect all Insurance Policies through and including the Closing Date. i. Maintenance of Assets. Sellers shall maintain the Assets in sub- stantially their current state of repair, excepting normal wear and tear. j. Payment of Rent Under Restaurant Leases. Subject to the terms and conditions of this Agreement, Sellers shall pay all rental and other payments required to be paid under the Restaurant Leases through the Closing Date. k. Access to Books and Records. Both prior and subsequent to the Closing Date, Sellers, upon the reasonable request of Buyer, shall grant Buyer access to all Books and Records in Sellers' possession. Sellers agree that for a period of one year following the -14- 15 Closing Date, Sellers will provide Buyer copies of all Books and Records reasonably requested by Buyer at cost based on copy center prices. 8. Buyer's Covenants. Notwithstanding anything to the contrary contained in the Woodland Hills Lease or any Landlord Consent, Buyer shall not transfer or assign the Woodland Hills Lease subsequent to the Closing Date without the prior consent of Zide, which consent shall not be unreasonably withheld; provided, however, no consent of Zide shall be required in connection with the transfer or assignment of the Woodland Hills Lease to any person or entity having a net worth in excess of $12,000,000 as verified by audit by an independent accounting firm (with no cost of audit borne by Sellers). 9. Indemnification. a. Indemnification by Sellers. Each Seller will jointly and severally defend, indemnify and hold the Buyer, its officers, directors, agents, shareholders, representatives, employees, attorneys, accountants, affiliates, beneficiaries, subsidiaries, successors and assigns (collectively, the "Buyer Indemnitees") harmless from and against: i. Any and all claims, demands, liabilities, liens, costs, expenses, penalties, damages and losses (including, but not limited to, attorneys' fees and costs) of every kind and nature incurred or accrued prior to the Closing Date with respect to the Assets, whether arising from acts or omissions of such Seller, its agents or employees or otherwise including, but not limited to, all liabilities and obligations for which either Seller would have been, or will be, liable had Seller not transferred the Assets to Buyer pursuant to this Agreement (which shall include, but not be limited to, all liabilities, obligations, claims (including, without limitation, statutory and contractual claims), damages and expenses resulting from or in any way related to the Seller's acts or omissions with respect to the operation of the Assets, as well as any infringement action arising before or after the Closing Date which relates to Sellers' or Buyer's use of the Tradenames); ii. Any and all liabilities and obligations arising from any breach of the warranties, representations, covenants and agreements of either Seller or their respective agents contained in this Agreement or in any agreements between either Seller and any third parties relating to the Assets or the Restaurant Leases; iii. Any and all liabilities and obligations arising before or after the Closing Date as a result of either Seller's failure to pay all taxes, assessments, fees and other government charges levied upon either Seller's assets and income or otherwise relating or attributable to the Assets or the operations conducted thereon; and iv. The failure of Buyer to obtain the protections afforded by compliance with the notification requirements of the Bulk Sales Laws in force in the jurisdictions in which such laws may be applicable to either Seller or the transactions contemplated by this Agreement. -15- 16 b. Indemnification by Buyer. Buyer will defend, indemnify and hold the Sellers, their respective officers, directors, agents, shareholders, representatives, employees, attorneys, accountants, affiliates, beneficiaries, subsidiaries, successors and assigns (collectively, the "Seller Indemnitees") harmless from and against: i. Any and all claims, demands, liabilities, liens, costs, expenses, penalties, damages and losses (including, but not limited to, attorneys' fees and costs) of every kind and nature incurred or accrued subsequent to the Closing Date with respect to Buyer's ownership or operation of the Assets, whether arising from acts or omissions of Buyer, its agents or employees or otherwise, including from any additional sales tax arising from a re-allocation of the Purchase Price subsequent to closing of this transaction, other than infringement actions arising after the Closing Date which relates to Sellers' or Buyer's use of the Tradenames); and ii. Any and all liabilities and obligations arising from any breach of the warranties, representations, covenants and agreements of Buyer or its agents contained in this Agreement or in any agreements between Buyer and any third parties relating to the Assets. c. Survival of Provisions. The indemnifications by Sellers and Buyer set forth in this Section 9 shall survive the Closing. 10. Conditions to Closing. a. Conditions to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated hereby shall be, at the option of Buyer, subject to the fulfillment, at or prior to the Closing Date (or such earlier date if so specified below), of the following additional conditions: i. Representations and Warranties True. The representations and warranties of Sellers contained in this Agreement or in any other document of Sellers delivered pursuant hereto shall be true and correct in all material respects on the Closing Date. Sellers shall deliver at Closing a certificate of each of them certifying that such representations and warranties are true and correct in all material respects as of the Closing Date. ii. Sellers' Performance. Each of the obligations of Sellers to be performed by either of them on or before the Closing Date pursuant to the terms of this Agreement shall have been duly performed in all respects on or before the Closing Date and Sellers shall deliver at Closing a certificate of each of them certifying that such obligations have been duly performed in all respects. iii. Personal Property Liens. Buyer has received a certificate from the Secretary of the State of California indicating that, as of the Closing Date, there are no -16- 17 filings against either Seller in the office of the Secretary of the State of California under the Commercial Code which would be a lien on any of the FF&E or Personal Property. iv. Authority. All actions required to be taken by, or on the part of, Sellers to authorize the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby shall have been duly and validly taken by each Sellers and/or the shareholders, officers and directors of any Seller. v. Additional Closing Documents of Sellers. Sellers shall have delivered all of the items to be delivered by Sellers pursuant to this Agreement. vi. Transfer of Liquor Licenses. The ABC shall have approved the transfer of the Liquor Licenses to Buyer. vii. No Adverse Changes. Between the date of this Agreement and the Closing Date there shall not have occurred any material change, disappearance, damage, destruction, or loss of any of the Assets, whether or not covered by insurance, nor shall there have occurred any other event or condition which has had or which reasonably may be expected to have a material and adverse effect on the Assets or the financial condition of the Restaurants. viii. Receipt of Consents. Sellers and Buyer shall have obtained all material landlord, ground lessor, governmental or other third-party consents reasonably necessary to effectuate the transactions contemplated by this Agreement, including, without limitation, the receipt and continuing effectiveness of the Landlord Consents. ix. Approval of Construction and Signage Plans. Each landlord (and, to the extent required, ground lessor) under the Restaurant Leases shall have approved construction and signage plans submitted for approval by Buyer at a reasonable time prior to the Closing Date, only to the extent that such approvals are required pursuant to the terms of the Restaurant Leases and/or the Landlord Consents. x. Completion of Audit. Buyer's independent public accountants shall have completed an audit of the financial statements for the Restaurants for the year 1995, in a form and substance satisfactory to Buyer. xi. Non-Disturbance Agreements. Delivery to Buyer of non- disturbance agreements, to the extent reasonable requested by Buyer, by each ground lessor or lender or other person who has a security interest in the premises on which the Restaurants are located or operate or the property on which all or any portion of such premises are located. xii. Licenses and Permits. All Licenses and Permits reasonably required by Buyer to operate the Restaurants consistent with prior use, including the Liquor Licenses, shall be in place and transferable to Buyer by Sellers on the Closing Date. -17- 18 xiii. Board of Directors Approval. The Board of Directors of Buyer shall have approved the transactions contemplated by this Agreement. xiv. Parking at Woodland Hills Restaurant. Buyer shall have received evidence satisfactory to Buyer that the parking for the shopping center of which the Woodland Hills Restaurant is a part is adequate to accommodate the additional restaurant square footage resulting from the use of the Additional Premises and the Spaces (as defined in the Woodland Hills Consent, dated April 4, 1996, between Zide and Plaza International) as a restaurant and that the operation of a restaurant on the Additional Premises will comply with all governmental and regulatory laws, rules, regulations, covenants and other restrictions pertaining to parking. xv. Extension of Option. The Woodland Hills Consent, dated April 4, 1996, between Plaza International and Zide, shall be amended by Plaza International and Zide to extend the option to lease the Additional Premises until June 30, 1996. b. Conditions to Obligations of Sellers. The obligation of Sellers to consummate the transactions contemplated hereby shall be, at the option of Sellers, subject to the fulfillment, at or prior to the Closing Date, of the following additional conditions: i. Representations and Warranties True. The representations and warranties of Buyer contained in this Agreement or in any document delivered pursuant hereto shall be true and correct in all material respects on the Closing Date with the same effect as if made on the Closing Date. ii. Performance of Covenants. Each of the obligations of Buyer to be performed on or before the Closing Date pursuant to the terms of this Agreement shall have been duly performed on or before the Closing Date and Buyer shall deliver at Closing a certificate certifying that such obligations have been duly performed in all respects. iii. Authority. All actions required to be taken by, or on the part of, Buyer to authorize the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby shall have been duly and validly taken by the shareholders, officers and/or directors of Buyer, as applicable. iv. Deliveries. Buyer shall have delivered the items, required to be delivered by Buyer pursuant to this Agreement. c. Failure of Conditions. In the event any of the foregoing conditions to either party's obligation to close the transactions contemplated hereunder are not satisfied by the dates set forth herein with respect thereto, the party in whose favor such condition was set forth shall have, in addition to any other right set forth in this Agreement, the right to waive such condition in which case the parties shall proceed to the Closing or terminate this Agreement by written notice to the other party and Escrow Holder in which case this -18- 19 Agreement shall be deemed terminated as of the effective date of such notice and Escrow Holder shall return all amounts and documents in its possession to the party who had deposited such items with Escrow Holder. 11. Prorations and Adjustments. Buyer is acquiring all of Sellers' right, title and interest in and to the Assets as of the Closing Date free and clear of all obligations, liabilities, claims, debts liens or encumbrances and, accordingly, there shall be no prorations between the parties except as follows: a. Utilities. Utility meters will be read, to the extent that the utility company will do so, during the daylight hours on the Closing Date, with charges to that time paid by Sellers and charges thereafter paid by Buyer. All utility deposits made by Sellers shall be returned to Sellers. b. Taxes. Real estate and personal property taxes with respect to the Assets to be conveyed to Buyer pursuant hereto shall be prorated through the Closing Date; however, such taxes shall be adjusted between the parties hereto from time to time after the Closing Date when such amounts become fixed, if the amounts calculated on the Closing Date with respect thereto differ from such fixed amounts. c. Lease Obligations. Sellers' share of rental payments, maintenance, real property taxes, and insurance relating to the common areas of the property on which the Restaurant is located (if any) payable by Seller pursuant to the terms of the Restaurant Leases, shall be prorated through the Closing Date. d. Method and Payment of Proration. All prorations will be made as of the Closing Date based on a 360-day year and 30 day month and, unless paid from escrow, shall be paid at Closing or as soon thereafter as calculable. e. Inventory. Buyer and Seller have prepared an inventory of the FF&E and Personal Property included in the Assets which is attached hereto as Exhibit "D." On the Closing Date, Buyer and Seller shall perform a new inventory thereof. To the extent any of the items of the FF&E and/or Personal Property specified in the original inventory are not set forth in the new inventory (and such disappearance is not due to any act of omission of Buyer or any of its affiliates or agents), the Purchase Price shall be adjusted to reflect the reduction of FF&E and Personal Property set forth in the new inventory. For purposes of calculating such adjustments, the parties shall assign values to the FF&E and Personal Property equal to the actual cost (less depreciation) of such items, or if such actual cost/depreciation data is not available, then the value shall be based on the parties good faith estimate of the current fair market value of the particular item(s) of the FF&E and/or Personal Property. Notwithstanding anything to the contrary contained herein or otherwise, Buyer shall have no liability for and shall not be deemed to have assumed any of Sellers' unpaid expenses or -19- 20 accounts payable or other obligations or liabilities under any Service Contracts or otherwise with respect to the operation of the Restaurant at any time prior to the Closing Date. f. Security Deposits. All of each Seller's right, title and interest in and to the Security Deposits shall be transferred and assigned to Buyer simultaneously with the Closing. Each Seller agrees that he or it will not request any refund of all or any portion of such Security Deposits and that any Sellers shall immediately transfer and deliver to Buyer any Security Deposit (or portion thereof) returned to either Seller by the landlords under the Restaurant Leases. 12. Costs and Expenses. The closing costs shall be allocated as follows: a. Sales and Transfer Taxes. Buyer shall pay any state and county sales or transfer taxes resulting from the sale of the Assets to Buyer pursuant to the terms of this Agreement. b. Lease Transfer Fees. Except as specifically provided in the Landlord Consents, any transfer fees imposed under the Restaurant Leases in connection with the assignment of the Restaurant Leases to Buyer shall be paid by Sellers out of Escrow on or prior to the Closing Date. c. Other Closing Costs. Buyer and Sellers will each pay their own legal and professional fees and fees of other consultants incurred by Buyer and Sellers, respectively. All other Closing costs and expenses, including any Escrow fees or costs, will be allocated one-half to Buyer and one-half to Sellers. 13. Risk of Loss. Until and including the Closing Date, all risk of loss or damage to the Assets shall be borne by Sellers, and thereafter shall be borne by Buyer. If any portion of the Assets whatsoever is destroyed or damaged by fire, flood, earthquake, vandalism or any other cause prior to the Closing Date, Sellers shall promptly give notice to Buyer of such damage or destruction and the amount of insurance, if any, covering said Assets. Prior to the Closing Date, Buyer shall have the option, which shall be exercised by written notice to Sellers within ten (10) days after receipt of Sellers' notice or if there is not ten (10) days prior to the Closing Date, as soon as possible but not less than 24 hours prior to the Closing Date, of (a) accepting the Assets in their destroyed or damaged condition, in which event any insurance proceeds payable to Sellers with respect to the damaged property shall be assigned to Buyer, and the Purchase Price payable by Buyer for the Assets shall be paid in accordance with Section 2 of this Agreement, or (b) terminating this Agreement. 14. Closing and Possession. Simultaneously with the Closing, Sellers shall deliver possession and enjoyment of the Assets to Buyer and Buyer shall thereupon have the immediate right to possess, develop, use, sell, encumber and/or transfer the Assets, or any part thereof for its own account to the total exclusion of Sellers. -20- 21 15. Cooperation in Litigation. Each party hereto will fully cooperate with the other in the defense or prosecution of any litigation or proceeding already instituted or which may be instituted hereafter against or by such party relating to or arising out of the Assets or the operation of the Restaurants prior to or after the Closing Date (other than litigation between the parties arising out of the transactions contemplated by this Agreement). 16. Covenant Not to Compete; Non Solicitation. a. Definitions. For the purposes of this Section 16, the following terms shall have the meanings ascribed to them below: i. "Covenant Term" shall mean a period beginning on the date hereof and ending five (5) years from the date hereof. ii. "Covenant Territory" shall mean the territories located within three (3) miles of any current "Jerry's Famous Deli" or "Solley's" restaurant location (including the "Jerry's Famous Deli" locations proposed or scheduled to be opened in Westwood (Los Angeles), California and, Las Vegas, Nevada). b. Non-Compete. During the Covenant Term, Zide covenants and agrees that he (i) shall not own, operate, manage or consult to any delicatessen or delicatessen-style restaurant or delicatessen-style restaurant chain having one or more locations in California or Las Vegas, Nevada, and (ii) shall not own, operate, manage or consult to any bagel restaurant or bagel restaurant chain located in the Covenant Territory. c. Non-Solicitation. Zide agrees that during the Covenant Term he will not, directly or indirectly, induce or encourage any employee to terminate his or her relationship with Buyer or the Restaurants. In addition, Zide agrees that, during the Covenant Term he will not, directly or indirectly, employ or attempt to employ any employees of the Restaurants as of the date of this Agreement or Buyer's employees. d. Limitations on Scope. If any provision of this Section 16, as applied to any party or to any circumstances, shall be adjudged by a court to be invalid or unenforceable, the same shall in no way affect any other provision of this Agreement, the application of such provision in any other circumstances, or the validity or enforceability of this Agreement. If any provision of this Section 16, or any part thereof, is held to be unenforceable, the provisions of this Section 16 shall be modified so that the restrictions imposed hereby are no greater than would otherwise be permissible under applicable law. e. Separate Covenants. Zide and Buyer intend that the covenants contained in this Section 16 be construed as a series of separate covenants (with identical terms except geographic coverage) for each city, county, state or province, as the case may be, specified herein. The parties hereby confer jurisdiction to enforce such covenants upon the courts of any state of the United States and any other governmental jurisdiction within the -21- 22 geographical scope of such covenants. If the courts of any one or more of such states or jurisdictions shall hold such covenants unenforceable such determination shall not bar or in any way affect Buyer's right to the relief provided hereunder in the courts of any other state or jurisdiction within the geographical scope of such covenants, as to breaches of such covenants in such other respective states or jurisdictions. 17. Consulting Services of Zide. At the request of Buyer, Zide agrees to provide consulting services to Buyer at Buyer's corporate offices, free of charge, for a period of sixty (60) days following the Closing Date in order to assist Buyer in the transition of ownership of the Restaurants. In addition, Zide agrees that for a period of one (1) year following the Closing Date and upon the reasonable request of Buyer, he will provide consulting services to Buyer at Buyer's corporate offices in connection with the operation and management of Buyer's restaurants (including the Restaurants) in exchange for compensation of $100 per hour. The parties hereto agree that any consulting services rendered by Zide will be rendered as an independent contractor and not as an employee, agent or servant of Buyer, nor shall Zide be deemed, by reason of this Agreement or any services to be performed by Zide, to be an employee of Buyer for purposes of withholding, employee payroll taxes, contributions, pensions, benefits or otherwise. It is further agreed and understood that Buyer will request such services on reasonable notice and subject to Zide's other activities and reasonable convenience, and shall accommodate any request by Zide to perform such services by telephone or other mutually agreed upon manner unless personal appearance by Zide is clearly and reasonably necessary. 18. Termination; Remedies. a. Drop Dead Date. Notwithstanding anything to the contrary contained in Section 18 b. or c. below, in the event that the Closing Date has not occurred by June 30, 1996 and the failure to close by such date is not due to any fault of the party seeking termination, any party hereto may terminate this Agreement by delivery of written notice to the other parties and all funds and documents held in Escrow shall be immediately returned by the Escrow Holder to the parties who deposited such funds and/or documents in Escrow. b. Buyer's Remedies Generally. IN THE EVENT THE CLOSING FAILS TO OCCUR BECAUSE OF EITHER A FAILURE OF SATISFACTION OF ANY OF THE CONDITIONS IN FAVOR OF BUYER SET FORTH IN THIS AGREEMENT, OR SELLERS' FAILURE TO PERFORM ANY OF SELLERS' OBLIGATIONS UNDER THIS AGREEMENT, THEN BUYER SHALL HAVE THE RIGHT TO TERMINATE THIS AGREEMENT UPON WRITTEN NOTICE TO SELLERS. UPON SUCH TERMINATION, SELLERS SHALL IMMEDIATELY RETURN, OR CAUSE THE ESCROW HOLDER TO RETURN, TO BUYER ANY AND ALL DOCUMENTS AND FUNDS THERETOFORE DEPOSITED OR PAID BY BUYER. ALTERNATIVELY, NOTWITHSTANDING SUCH FAILURE OF CONDITION AND/OR SELLERS' BREACH, BUYER MAY ELECT TO PROCEED WITH THE PURCHASE OF THE ASSETS, RESERVING THE RIGHT TO COLLECT DAMAGES FROM SELLERS FOR ANY SUCH BREACH. WHETHER OR -22- 23 NOT BUYER ELECTS TO TERMINATE THIS AGREEMENT OR TO PROCEED WITH THE PURCHASE OF THE ASSETS AS HEREINABOVE PROVIDED FOR, BUYER SHALL RETAIN THE RIGHT TO EXERCISE ANY AND ALL REMEDIES WHICH BUYER MAY HAVE AGAINST SELLERS, WHETHER AT LAW, IN EQUITY OR PURSUANT TO THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, THE RIGHT TO COMPEL SPECIFIC PERFORMANCE BY SELLERS. c. Sellers' Remedies. IF BUYER SHOULD TERMINATE THIS AGREEMENT FOR REASONS OTHER THAN AS A RESULT OF EITHER (i) SELLERS' MATERIAL BREACH OR DEFAULT UNDER THE TERMS OF THIS AGREEMENT, OR (ii) THE FAILURE OF SELLERS TO SATISFY ANY OF THE CONDITIONS TO CLOSING CONTEMPLATED BY THIS AGREEMENT (EITHER EVENT CONSTITUTING "CAUSE" FOR BUYER'S TERMINATION), THEN SELLERS, AS THEIR SOLE AND EXCLUSIVE REMEDY, MAY TERMINATE THIS AGREEMENT BY NOTIFYING BUYER THEREOF AND RECEIVE OR RETAIN ONE HALF OF THE DEPOSIT ($50,000) AS LIQUIDATED DAMAGES. THE PARTIES AGREE THAT SELLERS WILL SUFFER DAMAGES IN THE EVENT OF BUYER'S BREACH OF ITS OBLIGATIONS. ALTHOUGH THE AMOUNT OF SUCH DAMAGES IS DIFFICULT OR IMPOSSIBLE TO DETERMINE, THE PARTIES AGREE THAT THE AMOUNT OF THE DEPOSIT IS A REASONABLE ESTIMATE OF SELLERS' LOSSES IN THE EVENT OF BUYER'S TERMINATION OF THIS AGREEMENT WITHOUT CAUSE. THUS, SELLERS SHALL ACCEPT AND RETAIN ONE HALF OF THE DEPOSIT ($50,000) AS LIQUIDATED DAMAGES BUT NOT AS A PENALTY, WITH THE REMAINING PORTION OF THE DEPOSIT BEING RETURNED TO BUYER. SUCH LIQUIDATED DAMAGES SHALL CONSTITUTE SELLERS' SOLE AND EXCLUSIVE REMEDY. SELLERS AND BUYER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS OF THE FOREGOING PROVISION AND BY THEIR SIGNATURES IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS. "SELLERS" "BUYER" SOLLEY'S INC. JERRY'S FAMOUS DELI, INC. By:_______________________________ By:_______________________________ Sol Zide Ike Starkman __________________________________ SOL ZIDE 19. Confidentiality. The terms and provisions of this Agreement shall be kept in complete confidence by Zide and Solley's, their affiliates, and each of their respective directors, officers, employees and agents, and dissemination of the terms and conditions of this Agreement and related -23- 24 information shall only be made to those persons as absolutely necessary. Solley's and Zide each acknowledges that it(he) is aware that Buyer is a public company with listed securities and improper disclosure of the contents of this Agreement or related information could have an adverse effect on Buyer and its securities holders. In the event of a breach of this confidence, the Agreement may be immediately terminated in the sole discretion of Buyer. Notwithstanding anything to the contrary contained in this Agreement, Buyer shall have the right, subject to the reasonable review of the content and method of disclosure by Zide and Solley's, to make appropriate disclosure as a public corporation of the existence and terms of this Agreement and the terms and conditions hereof; provided, however, that any right of review by Zide or Solley's shall be subject to the requirements of applicable federal or state securities laws and shall terminate on the Closing Date. 20. Standstill. Neither Zide nor Solley's, nor any of their respective officers, directors, affiliates, representatives or agents, will directly or indirectly negotiate, cooperate in any manner with any other party, or agree to a sale of any or all of the Assets or stock of Solley's or any other transaction which would result in a change in control of Solley's or the Restaurants, or act in a manner which could have the effect, directly or indirectly, of frustrating the completion of the transactions contemplated by this Agreement, so long as Buyer is proceeding in good faith toward the consummation of the transactions contemplated herein (provided, however, that transfers among the existing shareholders of Solley's or by existing shareholders of Solley's to trusts established by them and for the benefit of them or their family for reasons of estate or financial planning shall not be prohibited by this Section). 21. Escrow Instructions. The parties hereto do hereby enter into the Escrow with Escrow Holder for the purpose of completing the transfer of the Assets and the Liquor License in accordance with Division 6 of the California Commercial Code and Sections 24071-24074 of the Business and Professions Code of California. Concurrently herewith, a fully executed copy of this Agreement is being deposited with, and countersigned by, Escrow Holder. This Agreement, together with the Escrow Instructions attached hereto as Exhibit "G", shall constitute escrow instructions to Escrow Holder and Escrow Holder is hereby appointed and designated to act as an escrow holder and is authorized and instructed to follow the escrow instructions set forth herein. 22. Miscellaneous. a. Notices. Unless applicable law requires a different method of giving notice, any and all notices, demands or other communications required or desired to be given hereunder by any party shall be in writing. Assuming that the contents of a notice meet the requirements of the specific Section of this Agreement which mandates the giving of that notice, a notice shall be validly given or made to another party if served either personally or if postage prepaid, or if transmitted by telegraph, telecopy or other electronic written transmission device or if sent by overnight courier service, and if addressed to the applicable party as set forth below. If such notice, demand or other communication is served personally, service shall be conclusively deemed made at the time of such personal service. If such notice, demand or other communication is given by mail, service shall be conclusively deemed given upon the earlier of receipt or seventy-two (72) hours after the deposit thereof in the United States mail, postage prepaid. If such notice, demand or other communication is given by overnight -24- 25 courier, or electronic transmission, service shall be conclusively made at the time of confirmation of delivery. The addresses for Sellers and Buyer are as follows: If to Buyer: Jerry's Famous Deli, Inc. 12711 Ventura Boulevard, Suite 400 Studio City, California 91604 Attention: Ike Starkman Telecopier: (818) 766-8315 With a copy to: Jeffer, Mangels, Butler & Marmaro LLP 2121 Avenue of the Stars, 10th Floor Los Angeles, California 90067 Attention: Steven J. Insel, Esq. Telecopier: (310) 203-0567 If to Sellers: Sol Zide C/O Barry Gordon 16027 Ventura Boulevard, Suite 204 Encino, CA 91436-2728 Telecopier: (818) 990-3609 With a copy to: Parker Mills & Patel 20631 Ventura Boulevard, Suite 300 Woodland Hills, California 91364-2392 Attention: William Mills, Esq. Telecopier: (818) 883-9345 Any party hereto may change his or its address for the purpose of receiving notices, demands and other communications as herein provided, by a written notice given in the aforesaid manner to the other parties hereto. b. Assignability and Parties in Interest. This Agreement shall not be assignable by either Seller without the express written consent of Buyer which shall be given in Buyer's sole and absolute discretion. This Agreement shall not be assignable by Buyer without the express written consent of each Seller; provided, however, that Buyer may assign this Agreement to any entity managed, wholly or partially owned, directly or indirectly, by Buyer. Subject to the foregoing, this Agreement shall inure to the benefit of and be binding upon Buyer and Sellers and their respective permitted successors and assigns. c. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California. d. Venue; Arbitration. Any claims or disputes arising out of or relating to this Agreement shall be settled by binding arbitration conducted in Los Angeles County, California in accordance -25- 26 with the Commercial Arbitration Rules of the American Arbitration Association then in effect, and judgment upon the award entered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Neither party's right to file a lawsuit seeking an injunction or such party's right to injunctive relief is subject to arbitration or to the provisions of this Section 22 d. e. Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which shall constitute but one and the same instrument. f. Indemnification for Brokerage. Buyer and Sellers each represent and warrant to the other that no broker or finder has acted on its behalf in connection with this Agreement or the transactions contemplated hereby other than Jerry Ackrich, who shall be paid a commission of One Hundred Thousand Dollars ($100,000) at Closing out of Escrow. Each party hereto agrees to indemnify and hold and save harmless the others from any other claim or demand for commissions or other compensation by any broker, finder or similar agent claiming to have been employed by or on behalf of such party. g. Further Assurances. From time to time after the Closing, Sellers will execute and deliver to Buyer such instruments of sale, transfer, conveyance, assignment and delivery, consents, assurances, powers of attorney and other instruments as may be reasonably requested by counsel for Buyer in order to vest in Buyer all right, title and interest of Sellers in and to the Assets and otherwise in order to carry out the purpose and intent of this Agreement. h. Complete Agreement. This Agreement, the Exhibits hereto, and the documents delivered or to be delivered pursuant to this Agreement contain or will contain the entire agreement between the parties hereto with respect to the transactions contemplated herein and shall supersede all previous oral and written and all contemporaneous oral negotiations, commitments, and understandings. i. Modification; Waiver. No supplement, modification or amendment of this Agreement, or of any covenant, condition or limitation herein contained, shall be valid unless made in writing and executed by the parties hereto. No waiver of any covenant, condition, or limitation herein contained shall be valid unless made in writing and executed by the party making the waiver. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. j. Severability. Any provision of this Agreement which is invalid, illegal, or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective only to the extent of such invalidity, illegality, or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement invalid, illegal, or unenforceable in any other jurisdiction. -26- 27 IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the date first above written. "SELLERS" "BUYER" SOLLEY'S, INC. JERRY'S FAMOUS DELI, INC. By:_________________________________ By:__________________________________ Sol Zide Ike Starkman ____________________________________ SOL ZIDE The undersigned, as agent for the Escrow Holder, hereby accepts the duties of Escrow Holder as more particularly described in this Agreement, subject to and in accordance with all the terms and conditions thereof. NETTIE BECKER ESCROW, INC. By:________________________________ Authorized Agent -27- EX-10.2 3 LEASE - SHOPPING CENTER FROM, SOL ZIDE & PLAZA 1 Exhibit 10.2 LEASE - SHOPPING CENTER FORM THIS LEASE, made and entered into this 31st day of August , 1993 by and between PLAZA INTERNATIONAL and SOL S. ZIDE , hereinafter respectively referred to as Landlord and Tenant, without regard to number or gender, WITNESSETH: 1. USE. The Landlord hereby leases to Tenant and Tenant hereby hires from Landlord, for the purpose of conducting therein a restaurant delicatessen , those certain premises with appurtenances described as hereinafter set forth, 2. PREMISES: The premises leased to Tenant, together with appurtenances, are hereinafter referred to as the "demised premises" and are situated in the City of Los Angeles, County of Los Angeles, State of California, and are the premises [This is struck out text] commonly known and designated as 21857 and 21845 Ventura Bl. Woodland Hills, Ca. in the WARNER PLAZA [This is struck out text] 3. TERM. The Term of this Lease shall be for a period of fifteen (15) years. The term of this Lease, and Tenant's obligation to pay rent, shall commence on [This is struck out text] August 1, 1993. [This is struck out text] 4. RENTAL. A. Guaranteed Minimum Monthly Rental. Tenant shall pay to Landlord as minimum monthly rental for the demised premises the sum of twenty six thousand ($26,000) Dollars per month, which sum shall be paid in advance on the first day of each calendar month throughout the term of this Lease. Said rental shall commence upon the commencement of the term of this Lease as set forth in Article Three hereof with proration of rentals for any partial calendar month of the term hereof. All rental to be paid by Tenant to Landlord shall be in lawful money of the United States of America and shall be paid without deduction or offset, prior notice or demand, and at such place or places as may be designated from time to time by Landlord. The Minimum Monthly Rental as set forth in 4(A) above shall be increased (but not decreased) for each year of the term of this lease following the first year, if the Consumer Price Index for Urban Consumers Los Angeles-Long Beach-Anaheim (Index) as published by the U.S. Department of Labor's Bureau of Labor Statistics, increases over the base period Index. The base period Index shall be the Index for the calender month which is two months prior to the month in which rentals commence. The base period Index shall be compared with the Index for the same calender month for each subsequent year (comparison month). If the Index for any comparison month is higher than the base period Index, then the Minimum Monthly Rental for the next year shall be increased by the identical percentage commencing with the next rental commencement month. 2 B. Percentage Rental (i) In addition to the minimum guaranteed monthly rental hereinabove agreed to be paid by Tenant, Tenant shall and will pay to Landlord at the time and in the manner herein specified an additional rental in an amount equal to 6 and 1/2% of the amount of Tenant's gross sales made in, upon or from the demised premises during each lease year of the term hereof, less the aggregate amount of the minimum guaranteed monthly rental previously paid by Tenant for said lease year. (ii) Within ten (10) days after the end of each calendar month of the term hereof, commencing with the 10th day of the month following the commencement of rentals (as hereinabove provided and ending with the 10th day of the month next succeeding in the last month of the lease term, Tenant shall furnish to Landlord a statement in writing, certified by Tenant to be correct, showing the total gross sales made in, upon, or from the demised premises during the preceding calendar month, and shall accompany each such statement with a payment to Landlord equal to six & 1/2% of the total monthly gross sales made in, upon, or from the demised premises during each calendar month less the minimum guaranteed rent for each such calendar month, if previously paid. Within twenty (20) days after the end of each lease year of the term hereof, Tenant shall furnish to Landlord a statement in writing, certified by Tenant to be correct, showing the total gross sales by month made in, upon, or from the demised premises during the preceding lease year, at which time an adjustment shall be made between Landlord and Tenant to the end that the total percentage rent paid for each such lease year shall be a sum equal to six & 1/2% of the total gross sales made in, upon, or from the demised premises during each lease year of the term hereof, less the minimum guaranteed rent for each such lease year, if previously paid, so that the percentage rent, although payable monthly shall be computed and adjusted on an annual basis. (iii) The term "lease year" as used in this Lease means as follows: (a) In reference to the first lease year, the period from the commencement of the term of this Lease to the last day of the calendar month which is one year after the commencement of said term. (b) In reference to any succeeding lease year, a full year commencing on the day following the first lease year or any anniversary thereof, and running to the next succeeding anniversary of such day. (iv) The term "gross sales" as used in this Lease shall include the entire gross receipts of every kind and nature from sales and services made in, upon, or from the demised premises, whether upon credit or for cash, in every department operating in the demised premises, whether operated by the Tenant or by a subtenant or subtenants, or by a concessionaire or concessionaires, excepting therefrom any rebates and/or refunds to customers and the amount of all sales tax receipts which has to be accounted for by Tenant to any government or governmental agency. Sales upon credit shall be deemed cash sales and shall be included in the gross sales for the period which the merchandise is delivered to the customer, whether or not title to the merchandise passes with delivery. (v) The Tenant shall keep full, complete and proper books, records and accounts of its daily gross sales, both for cash and on credit, of each separate department and concessionaire at any time operated in the demised premises. The Landlord and its agents and employees shall have the right at any and all times, during regular business hours, to examine and inspect all of the books and records of the Tenant, including any sales tax reports pertaining to the business of the Tenant conducted in, upon or from the demised premises, for the purpose of investigating and verifying the accuracy of any statement of gross sales. The Landlord may once in any lease year cause an audit of the business of Tenant to be made by a certified public accountant of Landlord's selection and if the statement of gross sales previously made to Landlord shall be found to be inaccurate, then and in that event, there shall be an adjustment and one party shall pay to the other on demand such sums as may be necessary to settle in full the accurate amount of said percentage rent that should have been paid to Landlord for the period or periods covered by such inaccurate statement or statements. If said audit shall disclose an inaccuracy of greater than 2% error with respect to the amount of gross sales reported by Tenant for the period of said report, then the Tenant shall immediately pay to Landlord the cost of such audit; otherwise, the cost of such audit shall be paid by Landlord. If such audit shall disclose any willful or substantial inaccuracies this Lease may thereupon be cancelled and terminated, at the option of Landlord. 5. REAL ESTATE TAXES. Tenant agrees to pay all real estate taxes, levies and assessments and all other charges in the nature of taxes and assessments upon said real property, general and special, ordinary and extraordinary, of any kind and nature whatsoever heretofore or which during the term of this Lease are laid, levied, assessed or imposed, or become a lien upon or become chargeable against or payable in connection with the demised premises or any part thereon. Tenant shall pay said taxes monthly upon receipt from Landlord of a statement delineating Tenant's share of said taxes; said taxes, payable monthly shall be computed and adjusted on an annual basis. In the event the Landlord does not have the demised premises separately assessed for tax purposes, then and in that event the taxes and assessments on the demised premises shall be apportioned according to the floor area of the demised premises, (said gross ground floor area), as it relates to the total floor area, (gross ground floor area), of the building or buildings including the demised premises. All taxes for the year in which this Lease commences shall be apportioned and adjusted. With respect to any assessment (other than those delineated in the tax bill) which may be levied against or upon the demised premises and which under the laws then in force may be evidenced by improvement or other bonds, or which may be paid in annual installments, the Landlord shall cause such improvement bonds to be issued or cause such assessments to be paid in the maximum permissible number of annual installments, and in such event the Tenant shall only be required to pay such installment payments with interest thereon as each thereof matures and Tenant shall have no obligation to continue such payments after the termination of this Lease. 2 3 The term "real estate taxes" as used herein shall be deemed to mean all taxes imposed upon the real property and permanent improvements, and all assessments levied against said premises, or the lease or the rental taxes levied or assessed upon the rent received by the Landlord from the Tenant but shall not include personal income taxes, personal property taxes, inheritance taxes, or franchise taxes levied against the Landlord, but not directly against said property, even though such taxes shall become a lien against said property. 6. PERSONAL PROPERTY TAXES. During the term hereof Tenant shall pay prior to delinquency all taxes assessed against and levied upon fixtures, furnishings, equipment and all other personal property of Tenant contained in the demised premises, and when possible Tenant shall cause said fixtures, furnishings, equipment and other personal property to be assessed and billed separately from the real property of Landlord. In the event any or all of the Tenant's fixtures, furnishings, equipment and other personal property shall be assessed and taxed with the Landlord's real property, the Tenant shall pay to Landlord its share of such taxes within ten (10) days after delivery to Tenant by Landlord of a statement in writing setting forth the amount of such taxes applicable to the Tenant's property. 8. PARKING AND COMMON FACILITIES. Landlord covenants that the common and parking areas shall be at all times available for the non-exclusive use of Tenant during the full term of this Lease or any extension of the term hereof; provided that the condemnation or other taking by any public authority, or sale in lieu of condemnation, of any or all of such common and parking areas shall not constitute a violation of this covenant. Landlord reserves the right to change the entrances, exits, traffic lanes and the boundaries and locations of such parking area or areas. (a) Prior to the date of Tenant's occupation of the demised premises, Landlord shall cause said common and parking area or areas to be graded, blacktopped, lighted and appropriately marked and landscaped at no expense to Tenant. (b) The Landlord shall keep said automobile parking and common areas in a neat, clean and orderly condition, properly lighted and landscaped, and shall repair any damage to the facilities thereof. -3- 4 (c) Tenant, for the use and benefit of Tenant, its agents, employees, customers, licensees and sub-tenants, shall have the non-exclusive right in common with Landlord, and other present and future owners, tenants and their agents, employees, customers, licensees and sub-tenants, to use said common and parking areas during the entire term of this Lease, or any extension thereof, for ingress and egress, roadway, sidewalk and automobile parking. (d) The Tenant, in the use of said common and parking areas, agrees to comply with such reasonable rules and regulations as the Landlord may adopt from time to time for the orderly and proper operation of said common and parking areas. Such rules may include but not be limited to the following: (1) The restricting of employee parking to a limited, designated area or areas; and (2) The regulation of the removal, storage and disposal of Tenant's refuse and other rubbish at the sole cost and expense of Tenant. 9. USES PROHIBITED. Tenant shall not use, or permit said premises, or any part thereof, to be used for any purpose or purposes other than the purpose or purposes for which said premises are hereby leased; and no use shall be made or permitted to be made of said premises, nor acts done, which will increase the existing rate of insurance upon the building of which said premises may be located (once said rate is established), or cause a cancellation of any insurance policy covering said building or any part thereof, nor shall Tenant sell or permit to be kept, used or sold in or about said premises any article which may be prohibited by standard form of fire insurance policies. Tenant shall, at his sole cost, comply with any and all requirements, pertaining to the use of said premises, of any insurance organization or company necessary for the maintenance of reasonable fire and public liability insurance, covering said building and appurtenances. In the event Tenant's use of the premises, recited in Article 1 hereof, results in a rate increase for the building of which the demised premises are a part, Tenant shall pay annually on the anniversary date of this Lease, as additional rent, a sum equal to that of the additional premium occasioned by said rent increase. 10. ALTERATIONS. Tenant shall not make, or suffer to be made, any alterations of the demised premises, or any part thereof, without the prior written consent of Landlord, and any additions to, or alterations of, said premises, except movable furniture and trade fixtures shall become at once a part of the realty and belong to Landlord. 11. MAINTENANCE AND REPAIR. Tenant shall, subject to Landlord's obligation as set forth in Article 19, at all times during the term hereof, and at Tenant's sole cost and expense, keep, maintain and repair the improvements upon the demised premises in good and sanitary order and condition (except as hereinafter provided with respect to Landlord's obligation) including without limitation, the maintenance and repair of any doors, window casements, glazing, electrical wiring and conduits. Tenant hereby waives all right to make repairs at the expense of Landlord as provided in Section 1942 of the Civil Code of the State of California and Tenant hereby waives all rights provided for by Section 1941 of said Civil Code. By entering into the demised premises Tenant shall be deemed to have accepted the demised premises as being in good and sanitary order, condition and repair and Tenant agrees on the last day of said term or sooner termination of this Lease to surrender the demised premises with appurtenances, in the same condition as when received, reasonable use and wear thereof and damage by fire, act of God or by the elements excepted. Landlord shall, at his sole cost and expense, keep and maintain in good repair the exterior walls, roof and sidewalks, provided, however, that anything to the contrary notwithstanding contained in this Lease, the Landlord shall not be required to make any repairs to the exterior walls, roof and sidewalks unless and until Tenant has notified Landlord in writing of the need for such repairs and Landlord shall have had a reasonable period of time thereafter within which to commence and complete said repairs. Landlord agrees to use due diligence in the making of said repairs upon receipt of Tenant's notice with regards thereto. 12. COMPLIANCE WITH LAWS. Tenant shall, at his sole cost and expense, comply with all of the requirements of all municipal, state and federal authorities now in force or which may hereafter be in force pertaining to the use of said premises, and shall faithfully observe in said use all Municipal ordinances and State and Federal statutes now in force or which shall hereinafter be in force. The judgment of any court of competent jurisdiction, or the admission of Tenant in any action, or proceeding against Tenant, whether Landlord be a party thereto or not, that Tenant has violated any such order or statute in said use, shall be conclusive of that fact as between the Landlord and Tenant. Tenant shall not commit, or suffer to be committed, any waste upon the demised premises, or any nuisance or other act or thing which may disturb the quiet enjoyment of any other tenant in the building in which the demised premises may be located. -4- 5 13. INDEMNIFICATION OF LANDLORD -- LIABILITY INSURANCE BY TENANT. Tenant as a material part of the consideration to be rendered to Landlord under this Lease, hereby waive all claims against Landlord for damage to goods, wares and merchandise in, upon or about said premises and for injuries to persons in or about said premises, from any cause arising at any time and Tenant will hold Landlord exempt and harmless from any damage or injury to any person, or the goods, wares, and merchandise of any person, arising from the use of the premises by Tenant or from the failure of Tenant to keep the premises in good condition and repair, as herein provided. During the entire term of this Lease, the Tenant shall, at the Tenant's sole cost and expense, but for the mutual benefit of Landlord and Tenant, maintain general public liability insurance against claims for personal injury, death or property damage occurring in, upon or about the demised premises and on any sidewalks directly adjacent to the demised premises. The limitation of liability of such insurance shall be not less than One Hundred Thousand and No/100ths ($100,000.00) Dollars in respect to injury or death of one person, and to the limit of not less than Three Hundred Thousand and No/100ths ($300,000.00) Dollars in respect to any one accident and to the limit of not less than Twenty-Five Thousand and No/100ths ($25,000.00) Dollars in respect to property damage. All such policies of insurance shall be issued in the name of Tenant and Landlord and for the mutual and joint benefit and protection of the parties, and such policies of insurance or copies thereof shall be delivered to the Landlord. 14. FREE FROM LIENS. Tenant shall keep the demised premises and the property in which the demised premises are situated free from any liens arising out of any work performed, material furnished, or obligation incurred by Tenant. 15. ABANDONMENT. Tenant shall not vacate or abandon the demised premises at any time during the term of this Lease; and if Tenant shall abandon, vacate or surrender the demised premises or be dispossessed by process of law, or otherwise, any personal property belonging to Tenant and left on the demised premises shall be deemed to be abandoned, at the option of Landlord, except such property as may be mortgaged to Landlord. 16. SIGNS AND AUCTIONS. The Tenant may affix and maintain upon the glass panes of the show windows only such signs, advertising placards, names, insignia, trademarks and descriptive material as shall have first received the written approval of the Landlord as to size, type, color, location, copy, nature and display qualities. Anything to the contrary in this Lease notwithstanding, Tenant shall not affix any sign to the roof of this building. Tenant further agrees not to install any exterior lighting, amplifiers or similar devices or use in or about the premises any advertising medium which may be heard or seen outside the premises, such as flashing lights, searchlights, loudspeakers, phonographs or radio broadcasts. Tenant shall not conduct or permit to be conducted any sale by auction in, upon or from the demised premises, whether said auction be voluntary, involuntary, pursuant to any assignment for the payment of creditors or pursuant to any bankruptcy or other solvency proceeding. 17. UTILITIES. Tenant shall pay before delinquency all charges for telephone service used in, upon, or about the demised premises by Tenant or any of its sub-tenants, licensees, or concessionaires during the term and any extension or renewal of the term of this Lease. 18. ENTRY AND INSPECTION. Tenant shall permit Landlord and his agents to enter into and upon the demised premises at all reasonable times for the purpose of inspecting the same or for the purpose of maintaining the building in which said premises are situated, or for the purpose of making repairs, alterations or additions to any other portion of said building, including the erection and maintenance of such scaffolding, canopy, fences and props as may be required, or for the purpose of posting notices of nonliability for alterations, additions or repairs, or for the purpose of placing upon the property in which the premises are located any usual or ordinary "For Sale" signs. Landlord shall be permitted to do any of the above without any rebate of rent and without any liability to Tenant for any loss of occupation or quiet enjoyment of the premises thereby occasioned. Tenant shall permit Landlord, at any time within thirty (30) days prior to the expiration of this Lease, to place upon said premises any usual or ordinary "For Lease" signs and during such thirty (30) day period Landlord or his agents may, during normal business hours, enter upon said premises and exhibit same to prospective tenants. 19. DAMAGE AND DESTRUCTION OF PREMISES. In the event of (a) partial destruction of said premises or the building containing same during said term which requires repairs to either said premises or said building, or (b) said premises or said building being declared unsafe or unfit for occupancy by any authorized public authority for any reason other than Tenant's act, use or occupation, which declaration requires repairs to either said premises or said building, Landlord shall forthwith make said repairs provided Tenant gives to Landlord thirty (30) days written notice of the necessity therefor. No such partial destruction (including any destruction necessary in order to make repairs required by any declaration made by any public authority) shall in any wise annul or void this Lease except that Tenant shall be entitled to a proportionate reduction of minimum guaranteed rental while such repairs are being made, such proportionate reduction to be based upon the extent to which the making of such repairs shall interfere with the business carried on by Tenant in said premises. However, if during the term of this Lease the building is damaged as a result of fire or any other casualty to an extent in excess of twenty-five 5 6 (25%) per cent of its then replacement cost, (excluding foundations(s), Landlord may within the (30) days following the date such damage occurs terminate this Lease by written notice to Tenant. If Landlord, however, elects to make said repairs, and provided Landlord uses due diligence making said repairs, this Lease shall continue in full force and effect and the minimum guarantee rental shall be proportionately reduced as hereinabove provided. If Landlord elects to terminate this Lease all rentals shall be prorated between Landlord and Tenant as of the date of such destruction. In respect to any partial destruction (including any destruction necessary in order to make repairs required by any such declaration of any authorized public authority) which Landlord is obligated to repair or may elect to repair under the terms of this Article 19, the provisions of Section 1932, Subdivision (2) and Section 1933, Subdivision (4) of the Civil Code of the State of California are waived by Tenant. 20. ASSIGNMENT AND SUBLETTING. Tenant shall not assign this Lease, or any interest therein, and shall not sublet the demised or any part thereof, or any right or privilege appurtenant thereto, or permit any other person (the agents and servants of Tenant excepted) occupy or use the demised premises, or any portion thereof. 21. DEFAULT. In the event of any breach of this Lease by Tenant, the Landlord shall notify the Tenant in writing of such breach, and Tenant shall have ten (10) days in which to cure any such breach as to payments of rent or other sums due hereunder, and thirty (30) days to cure any other breach, and if Tenant shall fail to cure such breach or default within such time limit, then Landlord, besides other rights or remedies Landlord may have, shall have the immediate right of re-entry and may remove all persons and property from the premises; and such property may be removed and stored in a public warehouse or elsewhere at the cost of, and for the account of, Tenant. Should Landlord elect to re-enter, as herein provided, or should Landlord take possession pursuant to legal proceedings or pursuant to any notice provided for by law, Landlord may either terminate this Lease or may from time to time, without terminating this Lease, re-let said premises or any part thereof for such term or terms (which may be for a term extending beyond the term of this Lease) and at such rental or rentals and upon such other terms and conditions as Landlord in his sole discretion may deem advisable, with the right to make alterations and repairs to said premises. Upon such re-letting (a) Tenant shall be immediately liable to pay to Landlord, in addition to any indebtedness other than rent due hereunder, the cost and expenses of such re-letting and of such alteration and repair, incurred by Landlord, and the amount, if any, by which the rent reserved in this Lease for the period of such re-letting (up to but not beyond the term of this Lease) exceeds the amount agreed to be paid as rent for the demised premises for such period of such re-letting; or (b) At the option of Landlord, rents received by such Landlord from such re-letting shall be applied as follows: First, to the payment of any indebtedness, other than rent, due hereunder from Tenant to Landlord; Second, to the payment of any costs and expenses of such re-letting and of such alterations and repairs; Third, to the payment of rent due and unpaid hereunder; and the residue, if any, shall be held by Landlord and applied in payment of future rent as the same may become due and payable hereunder. If Tenant has been credited with any rent to be received by such re-letting under option (a), and such rent shall not be promptly paid to Landlord by the new tenant, or if such rentals received from re-letting under option (b) during any month be less than that to be paid during that month by Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such deficiency shall be calculated and paid monthly. No such re-entry or taking possession of said premises by Landlord shall be construed as an election on Landlord's part to terminate this Lease unless a written notice of such intention be given to Tenant or unless the termination thereof be decreed by a court of competent jurisdiction. Notwithstanding any re-letting without termination, Landlord may at any time thereafter elect to terminate this Lease for such previous breach. Should Landlord at any time elect to terminate this Lease for any breach, in addition to any other remedies he may have, Landlord may recover from Tenant all damages incurred by Landlord by reason of such breach, including the cost of recovering the premises, and including the worth at the time of such termination of the excess, if any, of the amount of rent and charges equivalent to rent reserved in this Lease for the remainder of the stated term of this Lease over the then reasonable rental value of the premises for the remainder of the stated term, all of which amounts shall be immediately due and payable from Tenant to Landlord. 22. INSOLVENCY OF TENANT. Tenant agrees that in the event all or substantially all of its assets be placed in the hands of a receiver or trustee, and in the event such receivership or trusteeship continue for a period of ten (10) days, or should Tenant make an assignment for the benefit of 6 7 creditors, or be adjudicated a bankrupt, or should Tenant institute any proceedings under any state or federal bankruptcy act wherein Tenant seeks to be adjudicated a bankrupt, or seeks to be discharged of its debts, or should any involuntary proceeding be filed against such Tenant under such bankruptcy laws and Tenant consents thereto or acquiesces therein by pleading or default, then the Lease or any interest in and to the demised premises shall not become an asset in any of such proceedings and in any of such events, and in addition to any and all rights or remedies of Landlord hereunder or as provided by law, it shall be lawful for Landlord at his option to declare the terms hereof ended and to reenter the demised premises and take possession thereof and remove all persons therefrom and Tenant shall have no further claim therein or hereunder. 23. SURRENDER OF LEASE. The voluntary or other surrender of this Lease by Tenant, or mutual cancellation thereof, shall not work a merger, and shall, at the option of Landlord, terminate all or any existing sub-leases or sub-tenancies, or may, at the option of Landlord, operate as an assignment to him of any or all of such sub-leases or sub-tenancies. 24. SALE OF PREMISES BY LANDLORD. In the event of any sale of the demised premises by Landlord, Landlord shall be and is hereby entirely freed and relieved of all liability under an and all of its covenants and obligations contained in or derived from this Lease arising out of an act, occurrence or omission occurring after the consummation of such sale; and the purchaser, and such sale or any subsequent sale of the demised premises shall be deemed, without any further agreement between the parties or their successors in interest or between the parties and any such purchaser, to have assumed and agreed to carry out any and all of the covenants and obligations of the Landlord under this Lease. 25. HOURS OF BUSINESS. Subject to the provisions of Article 19 hereof, Tenant shall continuously during the entire term hereof conduct and carry on Tenant's business in the demised premises and shall keep the demised premises open for business and cause Tenant's business to be conducted therein during the usual business hours of each and every business day as is customary for businesses of like character in the city in which the demised premises are located to be open for business; provided, however, that this provision shall not apply if the demised premises should be closed and the business of Tenant temporarily discontinued therein on account of strikes, lockouts or similar causes beyond the reasonable control of Tenant or closed for not more than three days out of respect to the memory of any deceased officer or employee of Tenant, or the relative of any such officer or employee. Tenant shall keep the demised premises adequately stocked with merchandise, and with sufficient sales personnel to care for the patronage, and to conduct said business in accordance with sound business practice. In the event of breach by the Tenant of any of the conditions in this Article contained, the Landlord shall have, in addition to any and all remedies herein provided, the right at its option to collect not only the minimum rent herein provided, but additional rent at the rate of one-thirtieth (1/30) of the minimum monthly rent herein provided for each and every day that the Lessee shall fail to conduct its business as herein provided; said additional rent shall be deemed to be in lieu of any percentage rent that might have been earned during such period of the Tenant's failure to conduct its business as herein provided. 26. ATTORNEY'S FEES. In the event the Landlord finds it necessary to retain an attorney in connection with the default by the Tenant in any of the agreements or covenants contained in this Lease, Tenant shall pay reasonable attorneys' fees to said attorney. 27. SECURITY DEPOSIT. Tenant contemporaneously with the execution of this Lease, has deposited with Landlord the sum of sixty five thousand ($65,000.00) Dollars, receipt of which is hereby acknowledged by Landlord, said deposit being given to secure the faithful performance by the Tenant of all of the terms, covenants, and conditions of this Lease by the Tenant to be kept and performed during the term hereof. Tenant agrees that if the Tenant shall fail to pay the rent herein reserved promptly when due, said deposit may, at the option of the Landlord (but Landlord shall not be required to) be applied to any rent due and unpaid, and if the Tenant violates any of the other terms, covenants, and conditions of this Lease, said deposit may be applied to any damages suffered by Landlord as a result of Tenant's default, to the extent of the amount of the damages suffered. Nothing contained in this Article 27 shall in any way diminish or be construed as waiving any of the Landlord's other remedies as provided in Article 21 hereof, or by law or in equity. Should the entire security deposit, or any portion thereof, be appropriated and applied by Landlord for the payment of overdue rent or other sums due and payable to Landlord by Tenant hereunder, then Tenant shall, on the written demand of Landlord, forthwith remit to Landlord a sufficient amount in cash to restore said security deposit to its original amount, and Tenant's failure to do so within fifteen (15) days after receipt of such demand shall constitute a breach of this Lease. Should Tenant comply with all of the terms, covenants, and conditions of this Lease and promptly pay all of the rental herein provided for as it falls due, and all other sums payable by Tenant to Landlord hereunder, said security deposit shall be returned in full to Tenant at the end of the term of this Lease, or upon the earlier termination of this Lease pursuant to the provisions of Article 19 hereof. Landlord shall have the right to commingle said security deposit with other funds of Landlord. Landlord may deliver the funds deposited herein by Tenant to the purchaser of Landlord's interest in the demised premises in the event that such interest be sold, and thereupon Landlord shall be discharged from further liability with respect to such deposit. *The sum of $48,000.00 of the above said security deposit has been credited from the expiring lease for the premises, dated August 10, 1990. 7 8 28. 29. COMPETITION. During the term of this Lease, Tenant shall not directly or indirectly engage in any similar or competing business within a driving radius of three (3) miles from the outside boundary of the Shopping Center. 30. HOLDING OVER. Any holding over after the expiration of the term of this Lease, with the consent of Landlord, shall be construed to be a tenancy from month to month, cancellable upon thirty (30) days written notice, and at a rental and upon terms and conditions as existed during the last year of the term hereof. 31. NOTICES. Wherever in this Lease it shall be required or permitted that notice and demand be given or served by either party to this Lease to or on the other, such notice or demand shall be given or served and shall not be deemed to have been duly given or served unless in writing and forwarded by certified mail, addressed as follows: TO: Landlord TO: Tenant PLAZA INTERNATIONAL AT: 21777 Ventura Blvd. AT: Woodland Hills, Calif. 91364 Either party may change such address by written notice by registered mail to the other. 32. SUCCESSORS IN INTEREST. The covenants herein contained shall, subject to the provisions as to assignment, apply to and bind the heirs, successors, executors, administrators and assigns of all the parties hereto; and all of the parties hereto shall be jointly and severally liable hereunder. 33. TENANT'S PERFORMANCE. In the event Tenant shall fail within any time limits which may be provided herein to complete any work or perform any other requirement provided to be performed by Tenant prior to the commencement hereof, or in the event Tenant shall cause a delay in the completion of any work, Landlord shall send Tenant written notice of said default and if said default is not corrected within 10 days thereafter, Landlord shall have the option of terminating this Lease by a written notice of termination and upon forwarding of said notice this Lease shall cease and terminate, Landlord shall be entitled to retain as liquidated damages all deposits made hereunder and such improvements as Tenant may have annexed to the realty that can not be removed without damage thereto. 34. FORCE MAJEURE. If either party hereto shall be delayed or prevented from the performance of any act required hereunder by reason of acts of God, strikes, lockouts, labor troubles, inability to procure materials, restrictive governmental laws or regulations or other cause without fault and beyond the control of the party obligated (financial inability excepted), performance of such act shall be excused for the period of the delay and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay; provided, however, nothing in this Article 34 contained shall excuse Tenant from the prompt payment of any rental or other charge required of Tenant hereunder except as may be expressly provided elsewhere in this Lease. 35. PARTIAL INVALIDITY. If any term, covenant, condition or provision of this Lease is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions hereof shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereof. 36. MARGINAL CAPTIONS. The various headings and numbers herein and the grouping of the provisions of this Lease into separate Articles and paragraphs are for the purpose of convenience only and shall not be considered a part hereof. -8- 9 37. TIME. Time is of the essence of this Lease. 38. SUBORDINATION, ATTORNMENT. Upon request of the Landlord, Tenant will in writing subordinate its rights hereunder to the lien of any first mortgage, or first deed of trust, to any bank, insurance company or other lending institution, now or hereafter in force against the land and building of which the demised premises are a part, and upon any buildings hereafter placed upon the land of which demised premises are a part, and to all advances made or hereafter to be made upon the security thereof. In the event any proceedings are brought for foreclosure, or in the event of the exercise of the power of sale under any mortgage or deed of trust made by the Landlord covering the demised premises, the Tenant shall attorn to the purchaser upon any such foreclosure or sale and recognize such purchaser as the Landlord under this Lease. The provisions of this Article to the contrary notwithstanding, and so long Tenant is not in default hereunder, this Lease shall remain in full force and effect for the full term hereof. Within ten (10) days after request therefor by Landlord, or in the event that upon any sale, assignment or hypothecation of the demised premises or the land thereunder by the Landlord, an offset statement shall be required from Tenant, Tenant agrees to deliver in recordable form a certificate addressed to any such proposed mortgagee or purchaser or to the Landlord certifying that this Lease is in full force and effect (if such be the case) and that there are no differences or offsets thereto or stating those claimed by Tenant. 40. It is understood and agreed that should Landlord not be able to give possession to Tenant of 21845 Ventura Bl. Woodland Hills, Ca. on August 1, 1993, this lease shall remain in full force, except that the Tenant's obligations under this lease shall commence when possession is given to Tenant. 41. Tenant shall connect the water usage pipes from 21845 to the metered water usage system in 21857 Ventura Bl. Woodland Hills, Ca. 42. As of the commencement of this lease, the lease for the premises known as 21857 Ventura Bl. Woodland Hills, Ca. dated August 10, 1990 shall be null and void. 43. Landlord shall not unreasonably withhold his consent to an assignment of this lease by Tenant, provided that Tenant is not in default of this lease. In the event of an assignment, Tenant shall pay to Landlord the additional amount equal to 1-1/2 month's rent then in effect. 43. In the event of an assignment of this lease, new Tenant shall pay to Landlord the additional sum of $22,000.00 as security deposit under Article 27. IN WITNESS WHEREOF, the parties have duly executed this Lease together with the herein referred to Exhibits which are attached hereto, the day and year first above written. PLAZA INTERNATIONAL /s/ Sol S. Zide - --------------------------------------- ---------------------------------- Sol S. Zide - --------------------------------------- ---------------------------------- EX-10.3 4 AMENDMENT TO LEASE 1 Exhibit 10.3 AMENDMENT TO LEASE THIS AMENDMENT TO LEASE ("Amendment") is made and entered into as of the ____ day of _____________, 1996, by and among PLAZA INTERNATIONAL ("Landlord"), and SOL ZIDE, an individual ("Lessee"). RECITALS A. Lessee is the lessee pursuant to that certain Lease -- Shopping Center Form, dated as of August 31, 1993 (the "Lease"), by and between Landlord and Lessee, pursuant to which Lessee leased from Landlord commercial space commonly known as 21857 and 21845 Ventura Boulevard, Woodland Hills, California (the "Original Premises"), as such Original Premises are more particularly described in the Lease. B. Lessee currently owns and operates a restaurant known as "Solley's" on the Original Premises (the "Acquired Restaurant"). D. Lessee and Jerry's Famous Deli, Inc., a California corporation ("JFD"), 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, the Acquired Restaurant, including all of Lessee's right, title and interest in and to the Lease. E. In connection with the consummation of transactions contemplated by the Asset Purchase Agreement (the "Sale Transaction"), effective upon consummation of the Sale Transaction, Landlord and Lessee desire to modify the Lease in accordance with the terms set forth below. F. Upon effectiveness of the Sale Transaction, Landlord and Lessee desire to modify and amend the Lease to include the premises known as 21853 Ventura Boulevard, Woodland Hills, California (the "Additional Premises"). The Additional Premises and the Original Premises are sometimes collectively referred to herein as the "Premises." 2 AGREEMENT NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Certifications of Landlord. Landlord hereby agrees and certifies to Lessee that: a. Pursuant to the Lease, Lessee has leased the Original Premises and has paid to Landlord a security deposit of $65,000 which, upon effectiveness of the lease of the Additional Premises, will increase to $85,000. The term of the Lease commenced on August 1, 1993 and the expiration date of the Lease (prior to the effectiveness of the amendments contemplated by this Amendment) is July 31, 2008. The current minimum monthly rental for the Original Premises is $27,076.76 against a percentage rental of 6.5% of Lessee's gross sales, as set forth in the Lease. b. Notwithstanding anything to the contrary contained in the Lease, upon effectiveness of the lease of the Additional Premises, the initial minimum monthly rental for the Premises (including the Additional Premises) shall be $34,576.76 against a percentage rental of 6.5% of Lessee's gross sales for the entire Premises, as set forth in the Lease, inclusive of monthly common area and insurance charges as provided for in Section 3 below. c. The Premises consist of a total of 8,600 square feet of which the Original Premises constitute 6,975 square feet and the Additional Premises constitute 1,625 square feet. 2. Security Deposit. a. Article 43 (second numbered paragraph) of the Lease is hereby amended to read as follows: "In the event of an assignment of this lease, new Tenant shall pay to Landlord the additional sum of $15,000.00 as security deposit under Article 27." Upon assignment of the Lease to JFD in connection with closing of the Sale Transaction, all of Lessee's rights to any existing -2- 3 security deposit shall be assigned and transferred from Lessee to JFD and JFD shall cause the additional security deposit referenced in Article 43 of the Lease, as revised, to be deposited with Landlord. 3. Lease of Additional Premises. Upon the closing of the Sale Transaction (the "Effective Time"), the Additional Premises shall automatically be added to the Lease. At the Effective Time, the minimum monthly rent for the Premises (including the Additional Premises) shall be $34,576 (which includes the minimum monthly rental plus the amount of the monthly common area and insurance charges for the Premises as set forth in the Agreement) against a percentage rental of 6.5% of Lessee's gross sales for the entire Premises. Notwithstanding anything to the contrary contained in the Lease or this Amendment, after the Effective Time no separate common area or insurance charges will be made with respect to the Premises and the only adjustments to the minimum monthly rental for the Premises shall be inflation adjustments made pursuant to the provisions of Article 4 of the Lease and any adjustments in the real estate taxes payable pursuant to Article 5 of the Lease. 4. Real Estate Taxes. Real estate taxes shall be paid as provided in Article 5 of the Lease, currently at a rate of $1,015.00 per month, inclusive of the Additional Premises; provided, however, that Lessee shall be responsible for paying any increase in real estate taxes resulting from tenant improvements made by Lessee to any of the Original Premises, the Additional Premises, or any of the Spaces (as defined in Section 6 below). 5. Extension of Lease Term. At the Effective Time, the term of the Lease will be automatically extended for an additional three (3) year period, such that the initial Lease Term shall expire on July 31, 2011. 6. Option on Additional Space. At the Effective Time, the Lease will be automatically amended to grant Lessee the right to lease either or both of the spaces (the "Spaces") identified in Exhibit A, attached hereto and incorporated herein by this reference. The option shall be exercisable after termination of the currently existing terms of the lease(s) for the Space(s). If exercised, the Spaces shall be added to the Lease on identical terms as applicable to the Premises pursuant the terms of the Lease -3- 4 and this Amendment. Upon exercise of the right to lease the Space(s), the minimum monthly rental (inclusive of all common area and insurance charges) for the expanded Premises, inclusive of such additional Space or Spaces (the "Expanded Premises"), shall equal (i) the minimum monthly rental per square foot payable for the Premises as set forth in Section 3 of this Amendment, multiplied by (ii) the total square footage of the Expanded Premises, against a minimum monthly rental equal to 6.5% of Lessee's gross sales for the Expanded Premises, inclusive of monthly common area and insurance charges as provided for in Section 3 above. If the Space or Spaces are leased pursuant to the option contained in this Section 6, real estate taxes payable by the Lessee in respect of such additional Space or Spaces shall be paid at the same rate per square foot as applicable to the Premises. Landlord shall notify Lessee as soon as practical as to the date each Space's current lease will terminate. Within four calendar months before such termination date or five days from receipt of notice, whichever is later, Lessees shall notify Landlord if it will exercise the option. 7. Additional Covenant Regarding Use of Premises. On the Effective Date, the Lease shall be amended to provide that Lessee may not wash or clean equipment in the parking lot or any other area of the Center outside of the Premises. 8. Agreement Regarding Additional Premises. Notwithstanding anything to the contrary contained in that certain Agreement, dated March 9, 1996, between Lessee and Landlord, regarding the Additional Premises (the "Option"), a copy of which is attached hereto as Exhibit B, Lessee shall have the option to extend the term of such Option for an additional one month period by paying Landlord a non-refundable sum of $10,000 prior to April 1, 1996. In the event that the Sale Transaction shall not have closed prior to May 1, 1996, Lessee shall have the option to extend the term of the Option for one additional one month period by paying Landlord a non-refundable sum of $10,000 prior to the first date of the month for which the Option extension will apply. 9. Additional Amendments to Lease. In addition to the modifications to the Lease provided for in Sections 1 through 8 above, on the Effective Date, the Lease shall be modified and amended as reflected in the marked and initialed copy of the Lease attached hereto as Exhibit C, and incorporated herein by this -4- 5 reference. 10. 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 JFD in connection with the Sale Transaction. 11. Assignment. Except as specifically provided herein, this Amendment may not be assigned or transferred by any party hereto without the express written consent of the remaining parties, which consent shall not be unreasonably withheld; provided, however, that nothing herein shall be deemed to restrict the ability of Landlord to assign the Lease in connection with a sale of the property underlying the Premises. 12. Further Assurances. In addition to the obligations required to be performed under the Lease, as amended hereby, Landlord 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. 13. Authority. Landlord and Lessee represents and warrants to each other that it has the due power and authority to enter into this Amendment and to be bound by the terms hereof. 14. Binding Effect. This Amendment shall be binding upon and inure to the benefit of Landlord, Lessee, and their respective successors and assigns. 15. 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 as determined by the court or arbitrator, as the case may be. 16. 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. 17. No Other Amendment. Except as modified by this -5- 6 Amendment, the provisions of the Lease shall remain unaffected and in full force and effect. To the extent that any terms or provisions of this Amendment are inconsistent with 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: PLAZA INTERNATIONAL By:_____________________________ Name: Title: LESSEE: ________________________________ SOL ZIDE -6- 7 EXHIBIT A Description of Additional Space 1. The premises located at 21851 Ventura Boulevard, Woodland Hills, California, consisting of approximately 1,200 square feet. 2. The premises located at 21847 Ventura Boulevard, Woodland Hills, California, consisting of approximately 600 square feet. 8 EXHIBIT B Option Agreement See the Agreement attached hereto and incorporated herein by this reference. -8- 9 EXHIBIT C Additional Lease Modifications See the initialed and marked copy of the Lease attached hereto and incorporated herein by this reference. -9- EX-10.4 5 LANDLORD CONSENT AND AMENDMENT TO LEASE 1 Exhibit 10.4 LANDLORD CONSENT AND AMENDMENT TO LEASE THIS LANDLORD CONSENT AND AMENDMENT TO LEASE ("Consent") is made and entered into as of the ____ day of _____________, 1996, by and among PLAZA INTERNATIONAL ("Landlord"), and JERRY'S FAMOUS DELI, INC., a California corporation ("JFD"). RECITALS A. Sol Zide ("Lessee") is the lessee pursuant to that certain Lease -- Shopping Center Form (the "Lease"), dated as of August 31, 1993, as amended by that certain Consent to Lease, dated ______________ ___, 1996 (the "Amendment"), by and between Landlord and Lessee, pursuant to which Lessee leased from Landlord commercial space commonly known as 21857 and 21845 Ventura Boulevard, Woodland Hills, California (the "Original Premises"), as such Original Premises are more particularly described in the Lease. B. Pursuant to the Amendment, effective upon completion of the Sale Transaction (as defined below), the Lease will be amended to include the premises known as 21853 Ventura Boulevard, Woodland Hills, California (the "Additional Premises"). The Additional Premises and the Original Premises together consist of approximately 8,600 square feet and are sometimes collectively referred to herein as the "Premises." C. Lessee currently owns and operates a restaurant known as "Solley's" on the Original Premises (the "Acquired Restaurant"). D. JFD is in the business of owning and operating 24-hour restaurants ("JFD Restaurants") under the name "Jerry's Famous Deli." E. 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, the Acquired Restaurant, including all of Lessee's right, title and interest in and to the Lease. F. As a condition to the consummation of transactions contemplated by the Asset Purchase Agreement (the "Sale 2 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 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 in connection with the Sale Transaction. 2. Certifications of Landlord. Landlord hereby agrees and certifies to JFD that: a. No adjustment in percentage rental shall be made as a result of JFD obtaining a full or partial liquor license for the Original Premises or Additional Premises. b. Complete copies of the Lease and all amendments, modifications and supplements thereto are attached hereto and the Lease, as so amended, modified and supplemented, is in full force and effect, and represents the entire agreement between Lessee and Landlord with respect to the Premises. Other than the Amendment, there are no amendments, modifications or supplements to the Lease, whether oral or written, except as attached hereto. c. Landlord has received no written notice of any default under the Lease by Landlord, and (to Landlord's knowledge) Lessee has not assigned, transferred or hypothecated the Lease or any interest therein or subleased all or any portion of the Premises. Neither the Sale Transaction, the execution and performance of this Consent, nor the operation of the Premises, or any portion of the Premises, by JFD as contemplated by this Consent and the Lease violates any Landlord covenants or other conditions imposed on Landlord pursuant to the terms of any lease or other -2- 3 agreement to which Landlord is a party. d. Landlord has not received any notification from any federal, state, or local governmental authority having jurisdiction over the Premises asserting that any such violation exists. 3. Use of Premises. Landlord is familiar with the style, operations and menus (a copy of which current menu is attached hereto and incorporated herein as Exhibit A) of JFD Restaurants. Upon consummation of the Sale Transaction, Landlord consents to the operation of the Premises (including the Additional Premises) as a JFD Restaurant which shall include dining on-site as well as catering, take-out and delivery services. 4. Alterations and Signage. a. Subject to Landlord's approval of specific construction/renovation plans to be provided by JFD, which approval shall not be unreasonably withheld, and compliance by JFD with all applicable laws, rules and regulations relating to such construction/renovation, Landlord hereby consents to all construction and renovations to the Premises as JFD deems necessary or appropriate for the Premises (including the Additional Premises) to be converted into and operated as a JFD Restaurant. Such construction and alterations shall include, without limitation, use and bordering (by means of railing, plants and/or awning) of the public sidewalk adjoining the Premises on Ventura Boulevard as an outdoor dining patio. Landlord agrees that no additional rent will be payable to Landlord by JFD with respect to any such outdoor dining patio. b. Subject to Landlord's approval of specific signage plans to be provided by JFD, which approval shall not be unreasonably withheld, Landlord hereby consents to the installation of new signage on the Premises, including, without limitation, the installation of new signage on the roof and front and back entrances to the Premises as well as the installation of new awnings, exterior signs, window and/or door signs, exterior lighting, restaurant seating and/or decorations. Landlord further agrees that JFD shall have the right to change its signage, without the consent of Landlord, in the event of a change in the name of the restaurant operated on the Premises; provided, however, that -3- 4 (i) such signage shall comply with all applicable laws, rules and regulations and shall be no more prominent than the JFD Restaurant signage previously approved by Landlord, and (ii) such signage shall not block the existing primary sign for the shopping center of which the Premises are a part. c. Notwithstanding anything to the contrary contained in the Lease, Landlord acknowledges and agrees that JFD shall have the right to make (i) any and all non-structural renovations and alterations to the interior of the Premises deemed by JFD to be necessary or appropriate for it to operate its business, and (ii) any power, sewer, mechanical and HVAC connections deemed by JFD to be necessary or appropriate for it to operate its business; provided, however, that (i) all such renovations, alterations and connections shall be made in compliance with all applicable laws and regulations and shall not result in any mechanics' or other liens on the Premises, and (ii) no such renovations, alterations or connections shall disturb the structural integrity or exterior motif of the shopping center of which the Premises are a part. In addition, JFD agrees that any and all roof openings and penetrations shall be waterproofed at JFD's cost and expense pursuant to Landlord's reasonable specifications. Any and all additional equipment placed by JFD on the roof shall be placed, at JFD's costs and expense, in a safe location on wood platforms (2"x 6" studs with 1/2" plywood minimum) in accordance with Landlord's reasonable specifications d. Landlord shall reasonably cooperate with JFD (which cooperation shall include, without limitation, execution of any and all applications, requests, consents, correspondence or other documents) in connection with (i) any and all efforts by JFD to obtain all permits, licenses and any approvals required to commence and complete the construction and renovations referenced in subsections 4 a., b. and c. above, including, without limitation, the bordering and use of the public sidewalk as an outdoor dining patio, and (ii) any and all efforts by JFD to obtain a liquor license for the premises or to acquire the rights to any existing liquor license for the premises; provided, however, that any such construction and renovations shall comply with all applicable laws, rules and regulations. 5. Hours of Business; Payment of Certain Additional Utility Costs. -4- 5 a. Landlord hereby acknowledges and agrees that the business hours for the JFD Restaurant to be operated on the Premises are anticipated to be 24 hours a day, 7 days a week. Landlord shall reasonably cooperate with JFD (which cooperation shall include, without limitation, execution of any and all applications, requests, consents, correspondence or other documents) in connection with any and all efforts by JFD to obtain a conditional use permit and/or any other permits as are required or deemed by JFD to be reasonably necessary in order to operate the Premises on a 24 hour a day, 7 days a week basis. b. Notwithstanding anything to the contrary contained in the Lease or this Consent, JFD shall reimburse Landlord for the additional utility costs, if any, incurred by Landlord as a result of the provision of exterior lighting resulting from the operation of the Premises on a 24 hour a day basis. The measurement of the additional charge shall be a percentage of the total utility charge based on the additional wattage used at the applicable electric meter after JFD takes occupancy of the premises compared to the same period in the prior year measured as follows. The amount of such charge to JFD (the "Additional Utility Charge") shall equal the total utility costs incurred by the Landlord during a given billing period with respect to the exterior lighting for the Premises as measured by readings from (and corresponding bills for) the "F Building" utility meter during such period; multiplied by a fraction (the "Fraction"). The numerator of the Fraction is the difference between (i) the "F Building" meter aggregate bills during the one year period commencing on the first day of the first utility billing period for the meter after which JFD begins operating a JFD Restaurant on the premises (the "Commencement Date"), and (ii) the denominator of the Fraction shall be the "F Building" meter aggregate bills during the same one year period prior to the first day of the month in which the Sale Transaction is completed. The Additional Utility Charge for the first year following the Commencement Date shall be payable by JFD within 30 days following the date on which Landlord provides written description of the initial calculation of the Additional Utility Charge for such year and copies of the F Building meter bills; thereafter, the Additional Utility Charge shall be payable by JFD periodically (but not more often than monthly) within thirty (30) days after receipt from the Landlord of a copy of the applicable utility bills. -5- 6 c. Notwithstanding anything to the contrary in this Section 5, Landlord acknowledges and consents to the closure of the Premises, in the sole discretion of JFD, for (i) Yom Kippur and other traditional Jewish holidays as well as for any holidays recognized by the State of California or federal government for their respective employees, and/or (ii) a period of up to 90 days in connection with the alterations of the Premises discussed in Section 4 of this Consent. The provisions of the second paragraph of Article 25 of the Lease shall not apply to any closure of the Premises pursuant to this Section 5 c. 6. Damage and Destruction of Premises. Article 19 of the Lease is hereby amended to provide that in the event that Landlord fails to complete any structural repairs to the Premises which materially interfere with JFD's use of the Premises within ninety (90) days of the earlier of the date of JFD's notice of the need for such repairs or the commencement of such repairs, JFD shall have the right but not the obligation to make the structural repairs without the consent of the Landlord and offset the costs of such repairs against payment due from JFD to Landlord under the Lease. 7. Real Estate Taxes. Real estate taxes shall be paid as provided in Article 5 of the Lease, currently at a rate of $1,015.00 per month inclusive of the Additional Premises; provided, however, that JFD shall be responsible for paying any increase in real estate taxes resulting directly from tenant improvements made by JFD. 8. Landlord Covenant. Landlord agrees for itself, its agents, successors and assigns that during the term or any extended term of the Lease, it will not, to the extent permissible under applicable law, permit lease or allow any portion of the shopping center of which the Premises are a part to be used (either by itself or by any other tenant, directly or indirectly) for a delicatessen-style restaurant. Should any valid federal, state or local law or formal determination of any administrative agency of competent jurisdiction affect this covenant, the covenant shall be automatically conformed to the law and otherwise this covenant and the other provisions of the Lease shall continue in full force and effect. -6- 7 9. JFD Covenant. Notwithstanding anything to the contrary contained in Article 29 of the Lease, nothing in such Article 29 shall be deemed to preclude JFD from acquiring one or more stores or businesses located within the shopping center of which the Premises are a part. 10. Miscellaneous Payments. Landlord and JFD hereby agree that an assignment fee of $53,387.64 required by Article 43 (first numbered paragraph) of the Lease shall be paid by Lessee out of escrow simultaneously with the closing of the Sale Transaction from the sale price otherwise payable to Lessee. 11. Effectiveness of Lease Consents. Any amendments to the terms and provisions of the Lease provided for in this Consent shall be effective only upon assignment of the Lease to JFD in connection with the Sale Transaction. 12. Assignment. Notwithstanding anything to the contrary contained in this Consent or the Lease, JFD may, in its sole discretion, assign any or all of its rights, duties and obligations pursuant to this Consent or the Lease to any entity wholly or partially-owned, directly or indirectly by JFD. Except as specifically provided herein, this Consent may not be assigned or transferred by any party hereto without the express written consent of the remaining parties, which consent shall not be unreasonably withheld; provided, however, that nothing herein shall be deemed to restrict the ability of Landlord to assign the Lease in connection with a sale of the property underlying the Premises. 13. Confidentiality. Landlord acknowledges that (i) the existence and terms of this Consent, the Amendment and the Sale Transaction are confidential and neither Landlord nor Lessee shall issue any press release or make any public announcement or other public disclosure relating to the subject matter of this Consent, the Amendment or the Sale Transaction without the prior written consent of JFD, and (ii) JFD shall have the right, without the consent of Landlord or Lessee and in any manner that JFD deems necessary or appropriate, to disclose the existence and terms of this Consent, the Amendment and the Sale Transaction in order to satisfy its disclosure obligations as a public corporation. -7- 8 14. Further Assurances. In addition to the obligations required to be performed under the Lease, as amended hereby, Landlord and JFD 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. 15. Authority. Landlord represents and warrants to JFD that it has the due power and authority to enter into this Consent and to be bound by the terms hereof. 16. Binding Effect. This Consent shall be binding upon and inure to the benefit of Landlord and JFD and their respective successors and assigns. 17. 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 as determined by the court or arbitrator, as the case may be. 18. Counterparts. This Consent 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. 19. No Other Consent. Except as modified by this Consent, the provisions of the Lease shall remain unaffected and in full force and effect. To the extent that any terms or provisions of this Consent are inconsistent with any terms or provisions of the Lease, the terms and provisions of this Consent shall control. -8- 9 IN WITNESS WHEREOF, this Consent is executed as of the day and year aforesaid. LANDLORD: PLAZA INTERNATIONAL By:_____________________________ Name: Title: JFD: JERRY'S FAMOUS DELI, INC. By:_______________________________ Name: Title: -9- 10 EXHIBIT A JFD Menu See menu of "Jerry's Famous Deli" restaurants attached hereto and incorporated herein by this reference. EX-10.5 6 SHOPPING CENTER LEASE 1 Exhibit 10.5 SHOPPING CENTER LEASE LEASE SUMMARY Date: 2 April 1984 ----------------------- Lesser: WRAM Development Company ------------------------ Address of Lessor: 5831 Wish Avenue Encino, CA 91316 Lessee: SOLLEY'S INC. ------------- Trade Name: SOLLEY'S -------- Address of Lessee: 21857 Ventura Blvd. Woodland Hills, CA 91367 Tel. 818-340-0810 Lease Term: Ten years plus two five year options. See Addendum #10 ------------------------------------------------------ Lease Term Dates: See Addendum #17 ---------------- Monthly Minimum Rent: $ See Addendum #12 ------------------ Total Annual Rent: $ See Addendum #12 ------------------ Percentage Rent: Six (6%) Percent ---------------- Permitted Uses: Restaurant, Delicatessen, Bakery, Beer and Wine, ------------------------------------------------ Catering, Takeout and Alcoholic Beverages. ------------------------------------------ Current Payments: Security Deposit: $25,000.00 (See Addendum #11) ----------------------------- First Month's Rent: $ -------------- Guarantor: ----------------------------- Address of Guarantor: ------------------------------------------------- Broker(s): None ---- Merchant's Association See paragraph 26 of lease ------------------------- The foregoing Lease Summary provisions are an integral part of this Lease and each reference in this Lease to any such provision shall be construed to incorporate all of the terms provided under each such Lease Summary provision. In the event of any conflict between any Lease Summary provision and the balance of the Lease, the latter shall control. 2 [WRAM DEVELOPMENT COMPANY LETTERHEAD] (213) 450-9644 May 28, 1986 Mr. Sol Zide Solley's Deli 4578 Van Nuys Blvd., Sherman Oaks, CA 91403 Dear Solley: Your lease addendum calls for insertion on "Lease Summary" certain information. For convenience we are providing the following to be attached to the lease. Kindly sign below and return: LEASE SUMMARY ATTACHMENT Lease Term Dates (Addendum 17) Start: April 1, 1985 End: March 31, 1995 Plus two five year options Percentage share of Common Area and other allocated costs (Addendum 18) Eighteen (18) Percent Area occupied (Addendum 12) First floor - 4906.94 square feet Second floor - 483 square feet Approved Lessor: Lessee: WRAM DEVELOPMENT COMPANY SOLLEY'S INC. /s/ Arthur R. Grebler - -------------------------- ----------------------------- Arthur R. Grebler Date: 5-28- 1986 Date: 1986 -------------------- -------------------- 3 [WRAM DEVELOPMENT COMPANY LETTERHEAD] (213) 450-9644 May 28, 1986 Mr. Sol Zide Solley's Deli 4578 Van Nuys Blvd., Sherman Oaks, CA 91403 Dear Solley: Your lease addendum calls for insertion on "Lease Summary" certain information. For convenience we are providing the following to be attached to the lease. Kindly sign below and return: LEASE SUMMARY ATTACHMENT Lease Term Dates (Addendum 17) Start: April 1, 1985 End: March 31, 1995 Plus two five year options Percentage share of Common Area and other allocated costs (Addendum 18) Eighteen (18) Percent Area occupied (Addendum 12) First floor - 4906.94 square feet Second floor - 483 square feet Approved Lessor: Lessee: WRAM DEVELOPMENT COMPANY SOLLEY'S INC. /s/ Arthur R. Grebler - -------------------------- ----------------------------- Arthur R. Grebler Date: 5-28- 1986 Date: 1986 -------------------- -------------------- 4 SHOPPING CENTER LEASE THIS LEASE, executed this 2 day of April 1984, by and between WRAM Development Company, hereinafter called "Lessor" and SOLLEY'S INC., hereinafter called "Lessee". WITNESSETH: That for and in consideration of the covenants and agreements hereinafter set forth to be kept and performed by Lessee, Lessor hereby leases to Lessee and Lessee does hereby take, accept and hire from Lessor the leased premises hereinafter described for the period, and at the rental, subject to, and upon the terms and conditions herein set forth as follows: 1. LEASED PREMISES. The premises ("leased premises") leased hereunder are located in the City of Sherman Oaks, County of Los Angeles, State of California, and shall consist of the building space hatchmarked on the plan attached hereto at Exhibit "A", said building space to be constructed as set forth in Paragraph 25. The leased premises shall have a frontage of approximately ________ feet (said measurement being from the center of partition or outside dimension in the case of end space) and a depth of approximately ________ feet (outside dimensions) or a total square footage of approximately * square feet. -------- It is expressly understood that the leased premises do not include the roof or exterior face of walls (except store fronts), and the use of the foregoing is expressly reserved to Lessor. The leased premises, together with and including other property owned, leased or optioned by Lessor referred to hereinafter and throughout this Lease as the "shopping center" is now devoted to, or contemplated for development as a shopping center. The shopping center both present and proposed, is depicted on Exhibit "A" and is legally described in Exhibit "B", both attached hereto and made a part hereof by this reference. 2. TERM. The term of this Lease shall be for a period of approximately ten (10) years commencing on the earliest occurrence of either the following dates ("commencement date"); (1) the date upon which Lessee opens for business from the leased premises; or (2) November 1, 1984 whichever occurs first in time. See Lease Summary. In the event this Lease would expire on a day other than the last day of a calendar month, the term shall extend to the end of the calendar month during which the Lease would otherwise expire, and the rent shall be prorated for that period. When the commencement date and expiration date have been *See Addendum #12 and Lease Summary -1- 5 established Lessee agrees to execute a memorandum thereof at the request of Lessor. 3. PAYMENT OF RENT. Lessee hereby covenants and agrees to pay rent to Lessor in the form of "fixed minimum rent", "percentage rent" and "additional rent" all as hereinafter provided. The payment of all rents hereinafter set forth shall begin on the commencement date. All rents shall be paid at the office of Lessor. Time is of the essence in the payment of all forms of rent payable hereunder. 4. RENT. Lessee shall pay to Lessor, as rental hereunder, the aggregate of the following: A. An annual fixed minimum rent of * ($ ) subject to adjustment as provided in Paragraph 5, payable in 12 equal monthly installments of ($ ) each payable in advance of the first day of each month throughout the term. Should the term of this Lease commence on a day other than the first day of a month, the first monthly installment of fixed minimum rent shall be prorated on the basis of a 30 day month and shall be paid on the date the term commences. B. Monthly percentage rent in an amount of which Six (6%) Percent of gross sales (as defined in Paragraph 6) made during each month exceeds the amount of the installment of fixed minimum rent for such month. C. Additional rent (monthly or quarterly as Lessor shall designate) for Lessee's share of the aggregate of the following: (1) Estimated annual taxes and assessments as defined in Paragraph 11; (2) Estimated annual premiums for insurance carried by Lessor pursuant to Paragraph 13; and (3) Estimated common area charges as defined in Paragraph 12 incurred or to be incurred in connection with the operation of the shopping center. It is understood that the foregoing charges shall be paid in estimated amounts determined periodically by Lessor. When the actual amounts of such charges are determined, an appropriate lump sum adjustment shall be made between Lessor and Lessee. (4) See Addendum #13. 5. ADJUSTMENT OF FIXED MINIMUM RENT. Fixed minimum rent shall be increased, but in no event decreased, at the expiration of each year ("adjustment date") of the term of this Lease in accordance with the increase, if any, in the cost of living. The fixed minimum rent, as so adjusted, shall be paid in accordance with Paragraph 4.A. until the next adjustment date. See Addendum #21. The index for the adjustment date shall be the one reported in the U.S. Department of Labor's most comprehensive official index then in use and most nearly answering the foregoing description of the index to be used. If it is calculated from a *See Addendum #12 and Lease Summary -2- 6 base different from the base period 1967=100, figures used for calculating the adjustment shall first be converted under a formula supplied by the Bureau. If the described index shall no longer be published, another index generally recognized as authoritative shall be substituted by Lessor. 6. GROSS SALES AND RECORDS. The term "gross sales" as used in this Lease, shall mean the total of the gross selling price of all merchandise or services sold by Lessee, its subtenants, concessionaires and any other person in or from the leased premises including, without limitation, (1) All sales made in, or upon orders placed at, or completed by delivery in, through, or from the leased premises; (2) All charges, including membership fees, made for services rendered in or from or upon orders placed at the leased premises; and (3) All sales and charges made in connection with business transacted in whole or in part in, upon, or from the leased premises. Gross sales shall include sales and charges made for cash, credit card or upon credit, or partly for cash and partly for credit, without regard to whether or not collection is made of the amounts for which credit is given, and shall also include; (4) Sales and charges, whether made by Lessee or any other occupant or occupants of the leased premises or some part or parts thereof; and (5) Sales made by means of mechanical or other vending machines, in the leased premises. Each sale, charge or business transaction upon installment or contract therefor shall be treated as a gross sale for the full price or charge in the month during which such charge or contract is made. Gross sales shall exclude refunds for merchandise returned which were previously included in gross sales; allowances or adjustments granted to customers which were previously included in gross sales, sales and use taxes and any other government imposed surcharges. Lessee shall keep full and complete records and books of account reflecting all sales or business transactions in or from the leased premises, in order to enable Lessor to ascertain the percentage rent due hereunder. Lessee shall install one or more recording cash registers on which all sales including credit card sales in, on, or from the leased premises shall be recorded and such cash register tapes shall be retained as part of the records. Lessor, or its duly authorized representatives, shall have access thereto, at reasonable times for the purpose of examining the same and, if Lessor elects, of auditing the same, in the manner hereinafter provided. Lessee shall keep all records at or near the leased premises for a period of not less than four (4) years following the date on which Lessee submits its report of gross sales based on such records. Lessee shall prepare and deliver to Lessor within sixty (60) days after the end of each calendar quarter at the place -3- 7 where rent is then required to be paid hereunder, a true written statement signed by Lessee or Lessee's duly authorized officer or agent showing in such form and detail as Lessor shall specify the elements and amounts of gross sales made by Lessee during each calendar month or fraction thereof. Lessee shall pay to Lessor the amount of percentage rent due annually within sixty (60) days after the end of the year. In addition, Lessee shall further prepare and deliver to Lessor on or before the sixtieth day following the end of each calendar year during the term of this Lease and on or before the sixtieth day after the end of the term of this Lease, an annual statement, prepared and signed by a certified public accountant and signed by Lessee or Lessee's duly authorized officer or representative showing in such detail as Lessor shall specify the elements and amounts of gross sales made during the preceding calendar year or fraction thereof. If Lessee shall fail to prepare and deliver, within the time hereinabove specified, any statement of gross sales required hereunder, Lessor may elect to treat Lessee's failure as a breach of this Lease, entitling Lessor to terminate this Lease or to exercise any other remedy provided for in Paragraph 17. In the alternative or in any case in which Lessor questions the accuracy of any statement submitted by Lessee, Lessor may, at any time within 4 years following Lessee's failure to submit a statement or following the submittal of any statement elect to conduct an audit of all books and records of Lessee including without limitation, Lessee's bank accounts for the Sherman Oaks store only and tax returns, which in any way pertain to or show gross sales. Such audit may be conducted by Lessor or by any authorized representative. A statement prepared as a result of such audit shall be conclusively binding on Lessee and, in addition to all percentage rent, if any, shown to be due by such statement, Lessee shall pay for the cost of the audit in any case where the amount of gross sales shown by such audit is equal to or in excess of 102% of the amount shown by Lessee's statement for the same period. In the event such sales exceed 110% of the amount shown by Lessee's statement Lessor shall be entitled to declare same to be a breach of this Lease, or in the alternate, to assess such additional amount as percentage rental for the entire period back to the last audit or commencement of the lease, at option of Lessor. 7. USE. Lessee shall occupy and use the leased premises only for the operation of See "Lease Summary" and for no other purpose whatsoever without the prior written consent of Lessor. Lessee shall not: A. Use or permit the leased premises to be used for any purpose other than that set forth in this Paragraph and further covenants and agrees to comply promptly with all statutes, ordinances, rules, orders or regulations of any governmental -4- 8 authority regulating the use or occupation of the leased premises. B. Use or permit the use of the leased premises in any manner that will tend to create a nuisance or disturb other tenants or occupants of the shopping center or tend to injure the reputation of the shopping center. C. Conduct or permit to be conducted in the leased premises any fire sale, auction, bankruptcy sale, second-hand sale, going-out-of business sale or other promotions or sales without Lessor's prior written consent, except for periodic sales in the normal course of business. D. Allow any activity to be conducted on the leased premises or store any material on the leased premises which will increase premiums for or violate the terms of any insurance policy maintained by or for the benefit of Lessor or the shopping center. In no event shall any explosive, radioactive or dangerous materials be stored at the leased premises. E. Use or allow the premises to be used for sleeping quarters, dwelling rooms or for any unlawful purpose on the leased premises without Lessor's prior written consent. F. Solicit business, distribute advertising, obstruct, place any merchandise, vending or amusement machines on, or otherwise use in the conduct of its business, any part of the common area of the shopping center, including the sidewalks in front of the leased premises. G. Erect or install any exterior signs or window or door signs, advertising media or window or door lettering or placards, install any exterior lighting or plumbing fixtures, shades or awnings; make any exterior decoration or painting; build any fences, walls, barricades or other obstructions; or, install any radio, television, phonograph, antennae, loud speakers, sound amplifiers, flashing or revolving lights, or similar devices on the roof, exterior walls or in the windows of the leased premises, or make any changes to the store front without Lessor's prior written consent. Any signs, lights, advertising material, loud speakers or anything installed by Lessee on the leased premises which may be seen, heard or experienced outside the leased premises must be designed or approved by Lessor. Lessee shall not display, paint or place, or cause to be displayed, painted or placed any handbills, bumper stickers, or other advertising devices on any vehicles parked in the common area of the shopping center, nor shall Lessee distribute or cause to be distributed in the shopping center any handbills or other advertising devices. H. Interfere with any other tenant's use of the common area or cause or permit any waste on the leased premises or in the shopping center. -5- 9 I. Directly or indirectly own, operate or have any interest in the ownership or operation of any business similar in character to that conducted by Lessee in the leased premises within a radius of three (3) miles from the leased premises. Lessee Shall: A. Warehouse, store and/or stock in the leased premises only such goods, wares and merchandise as Lessee intends to offer for sale at retail at, in, from or upon the leased premises. Lessee shall use for office, clerical or other non-selling purposes only such space in the leased premises as is from time to time reasonably required for Lessee's business in the leased premises. B. Operate all of the leased premises during the entire term of this lease with due diligence and efficiency so as to produce maximum gross sales. Lessee shall provide sufficient sales personnel and carry at all times in said premises, a stock of merchandise of size, character, and quality as shall be reasonably designed to produce the maximum gross sales. Lessee shall keep the leased premises open for business during all regular customary days and hours as is reasonably determined by Lessor for such type of business in the city or area in which the shopping center is located. C. Install and maintain at all times, displays of merchandise in the display windows, if any, of the demised premises. Lessee shall keep the display windows and signs, if any, in the demised premises well lighted during the hours from sundown to midnight unless prevented by causes beyond the control of Lessee. In the event of breach by Lessee, of any of the conditions contained in these Subparagraphs B and C, Lessor shall have, in addition to any and all remedies herein provide, the right at its option to collect not only the fixed minimum rent herein provided, but further rent at the rate of 1/30th of the fixed minimum rent herein provided for each and every day that Lessee shall fail to conduct its business as herein provided; said further rent shall be deemed to be in lieu only of percentage rent as set forth in paragraph 4B, that might have been earned during such period of the Lessee's failure to conduct its business as herein provided. D. Keep the leased premises, entrances thereto, walkways adjacent thereto, loading platforms, service areas, garbage and refuse storage areas free from obstruction and clean and neat, and arrange for the prompt and frequent pickup of rubbish at such intervals as Lessor may direct. 8. UTILITIES. Lessee agrees to pay before delinquency all charges for gas, heat, sewer, power, electricity, telephone, storm drain, water service and water meter charges and all other utility -6- 10 charges including any hook up or connection fees or charges which may accrue with respect to the leased premises during the term of this Lease whether the same be charged or assessed at flat rates, measured by separate meters or prorated by the utility company or Lessor. Lessor shall in no event be liable to Lessee for any interruption in the service of any such utilities to the leased premises, howsoever such interruption may be caused; and his Lease shall continue in full force and effect despite any such interruptions. 9. REPAIRS. Lessee agrees that its acceptance of the leased premises evidenced by Lessee's entry into possession therefore shall constitute unqualified proof that the leased premises are, as of the commencement date of the term, in a tenantable and good condition; that Lessee will take good care therefore; and Lessee hereby waives the right to make repairs at Lessor's expense under the provisions of Section 1941 and 1942 of the Civil Code of California. Any partial destruction which Lessor is obligated to repair or may repair under any of the provisions of Section 1932, Subdivision 2 and Section 1933, Subdivision 4 of the Civil Code of California are hereby waived by Lessee. See Addendum #14. Lessee covenants and agrees at Lessee's own cost and expense to keep the leased premises, and each and every part thereof including without limitation, all plumbing and electrical conduits, wiring, fixtures and pipes and all sewers, floors, flooring, walls, lighting, store fronts, plate glass and glazing, air conditioning and heating systems, ceilings and all other parts thereof in good condition and repair at all times during the term hereof and to make promptly any and all repairs, renewals and replacements which may at any time be necessary or proper to put and keep the leased premises in good condition and repair, and to keep the leased premises and all appurtenances thereto in a good, clean, sale and wholesome condition at all times during said term. In the event that the leased premises contain air conditioning, Lessee's said obligation shall also include the retaining by Lessee of an air conditioning service company approved by Lessor, to service and to maintain the air conditioning equipment on a regular periodic inspection and service basis calling for inspection and servicing not less frequently than once each quarter. Lessee expressly agrees to pay promptly for any and all labor done or material furnished for any work or repair, maintenance, improvements, alteration or addition done by Lessee in connection with these items. Notwithstanding the fact that some of the following items are not part of the leased premises hereunder and shall be maintained by Lessor, Lessee shall nevertheless reimburse Lessor for Lessee's * share of the cost of ----- maintenance and repair thereof within ten (10) days following receipt of Lessor's statement therefor; exterior trim, all underground and overhead utilities and service lines and drops located outside the perimeter of the leased premises, and painting or staining of exterior walls, trim or accessories and roof at such intervals as Lessor shall reasonably determine and which work shall be performed by Lessor. * See Addendum #18 -7- 11 Lessee shall promptly notify Lessor in writing of the need for any of the foregoing repairs to be performed by Lessor at Lessee's expense and Lessor shall have the right to enter the leased premises at any time with men and equipment as may be deemed necessary by Lessor to make such repairs. In no event shall Lessor be liable to any person, including Lessee, its agents or employees for any loss, damage (including water damage), theft, or destruction of or to any merchandise, fixtures, money or other property belonging to any person as a result of Lessor's failure promptly or correctly to perform any of the foregoing repairs or occasioned by acts of Lessor or its agents or employees while making such repairs. In no event shall Lessee be entitled to any offset, abatement or reduction in rent during periods of such repair. In the event Lessee fails or refuses to perform any repairs required of it hereunder, in addition to all other remedies available hereunder or at law for Lessee's default, Lessor may, but shall not be obligated to, enter the leased premises, with men and equipment and perform such repairs on behalf and at the expense of Lessee. 10. ALTERATIONS. Lessee shall not make any alterations, additions, modifications, or changes ("alterations") to the leased premises without first procuring Lessor's written consent. Lessor shall not unreasonably withhold consent. Any alterations to the leased premises or the building of which they are a part which are required by reason of any present or future law, ordinance, rule, regulation or order of any governmental authority having jurisdiction over the leased premises or the shopping center or of any insurance company insuring the leased premises, and regardless of whether or not such alteration pertains to the nature, construction or structure of the building or to their use made thereof by Lessee, shall be at the cost of Lessee regardless of whether the work is performed by Lessor or Lessee. All alterations, to or upon the leased premises, except removable trade fixtures, shall at once when made or installed be deemed to have attached to the freehold and to have become the property of Lessor at the option of Lessor. See Addendum #15. 11. TAXES AND ASSESSMENTS. Lessee shall be responsible for and shall pay to Lessor all real property taxes, assessments (whether social or general), fees, rental business tax, (the term "rental business tax" as used herein, shall include any business tax imposed upon Lessor by the State of California, or any political subdivision thereof, which is based upon or measured in whole or in part by amounts charged or received by Lessor under this Lease, provided that Lessee shall only pay the amount of such rental business tax that would be payable by Lessor if the leased premises were the only property of Lessor) or surcharges including without limitation any tax, excise on rent, or levy for parking privileges or in any way relating to environmental protection, or any other tax, levy, assessment or other charge of any nature -8- 12 whatsoever imposed by any governmental authority having jurisdiction over the shopping center and levied upon or payable in connection with the shopping center, the leased premises, the operation thereof, or business conducted therein including any such tax, fee or assessment levied or assessed in lieu of such real property taxes (all of which are herein referred to as "taxes and assessments"). If the leased premises are not separately assessed, Lessee shall be responsible for * share of all taxes and assessments and other governmental charges included in such tax bill. In the event said taxes and/or assessments are not paid in accordance with Paragraph 4.C, Lessor may, in addition to all other remedies permitted in this Lease, add an additional charge to the penalty and interest that would have been due if Lessee had failed to make timely payments directly to the tax collector. Lessee shall pay, before delinquency, all property taxes and assessments on the furniture, fixtures, equipment, merchandise and other property of Lessee at any time situated or installed in the leased premises, and, in addition, on improvements in the leased premises made or installed by Lessee subsequent to the commencement date. If at any time during the term of this Lease any of the foregoing are assessed as a part of the real property of which the leased premises are a part, Lessee shall pay to Lessor upon demand the amount of such additional taxes as may be levied against said real property by reason thereof. For the purpose of determining said amount, figures supplied by the County Assessor as to the amount so assessed shall be conclusive. 12. COMMON AREA. Lessor hereby grants to Lessee the non-exclusive right in common with others during the term of this Lease to use the common area (as hereinafter defined) of the shopping center for itself, its employees, agents, customers, invitees, and licensees. The common area shall be subject to the exclusive control and management of Lessor or such other persons or nominees as Lessor may designate to exercise such management or control, in whole or in part over the common area, in Lessor's place and stead, and Lessor, and Lessor's nominees and assignees shall have the right to establish, modify, amend and enforce reasonable rules and regulations with respect to the common area. Lessee agrees to abide by and conform with reasonable such rules and regulations to cause its concessionaires, and its and their employees and agents, so to abide and conform; and to use its best efforts cause its customers, invitees and licensees so to abide and conform. Lessor shall have the right to close temporarily, if necessary, all or any portion of the common area to such extent as may in the opinion of Lessor's counsel be necessary or desirable in order to prevent a dedication thereof or the accrual of any rights of any person or of the public therein; to close temporarily all or any -9- 13 portion of the common area to discourage non-customer use; to use portions of the common area while engaged in making additional improvements or repairs or alterations to the shopping center and to do and perform such other acts in, to, and with respect to the common areas as Lessor, in its sole judgment, shall determine to be appropriate for the shopping center. Lessor shall have the unqualified right to increase or reduce the common area, and to rearrange the parking spaces, driveways and improvements on the common area. Lessor shall not reduce the parking area unless required by governmental order. At all times, the entrance to the restaurant shall not be restricted without the consent of the Lessee. Lessor shall have the sole right to place vending or amusement devices and public telephones on the common area. Lessee agrees that its officers, agents, employees, vendors, suppliers and other independent contractors will use such access roads and will operate trucks and trailers in delivering merchandise to and from the leased premises at such days and hours upon and over such access roads as are designated therefore by Lessor as a means of ingress to and egress from the leased premises. The use of such access roads by Lessee and Lessee's officers, agents, employees, vendors, suppliers and other independent contractors shall be subject to the rules and regulations established by the Lessor with respect to the use thereof. All automobiles, trucks and other vehicles of Lessee shall be parked only where and as permitted by Lessor from time to time, and officers, agents and employees of Lessee shall park their vehicles only in such places or in such particular areas, if any, as designated by Lessor as employee parking area. Lessee agrees that when and if requested by Lessor so to do, Lessee will furnish Lessor with the license numbers of the vehicles of Lessee and other respective officers, agents and employees. If any vehicle of Lessee or any concessionaire or any of their respective officers, agents or employees, is parked in any part of the shopping center other than the employee parking areas, Lessee hereby authorizes Lessor to engage a towing service to remove such vehicle at Lessee's expense, only after appropriate notice to Lessee and/or the particular vehicle's registered owner. As used herein, "common area" means all areas of the shopping center (as the same may be expanded or decreased at Lessor's option) except those areas which from time to time are designated by Lessor as being outside the common area or are leased to or within the exclusive control of a tenant of the shopping center. The common area includes, without limitation, the land and facilities utilized for or as parking areas, access and perimeter roads, truck passageways (which may be elevated or subsurface in whole or in part,) and platforms therein (including notwithstanding anything herein contained, any such platform as -10- 14 is for the use of Lessee or concessionaire); service corridors and stairways providing access from store premises to such platforms and truck passageways; loading docks, landscaped areas, exterior walks, arcades and/or balconies; directory equipment; wash rooms, comfort room, drinking fountain, toilets and other public facilities, bus stations, taxi stands and the like; areas devoted to or for maintenance purposes or equipment including management offices; and any areas dedicated or belonging to the public or any governmental authority which are contiguous or near to the shopping center and which are required to be maintained by or the cost of maintenance required to be borne by Lessor. Lessee shall pay to Lessor in the manner set forth in Paragraph 4.C. Lessee's * share of all charges of any kind or nature incurred or paid by --- Lessor in connection with the maintenance, repair, operation or ownership of the common area, which charges shall include by not necessarily be limited to the expense of the following: Repair, replacement, and maintenance, surfacing, resurfacing, painting, restriping, cleaning, sweeping, janitorial services, planting, and landscaping, signs and markers, lighting and other utilities, parking control and security guards and fire protection or detection service, all real property and personal property taxes and assessments (as defined in Paragraph 11), levied or assessed against the common area, premiums for all forms of insurance described in Paragraph 13, covering the common area as well as Workmen's Compensation Insurance and any other insurance carried by and deemed advisable by Lessor, wages and salaries for personnel employed to operate the common area, cost of machinery and equipment used for common area maintenance or rental thereof, plus fifteen (15%) percent of all the foregoing charges to cover Lessor's overhead so long as the costs are reasonable. Copies of all bills over One Thousand Dollars ($1,000) shall be furnished to Lessee prior to payment by Lessee to support charges paid by Lessor during the prior twelve (12) month period. 13. INSURANCE. At all times during the term of this Lease, Lessor shall maintain in full force and effect with insurance companies licensed to do business in the State of California and otherwise satisfactory to Lessor in its sole discretion one or more policies including the following coverages. A. General public liability insurance against claims for bodily injury, death or property damage occurring in or upon the common area with limits of coverage of not less than $500,000 for death or injury to one person, $1,000,000 for death or injury to more than one person in a common accident or occurrence, and $50,000 for damage or injury to property. Lessor may increase the foregoing limits if it deems such increases desirable to protect Lessor and Lessee. *See Addendum #18 -11- 15 B. Fire, extended coverage, vandalism, malicious mischief, earthquake, fire rental and sprinkler leakage (if building contains sprinklers) insurance in such form and with such covered perils as Lessor deems appropriate in its sole discretion insuring the buildings and other improvements on the leased premises in an amount equal to the full replacement value thereof. All proceeds shall belong to and be the sole property of Lessor and Lessee hereby assigns to Lessor or its nominee all of Lessee's right, title and interest thereto. Lessee shall pay its * share of such premiums in the manner provided in Paragraph 4. Lessor shall have the right to maintain blanket policies with the foregoing limits provided that the amount of insurance premium payable by Lessee hereunder shall be determined as the premium Lessee would have been required to pay if Lessor had caused to be issued a separate policy of the particular insurance on the leased premises in accordance with applicable tariff rules and rates duly promulgated for same by the Insurance Service Bureau or any successor insurance industry rating authority. Lessee shall be kept continuously informed of the continuity of coverage and coverage requirements of Lessor's lenders. At all times during the term of this Lease, Lessee shall maintain in full force and effect with insurance companies licensed to do business in the State of California and otherwise satisfactory to Lessor in its sole discretion one or more policies evidencing the following coverage: 1. General public liability and Workers' Compensation insurance against claims for bodily injury, death or property damage occurring within the leased premises with limits of coverage of not less than $500,000 for death or injury to one person, $1,000,000 for death or injury to more than one person in a common accident or occurrence and $50,000 for damage or injury to property. Lessee shall increase the foregoing limits if Lessor deems such increase desirable to protect Lessor and Lessee. 2. Plate glass insurance on the leased premises and policies of fire insurance, including extended coverage and such other insurance as Lessor may require, on all fixtures and equipment installed by Lessee and contents in the leased premises, such insurance to be in an amount equal to 100% of the insurable value thereof. All proceeds of such property insurance shall be paid to Lessor and held in trust to be used for the repair or replacement of the plate glass, fixtures, equipment or contents so insured. A duplicate original of all such policies shall be delivered to Lessor at least 15 days prior to the time such insurance is first required to be carried by Lessee, and thereafter at least 15 days prior to the expiration or cancellation of any such policy. In the event Lessee fails at any time during the term * See Addendum #18 -12- 16 of this Lease to obtain such insurance or to provide such evidence thereof, Lessor shall have the right but not the duty to procure such insurance and Lessee shall pay to Lessor the costs and expenses thereof as additional rent when the next payment of fixed minimum rent is required to be made. 14. DAMAGE AND DESTRUCTION. In the event the leased premises, or any part thereof, shall be damaged by any casualty, this Lease shall remain in full force and effect, and Lessor shall repair such damage and put the leased premises in good condition as rapidly as reasonably possible. Provided such damage was not caused or contributed to by the act of negligence of Lessee, its agents or employees, Lessee shall be entitled to an equitable abatement of the fixed minimum rent during periods of such restoration, but Lessee shall remain liable for other charges hereunder including, without limitation, percentage rent. Notwithstanding any other provision of this Paragraph 14 to the contrary, if the leased premises shall be damaged, and such damage shall be to the extent of more than fifty (50%) percent of the replacement value of the leased premises at the time of such damage, then Lessor may at its election upon notice to Lessee, within ninety (90) days after such damage, terminate this Lease as of the date of such damage. See addendum #19. In the event that fifty (50%) percent or more of the building area or common area of the shopping center shall be damaged or destroyed by casualty, notwithstanding that the leased premises may be unaffected by such casualty, Lessor may terminate this Lease and the tenancy hereby created by giving to Lessee written notice of Lessor's election so to do within the ninety (90) days following the date of said occurrence. Rent shall be adjusted as of the date of such termination. See Addendum #19. 15. EMINENT DOMAIN. If there is any taking of or damage to all or any part of the leased premises or any interest therein because of the exercise of the power of eminent domain, whether by condemnation proceedings or otherwise, or any transfer of any part of the leased premises or any interest therein made in avoidance of the exercise of the power of eminent domain (all of the foregoing being hereinafter referred to as "taking") prior to or during the term hereof, the rights and obligations of the Lessor and Lessee with respect to such taking shall be as follows: A. If there is a taking of all of the leased premises, this Lease shall terminate as of the date of such taking. -13- 17 B. If fifty (50%) percent or more of the ground floor area of the leased premises shall be taken, or fifty (50%) percent of the land area described in Exhibit "B" (as the same may be amended) shall be taken (regardless of whether or not any part of the leased premises is taken) then, in that event, Lessor shall be entitled to elect either to terminate this Lease or to rebuild the remainder of the leased premises or the shopping center. Lessor shall give written notice to Lessee of its election no later than ninety (90) days after the date Lessor receives notice that possession or title to the portion of the leased premises or shopping center taken has vested in the condemnor. If this Lease is terminated in accordance with the provisions of this Paragraph 15 such termination shall become effective as of the date physical possession of the particular portion is taken or immediate possession is ordered. The parties shall be released from all further liability hereunder. If this Lease is not terminated as provided in this Paragraph 15, Lessor shall restore the remainder of the improvements occupied by Lessee so far as practicable to a complete unit of like quality, character, and condition as that which existed immediately prior to the taking. If this Lease is not terminated as provided in this Paragraph 15, the annual fixed minimum rent only set forth in Article 4A for the remainder of the term shall be reduced by the proportion which the number of square feet of ground floor area of the leased premises taken bears to the total ground floor area of the leased premises immediately before the taking. The entire award or compensation in such proceedings, whether for a total or partial taking or for diminution in the value of the leasehold or for the fee shall belong to and be the property of Lessor, and Lessee hereby assigns to Lessor all of Lessee's interest in any award. 16. ASSIGNMENT AND SUBLEASE. Lessee shall not assign this Lease or any interest therein whether voluntarily, by operation of law, or otherwise and shall not sublet the leased premises or any part thereof, except by written permission and consent of Lessor being first had and obtained. Consent of Lessor to any such assignment shall not be unreasonably withheld if: (1) At the time of such assignment or transfer Lessee is not in default in the performance and observance of any of the covenants and conditions of this Lease; (2) The assignee or subtenant of Lessee shall expressly assume in writing all of Lessee's obligations hereunder; (3) Lessee shall provide proof to Lessor that the assignee or subtenant has a financial condition which is satisfactory to Lessor and Lessor's lender and (4) The leased premises continue to be used solely for the purpose set forth in Paragraph 7 and the assignee or subtenant is, in Lessor's opinion, capable of operating such business. In connection -14- 18 with any such assignment or sublease, Lessee or the assignee of Lessee shall pay to lessor a fee of One Thousand Dollars ($1,000). Any such subleasing or assignment, even with the approval of Lessor shall not relieve Lessee from liability for payment of all forms of rental and other charges herein provided or from the obligations to keep and be bound by the terms, conditions and covenants of this Lease. The acceptance of rent from any other person shall not be deemed to be a waiver of any of the provisions of this Lease, or a consent to the assignment or subletting of the leased premises. Consent to any assignment or subletting shall not be deemed a consent to any future assignment or subletting. Any merger, consolidation or transfer of corporate shares of Lessee, if Lessee is a corporation, so as to result in a change in the present voting control of the Lessee by the person or persons owning a majority of said corporate shares on the date of this Lease, shall constitute an assignment and be subject to the conditions of this paragraph. See Addendum #16. 17. LESSEE'S DEFAULT. The following shall be deemed to be acts of default under this Lease. A. Lessee shall fail, neglect or refuse to pay any installment of fixed minimum rent, additional rent, percentage rent or any other charge including, without limitation, penalty charges, required to be paid by Lessee hereunder at the time and in the amount as herein provided, or pay any moneys agreed by it to be paid promptly when and as the same shall become due and payable under the terms hereof and such default shall continue for a period of more than ten (10) days after notice thereof in writing given to Lessee by Lessor. B. Lessee shall fail, neglect or refuse to keep and perform any of the other covenants, conditions, stipulations or agreements herein contained and covenanted and agreed to be kept and performed by Lessee and such default shall continue for a period of more than fifteen (15) days after notice thereof in writing given to Lessee by Lessor; provided, however that if the cause for giving such notice involves the making of repairs or other matters reasonably requiring a longer period of time than the period of such notice. Lessee shall be deemed to have complied with such notice if Lessee has commenced and is diligently prosecuting compliance therewith. C. Any attachment or levy of execution or similar seizure of the leased premises or Lessee's merchandise, fixtures or other property at the leased premises or any foreclosure, repossession, or sale under any chattel mortgage, security agreement or conditional sales contract covering Lessee's merchandise, fixtures or other property at the leased premises; or the filing of any petition by or against Lessee under any -15- 19 chapter of the Bankruptcy Act, or the adjudication of Lessee as a bankrupt or insolvent; or the appointment of a receiver or trustee to take possession of all or substantially all of the assets of Lessee or a general assignment by Lessee for the benefit of creditors; or any other action taken or suffered by Lessee under any State or Federal Insolvency or Bankruptcy Act and the continuation thereof for more than 20 days. In the event of an act of default by Lessee, Lessor may, at its option: (1) Terminate Lessee's right to possession of the leased premises because of such breach and recover from Lessee all damages allowed under Section 1951.2 of the California Civil Code, including, without limitation, the worth at the time of the award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that Lessee proves could be reasonably avoided, or ; (2) Not terminate Lessee's right to possession because of such breach, but continue this Lease in full force and effect; and in that event (a) Lessor may enforce all rights and remedies under this Lease, including the right to recover the rent and all other changes due hereunder as such rent and other charges become due, and (b) Lessee may assign its interest in this Lease with Lessor's prior written consent shall not be unreasonably withheld in accordance with Paragraph 16. In the event of any reentry, Lessor may remove all persons from the leased premises and all property and any signs located in or about the leased premises and place such property in storage in a public warehouse at the cost and risk of Lessee. No reentry or reletting of the leased premises of any nature served under unlawful detainer action or the filing of any unlawful detainer or similar action shall be construed as an election by Lessor to terminate this Lease unless a written notice of such intention is given by Lessor to Lessee; and notwithstanding any such reletting without such termination, Lessor may at any time thereafter elect to terminate this Lease. Except in the case of Lessor's willful misconduct, Lessee hereby waives all claims or demands for damages that may be caused by Lessor in reentering and taking possession of the leased premises as hereinabove provided and all claims or demands for damages which may result from the destruction of or injury to the leased premises and all claims or demands for damages or loss of property belonging to Lessee or to any other person or firm that may be in or about the leased premises at the time of such reentry. Nothing contained in this Lease shall limit Lessor to the remedies set forth in this Paragraph 17; and upon Lessee's default Lessor shall be entitled to exercise any right or remedy then provided by law, including, but without limitation, the right to obtain injunctive relief and the right to recover all -16- 20 EXHIBIT "C" ----------- Store is leased "as is" subject to guarantees, except for the following work that Lessor shall do on Lessee's premises: 1. New standard acoustical tile ceiling, including water resistant tile as required by code in kitchen area. 2. Complete all perimeter walls with gypsum board ready for paint (covering by Lessee). 3. Complete all exterior walls in existing framework, including glass and stucco (doors and finish hardware by Lessee). 4. Air conditioning and Heating (see note (a)). 5. Secure all required Building Department permits for initial installation based on complete plans furnished by Lessee (permit fees, sewer and water and other governmental charges by Lessee). All structural planning shall be done by the Lessor and to include the placing of air conditioning, water heater and compressors on the roof for the Lessee's requirements. Lessor to pay the cost of structural changes. Lessee to pay for permits. 6. Remove separation wall between present June Ellen and present Hooper stores and install supporting posts for beams as may be required. 7. Painting excluded. All other work to complete approved plan and to conform to Los Angeles Building Department and Health Department and other Governmental Agency requirements shall be completed by Lessee at Lessee's sole expense. Note: (a) Cost of air conditioning and heating shall be paid by Lessee and shall be refunded to Lessee starting the 12th month of this lease by deducting $250.00 from the monthly rental until the full sum advanced has been returned or when the lease has been terminated, whichever is first in time. (b) Lessor shall complete all work required above in a timely and quality manner after notification by Lessee that work is ready for installation. (c) The Lessor shall include all roof repairs after all penetrations have been completed by the Lessee. Lessor: Lessee: WRAM Development Company SOLLEY's INC. /s/ /s/ - ------------------------- ----------------------- Dated: 2 April 1984 Dated: 4-2-84 ------------------ ---------------- 21 damages caused by Lessee's default in the performance of any of its obligations under this Lease. Neither this Lease nor any interest herein nor any estate created hereby shall pass by operation of law under any State or Federal Insolvency or Bankruptcy Act to any trustee, receiver, assignee for the benefit of creditors or any other person whatsoever without the prior written consent of Lessor. In computing damages or rental due under this Lease, the value of percentage rent for any period shall be based upon the percentage rent earned during the twelve month period prior to the termination of the Lease. If any payment of rent or other payment is not paid when due, the Lessee shall, as a penalty for such delinquency, pay to Lessor five (5%) percent of amount due as a late charge if payment is not received within SEE ADDENDUM #20. This provision shall not be construed to relieve Lessee from any default hereunder arising through the failure on the part of Lessee to make any payment at the time and in the manner specified, in addition any sum accruing to Lessor under the terms and provisions of this Lease which shall not be paid when due shall bear interest at the highest lawful rate from the date the same becomes due and payable by the terms and provisions of this Lease until paid. 18. DEFAULT BY LESSOR. Lessor shall in no event be charged with default in the performance of any of its obligations hereunder unless and until Lessor shall have failed to perform such obligations within thirty (30) days (or such additional time as is reasonably required to correct any such defaults) after written notice by Lessee to Lessor properly specifying wherein Lessor has failed to perform any such obligation. Notwithstanding any default by Lessor, Lessee shall not have the right to exercise any remedy provided for herein or at law unless and until Lessee shall have delivered a written notice to any lender holding a trust deed against the leased premises or the shopping center or portion thereof specifying wherein Lessor has failed to correct or remedy such default, which such notice may not be delivered until after the expiration of the period set forth herein for Lessor to remedy such default and shall grant to the lender an additional equal period within which to cure such default. Lessor to continuously inform Lessee of such lienholders. 19. SURRENDER OF PREMISES. At the expiration of the tenancy hereby created, Lessee shall surrender the leased premises in the same condition as the leased premises were in upon delivery of possession thereto under this Lease, in addition to any alterations or additions which Lessor elects to keep pursuant to Paragraph 10, reasonable wear and tear excepted, and shall surrender all keys for the leased premises to Lessor at the place then fixed for the payment of rent and shall inform -17- 22 Lessor of all combinations on locks, safes and vaults, if any, in the leased premises. No act or conduct of Lessor, except a written acknowledgement of acceptance of surrender signed by Lessor, shall be deemed to be or constitute an acceptance of the surrender of the leased premises by Lessee prior to the expiration of the term of this lease. If prior to the termination of this Lease or within fifteen (15) days thereafter, Lessor elects, by written notice to Lessee, Lessee shall promptly remove the additions, improvements, fixtures, trade fixtures and installations which were placed in the leased premises by Lessee and which are designated in said notice, and shall repair any damage occasioned by such removal; and in default thereof Lessor may effect said removals and repairs at Lessee's expense. The covenants of Lessee contained herein shall survive the expiration or termination of the Lease term. 20. INDEMNIFICATION, RELEASE AND LIENS. Lessee agrees and this Lease is made upon the express condition that Lessor shall not be liable, responsible, or in any way accountable, to Lessee, Lessee's agents, employees, servants, customers or invitees, or to any person whomever, for any loss, theft or destruction of or damage (including but not limited to any damage caused by rain storm or other water damage) to any goods, wares, merchandise, fixtures of other property stored, kept, maintained, or displayed in, on or about the leased premises, or in, on or about the facilities, the use of which Lessee may have in conjunction with this Lease, nor for injury to or death of any person or persons who may at any time be using, occupying or visiting the leased premises or thereabouts regardless of the nature or cause of such injury, damage or destruction including, without limitation, the negligence of Lessor. Lessee agrees to indemnify, defend and hold harmless Lessor, its agents and employees from and against any and all expense, liability and claims for damage to or loss of property (including Lessee's property) or injury to or death of persons (including Lessee, its agents, employees, visitors, or invitees) directly or indirectly resulting from anything occurring from any cause on or about the leased premises, in connection with the maintenance of operation of Lessee's business, or Lessee's occupation or use of the leased premises. Lessee shall discharge any judgement or compromise rendered against or suffered by Lessor, as a result of anything indemnified against hereunder and shall reimburse Lessor, for any and all costs, fees or expenses incurred or paid by Lessor, (including, without limitation, reasonable attorneys' fees) in connection with the defense of any action or claim. Lessee shall keep the leased premises and any buildings located thereon and all of the right, title and interest of Lessee and Lessor, therein free and clear of all liens or claims -18- 23 which may ripen into such a lien or encumbrance, and in the event Lessee fails to do so, Lessor may pay such lien or encumbrance or claim, and on or before the tenth (10th) day of the month following the month during which such payment is made, Lessee shall pay to Lessor such sums so paid, plus such reasonable costs and attorneys' fees as may have been incurred by Lessor; provided, however that in the event Lessee in good faith disputes such lien or encumbrance and with reasonable promptness furnishes an indemnity bond or such undertaking in an amount sufficient either to procure the release of such lien or encumbrance or to indemnify against the principal amounts thereof, together with such costs of attorneys' fees as may be covered by said liens or encumbrance, then the furnishing of such bond or undertaking shall be deemed due compliance with the foregoing provisions. 21. SUBORDINATION AND FINANCING. This Lease shall in all respects be junior and subordinate to any ground lease or other matters of record and all of the provisions contained therein. In the event of any conflict between the terms hereof and any of the foregoing, the provisions of the foregoing shall prevail. Subject to the foregoing, and upon payment by Lessee of all of the rents herein provided, and upon the observation and performance of all of the covenants, terms and conditions on Lessee's part to be observed and performed, Lessee shall quietly hold and enjoy the leased premises for the term hereby leased without hindrance or interruption by Lessor or any other person or persons lawfully or equitably claiming by, through or under Lessor, subject nevertheless to the terms and conditions of this Lease. Lessee covenants and agrees that upon written request of Lessor, Lessee will make, execute, acknowledge and deliver any and all instruments requested by Lessor which are necessary or proper to effect the subordination of this Lease to any mortgage, deed of trust, indenture or other encumbrance, and hereby irrevocably appoints Lessor as Lessee's attorney-in-fact to make, execute, acknowledge and deliver any such instruments in the name and on behalf of Lessee, or to subordinate any such mortgage, deed of trust, indenture or other encumbrance, such person may elect to continue this Lease in full force and effect in the same manner and with like effect as if such person has been named as Lessor herein, and in the event of such election, this Lease shall continue in full force and effect, as aforesaid, and Lessee hereby attorns and agrees to attorn to such person. At any time and from time to time, upon request in writing from Lessor, Lessee agrees to execute, acknowledge and deliver to Lessor a statement in writing certifying that this Lease is unmodified and in full force and effect (or if there have been modifications that the same is in full force and effect as modified and stating the modifications) and the dates to which fixed minimum rent, additional rent, percentage rent and -19- 24 other charges have been paid. It is understood and agreed that any such statement may be relied upon by any prospective purchaser of the leasehold or the mortgagee, beneficiary or grantee of any security or interest, or any assignee of any thereof, under any mortgage or deed of trust now or hereafter made covering any leasehold interest in the leased premises or the real property covered by this Lease. It is understood and agreed that Lessor may be required to obtain financing in connection with the purchase, construction and/or operation of the shopping center and the lender or lenders providing such financing may require modifications or amendments to this Lease. In the event Lessee does not agree to such amendments or modifications of this Lease, as may be required by such lender or lenders as a condition to providing such financing, then in either of these events Lessor may cancel this Lease on thirty (30) days written notice to Lessee without liability to either party. Lessee agrees to furnish such financial statements, balance sheets or operating statements as may be required and which Lessor is authorized to use or furnish to any lender or lenders. Any financial statements submitted to Lessor by Lessee prior to or after execution of this Lease are warranted by Lessee to be true and correct. If during the term of this Lease, Lessor sells or otherwise severs its entire interest in the leased premises of this Lease, or all of the shopping center, then all rights and obligations of Lessee hereunder, shall remain in full force and effect as though there had been no such sale or transfer. Upon such transfer and conveyance Lessor shall be unconditionally absolved and released of all obligations of Lessor accruing hereunder from the date of such sale or transfer. This Lease, or a short form thereof shall not be recorded without the prior written consent of Lessor and if Lessor so requests, Lessee agrees to execute and deliver a short form of this Lease for recordation. 22. ATTORNEY'S FEES. In case suit shall be brought for any breach of this Lease including without limitation unlawful detainer of the leased premises or for the recovery of any rent due under the provisions of this Lease, or because of the breach of any covenant herein contained on the part of Lessee to be kept or performed, the prevailing party shall be entitled to a reasonable attorney's fee which shall be deemed to have accrued on the commencement of such action and shall be paid whether or not such action is prosecuted to judgment. Arbitration before American Arbitration Assoc. shall be used except for monies due Lessor under Paragraphs 4 & 17 of Lease. -20- 25 23. NOTICES. Whenever under this Lease a provision is made for any demand, notice or declaration of any kind or where it is deemed desirable or necessary by either party to give or serve any such notice, demand or declaration to the other it shall be in writing delivered personally or by certified mail with postage prepaid addressed to Lessee or to Lessor at the address appearing opposite their signatures at the end of this Lease. Either party may, by like notice, at any time and from time to time designate a different address to which or a different person to whom or in care of whom notices shall be sent. Notices delivered by mail shall be deemed delivered 48 hours after deposit thereof in a U.S. Mail Post Box located in California postage prepaid and addressed as required herein. Lessee shall post in a conspicuous place on the front of leased premises an emergency telephone number where Lessee may be reached after business hours. 24. SECURITY DEPOSIT. Lessee, contemporaneously with the execution of this Lease, has deposited with Lessor the sum of Twenty-five Thousand and No/100 Dollars ($25,000,000), receipt of which is hereby acknowledged by Lessor. Said deposit shall be held by Lessor, without interest, and deposited with other funds of Lessor, as security for the faithful performance by Lessee of all of the terms, covenants, and conditions of this Lease by Lessee to be kept and performed during the term hereof. In the event of the failure of Lessee to keep and perform any of the terms, covenants and conditions of this Lease to be kept and performed by Lessee then Lessor, at its option may, with or without terminating this Lease appropriate and apply said entire deposit, or so much thereof as may be necessary, to compensate Lessor for all loss or damage sustained or suffered by Lessor due to such breach on the part of Lessee. Should the entire deposit or any portion thereof be appropriated and applied by Lessor the payment of overdue rent or other sums due and payable to Lessor by Lessee hereunder, then Lessee shall, upon the written demand of Lessor, forthwith remit to Lessor in cash an amount sufficient to restore said security to the original sum deposited, and Lessee's failure to do so within ten (10) days after receipt of such demand shall constitute a breach of this Lease. Should Lessee comply with all of said terms, covenants and conditions and promptly pay all the rental herein provided for as it falls due, and all other sums payable by Lessee to Lessor hereunder, the deposit or so much thereof as may remain, shall be returned in full to Lessee at the end of the term of this Lease, or upon the earlier termination of this Lease. See Addendum #11. 25. CONSTRUCTION OF LEASED PREMISES. Lessor shall complete, at its own expense, the work designated as "Lessor's Construction" on Exhibit "C" attached hereto and made a part hereof. All other work of any character, whether performed by Lessor or Lessee shall -21- 26 be at Lessee's sole expense including, without limitation, work designated as "Lessee's Construction" and "Lessor's Optional Construction" on Exhibit "C". All work to be performed by either party shall be done in accordance with plans and specifications to be approved by Lessor and in accordance with all applicable building codes and regulations governing said construction and in accordance with Exhibit "C" and same shall become the property of Lessor upon termination of this Lease. Upon execution of this Lease, Lessee will prepare by a designer at its expense plans and specifications for the work designated as "Lessee's Work" and "Lessor's Optional Work" and shall deliver a full set of plans to Lessor within sixty (60) days after signing of this Lease. Lessor shall have the right to approve, disapprove or require modification of said plans and specifications which changes shall be made by Lessee and revised plans submitted promptly to Lessor for approval. The foregoing procedure shall be followed until a satisfactory set of plans and specifications have been prepared. Approval or disapproval by Lessor or his representative shall be made within five (5) days from date of receipt and said approval shall not be unreasonably withheld. Lessor shall perform for Lessee such of "Lessor's Optional Work" as Lessor elects to perform and Lessee shall perform the remainder thereof. In any event, such work shall be at Lessee's sole expense. See Exhibit "C". Any changes in the work described in Exhibit "C" or the plans and specifications requested by Lessee or required by any governmental authority shall be at Lessee's sole expense. Lessee shall pay Lessor any costs which Lessee is required to pay pursuant to this article within five (5) days following Lessor's periodic billings therefor. In order to expedite the commencement of Lessee's business in the leased premises, Lessee, upon receipt of notice from Lessor that Lessee may enter to perform its work, may enter upon the leased premises for the purpose of performing "Lessee's Work" and installing trade fixtures and furnishing during the construction period; provided, however, that such activity on the part of Lessee shall be done only in such manner as not to interfere with Lessor's construction and Lessor shall not be liable to Lessee for damages to or loss of such fixtures, equipment or furnishings. Lessee agrees to comply with any union labor provisions of any Contractor's Agreement made with Lessor. Lessee and Lessor agree to promptly after notice commence and diligently prosecute the work to completion so that Lessee's business will be ready to open as soon as possible. Time is of the essence. -22- 27 26. MERCHANTS ASSOCIATION. Should a nonprofit corporation or association comprised of at least seventy-five (75%) percent of the tenants, excluding Security Bank and Allstate Insurance, at any time operating business establishments in the shopping center be now or hereafter organized for the purpose, among other things, of carrying out such common or general advertising or promotional activities or programs for the shopping center and the various business establishments operated therein as a majority of the members thereof may deem proper and expedient, then at Lessor's request Lessee shall at its own expense do all things necessary promptly to become, and throughout the term hereof remain, an active member in good standing of such corporation or association. 27. DEVELOPMENT OF SHOPPING CENTER. It is expressly understood and agreed that Lessor may at its sole option and without Lessee's consent (1) (but shall not be obligated to), develop that portion of the shopping center situated outside of the area outlined in red on Exhibit "A"; (2) increase the size of the shopping center by addition of contiguous property, or decrease the size of the shopping center or modify Exhibit "A" by adding, deleting or changing the building areas, common areas, parking layout, ingress or egress of the shopping center. In any of which events, Lessor shall deliver to Lessee revised Exhibits "A" and "B" which shall be substituted in and automatically become part of this Lease; (3) Vary the plan, location or dimensions of the leased premises at any time prior to the time Lessee commences its construction pursuant to Paragraph 25, provided that the approximate size and general location of the leased premises will not be changed without Lessee's consent, and provided further that if a material change of location or dimensions of the leased premises is requested by Lessor and Lessee does not consent to such change then Lessor may, at its option, terminate this Lease; (4) Build additional stories on any building or buildings in the shopping center and construct double-deck, subterranean, or elevated parking facilities. Lessor makes no warranty or representation whatever regarding the names of character of businesses to be conducted or the size or location of any space to be occupied by any tenant of the shopping center. The building use designation, if any, set forth on Exhibit "A" is for convenience only, and is not to be construed as a representation that the proposed building will be put to such use; and Lessee does not rely on any such representation in entering into this Lease. 28. MISCELLANEOUS. Lessor and its agents shall have free access to the leased premises during all reasonable hours for the purpose of examining the same and to ascertain if Lessee is in compliance with the terms of this Lease, to exhibit the same to prospective purchasers or tenants pursuant to this Lease and to post such notices as may be desirable or necessary in Lessor's sole judgment. -23- 28 As used in this Lease and whenever required by the context thereof, each number, both singular or plural, shall include all numbers, and each gender shall include all genders. Lessor and Lessee as used in this Lease or in any other instrument referred to in or made a part of this Lease shall likewise include both the singular and the plural, a corporation, co-partnership, individual or person acting in any fiduciary capacity as executor, administrator, trustee, or in any other representative capacity. All covenants herein contained on the part of Lessee shall be joint and several. All of the terms hereof shall apply to, run in favor of and shall be binding upon and inure to the benefit of, as the case may require, the parties hereto, and also their respective heirs, executors, administrators, personal representatives and assigns and successors in interest, subject at all times nevertheless to the provisions of Paragraph 16 of this Lease relating to restrictions upon assignment or subletting this Lease or the leased premises. One or more waivers of any covenant, term or condition of this Lease by either party shall not be construed by the other party as a waiver of a subsequent breach of the same or any other covenant, term or condition. The consent or approval of either party to or of any act by the other party of a nature requiring consent or approval shall not be deemed to waive or render unnecessary consent to or approval of any subsequent act. Nothing contained in this Lease shall be deemed or construed by the parties hereto or by any third party to create the relationship of principal and agent or of partnership or of joint venture or of any association whatsoever between Lessor and Lessee, it being expressly understood and agreed that neither the method of computation of rent nor any other provisions contained in this Lease nor any act or acts of the parties hereto shall be deemed to create any relationship between Lessor and Lessee other than the relationship of landlord and tenant. The laws of the State of California shall govern the validity, construction, performance and enforcement of this Lease. Each of the parties represents and warrants that it has engaged no broker or finder and that no claims for brokerage commissions or finder's fees will arise in connection with the execution of this lease and each of the parties agrees to indemnify the other against, hold it harmless from, all liabilities arising from any such claim (including, without limitation, the cost of attorney's fees in connection therewith). -24- 29 The submission of this Lease for examination does not constitute a reservation of or option for the leased premises and this Lease becomes effective as a Lease only upon execution thereof by Lessor and Lessee. It is understood that there are no oral agreements between the parties affecting this Lease and this Lease supersedes and cancels any and all previous negotiations, arrangements, brochures, agreements, representations and understandings, if any, between the parties hereto or displayed by Lessor to Lessee with respect to the subject matter thereof and none thereof shall be used to interpret or construe this Lease. If a corporation executes this Lease as a Lessee, Lessee shall promptly furnish Lessor certified corporate resolutions attesting to the authority of the officers to execute the Lease on behalf of such corporation. The Paragraph titles herein are for convenience only and do not define, limit or construe the contents of such paragraphs. Lessee hereby grants to Lessor such licenses or easements in, under or over the leased premises or any portion or portions thereof as shall be reasonably required for the installation or maintenance of mains, conduits, pipes or other facilities to serve the shopping center or any part thereof, including but not by way of limitation the premises of any occupant. It is specifically understood and agreed that this Lease is subject to conditions, covenants, restrictions, grants of easement and/or restrictions and easement agreements and any master leases if Lessors are master Lessors and not fee owners. In the event the Lessee shall hold over the leased premises after the expiration of the term hereof with the consent of the Lessor either express or implied, such holding over shall be construed to be only a tenancy from month-to-month, subject to all the covenants, conditions and obligations hereof and the Lessee hereby agrees to pay the Lessor the same rentals provided for by this Lease for such additional times as Lessee shall hold such property. Attached and made part of this lease: Addendum Dated 2 April 1984 ------------------- Exhibit A Plot Plan Exhibit B Legal 30 ADDENDUM DATE: 2 APRIL 1984 Addendum to Lease dated 2 April 1984 between WRAM Development Company, as Lessor, and SOLLEY'S INC., as Lessee. 1. Governmental and other reports made by Lessee now combine gross sales reports for Lessee's two or more stores. Accountant for Lessee or Lessee shall attach a signed statement to each such report submitted to Lessor making a true allocation of gross sales for the Sherman Oaks store only. Copies of reports shall be mailed concurrently to agency requiring same and the Lessor. 2. If, prior to, or at any time during the term of this Lease, a law, regulation, or rule is adopted by any governmental authority requiring that monitoring equipment measuring air quality be installed in the Shopping Center, Lessee shall pay to Lessor as additional rental upon demand, its * % share of the cost, maintenance, and operating expense of same. Lessee shall extend to Lessor reasonable rights of entry to the premises for purposes of testing air quality as may be required. Lessee acknowledges that Lessor may be required from time to time by governmental authority to reduce the energy consumption of the Shopping Center, to impose a parking or similar regulatory charge, to modify or restrict the hours of operation of Lessee's business, to limit access to the Shopping Center or to reduce the number of parking spaces available for Lessee's customers and other limited actions all of which shall be binding on Lessee if enacted or enforced by Lessor in accordance with the requirements of a governmental authority. No such action on the part of the Lessor shall be deemed to be a breach by Lessor of its obligations under the lease. This section shall not in any way limit any right given Lessor under any other section of this Lease. 3. It is understood and agreed that the terms of the Master Lease (under which Lessor is designated as "Lessee" of the underlying ground" provides for periodic reappraisal of the value of the land. The reappraisal occurs within thirty (30) days after June 30, 1989 and after 2004 and each fifteen years thereafter. If Lessor's rent is increased as a result of such reappraisal or for any other reason, Lessee's rent shall be increased by * % of such increase or Five Hundred Dollars ($500) whichever is the lesser. *See Addendum #18 31 Addendum Page 2 4. Signs heating and air conditioning units and other fixed equipment shall remain the property of the Lessor but maintained by Lessee. 5. Lessee shall, when in need of roof or other repairs, call subcontractors approved by Lessor, to do required repairs. In emergency call any available subcontractor of Lessee's choice. 6. If Lessee's usage of premises causes an increase in any of the insurance policies carried by the Lessor, then the full amount of said excess cost attributable to Lessee's usage shall be paid by Lessee. 7. No roof penetration shall be made by Lessee or Lessee's agent, at any time, without Lessor's express approval, except in the event of an emergency. Any roof patch by Lessee or agent of Lessee shall be painted white and guaranteed in writing for one year. Damage to any portion of the roof by Lessee or Lessee's agent or due to Lessee's usage of the premises shall be reported to Lessor in writing and shall be repaired at Lessee's expense. 8. Any use of a walk-way in front of an individual store shall be for use of pedestrians only. If Lessor grants Lessee the right to use same this approval shall be subject to revocation upon twenty-four (24) hours notice, at any time and for any reason. 9. Lessee shall cooperate with Lessor in any modification of the Center, so long as it doesn't interfere with Lessee's operation. 10. Lessor hereby grants to Lessee two consecutive five (5) year options. Lessee may exercise the first option by written notice to Lessor not later than the last day of the ninth year of the initial term. Second option shall require notice to Lessor not later than the last day of the fourth year of first option. Failure to so notify Lessor shall void these options. Rent for the extended term shall be not less than the rent for the last month of the prior term plus any applicable CPI and other increases to date of extension or five (5%) percent whichever is the higher. Rent for the last month shall not include items 4B and 4C of Lease as a base of calculations. 11. Lease security deposit shall be reduced by One Thousand Dollars ($1,000) per month commencing the twelfth month of this lease until it has been reduced to Ten Thousand Dollars ($10,000) or when the lease has been terminated 32 Addendum Page 3 whichever occurs first in time. Deposit shall be Ten Thousand Dollars ($10,000) on signing of this Lease, balance ten (10) days thereafter. 12. The area to be occupied by Lessee will be determined and the initial rental will be adjusted based on a charge of $1.45 per square foot for the ground floor area and a charge of $1.10 per square foot for the second floor area. 13. Such other charges covered by addendum and approved by Lessor and Lessee. (See Page 2 of Lease, Paragraph 4C(4). 14. Lessor shall guarantee roof and structure and all other work performed under this Lease for one (1) year after occupancy and make all necessary repairs to same during the year at no cost to Lessee. 15. Lessee may remove any kitchen equipment, counters, booths and other items normally associated with a restaurant which are not permanently affixed. 16. Lessee shall be relieved of liability under the lease if Lessor deems the new Lessee to be qualified to operate the restaurant at a high standard and has the financial capacity to do same and is otherwise acceptable to the Lessor. 17. Lease term dates shall be inserted on Lease Summary when exact dates have been determined. Lessor and Lessee shall initial such insertion. 18. Percentage share shall be inserted and initialled by the Lessor and Lessee when exact square footage occupied has been determined. 19. If Lessee's premises are damaged or destroyed during the original term or the first extension of this lease and the cost of this damage is reimbursed to the Lessor by the Insurance Company then Lessor shall be obligated to restore same to the extent of said reimbursement for said damage or destruction. This section of the Addendum applied to Paragraph 14 in its entirety. 20. Ten (10) days after notification in writing by Certified Mail to Sol Zide or Abe Zide personally, or their successor. 33 Addendum Page 4 21. The adjusted fixed minimum rent shall be determined on each adjustment date by multiplying the fixed minimum rent set forth in Paragraph 4A of this Lease by a fraction, the denominator of which is the average index figure for the year ending the month immediately preceding the date of the execution of this Lease as published by the U.S. Dept. of Labor, Bureau of Labor Statistics, Consumers Price Index, Los Angeles/Long Beach, All Items (1967-100) (the CPI) and the numerator of which is the average CPI index for the year ending immediately preceding the month during which the particular adjustment occurs for the second year. For ensuing years, the fraction shall be the denominator being the numerator of the just previous year and the numerator of which is the average CPI index for the year ending immediately preceding the month during which the particular adjustment occurs. 22. Lessor warrants there are no eminent domain proceedings now pending or are contemplated in the future relating to subject shopping center. 23. Lessor hereby warrants and guarantees that a reciprocal parking agreement between Hughes Market and Lessor will be kept in full force and effect for the term of this Lease. 24. Lessee's rent to start on November 1, 1984 or 120 days after Lessor completes all structural repairs (including removal of Hooper Camera from premises) and turns over all leased premises. Lessor: Lessee: WRAM DEVELOPMENT CO. SOLLEY'S INC. /s/ /s/ - ------------------------------ ------------------------------- Dated: 2 April 1984 Dated: 4-2-84 ---------------------- ----------------------- 34 4-1-87 I will initial a lease change page 6 item "I" as follows: "radius of two and one half miles (2 1/2) miles from the leased premises" Dupar's location in Encino is acceptable /s/ Arthur R. Grebler ------------------------------- WRAM DEVELOPMENT CO. EX-10.6 7 FIRST AMENDMENT TO SHOPPING CENTER LEASE 1 Exhibit 10.6 FIRST AMENDMENT TO SHOPPING CENTER LEASE This First Amendment to Shopping Center Lease ("Amendment") is made and entered into on this sixth day of March, 1992, by and between (1) ARTHUR R. GREBLER doing business as WRAM DEVELOPMENT COMPANY ("Lessor") and (2) SOLLEY'S, INC., a California corporation ("Lessee"). RECITALS WHEREAS, on or about April 2, 1984, Lessor and Lessee entered into a shopping center lease (the "Lease") for that certain premises located at 4578 Van Nuys Boulevard, Sherman Oaks, California 91403 (the "Deli"); WHEREAS, Lessor desires to lease to Lessee, and Lessee agrees to lease from Lessor, subject to the terms and conditions of this Amendment, the additional space located adjacent to the Deli, which consists of approximately 3,280 square feet and is commonly referred to as 4580 Van Nuys boulevard, Sherman Oaks, California 91403 (the "Bakery") and is more particularly described on Exhibit "A" attached hereto and incorporated herein by reference. TERMS OF AGREEMENT NOW, THEREFORE, in consideration of the foregoing Recitals, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Incorporation of Lease. All defined terms used in the Lease shall have the same meaning when used in this Amendment. In addition, all terms and conditions of the Lease shall continue to apply to the Deli except as expressly modified herein. -1- 2 2. Definition of Premises. Effective as of the date of execution of this Amendment, the Premises (as defined in the Lease) shall be expanded to include both the Deli and the Bakery. 3. Lease Term. So as to clarify any uncertainty that may exist, the term of the Lease is and shall be for the period commencing November 1, 1984, through and including October 31, 1994 (the "Initial Term"). 4. Options to Extend the Term. (a) Lessor hereby grants to Lessee two separate options to extend the term of the Lease. The First Option period shall be for the period November 1, 1994, through October 31, 2004 (the "First Option"). The Second Option period shall be for the period commencing November 1, 2004, through and including June 30, 2014 (the "Second Option"). (b) Both the First Option and Second Option shall be exercisable by Lessee by giving to Lessor written notice of Lessee's intent to exercise the option not more than 12 months nor less than 6 months before the expiration of the previous term (either upon expiration of the Initial Term or First Option as the case may be). (c) Lessee may exercise the options granted in this paragraph with respect to either the Deli or the Bakery (in which event this Lease shall again be amended to account for the reduction in size of the Premises) or both the Deli and the Bakery. 5. Rent Payable for Bakery. In addition to the rent payable for the Deli provided in the Lease, Lessee shall pay to Lessor, as rental for the Bakery, the aggregate of the following: (a) An annual fixed minimum rent of $78,720.00 subject to adjustment as provided in Paragraph 5 of the Lease payable in 12 equal monthly installments of $6,560.00 each payable in advance on the first day of each month throughout the Term, beginning on the Bakery Rent Commencement Date (as hereinafter defined). -2- 3 Should the Bakery Rent Commencement Date occur on a day other than the first day of the month, the first monthly installment of fixed minimum rent for the Bakery shall be prorated on a basis of a 30-day month and shall be paid on the Bakery Rent Commencement Date. (b) Monthly percentage rent as provided in Paragraphs 4B and 6 of the Lease, except that the amount of percentage rent with respect to the Bakery, shall be 8 percent of gross sales. Notwithstanding anything to the contrary in the Lease (and specifically Paragraph 6 thereof), gross sales with respect to the Bakery shall not include any sales for the transfer of any merchandise by the Bakery to the Deli or to any other restaurants owned or managed exclusively by Sol Zide provided said merchandise is not sold at wholesale by the deli or other restaurants to third parties. (c) Additional rent as provided in Paragraph 4C of the Lease, except that Lessee's total aggregate share of such expenses with respect to the Bakery shall be determined by dividing the square footage of the Bakery by the total square footage of the shopping center. Based on information provided by Lessor, this shall be 3280/31,606.55 or 10.37 percent. (d) Fixed minimum rent with respect to the Bakery shall be adjusted pursuant to the formula set forth in Paragraph 5 of the Lease. As used herein, the term "Bakery Rent Commencement Date" shall mean (i) the date when the Bakery first opens for business with the permission of all governmental authorities and has retail customers who actually purchase bakery items or (ii) 90 days after Lessor has provided the power to the Bakery as herein required and 90 days has elapsed from the issuance of the building permit, whichever shall first occur. 6. Prior Deli Improvements and Related Expenses by Lessee. Lessor hereby acknowledges, approves and consents to the design of any and all improvements made by Lessee to the Deli including, but not limited to, the patio area outside the Deli. Lessee shall be responsible, at its sole cost and expense, for complying with any and all governmental statutes, ordinances, rules, and requirements (including obtaining all necessary permits) in connection therewith. -3- 4 7. Deli and Bakery Improvements. ----------------------------- (a) As soon as possible after execution of this Amendment, Lessee, at its sole cost and expense, shall have the final plans and specifications (including electrical plans) for the modifications to the exterior of the Bakery desired by Lessee, plus the installation of sufficient electric power to the Bakery to meet Lessee's anticipated usage (the "Modification Improvements"), prepared for approval by Lessor. Additionally, Lessor shall deliver the Bakery to Lessee in broom-clean condition including, but not limited to, removal of the tile, carpet, and linoleum floor (so that the entire floor is returned to its original concrete condition except that Lessor shall not be responsible for any patching of the concrete), removal of the metal gates covering the front windows and back door, including the tracks for the gates, removal of the walls that hide the retractable gates on both the south and west walls, removal of all shelving, tables, counters, and the like on the north and west walls, removal of the facade wall on the north and west portion of the Bakery so that the drywall is removed, and removal of the mini blinds and all holders for the blinds. Lessor shall not be responsible for drywall patching or structural removal. Lessor shall provide sufficient additional power to the Premises to provide Lessee with adequate power to operate all equipment utilized by the Bakery and Deli. All of the items set forth herein shall be provided at Lessor's sole cost and expense. (b) For a period of five business days following receipt of the final plans and specifications from Lessee, Lessor shall have the right to accept and approve said final plans and specifications, as delivered, or to reject them. Such right of rejection or approval by Lessor must be exercised reasonably. Acceptance or rejection of said final plans and specifications shall be signified by Lessor delivering to Lessee, within said five-business day period, said final plans and specifications with each page marked "Approved" or "Rejected," as the case may be, and signed by Lessor. If Lessor shall not have delivered said final plans and specifications marked "Approved" or "Rejected," as the case may be, to Lessee within said period of time, Lessor shall be deemed to have accepted them. (c) If the final plans and specifications are approved by Lessor, then Lessee shall, at its sole cost and expense (except to those expenses designated herein to be paid by -4- 5 Lessor), construct the Modification Improvements in accordance with the approved plans and specifications and all applicable requirements of the appropriate governmental authority. (d) Lessee shall obtain the necessary building permits to construct the Modification Improvements as soon as possible after they are approved, and Lessor shall use its best efforts to complete construction of Lessor's portion of the Modification Improvements on or before the date (the "Estimated Completion Date"). (e) In the event Lessor's portion of the Modification Improvements are not completed by the Estimated Completion Date, Lessor shall complete the Modification Improvements as soon thereafter as is possible. Lessor shall not be responsible to Lessee for any damages due to delays beyond Lessor's control. (f) Lessor shall remove from the exterior of the Bakery all signs, decals, insignias, and other items which refer to Music Plus, the prior tenant in the Bakery. (g) If Lessor fails to accept the final plans and specifications or if Lessor rejects the final plans and specifications, Lessee shall have the right to do the following: (i) Within five business days of receipt of Lessor's non-acceptance or rejection, terminate the portion of the Lease which relates to the Bakery. In such event, Lessee shall have no obligation to pay any amounts to Lessor for the Bakery; (ii) Modify the plans and specifications so that they meet with Lessor's approval. If after resubmission of the revised plans and specifications to Lessor they are still not approved or are rejected, the provisions of this Paragraph 7(h)(i) shall apply so as to afford Lessee the opportunity to terminate the portion of the Lease which relates to the Bakery. (h) To the extent all or any portion of the Premises, which is Lessor's responsibility, does not meet with the applicable building code, ordinances or any other rules, regulations, laws or statutes, Lessor agrees to do such work as required, at Lessor's sole cost and expense, to bring the Premises into compliance. Said work includes, but is not limited to, the "landing" or loading area at the rear entrance to the Premises. Lessor also agrees to pay one-half the cost to replace and properly secure the glass in the front of the Premises. Lessee shall submit to Lessor the proposed changes and/or corrections to the glass for Lessor's approval, which approval shall not be unreasonably withheld. Lessee shall be -5- 6 responsible for supervising the glass replacement and shall submit to Lessor a copy of the invoice therefor. Lessor shall reimburse Lessee one-half the cost thereof within 10 days of receipt of the invoice. Lessee shall deduct Lessor's portion from the next payment of fixed minimum rent. 8. Damage and Destruction. Paragraph 14 of the Lease is hereby supplemented as follows: "Lessee shall carry business interruption insurance sufficient to cover the rent and other charges arising under the Lease during any period when Lessee is unable to fully operate the Deli and/or the Bakery. Lessor shall at all times carry sufficient insurance to pay for the replacement cost of the Premises, and Lessee shall carry sufficient insurance to pay for the replacement cost of the equipment. "Except as otherwise provided in this Amendment, if at any time during the term of this Lease or any extended term or option granted herein, the Premises is damaged or destroyed by any cause, Lessor shall promptly repair, rebuild, or restore the Building in which the Premises is located ("Building") to substantially the same condition as the Building was delivered to Lessee at the commencement of this Amendment (i.e., exclusive of Lessee fixtures and equipment) and shall be entitled for that purpose to any and all insurance proceeds. Lessor shall have the obligation to repair, rebuild, or restore the Building whether or not the insurance proceeds paid to Lessor are sufficient to cover the total cost of repair, restoration, or rebuilding. Lessor shall commence repair, restoration, or rebuilding, as appropriate, as soon as reasonably practical, but not later than 30 days after issuance of a building permit, shall apply for the permit within 15 days of the destruction, and shall cause construction to be completed as soon as possible, but not later than 180 days after occurrence of the event causing damage or destruction. -6- 7 Lessor's obligation to commence and complete construction within the time periods described in this section shall not be extended by the fact that Lessor may not yet have been paid the insurance proceeds. In the event Lessor does not commence or complete construction within the time periods described in this section, Lessee shall have the right, but not the obligation, to terminate this Lease by giving Lessor written notice within ten days after expiration of any time period set forth herein, in addition to any other rights which Lessee may have by law. "Notwithstanding anything contained herein, Lessor shall have the right to terminate this Lease and shall have no obligation to repair, restore, or rebuild the Premises or Building under any of the following circumstances: (a) Damage or destruction from a casualty when the damage or destruction cannot reasonably be repaired, restored, or rebuilt within a period of 180 days exclusive of any application, approval, or permit that may be required; (b) Damage or destruction from a casualty occurring during the last 24 months of any extended term of this Lease, unless Lessee has exercised an option to extend the term of this Lease, and in such event within 24 months of the expiration of the last extended term (Second Option). If Lessor elects to terminate this Lease as herein provided, Lessor shall give written notice to Lessee not later than 60 days after the occurrence of the casualty." The second and third paragraphs of Section 14 of the Lease are hereby deleted, are of no further force or effect, and are superceded by the terms contained herein. -7- 8 9. Eminent Domain. The last paragraph of Article 15 of the Lease is deleted in its entirety, which paragraph relates to the allocation of the award or compensation in an eminent domain proceeding. In its place, the following is substituted: Allocation of Condemnation Award. "In the event of such a condemnation of the whole or part of the Premises or Bakery, Lessor shall have the unqualified right to pursue its remedies against the condemnor for the full value of Lessor's fees interest and other property interests in and to the Premises and Bakery. Similarly, Lessee shall have the unqualified right to pursue its remedies against the condemnor for the full value of Lessee's leasehold interest and other property in and to the Premises and Bakery. If the laws of the State in which the Premises and Bakery are located allow or require the recovery from the condemnor to be paid into a common fund or to be paid to Lessor only and, if such recovery is so paid into such common fund or to lessor only, then in that event, the recovery so paid shall be apportioned between Lessor and Lessee according to the value of their respective property interests as they existed on the date of such condemnation. The provisions of this Article shall survive any termination of this Lease." 10. Use. The first four lines of Paragraph 7 of the Lease shall be deleted, and in its place, the following replacement language shall be added: "Lessee shall occupy and use the leased premises only for the operation of a restaurant, delicatessen, bakery, or for any other purpose permitted by law provided said use does not compete with any other use in the shopping center and does not adversely affect the tenant mix -8- 9 based upon an objective determination, and for no other purpose whatsoever without the prior written consent of Lessor." 11. Prohibition Against Competition. The following language shall be added as Paragraph 29 to the Lease: "Lessor's Covenant. "Lessor agrees for itself, its agents, successors, and assigns that during the term or any extended term of this Lease, it will not permit, lease, allow, or use (either by itself or any other tenant, directly or indirectly, in any portion of the Shopping Center to be used during the term of this Lease for a restaurant, delicatessen, or a Bakery that would directly compete with Lessee's restaurant operations in the Deli and Bakery. The foregoing covenants shall not apply, for example, to a yogurt store or a pizza parlor, or other establishment that is not substantially similar to and directly competing with Lessee, nor shall any of the business done by the tenants existing on the date of this Amendment be considered to compete with the business done by Lessee for purposes of this paragraph. The covenants of Lessor contained herein will continue only for so long as Lessee, its assignees, or subtenants, operate the restaurant, delicatessen, and bakery businesses in the Deli and Bakery." 12. Remedy for Breach. The covenants of Lessor and Lessee contained in Paragraph 12 of this Amendment are a material inducement for each party to enter into this Lease and upon any breach by either party of said covenants, which breach is not cured within 15 days after written notice thereof by the other party, said latter party shall have the right to pursue all of its rights available at law or in equity, including cancellation of this Lease, a suit for damages and/or a suit for injunctive relief (it being understood that the enumeration of the -9- 10 foregoing rights and remedies shall not preclude the exercise of any other rights or remedies which might be available at law or in equity). 13. Incorporation Into Short Form of Lease. The provisions of this Article shall be incorporated into a short form of this Lease or restrictive covenant in recordable form by Lessee. 14. Modifications to Exhibits and Addenda. (a) Exhibit "C" of the Lease, having been performed, is hereby deleted. (b) Addendum Paragraph 3 of the Lease is hereby deleted and replaced with the following: "3. The terms of the Master Lease (under which Lessor is designated as 'Lessee' of the underlying ground) provide for a periodic reappraisal of the value of the land. The next reappraisal is scheduled to occur within 30 days after June 30, 2004. If Lessor's rent is increased as a result of such reappraisal or for any other reason, Lessee's rent for the Deli shall be increased by Lessee's proportionate share of such increase or $500.00, whichever is the lesser, and Lessee's rent for the Bakery (to the extent it has not already been increased by Lessee's occupation of the Bakery) shall be increased by Lessee's proportionate share of such increase, which increase shall not exceed 10.4 percent of the fixed minimum rent on the date of execution of this Agreement. It being the intent of the parties that the rent payable by Lessee, as a result of its occupation of the space where the Bakery is located, shall be apportioned such that the increase in the Bakery rent will be in the same proportion that the Deli rent is increased based upon the square footage that the Bakery bears to the entire square footage of the Shopping Center." -10- 11 (c) Addendum Paragraph 10 of the Lease is hereby deleted. (d) Addendum Paragraph 12 of the Lease is inapplicable to the Bakery. (e) Addendum Paragraph 14 applies for one year after occupancy of the Bakery. To the extent there are any roof repairs or structural repairs by Lessor within one year after occupancy of the Bakery, no such costs or expenses shall be the responsibility of Lessee, and Lessor may not pass through or charge Lessee for these expenses as part of any expenses which Lessee is obligated to pay under the Lease, including what are commonly referred to as triple net expenses, except for charges incurred in connection with the repair of leaks caused by the failure of Lessee to have the approved shopping center roofer make any patch required after penetration of the roof by Lessee. (f) Addendum Paragraph 17 is deleted and replaced with the following: "17. The term of this Lease with respect to the Deli commenced on November 1, 1984, and shall expire on October 31, 1994, (the "Expiration Date"). The term of the Lease with respect to the Bakery shall commence upon execution hereof and shall expire on the Expiration Date." (g) Addendum Paragraph 18 of the Lease is hereby deleted. (h) Addendum Paragraph 19 of the Lease is hereby deleted and replaced with the following: "19. Notwithstanding anything to the contrary in Paragraph 14 of the Lease, if the Deli, the Bakery (exclusive of improvements installed by Lessee) is/are damaged or destroyed (with regard to the extent thereof) at any time prior to the last one year of the term of this Lease (unless Lessee has an option to extend the term of the Lease and either has exercised same or does so within ten days after such damages or destruction), then the Lessor shall rebuild and restore the damaged or -11- 12 destroyed portions of the Premises, and this Lease shall continue in full force and effect." (i) Addendum Paragraph 22 of the Lease is hereby deleted and replaced with the following: "22. Lessor has no knowledge of any eminent domain proceedings pending or contemplated with respect to the Shopping Center." (j) Addendum Paragraph 23 of the Lease is hereby supplemented as follows: "Lessor shall perform all of its obligations under the reciprocal parking agreement with Hughes Market and as to the Bakery shall use its best efforts to keep the reciprocal parking agreement (or any successor agreement thereto) in force during the term of this Lease, as same may be extended. This shall not change any of Lessor's obligations which are set forth in Addendum Paragraph 23 of the Lease." (k) Addendum Paragraph 24 of the Lease is hereby deleted. 15. Reaffirmation and Warranty of Authority. Except as expressly set forth herein, the Lease is hereby reaffirmed and ratified by the parties in its entirety. Except as expressly set forth herein, the use of the word "Premises" in the Lease shall refer to both the Deli and the Bakery. Lessor and Lessee hereby warrant and represent that each has the right, power, legal capacity, and authority to enter into and perform each of the obligations specified under this Agreement, and that no further approval or consent of any person, board of directors, or entities is necessary for him to enter into and perform each of the obligations of Lessor under this Amendment. -12- 13 IN WITNESS WHEREOF, this Agreement has hereunto been duly executed by the parties hereto the day and year first above-written. "LESSOR" WRAM DEVELOPMENT COMPANY By: /S./ Arthur R. Grebler ------------------------------ Arthur R. Grebler "LESSEE" SOLLEY'S, INC. A California Corporation By: /s/ Sol Zide ------------------------------ Sol Zide, President -13- 14 EXHIBIT "A" [Diagram showing the locations of Solley's Deli and Solley's Bakery spaces at the Sherman Oaks Center] EX-10.7 8 LANDLORD CONSENT AND AMENDMENT TO LEASE 1 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 2 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. -2- 3 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. -3- 4 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 -4- 5 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 -5- 6 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 -6- 7 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 -7- 8 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 -8- 9 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 -9- 10 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:_______________________________ -10- 11 Name: Title: LESSEE: SOLLEY'S INC., a California corporation By:_________________________________ Sol Zide, President -11- 12 EXHIBIT A JFD Menus See menus of "Jerry's Famous Deli" restaurants attached hereto and incorporated herein by this reference. 13 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 -13- -----END PRIVACY-ENHANCED MESSAGE-----