<PAGE> 1
As filed with the Securities and Exchange Commission on November 13, 1996
REGISTRATION NO. 333-_________
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________
UNITED RESTAURANTS, INC.
(Name of Small Business Issuer in its Charter)
___________
DELAWARE 95-4428370
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
___________
1990 WESTWOOD BOULEVARD
LOS ANGELES, CALIFORNIA 90025
(310) 475-5600
(Address, Including Zip Code and Telephone Number of
Principal Executive Offices)
HARRY SHUSTER
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
1990 WESTWOOD BOULEVARD
LOS ANGELES, CALIFORNIA 90025
(310) 475-5600
(Name, Address and Telephone Number
of Agent for Service)
COPIES TO:
GERALD M. CHIZEVER, ESQ.
MADGE S. BELETSKY, ESQ.
RICHMAN, LAWRENCE, MANN, GREENE, CHIZEVER
FRIEDMAN & PHILLIPS
9601 WILSHIRE BOULEVARD
PENTHOUSE
BEVERLY HILLS, CALIFORNIA 90210
(310) 274-8300
(310) 274-2831(FAX)
<PAGE> 2
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. X
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
If delivery of a prospectus is expected to be made pursuant to Rule
434, please check the following box.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Title of Each Class Amount Offering Aggregate Amount of
of Securities to be Price Offering Registration
to be Registered Registered Per Share(1) Price(1) Fee
<S> <C> <C> <C> <C>
Common Stock, par value 1,066,000 $1.3125 $ 1,399,125 $482.46
$.01 per share
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated in accordance with Rule 457 solely for the purpose of
determining the registration fee and based on the last sale price as
reported by the National Association of Securities Dealers Inc. on
November 7, 1996.
---------------
The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
ii
<PAGE> 3
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
Subject to Completion, dated November 13, 1996
1,066,000 SHARES
UNITED RESTAURANTS, INC.
COMMON STOCK
This Prospectus has been prepared for use in connection with the
proposed sale by H&H Restaurant Holding Corporation, a Delaware corporation
(the "Selling Stockholder"), of an aggregate of up to 1,066,000 shares (the
"Shares") of the Company's common stock, $.01 par value per share (the "Common
Stock"). The Selling Stockholder is owned and controlled by Clarinda
Investments, Inc., a corporation owned and controlled by Harvey Bibicoff, a
director of the Company. The Shares may be offered and sold by the Selling
Stockholder from time to time directly or through agents or to or through
broker-dealers. The Shares may be sold in one or more transactions at a fixed
price or prices, which may be changed, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at prices
determined on a negotiated or competitive bid basis. Shares may be sold
through a broker-dealer acting as agent or broker for the Selling Stockholder,
or to a broker-dealer acting as principal. See "Plan of Distribution." Unless
the context indicates or otherwise requires, references in this Prospectus to
the "Company" are to United Restaurants, Inc., a Delaware corporation, and its
subsidiaries.
The Common Stock is traded on the Nasdaq SmallCap Market under the
trading symbol UNIR. On November 7, 1996, the closing price for the Common
Stock as reported by Nasdaq was $1.3125.
The Company will receive no portion of the proceeds of the sale of the
Shares offered hereby and will bear certain of the expenses incident to their
registration. See "Plan of Distribution" and "Selling Stockholder."
SEE "RISK FACTORS," COMMENCING ON PAGE 6 OF THIS PROSPECTUS, FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
SHARES OFFERED HEREBY.
THE SHARES HAVE NOT BEEN REGISTERED FOR SALE UNDER THE SECURITIES LAWS
OF ANY STATE OR JURISDICTION AS OF THE DATE OF THIS PROSPECTUS. BROKERS OR
DEALERS EFFECTING TRANSACTIONS IN THE SHARES SHOULD CONFIRM THE EXISTENCE OF AN
EXEMPTION FROM REGISTRATION OR THE REGISTRATION THEREOF UNDER THE SECURITIES
LAWS OF THE STATES IN WHICH SUCH TRANSACTIONS OCCUR.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is __________, 1996.
<PAGE> 4
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and in accordance
therewith files periodic reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). The Registration
Statement, as well as such reports, proxy statements and other information, may
be inspected at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. and should
be available for inspection and copying at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, New York, New York
and Suite 1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois.
Copies of such material can be obtained at prescribed rates by writing to the
Commission, Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission maintains a website that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The Common Stock is listed on the Nasdaq
SmallCap Market, and the reports, proxy statements and certain other
information filed by the Company may be obtained by calling the Nasdaq Public
Reference Room Disclosure Information Group at (800) 638-8241 or (202)
728-8298.
This Prospectus constitutes a part of the Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company under the Securities Act of 1933, as amended
(the "1933 Act"). As permitted by the rules and regulations of the Commission,
this Prospectus, which constitutes a part of the Registration Statement, does
not contain all of the information set forth in the Registration Statement and
the exhibits and schedules thereto. Statements contained in this Prospectus as
to the contents of any agreement or other document referred to are not
necessarily complete. The material terms of such documents are described
herein. With respect to each such agreement or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in all respects by such reference.
2
<PAGE> 5
DOCUMENTS INCORPORATED BY REFERENCE
The following documents have been filed with the Commission and are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year
ended September 30, 1995 containing audited financial statements for the fiscal
year ended September 30, 1995.
(b) The Company's quarterly reports on Form 10-QSB for the fiscal
quarters ended December 31, 1995, March 31, 1996 and June 30, 1996, and all
other reports, if any, filed by the Company pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934 since the end of the fiscal year ended
December 31, 1995.
(c) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A, filed with the SEC on September
25, 1995, including any amendment or report filed for the purpose of updating
such description.
All documents filed by the Registrant pursuant to Section 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date hereof and prior to the
filing of a post-effective amendment to this registration statement which
indicates that all securities offered hereunder have been sold, or which
deregisters all securities then remaining unsold under this registration
statement, shall be deemed to be incorporated by reference in this registration
statement and to be a part hereof from the date of filing of such documents.
Any statement contained in a report or document shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in a subsequently filed document which also is or is deemed
to be incorporated by reference in this Prospectus modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company undertakes to provide without charge to each person to
whom a copy of this Prospectus is delivered, upon the written or oral request
of such person, a copy of any or all of the documents referred to above which
have been or may be incorporated by reference herein (other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
in such documents). Requests for such copies should be directed to United
Restaurants, Inc., 1990 Westwood Boulevard, Los Angeles, CA 92025, Attn:
Corporate Secretary (telephone (310) 475-5600).
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE SELLING STOCKHOLDER. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT.
3
<PAGE> 6
THE COMPANY
The Company is engaged in the business of the ownership, operation and
development of restaurants, and, more recently, private cigar clubs. On May
27, 1993, soon after its incorporation, the Company acquired all of the issued
and outstanding shares of the capital stock of Love's Enterprises, Inc.
("Love's"). Love's, which has been in business since the 1950's, currently
operates three Company-owned Love's restaurants and is the franchisor of an
additional 11 Love's restaurants. Love's restaurants are mid-priced, family
style restaurants located in Southern California which specialize in barbecued
beef, pork and chicken entrees and similar fare. The Company intends to
continue to operate the Company-owned Love's restaurants and to act as the
franchisor with respect to the existing franchised Love's restaurants. In
addition, the Company may seek to open additional Company-owned Love's
restaurants in the future as opportunities may arise, but has no current plans
to do so. Further, although the Company has no current plans to franchise
additional Love's restaurants, it may in the future offer to existing
franchisees of Love's restaurants the opportunity to open additional Love's
restaurants.
In June 1994, the Company acquired 85% of the stock of Il Forno, Inc.,
a California corporation, which corporation owns and operates an Italian-style
restaurant, Il Forno, located in Santa Monica, California. Because Il Forno
did not achieve the operating results anticipated by the Company, on September
20, 1996 the Company sold the 85% of the stock it owned in Il Forno, Inc. back
to the persons from whom the Company had originally purchased such stock. The
purchase price for the stock was $1,000 and, in addition, the original Stock
Purchase Agreement dated June 20, 1994, pursuant to which the Company had
acquired the stock of Il Forno, Inc., was terminated, including all continuing
obligations of the Company to make additional installment payments of the
original purchase price for the stock of Il Forno, Inc.
In August 1994, the Company entered into a Territory Rights Agreement
with PT Transpacific Ekagraha, an Asian holding company, which engages in a
number of businesses, including banking and the restaurant development
business. Under the Territory Rights Agreement, the territory rights holder
has committed to construct at least eight Love's Restaurants in portions of
Asia, including Mainland China, Hong Kong, Indonesia, Singapore, Malaysia and
Republic of China-Taiwan. The Territory Rights Agreement provides for
additional payments to Love's upon the opening of each restaurant and for
continuing royalties ranging from 5%-8.75% of gross sales. Love's is to
provide certain training, management and other services during the term of the
Territory Rights Agreement. It is expected that the initial restaurant to be
opened under the Territory Rights Agreement will open in late 1996 or early
1997.
In April 1995, the Company opened "On Canon," an upscale Italian
restaurant and bar in Beverly Hills, California, which it continues to operate.
4
<PAGE> 7
In June 1995, the Company opened its first "Grand Havana Room," a
cigar smoking establishment. The first Grand Havana Room is located on the
second story above the Company's On Canon restaurant in Beverly Hills,
California. The Grand Havana Room is a private club where members can keep
their cigars and smoking paraphernalia for use when they are at the Grand Havana
Room. The Grand Havana Room offers the ancillary sale of cigars, tobacco
products and cigar accessories and includes the operation of a restaurant
serving food and alcoholic beverages. The Company intends to open additional
Grand Havana Room locations in certain large cities, including New York and
Washington, D.C., and in this regard has recently entered into a lease for
space in New York City as well as a lease for space in Washington, D.C. in
which to operate its Grand Havana Rooms. The Company intends to continue to
develop and operate additional Grand Havana Rooms in other major cities.
The Company's lease for its Grand Havana Room in New York is for a
term of fifteen years expiring September 30, 2011 (the "New York Lease").
Annual rental under the New York Lease in its initial five years is $658,880
per annum, payable in equal monthly installments, provided that this rental
shall not commence until March 1997. In addition to this rental, the Company
will pay as additional rental under the New York Lease an amount equal to 6.5%
of the gross sales from its New York Grand Havana Room in excess of $10,136,600
in any lease year.
In connection with the New York Lease, the Company was required to
provide a letter of credit. In order to establish this letter of credit the
Company entered into an agreement dated September 10, 1996, with its affiliate,
United Leisure Corporation ("United Leisure"), pursuant to which United Leisure
agreed to pledge the sum of $850,000 in order for the Company to obtain the
required letter of credit. The Company has agreed to apply one-half of all
initial membership fees received from members of its New York, New York and
Washington D.C. Grand Havana Rooms to replace the cash collateral pledged by
United Leisure, and, in any event, the Company has agreed to replace all of the
cash collateral within 18 months after United Leisure's pledge of the cash
collateral. In consideration for United Leisure pledging the collateral for
the letter of credit, the Company has agreed to pay an amount to United Leisure
equal to 10% per annum on the amount of the pledged cash collateral, as it
exists from time to time. As additional consideration, the Company agreed to
issue 100,000 shares of its common stock to United Leisure, and has agreed to
grant to United Leisure a warrant to purchase an additional 100,000 shares of
common stock of the Company, which warrant is exercisable for a period of five
years at an exercise price of $.75 per share. Harry Shuster, the Chairman of
the Board, President and Chief Executive Officer of the Company is an officer
and director of United Leisure.
The lease for the Company's Grand Havana Room in Washington D.C., is
for a term of fifteen and one-half years expiring in February, 2012 (the
"Washington Lease"). Annual rental under the Washington Lease is $170,000 per
annum, payable in equal monthly installments, provided that rental under this
lease shall not commence until March 1997.
In October 1996 the Company conducted a private placement of an
aggregate of 839,999 shares of its common stock and five year warrants to
purchase an additional 839,999 shares of common stock at an exercise price of
$1.50 per share. Aggregate proceeds to the Company from the private placement
were $630,000. An aggregate of 5 investors purchased securities in the private
placement, including Harry Shuster, the Chairman of the Board, President and
Chief Executive Officer of the Company who purchased 333,333 shares of common
stock and warrants to purchase an additional 333,333 shares of common stock,
and United Leisure Corporation, an affiliate of the Company, which purchased
333,333 shares of common stock and warrants to purchase an additional 333,333
shares of common stock. This private placement was made pursuant to the
exemption from registration provided in Section 4(2) of the Securities Act
of 1933, as amended, for issuance of securities not involving any public
offering.
The Company intends to focus primarily in the future on the
development and operation of new cigar clubs, including the two new proposed
cigar clubs in New York, New York and
5
<PAGE> 8
Washington, D.C. The Company also intends to continue to develop new concepts
for restaurants and/or pursue acquisitions of additional restaurants or
restaurant groups as opportunities may arise, but currently has no plans with
respect to the development of any particular restaurants, and has identified no
additional restaurants for future acquisition.
The Company was incorporated under the laws of the State of Delaware
on April 13, 1993. The Company's executive offices are located at, and its
mailing address is, 1990 Westwood Boulevard, 3rd Floor, Los Angeles, California
90025, and its telephone number is (310) 475-5600.
6
<PAGE> 9
RISK FACTORS
An investment in the securities offered hereby is highly speculative
and involves a high degree of risk. Prospective investors should carefully
consider all of the information contained in this Prospectus and, in
particular, the following factors which could materially and adversely affect
the operations and prospects of the Company or an investment therein, before
making a decision to purchase any securities offered hereby:
Operating Losses. The Company has experienced operating losses since
its inception. For its fiscal years ended September 30, 1994 and September 30,
1995, the Company experienced net losses of $998,226 and $1,771,725,
respectively. In addition, for the nine-month period ended June 30, 1996, the
Company had a net loss of $563,874 and anticipates that it will experience a
net loss for its fiscal year ended September 30, 1996. Although the Company
believes a significant portion of its negative operating results since
inception is due to the high corporate overhead and development costs incurred
in connection with the Company's expansion, there can be no assurance that the
Company will be able to be operated profitably in the future. The Company
anticipates that it will continue to experience net operating losses as it
continues working on its ongoing development plans, including the establishment
of two new Grand Havana Rooms. Even after the Company's development plans are
completed, there can be no assurance that the restaurants and cigar clubs owned
by the Company will be able to operated profitably. Failure by the Company to
operate one or more of its restaurants or cigar clubs profitably could result
in significant operating losses for the Company.
Current Love's Franchisees; Expiration and Renewals; Lack of
Acceptance of Advertising Cooperative. Four of the Love's franchise agreements
are up for renewal or termination on or prior to December 31, 1998, and an
additional four of the Love's franchise agreements are up for renewal or
termination on or prior to December 31, 2000. Since Love's annual revenues,
which will remain a significant portion of the Company's revenues for the
foreseeable future, are substantially dependent on the operation of its
franchisee group, termination of these arrangements could result in
substantially decreased revenues. Moreover, management believes that in order
to increase the profitability of the Love's restaurants, it is necessary to
develop an advertising cooperative for the Company's greater Los Angeles Love's
franchises. Although the Company has made offers to the Love's franchisees for
an advertising cooperative, the Company and the Love's franchisees have not yet
reached agreement and there can be no assurance that an agreement will
ultimately be reached between the Company and the Love's franchisees on the
terms of cooperative advertising. Failure to reach such an agreement could
materially adversely effect the business, financial condition and results of
operations of the Company.
Dependence on Management. The Company's success will depend largely
upon the Company's management, in particular, Harry Shuster, the Company's
Chairman of the Board, President and Chief Execute Officer. The Company has
entered a consulting agreement with Mr. Shuster, which agreement is currently
renewable on a year-to-year basis unless either party determines to terminate
the agreement. The loss of the services of Mr. Shuster, or other key
7
<PAGE> 10
management personnel, could have a material adverse effect on the Company's
business and prospects.
Geographic Concentration; Uncertainty of Market Acceptance. There are
currently 14 Love's restaurants in operation, of which 11 are franchised and
three are company-owned. All are in Southern California. In addition, the
other restaurant owned by the Company, On Canon, is also located in Beverly
Hills, California. Further, the Company's initial Grand Havana Room is located
in Beverly Hills, California. Consequently, the results achieved to date by
the Company's existing restaurants and cigar club may not be indicative of the
prospects of market acceptance of a larger number of Love's restaurants, a
larger number of On Canon restaurants, a larger number of cigar clubs or any
new restaurant concepts introduced by the Company, particularly in wider and
more geographically dispersed areas with varied demographic characteristics,
e.g., the cigar clubs which the Company intends to open in New York and
Washington, D.C. The Company has not conducted and does not intend to conduct
formal concept feasibility or market studies with respect to the operation of
the restaurants and cigar clubs in other markets. Achieving customer awareness
and market acceptance, particularly as the Company seeks to penetrate new
markets and establish new restaurant concepts, will require extensive efforts
and expenditures by the Company. There can be no assurance that the Company's
restaurants or cigar clubs will achieve significant market acceptance.
Risks of Expansion. Since its inception in 1993, the Company has
rapidly expanded through a series of acquisitions and development. Although
the Company intends to continue its strategy of aggressive growth, in
particular with respect to the development of new cigar clubs, and will seek to
increase significantly the number of cigar clubs, the Company has no experience
in the growth of cigar clubs or in managing a large number of restaurants and
cigar clubs which are geographically dispersed. The Company's expansion will be
dependent on, among other things, market acceptance of the Company's cigar club
and restaurant concepts, the availability of suitable cigar club and restaurant
sites, timely development and construction of cigar clubs and restaurants, the
hiring of skilled management and other personnel, the general ability to
successfully manage growth (including monitoring cigar clubs and restaurants,
controlling costs and maintaining effective quality controls), and the
availability of adequate financing. There can be no assurance that the Company
will be successful in its proposed expansion. In view of the Company's small
restaurant and cigar club base, the lack of success or closing of any of its
cigar clubs or restaurants, whether franchised or company-owned (and in the
case of any closing of any cigar clubs or company-owned restaurants, any
continuing lease obligations or the resulting loss of the Company's
construction and development costs), could have a material adverse effect upon
the Company.
Possible Need for Additional Financing. The Company's capital
requirements have been and will continue to be significant. To date, the
Company has been using the proceeds form its initial public offering of
securities completed in April 1994 for its expansion activities, but it is
probable that the Company's cash flow from its operations and any remaining
proceeds from its initial public offering of securities will not be sufficient
for the Company's planned expansion during the next twelve months. The Company
may seek to finance its expansion
8
<PAGE> 11
activities by means of bank borrowings or by private placements of securities.
The Company has no current commitments or arrangements for additional
financing, other than its financing arrangement with United Leisure with
respect to that corporation's pledging collateral to support the Company's
letter of credit required with respect to its New York Lease, and other than
the Company's recent private placement conducted in October 1996, and there can
be no assurance that additional financing will be available on acceptable terms,
or at all.
Restaurant Industry. The restaurant business is often affected by
changes in consumer tastes, national, regional and local economic conditions,
demographic trends, traffic patterns and the type, number and location of
competing restaurants. In addition, factors such as inflation, increased food,
labor and employee benefit costs and availability of experienced management and
hourly employees may also adversely affect the restaurant industry in general
and the Company's restaurants in particular.
Competition. The restaurant industry is highly competitive with
respect to price, service, food quality and location, and there are numerous
well-established competitors possessing substantially greater financial,
marketing, personnel and other resources than the Company. These competitors
include national, regional and local chains, many of which specialize in or
offer products similar to those offered by the Company. The Company can also
be expected to face competition from numerous other restaurants and food
service establishments. Many of the Company's competitors have achieved
significant national, regional and local brand name and product recognition and
engage in extensive advertising and promotional programs, both generally and in
response to efforts by additional competitors to enter new markets or introduce
new products. In addition, there can be no assurance that consumers will
regard the Company's products as significantly distinguishable from competitive
products, that substantially equivalent products will not be introduced by the
Company's competitors or that the Company will be able to compete successfully.
Trademarks and Service Marks. The Company believes that its present
and proposed trademarks and service marks have significant value and are
important to the marketing of its restaurants and products. There can be no
assurance, however, that the Company's marks do not or will not violate the
proprietary rights of others, that the Company's marks would be upheld if
challenged or that the Company will not be prevented from using its marks, any
of which could have an adverse effect on the Company. In addition, there can
be no assurance that the Company will have the financial resources necessary to
enforce or defend its trademarks and service marks.
Government Regulation. The restaurant business is subject to various
federal, state and local government regulations, including those related to the
sale of food and alcoholic beverages. While the Company to date has not
experienced difficulties in obtaining necessary government approvals, the
failure to obtain and retain food and liquor licenses or any other governmental
approvals could have a material adverse effect on the Company's operating
results. In addition, restaurant operating costs are affected by increases in
the minimum hourly wage, unemployment tax rates, sales taxes and similar
matters over which the Company has no control. The Company is subject in
California, and also may be subject in certain other states, to "dram-shop"
statutes, which generally provide a person injured by an intoxicated person the
9
<PAGE> 12
right to recover damages from an establishment that wrongfully served alcoholic
beverages to the intoxicated person. Additionally, "tied-house" laws in
certain states may limit or delay the Company in obtaining liquor licenses.
The Company is also subject to certain laws governing its relationship with its
franchisees and will become subject to additional federal and state laws and
regulations governing the offer and sale of franchises in connection with its
plans to develop franchising capability.
Leasehold Commitments. The Company's income from operations is
currently insufficient to meet the lease payments that will commence in March
1997 with respect to its new leases for its proposed New York, New York and
Washington, D.C. Grand Havana Rooms. Although the Company anticipates that it
will be able to meet these leasehold obligations from the income from its New
York Grand Havana Room and Washington, D.C. Grand Havana Room once these
establishments are opened, there can be no assurance that the Company will be
successful in opening these establishments, and if opened, that income from
these establishments will be sufficient to allow the Company to meets its
leasehold obligations under these two leases.
Control by Management. Following completion of this offering, Harry
Shuster, the Chairman of the Board, President and Chief Executive Officer of the
Company, and Harvey Bibicoff, a director of the Company, will beneficially own,
in the aggregate, approximately 30% of the outstanding shares of Common Stock
of the Company (assuming the sale of all of the Selling Stockholder's Shares).
Accordingly, such persons will have significant influence over the outcome of
all matters submitted to the stockholders for approval, including the election
of Directors of the Company.
Tobacco Regulation. The tobacco industry is heavily regulated. There
are numerous governmental regulations that, among other things, limit the use
of tobacco in public places, including restaurants. Although the Company
believes governmental regulations would not effect the use of tobacco in
private cigar clubs, there can be no assurance that future governmental
regulation would not effect the Company's proposed operations with respect to
its cigar clubs. In addition, tobacco is heavily taxed. Increased taxes on
tobacco could decrease sales of the Company's tobacco products at its Grand
Havana Rooms as well as have the effect of decreasing cigar smoking generally.
Further, the advertising of tobacco products is heavily regulated. Significant
restrictions on the Company's ability to advertise its cigar clubs, as well as
significant restrictions on the advertising of tobacco products generally,
could have a material adverse affect on the Company.
No Dividends on Common Stock. The Company has never paid any
dividends on its Common Stock and does not anticipate payment of any cash
dividends for the foreseeable future.
Rule 144 Sales; Future Sales of Common Stock. As of October 1, 1996,
the Company had outstanding 6,262,500 shares of Common Stock, of which
2,012,500 were registered in the Company's initial public offering, and
1,066,000 are being registered in this offering. Most of the remaining
3,078,500 shares of Common Stock are "restricted securities" as that term is
10
<PAGE> 13
defined under Rule 144 of the Securities Act and may be sold in compliance with
Rule 144 of the Securities Act. Ordinarily, under Rule 144, a person who is an
affiliate of the Company (as that term is defined in Rule 144) and has
beneficially owned restricted securities for a period of two years may, every
three months, sell in brokerage transactions an amount that does not exceed the
greater of (i) 1% of the outstanding class of such securities or (ii) the
average weekly trading volume of trading in such securities on all national
exchanges and/or reported through the automated quotation system of a
registered securities association during the four weeks prior to the filing of
a notice of sale by a securities holder. A person who is not an affiliate of
the Company who beneficially owns restricted securities is also subject to the
foregoing volume limitations but may, after the expiration of three years, sell
unlimited amounts of such securities under certain circumstances. Possible or
actual sales of the Company's outstanding Common Stock by certain of the
present stockholders under Rule 144, as well as the sale of the shares by the
Selling Stockholder in this offering, may have a depressive effect on the price
of the Company's Common Stock and could impair the Company's ability to raise
capital through the sale of its equity securities.
Volatility of Market Price for the Common Stock. The market price for
the Common Stock prior to the date hereof has been highly volatile. Factors
such as the Company's operating results and announcements by the Company or its
competitors may have a significant impact on the market price for the Common
Stock. Additionally, in recent years, the stock market has experienced a high
level of price and volume volatility and market prices for the stock of many
companies have experienced wide price fluctuations not necessarily related to
the operating performance of such companies.
"Penny Stock" Regulations. The Commission has adopted regulations
which generally define a "penny stock" to be any equity security that has a
market price (as defined) of less than $5.00 per share or an exercise price of
less than $5.00 per share, subject to certain exceptions. If the securities
offered hereby are removed from Nasdaq, the Company's securities may be
considered "penny stock" and thereby become subject to rules that impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income exceeding
$200,000, or $300,000 together with their spouse). For transactions covered by
these rules, the broker-dealer must make a special suitability determination
for the purchase of such securities and must have received the purchaser's
written consent to the transaction prior to the purchase. Additionally, for
any transaction involving a penny stock, unless exempt, the rules require the
delivery, prior to the transaction, of a disclosure schedule prepared by the
Commission relating to the penny stock market. The broker-dealer also must
disclose the commission payable to both the broker-dealer and the registered
representative, current quotations for the securities and, if the broker-dealer
is the sole market-maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market. Finally, monthly statements
must be sent disclosing recent price information for the penny stock held in
the account and information on the limited market in penny stocks.
Consequently, the "penny stock" rules may restrict the ability of
broker-dealers to sell the Company's securities and may affect the ability of
purchasers in this offering to sell the Company's securities.
11
<PAGE> 14
Future Issuances of Stock by the Company. As of October 1, 1996 the
Company had outstanding 6,262,500 shares of Common Stock out of a total of
22,000,000 shares of Common Stock authorized, without giving effect to the
exercise of 2,012,500 of the Company's Class A Warrants and 2,012,500 of the
Company's Class B Warrants currently outstanding and excluding the
Underwriters' 175,000 Unit Purchase Option issued to the underwriters in the
Company's initial public offering, which Unit Purchase Option consists of (i)
the right to acquire 175,000 shares of Common Stock, (ii) the right to acquire
175,000 shares of Common Stock upon exercise of the Class A Warrants and (iii)
the right to acquire 175,000 shares of Common Stock upon exercise of Class B
Warrants (the "Underwriters' Unit Purchase Option"). The remaining shares of
Common Stock not issued or reserved for issuance upon exercise of options or
warrants may be issued without any action or approval of the Company's
stockholders. Although there are no present plans, agreements or undertakings
involving the issuance of shares, other than the issuance of shares of common
stock and a warrant to purchase common stock to United Leisure in connection
with its provision of collateral to support a letter of credit, any such
issuance could be used as a method of discouraging, delaying or preventing a
change in control of the Company or could dilute the public ownership of the
Company. There can be no assurance that the Company will not undertake to
issue such shares if it deems it appropriate to do so.
Underwriters' Unit Purchase Option. The Underwriters' Unit Option is
exercisable until April 14, 1999 and entitles the underwriters in the Company's
initial public offering to purchase shares of Common Stock at an exercise price
of $5.00, shares of Common Stock covered by the Class A Warrants at an exercise
price of $6.60 and shares of Common Stock covered by the Class B Warrants at an
exercise price of $6.60 per share, subject to adjustment. In addition, the
holders of the Underwriters' Unit Purchase Option have the opportunity to
profit from a rise in the market price of the Common Stock, if any, without
assuming the risk of ownership, with a resulting dilution in the interest of
other stockholders. The Company may find it more difficult to raise additional
equity capital if it should be needed for the business of the Company while the
Underwriters' Unit Purchase Option is outstanding. At any time when the
holders thereof might be expected to exercise it, the Company would probably be
able to obtain additional capital on terms more favorable than those provided
by the Underwriters' Unit Purchase Option. The holders of the Underwriters'
Unit Purchase Option have the right to require registration under the
Securities Act of the Units, the Common Stock, Warrants and the Common Stock
issuable upon exercise of the Warrants included in the Underwriters' Unit
Purchase Option and have certain "piggyback" registration rights.
Possible Adverse Effects of Authorization of Preferred Stock. The
Company's Restated Certificate of Incorporation authorizes the issuance of a
maximum of 3,000,000 shares of Preferred Stock on terms that may be fixed by
the Company's Board of Directors without further stockholder action. The terms
of any series of Preferred Stock, which may include priority claims to assets
and dividends, and special voting rights, could adversely affect the rights of
holders of the Common Stock. To date, no Preferred Stock has been issued and
the Company has no current plans to issue such Preferred Stock. The issuance
of such Preferred Stock could make the possible takeover of the Company or the
removal of management of the Company more difficult, discourage hostile bids
for control of the Company in which
12
<PAGE> 15
stockholders may receive premiums for their shares of Common Stock, or
otherwise dilute the rights of holders of Common Stock and the market price of
the Common Stock.
USE OF PROCEEDS
All of the shares of Common Stock offered hereby are being offered by
the Selling Stockholder for its own account. The Company will not receive any
proceeds from the sale of Common Stock by the Selling Stockholder.
PLAN OF DISTRIBUTION
The shares of Common Stock being sold by the Selling Stockholder are
being sold for its own account. The Company will not receive any of the
proceeds from such sales of Common Stock.
If and when the Shares are sold, it is anticipated that such Common
Stock will be sold from time to time primarily in transactions on the Nasdaq
SmallCap Market or any other exchange on which the Common Stock is listed, at
the market price then prevailing, although sales may also be made in negotiated
transactions or otherwise, at prices related to such prevailing market price or
otherwise. If Shares are sold through brokers, the Selling Stockholder may pay
customary brokerage commissions and charges. The Selling Stockholder may
effect such transactions by selling Shares to or through broker-dealers, and
such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholder and/or the purchasers
of Shares for whom such broker-dealers may act as agent or to whom they may
sell as principal, or both (which compensation as to a particular broker-dealer
might be in excess of customary commissions). The Selling Stockholder and any
broker-dealers that act in connection with the sale of the Shares hereunder
might be deemed to be "underwriters" within the meaning of Section 2(11) of the
1933 Act, and any commissions received by them and any profit on the resale of
Shares as principal might be deemed to be underwriting discounts and
commissions under the 1933 Act.
The Selling Stockholder has advised the Company that, during such
times as the Selling Stockholder may be deemed to be engaged in a distribution
of the Company's Common Stock, and therefore deemed an "underwriter" under the
1933 Act, it will comply with Rules 10b-6 and 10b-7 under the 1934 Act and
will, among other things: (i) not engage in any stabilization activities in
connection with the Company's securities; (ii) furnish each broker through
which Shares may be offered copies of this Prospectus, as may be amended from
time to time, as requested by a broker; and (iii) not bid for or purchase any
securities of the Company or attempt to induce any person to purchase any
securities of the Company other than as permitted under the 1934 Act.
There can be no assurances that the Selling Stockholder will sell any
or all of the Shares offered hereunder.
13
<PAGE> 16
SELLING STOCKHOLDER
The following table sets forth the name of the Selling Stockholder,
the number of shares of the Company's Common Stock beneficially owned by the
Selling Stockholder, the number of shares that may be sold by the Selling
Stockholder in this Offering, and the number of shares of Common Stock to be
owned by the Selling Stockholder, and the percentage of Common Stock to be
owned by the Selling Stockholder, assuming all of the shares of Common Stock
are sold in this Offering.
<TABLE>
<CAPTION>
Before Offering After Offering
------------------------------------ --------------------------------
Number of Number of Number of
Shares Shares to Shares Percent of
Beneficially be sold in Beneficially Outstanding
Owned(1) Offering Owned Shares
--------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
H & H Restaurant 1,066,000(3) 1,066,000(3) 0 0%
Holding Corporation(2)
</TABLE>
(1) As of October 1, 1996, there were 6,262,500 shares of Common Stock
outstanding.
(2) H&H Restaurant Holding Corporation, a Delaware corporation, is owned
and controlled by Clarinda Investments, Inc., a corporation owned and
controlled by Harvey Bibicoff, a director of the Company ("Clarinda
Investments").
(3) Does not include an additional 315,000 shares owned by Clarinda
Investments, Inc.
Prior to November 1, 1996 the Selling Stockholder was owned 50% by
Harry Shuster, the President, Chief Executive Officer and Chairman of the Board
of the Company and 50% by Clarinda Investments. Effective November 1, 1996,
Harry Shuster transferred all of his interest in the Selling Stockholder to
Clarinda Investments.
EXPERTS
The financial statements incorporated in this Prospectus by reference
to the Annual Report on Form 10-KSB of the Company for the year ended September
30, 1995 have been incorporated in reliance on the report of Hollander, Gilbert
& Co., independent certified public accountants, given upon the authority of
said firm as experts in auditing and accounting.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be
passed upon for the Company by Richman, Lawrence, Mann, Greene, Chizever,
Friedman & Phillips, Beverly Hills, California.
14
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is a schedule of the estimated expenses (all of which
will be borne by the Company) incurred in connection with the offering of the
securities registered hereby, other than underwriting discounts and
commissions, if any. All of the amounts shown are estimates, except the SEC
Registration Fee.
<TABLE>
<S> <C>
Sec registration fee . . . . . . . . . . . . . . $ 482.46
Blue Sky fees and expenses . . . . . . . . . . . 2,000
Accounting fees and expenses . . . . . . . . . . 5,000
Legal fees and expenses . . . . . . . . . . . . 10,000
Miscellaneous . . . . . . . . . . . . . . . . . 2,500
----------
Total . . . . . . . . . . . . . . . . . . . . . $19,982.46
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the General Corporation Law of the State of
Delaware grants corporations the right to limit or eliminate the personal
liability of their directors in certain circumstances in accordance with
provisions therein set forth. Article SEVENTH of the Company's Restated
Certificate of Incorporation, filed in the Office of the Secretary of State of
the State of Delaware on August 31, 1993, provides for the elimination of
personal liability of a Director to the corporation or its stockholders for
monetary damages for the breach of the Director's fiduciary duty to the full
extent allowable under Section 102(b)(7).
Section 145 of the General Corporation Law of the State of Delaware
grants corporations the right to indemnify their directors, officers, employees
and agents in accordance with the provisions therein set forth. Article VI of
the Company's Bylaws, provides for indemnification of such persons to the full
extent allowable under applicable law. In addition, the Company has entered
into Indemnity Agreements with each of its Directors, which generally provide
contractual indemnity protection which is coextensive with the indemnity
provisions of the General Corporation Law of the State of Delaware and the
Company's Bylaws.
II-1
<PAGE> 18
ITEM 16. EXHIBITS.
See the Exhibit Index which is incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration
Statement;
(i) To include any Prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended (the
"Securities Act"):
(ii) To reflect in the Prospectus any facts or
events which, individually or together, represent a
fundamental change in the information set forth in the
Registration Statement;
(iii) To include any additional or changed material
information on the plan of distribution not previously
disclosed in the Registration Statement or any material change
to such information in the Registration Statement.
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
section 13 or 15(d) of the Exchange Act that are incorporated by reference in
this registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at the time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the Registrant's Articles of Incorporation,
By-Laws or otherwise, the Registrant has been advised that in the
II-2
<PAGE> 19
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection which the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-3
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, State of California, on this 11th
day of November 11, 1996.
UNITED RESTAURANTS, INC.
By /s/ HARRY SHUSTER
------------------------------------
Harry Shuster
Chairman of the Board,
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Harry Shuster and Harvey Bibicoff, and
each of them, his attorney-in-fact with power of substitution for him in any
and all capacities, to sign any amendments, supplements, subsequent
registration statements relating to the offering to which this Registration
Statement relates, or other instructions he deems necessary or appropriate, and
to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorney-in-fact or his substitute may do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on this 11th day of November, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Harry Shuster Chairman of the Board,
- ----------------------------------- President and Chief Executive
Harry Shuster Officer (Executive and Principal
Financial Officer) and Director
/s/ Harvey Bibicoff Director
- -----------------------------------
Harvey Bibicoff
/s/ Stanley Shuster Vice President and
- ----------------------------------- Director
Stanley Shuster
</TABLE>
II-4
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Page No.
<S> <C>
(3)-1 Restated Certificate of Incorporation of the Company, filed in the office of the Secretary of
State of the State of Delaware, filed as Exhibit (3)-1 to the Company's Registration Statement
on Form SB-2 (Registration No. 33-68252-LA), is hereby incorporated herein by reference.
(3)-2 Bylaws of the Company, filed as Exhibit (3)-2 to the Company's Registration Statement on Form
SB-2 (Registration No. 33-68252-LA), is hereby incorporated herein by reference.
(4)-1 Warrant Agreement, dated April 20, 1994, between the Company and OTR, Inc., filed as Exhibit
(4)-1 to the Company's Annual Report on Form 10-KSB for the fiscal year ended September 30,
1994, is hereby incorporated herein by reference.
(4)-2 Form of Underwriters' Unit Purchase Options, Underwriters' Class A Warrant and Underwriters'
Class B Warrant issued to M. H. Meyerson & Co., Inc. and Biltmore Securities, Inc. and their
designees, filed as Exhibit (1)-2 to the Company's Registration Statement on Form SB-2
(Registration No. 33-68252-LA), is hereby incorporated herein by reference.
(5) Opinion of Richman, Lawrence, Mann, Greene, Chizever, Friedman & Phillips.
(10)-1 Documents related to the Company's Woodland Hills, California Franchise, including Franchise
Agreement, dated December 16, 1968 between Love's and Porter and Smith, Inc.; Consent to
Assignment dated January 12, 1982 among Love's, Porter and Smith, Inc., Pardew Corporation,
Garne, Inc., Ned Garlock, Manzanita Corporation, William R. Martin, John A. Webb and Dennis
Peterman; Mutual Release and Settlement Agreement effective as of December 30, 1985 among
Love's, Pardew Corporation, Garne, Inc. and Manzanita Corporation; Amendment to Franchise
Agreement, effective as of December 30, 1985, among Love's, Pardew Corporation, Garne, Inc.
and Manzanita Corporation, and Notice of Extension of Franchise Agreement and Sublease, dated
May 26, 1993, from Pardew Corporation to Love's, filed as Exhibit (10)-2 to the Company's
Registration Statement on Form SB-2 (Registration No. 33-68252-LA), is hereby incorporated
herein by reference.
</TABLE>
<PAGE> 22
<TABLE>
<S> <C>
(10)-2 Documents related to the Company's Lakewood, California Franchise, including Amendment to
Franchise Agreement, dated September 1, 1975, between Love's and Pacific Coast Restaurants,
Inc.; Amendment to Franchise Agreement, dated September 1, 1975, between Love's and Pacific
Coast Restaurants, Inc.; Mutual Release and Settlement Agreement, effective as of December 30,
1985, between Love's and Pacific Coast Restaurants, Inc.; and Amendment to Franchise
Agreement, effective as of December 30, 1985 between Love's and Pacific Coast Restaurants,
Inc., filed as Exhibit (10)-4 to the Company's Registration Statement on Form SB-2
(Registration No. 33-68252-LA), is hereby incorporated herein by reference.
(10)-3 Documents related to the Company's Brea, California Franchise, including Amended Franchise
Agreement, dated August 29, 1975, among Love's, William R. Barbour, Leroy M. Donahue and
Thomas F. Patten; Amendment to Franchise Agreement, effective December 30, 1985, between
Love's and BDP Enterprises; Mutual Release and Settlement Agreement, effective as of December
30, 1985, between Love's and BDP Enterprises; and Consent to Assignment, dated October 31,
1988, among BDP Enterprises Corp., Leroy M. Donahue, Thomas F. Patten and Galaxy Golden, Inc.,
Fung Ying Yong, Yim Ching Yong, Vincent Winghong Cheung and Love's, filed as Exhibit (10)-7 to
the Company's Registration Statement on Form SB-2 (Registration No. 33-68252-LA), is hereby
incorporated herein by reference.
(10)-4 Documents related to the Company's West Covina, California Franchise, including Agreement
dated December 24, 1968, between Love's and Garvey Enterprises, Inc.; Mutual Release and
Settlement Agreement, effective as of December 30, 1985, between Love's and Garvey
Enterprises, Inc.; Amendment to Franchise Agreement, effective as of December 30, 1985,
between Love's and Garvey Enterprises, Inc.; and Agreement, dated April 24, 1978, between
Love's and Garvey Enterprises, Inc., filed as Exhibit (10)-8 to the Company's Registration
Statement on Form SB-2 (Registration No. 33-68252-LA), is hereby incorporated herein by
reference.
(10)-5 Documents related to the Company's Northridge, California Franchise, including Franchise
Agreement, dated December 6, 1967, between Love's and Capital Restaurants, Inc.; Amendment to
Franchise Agreement, dated March 31, 1977, between Love's and Capital Restaurants, Inc.;
Mutual Release and Settlement Agreement, effective as of December 30, 1985, between Love's and
Capital Restaurants, Inc.; Amendment to Franchise Agreement, effective as of December 30,
1985, between Love's and Capital Restaurant Corporation; Consent to Assignment, dated November
17, 1986, among Love's, Capital Restaurants, Inc., Amore's Restaurant, Inc., Anthony and
Barbara Gentile and Ramon and Paula Antelo; and Amendment to Consent to Assignment, effective
July 1, 1993, between Love's and Amore's
</TABLE>
<PAGE> 23
<TABLE>
<S> <C>
Restaurant, Inc., filed as Exhibit (10)-9 to the Company's Registration Statement on Form
SB-2 (Registration No. 33-68252-LA), is hereby incorporated herein by reference.
(10)-6(a) Documents related to the Company's Rosemead, California Franchise, including Amended Franchise
Agreement dated August 29, 1975, between Love's and Alexander Jocic; Assignment and Assumption
Agreement, dated December 14, 1984, among Love's, Alexander Jocic, Kwan Lee and Joseph Dopico;
Amendment to Franchise Agreement, effective as of December 30, 1985, among Love's, Kwan Lee
and Joseph Dopico; and Amendment to Franchise Agreement, effective as of December 30, 1985,
among Love's, Kwan Lee and Joseph Dopico, filed as Exhibit (10)-14 to the Company's
Registration Statement on Form SB-2 (Registration No. 33-68252-LA), is hereby incorporated
herein by reference.
(10)-6(b) Consent to Assignment and Assumption Agreement dated October 8, 1993, by and among Joseph
Dopico and Kwan Lee, Zaks Restaurant Management, Inc., Mohd Q. Khan, MD, William P. Liu,
Rasheed Z. Khan and Love's Enterprises, Inc., filed as Exhibit (10)-6(b) to the Company's Form
10-KSB for the fiscal yar ended September 30, 1995, is hereby incorporated by reference.
(10)-7 Documents related to the Company's Riverside Franchise, including Amended Franchise Agreement,
dated August 29, 1975, between Love's and James A. Barr; Consent to Assignment, dated December
1, 1982, among James A. Barr, Philbarr Enterprises, Inc., Desert Country Enterprises, Inc.,
Robert Waite and Love's; Mutual Release and Settlement Agreement, effective December 30, 1985,
among Love's, Desert Country Enterprises, Inc. and Robert M. Waite; Amendment to Franchise
Agreement, effective December 30, 1985, among Love's, Desert Country Enterprises, Inc. and
Robert M. Waite; and Consent to Assignment, dated February 23, 1988, among Love's, Desert
Country Enterprises, Inc., Willstar, Inc., Robert M. Waite, Ronald B. J. Williams and Yomei
Williams, filed as Exhibit (10)-15 to the Company's Registration Statement on Form SB-2
(Registration No. 33-68252-LA), is hereby incorporated herein by reference.
(10)-8 Documents related to the Lease and Sublease of the Company's Woodland Hills Franchise,
including Lease, dated August 17, 1988, among John H. Lee, Ida Helen Lee and Love's; Sublease,
dated December 16, 1968, between Love's and Porter and Smith, Inc.; Sublease and Franchise
Extension Agreement, dated August 10, 1988, among Love's, Pardew Corporation, Garne, Inc. and
Manzanita Corporation and John A. Webb; and Notice of Renewal of Lease, dated June 18, 1993,
from Love's to John H. Lee and Ida H. Lee, filed as Exhibit (10)-17 to the Company's
Registration Statement on Form SB-2 (Registration No. 33-68252-LA), is hereby incorporated
herein by reference.
</TABLE>
<PAGE> 24
<TABLE>
<S> <C>
(10)-9 Documents related to the Lease and Sublease of the Company's Lakewood Franchise, including
Lease, dated December 27, 1968, between Lakewood Commercial Enterprises, Inc., L-E
Enterprises, Inc. and Love's; First Amendment to lease, dated July 10, 1974, between Lakewood
Commercial Enterprises, Inc. and Love's; Second Amendment to Lease, dated as of September 1,
1977, between Lakewood Mall Shopping Center Company and Love's; Sublease, dated March 31,
1969, between Love's and Pacific Coast Restaurants, Inc.; Amendment to Sublease, dated
September 1,1975, between Love's and Pacific Coast Restaurants, Inc.; Equipment Lease
Agreement, dated September 1, 1970, between Love's and Pacific Coast Restaurants, Inc.; and
Amendment to Equipment Lease, dated September 1, 1975, between Love's and Pacific Coast
Restaurants, Inc., filed as Exhibit (10)-19 to the Company's Registration Statement on Form
SB-2 (Registration No. 33-68252-LA), is hereby incorporated herein by reference.
(10)-10 Documents related to the Lease and Sublease of the Company's West Covina, California
Franchise, including Agreement of Lease, dated October 10, 1968, among Joseph K. Eichenbaum,
Ben Weingart, L-E Enterprises, Inc. and Love's; Amended Main Lease, dated October 10, 1968,
among Joseph K. Eichenbaum, Ben Weingart, L-E Enterprises, Inc. and Love's; Sublease, dated
December 24, 1968, between Love's and Garvey Enterprises, Inc.; Amendment to Lease, dated
December 25, 1970, among Joseph K. Eichenbaum, Ben Weingart, L-E Enterprises, Inc. and Love's;
Second Amendment to Lease, dated June 28, 1974, among Joseph K. Eichenbaum, Ben Weingart and
Love's; and Third Amendment to Lease, dated September 7, 1978, among Joseph K. Eichenbaum,
Trustee, and Love's, filed as Exhibit (10)-22 to the Company's Registration Statement on Form
SB-2 (Registration No. 33-68252-LA), is hereby incorporated herein by reference.
(10)-11 Documents related to the Lease and Sublease of the Company's Northridge, California Franchise,
including the Lease, dated December 10, 1966, between Fraser, Boise, Inc., L-E Enterprises,
Inc. and Love's, with accompanying letter dated July 20, 1993, reflecting the termination of
such lease and the lease by the landlord of the premises to Barbara and Sonny Gentile and
Amore's Restaurant, Inc.; and Sublease, dated December 6, 1967, between Love's and Capital
Restaurants, Inc., filed as Exhibit (10)-23 to the Company's Registration Statement on Form
SB-2 (Registration No. 33-68252-LA), is hereby incorporated herein by reference.
(10)-12 Documents related to the Lease and Sublease of the Company's Century City/Beverly Hills
California Store, including Lease, dated March 9, 1988, between Robert E. Burch, Trustee, and
Love's, as amended by letter of April 15, 1988, signed by Love's, filed as Exhibit (10)-27 to
the Company's Registration Statement on Form
</TABLE>
<PAGE> 25
<TABLE>
<S> <C>
SB-2 (Registration No. 33-68252-LA), is hereby incorporated herein by reference.
(10)-13 Documents related to the Lease and Sublease of the Company's Riverside, California Franchise,
including Lease Agreement dated February 29, 1972, among G. Lamar Fawcett, William S. Wixson
and Love's; Amendment to Lease, dated June 15, 1972, between Security Pacific National Bank,
as trustee, and Love's; Notice of Exercise of Option with respect thereto; Lease, dated April
4, 1972, between Love's and James A. Barr; Sublease, dated April 4, 1972, between Love's and
James A. Barr; Amendment to Sublease, dated October 1, 1992, between Love's, Willstar, Inc.,
Ronald B. J. Williams and Yomei Williams; and Amendment to Equipment Lease Agreement, dated
October 1, 1992, among Love's Willstar Company, Inc., Ronald B. J. Williams and Yomei
Williams, filed as Exhibit (10)-30 to the Company's Registration Statement on Form SB-2
(Registration No. 33-68252-LA), is hereby incorporated herein by reference.
(10)-14 Documents related to the Lease and Sublease of the Company's Tucson, Arizona Franchise,
including Lease, dated March 1, 1972, between Willen Corporation and Love's; Amendment, dated
May 22, 1972, between Willen Corporation and Love's; Notice of Exercise of Option with respect
thereto; Sublease Agreement, dated March 27, 1991, between Love's and Jerry's Restaurant,
Inc.; and Notice of Exercise of Option with respect thereto, filed as Exhibit (10)-31 to the
Company's Registration Statement on Form SB-2 (Registration No. 33-68252-LA), is hereby
incorporated herein by reference.
(10)-15 Documents related to the Lease of the Company's former Laguna Hills, California Franchise,
including Lease, dated November 14, 1977, between Lloyd's Bank California, Trustee, Lawrence
J. Sork and Joel C. Thompson; Amendment to Lease, dated May 11, 1979, among Lloyd's Bank
California, Trustee, Lawrence J. Sork, Joel C. Thompson and Love's; Second Amendment to Lease,
dated August 24, 1979, among Lloyd's Bank California, Trustee, Lawrence J. Sork, Joel C.
Thompson and Love's; Assignment and Amendment of Lease, dated August 9, 1981, between Lloyd's
Bank California, Trustee, Lawrence J. Sork, Joel C. Thompson and Love's Agreement re: Lease
Commencement Date and Minimum Rent, dated May 14, 1979, among Lloyd's Bank California,
Trustee, Lawrence J. Sork, Joel C. Thompson and Love's; Revised Agreement re: Lease
Commencement Date and Minimum Rents, dated August 24, 1979, among Lloyd's Bank California,
Trustee, Lawrence J. Sork, Joel C. Thompson and Love's; and Assignment of Lease, dated August
7, 1986, among Lloyd's Bank California, Trustee, Lawrence J. Sork, Joel C. Thompson, Love's,
IHOP Corp., Salvador Avila and Salvador Avila, Sr., filed as Exhibit (10)-32 to the Company's
Registration Statement on Form SB-2 (Registration No. 33-68252-LA), is hereby incorporated
herein by reference.
</TABLE>
<PAGE> 26
<TABLE>
<S> <C>
(10)-16 Documents related to the Lease of the Company's San Bernardino California Store, including
Lease, dated October 2, 1972, among G. Lamar Fawcett, William S. Wixson and Love's; and Notice
of exercise of option with respect thereto, filed as part of Exhibit (10)-33 to the Company's
Registration Statement on Form SB-2 (Registration No. 33-68252-LA), is hereby incorporated
herein by reference.
(10)-17 Documents related to the Company's former Huntington Beach, California location, including
Lease, dated September 17, 1990, between Brookhurst Limited and Love's with respect to Love's
Huntington Beach franchise; Installment Note, dated December 3, 1990, executed by Love's in
favor of H & G Restaurant Properties, Inc.; Security Agreement, dated December 3, 1990,
between Love's and H & G Restaurant Properties, Inc.; and Assumption of Real Property Lease
and Lease of Furnishings, Fixtures and Equipment, dated August 13, 1993, between Love's and
Huntington Beach Market Broiler, filed as Exhibit (10)-34 to the Company's Registration
Statement on Form SB-2 (Registration No. 33-68252-LA), is hereby incorporated herein by
reference.
(10)-18 Shopping Center lease, dated March 30, 1995, between Love's Enterprises, Inc. and University
National Bank & Trust Company, a California corporation, not personally but as Ancillary
Trustee under Trust Agreement, dated as of October 15, 1990, with respect to the Company's
Westchester restaurant, filed as Exhibit (10)-18 to the Company's Form 10-KSB for the fiscal
year ended September 30, 1995, is incorporated herein by reference.
(10)-19 Territory Franchise Agreement, dated October 31, 1966, among Love's, Irving Malashock and
Daniel F. Smith, relating to the Company's San Diego, California area franchises, filed as
Exhibit (10)-37 to the Company's Registration Statement on Form SB-2 (Registration No.
33-68252-LA), is hereby incorporated herein by reference.
(10)-20 Consulting Agreement, dated as of June 1, 1993, between the Company and Harry Shuster, filed
as Exhibit (10)-38 to the Company's Registration Statement on Form SB-2 (Registration No.
33-68252-LA), is hereby incorporated herein by reference.
(10)-21 Form of Indemnity Agreement entered into by the Company with each of its Directors, filed as
Exhibit (10)-39 to the Company's Registration Statement on Form SB-2 (Registration No. 33-
68252-LA), is hereby incorporated herein by reference.
(10)-22 Stock Purchase Agreement, dated as of February 4, 1994, between Chicken & Ribs, Inc. and H & H
Restaurant Holding Corporation and related Promissory Note, filed as Exhibit (10)-40 to the
Company's Registration Statement on Form SB-2
</TABLE>
<PAGE> 27
<TABLE>
<S> <C>
(Registration No. 33-68252-LA), is hereby incorporated herein by reference.
(10)-23 Amendment No. 1, dated March 24, 1994, to Stock Purchase Agreement dated as of February 4,
1994, between Chicken & Ribs, Inc. and H & H Restaurant Holding Corporation, filed as Exhibit
(10)-41 to the Company's Registration Statement on Form SB-2 (Registration No. 33-68252-LA),
is hereby incorporated herein by reference.
(10)-24 Amendment No. 2 to Stock Purchase Agreement, dated as of April 4, 1994, between Chicken &
Ribs, Inc. and H & H Restaurant Holding Corporation, filed as Exhibit (10)-34 to the Company's
Annual Report on Form 10-KSB for the fiscal year ended September 30, 1994, is hereby
incorporated by reference.
(10)-25 Note Modification and Extension Agreement, dated as of January 21, 1995, between H & H
Restaurant Holding Corporation and Chicken & Ribs, Inc., as filed as Exhibit (10)-25 to the
Company's Annual Report on Form 10-KSB for the fiscal year ended September 30, 1995, is hereby
incorporated by reference.
(10)-26 Territory Rights Agreement, dated August 22, 1994, between Love's Enterprises, Inc. and PT
Transpacific Ekagraha, filed as Exhibit (10)-29 to the Company's Annual Report on Form 10-KSB
for the fiscal year ended September 30, 1994, is hereby incorporated by reference.
(10)-27 Stock Option Agreement, dated September 21, 1994, as amended, between the Company and Arnold
Wasserman covering 25,000 shares of the Common Stock, par value $.01 per share, of the
Company, as filed as Exhibit (10)-27 to the Company's Annual Report on Form 10-KSB for the
fiscal year ended September 30, 1995, is hereby incorporated by reference.
(10)-28 Village on Canon Lease, dated July 1, 1994, between Pinkwood Properties Corp. and the Company,
filed as Exhibit (10)-37 to the Company's Annual Report on Form 10-KSB for the fiscal year
ended September 30, 1994, is hereby incorporated by reference.
(10)-29 Lease Agreement dated November 1, 1985, between II Forno, Inc. and Ocean Park Place, filed as
Exhibit (10)-38 to the Company's Annual Report on Form 10-KSB for the fiscal year ended
September 30, 1994, is hereby incorporated by reference.
(10)-30 Lease Agreement dated September 1, 1989, between II Forno, Inc. and Ocean Park Place, as
amended, filed as Exhibit (10)-39 to the Company's Annual Report on Form 10-KSB for the fiscal
year ended September 30, 1994, is hereby incorporated by reference.
</TABLE>
<PAGE> 28
<TABLE>
<S> <C>
(10)-31 Standard Office Lease dated December 20, 1991, between Joseph Suceveanu (on behalf of II
Forno, Inc.) and Ocean Park Place, filed as Exhibit (10)-40 to the Company's Annual Report on
Form 10-KSB for the fiscal year ended September 30, 1994, is hereby incorporated by reference.
(10)-32 Lease Agreement, dated December 1, 1994, between 1990 Westwood Boulevard and United
Restaurants, Inc., with respect to the Company's corporate offices, Filed as Exhibit (10)-32
to the Company's Annual Report on Form 10-KSB for the fiscal year ended September 30, 1995, is
hereby incorporated by reference.
(10)-33 Documents related to the Company's Garden Grove, California Franchise, including Franchise
Agreement, dated May 25, 1970, between the Company and Orange Coast Restaurants, Inc.;
Assignment and Consent to Assignment, dated June 18, 1973, among the Company, Orange Coast
Restaurants, Inc. and James Ronis; Amended Franchise Agreement, dated August 29, 1975, between
the Company and James Ronis; Mutual Release and Settlement Agreement, effective as of December
30, 1985, between the Company and James Ronis; and Amendment to Franchise Agreement, effective
as of December 30, 1985, between the Company and James Ronis, filed as Exhibit (10)-12 to the
Company's Registration Statement on Form SB-2 (Registration No. 33-68252-LA), is hereby
incorporated herein by reference.
(10)-34 Consent to Assignment and Assumption Agreement dated January 31, 1995 by and among James G.
Ronis Enterprises, Ltd., James G. Ronis, Deborah P. Miller and Love's Enterprises, Inc. with
respect to Love's Garden Grove Franchise.
(10)-35 Agreement of Lease, dated September 16, 1996, between 666 Fifth Avenue Limited Partnership and
Grand Havana Room -- New York, Inc.
(10)-36 Agreement for Purchase and Sale of Stock dated September 20, 1996 by and among the Company and
Joseph Suceveanu and Domenico Salvatore.
(10)-37 Additional documents related to the Company's City of Brea Love's Franchise, including 1996
Extension of Franchise Agreement dated April 15, 1996, and Consent to Assignment and
Assumption Agreement dated April 15, 1996, by and among Love's Galaxy Golden, Inc., Fung Ying
Yong, Yim Ching Yong, Vincent Winghong Cheung and Deborah P. Miller.
(10)-38 Additional documents related to the Company's City of Rosemead Love's Franchise, including
Extension of Franchise Agreement dated January 1, 1996, and 1996 Consent to Assignment dated
as of January 1, 1996 by and among Love's, Rasheed Z. Khan, Zaks Restaurant Management, Inc.
and Meena Khan.
</TABLE>
<PAGE> 29
<TABLE>
<S> <C>
(10)-39 Office Building Lease dated August 23, 1996, by and between Writ Limited Partnership and the
Company, T/A Grand Havana Room.
(10)-40 Financing Agreement dated September 10, 1996 by and between the Company and Untied Leisure
Corporation.
(23)-1 Consent of Richman, Lawrence, Mann, Greene, Chizever, Friedman and Phillips (included in
Exhibit 5).
(23)-2 Consent of Hollander, Gilbert & Co., independent public accountants.
(24) Powers of Attorney (included on the signature page in Part II of this Registration Statement).
</TABLE>
<PAGE> 1
[LETTERHEAD OF RICHMAN, LAWRENCE, MANN, GREENE,
CHIZEVER, FRIEDMAN & PHILLIPS]
Exhibit 5
November 11, 1996
United Restaurants, Inc.
1990 Westwood Boulevard
Los Angeles, California 90025
Ladies and Gentlemen:
We have been requested by United Restaurants, Inc., a Delaware
corporation (the "Company"), and H&H Restaurant Holding Corporation, a Delaware
corporation (the "Selling Stockholder"), to render our opinion in connection
with the registration under the Securities Act of 1933, as amended, and the
public offering by the Selling Stockholder of up to 1,066,000 shares of common
stock of the Company (the "Shares").
We have examined the Company's Registration Statement on Form
S-3 in the form to be filed with the Securities and Exchange Commission on or
about November 13, 1996 (the "Registration Statement"). We have examined such
further documents as we have deemed necessary as a basis for the opinion
hereafter expressed.
Based on the foregoing, we are of the opinion that, the Shares
to be offered by the Selling Stockholder have been duly authorized, are validly
issued, fully paid and non-assessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
RICHMAN, LAWRENCE, MANN, GREENE,
CHIZEVER, FRIEDMAN & PHILLIPS
By: /s/ Gerald M. Chizever
<PAGE> 1
EXHIBIT 10-34
CONSENT TO ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS CONSENT TO ASSIGNMENT AND ASSUMPTION AGREEMENT (the "Consent") is
made and entered into this 31st day of January, 1995 by and among James G.
Ronis Enterprises, Ltd, a partnership, and James G. Ronis, an individual
(collectively referred to herein as "Assignor"), Deborah P. Miller, an
individual, (referred to herein as, "Assignee"), and LOVE'S ENTERPRISES, INC.,
a California corporation (hereinafter referred to as "Love's").
R E C I T A L S:
A. Assignor is the operator and franchisee of that certain Love's
Wood Pit Barbecue Restaurant located at 13401 Harbor Boulevard, Garden Grove,
California 92643, (hereinafter referred to as "Love's #1027"). Love's and
Assignor entered into an Amended Franchise Agreement dated August 29, 1975
(which together with that certain Amendment to Amended Franchise Agreement
dated as effective December 30, 1985 between Love's and Assignor will be
referred to herein as the "Franchise Agreement") and a Sublease (the
"Sublease") dated August 4, 1970 (collectively hereinafter referred to as the
"Franchise Documents"). The Franchise Documents govern the terms of the Love's
Wood Pit Barbecue Restaurant franchise granted to Assignor by Love's (referred
to herein as the "Franchise").
B. Assignor and Assignee have entered into that certain agreement
entitled "Bulk and Liquor License Transfer Escrow Instructions" dated September
15, 1994 collectively issued by Benevest Escrow Company (the "Escrow
Instructions"), which provide that the sale of the Franchise and Assignment
from Assignor to Assignee will take place on the "close of escrow" as described
in the Escrow Instructions. The date on which the "close of escrow" occurs
under the Escrow Instructions will herein be referred to as the "Closing Date."
C. Under the terms and conditions of the Franchise Documents,
Assignor become obligated to pay to Love's certain sums, including but not
limited to the following:
(a) A royalty in an amount as set forth in the Franchise
Agreement;
(b) An advertising fee, when applicable, as set forth in
the Franchise Agreement; and
(c) The amount of all sales taxes, use taxes and similar
taxes imposed upon or required to be paid on account of goods and services
furnished to Assignor by Love's.
(d) Weekly rental, taxes and obligations due under the
Sublease for the Franchise location.
<PAGE> 2
D. In addition to the sums owing to Love's from Assignor under
the Franchise Documents, Assignor may have become indebted to Love's for
purchases made by Assignor from the Love's commissary, and for monies advanced
by Love's, and for sums which Love's has paid or for which Love's has become
obligated on behalf of Assignor. The sums due under the Franchise Agreement as
provided in the Recitals above and all additional amounts owed by Assignor
before the Closing Date, or by Assignee on or after the Closing Date, to Love's
are collectively referred to as the "General Account".
E. Under the Escrow Instructions, Assignor has agreed to assign
to Assignee, which assignment Assignee has agreed to accept, all of Assignor's
rights, title and interest in, and obligations and duties under, the Franchise
Documents, the inventory of foodstuffs and paper good and any state or local
business licenses, including liquor licenses, if any, which are applicable to
the operation of Love's #1027.
F. Assignor and Assignee each acknowledge the necessity of
obtaining Love's consent to the assignment of the Franchise and Love's is
willing to give such consent subject to the terms expressed in this Consent to
Assignment. It is understood by all parties that this Agreement is a part of
the Franchise Documents upon the effective date thereof.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing and of mutual
covenants contained herein and other valuable consideration, the parties hereby
agree as follows:
1. Consent to Assignment by Love'. Love's does hereby consent to
the assignment of the Franchise on the condition that all of the terms and
conditions of this Consent to Assignment are fully and faithfully satisfied and
all obligations and duties of Assignor and/or Assignee to be performed
hereunder are fully and timely performed or paid, as the case may be.
2. Covenants and Warranties of Assignee. Assignee represents and
covenants to Love's as follows:
(a) The Individual Assignee including Assignee's
designated Love's #1027 General Manager under Section 6 below, or any
successor(s), shall devote such of his or her time as is reasonably necessary
for the efficient conduct of Love's #1027 and the performance of Assignee's
obligations under the Franchise Documents, and shall not divorce him or herself
from the active conduct of the operation of Love's #1027. So long as Assignee
remains a franchisee under the Franchise Documents, the Assignee shall be
entitled to engage in other business activities only so long as he or she does
not compete with or unreasonably interfere with the conduct of the operation of
Love's #1027.
2
<PAGE> 3
(b) Assignee, as the franchisee under the Franchise
Documents, shall be obligated thereunder for the full and faithful performance
by Assignee of all of Assignor's obligations under the Franchise Documents
(including but not limited to the obligation to pay all General Account amounts
applicable to the period on or after the Closing Date, together with all
damages that may arise as a consequence of any default by Assignee under the
Franchise Documents or any other documents executed or to be executed by or on
behalf of Assignee), and any documents executed or to be executed by or on
behalf of Assignee within the time and in accordance with the terms of said
agreements, including without limitation, any amendments or modifications to
the Franchise Documents. These obligations of Assignee shall be continuing
obligations. Assignee agrees that any liability hereunder will not be affected
in any manner whatsoever by reason of:
(i) The assertion or nonassertion by Love's against
Assignee of any of Love's rights or remedies under the Franchise Agreement;
(ii) The waiver by Love's of any right or remedy against
the Assignee;
(iii) The failure by Love's to enforce any of the
provisions, covenants or conditions of the Franchise Documents; or
(iv) The granting by Love's of any indulgence or extension
of time to the Assignee.
The liability of the Assignee hereunder shall in no way be affected or
diminished by reason of any extension of the Franchise Documents, any change in
the terms of the Franchise Documents or the abandonment or surrender of the
Franchise by Assignee. Assignee acknowledges and agrees that any and all other
notices to the Assignee to which Assignee may be entitled in connection with
this obligation or the Franchise Documents, or required by the Franchise
Documents or by California law, shall be sufficient if addressed to Assignee at
23425 Park Colombo, Calabasas Park, California 91302 or to such other address
Assignee may from time to time designate by appropriate written notice to
Love's, including, but not limited to notice of default in payment of rent and
other specified sums, as the same may be adjusted, or any other amounts
contained or reserved in the Franchise Documents, and notice of nonperformance
or breach of any of the provisions, covenants or conditions thereof. Assignee
agrees that all liability hereunder shall remain and continue in full force and
effect as to any amendment, modification, renewal or extension of the Franchise
Documents.
(c) Assignee 80 long as it is the franchisee under the
Franchise Documents, shall advise Love's to the address of the principal office
of the Assignee; and shall notify Love's of any and all changes in the
occurrence of any such change.
3
<PAGE> 4
3. Payment to Love's By Assignor. As provided herein, as a
condition to the effectiveness of Love's consent to the assignment, Assignor
shall pay to Love's through the escrow established by Assignor and Assignee:
(a) The sum of $500.00 as reimbursement for Love's costs
and expenses incurred in connection with this Assignment. If processing aside
from the normal procedure is required, then additional amounts for
reimbursement over and above that fee will be paid by Assignor;
(b) A sum equal to the balance on the Closing Date of the
General Account indebtedness, and all other amounts necessary to make Assignor
current as of the Closing Date on all obligations under the Franchise
Documents.
4. Obligations of Assignor.
(a) Assignor shall remain liable for all obligations to
Love's arising under the Franchise Documents prior to the Closing Date.
(b) Within seventy-two (72) hours after said Closing
Date, Assignor shall prepare and deliver to Love's the weekly summary report(s)
(as required by the Franchise Agreement or by the custom, practice or policies
of Love's and its franchisees) (the "Weekly Summary Report(s)") for the final
week(s) of Assignor's operation of Love's #1027. Love's reserves the right to
review and audit said Weekly Summary Report(s), and in the event any mounts are
found due and owing pursuant to the Weekly Summary Report(s), Assignor
guarantees to pay Love's any amounts due forthwith. While Assignee shall have
no responsibility whatsoever regarding any monies that may be due Love' from
Assignor prior to the Closing Date (Article 2, Paragraph b), Assignee and
Assignor acknowledge Assignor's full payment of all amounts due under the
General Account, if any, are a condition to the effectiveness of Love's consent
to the assignment.
5. Assumption of Obligations by Assignee.
(a) Assignee agrees to assume all of the duties and
obligations of Assignor under the Franchise Documents and shall be entitled to
all of Assignor's rights, title and interest in and to the Love's #1027 and the
Franchise Documents.
(b) Any default by Assignee hereunder shall constitute a
default under the Franchise Agreement.
6. Training. Love's hereby waives Individual Assignee training
requirements, inasmuch as AssIgnee's designated General Manager, Patrick
Kolanoski, has completed training at Love's #1027 supervised by Assignor.
After considerable oral testing by Love's, Love's is satisfied that Patrick
Rolanoski's knowledge and abilities are sufficient to competently manage a
Love's Wood Pit
4
<PAGE> 5
Barbecue Restaurant. Should circumstances arise wherein Assignee's designated
Love's #1027 General Manager referenced herein shall be replaced by another
person or persons as the individual or individuals responsible for the
day-to-day operation of Love's #1027, Love's reserves at all times the right to
approve such person or persons, including Assignee, which approval shall not be
unreasonably withheld; provided, however that the Assignee shall be liable to
Love's for all reasonable costs and expenses incurred in connection therewith,
including the reasonable costs of approving, testing and training such
person(s), should Love's deem such testing and/or training by Loves be
necessary.
7. Effective Date of Assignment. Upon the full satisfaction of
each and every condition of this Consent to Assignment including, but not
limited to the performance of each of Assignor's and Assignee's obligations as
set forth in this Consent to Assignment, Love's consent to this Assignment of
Love's #1027 shall be deemed to be effective.
8. Release of Love's and Assignor.
(a) Except as provided herein, Assignor does hereby
release, discharge and acquit Love's and all officers, agents, employees and
representative of Love's and each of them, and Love's does hereby release and
discharge Assignor and all officers, agents, employees and representatives of
Assignor and each of them, of ad from any and all claims, demands, sums of
money, actions, rights, causes of action, obligations and including, but not
limited to, any antitrust actions or claims or any matters arising out of the
Franchise Documents or in any manner connected therewith or any one of them
with respect to Love' #1027.
(b) Assignor and Love's hereby waive the provisions of
Section 1542 of the California Civil Code which provides as follows:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
9. Indemnification of Love's by Assignor. Love's hall not be
responsible in any manner for the debts or obligations owed by Assignor to any
third party, including without limitation, vendors or taxing agencies.
Assignor agree to indemnify and hold Love's harmless for all amounts incurred
by Love's (including but not limited to attorneys fees) as a result of claims
made against Love's for any debts or obligations owed by Assignor to any such
third parties. Love's shall have the right but not the obligation to pay any
debts or obligations owed by Assignor to any third party, including vendors or
taxing agencies and charge Assignor therefor. Notwithstanding the Release
contained herein, Assignor shall not be released from its obligation to
reimburse Love's for
5
<PAGE> 6
payment of said debts or obligations which Love's is reasonably required to
pay.
10. Security Interest. Assignor, Assignee and Love's each
acknowledge that the success of the restaurant business being transferred
hereunder will depend in large measure on the personal qualities of the
individual owning and operating the same, that the success of such restaurant
will affect the success of other Love's restaurants and that involvement of the
restaurant in legal proceedings with respect to its ownership would, in all
probability, have an adverse effect on the restaurant's success. For these and
other reasons, Assignor, Assignee and Love's have agreed that there shall not
at any time exist (other than with Love's Enterprises, Inc.) any security
interest, lien, mortgage, right of re-entry or possession or encumbrance with
respect to the Franchise, or any interest in the Franchise created by Assignor
and/or Assignee (such interest being generally referred to herein as "Security
Interests").
"The aforesaid restriction regarding Security Interests applies only
to security interests purporting to encumber the franchise agreement and does
not limit the Assignee's right to create security interests in the physical
assets of the business such as the furniture, fixtures, equipment and
inventory. Nothing contained in this consent or in the Franchise Documents is
intended to limit the rights of Assignee's heirs, legatees he Franchise and/or
beneficiaries to inherit Assignee's rights under the Franchise Documents, with
or without probate proceedings, in the event of Assignee's death prior to the
expiration of the term thereof."
Love's consent to this sale is conditioned on the present nd continued
nonexistence of any such Security Interests (except as noted above). Any
attempt to create or enforce such claimed Security Interest shall, at Love's
election, terminate all rights of Assignee under the Franchise Agreement.
11. Extended Term of Franchise Agreement. Love's, Assignor and
Assignee jointly and severally acknowledge the Franchise Documents identified
in this Consent can expire at 12:01 A.M. on December 22, 1995. The Franchise
Docents contain certain provisions (Amended Franchise Agreement, Article II) to
extend the term of same for an additional five (5) year period. Love's desires
to provide additional options to extend the franchise term and Assignee desires
to receive additional options to extend the franchise term. Assignee has
signed a new fie (5) year Master Lease, dated August 1, 1995 (hereinafter
referred to as "New Lease") for the demised premises to be effective at 12:01
A.M. on December 22, 1995 with two (2) additional five (5) year extension
options (a copy of which is attached to this document).
NOW THEREFORE, Love's and Assignee, in consideration of the foregoing and of
mutual covenants contained herein and other valuable consideration, the parties
hereby agree as follows:
6
<PAGE> 7
(a) Love's will not exercise its option to extend the existing
Mater Lease for the demised premises for an additional five (5) year term, and
will allow that certain sublease to expire on December 21, 1995.
(b) Love's hereby extends that certain Franchise Agreement to
December 21, 2000. In addition, Franchisee (Assignee) shall have two (2) five
year options to further extend the term of the Franchise Agreement, subject to
the following:
(1) If, in the good faith judgement of the Franchisor
(Love's), Franchisee has operated the franchised restaurant in an efficient
manner at all times and is not in default under the Franchise Agreement during
the respective prior term, an extension of the term may be exercised by
Assignee by giving notice to Love's. Any notice to exercise an existing option
to extend the term of the Franchise Agreement must be in writing and received
by Love's no less than one hundred eighty (180) days prior to the expiration of
the then current term of the Franchise Agreement. Love's shall notify
Franchisee of its approval or disapproval thereof not later than one hundred
twenty (120) days prior to the expiration of the then current term of the
Franchise Agreement. Said decision as whether to approve or disapprove an
extension option to Franchisee shall be solely Love's, however, such approval
shall not be unreasonably withheld. In no case shall any extension go beyond
December 21, 2010 and Love's has no obligation to grant any further extension
of said franchise.
(2) It is expressly understood and agreed by the parties
that should the New Lease terminate for any reason at any earlier time than
December 21, 2010, the Franchise Agreement shall also terminate coterminous
with the lease. In the event the Franchisee desires a Love's franchise
relating to the Love's Restaurant described in the Recitals section of this
Consent, (paragraph A) after earlier termination as described above or after
December 21, 2010, Franchisee shall agree to enter into a new franchise
agreement so as to require payment of franchise fees, royalties, rents if any
and other charges in accordance with rates then prevailing for new Love's
franchisees. It is further understood and agreed by the parties hereto that if
a new Love's franchise is not executed immediately concurrent with the
termination of the Franchise Agreement, Franchisee shall relinquish all rights
provided in said Franchise Agreement.
(3) In consideration of Love's extending the Franchise
Agreement to December 21, 2000, Assignee (Franchisee) hereby agrees, effective
with the execution of this Consent and to December 21, 2000 and any extensions
of the Franchise Agreement thereafter, to at all times "support" Love's in any
matters concerning an advertising cooperative for Love's Restaurants in the
Greater Los Angeles Area of Dominate Influence (ADI), namely all Love's
Restaurants located in the counties of Los Angeles, Orange, San Bernardino,
Riverside and Ventura. The word "support" as used herein shall explicitly be
defined as the franchisee casting the
7
<PAGE> 8
identical vote as cast by Love's Company Operated Restaurants at any and all
times Love's is permitted to cat a vote regarding an advertising cooperative,
or formation thereof, in the Greater Los Angeles ADI of Love's Restaurants.
Franchisee shall sign a notarized irrevocable proxy docent authorizing Love's
to cast franchisee's vote in the event Franchisee is personally unable to cast
such advertising cooperative vote. Subject proxy docent will be held by Love's
for use by Love's at Love's sole discretion. Said "Support" and "Proxy
Document" provisions shall apply to Love's Greater Los Angeles ADI cooperative
advertising matters only, and only when Love's Company Operated Restaurants
have the right to cast a vote. All advertising provisions contained in the
Franchise Documents, with the exception of the herein described "support"
voting requirements, remain unchanged and shall remain in full force and
effect.
(4) Should Franchisee exercise any available option to
extend the Franchise Agreement available under this Consent, Franchisee agrees
and understands that, in consideration of Love's approving such extension,
Article IV of the Amended Franchise Agreement, as amended by that certain
Amendment to Franchise Agreement effective December 30, 1985, will
automatically change the royalty of 3.6% contained therein with a royalty of
5.0% effective December 22, 2000.
12. Attorneys' Fees. If any party hereto incurs legal fees,
whether or not an action is instituted, to enforce the terms of this Consent or
to recover damages or injunctive relief for breach of this Consent, it is
agreed that the prevailing party shall be entitled to reasonable attorneys'
fees, expert witness fees and other costs in addition to any other relief to
which it or they may be entitled.
13. Governing Law. This Consent is made and shall be construed in
accordance with the law of the State of California.
14. Jurisdiction and Venue. Each party consents to the
jurisdiction and venue of the Superior Court for the County of Orange, State of
California (or the Superior Court for such other county in the State of
California, as is consistent with California law) for any action arising from
or in connection with the interpretation or enforcement of this Consent.
15. Headings. Paragraph and subparagraph headings used in this
Consent are for reference and convenience purposes only and shall not affect
the meaning and interpretation of this Consent.
16. Waiver. Waiver by any party of any breach or his failure to
exercise any right under this Consent shall not be deemed a waiver of any
subsequent breach or right. The failure of any party to take action at the
earliest possible time to redress any such breach or to exercise any such right
shall not deprive such party of the right to take action at any subsequent
time, while such breach or condition giving rise to such right continue.
8
<PAGE> 9
17. Severability. If any provision of this Consent shall be held
invalid, such invalidity shall not affect the other provisions hereof, and to
this extent, the provisions of this Consent are intended to be and shall be
deemed severable.
IN WITNESS WHEREOF, the parties have executed this Consent as of the
day and year first above written.
ASSIGNOR: JAMES G. RONIS ENTERPRISES, LTD
A Partnership
By:/s/
James G. Ronis, Managing Partner
/s/
James G. Ronis, an individual
ASSIGNEE: DEBORAH P. MILLER
By:/s/
Deborah P. Miller, An Individual
LOVE'S: LOVE'S ENTERPRISES, INC.
a California corporation
By:/s/
Harry Shuster, President/CEO
9
<PAGE> 1
EXHIBIT 10-35
AGREEMENT OF LEASE, made as of this 16th day of September,
1996, between 666 FIFTH AVENUE LIMITED PARTNERSHIP, a Delaware limited
partnership, having an office at 666 Fifth Avenue, New York, New York 10103
("Landlord") and Grand Havana Room - New York, Inc., a New York corporation
having an office c/o Grand Havana Room, Corporate Office, Penthouse, 1990
Westwood Boulevard, Los Angeles, California 90025 ("Tenant")
W I T N E S S E T H :
The parties hereto, for themselves, their legal
representatives, successors and assigns, hereby covenant as follows:
DEFINITIONS
(1) "Affiliate" shall have the meaning set forth in Section D of Article
12 hereof.
(2) "Alterations" shall mean alterations (other than decorative items),
installations, improvements, additions or other physical changes in or about
the Premises.
(3) "Annual Statement" shall have the meaning set forth in Exhibit "B"
annexed hereto and made a part hereof.
(4) "Applicable Rate" shall mean the lesser of (x) two percent (2%) above
the then current "base" rate charged by Citibank, N.A. or its successor, and
(y) the maximum rate permitted by applicable law.
(5) "Assessed Valuation" shall have the meaning set forth in Section A of
Article 27 hereof.
(6) "Assignee Security" shall have the meaning set forth in Section C of
Article 12 hereof.
(7) "Bankruptcy Code" shall mean 11 U.S.C. Section 101 et seq., or any
statute of similar nature and purpose.
(8) "Base Operating Expenses" shall have the meaning set forth in Section
A of Article 27 hereof.
(9) "Base Taxes" shall have the meaning set forth in Section A of Article
27 hereof.
(10) "Breakpoint" shall have the meaning set forth in Exhibit "B" annexed
hereto and made a part hereof, subject to adjustment pursuant to Section F of
Article 12 hereof.
(11) "Broker" shall have the meaning set forth in Article 34 hereof.
<PAGE> 2
(12) "Building" shall mean all the buildings, equipment and other
improvements and appurtenances of every kind and description now located or
hereafter erected, constructed or placed upon the land and any and all
alterations, renewals, and replacements thereof, additions thereto and
substitutions therefor, known by the address of 666 Fifth Avenue, New York, New
York.
(13) "Building Systems" shall mean the mechanical, electrical, sanitary,
heating, air conditioning, ventilating, elevator, plumbing, life-safety and
other service systems of the Building up to the point of entry to the Premises.
(14) "Business Days" shall mean all days, excluding Saturdays, Sundays and
all days observed by either the State of New York or the Federal Government and
by the labor unions servicing the Building as legal holidays.
(15) "Certifying Officer" shall have the meaning set forth in Section C of
Article 3 hereof
(16) "Commencement Date" shall have the meaning set forth in Article 1
hereof.
(17) "Current Year" shall have the meaning set forth in Section C of
Article 27 hereof.
(18) "Deficiency" shall have the meaning set forth in Section B of Article
17 hereof.
(19) "Electric Rate" shall mean the rates in effect under Consolidated
Edison's Service Classification Number 4 - Rate II (Time of Day) at the time
particular electrical energy is consumed, plus taxes, or any successor or
replacement rate that Consolidated Edison uses in lieu of the foregoing that
applies from time to time to the consumption of and demand for electricity
(including all applicable surcharges, demand charges, rate adjustment charges,
energy charges, fuel adjustment charges, volume discounts, time of day charges,
and other sums payable to the utility in respect thereof).
(20) "Electrical Energy Sum" shall have the meaning set forth in Section E
of Article 13 hereof.
(21) "Events of Default" shall have the meaning set forth in Section A of
Article 16 hereof.
(22) "Expiration Date" shall have the meaning set forth in Article 1
hereof.
(23) "Fixed Rent" shall mean the rent set forth in Section A of Article 1
hereof, subject to increase pursuant to Section F of Article 12 and Article 27
hereof.
2
<PAGE> 3
(24) "Fixed Rent Commencement Date" shall have the meaning set forth in
Section D of Article 1 hereof.
(25)"Governmental Authority" (Authorities)" shall mean the United States of
America, the State of New York, the City of New York and any agency,
department, commission, board, bureau, instrumentality or political subdivision
of any of the foregoing, now existing or hereafter created, having jurisdiction
over the Real Property or any portion thereof.
(26) "Gross Sales" shall have the meaning set forth in Exhibit "B" annexed
hereto and made a part hereof.
(27) "HVAC" shall mean heat, ventilation and air conditioning.
(28) "HVAC Systems" shall mean the Building Systems providing HVAC.
(29) "Indemnities" shall mean the Landlord, its partners, shareholders,
officers, employees, agents and contractors.
(30) "Initial Alterations" shall have the meaning set forth in Section A of
Article 3 hereof.
(31) "Landlord", on the date as of which this Lease is made, shall mean
666 FIFTH AVENUE LIMITED PARTNERSHIP, a Delaware limited partnership having an
office at 666 Fifth Avenue, New York, New York 10103, but thereafter,
"Landlord" shall mean only the fee owner of the Real Property or if there shall
exist a Superior Lease, the tenant thereunder.
(32) "Landlord's Books" shall have the meaning set forth in Section C of
Article 27 hereof.
(33) "Lease Year" shall have mean any calendar year during the Term.
(34) "Lessor(s)" shall mean a lessor under a Superior Lease.
(35) "Letter of Credit" shall have the meaning set forth in Article 31
hereof.
(36) "Meter Date" shall have the meaning set forth in Section A of Article
13 hereof.
(37) "Mortgage(s)" shall mean any trust indenture or mortgage which may now
or hereafter affect the Real Property, the Building or any Superior Lease and
the leasehold interest created thereby, and all renewals, extensions,
supplements, amendments, modifications, consolidations and replacements thereof
or thereto, substitutions therefor, and advances made thereunder.
(38) "Mortgagee(s)" shall mean any trustee, mortgagee or holder of a
Mortgage.
3
<PAGE> 4
(39) "Occupancy Date" shall have the meaning set forth in Section A of
Article 13 hereof.
(40) "Office (Offices)" shall mean any premises other than premises used as
a store or stores for the sale or display, at any time, of goods, wares or
merchandise, of any kind, or a restaurant, shop, booth, bootblack or other
stand, barber shop, or for other similar purposes or for manufacturing.
(41) "Operating Expenses" shall have the meaning set forth in Section A of
Article 27 hereof.
(42) "Operating Statement" shall have the meaning set forth in Section A of
Article 27 hereof.
(43) "Operating Year" shall have the meaning set forth in Section A of
Article 27 hereof.
(44) "Operation of the Property" shall mean the maintenance, repair and
management of the Real Property or the Building and the curbs, sidewalks and
areas adjacent thereto.
(45) "Overtime Periods" shall have the meaning set forth in Section C of
Article 28 hereof.
(46) "Parties" shall have the meaning set forth in Section B of Article 37
hereof.
(47) "Partnership Tenant" shall have the meaning set forth in Article 29
hereof.
(48) "Percentage Rent" shall mean the rent set forth in Section B of
Article 1 hereof.
(49) "Percentage Rent Payment Date" shall have the meaning set forth in
Exhibit "B" annexed hereto and made a part hereof.
(50) "Premises" shall mean the area containing approximately 16,472
rentable square feet located on the thirty-ninth (39th) Floor of the Building
indicated by diagonal hatching on the floor plan attached hereto and made a
part hereof as Exhibit "A" For all purposes of this Lease, the rentable square
footage of the Premises shall be deemed to be 16,472 square feet, but in no
event shall such deemed rentable square footage constitute or imply
representation or warranty by Landlord as to the actual size of the Premises.
(51) "Private Cigar Club" shall mean a private club catering to cigar
smokers and their guests, which provides not less than annual membership based
on payment of a one-time initiation fee, if any, and monthly dues entitling
only such members and their guests to congregate at the club and enjoy the
club's facilities, and which club operates substantially in accordance with the
methods and policies in effect at the private cigar club known as the "Grand
4
<PAGE> 5
Havana Room" currently operated by the principals on the date hereof of Tenant
in Beverly Hills, California, and at all times operating in compliance with all
applicable Requirements.
(52) "Real Property" shall mean the Building, together with the plot of
land upon which it stands.
(53) "Rental" shall mean and be deemed to include Fixed Rent, any increases
in Fixed Rent (pursuant to Article 27 hereof), Percentage Rent, all additional
rent and any other sums payable by Tenant hereunder.
(54) "Requirements" shall mean all present and future laws, rules, orders,
ordinances, regulations, statutes, requirements, codes and executive orders,
extraordinary as well as ordinary, of all Governmental Authorities, and of any
and all of their departments and bureaus, and of any applicable fire rating
bureau, or other body exercising similar functions, whether now existing or
hereafter created, affecting the Real Property, or any street, avenue or
sidewalk comprising a part of or in front thereof or any vault in or under the
same, or requiring removal of any encroachment, or affecting the maintenance,
use or occupation of the Real Property.
(55) "Rules and Regulations" shall mean the rules and regulations annexed
hereto and made a part hereof as Schedule A, and such other and further rules
and regulations as Landlord or Landlord's agents may from time to time adopt on
such notice to be given as Landlord may elect, subject to Tenant's right to
dispute the reasonableness thereof as provided in Article 8 hereof. If there
is any conflict between the terms and provisions of this Lease and the terms
and provisions of the Rules and Regulations, the terms and provisions of this
Lease shall control.
(56) "Sublease Statement" shall have the meaning set forth in Section F of
Article 12 hereof.
(57) "Substantially Completed" shall mean the completion of construction
except for minor details of construction, decoration and mechanical adjustment,
the non-completion of which will not materially interfere with the Tenant's use
and occupancy of the Premises for Tenant's normal business purposes.
(58) "Superior Lease(s)" shall mean all ground or underlying leases of the
Real Property or the Building heretofore or hereafter made by Landlord.
(59) "Survey" shall have the meaning set forth in Section C of Article 13
hereof.
(60) "Taxes" shall have the meaning set forth in Section A of Article 27
hereof.
5
<PAGE> 6
(61) "Tax Payment" shall have the meaning set forth in Section B of Article
27 hereof.
(62) "Tax Statement" shall have the meaning set forth in Section A of
Article 27 hereof.
(63) "Tax Year" shall have the meaning set forth in Section A of Article 27
hereof.
(64) "Tenant" on the date as of which this Lease is made, shall mean Grand
Havana Room - New York, Inc., but thereafter "Tenant" shall mean only the
tenant under this Lease at the time in question; provided, however, that the
foregoing shall not be construed to permit any assignment of this Lease or to
relieve the Tenant named herein or any assignee or other successes in interest
(whether immediate or remote) of the Tenant named herein from the full and
prompt payment, performance and observance of the covenants, obligations and
conditions to be paid, performed and observed by Tenant under this Lease.
(65) "Tenant's Fund" shall have the meaning set forth in Section C of
Article 3 hereof.
(66) "Tenant's Share" shall have the meaning set forth in Section A of
Article 27 hereof.
(67) "Term" shall mean a term which shall commence on the Commencement Date
and shall expire on the Expiration Date.
(68) "Unavoidable Delays" shall have the meaning set forth in Article 25
hereof.
1. DEMISE, PREMISES, TERM, RENT. A. Landlord hereby
leases to Tenant and Tenant hereby hires from Landlord the Premises for the
Term to commence on the date hereof (the "Commencement Date"), and to end on
September 30, 2011 (the "Expiration Date"), both dates inclusive, unless the
Term shall sooner end pursuant to any of the terms, covenants or conditions of
this Lease or pursuant to law, at an annual rent consisting of the aggregate of
Fixed Rent as set forth below in this Section A of Article 1 and Percentage
Rent as set forth below in Section B of Article 1. Landlord shall deliver
possession of the Premises to Tenant on September 23, 1996. The annual fixed
rent (the "Fixed Rent") payable during the Term is as follows: (i) for the
period from the Commencement Date through the day immediately preceding the
fifth (5th) anniversary of the Commencement Date, an annual rent of $658,880,
payable in equal monthly installments of $54,906.67; (ii) for the period from
the fifth (5th) anniversary of the Commencement Date through the day
immediately preceding the tenth (10th) anniversary of the Commencement Date, an
annual rent of $724,768, payable in equal monthly installments of $60,397.33;
and (iii) for the period from the tenth (10th) anniversary of the Commencement
Date through the Expiration Date, an annual rent of $790,656, payable in equal
monthly installments of $65,888. Tenant agrees to pay Fixed Rent
6
<PAGE> 7
and Percentage Rent in lawful money of the United States which shall be legal
tender in payment of all debts and dues, public and private, at the time of
payment, in (with respect to Fixed Rent) equal monthly installments in advance,
on the first (1st) day of each calendar month during the Term (except that
Tenant shall pay the first full month's installment of Fixed Rent upon the
execution of this Lease), commencing on the Fixed Rent Commencement Date, at
the office of Landlord or such other place as Landlord may designate, without
any set-off, offset, abatement or deduction whatsoever. At the request of
Landlord, Fixed Rent and Percentage Rent and any other items of Rental shall be
payable when due to an account designated from time to time by Landlord.
B. In addition to the payment of Fixed Rent, Tenant
shall pay to Landlord for each Lease Year of the Term, Percentage rent as set
forth in Exhibit "B" annexed hereto and made a part hereof.
C. If the Fixed Rent Commencement Date shall occur on a
date other than the first (1st) day of any calendar month, the Fixed Rent
payable pursuant to this Article 1 for such calendar month shall be prorated on
a per diem basis.
D. Tenant's obligation to pay Fixed Rent shall not
commence until March 23, 1997 (the "Fixed Rent Commencement Date"). The
foregoing notwithstanding, Tenant shall pay any escalations under Article 27
hereof and the Electrical Energy Sum commencing on the date Landlord delivers
possession of the Premises to Tenant.
2. USE AND OCCUPANCY. A. Tenant shall use and occupy
the Premises for the operation of a first class Private Cigar Club, including
the ancillary sale of cigars, tobacco products, cigar accessories and related
(i) gifts, (ii) jewelry, (iii) souvenirs and (iv) other products incidental to
the operation of the Private Cigar Club, and the operation of a restaurant
serving food and alcoholic beverages, in compliance with all applicable
Requirements, to members only of the Private Cigar Club, and for no other
purpose. The foregoing notwithstanding, provided Tenant is not in default
under the Lease and Tenant shall have obtained Landlord's prior written
approval to such change, Tenant may change the use of the Premises to a first
class public cigar club and restaurant servicing patrons of the cigar club.
Tenant acknowledges and agrees that in determining whether or not to grant
Landlord's approval, Landlord may take into consideration the following
factors: (i) the nature, quality and presentation of the proposed facilities
and services to be provided at the Premises, (ii) the effect the change in use
will have upon the operation, marketability and value of the Building and/or
the use and occupancy thereof by occupants or potential occupants of the
Building; (iii) any effect in connection with security in or about the
Building; (iv) if the operation of the business shall be controlled by any
person other than Harry Shuster, the qualifications and experience of the
operator; and (v) any other
7
<PAGE> 8
factors which would be of concern to a reasonably prudent landlord operating a
prestigious, first-class office building.
B. Anything contained in this Lease to the contrary
notwithstanding, Tenant shall not use the Premises or any part thereof, or
permit the Premises or any part thereof to be used, (a) for the business of
photographic, multilith or multigraph reproductions or offset printing, except
in connection with, either directly or indirectly, Tenant's own business and/or
activities, (b) for a banking, trust company, depository, guarantee or safe
deposit business, (c) as a savings bank, a savings and loan association, or as
a loan company, (d) for the sale of travelers checks, money orders, drafts,
foreign exchange or letters of credit or for the receipt of money for
transmission, (e) as a stockbroker's or dealer's office or for the underwriting
or sale of securities, (f) by the United States government, the City or State
of New York, any foreign government, the United Nations or any agency or
department of any of the foregoing, (g) as an employment agency, executive
search firm or similar enterprise, labor union, school, or vocational training
center (except for the training of employees of Tenant intended to be employed
at the Premises), (h) as a barber shop or beauty salon, (i) in any manner which
Landlord deems offensive by reason of the discharge of objectionable fumes,
vapors, steam, moisture, condensation, gases of any kind or odors into the
Building Systems or facilities or into the Building flues or vents not designed
for or capable of receiving them, (j) in any manner which impairs or interferes
with any of the Building services or the proper heating, air conditioning,
cleaning or other servicing of the Building, or (k) in any manner which impairs
or interferes with the use or occupancy of any of the other areas of the
Building.
3. ALTERATIONS. A. (1) Tenant shall not make any
Alterations, including, without limitation, Alterations to prepare the Premises
for Tenant's initial occupancy (the "Initial Alterations") without Landlord's
prior consent. Landlord agrees not to unreasonably withhold its consent to any
non-structural Alterations proposed to be made by Tenant to adapt the Premises
for those business purposes permitted by Section A of Article 2, provided that
such Alterations are performed only by contractors or mechanics approved by
Landlord, which approval shall not be unreasonably withheld or delayed, do not
affect any part of the Building (including but not limited to the Building
Systems and the exterior of the Building) other than the Premises, do not
affect any service required to be furnished by Landlord to Tenant or to any
other tenant or occupant of the Building and do not reduce the value or utility
of the Building. Such Alterations shall be deemed approved unless Landlord
notifies Tenant of any objections within fifteen (15) business days after
receipt by Landlord of a notice from Tenant requesting Landlord's consent to
such Alterations, and which notice from Tenant shall specifically refer to this
section of the Lease and state that failure to object within such fifteen (15)
business day period shall constitute approval by Landlord. Whenever Tenant
shall submit to Landlord any plan, agreement or
8
<PAGE> 9
other document for Landlord's consent or approval, Tenant shall pay to
Landlord, on demand, any out-of-pocket expenses incurred by Landlord for review
of same, including the services of any architect, engineer or attorney employed
by Landlord to review same.
(2) Prior to making any Alterations, including
the Initial Alterations, Tenant shall (a) submit to Landlord detailed plans and
specifications (including layout, architectural, mechanical and structural
drawings) for each proposed Alteration and shall not commence any such
Alteration without first obtaining Landlord's approval of such plans and
specifications which approval, subject to Section A(1) of this Article, shall
not be unreasonably withheld or delayed, (b) at Tenant's expense, obtain all
permits, approvals and certificates required by any Governmental Authorities,
and (c) furnish to Landlord duplicate original policies or certificates thereof
of worker's compensation (covering all persons to be employed by Tenant, and
Tenant's contractors and subcontractors in connection with such Alteration) and
comprehensive public liability (including property damage coverage) insurance
in such form, with such companies, for such periods and in such amounts as
Landlord may reasonably require consistent with prudent practice, naming
Landlord and its agents, any Lessor and any Mortgagee, as additional insureds.
Upon completion of such Alteration, Tenant, at Tenant's expense, shall obtain
certificates of final approval of such Alteration required by any Governmental
Authority and shall furnish Landlord with copies thereof, together with the "as
built" plans and specifications for such Alteration. All Alterations shall be
made and performed in accordance with the plans and specifications therefor as
approved by Landlord, all Requirements and the Rules and Regulations. All
materials and equipment to be incorporated in the Premises as a result of any
Alterations or a part thereof shall be new and first quality and no such
materials or equipment (other than furniture, furnishings, office equipment and
other personal property not affixed to the Premises) shall be subject to any
lien, encumbrance, chattel mortgage or title retention or security agreement.
(3) All Alterations shall be performed by
contractors or mechanics approved by Landlord, which approval shall not be
unreasonably withheld or delayed, at Tenant's expense and at such times and in
such manner as Landlord may from time to time reasonably designate. The
foregoing notwithstanding, Landlord from time to time may provide Tenant with a
list of approved contractors for electrical and plumbing work, whose fees are
consistent with industry standards, and Tenant shall be obligated to select a
contractor from such list to perform any electrical or plumbing work involved
in an Alteration. All furniture, furnishings and movable fixtures and
partitions installed by Tenant and all Alterations in and to the Premises which
may be made by Tenant at its own cost and expense prior to and during the Term,
shall remain the property of Tenant, and upon the Expiration Date or earlier
end of the Term, may be removed from the Premises by Tenant at Tenant's
9
<PAGE> 10
option, provided, however, that Tenant shall repair and restore in a good and
workmanlike manner to the condition as of the Commencement Date (reasonable
wear and tear excepted) any damage to the Premises or the Building caused by
such removal. Notwithstanding the foregoing, however, Landlord, upon notice
given at least ten (10) days prior to the Expiration Date or earlier end of the
Term, may require Tenant to remove any such furniture, furnishings, and movable
fixtures, partitions, Alterations, vaults and raised floors installed by Tenant
and to repair and restore in a good and workmanlike manner to the condition as
of the Commencement Date (reasonable wear and tear excepted) any damage to the
Premises or the Building caused by such removal. Any of such items or
installations not so removed by Tenant shall become the property of Landlord,
and shall remain upon and be surrendered with the Premises as part thereof at
the end of the Term.
(4) Any mechanic's lien filed against the
Premises or the Real Property for work claimed to have been done for, or
materials claimed to have been furnished to, Tenant shall be discharged by
Tenant within thirty (30) days thereafter, at Tenant's expense, by payment or
filing the bond required by law. Tenant shall not, at any time prior to or
during the Term, directly or indirectly employ, or permit the employment of,
any contractor, mechanic or laborer in the Premises, whether in connection with
any Alteration or otherwise, if such employment would interfere or cause any
conflict with other contractors, mechanics or laborers engaged in the
construction, maintenance or operation of the Building by Landlord, Tenant or
others, or of any adjacent property owned by Landlord. In the event of any
such interference or conflict, Tenant, upon demand of Landlord, shall cause all
contractors, mechanics or laborers causing such interference or conflict to
leave the Building immediately.
B. Anything contained in this Lease to the contrary
notwithstanding, Landlord's consent shall not be required with respect to any
nonstructural Alteration (i) which does not affect the Building Systems or any
other part of the Building including the exterior of the Building (other than
the Premises), (ii) which does not result in a violation of the certificate of
occupancy of the Building, (iii) the estimated cost of the labor and materials
of which does not exceed One Hundred Twenty-Five Thousand Dollars
($125,000.00), either individually or in the aggregate with other nonstructural
Alterations constructed within any twelve (12) month period and (iv) does not
require any filing with the New York City Department of Buildings or any other
Governmental Authority; provided, however, that not less than ten (10) days
prior to making any such nonstructural Alteration, Tenant shall submit to
Landlord the plans and specifications for such Alteration, and any such
Alteration shall otherwise be performed in compliance with the provisions of
Article 3 hereof.
C. (1) Subject to compliance with the provisions of
this subsection C., Landlord shall reimburse Tenant, in an amount not to exceed
Four Hundred Eleven Thousand Eight Hundred ($411,800)
10
<PAGE> 11
Dollars (the "Tenant's Fund") for the cost of the Initial Alterations.
(2) At Tenant's request from time to time, but
not more frequently than once each month, Landlord, on the 15th or last day of
each month, provided Tenant gives Landlord at least fifteen (15) Business Days
prior written notice, shall disburse portions of the Tenant's Fund to Tenant in
an amount not in excess of the amounts incurred in connection with such Initial
Alterations and theretofore paid or then payable to Tenant's approved
contractors, subcontractors, materialmen, architects, engineers and decorators,
provided the same have not been the subject of a previous disbursement from the
Tenant's Fund. Landlord's obligation to make disbursements from the Tenant's
Fund shall be subject to receipt of: (a) a request for such disbursement from
Tenant, (b) copies of all receipts, invoices and bills for the work completed
and materials furnished (or for deposits paid thereon as required by the
contract therefor) in connection with the Initial Alterations and incorporated
(or to be incorporated with respect to items for which a deposit has been made)
in the Premises (or with respect to architectural and engineering services
rendered or other services rendered by a decorator, copies of the receipts or
invoices therefor), and to be paid for, or to be reimbursed to Tenant for the
previous payment by Tenant of, from the requested disbursement, and (c) except
with respect to disbursements solely for architectural and engineering services
rendered, a certificate by the architect or engineer stating, in his opinion,
that the portion of the Initial Alterations theretofore completed and for which
the disbursement (or any portion thereof) is requested was performed in a good
and workmanlike manner and substantially in accordance with the final detailed
plans and specifications for such Initial Alterations as approved by Landlord,
or that any deposit made was required to be made under the applicable contract.
(3) (a) Except as otherwise set forth in the
following sentence, upon the earlier to occur of (x) the disbursement
of the entire Tenant's Fund (or the portions thereof disbursed if upon
completion of the Initial Alterations and disbursements in connection
therewith, the Tenant's Fund is not exhausted), or (y) the date which
is three (3) months after the date Tenant shall have Substantially
Completed the Initial Alterations, Landlord shall have no obligation
or liability whatsoever to Tenant for disbursement of any further
funds from the Tenant's Fund to Tenant, and any amount of the Tenant's
Fund which has not been previously disbursed shall be retained by
Landlord. If Tenant shall dispute the amount owed to any contractor,
materialmen, supplier, engineer or architect, Tenant may nevertheless
be permitted to reserve, immediately prior to the date twenty four
(24) months after the Commencement Date, an amount to be thereafter
disbursed from the Tenant's Fund equal to one hundred fifteen percent
(115%) of the amount claimed by such contractor, materialmen,
supplier, engineer or architect, provided Tenant complies with the
provisions of Section C(2) of this Article (other than
11
<PAGE> 12
clause (c) of Section C(2)) and delivers to Landlord a certificate of
an officer of Tenant (a "Certifying Officer") setting forth the amount
in dispute. If it shall be resolved that all or any portion of the
amount in dispute is owing to such contractor, materialman, supplier
or consultant, then, upon receipt of a certification of a Certifying
Officer that the dispute has been resolved and setting forth the
amount due and owing by Tenant to such contractor, materialman,
supplier, engineer or architect Landlord shall disburse to Tenant the
amount determined to be owing to such contractor, materialman,
supplier, engineer or architect, from the amount reserved by Landlord
as aforesaid.
(b) It is expressly understood and agreed that
Tenant shall complete, at its sole cost and expense, the Initial
Alterations, whether or not the Tenant's Fund is sufficient to fund
such completion. Any costs to complete the Initial Alterations in
excess of the Tenant's Fund shall be the sole responsibility and
obligation of Tenant.
(4) Within sixty (60) days after Substantial
Completion of the Initial Alterations, Tenant shall deliver to Landlord (a)
general releases and waivers of lien from all contractors, subcontractors and
materialmen involved in the performance of the Initial Alterations and the
materials furnished in connection therewith (provided, however, that if
Tenant's contract with its general contractor, contractors, subcontractors or
materialmen shall obligate any such contractor or materialman to furnish such
general releases and waivers of liens, and Tenant shall have been unable to
obtain the same in spite of having used its best efforts (not including
litigation) to do so, Tenant shall be relieved of its obligation to obtain the
same), and (b) a certificate can engineer or architect stating that (i) the
Initial Alterations have been Substantially Completed in accordance with the
plans and specifications therefor approved by Landlord and (ii) all
contractors, subcontractors and materialmen have been paid for the Initial
Alterations and materials furnished through such date except for work in
dispute or work not yet completed, which incomplete work, by definition, may
only be work of an insubstantial nature (the nature and amount of such disputed
or incomplete work shall be set forth in such certificate); provided, however,
that if Tenant shall be a law firm, the certification specified in this clause
(ii) may be given by a Certifying Officer and not the engineer or architect.
D. Landlord shall deliver the Premises "as is", subject
to the removal by the existing tenant of selected paintings. In consideration
for Landlord arranging for the prior tenant to leave the kitchen equipment,
kitchen utensils, piano, bar equipment, tables and chairs and all other items
of equipment, furniture and furnishings currently located at the Premises
(except selected paintings), which shall be specified in a list to be provided
by Landlord to Tenant within approximately fifteen (15) days after the date
hereof, Tenant shall pay to Landlord upon delivery of the
12
<PAGE> 13
Premises to Tenant the sum of $75,000. Landlord may credit such amount against
the Tenant's Fund. All such listed equipment, furniture and furnishings shall
be and remain the property of Tenant and may be removed by Tenant at the end of
the term, subject to the security interest of Landlord therein as granted to
Landlord hereunder. Tenant hereby grants Landlord a security interest in all
such listed equipment, furniture and furnishings, to secure the payment and
performance of the obligations of Tenant under or in connection with this Lease
and, at Landlord's request, Tenant promptly shall execute at any time and from
time to time, at Tenant's expense, any and all documents (including, without
limitation, financing statements) in form and substance as Landlord may deem
necessary or advisable to perfect, protect, continue, enforce or further
evidence the security interest here n granted to Landlord, and Tenant shall pay
all costs of filing such documents. This Lease is intended to constitute a
"security agreement" (as defined in the Uniform Commercial Code of the State of
new york) covering the aforementioned items of property, which security
agreement shall be binding upon all assignees of Tenant's interest under this
Lease with the same force and effect as in this Lease had been signed by said
assignee. In connection with and as a condition to any assignment by Tenant of
its interest under this Lease, Tenant shall provide, at no cost or expense to
Landlord, any additional documents as may be deemed necessary by Landlord to
evidence or confirm the existence of a first lien in Landlord's favor on, and a
security interest in, the aforementioned items of property.
E. The existing HVAC equipment shall be in good working
order on the date that Landlord delivers possession of the Premises to Tenant
and thereafter Tenant, at Tenant's sole cost and expense, shall maintain same
in good working order and repair and replace same as necessary. Nothing herein
is or is deemed to imply that such HVAC equipment is adequate or meets any
particular specifications for the heating, ventilation or cooling needs of
Tenant, Tenant hereby agreeing to be solely responsible for any upgrading or
other changes or additions or supplements thereto required or desirable for the
comfortable and lawful use and occupancy by Tenant of the Premises.
F. Landlord, at Landlord's expense, will abate any
asbestos contained in the northwest quadrant of the Premises, including the
kitchen, locker area, men's room and manager's office, and the second kitchen.
In connection with such work, Tenant shall permit Landlord to have access to
the Premises and exclusive use of specific areas while Landlord is performing
such work. Landlord shall perform such work with due diligence and Landlord
and Tenant shall cooperate with each other to coordinate the progress of
Landlord's abatement work and Tenant's Alterations and each shall use
reasonable efforts to minimize interference with the other's work.
4. REPAIRS-FLOOR LOAD. A. Landlord shall maintain and
repair the Building Systems and the public portions of the
13
<PAGE> 14
Building. Tenant, at Tenant's sole cost and expense, shall take good care of
the Premises and the fixtures, equipment and appurtenances therein and make all
nonstructural repairs thereto as and when needed to preserve them in good
working order and condition, except for reasonable wear and tear, obsolescence
and damage for which Tenant is not responsible pursuant to the provisions of
Article 10 hereof. Notwithstanding the foregoing, all damage or injury to the
Premises or to any other part of the Building, or to its fixtures, equipment
and appurtenances, whether requiring structural or nonstructural repairs,
caused by or resulting from carelessness, omission, neglect or improper conduct
of, or Alterations made by, Tenant, Tenant's servants, employees, invitees or
licensees, shall be repaired at Tenant's sole cost and expense, by Tenant to
the reasonable satisfaction of Landlord (if the required repairs are
nonstructural in nature), or by Landlord (if the required repairs are
structural in nature). Tenant also shall repair all damage to the Building and
the Premises caused by the moving of Tenant's fixtures, furniture or equipment.
Not in limitation of the foregoing, Tenant shall maintain in good working order
and repair to the satisfaction of Landlord, at Tenant's sole cost and expense,
any and all plumbing facilities located within the Premises, whether supplied
by Landlord or Tenant, which serve Tenant exclusively. All the aforesaid
repairs shall be of quality or class equal to the original work or construction
and shall be made in accordance with the provisions of Article 3 hereof. If
Tenant fails after ten (10) days' notice (or such shorter period as Landlord
may be permitted pursuant to any Superior Lease or Mortgage) to proceed with
due diligence to make repairs required to be made by Tenant, the same may be
made by Landlord at the expense of Tenant, and the expenses thereof incurred by
Landlord, with interest thereon at the Applicable Rate, shall be paid to
Landlord as additional rent within thirty (30) days after Tenant's receipt of a
bill or statement therefor. Tenant shall give Landlord prompt notice of any
defective condition in any plumbing, air-cooling or heating system, or
electrical lines, located in, servicing or passing through the Premises.
Landlord shall use its reasonable efforts to minimize interference with
Tenant's use and occupancy of the Premises in making any repairs, alterations,
additions or improvements; provided, however, that Landlord shall have no
obligation to employ contractors or labor at so-called overtime or other
premium pay rates or to incur any other overtime costs or expenses whatsoever,
except that if Tenant shall be denied access to the Premises for more than
seven (7) consecutive business days by reason of Landlord's making any such
repairs, alterations, additions or improvements, other than in connection with
a fire or other casualty or a taking, then, at Tenant's request, Landlord shall
use overtime labor if necessary to promptly make such repairs, alterations,
additions or improvements.
B. Tenant shall not place a load upon any floor of the
Premises exceeding that permitted by the certificate of occupancy for the
Building. Tenant shall not move any safe, heavy machinery, heavy equipment,
industrial size refrigerators, stoves, ovens, freight, bulky matter or fixtures
into or out of the Building
14
<PAGE> 15
without Landlord's prior consent, which consent shall not be unreasonably
withheld or delayed, and shall make payment to Landlord of Landlord's costs in
connection therewith. If such safe, machinery, equipment, refrigerators,
stoves, ovens, freight, bulky matter or fixtures requires special handling,
Tenant shall employ only persons holding a Master Rigger's license to do said
work. All work in connection therewith shall comply with the Requirements, and
shall be done during such hours as Landlord may reasonably designate. Large
business machines and mechanical equipment shall be placed and maintained by
Tenant at Tenant's expense in settings sufficient in Landlord's reasonable
judgement to absorb and prevent vibration, noise and annoyance. Subject to the
provisions of Article 10 hereof, there shall be no allowance to Tenant for a
diminution of rental value and no liability on the part of Landlord by reason
of inconvenience, annoyance or injury to business arising from Landlord, Tenant
or others making, or failing to make, any repairs, alterations, additions or
improvements in or to any portion of the Building or the Premises, or in or to
fixtures, appurtenances or equipment thereof.
C. Tenant acknowledges that the nature of the business
to be conducted in the Premises could, in the absence of adequate preventive
measures, create objectionable fumes, vapors or odors, vermin, damage and
injury, unreasonable noise and other conditions which would cause annoyance and
interference to the Building and its occupants. As an express inducement to
Landlord to enter into this Lease, Tenant agrees that it shall conduct its
operation in the Premises so as to prevent such annoyance or interference and
Tenant specifically agrees that in furtherance of this covenant it shall, at
its own cost and expense:
(1) maintain, service and repair the ventilating
and exhaust system servicing the Premises and make all replacements
thereto during the Term, including installation of charcoal filters,
and in furtherance and not in limitation of the foregoing, maintain
such ventilating exhaust system, and any ducts connecting thereto, in
such manner so as not to interfere with the Building's ventilating
system;
(2) provide, to Landlord's satisfaction, chemical
treatment for the exhaust system for the elimination of all odors and
fumes and, prior to Tenant's occupancy at the Premises, furnish
Landlord with specifications for such treatment;
(3) keep the drain, waste and sewer pipes and
connections with water mains, to the extent the same service the
Premises exclusively, free from obstruction and otherwise in good
working order, and maintain in good working order grease traps in the
main soil lines of the Premises:
(4) keep the Premises free of noxious chemicals
or inflammable materials other than those customarily employed in
connection with restaurant use;
15
<PAGE> 16
(5) provide such other exhaust, cleaning or
similar systems, including, without limitation, a smoke and grease
laden vapors removal system acceptable to Landlord, which shall be
necessary to prevent any smoke, fumes, vapors, steam, moisture,
condensation, gases of any kind, odors and other offensive substances
from damaging the Premises or emanating from the Premises;
(6) fireproof all draperies and curtains in the
Premises and submit to Landlord, upon Landlord's request, current
certificates evidencing such fire proofing, and install and maintain
in all cooking areas chemical fire extinguishing devices (such as
ansul) approved by the Fire Insurance Rating Organization having
jurisdiction over the Premises; and
(7) take all necessary measures to keep the areas
of the Building below the Premises free from leaks related to
conditions at the Premises, and provide such waterproofing of the
Premises as necessary.
In the event that at any time during the Term there shall be
any violation of the foregoing covenants of this Section C, or notwithstanding
the performance by Tenant of such covenants, additional services, equipment or
facilities shall be necessary to accomplish the purposes of this Section C,
Landlord shall have the right upon twenty (20) days' prior written notice to
Tenant (except in the case of an emergency), to perform any of such obligations
or provide any such additional services or equipment to accomplish such
purposes and Tenant shall reimburse Landlord for any reasonable expenditures
made by Landlord in connection therewith within thirty (30) days after receipt
by Tenant of statement from Landlord thereof. Such obligation shall be deemed
to be additional rent hereunder and collectable by Landlord as such. All work
required to be done by Tenant pursuant to the provisions of this Section C
shall be done in strict compliance with the provisions and conditions of this
Lease.
5. WINDOW CLEANING. Tenant shall not clean, nor
require, permit, suffer or allow any window in the Premises to be cleaned from
the outside in violation of Section 202 of the Labor law, or any other
applicable law, or of the rules of the Board of Standards and Appeals, or of
any other board or body having or asserting jurisdiction.
6. REQUIREMENTS OF LAW. A. Tenant, at its sole
expense, shall comply with all Requirements applicable to the Building and the
Premises and/or the use and occupancy thereof by Tenant. Tenant shall not do
or permit to be done any act or thing upon the Premises which will invalidate
or be in conflict with any customary all-risk insurance policies covering the
Building and fixtures and property therein; and shall not do, or permit
anything to be done in or upon the Premises, or bring or keep anything therein,
except as now or hereafter permitted by the New York City
16
<PAGE> 17
Fire Department, New York Board of Fire Underwriters, New York Insurance
Service Office or other authority having jurisdiction and then only in such
quantity and manner of storage as not to increase the rate for fire insurance
applicable to the Building, or use the Premises in a manner which shall
increase the rate of fire insurance on the Building or on property located
therein, over that in similar type buildings or in effect on the Commencement
Date. Tenant's mere use, as opposed to manner of use, of the Premises for a
restaurant, is not deemed to violate the aforesaid provisions of this Article
6. If by reason of Tenant's failure to comply with the provisions of this
Article, the fire insurance rate shall be higher than it otherwise would be,
then Tenant shall desist from doing or permitting to be done any such act or
thing and shall reimburse Landlord, as additional rent hereunder, for that part
of all fire insurance premiums thereafter paid by Landlord which shall have
been charged because of such failure by Tenant, and shall make such
reimbursement upon demand by Landlord. In any action or proceeding wherein
Landlord and Tenant are parties, a schedule or "make up" of rates for the
Building or the Premises issued by the New York Fire Insurance Rating
Organization, or other body fixing such fire insurance rates, shall be
conclusive evidence of the facts therein stated and of the several items and
charges in the fire insurance rates then applicable to the Building.
B. Tenant, at its sole cost and expense and after notice
to Landlord, may contest by appropriate proceedings prosecuted diligently and
in good faith, the legality or applicability of any Requirement affecting the
Premises provided that (a) Landlord (or any Indemnitee) shall not be subject to
criminal or civil penalties or fines or to prosecution for a crime, nor shall
the Real Property or any part thereof be subject to being condemned or vacated,
nor shall the certificate of occupancy for the Premises or the Building be
suspended or threatened to be suspended by reason of non-compliance or by
reason of such contest, nor shall Landlord (or any Indemnitee) be liable to any
independent third party; (b) before the commencement of such contest, Tenant
shall furnish to Landlord either (i) a bond of a security company satisfactory
to Landlord, in form and substance reasonably satisfactory to Landlord, and in
an amount at least equal to one hundred twenty percent (120%) of the cost of
such compliance together with any interest, penalties or fines that may accrue
by reason of such noncompliance (as reasonably estimated by Landlord) and shall
indemnify Landlord (and any Indemnitee) against the cost of such compliance and
liability resulting from or incurred in connection with such contest or
non-compliance, or (ii) other security reasonably satisfactory in all respects
to Landlord; provided, however, that Tenant shall not be required to furnish
security under this clause (b) to the extent that Tenant shall furnish security
under clause (c) of this Section B; (c) such noncompliance or contest shall not
constitute or result in a violation (either with the giving of notice or the
passage of time or both) of the terms of any Mortgage or Superior Lease, or if
such Superior Lease or Mortgage shall condition such non-compliance or contest
upon the taking of action or furnishing of security by
17
<PAGE> 18
Landlord, such action shall be taken or such security shall be furnished at the
expense of Tenant; and (d) Tenant shall keep Landlord regularly advised as to
the status of such proceedings. Without limiting the applicability of the
foregoing, Landlord (or any Indemnitee) shall be deemed subject to prosecution
for a crime if Landlord (or any Indemnitee), a Lessor, a Mortgagee or any of
their officers, directors, partners, shareholders, agents or employees is
charged with a crime of any kind whatsoever unless such charges are withdrawn
ten (10) days before Landlord (or any Indemnitee), such Lessor or such
Mortgagee or such officer, director, partner, shareholder, agent or employee,
as the case may be, is required to plead or answer thereto.
7. SUBORDINATION. A. (1) This Lease is subject and
subordinate to each and every Superior Lease and to each and every Mortgage.
This clause shall be self-operative and no further instrument of subordination
shall be required to make the interest of any Lessor or Mortgagee superior to
the interest of Tenant hereunder, however, Tenant shall execute and deliver
promptly any certificate that Landlord may request in confirmation of such
subordination. If the date of expiration of any Superior Lease shall be the
same day as the Expiration Date, the Term shall end and expire twelve (12)
hours prior to the expiration of the Superior Lease. Tenant shall not do
anything that would constitute a default under any Superior Lease or Mortgage
of which Tenant has notice, or omit to do anything that Tenant is obligated to
do under the terms of this Lease so as to cause Landlord to be in default
thereunder. If, in connection with the financing of the Real Property, the
Building or the interest of the lessee under any Superior Lease, any lending
institution shall request reasonable modifications of this Lease that do not
materially increase the obligations or materially or adversely affect the
rights of the Tenant under this Lease, Tenant shall make such modifications, at
no cost or expense to Tenant.
(2) Tenant hereby irrevocably waives any and all
right(s) it may have in connection with any zoning lot merger or transfer of
development rights with respect to the Real Property including, without
limitation, any rights it may have to be a party to, to contest, or to execute,
any Declaration of Restrictions (as such term is defined in Section 12-10 of
the Zoning Resolution of the City of New York effective December 15, 1961, as
amended) with respect to the Real Property, which would cause the Premises to
be merged with or unmerged from any other zoning lot pursuant to such Zoning
Resolution or to any document of a similar nature and purpose, and Tenant
agrees that this Lease shall be subject and subordinate to any Declaration of
Restrictions or any other document of similar nature and purpose now or
hereafter affecting the Real Property. In confirmation of such subordination
and waiver, Tenant shall execute and deliver promptly any certificate or
instrument that Landlord reasonably may request and, in connection therewith,
Tenant hereby irrevocably constitutes and appoints Landlord as Tenant's
attorney-in-fact to execute any such
18
<PAGE> 19
certificate or instrument for and on behalf of Tenant, such power of attorney
being coupled with an interest.
B. If at any time prior to the expiration of the Term,
any Superior Lease shall terminate or be terminated for any reason or any
Mortgagee comes into possession of the Real Property or the Building or the
estate created by any Superior Lease by receiver or otherwise, Tenant agrees,
at the election and upon demand of any owner of the Real Property or the
Building, or of the Lessor, or of any Mortgagee in possession of the Real
Property or the Building, to attorn, from time to time, to any such owner,
Lessor or Mortgagee or any person acquiring the interest of Landlord as a
result of any such termination, or as a result of a foreclosure of the Mortgage
or the granting of a deed in lieu of foreclosure, upon the then executory terms
and conditions of this Lease, for the remainder of the Term, provided that such
owner, Lessor or Mortgagee, as the case may be, or receiver caused to be
appointed by any of the foregoing, shall then be entitled to possession of the
Premises. Notwithstanding the foregoing, this Lease shall not terminate by
reason of the termination of any Superior Lease without the prior written
consent of the Mortgagee of the Mortgage which is a first mortgage on the Real
Property. The provisions of this Section B shall inure to the benefit of any
such owner, Lessor or Mortgagee, shall apply notwithstanding that, as a matter
of law, this Lease may terminate upon the termination of any such Superior
Lease, and shall be self-operative upon any such demand, and no further
instrument shall be required to give effect to said provisions. Tenant,
however, upon demand of any such owner, Lessor or Mortgagee, shall execute,
from time to time, instruments in confirmation of the foregoing provisions of
this Section B, satisfactory to any such owner, Lessor or Mortgagee,
acknowledging such attornment and setting forth the terms and conditions of its
tenancy. Nothing contained in this Section B shall be construed to impair any
right otherwise exercisable by any such owner, Lessor or Mortgagee.
C. If requested by any Mortgagee, any Lessor or
Landlord, Tenant agrees to promptly execute and deliver at its own cost and
expense any instrument, in recordable form, to evidence such subordination.
Landlord represents that as of the date of this Lease, there is no Superior
Lease or Mortgage with respect to the Premises. Provided Tenant is not then in
default of this Lease, Landlord shall, upon Tenant's written request, utilize
reasonable efforts to obtain from any future Mortgagee or Lessor an instrument,
in recordable form, substantially stating that notwithstanding that the Lease
is subordinate to the interests of such Mortgagee or Lessor, that (i) in the
case of a Mortgagee, in the event of a foreclosure of its Mortgage, such
Mortgagee will not make Tenant a party defendant to such foreclosure, evict
Tenant, disturb Tenant's possession under this Lease, increase Tenant's
obligations as set forth in this Lease or diminish Tenant's rights under this
Lease provided Tenant is not in default under this Lease, and (ii) in the case
of a Lessor, that if its Superior Lease shall terminate or be terminated for
any reason, Lessor will
19
<PAGE> 20
recognize Tenant as the direct tenant of such Lessor on the same terms and
conditions as are contained in this Lease provided Tenant is not in default
under this Lease (such instrument from a Mortgagee or Lessor, as the case may
be, being hereinafter referred to as a "Non-Disturbance Agreement"). Any such
Non-Disturbance Agreement may provide that no Lessor or Mortgagee shall (a) be
liable for any act or omission or negligence of Landlord under this Lease, (b)
be subject to any counterclaim, offset or defense, which theretofore accrued to
Tenant against Landlord, (c) be bound by any modification or amendment of this
Lease (unless such modification or amendment shall have been consented to by
such Lessor or Mortgagee and a copy of the same shall have been presented to
such Lessor or Mortgagee), (d) be bound by any payment or rent or additional
rent for more than one (1) month in advance (unless actually received by Lessor
or Mortgagee), (e) be obligated to perform any work in the Premises (except to
the extent covered by insurance proceeds received by Lessor or Mortgagee), or
(f) be obligated to repair or restore the Premises or any portion thereof. The
term "reasonable efforts" shall not impose an obligation upon Landlord to pay a
sum of money to any Mortgagee or Lessor or to initiate judicial proceedings to
obtain such Non-Disturbance Agreement. Tenant shall within thirty (30) days of
Landlord's rendition of any bill or statement to Tenant reimburse Landlord for
any reasonable cost and expense of obtaining such Non-Disturbance Agreement.
D. From time to time, within seven (7) days next
following request by Landlord, any Mortgagee or any Lessor, Tenant shall
deliver to Landlord, such Mortgagee or such Lessor a written statement executed
and acknowledged by Tenant, in form satisfactory to Landlord, such Mortgagee or
such Lessor, (1) stating that this Lease is then in full force and effect and
has not been modified (or if modified, setting forth all modifications), (2)
setting forth the date to which the Fixed Rent, additional rent and other items
of Rental have been paid, (3) stating whether or not, to the best knowledge of
Tenant, Landlord is in default under this Lease, and, if Landlord is in
default, setting forth the specific nature of all such defaults, and (4) as to
any other matters requested by Landlord, such Mortgagee or such Lessor. Tenant
acknowledges that any statement delivered pursuant to this Section D may be
relied upon by any purchaser or owner of the Real Property or the Building, or
Landlord's interest in the Real property or the building or any Superior Lease,
or by any Mortgagee, or by an assignee of any mortgagee, or by any Lessor.
E. From time to time, within seven (7) days next
following request by Tenant, Landlord shall deliver to Tenant a written
statement executed and acknowledged by Landlord (i) stating that this Lease is
then in full force and effect and has not been modified (or if modified,
setting forth all modifications), (ii) setting forth the date to which the
Fixed Rent, all additional rent and any other items of Rental have been paid,
(iii) stating whether or not, to the best knowledge of Landlord (but without
having made any investigation), Tenant is in default under this Lease, and, if
20
<PAGE> 21
Tenant is in default, setting forth the specific nature of all such defaults,
and (iv) as to any other matters reasonably requested by Tenant and related to
this Lease.
F. As long as any Superior Lease or Mortgage shall
exist, Tenant shall not seek to terminate this Lease by reason of any act or
omission of Landlord until Tenant shall have given written notice of such act
or omission to all Lessors and Mortgagees at such addresses as shall have been
furnished to Tenant by such Lessors and Mortgagees and until a reasonable
period of time shall have elapsed following the giving of such notice, during
which period such Lessors and Mortgagees shall have the right, but not the
obligation, to remedy such act or omission.
8. RULES AND REGULATIONS. Tenant and Tenant's servants,
contractors, employees, agents, visitors and licensees shall comply with the
Rules and Regulations. If Tenant disputes the reasonableness of any additional
Rule or Regulation hereafter adopted by Landlord, the dispute shall be
submitted for decision to the Chairman of the Board of Directors of the
Management Division of The Real Estate Board of New York, Inc., or to such
impartial person or persons as he may designate, whose determination shall be
final and conclusive upon the parties hereto. The right to dispute the
reasonableness of any additional Rule or Regulation upon Tenant's part shall be
deemed waived unless the same shall be asserted by service of a notice upon
Landlord within sixty (60) days after receipt by Tenant of notice of the
adoption of any such additional Rule or Regulation. Nothing in this Lease
contained shall be construed to impose upon Landlord any duty or obligation to
enforce the Rules and Regulations or terms, covenants or conditions in any
other lease against any other tenant, and Landlord shall not be liable to
Tenant for violation of the same by any other tenant, its servants, employees,
agents, visitors or licensees.
9. INSURANCE, PROPERTY LOSS OR DAMAGE; REIMBURSEMENT.
A. (1) Any Building employee to whom any property shall be entrusted by or on
behalf of Tenant shall be deemed to be acting as Tenant's agent with respect to
such property and neither Landlord nor its agents shall be liable for any
damage to property of Tenant or of others entrusted to employees of the
Building, nor for the loss of or damage to any property of Tenant by theft or
otherwise. Neither Landlord nor its agents shall be liable for any injury or
damage to persons or property, or interruption of Tenant's business, resulting
from fire or other casualty; nor shall Landlord or its agents be liable for any
such damage caused by other tenants or persons in the Building or caused by
construction of any private, public or quasi-public work; nor shall Landlord be
liable for any latent defect in the Premises or in the Building. Nothing in
the foregoing sentence shall affect any right of Landlord to the indemnity from
Tenant to which Landlord may be entitled under Article 35 hereof in order to
recoup for payments made to compensate for losses of third parties.
21
<PAGE> 22
(2) If at any time any windows of the Premises
are temporarily closed, darkened or bricked-up for any reason whatsoever
including, but not limited to, Landlord's own acts, or any of such windows are
permanently closed, darkened or bricked-up if required by law or related to any
construction upon property adjacent to the Real Property by Landlord or others,
Landlord shall not be liable for any damage Tenant may sustain thereby and
Tenant shall not be entitled to any compensation therefor nor abatement of
Fixed Rent or any other item of Rental nor shall the same release Tenant from
its obligations hereunder nor constitute an eviction. Landlord shall use
reasonable efforts to perform all repairs, maintenance, alterations or
improvements which result in the temporary closing, darkening or bricking-up of
the windows of the Premises in a manner so as to minimize the period during
which such windows are closed, darkened bricked-up; provided, however, that
Landlord shall have no obligation to employ contractors or labor at so-called
overtime or other premium pay rates or to incur any other overtime costs or
expenses whatsoever.
(3) Tenant shall immediately notify Landlord of
any fire or accident in the Premises or in the Building.
B. (1) Tenant shall obtain and keep in full force
and effect a policy of (i) comprehensive general public liability and property
damage insurance, and (ii) liquor liability (dram shop) insurance, each such
insurance to contain a broad form contractual liability endorsement under which
Tenant is named as the insured, and Landlord and any Lessors and any Mortgagees
(whose names shall have been furnished to Tenant) are named as additional
insureds, and under which the insurer provides a broad form contractual
liability endorsement covering the indemnity contained in Article 35. Each
such policy shall contain a provision that no act or omission of Tenant shall
affect or limit the obligation of the insurance company to pay the amount of
any loss sustained and that the policy shall be non-cancelable with respect to
Landlord and such Lessors and Mortgagees unless thirty (30) days' written
notice shall have been given to Landlord by certified mail, return receipt
requested, which notice shall contain the policy number and the names of the
insured and additional insureds. A certificate of each such insurance shall be
delivered to Landlord and shall refer to Article 35 hereof. The minimum limits
of liability shall be (i) for the comprehensive general public liability and
property damage policy, a combined single limit with respect to each occurrence
in an amount of not less than $20,000,000 for injury (or death) and damage to
property, and (ii) for the liquor liability policy, $20,000,000 on an
occurrence basis, covering bodily injury and death to one or more persons and
$1,000,000 in connection with property damage. Tenant shall also purchase on
behalf of, and in the name of, Tenant and keep in full force and effect a
policy of business interruption insurance insuring the stoppage of Tenant's
business in the Premises for a period of not less than one (1) year. All
insurance required to be carried by Tenant pursuant to the terms of this Lease
shall be effected under valid and enforceable policies issued by reputable and
independent insurers
22
<PAGE> 23
permitted to do business in the State of New York, and rated in Best's
Insurance Guide, or any successor thereto (or if there be none, an organization
having a national reputation) as having a general policyholder rating of "A"
and a financial rating of a least "13".
(2) If any claim, action or proceeding shall be
made or commenced, as the case may be, against the Landlord as to which the
indemnification provided for in this Article 9 may be applicable, Landlord
shall give Tenant prompt notice thereof and shall afford Tenant, at Tenant's
sole cost and expense, the opportunity to resist or defend or settle any such
claim, action or proceeding by counsel reasonably satisfactory to Landlord,
Landlord's insurers, any Mortgagee and any Lessor, provided that within ten
(10) days after notice of any such claim, action or proceeding, Tenant shall
notify Landlord of its election so to resist or defend or settle the same; if
Tenant has made such timely election, Landlord shall not settle such claim,
action or proceeding without Tenant's consent, not to be unreasonably withheld
or delayed.
C. On or prior to the Commencement Date, Tenant shall
deliver to Landlord appropriate certificates of insurance, including evidence
of waivers of subrogation required pursuant to Section F of Article 10 hereof,
required to be carried by Tenant pursuant to this Article 9. Evidence of each
renewal or replacement of a policy shall be delivered by Tenant to Landlord at
least twenty (20) days prior to the expiration of such policy.
10. DESTRUCTION-FIRE OR OTHER CAUSE. A. If the Premises
shall be damaged by fire or other casualty, and if Tenant shall give prompt
notice thereof to Landlord, the damages shall be repaired by and at the expense
of Landlord to the condition existing immediately prior to he casualty,
exclusive of Tenant's Alterations, and until such repairs shall be made the
Fixed Rent shall be reduced in the proportion which the area of the part of the
Premises which is not usable by Tenant bears to the total area of the Premises.
Landlord shall have no obligation to repair any damage to, or to replace, any
Alterations, fixtures, furniture, furnishings, wall coverings, equipment or
other property or effects of Tenant.
B. Anything in Section A of this Article 10 to the
contrary notwithstanding, if the Premises are totally damaged or are rendered
wholly untenantable, and if Landlord shall decide not to restore the Premises,
or if the Building shall be so damaged by fire or other casualty that, in
Landlord's opinion, substantial alteration, demolition, or reconstruction of
the Building shall be required (whether or not the Premises shall have been
damaged or rendered untenantable), then in any of such events, Landlord, at
Landlord's option, may, not later than ninety (90) days following the damage,
give Tenant a notice in writing terminating this Lease. If Landlord elects to
terminate this Lease, the Term shall expire upon the tenth (10th) day after
such notice is given, and Tenant
23
<PAGE> 24
shall vacate the Premises and surrender the same to Landlord. If Tenant shall
not be in default under this Lease, then upon the termination of this Lease
under the conditions provided for in this Section B, Tenant's liability for
Fixed Rent shall cease and any prepaid portion of Fixed Rent for any period
after such date shall be refunded by Landlord to Tenant.
C. (1) Anything contained in this Article 10 to the
contrary notwithstanding, within sixty (60) days after Landlord has notice of
any damage that materially impairs Tenant's ability to conduct its business in
the Premises, Landlord shall deliver to Tenant a statement prepared by a
reputable contractor setting forth such contractor's estimate as to the time
required to repair such damage and the assumptions regarding the use of labor
(including overtime labor, if applicable) and construction methods considered
in arriving at such estimate. If the estimated time period exceeds fifteen
(15) months from the date of such damage, Tenant may elect to terminate this
Lease by notice to Landlord not later than sixty (60) days following receipt of
such statement. If Tenant makes such election, the Term shall expire upon the
sixtieth (60th) day after notice of such election is given by Tenant, and
Tenant shall vacate the Premises and surrender the same to Landlord in
accordance with the provisions of Article 20 hereof. If Tenant shall not have
elected to terminate this Lease pursuant to this Article 10 (or is not entitled
to terminate this Lease pursuant to this Article 10) and such repairs are (i)
not commenced by Landlord within ninety (90) days after the date Landlord has
notice of such damage, (ii) not prosecuted substantially on the basis specified
in the contractor's estimate referred to in this paragraph (1) so that the
repairs cannot be Substantially Completed within the estimated time period
(unless Landlord agrees to take such other measures required to Substantially
Complete such repairs within such period), or (iii) not Substantially Completed
by Landlord within fifteen (15) months after the date Landlord has such notice,
subject to Unavoidable Delays but in no event later than twenty four (24)
months after Landlord has such notice, Tenant may elect, as its sole remedy
(except as provided below), to terminate this Lease by notice to Landlord not
later than thirty (30) days following the expiration of either of the periods
specified in clauses (i) and (iii) above or on thirty (30) days' notice if
Landlord shall not be prosecuting such repairs as required by clause (ii)
hereof. Notwithstanding the foregoing, if at any time Tenant believes that
Landlord shall not be diligently prosecuting such repairs and shall notify
Landlord, Tenant shall have the right to seek injunctive relief but shall not
have the right to seek damages. Upon the termination of this Lease under the
conditions provided in this Section C, Tenant's liability for Rental thereafter
due and payable shall cease and any prepaid portion of Rental for any period
after such date shall be refunded by Landlord to Tenant. Landlord, upon
request by Tenant, shall advise Tenant of any Unavoidable Delays, and the
length thereof, that Landlord shall have incurred in connection with any such
repair prior to such request.
24
<PAGE> 25
(2) Notwithstanding the foregoing, if the
Premises shall be substantially damaged during the last year of the Term,
Landlord or Tenant may elect by notice, given within sixty (60) days after the
occurrence of such damage, to terminate this Lease and if either party makes
such election, the Term shall expire upon the sixtieth (60th) day after notice
of such election is given by such party and Tenant shall vacate the Premises
and surrender the same to Landlord in accordance with the provisions of Article
20 hereof. Tenant shall have no other options to cancel this Lease under this
Article 10.
D. No penalty shall accrue for delays which may arise by
reason of adjustment of fire insurance on the part of Landlord or Tenant, and
for delay on account of "labor troubles" or any other cause beyond Landlord's
control.
E. This Article 10 constitutes an express agreement
governing any case of damage or destruction of the Premises or the Building by
fire or other casualty, and that Section 227 of the Real Property Law of the
State of New York, which provides for such contingency in the absence of an
express agreement, and any other law of like import now or hereafter in force
shall have no application in any such case.
F. The parties hereto shall procure an appropriate
clause in, or endorsement on, any fire or extended coverage insurance covering
the Premises, the Building and personal property, fixtures and equipment
located thereon or therein, pursuant to which the insurance companies waive
subrogation or consent to a waiver of right of recovery and having obtained
such clauses or endorsements of waiver of subrogation or consent to a waiver of
right of recovery, will not make any claim against or seek to recover from the
other for any loss or damage to its property or the property of others
resulting from fire or other hazards covered by such fire and extended coverage
insurance, provided, however, that the release, discharge, exoneration and
covenant not to sue herein contained shall be limited by and coextensive with
the terms and provisions of the waiver of subrogation clause or endorsements or
clauses or endorsements consenting to a waiver of right of recovery. If the
payment of an additional premium is required for the inclusion of such waiver
of subrogation provision, each party shall advise the other of the amount of
any such additional premiums and the other party at its own election may, but
shall not be obligated to, pay the same. If such other party shall not elect
to pay such additional premium, the first party shall not be required to obtain
such waiver of subrogation provision. If either party shall be unable to
obtain the inclusion of such clause even with the payment of an additional
premium, then such party shall attempt to name the other party as an additional
insured (but not a loss payee) under the policy. If the payment of an
additional premium is required for naming the other party as an additional
insured (but not a loss payee), each party shall advise the other of the amount
of any such additional premium and the other party at its own election may, but
shall not
25
<PAGE> 26
be obligated to, pay the same. If such other party shall not elect to pay such
additional premium or if it shall not be possible to have the other party named
as an additional insured (but not loss payee), even with the payment of an
additional premium, then (in either event) such party shall so notify the first
party and the first party's agreement to name the other party as an additional
insured shall be satisfied. Tenant acknowledges that Landlord shall not carry
insurance on and shall not be responsible for damage to, Tenant's Alterations,
fixtures, furnishings, wall coverings, equipment or other property or effects,
and that Landlord shall not carry insurance against, or be responsible for any
loss suffered by Tenant due to, interruption of Tenant's business.
11. EMINENT DOMAIN. A. If the whole of the Real
Property, the Building or the Premises shall be acquired or condemned for any
public or quasi-public use or purpose, this Lease and the Term shall end as of
the date of the vesting of title with the same effect as if said date were the
Expiration Date. If only a part of the Real Property shall be so acquired or
condemned then, (1) except as hereinafter provided in this Section A, this
Lease and the Term shall continue in force and effect but, if a part of the
Premises is included in the part of the Real Property so acquired or condemned,
from and after the date of the vesting of title, the Fixed Rent and Tenant's
Share shall be reduced in the proportion which the area of the part of the
Premises so acquired or condemned bears to the total area of the Premises
immediately prior to such acquisition or condemnation; (2) whether or not the
Premises shall be affected thereby, Landlord, at Landlord's option, may give to
Tenant, within sixty (60) days next following the date upon which Landlord
shall have received notice of vesting of title, a five (5) days' notice of
termination of this Lease; and (3) if the part of the Real Property so acquired
or condemned shall contain more than fifteen percent (15%) of the total area of
the Premises immediately prior to such acquisition or condemnation, or if, by
reason of such acquisition or condemnation, Tenant no longer has reasonable
means of access to the Premises, Tenant, at Tenant's option, may give to
Landlord, within sixty (60) days next following the date upon which Tenant
shall have received notice of vesting of title, a five (5) days' notice of
termination of this Lease. If any such five (5) days' notice of termination is
given, by Landlord or Tenant, this Lease and the Term shall come to an end and
expire upon the expiration of said five (5) days with the same effect as if the
date of expiration of said five (5) days were the Expiration Date. If a part
of the Premises shall be so acquired or condemned and this Lease and the Term
shall not be terminated pursuant to the foregoing provisions of this Section A,
Landlord, at Landlord's expense, shall restore that part of the Premises not so
acquired or condemned to a self-contained rental unit to the then Building
standard conditions, exclusive of Tenant's Alterations. In the event of any
termination of this Lease and the Term pursuant to the provisions of this
Section A, the Fixed Rent shall be apportioned as of the date of sooner
termination and any prepaid portion of
26
<PAGE> 27
Fixed Rent for any period after such date shall be refunded by Landlord to
Tenant.
B. In the event of any such acquisition or condemnation
of all or any part of the Real Property, Landlord shall be entitled to receive
the entire award for any such acquisition or condemnation, Tenant shall have no
claim against Landlord or the condemning authority for the value of any
unexpired portion of the Term and Tenant hereby expressly assigns to Landlord
all of its right in and to any such award. Nothing contained in this Section B
shall be deemed to prevent Tenant from making a separate claim in any
condemnation proceedings for the then value of any furniture, furnishings and
fixtures installed by and at the sole expense of Tenant and included in such
taking, and for any moving expenses.
C. If the whole or any part of the Premises shall be
acquired or condemned temporarily during the Term for any public or
quasi-public use or purpose, Tenant shall give prompt notice thereof to
Landlord and the Term shall not be reduced or affected in any way and Tenant
shall continue to pay in full all items of Rental payable by Tenant hereunder
without reduction or abatement, and Tenant shall be entitled to receive for
itself any award or payments for such use, provided, however, that:
(i) if the acquisition or condemnation is for a
period not extending beyond the Term, and if by reason of such
acquisition or condemnation changes or alterations are required to be
made to the Premises which would necessitate an expenditure to restore
the Premises to its former condition, such changes or alterations
shall be performed by Tenant, at Tenant's sole cost and expense and in
accordance with the provisions of Article 3 hereof, to Landlord's
satisfaction; or
(ii) if the acquisition or condemnation is for a
period extending beyond the Term, after deducting the cost for any
changes or alterations required for the restoration of the Premises
from the amount of any award or payment which shall be retained by
Landlord, the balance of such award or payment shall be apportioned
between Landlord and Tenant as of the Expiration Date.
12. ASSIGNMENT, SUBLETTING, MORTGAGE, ETC. A. (1) Except
as expressly permitted herein, Tenant, without the prior consent of Landlord in
each instance, shall not (a) assign its rights or delegate its duties under
this Lease (whether by operation of law, transfers of interests in Tenant or
otherwise), (b) mortgage or encumber its interest in this Lease, in whole or in
part, (c) sublet, or permit the subletting of, the Premises or any part
thereof, or (d) permit the Premises or any part thereof to be occupied, or used
for desk space, mailing privileges or otherwise, by any person other than
Tenant.
(2) If this Lease is assigned to any person or
entity pursuant to the provisions of the Bankruptcy Code, any and
27
<PAGE> 28
all monies or other consideration payable or otherwise to be delivered in
connection with such assignment shall be paid or delivered to Landlord, shall
be and remain the exclusive property of Landlord and shall not constitute
property of Tenant or of the estate of Tenant within the meaning of the
Bankruptcy Code. Any and all monies or other considerations constituting
Landlord's property under the preceding sentence not paid or delivered to
Landlord shall be held in trust for the benefit of Landlord and shall be
promptly paid to or turned over to Landlord.
B. If Tenant's interest in this Lease is assigned in
violation of the provisions of this Article 12, such assignment shall be void
and of no force and effect against Landlord; provided, however, that Landlord
may collect an amount equal to the then Fixed Rent plus Percentage Rent plus
any other item of Rental from the assignee as a fee for its use and occupancy.
If the Premises or any part thereof are sublet to, or occupied by, or used by,
any person other than Tenant, whether or not in violation of this Article 12,
Landlord, after default by Tenant under this Lease, may collect any item of
Rental or other sums paid by the subtenant, user or occupant as a fee for its
use and occupancy, and shall apply the net amount collected to the Fixed Rent,
Percentage Rent and other items of Rental reserved in this Lease. No such
assignment, subletting, occupancy or use, whether with or without Landlord's
prior consent, nor ar.y such collection or application of Rental or fee for use
and occupancy, shall be deemed a waiver by Landlord of any term, covenant or
condition of this Lease or the acceptance by Landlord of such assignee,
subtenant, occupant or user as tenant hereunder. The consent by Landlord to
any assignment, subletting, occupancy or use shall not relieve Tenant from its
obligation to obtain the express prior consent of Landlord to any further
assignment, subletting, occupancy or use. Tenant shall pay to Landlord a
processing fee and the reasonable attorneys' fees and disbursements incurred by
Landlord in connection with any proposed assignment of Tenant's interest in
this Lease or any proposed subletting of the Premises or any part thereof.
Neither any assignment of Tenant's interest in this Lease nor any subletting,
occupancy or use of the Premises or any part thereof by any person other than
Tenant, nor any collection of Rental by Landlord from any person other than
Tenant as provided in this Section B, nor any application of any such Rental as
provided in this Section B shall, in any circumstances, relieve Tenant of its
obligations under this Lease on Tenant's part to be observed and performed.
Any person or entity to which this Lease is assigned pursuant to the provisions
of the Bankruptcy Code shall be deemed without further act or deed to have
assumed all of the obligations arising under this Lease on and after the date
of such assignment. Any such assignee shall execute and deliver to Landlord
upon demand an instrument confirming such assumption. No assignment of this
Lease shall relieve Tenant of its obligations hereunder and, subsequent to any
assignment, Tenant's liability hereunder shall continue notwithstanding any
subsequent modification or amendment hereof or the release of any subsequent
28
<PAGE> 29
tenant hereunder from any liability, to all of which Tenant hereby consents in
advance.
C. (1) If Tenant assumes this Lease and proposes to
assign the same pursuant to the provisions of the Bankruptcy Code to any person
or entity who shall have made a bona fide offer to accept an assignment of this
Lease on terms acceptable to the tenant, then notice of such proposed
assignment shall be given to Landlord by Tenant no later than twenty (20) days
after receipt by Tenant, but in any event no later than ten (10) days prior to
the date that Tenant shall make application to a court of competent
jurisdiction for authority and approval to enter into such assignment and
assumption. Such notice shall set forth (a) the name and address of such
person, (b) all of the terms and conditions of such offer, and (c) adequate
assurance of future performance by such person under the Lease, including,
without limitation, the assurance referred to in Section 365(b)(3) of the
Bankruptcy Code. Landlord shall have the prior right and option, to be
exercised by notice to Tenant given at any time prior to the effective date of
such proposed assignment, to accept an assignment of this Lease upon the same
terms and conditions and for the same consideration, if any, as the bona fide
offer made by such person, less any brokerage commissions which would otherwise
be payable by Tenant out of the consideration to be paid by such person in
connection with the assignment of this Lease.
(2) The term "adequate assurance of future
performance" as used in this Lease shall mean that any proposed assignee shall,
among other things, (a) deposit with Landlord on the assumption of this Lease
an amount equal to the then Fixed Rent payable for one (1) full year hereunder
(the "Assignee Security") as security for the faithful performance and
observance by such assignee of the terms and obligations of this Lease, which
sum shall be held and applied as set forth in Section C (3) of this Article 12,
(b) furnish Landlord with financial statements of such assignee for the prior
three (3) fiscal years, as finally determined after an audit and certified as
correct by a certified public accountant, which financial statements shall show
a net worth equal to or greater than at least one half the Fixed Rent then
payable by Tenant at the time of the proposed assignment for each of such three
(3) years, (c) grant to Landlord a security interest in such property of the
proposed assignee as Landlord shall deem necessary to secure such assignee's
future performance under this Lease, and (d) provide such other information or
take such action as Landlord, in its reasonable judgment shall determine is
necessary to provide adequate assurance of the performance by such assignee of
its obligations under the Lease.
(3) If assignee defaults in respect of any of the
terms, provisions and conditions of this Lease, including, but not limited to,
the payment of Fixed Rent or any other item of Rental, Landlord may apply or
retain the whole or any part of the Assignee Security so deposited to the
extent required for the payment of any Fixed Rent or any other item of Rental
as to which assignee is in
29
<PAGE> 30
default or for any sum which Landlord may expend or may be required to expend
by reason of assignee's default in respect of any of the terms, covenants and
conditions of this Lease, including, but not limited to, any damages or
deficiency in the reletting of the Premises, whether such damage or deficiency
accrue or accrues before or after summary proceedings or other reentry by
Landlord. If Landlord applies or retains any part of the Assignee Security so
deposited, assignee, upon demand, shall deposit with Landlord the amount so
applied or retained so that Landlord shall have the full deposit on hand at all
times during the Term. If assignee shall fully and faithfully comply with all
of the terms, provisions, covenants and conditions of this Lease, the Assignee
Security shall be returned to assignee after the Expiration Date and after
delivery of possession of the entire Premises to Landlord. In the event of a
sale of the Real Property or the Building or the leasing of the Building,
Landlord shall have the right to transfer the Assignee Security to the vendee
or lessee and Landlord shall thereupon be released by assignee from all
liability for the return of such security; and assignee shall look solely to
the new Landlord for the return of said Assignee Security; the provisions
hereof shall apply to every transfer or assignment made of the Assignee
Security to a new Landlord. Assignee will not assign or encumber or attempt to
assign or encumber the monies deposited herein as Assignee Security and neither
Landlord nor its successors or assigns shall be bound by any such assignment,
encumbrances, attempted assignment or attempted encumbrances.
D. Notwithstanding anything to the contrary contained in
this Article 12, if Tenant shall be a corporation, Tenant shall have the
privilege, without the consent of Landlord, to assign its interest in this
Lease (i) to any corporation which is a successor to Tenant either by merger or
consolidation, (ii) to a purchaser of all or substantially all of Tenant's
assets (provided such purchaser shall have also assumed substantially al_ of
Tenant's liabilities), or (iii) to a corporation or other entity (an
"Affiliate") which shall (1) control, (2) be under the control of, or (3) be
under common control with, Tenant (the term "control" as used herein shall be
deemed to mean ownership of more than 50% of the outstanding voting stock of a
corporation, or other majority equity and control interest if Tenant is not a
corporation). Tenant may also sublease all or any portion of the Premises to
any entity described in clause (iii) without the consent of Landlord. Any
assignment or subletting pursuant to the previous sentences of this Section D
is subject to the satisfaction of the conditions that, (a) any such assignee or
subtenant shall continue to use the Premises for the conduct of the same
business as Tenant was conducting prior to such assignment or subtenancy, (b)
the principal purpose of such assignment or sublease shall not be the
acquisition of Tenant's interest in this Lease (except if such assignment or
sublease is made pursuant to clause (iii) and is made for a valid
intracorporate business purpose and is not made to circumvent the provisions of
Section A of this Article), and (c) any such assignee or subtenant shall have a
net worth and annual income and cash flow, determined in accordance with
30
<PAGE> 31
generally accepted accounting principles, consistently applied, after giving
effect to such assignment, equal to or greater than Tenant's net worth and
annual income and cash flow, as so determined, on the date of such assignment.
Tenant shall, within ten (10) business days after execution thereof, deliver to
Landlord (a) a duplicate original instrument of assignment in form and
substance reasonably satisfactory to Landlord, duly executed by Tenant, and (b)
an instrument in form and substance reasonably satisfactory to Landlord, duly
executed by the assignee, in which such assignee shall assume observance and
performance of, and agree to be personally bound by, all of the terms,
covenants and conditions of this Lease on Tenant's part to be observed and
performed. Except as set forth above, either a transfer of a controlling
interest in the shares of Tenant (if Tenant is a corporation or trust) or a
transfer of a majority of the total interest in Tenant (if Tenant is a
partnership) at any one time or over a period of time through a series of
transfers, shall be deemed an assignment of this Lease and shall be subject to
all of the provisions of this Article 12, including, without limitation, the
requirement that Tenant obtain Landlord's prior consent thereto. The transfer
of shares of Tenant (if Tenant is a corporation or trust) for purposes of this
Section D shall not include the sale of shares of persons other than those
deemed "insiders" within the meaning of the Securities Exchange Act of 1934, as
amended, which sale is effected through the "over-the-counter market" or
through any recognized stock exchange.
E. If, at any time after Tenant may have assigned
Tenant's interest in this Lease, this Lease shall be disaffirmed or rejected in
any proceeding pursuant to the Bankruptcy Code, or in any similar proceeding,
or in the event of termination of this Lease by reason of any such proceeding
or by reason of lapse of time following notice of termination given pursuant to
said Article 16 based upon any of the Events of Default set forth in such
paragraphs, Tenant, upon request of Landlord given within thirty (30) days next
following any such disaffirmance, rejection or termination (and actual notice
thereof to Landlord in the event of a disaffirmance or rejection or in the
event of termination other than by act of Landlord), shall (1) pay to Landlord
all Fixed Rent, additional rent and other items of Rental due and owing by the
assignee to Landlord under this Lease to and including the date of such
disaffirmance, rejection or termination, and (2) as "tenant", enter into a new
lease with Landlord of the Premises for a term commencing on the effective date
of such disaffirmance, rejection or termination and ending on the Expiration
Date, unless sooner terminated as in such lease provided, at the same Fixed
Rent and upon the then executory terms, covenants and conditions as are
contained in this Lease, except that (a) Tenant's rights under the new lease
shall be subject to the possessory rights of the assignee under this Lease and
the possessory rights of any person claiming through or under such assignee or
by virtue of any statute or of any order of any court, and (b) such new lease
shall require all defaults existing under this Lease to be cured by Tenant with
due diligence, and (c) such new lease shall require Tenant to pay all
31
<PAGE> 32
increases in the Fixed Rent reserved in this Lease which, had this Lease not
been so disaffirmed, rejected or terminated, would have accrued under the
provisions of Articles 27 and 28 hereof after the date of such disaffirmance,
rejection or termination with respect to any period prior thereto. If Tenant
shall default in its obligation to enter into said new lease for a period of
ten (10) days next following Landlord's request therefor, then, in addition to
all other rights and remedies by reason of such default, either at law or in
equity, Landlord shall have the same rights and remedies against Tenant as if
Tenant had entered into such new lease and such new lease had thereafter been
terminated as of the commencement date thereof by reason of Tenant's default
thereunder.
F. (1) Notwithstanding the provisions of Section A
hereof, and provided that Tenant shall have otherwise complied with the
provisions of this Article 12 and Landlord shall not have exercised any of its
options pursuant to paragraph 2 of this Section F, Landlord shall not
unreasonably withhold its consent to any subletting of all, but not part, of
the Premises, provided that:
(a) the Premises shall not, without Landlord's
prior written consent, have been listed or otherwise publicly
advertised for subletting at a rental rate less than the higher of (i)
the rate of Fixed rent and Percentage Rent then payable hereunder, or
(ii) the rate of fixed rent and percentage rent for which leases of
comparable space in comparable buildings are then being made;
(b) no Event of Default shall have occurred and
be continuing;
(c) the proposed subtenant shall have experience
in operating a first-class club and restaurant establishment of the
type then being operated by Tenant at the Premises equal to or greater
than Tenant;
(d) the proposed subtenant shall have a net worth
and annual income and cash flow, determined in accordance with
generally accepted accounting principles, consistently applied, after
giving effect to such sublease, equal for or greater than Tenant's net
worth and annual income and cash flow, as so determined, immediately
prior to the date of such sublease;
(e) Tenant and the proposed subtenant shall
provide evidence satisfactory to Landlord that the subtenant shall
continue to operate the business then being operated by Tenant at the
Premises in a manner, and comporting with such quality and
presentation, comparable at least to the manner, quality and
presentation in which Tenant is then operating the business;
32
<PAGE> 33
(f) the annual Fixed Rent amounts set forth in
clauses (i), (ii) and (iii) of Section A of Article 1 hereof shall
each be increased from and after the date of the subletting by the
average annual Percentage Rent payable by Tenant for the twenty-four
(24) month period immediately preceding the subletting; and the
Breakpoint shall be increased accordingly by the quotient obtained by
dividing (x) said average Percentage Rent, by (y) 6.5%;
(g) the subletting shall be expressly subject to
all of the terms, covenants, conditions and obligations on Tenant's
part to be observed and performed under this Lease and the further
condition and restriction that the sublease shall not be assigned,
encumbered or otherwise transferred or the subleased premises further
sublet by the subtenant in whole or in part, or any part thereof
suffered or permitted by the subtenant to be used or occupied by
others, without the prior written consent of Landlord in each
instance:
(h) the subletting shall end no later than one
(1) day before the Expiration Date and shall not be for a term of less
than two (2) years unless it commences less than two (2) years before
the Expiration Date:
(i) Tenant shall reimburse Landlord on demand for
any processing fees and costs that may be incurred by Landlord in
connection with said sublease, including, without limitation, the
costs of making investigations as to the acceptability of the proposed
subtenant; and
(j) Tenant shall execute Landlord's standard form
of consent.
(2) At least thirty (30) business days prior to
any proposed subletting Tenant shall submit a statement to Landlord (a
"Sublease Statement") containing the following information: (a) the name and
address of the proposed subtenant, (b) a description of the portion of the
Premises to be sublet (the "Sublet Premises"), (c) the terms and conditions of
the proposed subletting including the rent payable, (d) the nature and
character of the business of the proposed subtenant and (e) any other
information that Landlord may reasonably request. Except with respect to a
proposed sublease of the Premises pursuant to Section D of this Article,
Landlord shall have the right, exercisable within twenty (20) business days
after Landlord's receipt of the Sublease Statement, to (i) sublet the Sublet
Premises from Tenant on the terms and conditions set forth in the Sublease
Statement and this Lease, (ii) if the proposed subletting is for substantially
the balance of the Term, terminate this Lease as to the Sublet Premises, or
(iii) if the proposed subletting is a sublease of all or substantially all of
the Premises, terminate this Lease.
If Landlord exercises its right to terminate this Lease, with
respect to all, or any portion of the Premises, (a) the
33
<PAGE> 34
effective date of such termination shall be the date set forth in the Sublease
Statement as the proposed commencement date for the proposed sublease (the
"Termination Date"), (b) Tenant shall, as of the Termination Date, vacate and
surrender the Sublet Premises in accordance with Article 20 hereof, (c) this
Lease shall be terminated with respect to the Sublet Premises, as of the
Termination Date, and (d) if the Sublet Premises constitutes less than all of
the Premises, Landlord, at Tenant's expense, may make such alterations as may
be required or deemed necessary by Landlord to physically separate the Sublet
Premises from the balance of the Premises and to comply with all Requirements
relating to such separation.
If Landlord shall fail to notify Tenant within said twenty
(20) day period of Landlord's intention to exercise its rights pursuant to this
Section F(2) and if Landlord shall have consented to such subletting as
provided in Section F(1) hereof, Tenant shall be free to sublease that portion
of the Premises to such proposed subtenant on the terms and conditions set
forth in the Sublease Statement, subject to the terms and conditions of this
Lease, including paragraph (1) of this Section F. If Tenant shall not enter
into such sublease within one hundred twenty (120) days after the delivery of
the Sublease Statement to Landlord, then the provisions of Sections A and F of
this Article 12 shall again be applicable to any other proposed subletting.
If Landlord exercises its right to sublet the Sublet Premises,
such sublease shall:
(a) be for the same term as set forth in the
Sublease Statement;
(b) give the sublessee the unqualified and
unrestricted right, without Tenant's permission, to assign such sublease or any
interest therein and/or to sublet the Sublet Premises or any part or parts of
the Sublet Premises and to make any and all changes, alterations, and
improvements in the space covered by such sublease as Landlord deems necessary
or desirable;
(c) provide that any assignee or further
subtenant of Landlord may, at the election of Landlord, be permitted to make
alterations, decorations and installations in the Sublet Premises or any part
thereof as Landlord deems necessary or desirable and shall also provide in
substance that any such alterations, decorations and installations in the
Sublet Premises therein made by any assignee or subtenant of Landlord may be
removed, in whole or in part, by such assignee or subtenant, at its option,
prior to or upon the expiration or other termination of such assignment or
sublease provided that such assignee or subtenant, at its expense, shall repair
any damage and injury to the Sublet Premises caused by such removal; and
(d) also provide that (i) the parties to such
sublease expressly negate any intention that any estate created
34
<PAGE> 35
under such sublease be merged with any other estate held by either of said
parties, (ii) any assignment or subletting by Landlord (as the subtenant) may
be for any purpose or purposes that Landlord, in Landlord's uncontrolled
discretion, shall deem suitable or appropriate, (iii) Tenant, at Landlord's
expense, shall and will at all times provide and permit reasonably appropriate
means of ingress to and egress from the Sublet Premises so sublet by Tenant to
Landlord, and (iv) that at the expiration of the term of such sublease, Tenant
will accept the space covered by such sublease in its then existing condition,
subject to the obligations of the sublessee or Landlord to make such repairs
thereto as may be necessary to preserve the premises demised by such sublease
in reasonable order and condition.
(3) If there is a dispute between Landlord and
Tenant as to the reasonableness of Landlord's refusal to consent to any
subletting, such dispute shall be determined by arbitration in the City of New
York in as ordnance with the rules and regulations then obtaining f the
American Arbitration Association or its successor.
Any such determination shall be final and binding upon the parties, whether or
not a judgment shall be entered in any court. If the determination of any such
arbitration shall be adverse to Landlord, Landlord, nevertheless, shall not be
liable to Tenant for a breach of Landlord's covenant not unreasonably to
withhold such consent, and Tenant's sole remedy in such event shall be to enter
into the proposed subletting.
G. If Tenant sublets the premises in whole or in part,
Tenant shall deliver to Landlord a true copy of the executed sublease within
seven (7) days of the date of execution and delivery thereof. Tenant shall
receive as trust funds and pay over to Landlord fifty (50%) percent of the
excess of (x) a sum equal to (i) any rent or other consideration paid to Tenant
by any subtenant in excess of the pro rata portion of the Fixed Rent,
Percentage Rent and additional rent (payable pursuant to Article 27) for such
space then being paid by Tenant to Landlord pursuant to the provisions of this
Lease, plus (ii) any other amount received by Tenant from or in connection with
such subletting, including, in either case, but not limited to, sums paid for
the sale or rental of Tenant's fixtures, leasehold improvements, equipment,
furniture or other personal property, over (y) the actual reasonable
out-of-pocket costs of Tenant in making such sublease for (a) customary
brokerage fees and (b) improvement and alteration costs to prepare such portion
of the Premises for such sublease. All sums payable hereunder by Tenant shall
be paid to Landlord as additional rent immediately upon the receipt thereof by
Tenant.
13. ELECTRIC CURRENT. A. Tenant shall make no
electrical installations, alterations, additions or changes to electrical
equipment or appliances without the prior written consent of Landlord in each
instance. Tenant shall at all times comply with the rules, regulations, terms
and conditions applicable
35
<PAGE> 36
to service, equipment, wiring and requirements of the public utility supplying
electricity to the Building. Tenant's use of electric current shall not exceed
the capacity of existing feeders to the Building or the risers or wiring
installations serving the Premises and Tenant shall not use any electrical
equipment which, in Landlord's sole judgment, will overload such installations
or interfere with the use thereof by other tenants of the Building. In the
event that, in Landlord's sole judgment, Tenant's electrical requirements
necessitate installation of an additional riser, risers or other proper and
necessary equipment, the same shall be installed by Landlord, provided,
however, that Landlord, in Landlord's sole judgment (taking into consideration
the potential needs of present and future tenants of the Building and of the
Building itself), determines that such installation is practicable. Any such
installation shall be made at Tenant's sole expense, and shall be chargeable
and collectible as additional rent and paid within five (5) days after the
rendition of a bill to Tenant therefor. Rigid conduit only will be allowed.
Landlord shall not be liable in any way to Tenant for any failure or defect in
the supply or character of electric service furnished to the Premises by reason
of any requirement, act or omission of the utility serving the Building or for
any other reason not attributable to the gross negligence of Landlord, whether
electric service is provided by public or private utility or by any electricity
generation system owned and operated by Landlord.
B. Tenant agrees to purchase from Landlord or a meter
company designated by Landlord all electricity consumed, used or to be used in
the Premises. The amount to be paid by Tenant for electricity consumed at the
Premises shall be determined by meter or meters and related equipment installed
by Landlord, at Landlord's expense. Throughout the Term, Tenant shall keep all
meters and any related equipment in god working order and repair at Tenant's
own cost and expense. The date upon which such meter(s) are installed is
hereinafter referred to as the "Meter Date". Landlord shall endeavor to
install such meter(s) and related equipment by no later than the date (the
"Meter Installation Date") which is fifteen (15) days after the date upon which
Tenant occupies substantially all of the Premises for the conduct of its
business (the "Occupancy Date"). The "Meter Installation Date" shall be
deferred to the extent Landlord is unable to install such meter(s) and related
equipment for reasons beyond Landlord's control until such time as Landlord is
able to install such meter(s) and related equipment. In connection with such
installation, Tenant shall promptly provide Landlord with a "panel schedule"
and "panel configuration" indicating the location of the meter(s) and related
equipment. Landlord or the meter company, from time to time as Landlord may
elect, shall render to Tenant bills for electricity consumption at the
Premises, which bills Tenant hereby agrees to pay, as additional rent, within
five (5) days after rendition of same. Tenant shall also pay to Landlord as
additional rent, the amount of any taxes imposed by any Governmental Authority
(including utility taxes) on Landlord's receipt from the sale of electricity to
Tenant, and Landlord may
36
<PAGE> 37
include the amount thereof in Landlord's bills rendered thereunder. The bills
rendered to Tenant, as hereinbefore provided, for electricity consumption shall
be for an amount equal to the sum of (i) the product of (x) Tenant's actual
consumption in kilowatt hours and demand in kilowatts of electricity,
respectively (and/or any other method of quantifying Tenant's use of or demand
for electricity as set forth in the utility company's tariff) (as shown on such
meter or meters), and (y) the Landlord's Electric Rate (herein, such product as
adjusted from time to time, called "Tenant's Rate"), plus (ii) an amount equal
to five percent (5%) of Tenant's Rate.
C. Landlord reserves the right to discontinue furnishing
electricity to Tenant in the Premises on not less than ninety (90) days' notice
to Tenant, except that if Tenant shall be unable to obtain electric service
from the public utility within said ninety (90) day period, Landlord shall
continue to furnish electricity to Tenant until such time as Tenant shall
obtain electric service directly from the public utility, provided that Tenant
shall have used, and shall continue to use, its best efforts to obtain such
electrical service. If Tenant shall have failed to use best efforts or shall
not continue to use best efforts to obtain such electric service, Landlord
shall have no obligation to furnish electricity to Tenant after the expiration
of the aforesaid ninety (90) day period. If Landlord exercises such right to
discontinue furnishing electricity to Tenant, this Lease shall continue in full
force and effect and shall be unaffected thereby, except only that from and
after the effective date of such discontinuance, Landlord shall not be
obligated to furnish electricity to Tenant. If Landlord so discontinues
furnishing electricity to Tenant, Tenant shall obtain electric energy directly
from the public utility company furnishing electric service to the Building.
The costs of such service shall be paid by Tenant directly to such public
utility however, if Landlord voluntarily discontinues furnishing electricity to
Tenant, Landlord shall reimburse Tenant for the costs of switching to the
public utility upon presentation to Landlord of receipted invoices evidencing
such costs. Such electricity may be furnished to Tenant by means of the
existing electrical facilities serving the Premises to the extent the same are
available, suitable and safe for such purposes as determined by Landlord. All
meters and all additional panel boards, feeders, risers, wiring and other
conductors and equipment which may be required to obtain electricity shall be
installed by Landlord at Tenant's expense.
D. Landlord shall not in any way be liable or
responsible to Tenant for any loss, damage or expense which Tenant may sustain
or incur if (i) the supply of electric energy to the Premises is temporarily
interrupted or (ii) the quantity or character of electric services is changed
or is no longer available or suitable for Tenant's requirements, except in both
cases to the extent resulting from Landlord's willful misconduct or gross
negligence.
37
<PAGE> 38
E. Notwithstanding the foregoing provisions of this
Article 13 hereof, the Fixed Rent payable by Tenant to Landlord shall be
increased (i) during the period commencing on the Commencement Date and ending
on the earlier to occur of the Occupancy Date and the Meter Date, by an amount
equal to $24,708 per annum ($1.50 per square foot), and (ii) if the Occupancy
Date occurs prior to the Meter Date, during the period commencing on the
Occupancy Date and ending on the Meter Date, by an amount equal to $82,360 per
annum ($5.00 per square foot) (in either case, the "Electrical Energy Sum").
14. ACCESS TO PREMISES. A. Tenant shall permit
Landlord, Landlord's agents and public utilities servicing the Building to
erect, use and maintain, concealed ducts, pipes and conduits in and through the
Premises. Landlord or Landlord's agents shall have the right upon reasonable
notice to Tenant (except in the event of an emergency) to enter the Premises at
all reasonable times to examine the same, to show them to prospective
purchasers, Mortgagees or lessees of the Building or space therein, and to make
such repairs, alterations, improvements or additions as Landlord may deem
necessary or desirable to the Premises or to any other portion of the Building,
or which Landlord may elect to perform following Tenant's failure to make
repairs or perform any work which Tenant is obligated to make or perform under
this Lease, or for the purpose of complying with all Requirements, and Landlord
shall be allowed to take all material into and upon the Premises that may be
required therefor without the same constituting an eviction or constructive
eviction of Tenant in whole or in part and the Fixed Rent (and any other item
of Rental) shall in no wise abate while said repairs, alterations, improvements
or additions are being made, by reason of loss or interruption of business of
Tenant, or otherwise.
B. (1) Any work performed or installations made
pursuant to this Article 14 shall be made with reasonable diligence and in a
manner designed to minimize interference with, or disruption of, Tenant's
normal business operations; provided, however, that, except to the extent
provided in Section A of Article 4 hereof, Landlord shall not be obligated to
employ contractors or labor at so-called overtime or other premium pay rates or
to incur any other overtime costs or expenses whatsoever. Landlord shall
promptly repair any damage to the Premises or Tenant's property caused by such
work or installations.
(2) Any pipes, ducts, or conduits installed in or
through the Premises pursuant to this Article 14 shall either be concealed
behind, beneath or within partitioning, columns, ceilings or floors located or
to be located in the Premises, or completely furred at points immediately
adjacent to partitioning columns or ceilings located or to be located in the
Premises, provided that the installation of such pipes, ducts, or conduits,
when completed, shall not materially or unreasonably reduce the usable area of
the Premises.
38
<PAGE> 39
C. During the eighteen (18) months prior to the
Expiration Date or the expiration of any renewal or extended term, Landlord
may, upon reasonable notice to Tenant, exhibit the Premises to prospective
tenants thereof. If Tenant shall not be present when for any reason entry into
the Premises shall be necessary or permissible, Landlord or Landlord's agents
may enter the same by a master key, or may forcibly enter the same, without
rendering Landlord or such agents liable therefor (if during such entry
Landlord or Landlord's agents shall accord reasonable care to Tenant's
property), and without in any manner affecting this Lease. Nothing herein
contained, however, shall be deemed or construed to impose upon Landlord any
obligation, responsibility or liability whatsoever, for the care, supervision
or repair of the Building or any part thereof, other than as herein provided.
D. Landlord also shall have the right at any time,
without the same constituting an actual or constructive eviction and without
incurring any liability to Tenant therefor, to change the arrangement or
location of entrances or passageways, doors and doorways, and corridors,
elevators, stairs, toilets, or other public parts of the Building provided that
any such change does not (a) unreasonably interfere with or deprive Tenant of
access to the Building or Premises or (b) materially reduce the useable area of
the Premises, and to change the name, number or designation by which the
Building is commonly known. All parts (except surfaces facing the interior of
the Premises) of all walls, windows and doors bounding the Premises (including
exterior Building walls, exterior core corridor walls, exterior doors and
entrances), all balconies, terraces and roofs adjacent to the Premises, all
space in or adjacent to the Premises used for shafts, stacks, stairways,
chutes, pipes, conduits, ducts, fan rooms, heating, air cooling, plumbing and
other mechanical facilities, service closets and other Building facilities are
not part of the Premises, and Landlord shall have the use thereof, as well as
access thereto through the Premises for the purposes of operation, maintenance,
alteration and repair.
15. CERTIFICATE OF OCCUPANCY. Tenant shall not at any
time use or occupy the Premises in violation of the certificate of occupancy at
such time issued for the Premises or for the Building and in the event that any
department of the City or State of New York shall hereafter contend or declare
by notice, violation, order or in any other manner whatsoever that the Premises
are used for a purpose which is a violation of such certificate of occupancy,
Tenant shall, upon five (5) days' written notice from Landlord or any
Governmental Authority, immediately discontinue such use of the Premises.
Failure by Tenant to discontinue such use after such notice shall be considered
a default in the fulfillment of a material covenant of this Lease and Landlord
shall have the right to terminate this Lease immediately, and in addition
thereto shall have the right to exercise any and all rights and privileges and
remedies given to Landlord by and pursuant to the provisions of Articles 16 and
17 hereof. Annexed hereto as Exhibit "C" is the certificate of occupancy for
the Building.
39
<PAGE> 40
16. DEFAULT. A. Each of the following events shall be an
"Event of Default" hereunder:
(1) if Tenant shall fail to pay any installment
of Fixed Rent or Percentage Rent within ten (10) days after notice that such
payment is due; provided, however, that if Landlord shall have given Tenant two
(2) such notices in any twelve (12) month period, Tenant shall not be entitled
to any further notice of its delinquency in the payment of any installment of
Fixed Rent or Percentage Rent until such time as twelve (12) consecutive months
shall have elapsed without Tenant having defaulted in any such payment; or if
Tenant shall fail to pay any additional rent or any other item of Rental within
thirty (30) days after notice that such payment is due; or
(2) if Tenant's interest in this Lease shall
devolve upon or pass to any person or entity, whether by operation of law or
otherwise, except as expressly permitted under Article 12 hereof; or
(3) (a) if Tenant shall generally not, or shall
be unable to, or shall admit in writing its inability to, pay its debts as they
become due; or
(b) if Tenant shall commence or institute
any case, proceeding or other action (A) seeking relief on its behalf
as debtor, or to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its
debts under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, or (B) seeking appointment of a receiver, trustee,
custodian or other similar official for it or for all or any
substantial part of its property; or
(c) if Tenant shall make a general
assignment for the benefit of creditors; or
(d) if any case, proceeding or other
action shall be commenced or instituted against Tenant (A) seeking to
have an order for relief entered against it as debtor or to adjudicate
it a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts under any existing or future
law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, or (B) seeking
appointment of a receiver, trustee, custodian or other similar
official for it or for all of any substantial part of its property,
which either (i) results in any such entry of an order for relief,
adjudication of bankruptcy or insolvency or such an appointment or the
issuance or entry of any other
40
<PAGE> 41
order having a similar effect or (ii) remains undismissed for a period
of ninety (90) days; or
(e) if any case, proceeding or other
action shall be commenced or instituted against Tenant seeking
issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its property which
results in the entry of an order for any such relief which shall not
have been vacated, discharged, or stayed or bonded pending appeal
within ninety (90) days from the entrY thereof; or
(f) if Tenant shall take any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clauses (b), (c), (d) or
(e) above; or
(g) if a trustee, receiver or other
custodian is appointed for any substantial part of the assets of
Tenant which appointment is not vacated or effectively stayed within
seven (7) business days; or
(4) if Tenant shall default in the observance or
performance of any other term, covenant or condition of this Lease on Tenant's
part to be observed or performed and Tenant shall fail to remedy such default
within thirty (30) days after notice by Landlord to Tenant of such default, or
if such default is of such a nature that it cannot be completely remedied
within said period of thirty (30) days and Tenant shall not commence within
said period of thirty (30) days, or shall not thereafter diligently prosecute
to completion, all steps necessary to remedy such default; or
(5) if this Lease is assigned (or all or
substantially all of the Premises are subleased) pursuant to clause (iii) of
Section D of Article 12 hereof, and Tenant shall no longer (i) control, (ii) be
under common control with, or (iii) be under the control of such Affiliate (or
any permitted successor by merger, consolidation or purchase) as provided
herein.
B. (1) If an Event of Default (i) described in
Section A(3) hereof shall occur, or (ii) described in Sections A(1), A(2), (4)
or (5) or elsewhere in this Lease shall occur and Landlord, at any time
thereafter, at its option gives written notice to Tenant stating that this
Lease and the Term shall expire and terminate on the date specified in such
notice, which date shall not be less than ten (10) days after the giving of
such notice, and if, on the date specified in such notice, Tenant shall have
failed to cure the default which was the basis for the Event of Default, then
this Lease and the Term and all rights of Tenant under this Lease shall expire
and terminate as if the date on which the Event of Default described in clause
(i) above occurred or the date specified in the notice given pursuant to clause
(ii) above, as the case may be, were the date herein definitely fixed for the
expiration of the
41
<PAGE> 42
Term, it being the intention of the parties hereto to create hereby a
conditional limitation, and Tenant immediately shall quit and surrender the
Premises. Anything contained herein to the contrary notwithstanding, if such
termination shall be stayed by order of any court having jurisdiction over any
proceeding described in Section A(3) hereof, or by federal or state statute,
then, following the expiration of any such stay, or if the trustee appointed in
any such proceeding, Tenant or Tenant as debtor-in-possession shall fail to
assume Tenant's obligations under this Lease within the period prescribed
therefor by law or within one hundred twenty (120) days after entry of the
order for relief or as may be allowed by the court, or if said Trustee, Tenant
or Tenant as debtor-in-possession shall fail to provide adequate protection of
Landlord's right, title and interest in and to the Premises or adequate
assurance of the complete and continuous future performance of Tenant's
obligations under this Lease as provided in Section C(2) of Article 12,
Landlord, to the extent permitted by law or by leave of the court having
jurisdiction over such proceeding, shall have the right, at its election, to
terminate this Lease on five (5) days' notice to Tenant, Tenant as
debtor-in-possession or said trustee and upon the expiration of said five (5)
day period this lease shall cease and expire as aforesaid and Tenant, Tenant as
debtor-in-possession or said trustee shall immediately quit and surrender the
Premises as aforesaid.
(2) If an Event of Default described in Section
A(1) hereof shall occur, or this Lease shall be terminated as provided in
Section B(1) hereof, Landlord, without notice, may reenter and repossess the
Premises using such force for that purpose as may be necessary without being
liable to indictment, prosecution of damages therefor and may dispossess Tenant
by summary proceedings or otherwise.
C. If, at any time, (i) Tenant shall comprise two (2) or
more persons, or (ii) Tenant's obligations under this Lease shall have been
guaranteed by any person other than Tenant, or (iii) Tenant's interest in this
Lease shall have been assigned, the word "Tenant", as used in clause (3) of
Section A of this Article 16, shall be deemed to mean any one or more of the
persons primarily or secondarily liable for Tenant's obligations under this
Lease. Any monies received by Landlord from or on behalf of Tenant during the
pendency of any proceeding of the types referred to in said clause (3) shall be
deemed paid as compensation for the use and occupation of the Premises and the
acceptance of any such compensation by Landlord shall not be deemed an
acceptance of Rental or a waiver on the part of Landlord of any rights under
Section B.
17. REMEDIES AND DAMAGES. A. (1) If there shall occur
any Event of Default, and this Lease and the Term shall expire and come to an
end as provided in Article 16 hereof:
42
<PAGE> 43
(a) Tenant shall quit and peacefully surrender
the Premises to Landlord, and Landlord and its agents may immediately,
or at any time after such default or after the date upon which this
Lease and the Term shall expire and come to an end, re-enter the
Premises or any part thereof, without notice, either by summary
proceedings, or by any other applicable action or proceeding, or by
force or otherwise (without being liable to indictment, prosecution or
damages therefor), and may repossess the Premises and dispossess
Tenant and any other persons from the Premises and remove any and all
of their property and effects from the Premises; and
(b) Landlord, at Landlord's option, may relet the
whole or any part or parts of the Premises from time to time, either
in the name of Landlord or otherwise, to such tenant or tenants, for
such term or terms ending before, on or after the Expiration Date, at
such rental or rentals and upon such other conditions, which may
include concessions and free rent periods, as Landlord, in its sole
discretion, may determine; provided, however, that Landlord shall have
no obligation to relet the Premises or any part thereof and shall in
no event be liable for refusal or failure to relet the Premises or any
part thereof, or, in the event of any such reletting, for refusal or
failure to collect any rent due upon any such reletting, and no such
refusal or failure shall operate to relieve Tenant of any liability
under this Lease or otherwise affect any such liability, and Landlord,
at Landlord's option, may make such repairs, replacements,
alterations, additions, improvements, decorations and other physical
changes ln and to the Premises as Landlord, in its sole discretion,
considers advisable or necessary in connection with any such reletting
or proposed reletting, without relieving Tenant of any liability under
this Lease or otherwise affecting any such liability.
(2) Tenant hereby waives the service of any
notice of intention to re-enter or to institute legal proceedings to that end
which may otherwise be required to be given under any present or future law.
Tenant, on its own behalf and on behalf of all persons claiming through or
under Tenant, including all creditors, does further hereby waive any and all
rights which Tenant and all such persons might otherwise have under any present
or future law to redeem the Premises, or to re-enter or repossess the Premises,
or to restore the operation of this Lease, after (a) Tenant shall have been
dispossessed by a judgment or by warrant of any court or judge, or (b) any
re-entry by Landlord, or (c) any expiration or termination of this Lease and
the Term, whether such dispossess, re-entry, expiration or termination shall be
by operation of law or pursuant to the provisions of this Lease. The words
"re-enter", "re-entry" and "re-entered" as used in this Lease shall not be
deemed to be restricted to their technical legal meanings. In the event of a
breach or threatened breach by Tenant, or any persons claiming through or under
Tenant, of any term, covenant or condition of this Lease, Landlord shall have
the right to enjoin
43
<PAGE> 44
such breach and the right to invoke any other remedy allowed by law or in
equity as if re-entry, summary proceedings and other special remedies were not
provided in this Lease for such breach. The right to invoke the remedies
hereinbefore set forth are cumulative and shall not preclude Landlord from
invoking any other remedy allowed at law or in equity.
B. (1) If this Lease and the Term shall expire and
come to an end as provided in Article 16 hereof, or by or under any summary
proceeding or any other action or proceeding, or if Landlord shall re-enter the
Premises as provided in Section A of this Article 17, or by or under any
summary proceeding or any other action or proceeding, then, in any of said
events:
(a) Tenant shall pay to Landlord all Fixed Rent,
additional rent and other items of Rental payable under this Lease by
Tenant to Landlord to the date upon which this Lease and the Term
shall have expired and come to an end or to the date of re-entry upon
the Premises by Landlord, as the case may be;
(b) Tenant shall also be liable for and shall pay
to Landlord, as damages, any deficiency (referred to as "Deficiency")
between the Rental for the per od which otherwise would have
constituted the unexpired portion of the Term and the net amount, if
any, of rents collected under any reletting effected pursuant to the
provisions of clause (1) of Section A of this Article 17 for any part
of such period (first deducting from the rents collected under any
such reletting all of Landlord's reasonable expenses in connection
with the termination of this Lease, Landlord's re-entry upon the
Premises and with such reletting including, but not limited to, all
repossession costs, brokerage commissions, legal expenses, attorneys'
fees and disbursements, alteration costs and other expenses of
preparing the Premises for such reletting); any such Deficiency shall
be paid in monthly installments by Tenant on the days specified in
this Lease for payment of installments of Fixed Rent, Landlord shall
be entitled to recover from Tenant each monthly Deficiency as the same
shall arise, and no suit to collect the amount of the Deficiency for
any month shall prejudice Landlord's right to collect the Deficiency
for any subsequent month by a similar proceeding; and
(c) Whether or not Landlord shall have collected
any monthly Deficiency as aforesaid, Landlord shall be entitled to
recover from Tenant, and Tenant shall pay to Landlord, on demand, in
lieu of any further Deficiency as and for liquidated and agreed final
damages, a sum equal to the amount by which the Rental for the period
which otherwise would have constituted the unexpired portion of the
Term exceeds the then fair and reasonable rental value of the Premises
for the same period, both discounted to present worth at the then
current "base" rate charged by Citibank N.A., or
44
<PAGE> 45
its successor, as of the date the Lease is terminated, less the
aggregate amount of Deficiencies theretofore collected by Landlord
pursuant to the provisions of clause (l)(b) of Section B of this
Article 17 for the same period; if, before presentation of proof of
such liquidated damages to any court, commission or tribunal, the
Premises, or any part thereof, shall have been relet by Landlord for
the period which otherwise would have constituted the unexpired
portion of the Term, or any part thereof, the amount of rent reserved
upon such reletting shall be deemed, prima facie, to be the fair and
reasonable rental value for the part of the whole of the Premises so
relet during the term of the reletting.
(2) If the Premises, or any part thereof, shall
be relet together with other space in the Building, the rents collected or
reserved under any such reletting and the expenses of any such reletting shall
be equitably apportioned for the purposes of this Section B. Tenant shall in
no event be entitled to any rents collected or payable under any reletting,
whether or not such rents shall exceed the Fixed Rent reserved in this Lease.
Solely for the purposes of this Article 17, the term "Fixed Rent" as used in
clause (1) of Section B of this Article 17 shall mean the Fixed Rent in effect
immediately prior to the date upon which this Lease and the Term shall have
expired and come to an end, or the date of reentry upon the Premises by
Landlord, as the case may be, adjusted to reflect any increase pursuant to the
provisions of Article 27 hereof. Nothing contained in Article 16 hereof or
this Article 17 shall be deemed to limit or preclude the recovery by Landlord
from Tenant of the maximum amount allowed to be obtained as damages by any
statute or rule of law, or of any sums or damages to which Landlord may be
entitled in addition to the damages set forth in clause (1) of Section B of
this Article 17.
18. FEES AND EXPENSES. A. If Tenant shall default under
this Lease or if Tenant shall do or permit to be done any act or thing upon the
Premises which would cause Landlord to be in default under any Superior Lease
or Mortgage, or if Tenant shall fail to comply with its obligations under this
Lease and the preservation of property or the safety of any tenant, occupant or
other person is threatened, Landlord may (1) perform the same for the account
of Tenant if the same arises out of any obligation owed by Tenant to a third
party, or (2) make any expenditure or incur any obligation for the payment of
money in connection with any obligation owed to Landlord, including, but not
limited to, reasonable attorneys' fees and disbursements in instituting,
prosecuting or defending any action or proceeding, and the cost thereof, with
interest thereon at the Applicable Rate, shall be deemed to be additional rent
hereunder and shall be paid by Tenant to Landlord within five (5) days of
rendition of any bill or statement to Tenant therefor.
B. If Tenant shall fail to pay any installment of Fixed
Rent or Percentage Rent within ten (10) days or any other item of Rental within
thirty (30) days after the date when such payment is
45
<PAGE> 46
due, Tenant shall pay to Landlord, in addition to such installment of Fixed
Rent, Percentage Rent or other item of Rental, as the case may be, as a late
charge and as additional rent, a sum equal to interest at the Applicable Rate
on the amount unpaid, computed from the date such payment was due to and
including the date of payment.
19. NO REPRESENTATIONS BY LANDLORD. Landlord and
Landlord's agents have made no representations or promises with respect to the
Building, the Real Property or the Premises except as herein expressly set
forth, and no rights, easements or licenses are acquired by Tenant by
implication or otherwise except as expressly set forth herein. Tenant shall
accept possession of the Premises in the condition which shall exist on the
Commencement Date "as is", and Landlord shall have no obligation to perform any
work or make any installations in order to prepare the Premises for Tenant's
occupancy. All references in this Lease to the consent or approval of Landlord
shall be deemed to mean the written consent or approval of Landlord and no
consent or approval of Landlord shall be effective for any purpose unless such
consent or approval is set forth in a written instrument executed by Landlord.
The taking of possession of the Premises by Tenant shall be conclusive evidence
as against Tenant, that, at the time such possession was so taken, the Premises
and the Building were in good and satisfactory condition.
20. END OF TERM. A. Upon the expiration or other
termination of this Lease, Tenant shall quit and surrender to Landlord the
Premises, vacant, broom clean, in good order and condition, ordinary wear and
tear and damage for which Tenant is not responsible under the terms of this
Lease excepted, and Tenant shall remove such of its property as may be required
pursuant to Article 3 hereof; this obligation shall survive the expiration or
sooner termination of the Term. If the last day of the Term or any renewal
thereof falls on Saturday or Sunday, this Lease shall expire on the business
day immediately preceding. Tenant expressly waives, for itself and for any
person claiming through or under Tenant, any rights which Tenant or any such
person may have under the provisions of Section 2201 of the New York Civil
Practice Law and Rules and of any successor law of like import then in force in
connection with any holdover summary proceedings which Landlord may institute
to enforce the foregoing provisions of this Article 20.
B. If an Event of Default has occurred and Landlord has
given Tenant a notice demanding that Tenant vacate the Premises, and Tenant
fails to vacate the Premises within the time period set forth in said notice,
then the undersigned individuals, Harry Shuster and Stanley Shuster, shall be
jointly and severally personally liable to Landlord for the Fixed Rent,
Percentage Rent and all other items of Rental due under the terms of this Lease
with respect to the portion of the Term (and any holdover period) from and
after the date set forth in the notice for Tenant to vacate the Premises until
the date that Tenant vacates the Premises; provided, however, that Landlord
shall apply any security
46
<PAGE> 47
deposit remaining in its possession first before looking to either of the
aforesaid individuals for payment.
21. QUIET ENJOYMENT. So long as no event of default has
occurred and is continuing, Tenant may peaceably and quietly enjoy the Premises
subject, nevertheless, to the terms and conditions of this Lease including, but
not limited to, Section B of Article 37 hereof and to all Superior Leases and
Mortgages.
22. FAILURE TO GIVE POSSESSION. Tenant waives any right
to rescind this Lease under Section 223-a of the New York Real Property Law or
any successor statute of similar import then in force and further waives the
right to recover any damages which may result from Landlord's failure to
deliver possession of the Premises on the date set forth in Section A of
Article 1 hereof for the commencement of the Term. If permission is given to
Tenant to enter into the possession of the Premises or to occupy premises other
than the Premises prior to the Commencement Date, such occupancy shall be
deemed to be under all the terms, covenants, conditions and provisions of this
Lease, including the covenant to pay Fixed Rent, Percentage Rent and all other
items of Rental.
23. NO WAIVER. A. If there be any agreement between
Landlord and Tenant providing for the cancellation of this Lease upon certain
provisions or contingencies or any agreement for the renewal hereof at the
expiration of the Term, the right to such renewal or the execution of a renewal
agreement between Landlord and Tenant prior to the expiration of the Term shall
not be considered an extension thereof or a vested right in Tenant to such
further term, so as to prevent Landlord from canceling this Lease and any such
extension thereof during the remainder of the original Term; such privilege, if
and when so exercised by Landlord, shall cancel and terminate this Lease and
any such renewal or extension previously entered into between Landlord and
Tenant or the right of Tenant to any such renewal or extension; any right
herein contained on the part of Landlord to cancel this Lease shall continue
during any extension or renewal hereof; any option on the part of Tenant herein
contained for an extension or renewal hereof shall not be deemed to give Tenant
any option for a further extension beyond the first renewal or extended term.
B. No act or thing done by Landlord or Landlord's agents
during the Term shall be deemed an acceptance of a surrender of the Premises,
and no agreement to accept such surrender shall be valid unless in writing
signed by Landlord. No employee of Landlord or of Landlord's agents shall have
any power to accept the keys of the Premises prior to the termination of this
Lease. The delivery of keys to any employee of Landlord or of Landlord's
agents shall not operate as a termination of this Lease or a surrender of the
Premises. In the event Tenant at any time desires to have Landlord sublet the
Premises for Tenant's account, Landlord or Landlord's agents are authorized to
receive said keys for such purpose without releasing Tenant from any of the
obligations under this Lease, and Tenant hereby relieves Landlord of any
liability
47
<PAGE> 48
for loss of or damage to any of Tenant's effects in connection with such
subletting.
C. The failure of Landlord to seek redress for violation
of, or to insist upon the strict performance of, any covenant or condition of
this Lease, or any of the Rules and Regulations set forth or hereafter adopted
by Landlord, shall not prevent a subsequent act, which would have originally
constituted a violation, from having all of the force and effect of an original
violation. The receipt by Landlord of Fixed Rent, additional rent or any other
item of Rental with knowledge of the breach of any covenant of this Lease shall
not be deemed a waiver of such breach. The failure of Landlord to enforce any
of the Rules and Regulations set forth, or hereafter adopted, against Tenant or
any other tenant in the Building shall not be deemed a waiver of any such Rules
and Regulations. No provision of this Lease shall be deemed to have been
waived by Landlord, unless such waiver be in writing signed by Landlord. No
payment by Tenant or receipt by Landlord of a lesser amount than the monthly
Fixed Rent or other item of Rental herein stipulated shall be deemed to be
other than on account of the earliest stipulated Fixed Rent or other item of
Rental, or as Landlord may elect to apply same, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment as Fixed
Rent or other item of Rental be deemed an accord and satisfaction, and Landlord
may accept such check or payment without prejudice to Landlord's right to
recover the balance of such Fixed Rent or other item of Rental or pursue any
other remedy in this Lease provided. This Lease contains the entire agreement
between the parties and all prior negotiations and agreements are merged
herein. Any executory agreement hereafter made shall be ineffective to change,
modify, discharge or effect an abandonment of this Lease in whole or in part
unless such executory agreement is in writing and signed by the party against
whom enforcement of the change, modification, discharge or abandonment is
sought.
24. WAIVER OF TRIAL BY JURY. The respective parties
hereto shall and they hereby do waive trial by jury in any action, proceeding
or counterclaim brought by either of the parties hereto against the other
(except for personal injury or property damage) on any matters whatsoever
arising out of or in any way connected with this Lease, the relationship of
Landlord and Tenant, Tenant's use or occupancy of the Premises, or for the
enforcement of any remedy under any statute, emergency or otherwise. If
Landlord commences any summary proceeding against Tenant, Tenant will not
interpose any counterclaim of whatever nature or description in any such
proceeding, and will not seek to consolidate such proceeding with any other
action which may have been or will be brought in any other court by Tenant.
25. INABILITY TO PERFORM. A. This Lease and the
obligation of Tenant to pay Rental hereunder and perform all of the other
covenants and agreements hereunder on the part of Tenant to be performed shall
in no wise be affected, impaired or excused because Landlord is unable to
fulfill any of its obligations under
48
<PAGE> 49
this Lease expressly or impliedly to be performed by Landlord or because
Landlord is unable to make, or is delayed in making any repairs, additions,
alterations, improvements or decorations or is unable to supply or is delayed
in supplying any equipment or fixtures, if Landlord is prevented or delayed
from so doing by reason of strikes or labor troubles or by accident, adjustment
of insurance or by any cause whatsoever reasonably beyond Landlord's control,
including but not limited to, laws, governmental preemption in connection with
a national emergency or by reason of any Requirements of any Governmental
Authority or by reason of the conditions of supply and demand which have been
or are affected by war or other emergency ("Unavoidable Delays").
26. BILLS AND NOTICES. Except as otherwise expressly
provided in this Lease, any bills, statements, consents, notices, demands,
requests or other communications given or required to be given under this Lease
shall be in writing and shall be deemed sufficiently given or rendered if sent
by registered or certified mail (return receipt requested) addressed (1) to
Tenant (a) at Tenant's address set forth in this Lease if mailed prior to
Tenant's taking possession of the Premises, or (b) at the Building if mailed
subsequent to Tenant's taking possession of the Premises, or (c) at any place
where Tenant or any agent or employee of Tenant may be found if mailed
subsequent to Tenant's vacating, deserting, abandoning or surrendering the
Premises, or (2) to Landlord (a) at Landlord's address set forth in this Lease,
and with a copy to (b) Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue,
New York, New York 10022, Attn.: Richard Kalikow, Esq., and (c) any Mortgagee
which shall have requested same, by notice given in accordance with the
provisions of this Article 26 at the address designated by such Mortgagee, or
(3) to such other address(es) as either Landlord or Tenant may designate as its
new address(es) for such purpose by notice given to the other in accordance
with the provisions of this Article 26. Any such bill, statement, consent,
notice, demand, request or other communication shall be deemed to have been
rendered or given on the date when it shall have been led as provided in this
Article 26.
27. ESCALATION. A. In a determination of any increase
in the Fixed Rent under the provisions of this Article 27:
(1) "Assessed Valuation" shall mean the amount
for which the Real Property is assessed pursuant to applicable provisions of
the New York City Charter and of the Administrative Code of the City of New
York for the purpose of imposition of Taxes.
(2) "Base Operating Expenses" shall mean the
Operating Expenses incurred during the Base Operating Year.
(3) "Base Operating Year" shall mean the calendar
year commencing January 1, 1997 and ending December 31, 1997.
49
<PAGE> 50
(4) "Base Taxes" shall mean the Taxes payable
with respect to the Real Property for the Tax Year commencing July 1, 1996 and
ending June 30, 1997.
(5) (a) "Operating ExPenses" shall mean the
aggregate of those costs and expenses (and taxes, if any, thereon)
paid or incurred by or on behalf of Landlord (whether directly or
through independent contractors) in respect of the Operation of the
Property which, in accordance with the accounting practice used by
Landlord (and which is in accordance with sound management principles
respecting the operation of non-institutional first class office
buildings in New York City) are properly chargeable to the Operation
of the Property together with and including (without limitation): the
costs of gas, oil, steam, water, sewer rental, electricity (for the
portions of the Real Property and the Building not leased to and
occupied by tenants in the Building or available for occupancy), HVAC
and other utilities furnished to the public portions of the Building
and utility taxes, a management fee not to exceed 3% of the gross
revenues of the Building, and the financial expenses incurred in
connection with the Operation of the Property such as increases in
ground rent, if any, insurance premiums, attorneys' fees and
disbursements (exclusive of any such fees and disbursements incurred
in applying for any abatement of Taxes) and auditing and other
professional fees and expenses, but specifically excluding (i) Taxes,
(ii) franchise or income taxes imposed upon Landlord, (iii) mortgage
interest, (iv) leasing commissions, (v) capital improvements (except
as provided in clause (c) of this Section (A)(5), (vi) the cost of
electrical energy furnished directly to tenants of the Building, (vii)
the cost of tenant installations and decorations incurred in
connection with preparing space for a new tenant, (viii) salaries of
personnel above the grade of building manager or any equivalent
position, and (ix) ground rent, if any; except, however, that if
Landlord is not furnishing any particular work or service (the cost of
which if performed by Landlord would constitute an Operating Expense)
to a tenant who has undertaken to perform such work or service in lieu
of the performance thereof by Landlord, Operating Expenses shall be
determined to be increased by an amount equal to the additional
Operating Expenses which reasonably would have been incurred during
such period by Landlord if it had at its own expense furnished such
work or services to such tenant.
(b) In determining the amount of Operating
Expenses for any Operating Year, if less than ninety-five percent
(95~) of the Building rentable area shall have been occupied by
tenant(s) at any time during any such Operating Year, Operating
Expenses shall be determined for such Operating Year, at Landlord's
option, to be an amount equal to the like expenses which would
normally be expected to be incurred had such occupancy been
ninety-five percent (95%) throughout such Operating Year.
50
<PAGE> 51
(c) If any capital improvement is made after the
Base Operating Year either (i) in compliance with a Requirement,
whether or not such requirement is valid or mandatory, or (ii) for the
purpose of reducing Operating Expenses (as, for example, a
labor-saving improvement), then the cost of such improvement shall be
included in Operating Expenses for the Operating Year in which such
improvement was made; provided, however, to the extent the cost of
such improvement is required to be capitalized for federal income tax
purposes, such cost shall be amortized over the shortest useful life
of such improvement permitted pursuant to the Internal Revenue Code of
1986, as amended, and the annual amortization, together with interest
thereon at the then "base" rate being charged by Citibank, N.A. or its
successor, of such improvement shall be deemed an Operating Expense in
each of the Operating Years during which such cost of the improvement
is amortized.
(6) "Operating Statement" shall mean a statement
setting forth any increase or decrease in the Fixed Rent for the preceding
Operating Year pursuant to the provisions of this Article 27.
(7) "Operating Year" shall mean each calendar
year following the Base Operating Year, all or any part of which falls within
the Term.
(8) "Taxes" shall mean the aggregate amount of
real estate taxes and any general or special assessments (exclusive of
penalties and interest thereon) imposed upon the Real Property (including,
without limitation, (i) assessments made upon or with respect to any "air" and
"development" rights now or hereafter appurtenant to or affecting the Real
Property, (ii) any fee, tax or charge imposed by any Governmental Authority for
any vaults, vault space or other space within or outside the boundaries of the
Real Property, (iii) any charges imposed upon or with respect to the Real
Property pursuant to a city business improvement district, and (iv) any
assessments levied after the date of this Lease for public benefits to the Real
Property or the Building); provided that if because of any change in the
taxation of real estate, any other tax or assessment, however denominated
(including, without limitation, any franchise, income, profit, sales, use,
occupancy, gross receipts or rental tax), is imposed upon Landlord or the owner
of the Real Property or the Building, or the occupancy, rents or income
therefrom, in substitution for or in addition to, any of the foregoing Taxes,
such other tax or assessment shall be deemed part of Taxes. With respect to
any Tax Year, all expenses including reasonable attorneys' fees and
disbursements, experts' and other witnesses' fees, incurred in contesting the
validity or amount of any Taxes or in obtaining a refund of Taxes shall be
considered as part of the Taxes for such Tax Year.
51
<PAGE> 52
(9) "Tax Statement" shall mean a statement
setting forth a comparison of Taxes and the Tax Payment due for the Tax Year.
(10) "Tax Year" shall mean the period July l
through June 30 (or such other period as hereinafter may be duly adopted by The
City of New York as its fiscal year for real estate tax purposes), any portion
of which occurs during the Term.
(11) "Tenant's Share" shall mean 1.303%.
B. (1) If the Taxes payable for any Tax Year (any
part or all of which falls within the Term) shall represent an increase above
the Base Taxes then the Fixed Rent for such Tax Year and continuing thereafter
until a new Tax Statement is rendered to Tenant, shall be increased by Tenant's
Share of such increase (the "Tax Payment"). Tenant shall not be entitled to
any credit against any Tax Payment on account of any discount that Landlord may
receive by virtue of any early payment of Taxes or on account of any exemptions
or abatements of Taxes to which the Real Property is entitled, and Taxes shall
be calculated without taking into account any such discounts, exemptions or
abatements. The Taxes shall be computed initially on the basis of the Assessed
Valuation in effect at the time the Tax Statement is rendered (as the Taxes may
have been settled or finally adjudicated prior to such time) regardless of any
then pending application, proceeding or appeal respecting the reduction of any
such Assessed Valuation, but shall be subject to subsequent adjustment as
provided in Section C(8) of this Article 27.
(2) At any time during or after the Term,
Landlord shall render to Tenant, either in accordance with the provisions of
Article 26 hereof or by personal delivery at the Premises, a Tax Statement or
Statements showing (i) a comparison of the Taxes for the Tax Year with the Base
Taxes and (ii) the amount of the Tax Payment resulting from such comparison.
Tenant shall pay to Landlord in two (2) equal installments, in advance, on
January 1st and July 1st of each year, the Tax Payment shown thereon. If Taxes
are required to be paid in full or on any other date or dates than as presently
required by the Governmental Authority imposing the same, then the due date of
the installments of the Tax Payment shall be correspondingly accelerated or
revised so that the Tax Payment (or the two (2) installments thereof) is due at
least 30 days prior to the date the corresponding payment is due to the
Governmental authority. If the Tax Year established by The City of New York
shall be changed, any Taxes for the Tax year prior to such change which are
included within the new Tax Year and which were the subject of a prior Tax
Statement shall be apportioned for the purpose of calculating the Tax Payment
payable with respect to such new Tax Year. Landlord's failure to render a Tax
Statement during or with respect to any Tax Year shall not prejudice Landlord's
right to render a Tax Statement during or with respect to any subsequent Tax
Year, and shall not eliminate or reduce Tenant's obligation to make Tax
Payments pursuant to this Article 27 for
52
<PAGE> 53
such Tax Year. Whenever so requested, but not more than once a year, Landlord
shall furnish Tenant with a reproduced copy of the tax bill (or receipted bill)
for the Taxes for the current or next succeeding Tax Year (if theretofore
issued by the Governmental Authority).
(3) The Tax Payment shall be prorated for any
partial Tax Year in which the Term of this Lease shall commence or end. If a
Tax Statement is furnished to Tenant after the commencement of the Tax Year in
respect of which such Tax Statement is rendered, Tenant shall, within thirty
(30) days thereafter, pay to Landlord an amount equal to the amount of any
underpayment of the Tax Payment with respect to such Tax Year and, in the event
of an overpayment, Landlord shall either pay to Tenant or, at Landlord's
election, credit against subsequent payments of Fixed Rent, the amount of
Tenant's overpayment.
C. (1) If the Operating Expenses for any Operating
Year (any part of all of which falls within the Term) shall be greater than the
Base Operating Expenses, then the Fixed Rent for such Operating Year and
continuing thereafter until a new Operating Statement is rendered to Tenant,
shall be increased by Tenant's Share of such increase.
(2) At any time during or after the Term Landlord
shall render to Tenant, either in accordance with the provisions of Article 26
hereof or by personal delivery at the Premises, an Operating Statement or
Statements showing (i) a comparison of the Operating Expenses for the Operating
Year with the Base Operating Expenses and (ii) the amount of the increase in
the Fixed Rent resulting from such comparison. Landlord's failure to render an
Operating Statement during or with respect to any Operating Year shall not
prejudice Landlord~s right to render an Operating Statement during or with
respect to any subsequent Operating Year, and shall not eliminate or reduce
Tenant's obligation to pay increases in the Fixed Rent pursuant to this Article
27 for such Operating Year.
(3) (a) On the first day of the month
following the furnishing to Tenant of an Operating Statement, Tenant
shall pay to Landlord a sum equal to 1/12th of such increase in the
Fixed Rent multiplied by the number of months (and any fraction
thereof) of the Term then elapsed since the commencement of the
Operating Year for which the increase is applicable; and thereafter,
commencing with the then current monthly installment of Fixed Rent and
continuing monthly thereafter until rendition of the next succeeding
Operating Statement, the monthly installments of Fixed Rent shall be
increased by an amount equal to 1/12th of such increase. Any increase
in the Fixed Rent shall be collectible by Landlord in the same manner
as Fixed Rent.
(b) Following each Operating Statement, a
reconciliation shall be made as follows: Tenant shall be
53
<PAGE> 54
debited with any increase in the Fixed Rent shown on such Operating
Statement and credited with the aggregate, if any, paid by Tenant on
account in accordance with the provisions of subsection C(3)(a) for
the Operating Year in question. Tenant shall pay any net debit
balance to Landlord within thirty (30) days next following rendition
by Landlord, either in accordance with the provisions of Article 26
hereof or by personal delivery to the Premises, of an invoice for such
net debit balance.
(4) (a) As used in this subsection C(4) (ii the
phrase "Tentative Monthly Escalation Charge" shall mean a sum equal to
1/12th of Tenant's Share multiplied by the difference between (x) the
Base Operating Expenses and (y) Landlord's estimate of Operating
Expenses for the Current Year and (ii) "Current Year" shall mean the
calendar year in which a demand is made upon Tenant for payment of a
Tentative Monthly Escalation Charge.
(b) At any time in any Operating Year, Landlord,
at its option, in lieu of the payments required under subsection
C(3)(a) of this Article 27, may demand and collect from Tenant, as
additional rent, a sum equal to the Tentative Monthly Escalation
Charge multiplied by the number of months in said Operating Year
preceding the demand, and thereafter, commencing with the month in
which the demand is made and continuing thereafter for each month
remaining in said Operating Year, the monthly installments of Fixed
Rent shall be deemed increased by the Tentative Monthly Escalation
Charge. Any amount due to Landlord under this subsection C(4) may be
included by Landlord in any Operating Statement rendered to Tenant as
provided in subsection C(2) of this Article 27.
(c) After the end of the Current Year and at any
time that Landlord renders an Operating Statement or Statements to
Tenant as provided in subsection C(2) of this Article 27 with respect
to the comparison of the Operating Expenses for said Current Year
(i.e., an Operating Year), with the Base Operating Expenses, the
amounts, if any collected by Landlord from Tenant under this
subsection C(4) on account of the Tentative Monthly Escalation Charge
shall be adjusted, and, if the amount so collected is less than or
exceeds the amount actually due under said Operating Statement for the
Operating Year, a reconciliation shall be made in the same manner as
provided in subsection C(3)(b) of this Article 27.
(5) Only Landlord shall be eligible to institute
tax reduction or other proceedings to reduce the Assessed Valuation. In the
event that, after a Tax Statement has been sent to Tenant, an Assessed
Valuation which had been utilized in computing the Taxes for a Tax Year is
reduced (as a result of settlement, final determination of legal proceedings or
otherwise), and as a result thereof a refund of Taxes is actually received by
54
<PAGE> 55
or on behalf of Landlord, then promptly after receipt of such refund, Landlord
shall send Tenant a Tax Statement adjusting the Taxes for such Tax Year (taking
into account the expenses mentioned in subsection A(8) of this Article 27) and
setting forth Tenant's Share of such refund and Tenant shall be entitled to
receive such Share by way of a credit against the Fixed Rent next becoming due
after the sending of such Tax Statement; provided, however, that Tenant's Share
of such refund shall be limited to the amount, if any, which Tenant had
theretofore paid to Landlord as increased Fixed Rent for such Tax year on the
basis of the Assessed Valuation before it had been reduced.
(6) Any Operating Statement sent to Tenant shall
be conclusively binding upon Tenant unless, within forty-five (45) days after
such statement is sent, Tenant shall send a written notice to Landlord
objecting to such Statement and specifying the respects in which such Statement
is claimed to be incorrect. Upon the request of Tenant, given within sixty
(60) days of Tenant's receipt of such Operating Statement and provided that (i)
Tenant's Share of all Operating Expenses then due and payable has been paid in
full prior to such request, and (ii) no default by Tenant under the Lease shall
have occurred and then be continuing, Landlord shall promptly make available to
Tenant or its certified public accountant (at Landlord's offices during normal
business hours) information relating to the Operating Statement or the
preparation thereof which is reasonably necessary to enable Tenant to verify
Landlord's calculations with regard to Tenant's specific objections to such
statement provided, in no event shall Landlord be required to make available
any information to any third party contractor or consultant employed by Tenant
to perform such review on a contingent-fee basis or other "savings" based fee
structure. Neither Tenant nor its certified public accountant shall be
permitted to make copies of such information or remove such books and records
from Landlord's offices. All such information shall be made available on a
confidential basis and Tenant shall not disclose such information to any third
party, except to its certified public accountant who shall acknowledge in
writing the confidential nature of such information. If the objections are not
settled by agreement, either party may refer the decision of the issues raised
to a reputable independent firm of certified public accountants mutually
acceptable to the parties, and the decision of such accountants shall be
conclusively binding upon the parties. The fees and expenses involved in such
decision shall be borne by the unsuccessful party (and if both parties are
partially unsuccessful, the accountants shall apportion the fees and expenses
between the parties based on the degree of success of each party).
Notwithstanding the giving of such notice by Tenant, and pending the resolution
of any such dispute, Tenant shall pay to Landlord when due the amount shown on
any such Operating Statement, as provided in Section C hereof.
(7) The expiration or termination of this Lease
during any Tax Year or any calendar year for any part or all of which there is
an increase in the Fixed Rent under this Article
55
<PAGE> 56
shall not affect the rights or obligations of the parties hereto respecting
such increase and any Operating Statement or Tax Statement relating to such
increase may, on a pro rata basis, be sent to Tenant subsequent to, and all
such rights and obligations shall survive, any such expiration or termination.
Any payments due under such Operating Statement or Tax Statement shall be
payable within thirty (30) days after such Statement is sent to Tenant.
(8) In the event that, after a Tax Statement has
been sent to Tenant, the Assessed Valuation which had been utilized in
computing the Base Taxes is reduced (as a result of settlement, final
determination of legal proceedings or otherwise) then, and in such event: (i)
the Base Taxes shall be retroactively adjusted to reflect such reduction, (ii)
the monthly installment of Fixed Rent shall be increased accordingly, and (iii)
all retroactive additional rent resulting from such retroactive adjustment
shall be due and payable when billed by Landlord. Landlord promptly shall send
to Tenant a statement setting forth the basis for such retroactive adjustment
and additional rent payments.
D. Anything to the contrary herein notwithstanding, in
no event shall the operation of the provisions of this Article 27 reduce
Tenant's obligation to pay Fixed Rent in the amount set forth in Article 1
hereof.
28. SERVICES. A. Landlord shall provide passenger
elevator facilities twenty-four (24) hours a day, seven days a week, and
freight elevator facilities on a "first come, first serve" non-exclusive basis
on Business Days from 8:00 a.m. to 5:30 p.m. It is hereby acknowledged that
for hours other than 8:00 a.m. to 6:00 p.m. on Business days and Saturdays,
less than all, but not less than one (1), of the passenger elevators which
serve the Premises may be in service. Tenant has the right, in accordance with
the provisions of Article 3 hereof, to install a card key access system in a
passenger elevator designated by Landlord which serves the 39th floor such that
entry to the 39th floor will be available only by card-carrying members and
Landlord. Tenant has the right, at Tenant's sole cost and expense, to remove
and replace the existing tenant's signs currently located on the columns
outside the Building with signs of substantially the same dimensions as the
existing signs and otherwise subject to Landlord's approval; Tenant
acknowledges and agrees, however, that if due to any change in the design of
the lobby, arcade or entry to the Building or other alterations or improvements
by Landlord affecting or relating to the columns, Landlord requires that the
signs be removed, Tenant promptly, at its sole cost and expense, shall remove
same and Landlord shall endeavor to designate another suitable place for Tenant
to reinstall, at Tenant's own cost and expense, such signs or other signs first
approved by Landlord. If Tenant fails after five (5) days' notice to remove
such signs as aforesaid, the same may be removed by Landlord at the expense of
Tenant. Throughout the Term, Tenant shall be liable for the entire cost of
maintenance, cleaning, repair and replacement of any of
56
<PAGE> 57
Tenant's signs and all necessary fees and permits in connection therewith.
Tenant, at Tenant's sole cost and expense, shall at all times comply with all
Requirements applicable to any of its signs. Upon the expiration or earlier
termination of this Lease, Tenant shall remove all of its signs and repair any
damage to the Building caused by such removal.
B. Landlord shall not be obligated to furnish any heat,
ventilation or air-conditioning services to the Premises other than the
furnishing of steam to provide heat to the periphery radiation system in the
Premises during Landlord's normal business hours and on Business Days during
such months as required by law. Tenant understands that Tenant, at Tenant's
sole expense, shall supply supplementary heating through its own
air-conditioning system in order to heat the Premises adequately and in
compliance with the requirements of law. Notwithstanding the foregoing,
Landlord, throughout the Term shall have free access to any and all mechanical
installations of Landlord, including, but not limited to, aircooling, fan,
ventilating and machine rooms and electrical closets; Tenant shall not
construct partitions or other obstructions which may interfere with Landlord's
free access thereto, or interfere with the moving of Landlord's equipment to
and from the enclosures containing said installations. Neither Tenant, nor its
agents, employees or contractors shall at any time enter the said enclosures or
tamper with, adjust or touch or otherwise in any manner affect said mechanical
installations.
C. The Fixed Rent and Percentage Rent do not reflect or
include any charge to Tenant for the furnishing or distributing of any
necessary freight elevator facilities to the Premises during periods ("Overtime
Periods") other than the hours and days set forth above. Accordingly, if
Landlord shall furnish any such elevator facilities to the Premises at the
request of Tenant during Overtime Periods, Tenant shall pay Landlord additional
rent for such services at the standard rates then fixed by Landlord for the
Building or, if no such rates are then fixed, at reasonable rates. Landlord
shall not be required to furnish any such service during any Overtime Periods
unless Landlord has received advance notice from Tenant requesting such service
prior to 2:00 p.m. of the day upon which such service is requested or by 2:00
p.m. of the last preceding business day if such Overtime Periods are to occur
on a day other than a Business Day. If Tenant fails to give Landlord such
advance notice, then, failure by Landlord to furnish or distribute any such
service during such Overtime Periods shall not constitute an actual or
constructive eviction, in whole or in part, or entitle Tenant to any abatement
or diminution of Rental, or relieve Tenant from any of its obligations under
this Lease, or impose any liability upon Landlord or its agents by reason of
inconvenience or annoyance to Tenant, or injury to or interruption of Tenant's
business or otherwise. If more than one tenant utilizing the same system as
Tenant requests the same Overtime Periods for the same service as Tenant, the
charge to Tenant shall be adjusted pro rata. Tenant agrees that all deliveries
for the Premises shall be made only to the loading area of the Building and
57
<PAGE> 58
from there to the basement via the loading dock elevator and thence via the
freight elevator to the Premises, and only between the hours of 7:00 P.M. and
7:00 A.M. or such other times as Landlord may from time to time designate, and
at all times in such manner so as not to inconvenience other tenants in the
Building or their visitors. The loading area of the Building, the loading dock
elevator and the basement corridors shall at all times be kept neat and clean
by Tenant of Tenant's debris to the satisfaction of Landlord, and immediately
after any and all deliveries, Tenant shall clean the area of any debris or
spillage left by Tenant. Tenant shall not at any time transport supplies,
equipment or its service personnel through the Building lobby.
D. Tenant, at Tenant's sole cost and expense, shall
cause the Premises to be cleaned at regular intervals, and shall cause all
portions of the Premises used for the storage, preparation, service or
consumption of food or beverages to be cleaned daily in a manner satisfactory
to Landlord, and to be exterminated against infestation by vermin, rodents or
roaches regularly and, in addition, whenever there shall be evidence of any
infestation. Tenant shall cause the furnishing of cleaning and exterminating
services and garbage removal to be performed by contractors approved by
Landlord and in accordance with such Rules and Regulations as, in Landlord's
judgment, are necessary for the proper operation of the Building, and Tenant
agrees that Tenant shall not permit any person to enter the Premises or the
Building for the purpose of providing such cleaning, extermination or garbage
removal services, other than persons first approved by Landlord. Not in
limitation of the foregoing, Tenant agrees throughout the Term to keep in full
force and effect a full-service preventive extermination contract approved by
Landlord with a licensed pest-control operator to keep the Premises at all
times free from vermin and to keep vermin attracted by Tenant's use of the
Premises from other parts of the Building.
E. Tenant shall cause all refuse and rubbish in the
Premises to be stored in a refrigerated area in sealed, water-tight-rubber
plastic, industrial-type containers approved by Landlord having rubber wheels
and bumpers so fashioned as to prevent damage to the Premises and the Building,
and to be kept inside the Premises completely out of view except when same is
being taken to the location of collection. All refuse and rubbish shall be
removed daily from the Premises and the Building and shall be transported by
Tenant from the Premises to the loading area via the basement corridors and the
service elevator and loading dock elevator, or to such other location of
collection and in such manner from time to time designated by Landlord. Tenant
shall clean the area of any debris or spillage and shall return its containers
to the Premises via the same route described herein or otherwise designated by
Landlord from time to time. Tenant shall not suffer or permit Tenant's
employees or any persons making deliveries to or from the Premises or removing
refuse and rubbish therefrom, to leave any food, refuse and rubbish containers
or other matters standing upon the streets or sidewalks adjacent to
58
<PAGE> 59
the Building, and, if Tenant shall fail to comply with the foregoing provisions
of this sentence, Landlord, in addition to all other remedies provided in this
Lease and at law, may remove any food, refuse and rubbish containers and other
matter, including deliveries so left standing, at Tenant's expense, without any
liability on the part of Landlord therefor. If Landlord furnishes to Tenant
for its use a holding area in the Building, Tenant shall store its refuse and
rubbish therein until removed. Tenant shall cause the removal of refuse and
rubbish from the Premises and the Building to be made between the hours of 7:00
P.M. and 7:00 A.M. each day and in a manner so as not to create unsightly
appearance or interfere with, render uncomfortable or annoy tenants or visitors
in or about the Building or any other nearby buildings owned or controlled by
Landlord or any affiliate of Landlord. Tenant covenants and agrees, at
Tenant's sole cost and expense, to comply with all present and future
Requirements regarding the collection, sorting, separation and recycling of
waste products, garbage, refuse and trash, and Tenant shall pay all costs,
expenses, fines, penalties or damages which may be imposed on Landlord or
Tenant by reason of Tenant's failure to comply with the provisions of this
sentence, and, at Tenant's sole cost and expense, shall indemnify, defend and
hold Landlord harmless from and against any actions, claims, costs (including
without limitation, reasonable legal fees) and suits arising from such
non-compliance.
F. If the "sprinkler system" installed in the Building
or any of its appliances shall be damaged or injured or not in proper working
order by reason of any act or omission of Tenant, Tenant's agents, servants,
employees, licensees or visitors, Tenant shall forthwith restore the same to
good working condition at its own expense; and if the New York Board of Fire
Underwriters or the New York Fire Insurance Rating Organization or any bureau,
department or official of the state or city government shall require or
recommend that any changes, modifications, alterations or additional sprinkler
heads or other equipment be made or supplied by reason of Tenant's business, or
the location of the partitions, trade fixtures, or other contents of the
Premises, Landlord shall, at Tenant's expense, promptly make and supply such
changes, modifications, alterations, additional sprinkler heads or other
equipment.
G. Tenant's cold water consumption shall be measured
through a water meter INSTALLED BY LANDLORD at Tenant's expense. Throughout
the Term, Tenant shall keep the meter and any related equipment in good working
order and repair at Tenant's own cost and expense; (2) Tenant shall pay for
water consumed as shown on said meter, as and when bills are rendered as
additional rent, and on default in making such payment Landlord may pay such
charges and collect the same from Tenant; and (3) Tenant shall pay the sewer
rent, charge or any other tax, rent, levy or charge which now or hereafter is
assessed, imposed or shall become a lien upon the Premises or the realty of
which they are a part pursuant to any Requirement made or issued in connection
with any such metered use,
59
<PAGE> 60
consumption, maintenance or supply of water, water system, or sewage or sewage
connection or system. The bill rendered by Landlord for the above shall be
based upon Tenant's consumption and shall be payable by Tenant as additional
rent within five (5) days of rendition. Landlord shall not be obligated to
furnish hot water to the Premises and Tenant, at its own cost and expense,
shall provide the Premises with hot water and related equipment in compliance
with all Requirements.
H. Landlord reserves the right to stop service of the
HVAC System in the Building during any period of a violation or breach by
Tenant of the provisions of Section B of this Article 28 and to stop the
service of the HVAC System or the elevator, electrical, plumbing or other
mechanical systems or facilities in the Building when necessary, by reason of
accident or emergency, or for repairs, additions, alterations, replacements or
improvements in the judgment of Landlord desirable or necessary to be made,
until said repairs, alterations, replacements or improvements shall have been
completed. Landlord shall have no responsibility or liability .or
interruption, curtailment or failure to supply HVAC, elevator, or plumbing when
prevented by Unavoidable Delays or by any Requirement of any Governmental
Authority or due to the exercise of its right to stop service as provided in
this Section G. The exercise of such right or such failure by Landlord shall
not constitute an actual or constructive eviction, in whole or in part, or
entitle Tenant to any compensation or to any abatement or diminution of Rental,
or relieve Tenant from any of its obligations under this Lease, or impose any
liability upon Landlord or its agents by reason of inconvenience or annoyance
to Tenant, or injury to or interruption of Tenant's business, or otherwise.
Nothing in this Section H shall impose or be deemed to impose upon Landlord any
obligations to provide services to Tenant or the Premises not otherwise
expressly provided in this Lease.
I. Tenant shall arrange to obtain gas directly from the
utility company servicing the Building, and shall pay all charges therefor
directly to such utility company. All meters and equipment required in
connection with the obtaining of such gas, as well as gas cut-off devices, both
manual and automatic, shall be installed, by Landlord at Tenant's expense.
Throughout the Term, Tenant shall keep the meters and any related equipment in
good working order and repair at Tenant's own cost and expense. Landlord shall
not be liable to Tenant in any way for any interruption, curtailment or failure
or defect in the supply or character of gas furnished to the Premises by reason
of any Requirement, act or omission of any public utility company servicing the
building with gas or for any other reason except Landlord's gross negligence or
willful misconduct.
J. Other than steam furnished by Landlord to Tenant's
periphery radiation system as aforesaid, Tenant agrees to purchase from
Landlord all steam consumed at the Premises. The amount to be paid by Tenant
for steam at the Premises shall be determined by meter or meters and related
equipment installed by Landlord, at
60
<PAGE> 61
Tenant's expense. Throughout the Term, Tenant shall keep the meters and any
related equipment in good working order and repair at Tenant's own cost and
expense. Landlord from time to time shall render to Tenant bills for steam
consumption at the Premises, which bills Tenant hereby agrees to pay, as
additional rent, within five (5) days after rendition of same. Tenant shall
also pay to Landlord as additional rent, the amount of any taxes imposed by any
Governmental Authority (including utility taxes) on Landlord's receipt from the
sale of steam to Tenant, and Landlord may include the amount thereof in
Landlord's bills rendered thereunder. The bills rendered to Tenant, as
hereinbefore provided, for steam consumption shall be for an amount equal to
the sum of (i) the product of (x) Tenant's actual consumption as shown on such
meter or meters, and (y) the rate that Tenant would be charged if Tenant were
purchasing steam directly from the supplying utility company, plus (ii) an
amount equal to five percent (5%) of the resulting product set forth in the
preceding clause (i).
29. PARTNERSHIP TENANT. If Tenant is a partnership (or
is comprised of two (2) or more persons, individually or as co-partners of a
partnership) or if Tenant's interest in this Lease shall be assigned to a
partnership (or to two (2) or more persons, individually or as co-partners of a
partnership) pursuant to Article 12 hereof (any such partnership and such
persons are referred to in this Article 29 as "Partnership Tenant"), the
following provisions shall apply to such Partnership Tenant: (a) the liability
of each of the parties comprising Partnership Tenant shall be joint and
several; (b) each of the parties comprising Partnership Tenant hereby consents
in advance to, and agrees to be bound by (x) any written instrument which may
hereafter be executed by Partnership Tenant or any successor partnership,
changing, modifying, extending or discharging this Lease, in whole or in part,
or surrendering all or any part of the Premises to Landlord, and (y) any
notices, demands, requests or other communications which may hereafter be given
by Partnership Tenant; (c) any bills, statements, notices, demands, requests or
other communications given or rendered to Partnership Tenant or to any of such
parties shall be binding upon Partnership Tenant and all such parties (d) if
Partnership Tenant shall admit new partners, all of such new partners shall, by
their admission to Partnership Tenant, be deemed to have assumed joint and
several liability for the performance of all of the terms, covenants and
conditions of this Lease on Tenant's part to be observed and performed; and (e)
Partnership Tenant shall give prompt notice to Landlord of the admission of any
such new partners, and upon demand of Landlord, shall cause such new partners
to execute and deliver to Landlord an agreement in form satisfactory to
Landlord, wherein each such new partner shall assume joint and several
liability for the performance of all the terms, covenants and conditions of
this Lease on Tenant's part to be observed and performed (but neither
Landlord's failure to request any such agreement nor the failure of any such
new partner to execute or deliver any such agreement to Landlord shall vitiate
the provisions of clause (d) of this Article 29).
61
<PAGE> 62
30. RIGHT TO TERMINATE. Tenant shall have a one-time
option (the "Termination Option") to terminate this Lease effective upon the
tenth (10th) anniversary of the Commencement Date (the "Termination Date")
provided that no Event of Default exists on the date Tenant gives Landlord
written notice (the Termination Notice") of Tenant's election to exercise the
Termination Option. The Termination Option may be exercised with respect to
the entire Premises only and shall be exercisable by Tenant delivering the
Termination Notice to Landlord at least eighteen (18) months prior to the
Termination Date, which Termination Notice must be accompanied by a certified
check in the amount of $500,000 made payable to Landlord (the "Termination
Payment"). Time is of the essence with respect to the giving of the
Termination Notice and the Termination Payment. Upon the giving of the
Termination Notice and the Termination Payment pursuant to the provisions of
this Article, this Lease shall terminate as of the Termination Date in the same
manner as if the Termination Date were the Expiration Date.
31. SECURITY. A. Tenant shall deposit with Landlord on
the signing of this Lease, an unconditional, irrevocable letter of credit
effective through September 30, 2011 in form and substance reasonably
acceptable to Landlord and from such New York clearing-house bank reasonably
acceptable to Landlord, which letter of credit shall be in the amount of
$875,000 (the amount required to be posted by Tenant at any time during the
Term of this Lease being hereinafter referred to as the "Required Amount")
payable at the demand of Landlord without any accompanying certification (such
letter of credit and any renewal thereof is hereinafter referred to as the
"Letter of Credit"). Provided that no Event of Default, or event which with
the giving of notice or passage of time would constitute an Event of Default,
exists and is continuing, (i) at the end of the third (3rd) anniversary of the
Fixed Rent Commencement Date, the Required Amount shall be reduced to $700,000,
and (ii) at the end of the tenth (10) anniversary of the Fixed Rent
Commencement Date, the Required Amount shall be reduced to $500,000 and Tenant
may substitute a Letter of Credit in the applicable reduced amount for the
Letter of Credit then being held by Landlord. Failure by Tenant to maintain
the Letter of Credit in full force and effect throughout the Term as required
hereunder shall constitute an Event of Default under this Lease.
B. Tenant agrees that in the event Tenant is in default
beyond any applicable notice and grace period (if any) in respect of any of the
terms, provisions and conditions of this Lease, including, without limitation,
the payment of Fixed Rent, Percentage Rent, additional rent or any other item
of Rental, or if Landlord is on notice that the Letter of Credit shall be
terminated, Landlord may draw the entire proceeds of the Letter of Credit and
apply the whole or any part of such proceeds to the extent required for the
payment of any such Fixed Rent, Percentage Rent, additional rent or any other
item of Rental as to which Tenant is in default, or for any sum which Landlord
may expend or may be required to expend by reasons of such default by Tenant,
62
<PAGE> 63
including without limitation, any damages or deficiency in the reletting of the
Premises, whether such damages or deficiency accrued before or after summary
proceedings or other reentry by Landlord. Landlord may retain any of the
proceeds drawn under the Letter of Credit and not applied as hereinabove
provided as continued security for the faithful performance by Tenant of the
terms, covenants and conditions of this Lease. In the event that Tenant shall
fully and faithfully comply with all of the terms, provisions, covenants and
conditions of this Lease, Landlord shall execute and deliver to Tenant a
written consent to the cancellation of the Letter of Credit and shall return
the outstanding Letter of Credit to Tenant after the Expiration Date and after
delivery of possession of the entire Premises to Landlord. In the event of a
sale, conveyance or transfer of the Land and Building or leasing of the
Building, Landlord shall have the right to transfer the Letter of Credit to the
vendee, transferee or lessee and Landlord shall thereupon be released by Tenant
from all liability for the return of such Letter of Credit and Tenant agrees to
look solely to the new Landlord for the return of said Letter of Credit It is
agreed that the provisions hereof shall apply to every transfer or assignment
made of the Letter of Credit to a new Landlord. Tenant further covenants that
it will not assign or encumber or attempt to assign or encumber the Letter of
Credit and that neither Landlord nor its successors or assigns shall be bound
by any such assignment, encumbrance, attempted assignment or attempted
encumbrance.
C. If Landlord applies or retains any part of the
proceeds of the Letter of Credit, Tenant shall not be deemed to have cured the
Event of Default which gave rise to the application or retention of any part of
the proceeds of the Letter of Credit unless Tenant shall have deposited with
Landlord, within ten (10) days after demand therefor, the amount so applied or
retained, so that Landlord shall have the Required Amount on deposit at all
times during the Term of this Lease.
D. Whenever Landlord draws down on the entire Letter of
Credit as a result of Tenant's failure to timely deposit a new letter of credit
or a replacement letter of credit as required pursuant to Section A of this
Article 31, Landlord agrees that it shall hold the proceeds thereof in excess
of the portion applied by Landlord as a result of any applicable default by
Tenant, as the security hereunder (in which case such cash shall constitute
trust funds and Landlord shall deposit such trust funds into an interest
bearing account). Notwithstanding the terms of the preceding sentence, if
Tenant shall at any time thereafter deliver a new letter of credit in the
Required Amount, then Landlord shall promptly refund to Tenant such cash as has
not been applied by Landlord pursuant to the terms of this Lease, together with
all interest earned thereon, less a one (1~) percent administrative fee.
E. In lieu of depositing the Letter of Credit, Tenant
may deposit with Landlord, subject to collection, cash (the "Cash
63
<PAGE> 64
Security"). Landlord shall hold and apply the Cash Security in accordance with
the provisions of this Article.
32. CAPTIONS. The captions are inserted only as a matter
of convenience and for reference and in no way define, limit or describe the
scope of this Lease nor the intent of any provision hereof.
33. PARTIES BOUND. The covenants, conditions and
agreements contained in this Lease shall bind and inure to the benefit of
Landlord and Tenant and their respective heirs, distributes, executors,
administrators, successors, and, except as otherwise provided in this Lease,
their assigns.
34. BROKER. Tenant represents and warrants that Tenant
has not dealt directly with any broker in connection with this Lease, and that
insofar as Tenant knows no broker negotiated this Lease or is entitled to any
commission in connection therewith (other than Grubb & Ellis New York, Inc.
(the "Broker")) and the execution and delivery of this Lease by Landlord shall
be conclusive evidence that Landlord has relied upon the foregoing
representation and warranty. Tenant shall indemnify and hold Landlord harmless
from and against any and all claims for commission, fee or other compensation
by any person other than the Broker who shall claim to have dealt with Tenant
in connection with this Lease and for any and all costs incurred by Landlord in
connection with such claims, including, without limitation, reasonable
attorneys' fees and disbursements. This provision shall survive the
cancellation or expiration of this Lease.
35. INDEMNITY. A. Tenant shall not do or permit any act
or thing to be done upon the Premises which may subject Landlord to any
liability or responsibility for injury, damages to persons or property or to
any liability by reason of any violation of law or of any Requirement, but
shall exercise such control over the Premises as to fully protect Landlord
against any such liability. Tenant shall indemnify and save the Indemnities
harmless from and against (a) all claims of whatever nature against the
Indemnities arising from any act, omission or negligence of Tenant, its
contractors, licensees, agents, servants, employees, invitees or visitors, (b)
all claims against the Indemnities arising from any accident, injury or damage
whatsoever caused to any person or to the property of any person and occurring
during the Term in or about the Premises, (c) all claims against the
Indemnities arising from any accident, injury or damage occurring outside of
the Premises but anywhere within or about the Real Property, where such
accident, injury or damage results or is claimed to have resulted from an act,
omission or negligence of Tenant or Tenant's agents, employees, invitees or
visitors, and (d) any breach, violation or non-performance of any covenant,
condition or agreement in this Lease set forth and contained on the part of
Tenant to be fulfilled, kept,observed and performed. This indemnity and hold
harmless agreement shall include indemnity from and against any and all
liability, fines, suits, demands, costs and
64
<PAGE> 65
expenses of any kind or nature (including, without limitation, attorneys' fees
and disbursements) incurred in or in connection with any such claim or
proceeding brought thereon, and the defense thereof.
B. If any claim, action or proceeding is made or brought
against either party, which claim, action or proceeding the other party shall
be obligated to indemnify such first party against, pursuant to the terms of
this Lease, then, upon demand by the indemnified party, the indemnifying party,
at its sole cost and expense, shall resist or defend such claim, action or
proceeding in the indemnified party's name, if necessary, by such attorneys as
the indemnified party shall approve, which approval shall not be unreasonably
withheld. Attorneys for the indemnifying party's insurer shall hereby be
deemed approved for purposes of this Section B. Notwithstanding the foregoing,
an indemnified party may retain its own attorneys to defend or assist in
defending any claim, action or proceeding involving potential liability of Five
Million Dollars ($5,000,000) or more, and the indemnifying party shall pay the
reasonable fees and disbursements of such attorneys.
36. ADJACENT EXCAVATION--SHORING. If an excavation shall
be made upon land adjacent to the Premises, or shall be authorized to be made,
Tenant shall afford to the person causing or authorized to cause such
excavation, license to enter upon the Premises for the purpose of doing such
work as said person shall deem necessary to preserve the wall or the Building
from injury or damage and to support the same by proper foundations without any
claim for damages or indemnity against Landlord, or diminution or abatement of
Rental.
37. MISCELLANEOUS. A. This Lease is offered for
signature by Tenant and it is understood that this Lease shall not be binding
upon Landlord unless and until Landlord shall have executed and delivered a
fully executed copy of this Lease to Tenant. Upon execution of this Lease by
Tenant, Landlord is granted an irrevocable option for fifteen (15) days to
execute this Lease within said period and thereafter return a fully executed
copy to Tenant.
B. The obligations of Landlord under this Lease shall
not be binding upon Landlord named herein after the sale, conveyance,
assignment or transfer by such Landlord (or upon any subsequent landlord after
the sale, conveyance, assignment or transfer by such subsequent landlord) of
its interest in the Building or the Real Property (and any insurance proceeds
relating to the Building or the Real Property), as the case may be, and in the
event of any such sale, conveyance, assignment or transfer, Landlord shall be
and hereby is entirely free and relieved of all covenants and obligations of
Landlord hereunder. Neither the partners comprising Landlord, nor the
shareholders (nor any of the partners comprising same), partners, directors or
officers of any of the foregoing (collectively, the "Parties") shall be liable
for the performance of Landlord's obligations under this Lease. Tenant
65
<PAGE> 66
shall look solely to Landlord to enforce Landlord's obligations hereunder and
shall not seek any damages against any of the Parties. The liability of
Landlord for the performance of Landlord's obligations hereunder shall be
limited to Landlord's interest in the Real Property and Tenant shall not look
to any other property or assets of Landlord or the property or assets of any of
the Parties in seeking either to enforce Landlord's obligations under this
Lease or to satisfy a judgment for Landlord's failure to perform such
obligations.
C. Notwithstanding anything contained in this Lease to
the contrary, all amounts payable by Tenant to or on behalf of Landlord under
this Lease, whether or not expressly denominated Fixed Rent, additional rent or
any other item of Rental, shall constitute rent for the purposes of Section
502(b)(7) of the Bankruptcy Code.
D. Tenant shall reimburse Landlord as additional rent,
within thirty (30) days after rendition of a statement, for all expenditures
made by, or damages or fines sustained or incurred by, Landlord, due to any
default by Tenant under this Lease, with interest thereon at the Applicable
Rate.
E. Tenant hereby waives any claim against Landlord which
Tenant may have based upon any assertion that Landlord has unreasonably
withheld or unreasonably delayed any consent requested by Tenant, and Tenant
agrees that its sole remedy shall be an action or proceeding to enforce any
related provision or for specific performance, injunction or declaratory
judgment. In the event of such determination, the requested consent shall be
deemed to have been granted, however, Landlord shall have no liability to
Tenant for its refusal or failure to give such consent. Tenant's sole remedy
for Landlord's unreasonably withholding or delaying consent shall be as
provided in this Section E.
F. Time shall be of the essence with respect to all time
periods for the performance of any obligations or the giving of a notice by
Tenant hereunder.
G. In the event that Landlord, in its sole discretion,
shall create or install a messenger center in the Building for the purpose of
making available to tenants of the Building an in-house messenger delivery
service from the public portion of the Building to tenanted areas of the
Building, Landlord reserves the right to deny access to any portion of the
Building (including tenanted areas) to any outside messengers or couriers,
except to the extent necessary to permit such outside messengers or couriers to
utilize the messenger center.
38. RENT CONTROL. If at the commencement of, or at any
time or times during the Term of this Lease, the Rental reserved in this Lease
shall not be fully collectible by reason of any Requirement, Tenant shall enter
into such agreements and take such other steps (without additional expense to
Tenant) as Landlord may
66
<PAGE> 67
request and as may be legally permissible to permit Landlord to collect the
maximum rents which may from time to time during the continuance of such legal
rent restriction be legally permissible (and not in excess of the amounts
reserved therefor under this Lease). Upon the termination of such legal rent
restriction prior to the expiration of the Term, (a) the Rental shall become
and thereafter be payable hereunder in accordance with the amounts reserved in
this Lease for the periods following such termination and (b) Tenant shall pay
to Landlord, if legally permissible, an amount equal to (i) the items of Rental
which would been paid pursuant to this Lease but for such legal rent
restriction less (ii) the rents paid by Tenant to Landlord during the period or
periods such legal rent restriction was in effect.
39. COVENANTS IN CONNECTION WITH OPERATION. Tenant
hereby represents, warrants and covenants as follows:
(1) If at any time during the Term, Tenant, Harry
Shuster, Stanley Shuster or any other person, firm or corporation who or which
controls or is controlled by Tenant, shall own, operate or in any way be
affiliated, directly or indirectly, with the operation or ownership of a cigar
club and/or restaurant operating within the area bounded by and including Third
Avenue, 59th Street, Broadway and 47th Street in New York City, then the Gross
Sales of such cigar club and/or restaurant within said radius shall be included
in Gross Sales made from the Premises and the Percentage Rent hereunder shall
be computed upon the aggregate of the Gross Sales from the Premises and any
such other club and/or restaurant, and Tenant shall report and maintain records
of such sales in the manner provided in Exhibit "B" hereto and Landlord shall
have the right to audit the same as provided in Exhibit "B" hereto;
(2) Tenant shall use and occupy the entire
Premises during the Term for the use permitted by Section A of Article 2 hereof
only;
(3) Tenant shall duly procure and maintain
throughout the Term all licenses and permits required by any Governmental
Authority for the proper and lawful conduct of Tenant's business:
(4) Tenant shall preserve the security and safety
of occupants and visitors of the Premises, and in the event that Landlord
receives any complaints from other tenants at the Building with respect to
breaches of security or safety at the Building arising out of, or any nuisance
with respect to, the conduct of Tenant's business or the existence of any
dangerous or potentially injurious situation or circumstance, Tenant shall
promptly take whatever measures as shall be necessary or desirable or as
Landlord shall reasonably direct to remedy any such complaint;
(5) Tenant shall not, at any time, use or occupy,
or suffer or permit anyone to use or occupy the Premises in any
67
<PAGE> 68
manner inconsistent with Landlord's interest in maintaining the Building as a
first-class building; and
(6) Tenant shall not, at any time, permit any
objectionable noises to emanate from the Premises or to disturb other tenants
in the Building; and Tenant agrees that Tenant shall not use any loudspeakers,
phonographs, compact disks, radio, television or other communications equipment
in a manner to be heard outside the Premises or any cabaret or band music
(other than piano).
IN WITNESS WHEREOF, Landlord and Tenant have respectively
executed this Lease as of the day and year first above written.
666 FIFTH AVENUE LIMITED
PARTNERSHIP, Landlord
By: SUMITOMO REALTY & DEVELOPMENT
(N.Y.), INC., General Partner
By: /s/
-----------------------
Title:
-----------------------
GRAND HAVANA ROOM-NEW YORK,INC.,
Tenant
By:/s/Harry Shuster
-----------------------------------
President
AS TO SECTION B OF ARTICLE 20:
/s/ Harry Shuster
--------------------------------------
Harry Shuster
/s/ Stanley Shuster
--------------------------------------
Stanley Shuster
68
<PAGE> 69
Exhibit B
PERCENTAGE RENT
1. In addition to Fixed Rent, Tenant shall pay to
Landlord, as Rental hereunder, an annual amount equal to six and one-half
percent (6.5%) of Gross Sales in excess of $10,136,600 (the "Breakpoint") made
during any Lease Year or partial lease year ("Percentage Rent"). Percentage
Rent shall be paid in semi-annual installments. Tenant shall pay each
installment of Percentage Rent within thirty (30) days after the expiration of
each six (6) month period of each Lease Year (and on the first (1st) day of the
month immediately succeeding the Expiration Date) (each a "Percentage Rent
Payment Date"), commencing with the first six (6) month period in each Lease
Year in which Gross Sales first exceeds the Breakpoint, and each such payment
shall reflect all Gross Sales made in the preceding six (6) month period. In
connection therewith, Tenant shall submit to Landlord on or before the
ninetieth (90th) day following the end of each Lease Year or partial Lease Year
(including the final Lease Year as to which Tenant's obligations shall survive
the termination of this Lease) an Annual Statement, showing the amount of the
Gross Sales made during the previous Lease Year. Tenant's obligation to pay
any item of Percentage Rent shall survive the Expiration Date.
2. As used herein, the term "Gross Sales" shall mean the
sum of all gross receipts derived from the operation of business conducted on
or from the Premises, including, without limitation:
(a) the entire amount of the price charged for
all food, beverages, goods, wares and merchandise sold, and all charges for all
services sold or performed by Tenant from all business conducted at, upon or
from the Premises, whether made for cash, by check, on credit, charge accounts
or otherwise, without reserve or deduction for inability or failure to collect
the same, including, but not limited to, transactions (i) where the orders
therefor originate at or are accepted by Tenant in the Premises, but delivery
or performance thereof is made from or at any other place; all sales made and
orders received in or at the Premises shall be deemed as made and completed
therein, even though the payment of account may be transferred to another
office for collection, and all orders which result from solicitation off the
Premises but which are conducted by personnel operating from or reporting to or
under the control or supervision of Tenant, an Affiliate of Tenant or any
employee of Tenant or an Affiliate of Tenant shall be deemed part of Gross
Sales; (ii) by means of mechanical or other vending devices; and (iii)
originating from whatever source, and which Tenant in the normal and customary
course of Tenant's operations would credit or attribute to Tenant's business
conducted in the Premises;
(b) all proceeds of any "business interruption~
insurance required to be carried by Tenant hereunder; and
1
<PAGE> 70
(c) all monies or other things of value received by
Tenant from Tenant's operations at, upon or from the Premises, which are
neither included in or excluded from Gross Sales by the other provisions of
this definition, but without any duplication.
3. Each charge or sale upon installment or credit shall
be treated as a sale for the full price in the month during which such charge
or sale is made, irrespective of the time when Tenant shall receive payment
(whether full or partial) therefor. A "sale" shall be deemed consummated for
the purpose of this Lease, and the entire amount of the sales price shall be
included in Gross Sales, at the time that (i) the transaction is initially
reflected on the books or records of Tenant (or an Affiliate of Tenant), (ii)
Tenant (or an Affiliate of Tenant) receives all or any portion of the sales
price, or (iii) the applicable goods or services are delivered to the customer,
whichever occurs first.
4. For the purpose of ascertaining the amount of Gross
Sales upon which the payment of Percentage Rent is to be computed hereunder,
the following may be excluded from Gross Sales: (i) the amount of any local,
county, State or Federal sales, luxury or excise tax on such sales collected by
Tenant (but not by any vendor of Tenant), provided such tax is both added to
the selling price (or absorbed therein) and paid to the taxing authority by
Tenant, provided, however, no franchise or capital stock tax and no income or
similar tax based upon income, profits or gross sales as such, shall be
excluded or deducted from Gross Sales in any event whatsoever, (ii) gratuities
and tips to Tenant's employees which are added to the customer's check or
invoice and which Tenant is committed to, and in fact does, turn over to its
employees, (iii) any refunds or rebates made to customers, (iv) any sums that
any vending machine operator is entitled to retain from the gross proceeds of
mechanical or other vending devices pursuant to the terms of its agreement with
Tenant, and (v) the initial one-time initiation fee, if any, per member of the
Private Cigar Club.
5. A. Tenant shall prepare and keep for a period of
not less than three (3) years following the end o each calendar year during the
Term, true and accurate books of account and records, conforming to generally
accepted accounting principles, consistently applied, including, but not
limited to, sales tax and other reports filed with Governmental Authorities,
and all sales ar.d other transactions by Tenant from which Gross Sales can be
determined. Tenant shall record all sales, at the time each sale is made,
whether for cash or credit, in cash register or registers containing locked and
cumulative tapes with a cumulation capacity.
B. Tenant shall submit to Landlord on each
Percentage Rent Payment Date (including the first day of the month following
the end of the Term, as to which Tenant's obligation shall survive the
termination o this Lease), together with the installment of Percentage Rent due
on such date, a written statement, signed and certified by Tenant (or by an
authorized officer, if Tenant is a corporation) to be true and correct,
2
<PAGE> 71
showing the amount of Gross Sales during the six (6) month period ending one
month prior to such Percentage Rent Payment Date or portion thereof, and an
itemization of all permissible exclusions therefrom. Tenant shall submit to
Landlord on or before the ninetieth (90th) day following the end of each Lease
Year or partial Lease Year (including the last Lease Year, as to which Tenant's
obligation shall survive the termination of this Lease) a written statement
(the "Annual Statement"), signed and certified by Tenant (or by an authorized
officer, member or principal, if Tenant is a corporation or limited liability
company) to be true and correct, showing the amount of such Gross Sales during
the preceding Lease Year or partial Lease Year and an itemization of all
permissible exclusions therefrom. Such Annual Statement shall also be duly
certified to be true and correct in compliance with definition of Gross Sales
and in accordance with generally accepted accounting practices, consistently
applied, by a certified public accountant or authorized officer, member or
principal of Tenant. If such Annual Statement shall reveal that the Percentage
Rent paid on account of such Gross Sales shall have been understated, then such
statement shall be accompanied by the amount of additional Percentage Rent
payable as shown thereon. If such annual statement shall reveal that the
Percentage Rent paid on account of such Gross Sales shall have been understated
by more than five percent (5%), then the payment to be made to Landlord as a
result of such understatement shall bear interest from the Percentage Rent
Payment. Date(s) as to which the understatement relates at the Applicable
Rate. If such annual statement shall show that Tenant shall have overpaid any
installment of Rent, then Landlord shall promptly refund any such overpayment
to Tenant (if such overpayment was for the last Lease Year) or credit such
overpayment to the next installment of Rent due form Tenant. The statements
referred to in this Exhibit B shall be in such form and style and shall contain
such details and information as Landlord reasonably may require. The
acceptance by Landlord of payments of Percentage Rent or reports thereof shall
be without prejudice and shall in no event constitute a waiver of Landlord's
right to claim a deficiency in the payment of Percentage Rent or to audit
Tenant's books and records as set forth below.
6. Landlord shall have the right, upon fifteen (15)
days' notice to Tenant, to cause a complete audit of all statements of Gross
Sales to be performed by an independent certified public accountant and in
connection with such audit, to examine Tenant's books of accountant and records
(including all supporting data and any other records from which Gross Sales may
be tested or determined). Landlord and the certified public accountant shall
keep confidential the information obtained from such audit. Tenant shall make
all such books and records available for examination at the office where such
books and records are regularly maintained. Landlord and Landlord's agent
shall have the right to copy and duplicate such information as Landlord may
require. If any such audit by an independent certified public accountant
discloses the actual Gross Sales transacted by Tenant exceed those reported,
such determination shall be conclusively binding upon the parties, and
3
<PAGE> 72
Tenant shall pay Landlord within three (3) business days after such
accountant's determination, such additional Rent as may be so shown to be
payable. If such audit shall reveal that the Percentage Rent paid on account
of such Gross Sales shall have been understated by more than five percent (5%),
then Tenant shall pay the fees of the accountant in connection with such audit,
and the payment to be made to Landlord as a result of such understatement shall
bear interest at the Applicable Rate. The furnishing by Tenant of any
fraudulent statement shall constitute a default under this Lease. Tenant shall
have the right to dispute the results of any audit arranged by Landlord by
notifying Landlord at any time within thirty (30) days after Tenant's receipt
of Landlord's invoice, in which event the dispute shall be resolved by a
so-called "Big-Six" independent firm of certified public accountants hired by
Landlord and approved by Tenant (such approval not to be unreasonably withheld
or delayed). The decision of said accountants shall be conclusively binding
upon the parties. The fees of said accountants for such audit shall be borne
by Tenant unless such audit shall reveal that Tenant shall have overpaid
Percentage Rent for the period in question by more than five (5%) percent, in
which event Landlord shall bear the cost of the audit.
7. If any audit shall be commenced by Landlord or there
shall arise any difference or dispute concerning Gross Sales, then and in any
such event, Tenant's books of account and records (including all supporting
data and any other records from which Gross Sales may be tested or determined)
shall be preserved and retained by Tenant until a final resolution or final
determination of such dispute or difference. Any information obtained by
Landlord as the result of such audit shall be treated as confidential, except
in any litigation or proceeding between the parties and except further that
Landlord may disclose such information to prospective purchasers, to
prospective or existing Mortgagees, to the Superior Landlord and in any
statement filed with the Securities and Exchange Commission, Internal Revenue
Service, or other similar Governmental Authorities or pursuant to any subpoena
or judicial process.
8. If the Commencement Date shall be other than January
1, then, for the fist partial Lease Year and the final partial Lease Year, the
Breakpoint shall be an amount equal to the product of (i) $27,769.86 and (ii)
the number of days in such partial Lease Year.
4
<PAGE> 1
EXHIBIT 10-36
AGREEMENT FOR PURCHASE AND SALE OF STOCK
THIS AGREEMENT FOR PURCHASE AND SALE OF STOCK ("Agreement") is made
and entered into this 20th day of September, 1996, by and among UNITED
RESTAURANTS, INC., a Delaware corporation ("URI"), and JOSEPH SUCEVEANU and
DOMENICO SALVATORE, both individual residents of the State of California
("Buyers").
W I T N E S S E T H:
WHEREAS, Il Forno, Inc., a California corporation (the "Company"),
owns and operates a pizzeria and Italian-style restaurant located at 2901 Ocean
Park Boulevard, Santa Monica, California (the business, assets and operations
of the Company, as a going concern, being herein called the "Acquired
Business");
WHEREAS, URI owns 680 shares of the Common Stock, no par value, of the
Company (the "Common Stock"), constituting 85% of the issued and outstanding
shares of capital stock of the Company; and
WHEREAS, URI desires to sell to Buyers, and Buyers desire to purchase
and acquire from URI, the aforesaid 680 shares of Common Stock of the Company
(the "Shares"), all upon the terms and subject to the conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the premises, the mutual promises
and covenants hereinafter set forth, and the contemplated payment by Buyers to
URI of the Purchase Price, and for other good and valuable considerations, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:
Section 1. Terms of the Sale and Purchase of the Shares.
The sale of the Shares and the acquisition thereof by Buyers shall be
made on the date of execution and delivery of this Agreement (the "Effective
Date"), shall be based on the respective representations, warranties and
agreements of the parties hereto, and shall be subject to the terms and
conditions herein stated.
1.1 Sale of Shares. On the Effective Date, URI will sell, convey,
transfer and assign to Buyers all of URI's right, title and interest in and to
the Shares, free and clear of all liens, claims, charges and encumbrances of
any kind whatsoever.
1.2 Purchase Price. As consideration for the sale of the Shares
by URI, Buyers shall pay to URI on the Effective Date the aggregate sum of
$1,000.00 (the "Purchase Price").
1.3 Instruments of Conveyance. In order to effect the sale,
conveyance, transfer and assignment of the Shares, URI will execute and deliver
at the Effective Date all such stock powers and other documents or instruments
of conveyance, transfer or assignment as
<PAGE> 2
shall be necessary or appropriate to vest in or confirm to Buyers all of URI's
right, title and interest in and to the Shares at the Effective Date. URI will
execute and deliver from time to time thereafter at the request of Buyers, all
such further instruments of conveyance, assignment and further assurance as may
reasonably be required in order to vest in and conform to Buyers all of URI's
right, title and interest in and to the Shares.
1.4 Closing Documents. Contemporaneously with the execution and
delivery of this Agreement, URI has furnished Buyers with copies of the
following documents:
(a) The Articles of Incorporation and all amendments
thereto of the Company, duly certified by the appropriate official of the
State of California.
(b) The Bylaws of the Company, duly certified by the
Secretary of the Company.
(c) Resignations of all officers and/or Directors of the
Company.
1.5 Excluded Assets. Notwithstanding anything to the contrary
contained herein, UPI shall keep and retain any and all cash, accounts
receivable and credit card receivables of the Company in existence prior to the
Effective Date and none of such cash, accounts receivable or credit card
receivables shall be deemed to be part of the Company or the Acquired Business.
Section 2. Representations and Warranties of URI.
URI hereby represents and warrants to Buyers, as follows:
2.1 Corporate Existence; Good Standing. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California. The Company has all necessary corporate power
to own all of its assets and to carry on its business as such business is now
being conducted.
2.2 Power and Authority for Transactions. The execution and
delivery of this Agreement, and the agreements related hereto executed and
delivered pursuant to this Agreement, do not, and subject to the receipt of
consents to assignments of leases and other contracts where required, the
consummation of the transactions contemplated hereby will not, violate any
provision of the Articles of Incorporation or Bylaws of the Company or any
provisions of, or result in the accelerations of, any obligation under any
mortgage, lien, lease, agreement, instrument, order, arbitration award,
judgment or decree to which the Company is a party or by which the Company is
bound, or violate any material restrictions of any kind as to which the Company
is subject.
2.3 Free and Clear; Subsidiaries and Affiliates. (a) The Shares
constitute 85% of the issued and outstanding capital stock
2
<PAGE> 3
of the Company. The Shares are owned by URI, free and clear of any liens,
claims, charges or encumbrances of any kind whatsoever. The Shares are validly
issued, fully paid and nonassessable. URI has full power and authority to
execute and deliver this Agreement and the other documents executed and
delivered in connection herewith. Upon the consummation of the transactions
contemplated by this Agreement, Buyers shall own the Shares, free and clear of
all liens, claims, charges and encumbrances of any kind whatsoever, subject to
any encumbrances that may attach to the Shares by reason of Buyers' ownership
thereof.
(b) The Company does not own stock in or control,
directly or indirectly, any other corporation, association or business
organization, nor is the Company a party to any joint venture or partnership.
There are no outstanding (i) securities of the Company convertible into capital
stock of the Company, or (ii) commitments, options, rights or warrants to issue
any capital stock of the Company, or to issue securities of the Company
convertible into capital stock of the Company.
2.4 Permits, Licenses and Governmental Authorizations. All
material building or other permits, certificates of occupancy, concessions,
grants, franchises, licenses and other governmental authorizations and
approvals necessary for the conduct of the Acquired Business have been duly
obtained (or waivers thereof have been duly obtained) and are in full force and
effect, and there are no proceedings pending or, to the knowledge of URI,
threatened which may result in the revocations, cancellation or suspension, or
any adverse modification, of any thereof.
2.5 Leases. Exhibit 2.5 attached to this Agreement sets forth a
list of all leases pursuant to which the Company leases, as lessor or lessee,
real or personal property used in operating the Acquired Business, or
otherwise. All such leases on Exhibit 2.5 are valid and effective in
accordance with their respective terms, and there is not under any such lease
any existing default by the Company, as lessor or lessee, or any condition or
event of which URI has knowledge which with notice or lapse of time, or both,
would constitute a default, in respect of which the Company has not taken
adequate steps to cure such default or to prevent a default from occurring.
2.6 Personal Property. The Company owns all of the personal
property, including but not limited to furniture, fixtures, equipment and
inventory located in the Company's restaurant, free and clear of any liens,
claims, charges, exceptions or encumbrances.
2.7 Intellectual Property Rights. Except for the name "Il Forno",
which was registered in 1986 as a service mark with the California Secretary of
State, the Company has no right, title or interest in or to patents, patent
rights, manufacturing processes, trade names, trademarks, service marks,
inventions, specialized
3
<PAGE> 4
treatment protocols, copyrights, formulas and trade secrets. URI has no
knowledge of any adverse claim against such service mark.
2.8 Legal Proceeding. URI has no knowledge of any pending or
threatened litigation, governmental investigation, condemnation or other
proceeding against or relating to or affecting the Company, the Acquired
Business or the transactions contemplated by this Agreement, and, to the
knowledge of URI, no basis for any such action exists, nor is there any legal
impediment of which URI has knowledge to the continued operation of the
Acquired Business in the ordinary course, subject to required consents and
regulatory approvals.
2.9 Contracts, etc. Except for the leases described in Exhibit
2.5 and except for any contracts of which either or both of the Buyers have
knowledge, the Company is not a party to any written or oral agreement,
contract, lease or plan.
2.10 Tax Returns. The Company has filed all tax returns for the
September 30, 1995 fiscal year, and URI will, at its own expense, file on a
timely basis, all tax returns required to be filed by the Company for the
period ending September 30, 1996. The Company has made, and URI will continue
to make on a timely basis, all payments required to be made by the Company,
with respect to income taxes, real property taxes, sales taxes, use taxes,
employment taxes and similar taxes due and payable on or before the date of
this Agreement and due and payable thereafter for the activities of the Company
prior to the Effective Date.
2.11 Liabilities. As of the Effective Date, the Company shall not
have any liabilities or obligations of any nature, known or unknown, whether
accrued, absolute, contingent or otherwise, and whether due or to become due,
including but not limited to any and all salaries, commission and tips for the
period of time through the Effective Date. To the extent that there are any
such liabilities or obligations, URI shall pay and discharge same before they
become delinquent. Any and all payments due under the Company's leases shall
be paid through September 30, 1996 and any and all security deposits thereunder
shall remain with the Company. URI shall not have any obligations or
liabilities for any unused vacation.
2.12 Insurance Policies. The Company maintains policies of
insurance on the assets to be sold hereunder with extended coverage and in
respect of the products and services provided or performed by the Company in
amounts deemed by its management to be sufficient. Valid policies in such
amounts are outstanding and duly in force and will remain duly in force through
at least the 30th day following the Effective Date.
2.13 Employee Benefit Plans. The Company has neither established
nor maintains nor is obligated to make contributions to or under or otherwise
participate in (a) any bonus or other type of
4
<PAGE> 5
incentive compensation plan, program, agreement, policy, commitment, contract
or arrangement (whether or not set forth in a written document), (b) any
pension, profit-sharing, retirement or other plan, program or arrangement, or
(c) any other employee benefit plan, fund or program.
2.14 Compliance with Laws in General. The Company has not received
any notices of material violations of any federal, state and local laws,
regulations and ordinances relating to the operations of the Acquired Business,
including without limitation the Federal Environmental Protection Act, the
Occupational Safety and Health Act, the Americans with Disabilities Act and any
Environmental Laws, and no notice of any pending inspection or violation of any
such law, regulation or ordinance has been received by the Company.
2.15 No Untrue Representations. No representation or warranty by
URI in this Agreement, and no Exhibit or certificate issued by URI and
furnished or to be furnished to Buyers pursuant hereto, or in connection with
the transactions contemplated hereby, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements or facts contained therein not misleading.
Section 3. Access to Information and Documents.
3.1 Access to the Company Information. Within ten (10) days after
the Effective Date, URI shall deliver to Buyers all documents, contracts,
personnel files and all other books and records of the Company and the Acquired
Business.
3.2 Retention of Records. Buyers shall retain all books and
records of the Company (the "Records") transferred to it hereunder for the
greater of four years from the Effective Date or such longer periods of time as
required by applicable statutes, rules and regulations. For a period of four
years after the Effective Date, and for such longer period as the Records are
maintained, each party will, during normal business hours and so as not to
unreasonably disrupt normal business, afford any other party, its counsel, its
accountants or other parties who have a reasonably need for such access full
access (and copying at the expense of the requesting party, if desired) to the
books and records relating to the Acquired Business in the possession of such
party as such other party may reasonably request.
Section 4. Nature and Survival of Representations and Warranties;
Restriction Against Hiring Employees.
4.1 Nature and Survival. All statements contained in this
Agreement or in any Exhibit attached hereto, any agreement executed pursuant
hereto, and any certificate executed and delivered by any party pursuant to the
terms of this Agreement, shall constitute representations and warranties of URI
and Buyers, as the case may be. All such representations and warranties, and
all
5
<PAGE> 6
representations and warranties expressly labeled as such in this Agreement,
shall survive the date of this Agreement and the Effective Date for a period of
three years following the Effective Date, and each party covenants with the
other parties not to make any claim with respect to such representations and
warranties, against the other party after the date on which such survival
period shall terminate.
For a period of two (2) years after the Effective Date, (i) the Buyers
shall not, nor shall they permit or cause any company over which they have
control, to solicit or hire any one or more employees of URI and/or any of its
subsidiaries or affiliates and (ii) URI shall not, nor shall it permit or cause
any company over which it has control, to solicit or hire any one or more
employees of the Company; provided, however, this provision shall be of no
further force or effect as such time as all or a substantial portion of the
business or assets of On Canon Restaurant are no longer owned or controlled by
URI or any of its subsidiaries or affiliates.
Section 5. Miscellaneous.
5.1 Notices. Any communications required or desired to be given
hereunder shall be deemed to have been properly given if sent by hand delivery
or by facsimile and overnight courier to the parties hereto at the following
address, or at such other address as either party may advise the other in
writing from time to time:
If to URI:
United Restaurants, Inc.
1990 Westwood Boulevard
Los Angeles, California 90025
Attention: Harry Shuster
Facsimile: (310) 474-7475
If to the Buyers:
Joseph Suceveanu
17167 Avenida de Santa Ynez
Pacific Palisades, California 90272
Domenico Salvatore
7749 Airport Boulevard
Los Angeles, California 90045
All such communications shall be deemed to have been delivered on the date of
hand delivery or on the next business day following the deposit of such
communications with the overnight courier.
5.2 Further Assistance. Each party hereby agrees to perform any
further acts and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of this Agreement.
6
<PAGE> 7
5.3 Governing Law. This Agreement shall be interpreted, construed
and enforced in accordance with the laws of the State of California, applied
without giving effect to any conflicts-of-law principles.
5.4 Captions. The captions or headings in this Agreement are made
for convenience and general reference only and shall not be construed to
describe, define or limit the scope or intent of the provisions of this
Agreement.
5.5 Entire Agreement; Termination of Prior Agreements. This
instrument, including all Exhibits attached hereto, contain the entire
agreement of the parties and supersede any and all prior or contemporaneous
agreements between the parties, written or oral, with respect to the
transactions contemplated hereby. This Agreement may not be changed or
terminated orally, but may only be changed by an agreement in writing signed by
the party or parties against whom enforcement of any waiver, change,
modification, extension, discharge or termination is sought. Except as
specifically provided for in this Agreement, any and all prior agreements,
written or oral, which may have been entered into between URI and/or the
Company, on one hand, and the Company and/or either or both of the Buyers, on
the other hand, are hereby terminated (and none of the parties thereunder shall
have any rights, liabilities or obligations against any of the other parties
thereunder), including but not limited to that certain Stock Purchase
Agreement, dated June 20, 1994, by and among URI and the Buyers, including but
not limited to the option and put rights under Paragraph 1.6 thereof and the
Employment Agreement entered into under Paragraph 1.5 thereof as well as the
restrictive covenants in Paragraph 4 of such Employment Agreements.
5.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which, when so executed, shall be deemed to be an
original, and such counterparts shall, together, constitute and be one and the
same instrument.
5.7 Binding Effect. This Agreement shall be binding on, and shall
inure to the benefit of, the parties hereto, and their respective successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement. No party may assign any right or obligation
hereunder without the prior written consent of the other parties.
5.8 Costs of Enforcement. In the event that URI, on the one hand,
or the Buyers, on the other hand, file suit in any court against the other
party as a result of a breach or default under this Agreement, the prevailing
party will be entitled to recover all reasonable costs, including reasonable
attorneys' fees, from the other party as part of any judgment in such suit.
The term "prevailing party" shall mean the party in whose favor final judgment
after appeal (if any) is rendered with respect to the claims asserted in the
Complaint. "Reasonable attorneys' fees" are
7
<PAGE> 8
those attorneys' fees actually incurred in obtaining a judgment in favor of the
prevailing party.
5.9 Conflict of Interest. The parties hereto have requested that
Richman, Lawrence, Mann, Greene, Chizever, Friedman & Phillips, a Partnership
of Professional Corporations ("Attorneys"), represent each of them in the
preparation of this Agreement. In connection therewith, each of them
represents and acknowledges that it or he has been advised by Attorneys of the
following:
A. The Rules of Professional Conduct of the
California State Bar require that each party be advised that each of them has
potentially conflicting interests;
B. Each party is free to seek other counsel to
advise it or him in connection with this Agreement and, in fact, Attorneys have
recommended each such party to be represented by separate counsel; and
C. Attorneys will not represent any of the
parties in connection with a dispute which may arise among the parties at any
time in the future in connection with this Agreement.
Notwithstanding the foregoing, each of the parties hereby
consents and agrees that Attorneys represent each of them in connection with
the preparation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
UNITED RESTAURANTS, INC.
By/s/Harry Shuster
Harry Shuster,
Chairman of the Board,
President, and Chief Executive
Officer
/s/Joseph Suceveanu
JOSEPH SUCEVEANU
/s/Domenico Salvatore
DOMENICO SALVATORE
8
<PAGE> 9
EXHIBIT 2.5
1. Lease Agreement dated November 1, 1985 between Il Forno, Inc., as
Tenant, and Ocean Park Place, as Landlord, for premises located at
2901 Ocean Park Boulevard, Suite 111, Santa Monica, California 90405,
as amended.
2. Lease Agreement dated September 1, 1989, between Il Forno, Inc., as
Tenant, and Ocean Park Place, as Landlord, for premises located at
2901 Ocean Park Boulevard, Suite 109, Santa Monica, California 90405,
as amended.
3. Standard Office Lease dated December 20, 1991, between Joseph
Suceveanu (on behalf of Il Forno, Inc.), as Tenant, and Ocean Park
Place, as Landlord, for premises located at 2901 Ocean Park Boulevard,
Suite 202, Santa Monica, California 90405.
4. Lease with Ecolab, Inc. for one dishmachine and one softener.
<PAGE> 1
EXHIBIT 10-37
Love's(R)
1996 Extension of Franchise Agreement
Parties:
Franchisor: Franchisee:
Love's Enterprises, Inc. Deborah P. Miller, an Individual
1990 Westwood Boulevard
Penthouse
Los Angeles, California 90025
[Note: For convenience, the Franchisor is sometimes referred to in
this and other documents as "Love's," "we," "us," or "our" and the Franchisee
is collectively and individually sometimes referred to as the "Franchisee,"
"you" or "your."]
This Document is Effective: April 15, 1996
Background and Preliminary Agreements:
A. Effective August 29, 1975, Love's and B.D.P. Enterprises, a
California corporation, executed an Amended Franchise Agreement (the "Franchise
Agreement") granting a franchise (the "Franchise") covering a "Love's(R) Wood
Pit Barbecue" restaurant (the "Restaurant") located at 720 North Brea
Boulevard, in the City of Brea, California.
B. Effective December 30, 1985, the same parties executed an
Amendment to Franchise Agreement which had the effect of amending the Franchise
Agreement in various regards. Effective the same date, the same parties
executed a Mutual Release and Settlement Agreement.
C. Effective October 31, 1988, (a) Love's, (b) B.D.P.
Enterprises, LeRoy M. Donahue and Thomas F. Padden (as "Assignor" in that
document) and (c) Galaxy Golden, Inc., a California corporation, Fung Ying
Yong, an Individual, Yim Ching Yong, an Individual and Vincent Winghong Cheung,
an Individual (all referred to in this document as the "1996 Assignors," and
referred to in the October 31, 1988, document as "Assignee") executed a Consent
to Assignment. Among other things, the parties to that Consent to Assignment
agreed that the initial term of the Franchise would expire on April 15, 1991,
and that there would be one extension term which would be for a period of five
(5) years ending April 15, 1996. In addition, the terms of the Sublease and
Equipment Lease relating to the Restaurant were amended so that the termination
dates and option extension periods would be the same as under the Franchise
Agreement. Love's retained the option to extend or not extend the term of the
Master Lease at its sole election, having no obligation to so extend.
<PAGE> 2
D. Effective November 15, 1995, Fedora-Olympic, a California
Limited Partnership (as "Landlord"), Love's and the Franchisee entered into an
Assignment of Lease under which Love's assigned to the Franchisee its interests
in the Lease for the Restaurant, the Franchisee accepted such assignment and
agreed to be bound by the Lease and the Landlord consented thereto. Effective
the same date, the Landlord and the Franchisee executed a Third Amendment to
Lease which had the effect, among other things, of extending the term of the
Lease to December 31, 1998, and providing the Franchisee with options to
further extend the term of the Lease, as well as to cancel the Lease effective
December 31, 1996, under certain terms and conditions.
E. By separate instruments and as independent transactions (noted
here merely for convenience of the parties and completeness of documentation),
(a) the 1996 Assignors, the Franchisee and Love's have agreed to an assignment
of the rights of the 1996 Assignors in and to the Franchise Agreement and the
Franchised Business to the Franchisee and (b) the Landlord has agreed to
release Love's from all responsibility under the Lease, the Franchisee assuming
all such responsibility. The parties acknowledge that no Equipment Lease or
Sublease apply to or will apply to the Restaurant.
F. Love's and the Franchisee wish to extend the term of the
Amended Franchise Agreement to expire on the expiration of the Lease for the
Restaurant as subject to extension and/or early cancellation or termination as
provided in the Third Amendment to Lease (but not, without Love's written
consent which it may withhold in its sole discretion) to extend beyond December
31, 2005), and the Franchisee having made or agreeing to make separate
arrangements (acceptable to Love's) with the Landlord for the Franchisee's
continued occupancy of the Restaurant, with Love's to have no responsibility or
obligation with respect to the Lease or otherwise on or after April 15, 1996.
G. The parties agree that, in the event of any inconsistency
between the provisions of this document and any of the foregoing documents (or
other documents or agreements prior to the date of this document), the
provisions of this document shall prevail. The Franchisee has reviewed all of
the documents referred to in this Agreement and has been urged by Love's to
have this and all other documents reviewed by her attorney.
Main Agreements:
1. Extension of Term of Franchise Agreement. The term of the
Amended Franchise Agreement (as subsequently amended) is hereby extended to
expire on December 31, 1998; provided that if the Franchisee is not and has not
been in default of any obligation to Love's and the Franchisee and the Landlord
extend the term of the Lease to December 31, 2000, the term of the Franchise
Agreement shall be similarly extended; provided further that if the Franchisee
is not and has not been in default of any obligation to
2
<PAGE> 3
Love's and the Franchisee and the Landlord extend the term of the Lease to
December 31, 2005, the term of the Franchise Agreement shall be similarly
extended; provided further that if the Lease is canceled by the Tenant at any
time, as provided in the Third Amendment to Lease, or is terminated for any
reason (for example, terminated by the Landlord due to a default by the
Franchisee as Tenant) all rights of the Franchisee, and all obligations of
Love's, will become month-to-month, terminable by Love's at any time on 30
day's prior written notice, unless Love's agrees otherwise in writing in its
sole and absolute discretion.; and provided finally that in no case will the
Franchisee's rights or Love's obligations under and/or related to the Franchise
Agreement (or otherwise) extend after December 31, 2005, even if the Franchisee
and the Landlord agree to further extensions of the Lease, unless Love's
consents otherwise in writing and Love's may withhold such consent in its sole
and absolute discretion.
Each of such extensions shall not require any notification or
otherwise (notwithstanding any provisions to the contrary in any other
document) but Love's may determine that any of such extensions will not be
allowed based on the criteria for nonrenewal as set forth in the Amended
Franchise Agreement (as subsequently amended.) If Love's makes such
determination, it need give the Franchisee no more than 30 days notice thereof,
but, where such default is curable under the terms of the Amended Franchise
Agreement, with opportunity to cure as provided in the Amended Franchise
Agreement (as subsequently amended.) In any event, the Franchisee's rights and
Love's obligations under and/or related to the Amended Franchise Agreement (as
subsequently amended) shall expire as detailed above (and, in any event, by
December 31, 2005) and neither the Franchisee nor Love's will have any right or
obligation to extend the terms of the Amended Franchise Agreement (as
subsequently amended) past such points even if the Lease is extended beyond
such date.
The Franchisee will have sole responsibility for, and indemnify and
hold Love's (and each of the Love's Entities as defined below) harmless with
respect to, any causes of action, in law or in equity, suits, debts, liens,
actual and/or alleged defaults, liabilities, claims, demands, damages, losses,
costs or expenses, of any kind and/or nature whatsoever, howsoever arising,
KNOWN OR UNKNOWN, fixed or contingent or otherwise related to the Lease for the
Restaurant arising or relating in any way to the period after April 15, 1996.
2. Conditions for Each Extension. The right of the Franchisee to
extend the term of the Amended Franchise Agreement (as subsequently amended) is
conditioned on the Franchisee fully and timely observing each of her
obligations under this document (including all payment terms) and any other
document signed or assumed by her, as well as not being, at any time after
April 15, 1996, in default of any of her financial, operational or other
obligations to Love's, howsoever arising, whether they relate to the Restaurant
or otherwise; provided that, in any case, if the
3
<PAGE> 4
Franchisee defaults in any payment obligation to Love's, she shall have twelve
(12) days after written notice thereof to cure such default, such twelve (12)
days to be counted from the date such notice is deposited with first class
postage in the United States Mail. For example, if the Franchisee failed to
pay an amount due to Love's on December 1, 1996, then (unless cured as set
forth above) the Franchisee's right to extend the term of the Amended Franchise
Agreement (as subsequently amended) would be forever lost and the term of the
Amended Franchise Agreement (as subsequently amended) would become
month-to-month, terminable by Love's at any time on 30 day's prior written
notice, unless Love's agrees otherwise in writing in its sole and absolute
discretion.
3. Ownership of Equipment. The Equipment Lease for the
Restaurant is no longer in effect and Love's has no ownership interest in any
equipment located at the Restaurant.
4. Release of Love's. The Franchisee hereby releases and forever
discharges, indemnifies and agrees to hold harmless Love's, all persons and
entities controlling, controlled by, under common control, affiliated and/or
associated with it in any way, each of the affiliates, subsidiaries, corporate
parents and predecessors of any of the foregoing, each of the owners, partners,
stockholders, directors, officers, employees, agents, representatives,
attorneys, accountants of any of the foregoing, and all persons acting by,
through, under or in concert or affiliated or associated in any way with any of
the foregoing, (all of the foregoing, including Love's, are collectively and
individually referred to in this document as the "Love's Entities") from and
against any and all causes of action, in law or in equity, suits, debts, liens,
actual and/or alleged defaults, liabilities, claims, demands, damages, losses,
costs or expenses, of any kind and/or nature whatsoever, howsoever arising,
KNOWN OR UNKNOWN, fixed or contingent, past or present, whether or not related
to the 1975 Amended Franchise Agreement (as subsequently amended), the
Equipment Lease (as subsequently amended) the Lease for the Restaurant, the
Sublease, the Restaurant or otherwise, which the Franchisee or any of them now
have or may hereafter have against all or any of the Love's Entities by reason
of any matter, cause or thing whatsoever from the beginning of time to the date
hereof (the "Claims"), it being the mutual intention of the parties that this
release be unqualified general in scope and effect.
THE FRANCHISEE ACKNOWLEDGES THAT SHE IS FAMILIAR WITH THE PROVISIONS
OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."
4
<PAGE> 5
THE FRANCHISEE, BEING AWARE OF THIS CODE SECTION, HEREBY EXPRESSLY
WAIVES ALL RIGHTS THEREUNDER AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW
PRINCIPLES OF SIMILAR EFFECT OF ANY APPLICABLE JURISDICTION, INCLUDING BUT NOT
LIMITED TO THOSE OF CALIFORNIA.
The Franchisee represents and warrants that there has been, and there
will be, no assignment or other transfer of any interest in any Claims which
she may have against any or all of the Love's Entities, that any and all such
Claims have been forever extinguished, and the Franchisee agrees to indemnify
and forever hold each and all of the Love's Entities harmless from any
liability, claims, demands, damages, losses, costs, expenses and/or attorney's
fees incurred by any of the Love's Entities as a result of any person asserting
any such assignment or transfer, or any rights or claims under such assignment
or transfer. It is the intention of the parties that this indemnity does not
require payment by any of the Love's Entities as a condition precedent to their
recovery against the Franchisee under this clause.
General Agreements:
5. No Attorney's Fees. Unless expressly provided otherwise in
this document, in the event of any legal action or proceeding with respect to
this document, the matters covered thereby (for example, to enforce any
arbitration award) or otherwise, which involves Love's, the Love's Entities
and/or the interests of Love's and/or the Love's Entities, each party will bear
their own legal costs.
6. Forum, WAIVER OF JURY TRIAL. Subject to the parties'
agreement below regarding binding arbitration of disputes, any litigation with
respect to this document, the matters covered thereby (for example, to enforce
any arbitration award) or otherwise, which involves Love's, the Love's Entities
and/or the interests of Love's and/or the Love's Entities, will take place in
Los Angeles County, California, or, if required, the Federal court nearest
thereto, the parties expressly consenting to the exclusive jurisdiction of such
court(s) and waiving their rights to conduct litigation of any nature in any
other forum. IN ANY ARBITRATION AND/OR LITIGATION INVOLVING LOVE'S, THE LOVE'S
ENTITIES AND/OR THE INTERESTS OF LOVE'S AND/OR THE LOVE'S ENTITLES, EACH OF THE
PARTIES WAIVES THEIR RIGHTS TO TRIAL BY JURY AND WAIVES ALL RIGHTS TO PUNITIVE,
EXEMPLARY, MULTIPLE, PAIN-AND-SUFFERING, MENTAL DISTRESS OR SIMILAR DAMAGES AND
AGREES THAT EACH MAY ONLY RECOVER ACTUAL FINANCIAL LOSSES.
7. Dispute Resolution, Including Mediation and MANDATORY BINDING
ARBITRATION.
(a) IN THE EVENT OF ANY DISPUTE INVOLVING LOVE'S, THE LOVE'S
ENTITIES OR ANY INTERESTS OF LOVE'S OR THE LOVE'S ENTITIES, WHETHER RELATED TO
THIS DOCUMENT, ANY FRANCHISE AGREEMENT OR OTHER AGREEMENTS, THE TRANSACTION(S)
REFERENCED OR CONTEMPLATED HEREIN,
5
<PAGE> 6
ANY TRANSACTIONS RELATED THERETO AND/OR ANY OTHER DOCUMENTS, AGREEMENTS,
UNDERSTANDINGS, TRANSACTIONS AND/OR ANY OTHER MATTER (WHETHER RELATED OR
OTHERWISE), SUCH DISPUTE WILL BE:
(1) FIRST, DISCUSSED IN A FACE-TO-FACE MEETING BETWEEN
EACH OF THE DISPUTANTS (OR, IF A DISPUTANT IS A CORPORATION OR
PARTNERSHIP, A PRINCIPAL OF THE DISPUTANT AUTHORIZED TO MAKE BINDING
COMMITMENTS ON BEHALF OF THE DISPUTANT), SUCH MEETING SHALL BE HELD AT
LOVE'S HEADQUARTERS AND WITHIN 30 DAYS AFTER ANY DISPUTANT GIVES
WRITTEN NOTICE OF THE DISPUTE.
(2) SECOND, IF, IN THE OPINION OF LOVE'S OR ANY DISPUTANT
PARTICIPATING IN SUCH MEETING, SUCH MEETING HAS NOT SUCCESSFULLY
RESOLVED SUCH MATTERS, AND IF DESIRED BY ANY PERSON OR ENTITY INVOLVED
IN THE CLAIM, SUBMITTED TO NON-BINDING MEDIATION FOR A MINIMUM OF 8
HOURS BEFORE (A) THE AMERICAN ARBITRATION ASSOCIATION (THE "AAA") OR
(B) ANY OTHER MEDIATION ORGANIZATION APPROVED BY ALL SUCH PERSONS
AND/OR ENTITIES OR (C) A MEDIATOR APPOINTED BY A COURT IF THE AAA
CANNOT CONDUCT SUCH MEDIATION AND THE PARTIES CANNOT AGREE ON A
MEDIATION ORGANIZATION. ON ELECTION BY ANY PARTY, ARBITRATION AND/OR
ANY OTHER REMEDY ALLOWED BY THIS AGREEMENT MAY PROCEED FORWARD AT THE
SAME TIME AS MEDIATION. IN THE MEDIATION, THE DISPUTANTS SHALL EACH
BE REPRESENTED BY AN INDIVIDUAL AUTHORIZED TO MAKE BINDING COMMITMENTS
ON THEIR BEHAVES AND MAY BE REPRESENTED BY COUNSEL. IN ADDITION, THE
DISPUTANTS MAY, WITH PERMISSION OF THE MEDIATOR, BRING SUCH ADDITIONAL
PERSONS AS ARE NEEDED TO RESPOND TO QUESTIONS, CONTRIBUTE INFORMATION
AND PARTICIPATE IN THE NEGOTIATIONS. THE FEES AND EXPENSES OF THE
MEDIATOR AND/OR MEDIATION ORGANIZATION SHALL BE SHARED EQUALLY BY THE
DISPUTANTS. THE MEDIATOR SHALL BE DISQUALIFIED AS A WITNESS,
CONSULTANT, EXPERT OR COUNSEL FOR ANY PARTY WITH RESPECT TO THE
DISPUTE AND ANY RELATED MATTERS.
(3) THIRD, IF NO SUCH PERSON OR ENTITY DESIRES MEDIATION
(OR IF SUCH MEDIATION IS NOT SUCCESSFUL IN RESOLVING SUCH CLAIM),
SUBMITTED TO AND FINALLY RESOLVED BY BINDING ARBITRATION BEFORE AND IN
ACCORDANCE WITH THE ARBITRATION RULES OF THE AMERICAN ARBITRATION
ASSOCIATION PURSUANT TO ITS COMMERCIAL ARBITRATION RULES. IN EACH
CASE, THE PARTIES TO ANY MEDIATION/ARBITRATION WILL EXECUTE
APPROPRIATE CONFIDENTIALITY AGREEMENTS, EXCEPTING ONLY SUCH PUBLIC
DISCLOSURES AND FILINGS AS ARE REQUIRED BY LAW.
(b) ANY MEDIATION/ARBITRATION WILL BE CONDUCTED AT THE OFFICE OF
THE MEDIATING/ ARBITRATING ORGANIZATION (OR ITS REPRESENTATIVES) WHICH IS
LOCATED CLOSEST TO LOVE'S HEADQUARTERS. EXCEPT AS EXPRESSLY PROVIDED OTHERWISE
IN THIS DOCUMENT, THE PARTIES TO ANY MEDIATION OR ARBITRATION WILL BEAR THEIR
OWN COSTS, INCLUDING ATTORNEY'S FEES. ANY CLAIM, AND ANY
MEDIATION/ARBITRATION, WILL BE CONDUCTED AND RESOLVED ON AN INDIVIDUAL BASIS
ONLY AND NOT ON A CLASS-WIDE, MULTIPLE PLAINTIFF OR SIMILAR BASIS. UPON
REQUEST OF ANY PARTY TO A CLAIM, THE ARBITRATOR MAY BE REQUIRED TO ISSUE A
6
<PAGE> 7
WRITTEN AWARD, SPECIFYING THE FACTS FOUND AND THE LAW APPLIED, BUT THE PARTY SO
REQUESTING WILL BEAR THE FEES AND CHARGES INCURRED IN CONNECTION THEREWITH.
THE ARBITRATOR MAY ISSUE TEMPORARY RESTRAINING ORDERS, PRELIMINARY INJUNCTIONS,
INJUNCTIONS AND OTHER EQUITABLE AND/OR INTERIM RELIEF TO THE EXTENT REASONABLY
NECESSARY TO PRESERVE THE STATUS QUO (OR PREVENT IRREPARABLE INJURY) PENDING
FINAL RESOLUTION BY BINDING ARBITRATION OF A CLAIM, AS WELL AS IN CONNECTION
WITH ANY SUCH FINAL RESOLUTION, AND MAY ISSUE SUMMARY ORDERS DISPOSING OF ALL
OR PART OF A CLAIM AT ANY POINT. EACH PARTY CONSENTS TO THE ENFORCEMENT OF
SUCH ORDERS, INJUNCTIONS, ETC. BY ANY COURT HAVING JURISDICTION.
NOTWITHSTANDING ANY PROVISIONS OF STATE LAW TO THE CONTRARY, LOVE'S INTENDS TO
FULLY ENFORCE THE PROVISIONS OF THIS DOCUMENT AND OTHER DOCUMENTS, INCLUDING
ALL VENUE AND MEDIATION/ARBITRATION PROVISIONS AND TO RELY ON FEDERAL
PREEMPTION UNDER THE FEDERAL ARBITRATION ACT (9 U.S.C. Section 1 ET SEQ.)
8. Entire Understanding. Excepting only any document(s)
contemporaneously signed by Love's:
This document contains the entire understanding between Love's (on the
one hand) and the Franchisee (on the other hand) and supersedes any prior
understandings and agreements between and/or among any of them respecting the
within subject matter nd no representations, promises, guarantees, or
warranties of any kind are or have been made by Love's or anyone else to induce
the Franchisee to execute this document, except as specifically set forth in
writing in this document.
THERE ARE NO REPRESENTATIONS, WARRANTIES, AGREEMENTS, PROMISES,
CONTRACTS, COMMITMENTS, ARRANGEMENTS, OPTIONS, RIGHTSOF-FIRST-REFUSAL, "SIDE
DEALS," UNDERSTANDINGS OR OTHERWISE, ORAL OR WRITTEN, AFFECTING OR RELATED TO
LOVE'S RELATING TO THE WITHIN SUBJECT MATTER WHICH ARE NOT FULLY EXPRESSED
HEREIN. THE FRANCHISEE HAVE NOT RELIED ON ANY REPRESENTATIONS, PROMISES,
UNDERSTANDINGS, AGREEMENTS OR OTHERWISE WHICH ARE NOT EXPRESSLY SET FORTH IN
THIS DOCUMENT, NOR DO THE FRANCHISEE HAVE ANY RESERVATIONS, NOR DO THERE EXIST
ANY CONTINGENCIES, WITH REGARD TO ANY OF THEIR OBLIGATIONS UNDER THIS DOCUMENT
OR ANY DOCUMENT CURRENTLY IN EXISTENCE OR TO BE EXECUTED. IF THE FRANCHISEE
BELIEVE THERE HAVE BEEN ANY REPRESENTATIONS, PROMISES, UNDERSTANDINGS,
AGREEMENTS OR OTHERWISE WHICH ARE NOT EXPRESSLY SET FORTH IN THIS DOCUMENT OR
THAT ANY OF THE FOREGOING IS NOT TRUE, CORRECT AND COMPLETE, THEY WILL MAKE A
WRITTEN STATEMENT REGARDING SUCH NEXT TO THEIR SIGNATURE.
9. Severability. The invalidity or unenforceability of any
provision hereof as determined by an arbitrator or a court of competent
jurisdiction will in no way affect the validity or enforceability of any other
provision hereto.
10. Waiver. The failure of any party to seek redress for
violation of this document or to insist upon the strict performance of any
covenant or condition of this document will not prevent a subsequent act, which
would have originally constituted a
7
<PAGE> 8
violation, from having the effect of an original violation. The rights and
remedies provided by this document are cumulative and the use of any one right
or remedy by any party will not preclude or waive its right to use any or all
other remedies. Subject to the provisions of the release(s) granted herein,
these rights and remedies are given in addition to any other rights and
remedies the parties may have by law, statute, ordinance or otherwise.
11. Heirs and Assigns. Each of the terms, covenants and
conditions of this document will extend to and be binding on and inure to the
benefit of not only the parties, but also each of their respective heirs,
representatives executors, administrators, assigns, and successors in interest.
Whenever in this document reference is made to any party, the reference will be
deemed to include, whenever applicable, the heirs, representatives, executors,
administrators, assigns and successors in interest of that party the same as if
in every case expressed.
12. Effective Date. This document will take effect on April 15,
1996, unless the escrow for the Franchisee's purchase of the Restaurant closes
sooner. If the escrow closes sooner, and all documents required by Love's have
been fully signed (and all payments due Love's have been made) by that time,
this document will take effect on the close of escrow. However, in any event
(including the failure of the escrow to close for any reason), the releases
granted to Love's and related persons and entities shall be effective on the
date the person/entity granting such release signs this document and shall be
deemed to be re-effectuated on the effective date of this document.
FRANCHISEE: LOVE'S ENTERPRISES, INC.
/s/ By /s/
Deborah P. Miller (Individually) Harry Shuster, President and
April 6, 1996 CEO
8
<PAGE> 9
Love's(R)
1996 Consent to Assignment
and
Assumption Agreement
Parties:
Franchisor: Love's Enterprises, Inc.
1990 Westwood Boulevard, Penthouse
Los Angeles, California 90025
1996 Assignors: Galaxy Golden, Inc., a California
corporation
Fung Ying Yong, an Individual
Yim Ching Yong, an Individual
Vincent Winghong Cheung, an Individual
1996 Assignee: Deborah P. Miller, an Individual
[Note: For convenience, the Franchisor is sometimes referred to in
this and other documents as "Love's," "we," "us," or "our." The obligations of
the 1996 Assignors under this and any other documents shall be joint and
several.]
Date: April 15, 1996
Background and Preliminary Agreements:
A. Effective August 29, 1975, Love's and B.D.P. Enterprises, a
California corporation, executed an Amended Franchise Agreement (the "Franchise
Agreement") granting a franchise (the "Franchise") covering a "Love's(R) Wood
Pit Barbecue" restaurant (the "Restaurant") located at 720 North Brea
Boulevard, in the City of Brea, California.
B. Effective December 30, 1985, the same parties executed an
Amendment to Franchise Agreement which had the effect of amending the Franchise
Agreement in various regards. Effective the same date, the same parties
executed a Mutual Release and Settlement Agreement.
C. Effective October 31, 1988, (a) Love's, (b) B.D.P.
Enterprises, LeRoy M. Donahue and Thomas F. Padden (as "Assignor" in that
document) and (c) the 1996 Assignors (as "Assignee" in that document) executed
a Consent to Assignment. Among other things, the parties to that Consent to
Assignment agreed that the initial term of the Franchise would expire on April
15, 1991, and that there would be one extension term which would be for a
period of five (5) years ending April 15, 1996. In addition, the terms of the
Sublease and Equipment Lease relating to the Restaurant were amended so that
the termination dates and option extension periods would be the same as under
the Franchise Agreement. Love's
<PAGE> 10
retained the option to extend or not extend the term of the Master Lease at its
sole election, having no obligation to so extend.
D. Effective November 15, 1995, Fedora-Olympic, a California
Limited Partnership (as "Landlord"), Love's and the 1996 Assignee entered into
an Assignment of Lease under which Love's assigned to the 1996 Assignee its
interests in the Lease for the Restaurant, the 1996 Assignee accepted such
assignment and agreed to be bound by the Lease and the Landlord consented
thereto. Effective the same date, the Landlord and the 1996 Assignee executed
a Third Amendment to Lease which had the effect, among other things, of
extending the term of the Lease to December 31, 1998, and providing the 1996
Assignee with options to further extend the term of the Lease, as well as to
cancel the Lease effective December 31, 1996, under certain terms and
conditions.
E. Subject to the terms and conditions of this 1996 Consent to
Assignment and Assumption Agreement, the 1996 Assignors wish to assign to the
1996 Assignee their interests in and to the Franchise Agreement. The parties
acknowledge that no Equipment Lease or Sublease apply to or will apply to the
Restaurant.
F. By separate instruments and as independent transactions (noted
here merely for convenience of the parties and completeness of documentation),
the 1996 Assignees and Love's have agreed to extend the term of the Amended
Franchise Agreement (as detailed in such separate instrument), and the 1996
Assignees having made or agreeing to make separate arrangements (acceptable to
Love's) with the Landlord for the 1996 Assignee's continued occupancy of the
Restaurant, with Love's to have no responsibility or obligation with respect to
the Lease or otherwise on or after April 15, 1996.
G. The parties agree that, in the event of any inconsistency
between the provisions of this document and any of the foregoing documents (or
other documents or agreements prior to the date of this document), the
provisions of this document shall prevail. The Franchisee has reviewed all of
the documents referred to in this Agreement and has been urged by Love's to
have this and all other documents reviewed by her attorney.
Main Agreements:
1. Consent to Assignment. Effective April 15, 1996, and subject
to the compliance by 1996 Assignors and the 1996 Assignees with the terms and
conditions of this document, Love's consents to the transfer of each of the
rights of the 1996 Assignors in and to the Amended Franchise Agreement and the
business conducted thereunder (the "Franchised Business") and the 1996
Assignors confirm that they have transferred all of their rights therein to the
1996 Assignees, together with their rights in and to the real property and all
equipment used in the operation of the Franchised Business. All rights of the
1996 Assignors and all obligations and/or liabilities of Love's (and/or of the
"Love's Entities" as defined below) to the 1996 Assignors, WHETHER KNOWN OR
UNKNOWN,
2
<PAGE> 11
under the Amended Franchise Agreement or otherwise, are hereby canceled,
released and of no further force or effect.
2. Payments. Love's waives its rights to receive any
"administrative fee" in connection with the extension of the franchise. The
1996 Assignee will reimburse Love's for its legal and other costs in connection
with this transaction and all related transactions in an amount not to exceed
Two Thousand One Hundred Twenty Five Dollars ($2125.00) and Love's may require
such reimbursement to be made through the escrow established by the 1996
Assignors and the 1996 Assignee.
3. Obligations of 1996 Assignors.
(a) 1996 Assignors shall remain liable for all
obligations to Love's arising under the Amended Franchise Agreement (as later
defined) prior to the "Closing Date" (April 15, 1995.)
(b) Within seventy-two (72) hours after said Closing
Date, the 1996 Assignors shall prepare and deliver to Love's the weekly summary
report(s) (as required by the Franchise Agreement or by the custom, practice or
policies of Love's and its franchisees [the "Weekly Summa Report(s)"]) for the
final week(s) of 1996 Assignors' operation of Love's #611. Love's reserves the
right to review and audit said Weekly Summary Report(s), and in the event any
amounts are found due and owing pursuant to the Weekly Summary Report(s),
without limiting its right to collect any such amount from 1996 Assignors, 1996
Assignee guarantees to pay Love's any amounts due forthwith as a condition to
the effectiveness of Love's consent to the assignment.
4. Assumption of Obligations by 1996 Assignee.
(a) The 1996 Assignee agrees to assume all of the duties
and obligations of 1996 Assignors under the Amended Franchise Agreement and/or
under this document and shall be entitled to all of 1996 Assignors' rights,
title and interest in and to the Love's #611 and the Amended Franchise
Agreement.
(b) Any default by 1996 Assignee hereunder shall
constitute a default under the Amended Franchise Agreement.
5. Indemnification of Love's by 1996 Assignors. Love's shall not
be responsible in any manner for the debts or obligations owed by 1996
Assignors to any third party, including, without limitation, vendors or taxing
agencies. 1996 Assignors agrees to indemnify and hold Love's harmless for all
amounts incurred by Love's (including but not limited to attorneys' fees) as a
result of claims made against Love's for any debts or obligations owed by 1996
Assignors to any such third parties. Love's shall have the right but not the
obligation to pay any debts or obligations owed by 1996 Assignors to any third
party, including vendors or taxing agencies and charge 1996 Assignors therefor.
Notwithstanding the Release contained herein, 1996 Assignors shall not be
released from
3
<PAGE> 12
its obligation to reimburse Love's for payment of said debts or obligations
which Love's is reasonably required to pay.
6. Continued Obligations of 1996 Assignors. In any event and
notwithstanding any other provisions of this document or otherwise or the
transfer of the Franchise and the Franchised Business, the cancellation of the
1996 Assignors' rights and any release granted to the 1996 Assignors (or any of
them) and in addition to any other rights preserved by Love's, the 1996
Assignors' obligations regarding indemnity, non-competition and confidentiality
will remain in effect and will be regarded as in-term covenants and fully
enforceable by Love's, notwithstanding such assignment.
7. Release of Love's. The 1996 Assignors and the 1996 Assignees,
jointly and severally, hereby release and forever discharge, indemnify and
agree to hold harmless Love's, all persons and entities controlling, controlled
by, under common control, affiliated and/or associated with it in any way, each
of the affiliates, subsidiaries, corporate parents and predecessors of any of
the foregoing, each of the owners, partners, stockholders, directors, officers,
employees, agents, representatives, attorneys, accountants of any of the
foregoing, and all persons acting by, through, under or in concert or
affiliated or associated in any way with any of the foregoing, (all of the
foregoing, including Love's, are collectively and individually referred to in
this document as the "Love's Entities") from and against any and all causes of
action, in law or in equity, suits, debts, liens, actual and/or alleged
defaults, liabilities, claims, demands, damages, losses, costs or expenses, of
any kind and/or nature whatsoever, howsoever arising, KNOWN OR UNKNOWN, fixed
or contingent, past or present, whether or not related to the Amended Franchise
Agreement any Sublease, any Equipment Lease, the Lease or otherwise, which the
1996 Assignors, 1996 Assignees or any of them now have or may hereafter have
against all or any of the Love's Entities by reason of any matter, cause or
thing whatsoever from the beginning of time to the date hereof (the "Claims"),
it being the mutual intention of the parties that this release be unqualifiedly
general in scope and effect.
THE 1996 ASSIGNORS AND THE 1996 ASSIGNEES AND EACH OF THEM, JOINTLY
AND SEVERALLY, ACKNOWLEDGE THAT EACH IS FAMILIAR WITH THE PROVISIONS OF
CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."
THE 1996 ASSIGNORS AND THE 1996 ASSIGNEES AND EACH OF THEM, JOINTLY
AND SEVERALLY, BEING AWARE OF THIS CODE SECTION, HEREBY EXPRESSLY WAIVE ALL
RIGHTS THEREUNDER AS WELL AS UNDER ANY OTHER
4
<PAGE> 13
STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT OF ANY APPLICABLE
JURISDICTION, INCLUDING BUT NOT LIMITED TO THOSE OF CALIFORNIA.
The 1996 Assignors and the 1996 Assignees, jointly and severally,
represent and warrant that there have been, and there will be, no assignment or
other transfer of any interest in any Claims which any of them may have against
any or all of the Love's Entities, that any and all such Claims have been
forever extinguished, and the 1996 Assignors and the 1996 Assignees, jointly
and severally, agree to indemnify and forever hold each and all of the Love's
Entities harmless from any liability, claims, demands, damages, losses, costs,
expenses and/or attorney's fees incurred by any of the Love's Entities as a
result of any person asserting any such assignment or transfer, or any rights
or claims under such assignment or transfer. It is the intention of the
parties that this indemnity does not require payment by any of the Love's
Entities as a condition precedent to their recovery against the 1996 Assignors
and/or the 1996 Assignees (or any of them) under this clause.
8. No Security or Similar Interest. Notwithstanding any
provisions in any agreement between 1996 Assignees and 1996 Assignors or
otherwise, the 1996 Assignors will have no right to retake possession,
ownership or any other interest in the Amended Franchise Agreement, the Lease
or the Franchised Business (or any assets or part thereof) in the event of any
breach or default in any obligation by the 1996 Assignees. The 1996 Assignors
and the 1996 Assignees jointly and severally represent and warrant, and agree,
that there is, and will be, no "security" or similar interest in the Amended
Franchise Agreement, the Lease or the Franchised Business (or any assets or
part thereof), whether in favor of the Sellers or otherwise and that any such
interest will be void and ineffective. In the event that any attempt by the
1996 Assignors to retake possession, ownership or any other interest in the
Amended Franchise Agreement, the Lease or the Franchised Business (or any
assets or part thereof) is not held to be void or otherwise ineffective, such
attempt will be subject to (1) a right-of-first refusal in favor of Love's and
(2) the prior written consent of Love's, which may be subject to reasonable
conditions, including but not limited to the 1996 Assignors providing a release
(in form satisfactory to Love's) of all claims, KNOWN OR UNKNOWN, with respect
to the "Love's Entities" or any of them and the 1996 Assignors curing any and
all defaults of the 1996 Assignees in their obligations to the "Love's
Entities" and its affiliates and the 1996 Assignors providing full and
unlimited indemnities to the "Love's Entities" regarding any claims by 1996
Assignees and/or others.
General Agreements:
9. No Attorney's Fees. Unless expressly provided otherwise in
this document, in the event of any legal action or proceeding with respect to
this document, the matters covered thereby (for
5
<PAGE> 14
example, to enforce any arbitration award) or otherwise, which involves Love's,
the Love's Entities and/or the interests of Love's and/or the Love's Entities,
each party will bear their own legal costs.
10. Forum, WAIVER OF JURY TRIAL. Subject to the parties'
agreement below regarding binding arbitration of disputes, any litigation with
respect to this document, the matters covered thereby (for example, to enforce
any arbitration award) or otherwise, which involves Love's, the Love's Entities
and/or the interests of Love's and/or the Love's Entities, will take place in
Los Angeles County, California, or, if required, the Federal court nearest
thereto, the parties expressly consenting to the exclusive jurisdiction of such
court(s) and waiving their rights to conduct litigation of any nature in any
other forum. IN ANY ARBITRATION AND/OR LITIGATION INVOLVING LOVE'S, THE LOVE'S
ENTITIES AND/OR THE INTERESTS OF LOVE'S AND/OR THE LOVE'S ENTITIES, EACH OF THE
PARTIES WAIVES THEIR RIGHTS TO TRIAL BY JURY AND WAIVES ALL RIGHTS TO PUNITIVE,
EXEMPLARY, MULTIPLE, PAIN-AND-SUFFERING, MENTAL DISTRESS OR SIMILAR DAMAGES AND
AGREES THAT EACH MAY ONLY RECOVER ACTUAL FINANCIAL LOSSES.
11. Mandatory Binding Arbitration.
(a) IN THE EVENT OF ANY DISPUTE INVOLVING LOVE'S, HE LOVE'S
ENTITIES OR ANY INTERESTS OF LOVE'S OR THE LOVE'S ENTITIES, WHETHER RELATED TO
THIS DOCUMENT, ANY FRANCHISE AGREEMENT OR OTHER AGREEMENTS, THE TRANSACTION(S)
REFERENCED OR CONTEMPLATED HEREIN, ANY TRANSACTIONS RELATED THERETO AND/OR ANY
OTHER DOCUMENTS, AGREEMENTS, UNDERSTANDINGS, TRANSACTIONS AND/OR ANY OTHER
MATTER (WHETHER RELATED OR OTHERWISE), SUCH DISPUTE WILL BE:
(1) FIRST, DISCUSSED IN A FACE-TO-FACE MEETING BETWEEN
EACH OF THE DISPUTANTS (OR, IF A DISPUTANT IS A CORPORATION OR
PARTNERSHIP, A PRINCIPAL OF THE DISPUTANT AUTHORIZED TO MAKE BINDING
COMMITMENTS ON BEHALF OF THE DISPUTANT), SUCH MEETING SHALL BE HELD AT
LOVE'S HEADQUARTERS AND WITHIN 30 DAYS AFTER ANY DISPUTANT GIVES
WRITTEN NOTICE OF THE DISPUTE.
(2) SECOND, IF, IN THE OPINION OF LOVE'S OR ANY DISPUTANT
PARTICIPATING IN SUCH MEETING, SUCH MEETING HAS NOT SUCCESSFULLY
RESOLVED SUCH MATTERS, AND IF DESIRED BY ANY PERSON OR ENTITY INVOLVED
IN THE CLAIM, SUBMITTED TO NONBINDING MEDIATION FOR A MINIMUM OF 8
HOURS BEFORE (A) THE AMERICAN ARBITRATION ASSOCIATION (THE "AAA") OR
(B) ANY OTHER MEDIATION ORGANIZATION APPROVED BY ALL SUCH PERSONS
AND/OR ENTITIES OR (C) A MEDIATOR APPOINTED BY A COURT IF THE AAA
CANNOT CONDUCT SUCH MEDIATION AND THE PARTIES CANNOT AGREE ON A
MEDIATION ORGANIZATION. ON ELECTION BY ANY PARTY, ARBITRATION AND/OR
ANY OTHER REMEDY ALLOWED BY THIS AGREEMENT MAY PROCEED FORWARD AT THE
SAME TIME AS MEDIATION. IN THE MEDIATION, THE DISPUTANTS SHALL EACH
BE REPRESENTED BY AN INDIVIDUAL AUTHORIZED TO MAKE BINDING COMMITMENTS
ON THEIR RESPECTIVE BEHAVES AND MAY BE REPRESENTED BY COUNSEL IN
6
<PAGE> 15
ADDITION, THE DISPUTANTS MAY, WITH PERMISSION OF THE MEDIATOR, BRING
SUCH ADDITIONAL PERSONS AS ARE NEEDED TO RESPOND TO QUESTIONS,
CONTRIBUTE INFORMATION AND PARTICIPATE IN THE NEGOTIATIONS. THE FEES
AND EXPENSES OF THE MEDIATOR AND/OR MEDIATION ORGANIZATION SHALL BE
SHARED EQUALLY BY THE DISPUTANTS. THE MEDIATOR SHALL BE DISQUALIFIED
AS A WITNESS, CONSULTANT, EXPERT OR COUNSEL FOR ANY PARTY WITH RESPECT
TO THE DISPUTE AND ANY RELATED MATTERS.
(3) THIRD, IF NO SUCH PERSON OR ENTITY DESIRES MEDIATION
(OR IF SUCH MEDIATION IS NOT SUCCESSFUL IN RESOLVING SUCH CLAIM),
SUBMITTED TO AND FINALLY RESOLVED BY BINDING ARBITRATION BEFORE AND IN
ACCORDANCE WITH THE ARBITRATION RULES OF THE AMERICAN ARBITRATION
ASSOCIATION PURSUANT TO ITS COMMERCIAL ARBITRATION RULES. IN EACH
CASE, THE PARTIES TO ANY MEDIATION/ARBITRATION WILL EXECUTE
APPROPRIATE CONFIDENTIALITY AGREEMENTS, EXCEPTING ONLY SUCH PUBLIC
DISCLOSURES AND FILINGS AS ARE REQUIRED BY LAW.
(b) ANY MEDIATION/ARBITRATION WILL BE CONDUCTED AT THE OFFICE OF
THE MEDIATING/ ARBITRATING ORGANIZATION (OR ITS REPRESENTATIVES) WHICH IS
LOCATED CLOSEST TO LOVE'S HEADQUARTERS. EXCEPT AS EXPRESSLY PROVIDED OTHERWISE
IN THIS DOCUMENT, THE PARTIES TO ANY MEDIATION OR ARBITRATION WILL BEAR THEIR
OWN COSTS, INCLUDING ATTORNEY'S FEES. ANY CLAIM, AND ANY
MEDIATION/ARBITRATION, WILL BE CONDUCTED AND RESOLVED ON AN INDIVIDUAL BASIS
ONLY AND NOT ON A CLASS-WIDE, MULTIPLE PLAINTIFF OR SIMILAR BASIS. UPON
REQUEST OF ANY PARTY TO A CLAIM, THE ARBITRATOR MAY BE REQUIRED TO ISSUE A
WRITTEN AWARD, SPECIFYING THE FACTS FOUND AND THE LAW APPLIED, BUT THE PARTY SO
REQUESTING WILL BEAR THE FEES AND CHARGES INCURRED IN CONNECTION THEREWITH.
THE ARBITRATOR MAY ISSUE TEMPORARY RESTRAINING ORDERS, PRELIMINARY INJUNCTIONS,
INJUNCTIONS AND OTHER EQUITABLE AND/OR INTERIM RELIEF TO THE EXTENT REASONABLY
NECESSARY TO PRESERVE THE STATUS QUO (OR PREVENT IRREPARABLE INJURY) PENDING
FINAL RESOLUTION BY BINDING ARBITRATION OF A CLAIM, AS WELL AS IN CONNECTION
WITH ANY SUCH FINAL RESOLUTION, AND MAY ISSUE SUMMARY ORDERS DISPOSING OF ALL
OR PART OF A CLAIM AT ANY POINT. EACH PARTY CONSENTS TO THE ENFORCEMENT OF
SUCH ORDERS, INJUNCTIONS, ETC. BY ANY COURT HAVING JURISDICTION.
NOTWITHSTANDING ANY PROVISIONS OF STATE LAW TO THE CONTRARY. LOVE'S INTENDS TO
FULLY ENFORCE THE PROVISIONS OF THIS DOCUMENT AND OTHER DOCUMENTS. INCLUDING
ALL VENUE AND MEDIATION/ARBITRATION PROVISIONS, AND TO RELY ON FEDERAL
PREEMPTION UNDER THE FEDERAL ARBITRATION ACT (9 U.S.C. Section 1 ET SEQ.)
12. Entire Understanding. Excepting only any document(s)
contemporaneously executed by Love's:
This document contains the entire understanding between Love's (on the
one hand) and the 1996 Assignors and the 1996 Assignees (on the other hand) and
supersedes any prior understandings and agreements between and/or among any of
them respecting the within subject matter and no representations, promises,
guarantees, or warranties of any kind are or have been made by Love's or anyone
else to induce the 1996 Assignors and the 1996 Assignees to execute
7
<PAGE> 16
this document, except as specifically set forth in writing in this document.
THERE ARE NO REPRESENTATIONS, WARRANTIES, AGREEMENTS, PROMISES,
CONTRACTS, COMMITMENTS, ARRANGEMENTS, OPTIONS, RIGHTS-OF-FIRST-REFUSAL, "SIDE
DEALS," UNDERSTANDINGS OR OTHERWISE, ORAL OR WRITTEN, AFFECTING OR RELATED TO
LOVE'S RELATING TO THE WITHIN SUBJECT MATTER WHICH ARE NOT FULLY EXPRESSED
HEREIN. NEITHER THE 1996 ASSIGNORS NOR THE 1996 ASSIGNEES HAVE RELIED ON ANY
REPRESENTATIONS, PROMISES, UNDERSTANDINGS, AGREEMENTS OR OTHERWISE WHICH ARE
NOT EXPRESSLY SET FORTH IN THIS DOCUMENT, NOR DO THE 1996 ASSIGNORS NOR THE
1996 ASSIGNEES HAVE ANY RESERVATIONS, NOR DO THERE EXIST ANY CONTINGENCIES,
WITH REGARD TO ANY OF THEIR OBLIGATIONS UNDER THIS DOCUMENT OR ANY DOCUMENT
CURRENTLY IN EXISTENCE OR TO BE EXECUTED. IF THE 1996 ASSIGNORS OR THE 1996
ASSIGNEES BELIEVE THERE HAVE BEEN ANY REPRESENTATIONS, PROMISES,
UNDERSTANDINGS, AGREEMENTS OR OTHERWISE WHICH ARE NOT EXPRESSLY SET FORTH IN
THIS DOCUMENT OR THAT ANY OF THE FOREGOING IS NOT TRUE, CORRECT AND COMPLETE,
THEY WILL MAKE A WRITTEN STATEMENT REGARDING SUCH NEXT TO THEIR SIGNATURE.
13. Severability. The invalidity or unenforceability of any
provision hereof as determined by an arbitrator or a court of competent
jurisdiction will in no way affect the validity or enforceability of any other
provision hereto.
14. Waiver. The failure of any party to seek redress for
violation of this document or to insist upon the strict performance of any
covenant or condition of this document will not prevent a subsequent act, which
would have originally constituted a violation, from having the effect of an
original violation. The rights and remedies provided by this document are
cumulative and the use of any one right or remedy by any party will not
preclude or waive its right to use any or all other remedies. Subject to the
provisions of the release(s) granted herein, these rights and remedies are
given in addition to any other rights and remedies the parties may have by law,
statute, ordinance or otherwise.
15. Heirs and Assigns. Each of the terms, covenants and
conditions of this document will extend to and be binding on and inure to the
benefit of not only the parties, but also each of their respective heirs,
representatives, executors, administrators, assigns, and successors in
interest. Whenever in this document reference is made to any party, the
reference will be deemed to include, whenever applicable, the heirs,
representatives, executors, administrators, assigns and successors in interest
of that party the same as if in eve case expressed.
16. Effective Date. This document will take effect on April
15,1996, unless the escrow for the 1996 Assignee's purchase of the Restaurant
closes sooner. If the escrow closes sooner, and all documents required by
Love's have been fully signed (and all payments due Love's have been made) by
that time, this document will take effect on the close of escrow. However, in
any event
8
<PAGE> 17
(including the failure of the escrow to close for any reason), the releases
granted to Love's and related persons and entities shall be effective on the
date the person/entity granting such release signs this document and shall be
deemed to be re-effectuated on the effective date of this document.
AGREED:
1996 ASSIGNORS (jointly and severally):
Galaxy Golden, Inc., a California corporation
By /s/
Its President
N/A
Fung Ying Yong, an individual
N/A
Yim Ching Yong, an individual
/s/
Vincent Winghong Cheung, an individual
1996 ASSIGNEE
/s/
Deborah P. Miller, an Individual
LOVE'S ENTERPRISES, INC.
By /s/
Harry Shuster, President and CEO
9
<PAGE> 1
EXHIBIT 10-38
Love's(R)
1996 Consent to Assignment
and
Assumption Agreement
Parties:
Franchisor: Love's Enterprises, Inc.
1990 Westwood Boulevard, Penthouse
Los Angeles, California 90025
1995 Assignors: Rasheed Z. Khan (individually)
William P. Liu (individually)
Mohd Q. Khan, M.D. (individually)
Zaks Restaurant Management, Inc.,
a California corporation
1995 Assignees: Rasheed Z. Khan (individually)
Meena Khan (individually)
Zaks Restaurant Management, Inc.,
a California corporation
[Note: For convenience, the Franchisor is sometimes referred to in
this and other documents as "Love's," "we," "us," or "our." The obligations of
the 1995 Assignors and the 1995 Assignees under this and any other documents
shall be joint and several.]
Date: January 1, 1996
Background and Preliminary Agreements:
A. On December 16, 1969, Love's executed a Franchise Agreement
(the "Franchise Agreement") with Alexander Jocic covering a "Love's(R) Wood Pit
Barbecue" restaurant (the "Restaurant") located at the southeast corner of the
intersection of Rosemead Boulevard and Marshall Street in the City of Rosemead,
California.
B. A the same time, the same parties executed a Lease Agreement
(the "Equipment Lease") covering the lease of certain signs, fixtures,
equipment and supplies for use at the restaurant.
C. At the same time, the same parties executed a Sublease (the
"Sublease") covering the premises used for the restaurant.
D. On August 29, 1975, the same parties executed a Mutual Release
and Settlement Agreement and a related Amended Franchise Agreement (the "1975
Amended Franchise Agreement.")
E. As of December 14, 1984, Love's, Alexander Jocic, Kwan Lee and
Joseph Dopico executed an Assignment and Assumption Agreement (the "1984
Assignment"), which had the effect of transferring certain rights under the
Franchise Agreement from Alexander Jocic to Kwan Lee and Joseph Dopico.
<PAGE> 2
F. Effective December 30, 1985, Love's, Kwan Lee and Joseph
Dopico executed an Amendment to Franchise Agreement (the "1985 Amendment.")
G. As of November 1, 1990, Love's, Kwan Lee and Joseph Dopico
executed an Amendment to Franchise Agreement (the "1990 Amendment"), which had
the effect of extending the term of the 1975 Amended Franchise Agreement (as
subsequently amended) to and including October 31, 1995, unless sooner
terminated pursuant to the terms of the 1975 Amended Franchise Agreement (as
subsequently amended), Sublease and Equipment Lease. Also as of November 1,
1990, the same parties executed an Amendment to Sublease (which had the effect
of extending the Sublease term to and including October 31, 1995) and executed
an Amendment to Equipment Lease (which had the effect of extending the
Equipment Lease term to and including October 31, 1995.)
H. On October 8, 1993, Love's, Kwan Lee, Joseph Dopico, Zaks
Restaurant Management, Inc. ("Zaks"), Mohd Q. Khan, M.D., William P. Liu and
Rasheed Z. Khan executed a Consent to Assignment and Assumption Agreement (the
"1993 Assignment"), which had the effect of transferring certain rights under
the Franchise Agreement from Kwan Lee and Joseph Dopico to Zaks, Mohd Q. Khan,
M.D., William P. Liu and Rasheed Z. Khan.
I. Notwithstanding the fact that the 1975 Amended Franchise
Agreement (as subsequently amended) and the Equipment Lease (as subsequently
amended) are due to expire at the end of October 31,1995, Zaks, Mohd Q. Khan,
M.D., William P. Liu and Rasheed Z. Khan (Zaks, Mohd Q. Khan, M.D., William P.
Liu and Rasheed Z. Khan be jointly and individually referred to in this
document as the "1995 Assignors") wish to assign their interests thereunder to
Zaks, Rasheed Z. Khan and Meena Khan (Zaks, Rasheed Z. Khan and Meena Khan be
jointly and individually referred to in this document as the "1995 Assignees.")
Rasheed Z. Khan and Meena Khan are sometimes referred tn as the Stockholders."
J. By separate instrument and as an independent transaction
(noted here merely for convenience of the parties and completeness of
documentation), the 1995 Assignees and Love's have agreed to extend the term of
the 1975 Amended Franchise Agreement (as subsequently amended) and the
Equipment Lease (as subsequently amended), the Sublease being due to expire at
the end of October 31, 1995, and the 1995 Assignees having made or to make
separate arrangements with the landlord for continued occupancy of the
Restaurant, Love's to have no responsibility or obligation with regard thereto
or with regard to occupancy by the 1995 Assignors or Assignees after October
31,1995.
K. The parties agree that, in the event of any inconsistency
between the provisions of this document and any of the foregoing documents (or
other documents or agreements prior to the date of this document), the
provisions of this document shall prevail.
2
<PAGE> 3
Main Agreements:
1. Consent to Assignment. Effective October 31, 1995, and
subject to the compliance by 1995 Assignors and the 1995 Assignees with the
terms and conditions of this document, Love's consents to the transfer of each
of the rights of the 1995 Assignors in and to the 1975 Amended Franchise
Agreement (as subsequently amended) and the business conducted thereunder (the
"Franchised Business") and the Equipment Lease (as subsequently amended) to the
1995 Assignees and the 1995 Assignors confirm that they have transferred all of
their rights therein to the 1995 Assignees, together with their rights in and
to the real property and all equipment used in the operation of the Franchised
Business. All rights of the 1995 Assignors and all obligations and/or
liabilities of Love's (and/or of the "Love's Entities" as defined below) to the
1995 Assignors, WHETHER KNOWN OR UNKNOWN, under the 1975 Amended Franchise
Agreement (as subsequently amended), the Sublease (as subsequently amended)
and/or the Equipment Lease (as subsequently amended) or otherwise, are hereby
canceled, released and of no further force or effect. In connection therewith,
the 1995 Assignees shall execute the attached Exhibit A - "Guarantee of
Obligations."
2. Payments. Love's waives its rights to receive any
"administrative fee" in connection with the extension of the franchise.
3. Covenants and Warranties of 1995 Assignee - Corporate and
Related Requirements. Attached to this document as Exhibit "B" is Section 2 of
the 1993 Assignment. The 1995 Assignees (and particularly the Stockholders)
agree that the provisions of that Section 2 shall govern the 1995 Assignees
(and particularly the Stockholders) and this assignment, and that they will
fully and faithfully comply with those provisions, as if Sully reproduced
herein.
4. Obligations of 1995 Assignor.
(a) 1195 Assignor shall remain liable for all obligations
to Love's arising under the Franchise Documents (as later defined) prior to the
"Closing Date" (October 31,1995.)
(b) Within seventy-two (72) hours after said Closing
Date, 1995 Assignor shall prepare and deliver to Love's the weekly summary
report(s) (as required by the Franchise Agreement or by the custom, practice or
policies of Love's and its franchisees [the "Weekly Summary Report(s)"]) for
the final week(s) of 1995 Assignor's operation of Love's #1038. Love's
reserves the right to review and audit said Weekly Summary Report(s), and in
the event any amounts are found due and owing pursuant to the Weekly Summary
Report(s), without limiting its right to collect any such amount from 1995
Assignor, 1995 Assignee guarantees to pay Love's any amounts due forthwith as a
condition to the effectiveness of Love's consent to the assignment.
3
<PAGE> 4
5. Assumption of Obligations by 1995 Assignee.
(a) Each 1995 Assignee, jointly and severally,
individually and as a corporate entity, agrees to assume all of the duties and
obligations of 1995 Assignor under the 1975 Amended Franchise Agreement (as
subsequently amended) and/or the Equipment Lease (as subsequently amended) (the
"Franchise Documents") and/or under this document and shall be entitled to all
of 1995 Assignor's rights, title and interest in and to the Love's #1038 and
the Franchise Documents.
(b) Any default by 1995 Assignee hereunder shall
constitute a default under the Franchise Documents.
6. Indemnification of Love's by 1995 Assignor. Love's shall not
be responsible in any manner for the debts or obligations owed by 1995 Assignor
to any third party, including, without limitation, vendors or taxing agencies.
1995 Assignor agrees to indemnify and hold Love's harmless for all amounts
incurred by Love's (including but not limited to attorneys' fees) as a result
of claims made against Love's for any debts or obligations owed by 1995
Assignor to any such third parties. Love's shall have he right but not the
obligation to pay any debts or obligations owed by 1995 Assignor to any third
party, including vendors or taxing agencies and charge 1995 Assignor therefor.
Notwithstanding the Release contained herein, 1995 Assignor shall not be
released from its obligation to reimburse Love's for payment of said debts or
obligations which Love's is reasonably required to pay.
7. Continued Obligations of 1995 Assignors. In any event and
notwithstanding any other provisions of this document or otherwise or the
transfer of the Franchise and the Franchised Business, the cancellation of the
1995 Assignors' rights and any release granted to the 1995 Assignors (or any of
them) and in addition to any other rights preserved by Love's, the 1995
Assignor's obligations regarding indemnity, non-competition and confidentiality
will remain in effect and will be regarded as in-term covenants and fully
enforceable by Love's, notwithstanding such assignment.
8. Training. Meena Khan is exempted from any training
requirements so long as Rasheed Z. Khan remains as the manager of the
Restaurant.
9. Release of Love's. The 1995 Assignors and the 1995 Assignees,
jointly and severally, hereby release and forever discharge, indemnify and
agree to hold harmless Love's, all persons and entities controlling, controlled
by, under common control, affiliated and/or associated with it in any way, each
of the affiliates, subsidiaries, corporate parents and predecessors of any of
the foregoing, each of the owners, partners, stockholders, directors, officers,
employees, agents, representatives, attorneys, accountants of any of the
foregoing, and all persons acting by, through, under or in concert or
affiliated or associated in any way
4
<PAGE> 5
with any of the foregoing, (all of the foregoing, including Love's, are
collectively and individually referred to in this document as the "Love's
Entities") from and against any and all causes of action, in law or in equity,
suits, debts, liens, actual and/or alleged defaults, liabilities, claims,
demands, damages, losses, costs or expenses, of any kind and/or nature
whatsoever, howsoever arising, KNOWN OR UNKNOWN, fixed or contingent, past or
present, whether or not related to the 1975 Amended Franchise Agreement (as
subsequently amended), the Equipment Lease (as subsequently amend the Sublease
(as subsequently amended), the Franchised Business or otherwise, which the 1995
Assignors, 1995 Assignees or any of them now have or may hereafter have against
all or any of the Love's Entities by reason of any matter, cause or thing
whatsoever from the beginning of time to the date hereof (the "Claims"), it
being the mutual intention of the parties that this release be unqualifiedly
general in scope and effect.
THE 1995 ASSIGNORS AND THE 1995 ASSIGNEES AND EACH OF THEM, JOINTLY
AND SEVERALLY, ACKNOWLEDGE THAT EACH IS FAMILIAR WITH THE PROVISIONS OF
CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."
THE 1995 ASSIGNORS AND THE 1995 ASSIGNEES AND EACH OF THEM, JOINTLY
AND SEVERALLY, BEING AWARE OF THIS CODE SECTION, HEREBY EXPRESSLY WAIVE ALL
RIGHTS THEREUNDER AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES
OF SIMILAR EFFECT OF ANY APPLICABLE JURISDICTION, INCLUDING BUT NOT LIMITED TO
THOSE OF CALIFORNIA.
The 1995 Assignors and the 1995 Assignees, jointly and severally,
represent and warrant that there have been, and there will be, no assignment or
other transfer of any interest in any Claims which any of them may have against
any or all of the Love's Entities, that any and all such Claims have been
forever extinguished, and the 1995 Assignors and the 1995 Assignees, jointly
and severally, agree to indemnify and forever hold each and all of the Love's
Entities harmless from any liability, claims, demands, damages, losses, costs,
expenses and/or attorney's fees incurred by any of the Love's Entities as a
result of any person asserting any such assignment or transfer, or any rights
or claims under such assignment or transfer. It is the intention of the
parties that this indemnity does not require payment by any of the Love's
Entities as a condition precedent to their recovery against the 1995 Assignors
and/or the 1995 Assignees (or any of them) under this clause.
10. Release of Mohd Q. Khan. M.D. and William P. Liu. Love's
hereby releases and forever discharges, indemnify and agree to hold
5
<PAGE> 6
harmless Mohd Q. Khan, M.D. and William P. Liu from and against any and all
causes of action, in law or in equity, suits, debts, liens, actual and/or
alleged defaults, liabilities, claims, demands, damages, losses, costs or
expenses, of any kind and/or nature whatsoever, howsoever arising, KNOWN OR
UNKNOWN, fixed or contingent, past or present, whether or not related to the
1975 Amended Franchise Agreement (as subsequently amended), the Equipment Lease
(as subsequently amended), the Sublease (as subsequently amended), the
Franchised Business or otherwise, which the 1995 Assignors, 1995 Assignees or
any of them now have or may hereafter have against all or any of the Love's
Entities by reason of any matter, cause or thing whatsoever from the beginning
of time to the date hereof (the "Claims"), it being the mutual intention of the
parties that this release be unqualifiedly general in scope and effect;
provided that any obligations of Mohd Q. Khan, M.D. and/or William P. Liu
contained or referenced in this document will continue in full force and
effect.
LOVE'S ACKNOWLEDGES THAT IT IS FAMILIAR WITH THE PROVISIONS OF
CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME O EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."
LOVE'S, BEING AWARE OF THIS CODE SECTION, HEREBY EXPRESSLY WAIVE ALL
RIGHTS THEREUNDER AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES
OF SIMILAR EFFECT OF ANY APPLICABLE JURISDICTION, INCLUDING BUT NOT LIMITED TO
THOSE OF CALIFORNIA.
11. No Security or Similar Interest. Notwithstanding any
provisions in any agreement between 1995 Assignees and 1995 Assignors or
otherwise, the 1995 Assignors will have no right to retake possession,
ownership or any other interest in tho 1975 Amended Franchise Agreement (as
subsequently amended), the Equipment Lease or the Franchised Business (or any
assets or part thereof) in the event of any breach or default in any obligation
by the 1995 Assignees. The 1995 Assignors and tho 1995 Assignees jointly and
severally represent and warrant, and agree, that there is, and will be, no
"security" or similar interest in the 1975 Amended Franchise Agreement (as
subsequently amended), the Equipment Lease (as subsequently amended) or the
Franchised Business (or any assets or part thereof), whether in favor of the
Sellers or otherwise and that any such interest will be void and ineffective.
In the event that any attempt by the 1995 Assignors to retake possession,
ownership or any other interest in the 1975 Amended Franchise Agreement (as
subsequently amended), the Equipment Lease (as subsequently amended) or the
Franchised Business (or any assets or part thereof) is not held to be void or
otherwise ineffective, such attempt will be subject to (1) a right-of-first
refusal in favor of Love's and (2) the prior written consent of Love's, which
may be subject to reasonable conditions,
6
<PAGE> 7
including but not limited to the 1995 Assignors providing a release (in form
satisfactory to Love's) of all claims, KNOWN OR UNKNOWN, with respect to the
"Love's Entities" or any of them and the 1995 Assignors curing any and all
defaults of the 1995 Assignees in their obligations to the "Love's Entities"
and its affiliates and the 1995 Assignors providing full and unlimited
indemnities to the "Love's Entities" regarding any claims by 1995 Assignees
and/or others.
General Agreements:
12. No Attorney's Fees. Unless expressly provided otherwise in
this document, in the event of any legal action or proceeding with respect to
this document, the matters covered thereby (for example, to enforce any
arbitration award) or otherwise, which involves Love's, the Love's Entities
and/or the interests of Love's and/or the Love's Entities, each party will bear
their own legal costs.
13. Forum. WAIVER OF JURY TRIAL. Subject to the parties'
agreement below regarding binding arbitration of disputes, any litigation with
respect to this document, the matters covered thereby (for example, to enforce
any arbitration award) or otherwise, which involves Love's, the Love's Entities
and/or the interests of Love's and/or the Love's Entities, will take place in
Los Angeles County, California, or, if required, the Federal court nearest
thereto, the parties expressly consenting to the exclusive jurisdiction of such
court(s) and waiving their rights to conduct litigation of any nature in any
other forum. IN ANY ARBITRATION AND/OR LITIGATION INVOLVING LOVE'S, THE LOVE'S
ENTITIES AND/OR THE INTERESTS OF LOVE'S AND/OR THE LOVE'S ENTITIES, EACH OF THE
PARTIES WAIVES THEIR RIGHTS TO TRIAL BY JURY AND WAIVES ALL RIGHTS TO PUNITIVE,
EXEMPLARY, MULTIPLE, PAIN-AND-SUFFERING, MENTAL DISTRESS OR SIMILAR DAMAGES AND
AGREES THAT EACH MAY ONLY RECOVER ACTUAL FINANCIAL LOSSES.
14. Mandatory Binding Arbitration.
(a) IN THE EVENT OF ANY DISPUTE INVOLVING LOVE'S, THE LOVE'S
ENTITIES OR ANY INTERESTS OF LOVE'S OR THE LOVE'S ENTITIES, WHETHER RELATED TO
THIS DOCUMENT, ANY FRANCHISE AGREEMENT OR OTHER AGREEMENTS, THE TRANSACTION(S)
REFERENCED OR CONTEMPLATED HEREIN, ANY TRANSACTIONS RELATED THERETO AND/OR ANY
OTHER DOCUMENTS, AGREEMENTS, UNDERSTANDINGS, TRANSACTIONS AND/OR ANY OTHER
MATTER (WHETHER RELATED OR OTHERWISE), SUCH DISPUTE WILL BE:
(1) FIRST, DISCUSSED IN A FACE-TO-FACE MEETING BETWEEN
EACH OF THE DISPUTANTS (OR, IF A DISPUTANT IS A CORPORATION OR
PARTNERSHIP, A PRINCIPAL OF THE DISPUTANT AUTHORIZED TO MAKE BINDING
COMMITMENTS ON BEHALF OF THE DISPUTANT), SUCH MEETING SHALL BE HELD AT
LOVE'S HEADQUARTERS AND WITHIN 30 DAYS AFTER ANY DISPUTANT GIVES
WRITTEN NOTICE OF THE DISPUTE.
7
<PAGE> 8
(2) SECOND, IF, IN THE OPINION OF LOVE'S OR ANY DISPUTANT
PARTICIPATING IN SUCH MEETING, SUCH MEETING HAS NOT SUCCESSFULLY
RESOLVED SUCH MATTERS, AND IF DESIRED BY ANY PERSON OR ENTITY INVOLVED
IN THE CLAIM, SUBMITTED TO NONBINDING MEDIATION FOR A MINIMUM OF 8
HOURS BEFORE (A) THE AMERICAN ARBITRATION ASSOCIATION (THE "AAA") OR
(B) ANY OTHER MEDIATION ORGANIZATION APPROVED BY ALL SUCH PERSONS
AND/OR ENTITIES OR (C) A MEDIATOR APPOINTED BY A COURT IF THE AAA
CANNOT CONDUCT SUCH MEDIATION AND THE PARTIES CANNOT AGREE ON A
MEDIATION ORGANIZATION. ON ELECTION BY ANY PARTY, ARBITRATION AND/OR
ANY OTHER REMEDY ALLOWED BY THIS AGREEMENT MAY PROCEED FORWARD AT THE
SAME TIME AS MEDIATION. IN THE MEDIATION, THE DISPUTANTS SHALL EACH
BE REPRESENTED BY AN INDIVIDUAL AUTHORIZED TO MAKE BINDING COMMITMENTS
ON THEIR RESPECTIVE BEHAVES AND MAY BE REPRESENTED BY COUNSEL. IN
ADDITION, THE DISPUTANTS MAY, WITH PERMISSION OF THE MEDIATOR, BRING
SUCH ADDITIONAL PERSONS AS ARE NEEDED TO RESPOND TO QUESTIONS,
CONTRIBUTE INFORMATION AND PARTICIPATE IN THE NEGOTIATIONS. THE FEES
AND EXPENSES OF THE MEDIATOR AND/OR MEDIATION ORGANIZATION SHALL BE
SHARED EQUALLY BY THE DISPUTANTS. THE MEDIATOR SHALL BE DISQUALIFIED
AS A WITNESS, CONSULTANT, EXPERT OR COUNSEL FOR ANY PARTY WITH RESPECT
TO THE DISPUTE AND ANY RELATED MATTERS.
(3) THIRD, IF NO SUCH PERSON OR ENTITY DESIRES MEDIATION
(OR IF SUCH MEDIATION IS NOT SUCCESSFUL IN RESOLVING SUCH CLAIM),
SUBMITTED TO AND FINALLY RESOLVED BY BINDING ARBITRATION BEFORE AND IN
ACCORDANCE WITH THE ARBITRATION RULES OF THE AMERICAN ARBITRATION
ASSOCIATION PURSUANT TO ITS COMMERCIAL ARBITRATION RULES. IN EACH
CASE, THE PARTIES TO ANY MEDIATION/ARBITRATION WILL EXECUTE
APPROPRIATE CONFIDENTIALITY AGREEMENTS, EXCEPTING ONLY SUCH PUBLIC
DISCLOSURES AND FILINGS AS ARE REQUIRED BY LAW.
(b) ANY MEDIATION/ARBITRATION WILL BE CONDUCTED AT THE OFFICE OF
THE MEDIATING/ARBITRATING ORGANIZATION (OR ITS REPRESENTATIVES) WHICH IS
LOCATED CLOSEST TO LOVE'S HEADQUARTERS. EXCEPT AS EXPRESSLY PROVIDED OTHERWISE
IN THIS DOCUMENT, THE PARTIES TO ANY MEDIATION OR ARBITRATION WILL BEAR THEIR
OWN COSTS, INCLUDING ATTORNEY'S FEES. ANY CLAIM, AND ANY
MEDIATION/ARBITRATION, WILL BE CONDUCTED AND RESOLVED ON AN INDIVIDUAL BASIS
ONLY AND NOT ON A CLASS-WIDE, MULTIPLE PLAINTIFF OR SIMILAR BASIS. UPON
REQUEST OF ANY PARTY TO A CLAIM, THE ARBITRATOR MAY BE REQUIRED TO ISSUE A
WRITTEN AWARD, SPECIFYING THE FACTS FOUND AND THE LAW APPLIED, BUT THE PARTY SO
REQUESTING WILL BEAR THE FEES AND CHARGES INCURRED IN CONNECTION THEREWITH.
THE ARBITRATOR MAY ISSUE TEMPORARY RESTRAINING ORDERS, PRELIMINARY INJUNCTIONS,
INJUNCTIONS AND OTHER EQUITABLE AND/OR INTERIM RELIEF TO THE EXTENT REASONABLY
NECESSARY TO PRESERVE THE STATUS QUO (OR PREVENT IRREPARABLE INJURY) PENDING
FINAL RESOLUTION BY BINDING ARBITRATION OF A CLAIM, AS WELL AS IN CONNECTION
WITH ANY SUCH FINAL RESOLUTION, AND MAY ISSUE SUMMARY ORDERS DISPOSING OF ALL
OR PART OF A CLAIM AT ANY POINT. EACH PARTY CONSENTS TO THE ENFORCEMENT OF
SUCH ORDERS, INJUNCTIONS, ETC. BY ANY COURT HAVING JURISDICTION.
NOTWITHSTANDING ANY PROVISIONS
8
<PAGE> 9
OF STATE LAW TO THE CONTRARY. LOVE'S INTENDS TO FULLY ENFORCE THE PROVISIONS
OF THIS DOCUMENT AND OTHER DOCUMENTS, INCLUDING ALL VENUE AND
MEDIATION/ARBITRATION PROVISIONS, AND TO RELY ON FEDERAL PREEMPTION UNDER THE
FEDERAL ARBITRATION ACT (9 U.S.C. Section 1 ET SEQ.)
15. Entire Understanding. Excepting only any document(s)
contemporaneously executed by Love's:
This document contains the entire understanding between Love's (on the
one hand) and the 1995 Assignors and the 1995 Assignees (on the other hand) and
supersedes any prior understandings and agreements between and/or among any of
them respecting the within subject matter and no representations, promises,
guarantees, or warranties of any kind are or have been made by Love's or anyone
else to induce the 1995 Assignors and the 1995 Assignees to execute this
document, except as specifically set forth in writing in this document.
THERE ARE NO REPRESENTATIONS, WARRANTIES, AGREEMENTS, PROMISES,
CONTRACTS, COMMITMENTS, ARRANGEMENTS, OPTIONS, RIGHTSOF-FIRST-REFUSAL, "SIDE
DEALS," UNDERSTANDINGS OR OTHERWISE, ORAL OR WRITTEN, AFFECTING OR RELATED TO
LOVE'S RELATING TO THE WITHIN SUBJECT MATTER WHICH ARE NOT FULLY EXPRESSED
HEREIN. NEITHER THE 1995 ASSIGNORS NOR THE 1995 ASSIGNEES HAVE RELIED ON ANY
REPRESENTATIONS, PROMISES, UNDERSTANDINGS, AGREEMENTS OR OTHERWISE WHICH ARE
NOT EXPRESSLY SET FORTH IN THIS DOCUMENT, NOR DO THE 1995 ASSIGNORS NOR THE
1995 ASSIGNEES HAVE ANY RESERVATIONS, NOR DO THERE EXIST ANY CONTINGENCIES,
WITH REGARD TO ANY OF THEIR OBLIGATIONS UNDER THIS DOCUMENT OR ANY DOCUMENT
CURRENTLY IN EXISTENCE OR TO BE EXECUTED. IF THE 1995 ASSIGNORS OR THE 1995
ASSIGNEES BELIEVE THERE HAVE BEEN ANY REPRESENTATIONS, PROMISES,
UNDERSTANDINGS, AGREEMENTS OR OTHERWISE WHICH ARE NOT EXPRESSLY SET FORTH IN
THIS DOCUMENT OR THAT ANY OF THE FOREGOING IS NOT TRUE, CORRECT AND COMPLETE,
THEY WILL MAKE A WRITTEN STATEMENT REGARDING SUCH NEXT TO THEIR SIGNATURE.
16. Severability. The invalidity or unenforceability of any
provision hereof as determined by an arbitrator or a court of competent
jurisdiction will in no way affect the validity or enforceability of any other
provision hereto.
17. Waiver. The failure of any party to seek redress for
violation of this document or to insist upon the strict performance of any
covenant or condition of this document will not prevent a subsequent act, which
would have originally constituted a violation, from having the effect of an
original violation. The rights and remedies provided by this document are
cumulative and the use of any one right or remedy by any party will not
preclude or waive its right to use any or all other remedies. Subject to the
provisions of the release(s) granted herein, these rights and remedies are
given in addition to any other rights and remedies the parties may have by law,
statute ordinance or otherwise.
9
<PAGE> 10
18. Heirs and Assigns. Each of the terms, covenants and
conditions of this document will extend to and be binding on and inure to the
benefit of not only the parties, but also each of their respective heirs,
representatives, executors, administrators, assigns, and successors in
interest. Whenever in this document reference is made to any party the
reference will be deemed to include whenever applicable, the heirs,
representatives, executors, administrators, assigns and successors in interest
of that party the same as if in every case expressed.
1995 Assignors (jointly 1995 Assignees (jointly
and severally): and severally):
/s/ /s/
Rasheed Z. Khan Rasheed Z. Khan
/s/ /s/
William P. Liu Meena Khan
/s/
Mohd Q. Khan, M.D.
Zaks Restaurant Management, Inc. Zaks Restaurant Management, Inc.
By /s/ By /s/
LOVE'S ENTERPRISES, INC.
By /s/
Harry Shuster, President and CEO
10
<PAGE> 11
EXHIBIT "A"
Store #1038 - Rosemead
GUARANTEE OF OBLIGATIONS
THIS GUARANTEE is given by the undersigned to LOVE'S ENTERPRISES,
INC., a California corporation (hereinafter, together with its successors and
assigns, referred to as "Franchisor") in connection with the assignment of the
franchise interests of the Love's Wood Pit Barbecue Restaurant #1038 (Love's
#1038) located at the southeast corner of the intersection of Rosemead
Boulevard and Marshall Street in the City of Rosemead, California, to ZAKS
RESTAURANT MANAGEMENT, INC. (hereinafter together with its successors and
assigns referred to as "Assignee Corporation" or "Zaks"), Rasheed Z. Khan and
Meena Khan by Zaks, Mohd Q. Khan, M.D., William P. Liu and Rasheed Z. Khan,
(hereinafter referred to as "Assignor:).
The undersigned hereby covenants with Franchisor that if default shall
at any time be made by Assignee Corporation in the payment of any sums of money
due Franchisor pursuant to that certain Love's 1995 Consent to Assignment and
Assumption Agreement dated October 31, 1995, (hereinafter referred to as
"Consent") or pursuant to the Franchise Documents as defined in the Consent, or
if Assignee Corporation shall default in fulfilling any covenants, agreements
or conditions to be performed by Assignee Corporation, the undersigned shall
pay to Franchisor, its successors or assigns any sums of money which may be
owing under the Consent or the Franchise Documents, and/or shall take such
action as may be required to cure the default in any of the covenants,
agreements or conditions of the Consent or the Franchise Documents to be
performed by Assignee Corporation, and the undersigned will pay all damages
that may arise in the consequence of any default by Assignee Corporation under
the Consent or the Franchise Documents on receipt of written notice of such
default from Franchisor, its successors or assigns. This Guarantee shall be a
continuing guarantee, and the liability hereunder shall in no way be affected
or diminished by reason of any extension of the Consent or the Franchise
Documents, any change in the terms of the Consent or the Franchise Documents or
the abandonment or surrender of the Franchise by Assignee Corporation.
The undersigned hereby expressly waives the following:
(i) Notice of the acceptance of this Guarantee by any person or
entity; and
(ii) Any and all notices to which the undersigned might otherwise
be entitled in connection with this Guarantee or the Franchise Documents. It
shall not be necessary for Franchisor, in order to enforce this Guarantee, to
first institute any suit or proceeding or exhaust legal remedies against
Assignee Corporation.
11
<PAGE> 12
The undersigned hereby waives any right to require Franchisor, as a
condition precedent to bringing action on this Guarantee, to:
(a) Proceed against Assignee Corporation under the Franchise
Documents; or
(b) Pursue any other remedy in Franchisor's power whatsoever.
This Guarantee shall not be discharged or affected by the dissolution,
liquidation, bankruptcy or merger of Assignee Corporation. The undersigned
agrees to pay reasonable attorneys' fees, court and any and all other costs
which may be incurred in the enforcement of this Guarantee, whether or not suit
is brought thereon.
The Guarantee hall inure to the benefit of Franchisor and its
successors and assigns. Notice of assignment, transfer or disposition by
Franchisor under the Franchise Documents is hereby waived by the undersigned.
This Guarantee shall be construed under the laws of the State of
California.
IN WITNESS WHEREOF, this Guarantee of Obligations is executed as of
this 31 st day of October, 1995.
/s/
Rasheed Z. Khan
/s/
Meena Khan
APPROVED:
ZAKS RESTAURANT MANAGEMENT, INC.
By: /s/
ACCEPTED:
LOVE'S ENTERPRISES, INC.:
By: /s/
Harry Shuster, President & CEO
12
<PAGE> 13
Love's(R)
1996 Extension of Franchise Agreement
and
Equipment Lease, Related Agreements
Parties:
Franchisor: Franchisees:
Love's Enterprises, Inc. Rasheed Z. Kahn
1990 Westwood Boulevard Meena Kahn
Penthouse Zaks Restaurant Management, Inc.
Los Angeles, California 90025 a California corporation
[Note: For convenience, the Franchisor is sometimes referred to in
this and other documents as "Love's," "we," "us." or "our" and the Franchisees
are collectively and individually sometimes referred to as the "Franchisees,"
"you" or "your." The obligations of the Franchisees under this and any other
documents shall be joint and several.]
This Document is Effective: 01/01/96
Background and Preliminary Agreements:
A. On December 16, 1969, Love's executed a Franchise Agreement
(the "Franchise Agreement") with Alexander Jocic covering a "Love's(R) Wood Pit
Barbecue" restaurant (the "Restaurant") located at the southeast corner of the
intersection of Rosemead Boulevard and Marshall Street in the City of Rosemead,
California.
B. At the same time, the same parties executed a Lease Agreement
(the "Equipment Lease") covering the lease of certain signs, fixtures,
equipment and supplies for use at the Restaurant.
C. At the same time, the same parties executed a Sublease (the
"Sublease") covering the premises used for the restaurant.
D. On August 29, 1975, the same parties executed a Mutual Release
and Settlement Agreement and a related Amended Franchise Agreement (the "1975
Amended Franchise Agreement.")
E. As of December 14, 1984, Love's, Alexander Jocic, Kwan Lee and
Joseph Dopico executed an Assignment and Assumption Agreement (the "1984
Assignment"), which had the effect of transferring certain rights under the
Franchise Agreement from Alexander Jocic to Kwan Lee and Joseph Dopico.
F. As of December 30, 1985, Love's, Kwan Lee and Joseph Dopico
executed an Amendment to Franchise Agreement (the "1985 Amendment.")
G. As of November 1, 1990, Love's, Kwan Lee and Joseph Dopico
executed an Amendment to Franchise Agreement (the "1990
<PAGE> 14
Amendment.), which had the effect of extending the term of the 1975 Amended
Franchise Agreement (as subsequently amended) to and including October 31,
1995, unless sooner terminated pursuant to the terms of the 1975 Amended
Franchise Agreement (as subsequently amended), Sublease and Equipment Lease.
Also as of November 1, 1990, the same parties executed an Amendment to Sublease
(which had the effect of extending the Sublease term to and including October
31, 1995) and executed an Amendment to Equipment Lease (which had the effect of
extending the Equipment Lease term to and including October 31, 1995.)
H. On October 8, 1993, Love's, Kwan Lee, Joseph Dopico, Zaks
Restaurant Management, Inc. ("Zaks"), Mohd Q. Kahn, M.D., William P. Liu and
Rasheed Z. Kahn executed a Consent to Assignment and Assumption Agreement (the
"1993 Assignment"), which had the effect of transferring certain rights under
the Franchise Agreement from Kwan Lee and Joseph Dopico to Zaks, Mohd Q. Kahn,
M.D., William P. Liu and Rasheed Z. Kahn.
I. Notwithstanding the fact that the 1975 Amended Franchise
Agreement (as subsequently amended) and the Equipment Lease are due to expire
at the end of October 31, 1995, Zaks, Mohd Q. Kahn, M.D., William P. Liu and
Rasheed Z. Kahn (Zaks, Mohd Q. Kahn, M.D., William P. Liu and Rasheed Z. Kahn
be jointly and individually referred to in this document as the "1995
Assignors") have, concurrently herewith, assigned their interests thereunder to
Zaks, Rasheed Z. Kahn and Meena Kahn. Such assignment is being accomplished by
separate instrument and as an independent transaction and is noted here merely
for convenience of the parties and completeness of documentation.
J. The Franchisees and Love's wish to extend the term of the 1975
Amended Franchise Agreement (as subsequently amended) and the Equipment Lease
(as subsequently amended), the Sublease being due to expire at the end of
October 31, 1995, and the Franchisees having made, or to make, separate
arrangements with the landlord for continued occupancy of the Restaurant,
Love's to have no responsibility or obligation with regard thereto or with
regard to occupancy by the Franchisees after October 31, 1995. In connection
therewith, the Franchisees and Love's wish to arrange for the payment of
certain amounts already owed to Love's and to enter into certain releases,
among other things.
K. The parties agree that, in the event of any inconsistency
between the provisions of this document and any of the foregoing documents (or
other documents or agreements prior to the date of this document), the
provisions of this document shall prevail.
Main Agreements:
1. Extension of Terms of Franchise Agreement and Equipment Lease.
The terms of the 1975 Amended Franchise Agreement (as subsequently amended) and
of the Equipment Lease (as subsequently amended) are hereby at, first extended
for one (1) year each and shall terminate at the end of 12/31/96; provided
that, subject to
14
<PAGE> 15
the provisions of this document, such terms shall be further automatically
extended for four (4) additional one-year terms each. Each of the four (4)
additional one-year extensions shall not require any notification or otherwise
(notwithstanding any provisions to the contrary in any other document) but
Love's may determine that extension will not be allowed based on the criteria
for non-renewal as set forth in the 1975 Amended Franchise Agreement (as
subsequently amended.) If Love's makes such determination, it need give the
Franchisees no more than 30 days notice thereof, but, where such default is
curable under the terms of the 1975 Amended Franchise Agreement, with
opportunity to cure as provided in the 1975 Amended Franchise Agreement (as
subsequently amended.) The terms of the 1975 Amended Franchise Agreement (as
subsequently amended) and of the Equipment Lease (as subsequently amended) may
only be extended together, i.e. the Franchisees may not elect to extend the
term of one document without also extending the term of the other. In any
event, the terms of the 1975 Amended Franchise Agreement (as subsequently
amended) and of the Equipment Lease (as subsequently amended) shall expire at
the end of December 31, 2000.
2. Conditions for Each Extension. The right of the Franchisees
to extend the terms of the 1975 Amended Franchise Agreement (as subsequently
amended) and of the Equipment Lease (as subsequently amended) are conditioned
on the Franchisees fully and timely observing each of their obligations under
this document (including all payment terms) and any other document signed by
them, as well as not being, at any time after October 31, 1995, in default of
any of their financial, operational or other obligations to Love's, whether
such obligations are cured or not. For example, if the Franchisees defaulted
by failing to pay an amount due to Love's on December 1, 1995, then (even if
such default was subsequently cured) the Franchisees' right to extend the terms
of the 1975 Amended Franchise Agreement (as subsequently amended) and of the
Equipment Lease (as subsequently amended) would be lost and the terms of the
1975 Amended Franchise Agreement (as subsequently amended) and of the Equipment
Lease (as subsequently amended) would cease as of the end of the next annual
period (October 31, 1996, in this example) and the terms would become
month-to-month, terminable by Love's at any time on 30 day's prior written
notice, unless Love's agrees otherwise in writing in its sole and absolute
discretion.
3. Ownership of Equipment. Conditioned on the Franchisees fully
and timely observing each of their obligations under this document (including
all payment terms) and any other document signed by them, as well as not being,
at any time after October 31, 1995, in default of any of their financial,
operational or other obligations to Love's, whether such obligations are cured
or not, on the termination of the 4th additional one year term of the Equipment
Lease (as subsequently amended), the items covered by the Equipment Lease (as
subsequently amended) will become the property of the Franchisees, "as is" and
without any warranties, express or implied (including, but not limited to, the
warranties of
15
<PAGE> 16
merchantability and/or fitness for a particular purpose), by Love's.
4. Reduction in Equipment Lease Payments. Conditioned on the
Franchisees fully and timely observing each of their obligations under this
document (including all payment terms) and any other document signed by them,
as well as not, being, at any time after October 31, 1995, in default of any of
their financial, operational or other obligations to Love's, whether such
obligations are cured or not, from January 1, 1996 through the termination of
the Equipment Lease (as subsequently amended), the weekly equipment lease
payment shall be reduced from $197.50 to $150.00, conditioned on the
Franchisees not having been, at any time during the period after October 31,
1995, in default of any of their financial, operational or other obligations to
Love's, whether such obligations are cured or not.
5. Payment of Outstanding Obligations. The Franchisees will pay,
or cause to be paid, to Love's, by cashier's or certified check, on or before
January 1, 1996, $18,025.19, together with any other indebtedness of
Franchisees and/or their assignors to Love's and all amounts necessary to make
the Franchisees and/or their assignors current as of October 31, 1995, on all
obligations to Love's, such amount being already contractually owed to Love's
by the Franchisees and/or their assignors in connection with their operation
and/or ownership of the Restaurant. Love's waives any termination rights
connected with any prior non-payment of such amount.
6. Release of Love's. The Franchisees, jointly and severally,
hereby release and forever discharge, indemnify and agree to hold harmless
Love's, all persons and entities controlling, controlled by, under common
control, affiliated and/or associated with it in any way, each of the
affiliates, subsidiaries, corporate parents and predecessors of any of the
foregoing, each of the owners, partners, stockholders, directors, officers,
employees, agents, representatives, attorneys, accountants of any of the
foregoing, and all persons acting by, through, under or in concert or
affiliated or associated in any way with any of the foregoing, (all of the
foregoing, including Love's, are collectively and individually referred to in
this document as the "Love's Entities") from and against any and all causes of
action, in law or in equity, suits, debts, liens, actual and/or alleged
defaults, liabilities, claims, demands, damages, losses, costs or expenses, of
any kind and/or nature whatsoever, howsoever arising, KNOWN OR UNKNOWN, fixed
or contingent, past or present, whether or not related to the 1975 Amended
Franchise Agreement (as subsequently amended), the Equipment Lease (as
subsequently amended) the Sublease, the Restaurant or otherwise, which the
Franchisees or any of them now have or may hereafter have against all or any of
the Love's Entities by reason of any matter, cause or thing whatsoever from the
beginning of time to the date hereof (the "Claims"), it being the mutual
intention of the parties that this release be unqualifiedly general in scope
and effect.
16
<PAGE> 17
THE FRANCHISEES AND EACH OF THEM, JOINTLY AND SEVERALLY, ACKNOWLEDGE
THAT EACH IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION
1542, WHICH PROVIDES AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."
THE FRANCHISEES AND EACH OF THEM, JOINTLY AND SEVERALLY, BEING AWARE
OF THIS CODE SECTION, HEREBY EXPRESSLY WAIVE ALL RIGHTS THEREUNDER AS WELL AS
UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT OF ANY
APPLICABLE JURISDICTION, INCLUDING BUT NOT LIMITED TO THOSE OF CALIFORNIA.
The Franchisees, jointly and severally, represent and warrant that
there has been, and there will be, no assignment or other transfer of any
interest in any Claims which any of them may have against any or all of the
Love's Entities, that any and all such Claims have been forever extinguished,
and the Franchisees, jointly and severally, agree to indemnify and forever hold
each and all of the Love's Entities harmless from any liability, claims,
demands, damages, losses, costs, expenses and/or attorney's fees incurred by
any of the Love's Entities as a result of any person asserting any such
assignment or transfer, or any rights or claims under such assignment or
transfer. It is the intention of the parties that this indemnity does not
require payment by any of the Love's Entities as a condition precedent to their
recovery against the Franchisees under this clause.
General Agreements:
7. No Attorney's Fees. Unless expressly provided otherwise in
this document, in the event of any legal action or proceeding with respect to
this document, the matters covered thereby (for example, to enforce any
arbitration award) or otherwise, which involves Love's, the Love's Entities
and/or the interests of Love's and/or the Love's Entities, each party will bear
their own legal costs.
8. Forum, WAIVER OF JURY TRIAL. Subject to the parties'
agreement below regarding binding arbitration of disputes, any litigation with
respect to this document, the matters covered thereby (for example, to enforce
any arbitration award) or otherwise, which involves Love's, the Love's Entities
and/or the interests of Love's and/or the Love's Entities, will take place in
Los Angeles County, California, or, if required, the Federal court nearest
thereto, the parties expressly consenting to the exclusive jurisdiction of such
court(s) and waiving their rights to conduct litigation of any nature in any
other forum. IN ANY ARBITRATION AND/OR LITIGATION INVOLVING LOVE'S, HE LOVE'S
ENTITIES AND/OR THE INTERESTS OF LOVE'S AND/OR THE LOVE'S ENTITIES, EACH OF THE
PARTIES WAIVES THEIR RIGHTS TO TRIAL BY JURY AND WAIVES ALL RIGHTS TO PUNITIVE,
EXEMPLARY, MULTIPLE, PAIN-AND-SUFFERING, MENTAL DISTRESS
17
<PAGE> 18
OR SIMILAR DAMAGES AND AGREES THAT EACH MAY ONLY RECOVER ACTUAL FINANCIAL
LOSSES.
9. Dispute Resolution. Including Mediation and MANDATORY BINDING
ARBITRATION.
(a) IN THE EVENT OF ANY DISPUTE INVOLVING LOVE'S, THE
LOVE'S ENTITIES OR ANY INTERESTS OF LOVE'S OR THE LOVE'S ENTITIES, WHETHER
RELATED TO THIS DOCUMENT, ANY FRANCHISE AGREEMENT OR OTHER AGREEMENTS, THE
TRANSACTION(S) REFERENCED OR CONTEMPLATED HEREIN, ANY TRANSACTIONS RELATED
THERETO AND/OR ANY OTHER DOCUMENTS, AGREEMENTS, UNDERSTANDINGS, TRANSACTIONS
AND/OR ANY OTHER MATTER (WHETHER RELATED OR OTHERWISE), SUCH DISPUTE WILL BE:
(1) FIRST, DISCUSSED IN A FACE-TO-FACE MEETING BETWEEN
EACH OF THE DISPUTANTS (OR, IF A DISPUTANT IS A CORPORATION OR
PARTNERSHIP, A PRINCIPAL OF THE DISPUTANT AUTHORIZED TO MAKE BINDING
COMMITMENTS ON BEHALF OF THE DISPUTANT), SUCH MEETING SHALL BE HELD AT
LOVE'S HEADQUARTERS AND WITH IN 30 DAYS AFTER ANY DISPUTANT GIVES
WRITTEN NOTICE OF THE DISPUTE.
(2) SECOND, IF, IN THE OPINION OF LOVE'S OR ANY DISPUTANT
PARTICIPATING IN SUCH MEETING, SUCH MEETING HAS NOT SUCCESSFULLY
RESOLVED SUCH MATTERS, AND IF DESIRED BY ANY PERSON OR ENTITY INVOLVED
IN THE CLAIM, SUBMITTED TO NON-BINDING MEDIATION FOR A MINIMUM OF 8
HOURS BEFORE (A) THE AMERICAN ARBITRATION ASSOCIATION (THE "AAA") OR
(B) ANY OTHER MEDIATION ORGANIZATION APPROVED BY ALL SUCH PERSONS
AND/OR ENTITIES OR (C) A MEDIATOR APPOINTED BY A COURT IF THE AAA
CANNOT CONDUCT SUCH MEDIATION AND THE PARTIES CANNOT AGREE ON A
MEDIATION ORGANIZATION. ON ELECTION BY ANY PARTY, ARBITRATION AND/OR
ANY OTHER REMEDY ALLOWED BY THIS AGREEMENT MAY PROCEED FORWARD AT THE
SAME TIME AS MEDIATION. IN THE MEDIATION, THE DISPUTANTS SHALL EACH
BE REPRESENTED BY AN INDIVIDUAL AUTHORIZED TO MAKE BINDING COMMITMENTS
ON THEIR BEHALVES AND MAY BE REPRESENTED BY COUNSEL. IN ADDITION, THE
DISPUTANTS MAY, WITH PERMISSION OF THE MEDIATOR, BRING SUCH ADDITIONAL
PERSONS AS ARE NEEDED TO RESPOND TO QUESTIONS, CONTRIBUTE INFORMATION
AND PARTICIPATE IN THE NEGOTIATIONS. THE FEES AND EXPENSES OF THE
MEDIATOR AND/OR MEDIATION ORGANIZATION SHALL BE SHARED EQUALLY BY THE
DISPUTANTS. THE MEDIATOR SHALL BE DISQUALIFIED AS A WITNESS,
CONSULTANT, EXPERT OR COUNSEL FOR ANY PARTY WITH RESPECT TO THE
DISPUTE AND ANY RELATED MATTERS.
(3) THIRD, IF NO SUCH PERSON OR ENTITY DESIRES MEDIATION
(OR IF SUCH MEDIATION IS NOT SUCCESSFUL IN RESOLVING SUCH CLAIM),
SUBMITTED TO AND FINALLY RESOLVED BY BINDING ARBITRATION BEFORE AND IN
ACCORDANCE WITH THE ARBITRATION RULES OF THE AMERICAN ARBITRATION
ASSOCIATION PURSUANT TO ITS COMMERCIAL ARBITRATION RULES. IN EACH
CASE, THE PARTIES TO ANY MEDIATION/ARBITRATION WILL EXECUTE
APPROPRIATE CONFIDENTIALITY AGREEMENTS, EXCEPTING ONLY SUCH PUBLIC
DISCLOSURES AND FILINGS AS ARE REQUIRED BY LAW.
18
<PAGE> 19
(b) ANY MEDIATION/ARBITRATION WILL BE CONDUCTED AT THE OFFICE OF
THE MEDIATING/ARBITRATING ORGANIZATION (OR ITS REPRESENTATIVES) WHICH IS
LOCATED CLOSEST TO LOVE'S HEADQUARTERS. EXCEPT AS EXPRESSLY PROVIDED OTHERWISE
IN THIS DOCUMENT, THE PARTIES TO ANY MEDIATION OR ARBITRATION WILL BEAR THEIR
OWN COSTS, INCLUDING ATTORNEY'S FEES. ANY CLAIM, AND ANY
MEDIATION/ARBITRATION, WILL BE CONDUCTED AND RESOLVED ON AN INDIVIDUAL BASIS
ONLY AND NOT ON A CLASS-WIDE, MULTIPLE PLAINTIFF OR SIMILAR BASIS. UPON
REQUEST OF ANY PARTY TO A CLAIM, THE ARBITRATOR MAY BE REQUIRED TO ISSUE A
WRITTEN AWARD, SPECIFYING THE FACTS FOUND AND THE LAW APPLIED, BUT THE PARTY SO
REQUESTING WILL BEAR THE FEES AND CHARGES INCURRED IN CONNECTION THEREWITH.
THE ARBITRATOR MAY ISSUE TEMPORARY RESTRAINING ORDERS, PRELIMINARY INJUNCTION,
INJUNCTIONS AND OTHER EQUITABLE AND/OR INTERIM RELIEF TO THE EXTENT REASONABLY
NECESSARY TO PRESERVE THE STATUS QUO (OR PREVENT IRREPARABLE INJURY) PENDING
FINAL RESOLUTION BY BINDING ARBITRATION OF A CLAIM, AS WELL AS IN CONNECTION
WITH ANY SUCH FINAL RESOLUTION, AND MAY ISSUE SUMMARY ORDERS DISPOSING OF ALL
OR PART OF A CLAIM AT ANY POINT. EACH PARTY CONSENTS TO THE ENFORCEMENT OF
SUCH ORDERS, INJUNCTIONS, ETC. BY ANY COURT HAVING JURISDICTION.
NOTWITHSTANDING ANY PROVISIONS OF STATE LAW TO THE CONTRARY, LOVE'S INTENDS TO
FULLY ENFORCE THE PROVISIONS OF THIS DOCUMENT AND OTHER DOCUMENTS, INCLUDING
ALL VENUE AND MEDIATION/ARBITRATION PROVISIONS, AND TO RELY ON FEDERAL
PREEMPTION UNDER THE FEDERAL ARBITRATION ACT (9 U.S.C. Section 1 ET SEQ.)
10. Entire Understanding. Excepting only any document(s)
contemporaneously signed by Love's:
This document contains the entire understanding between Love's (on the
one hand) and the Franchisees (on the other hand) and supersedes any prior
understandings and agreements between and/or among any of them respecting the
within subject matter and no representations, promises, guarantees, or
warranties of any kind are or have been made by Love's or anyone else to induce
the Franchisees to execute this document, except as specifically set forth in
writing in this document.
THERE ARE NO REPRESENTATIONS, WARRANTIES, AGREEMENTS, PROMISES,
CONTRACTS, COMMITMENTS, ARRANGEMENTS, OPTIONS, RIGHTS-OF-FIRST-REFUSAL, "SIDE
DEALS," UNDERSTANDINGS OR OTHERWISE, ORAL OR WRITTEN, AFFECTING OR RELATED TO
LOVE'S RELATING TO THE WITHIN SUBJECT MATTER WHICH ARE NOT FULLY EXPRESSED
HEREIN. THE FRANCHISEES HAVE NOT RELIED ON ANY REPRESENTATIONS, PROMISES,
UNDERSTANDINGS, AGREEMENTS OR OTHERWISE WHICH ARE NOT EXPRESSLY SET FORTH IN
THIS DOCUMENT, NOR DO THE FRANCHISEES HAVE ANY RESERVATIONS, NOR DO THERE EXIST
ANY CONTINGENCIES, WITH REGARD TO ANY OF THEIR OBLIGATIONS UNDER THIS DOCUMENT
OR ANY DOCUMENT CURRENTLY IN EXISTENCE OR TO BE EXECUTED. IF THE FRANCHISEES
BELIEVE THERE HAVE BEEN ANY REPRESENTATIONS, PROMISES, UNDERSTANDINGS,
AGREEMENTS OR OTHERWISE WHICH ARE NOT EXPRESSLY SET FORTH IN THIS DOCUMENT OR
THAT ANY OF THE FOREGOING IS NOT TRUE, CORRECT AND COMPLETE, THEY WILL MAKE A
WRITTEN STATEMENT REGARDING SUCH NEXT TO THEIR SIGNATURE.
19
<PAGE> 20
11. Severability. The invalidity or unenforceability of any
provision hereof as determined by an arbitrator or a court of competent
jurisdiction will in no way affect the validity or enforceability of any other
provision hereto.
12. Waiver. The failure of any party to seek redress for
violation of this document or to insist upon the strict performance of any
covenant or condition of this document will not prevent a subsequent act, which
would have originally constituted a violation, from having the effect of an
original violation. The rights and remedies provided by this document are
cumulative and the use of any one right or remedy by any party will not
preclude or waive its right to use any or all other remedies. Subject to the
provisions of the release(s) granted herein, these rights and remedies are
given in addition to any other rights and remedies the parties may have by law,
statute, ordinance or otherwise.
13. Heirs and Assigns. Each of the terms, covenants and
conditions of this document will extend to and be binding on and inure to the
benefit of not only the parties, but also each of their respective heirs,
representatives, executors, administrators, assigns, and successors in
interest. Whenever in this document reference is made to any party, the
reference will be deemed to include, whenever applicable, the heirs,
representatives, executors, administrators, assigns and successors in interest
of that party the same as if in every case expressed.
FRANCHISEES (jointly and severally): LOVE'S ENTERPRISES, INC.
/s/ By /s/
Rasheed Z. Khan (Individually)
/s/
Meena Kahn (Individually)
Zaks Restaurant Management, Inc.
By /s/
20
<PAGE> 1
EXHIBIT 10-39
WRIT LIMITED PARTNERSHIP
OFFICE BUILDING LEASE
THIS AGREEMENT OF LEASE is made this 23rd day of August, 1996, by and
between the WRIT Limited Partnership ("WRIT"), hereinafter called Landlord, and
United Restaurants, Inc. T/A Grand Havana Room, hereinafter called Tenant.
WITNESSETH:
ARTICLE I PREMISES
1.1 In consideration of the rent hereinafter reserved and of the
covenants hereinafter contained, Landlord hereby leases and demises to Tenant,
and Tenant hereby leases from Landlord. Suite(s) N/A, containing approximately
8298 square feet of rentable area measured in accordance with the WDCAR
Standard Method of Measurement (January 1, 1989), on the lower level (floor(s)
of the building located at 1220 19th Street, NW, Washington, DC 20006,
("Building") which space is hereinafter referred to as the Premises. The
foregoing approximately of square footage shall in no way affect the basic
annual rent hereunder should any variance be found to exist between the
approximation and the actual square footage. The Premises are identified on
Exhibit "A" which is attached hereto and incorporated herein for all purposes,
The lease of the Premises includes the right, together with other tenants of
the Building and members of the public, to use the common areas of the
Building, but includes no other rights not specifically set forth herein.
Landlord reserves the right to modify the size, location, arrangement, finish
and other features of the common areas of the Building.
ARTICLE II TERM
2.1 The Lease Term shall be for fifteen (15) year(s) and six (6)
month(s) ("Term"). The Lease Term shall commence on the date Landlord delivers
possession of the Premises to Tenant ("Lease Commencement Date"). It is
presently anticipated that the Premises will be delivered to Tenant on or about
August , 1996 ("Anticipated Occupancy Date"). If the Lease Commencement Date
is not the first day of a month, then the Lease Term shall be extended to
include the partial month in which the Lease Commencement Date occurs. The
date on which the Lease Term expires shall be the Lease Expiration Date.
2.2 If Landlord is unable to give possession of the Premises on or
about the Anticipated Occupancy Date by reason of the holding over or retention
of possession of any tenant or occupant, or if repairs, improvements or
decorations of the Premises, or of the Building of which the Premises form a
part, are not completed, or for any other reason, this Lease shall not be void
or voidable and
<PAGE> 2
Landlord shall not be subject to any liability for the failure to give
possession on the Anticipated Occupancy Date. Under such circumstances the
rent reserved and covenanted to be paid herein shall not commence until the
possession of the Premises is given or the Premises are available for occupancy
by Tenant, and no such failure to fie possession on the Anticipated Occupancy
Date shall in any other respect affect the validity of this Lease or the
obligations of Tenant hereunder, nor shall same to construed in any way to
extend the Lease Term. If permission is given to Tenant to possess the
Premises or to occupy premises other than the Premises prior to the Anticipated
Occupancy Date, Tenant covenants and agrees that such occupancy shall be deemed
to be under all the terms, covenants, conditions and provisions of this Lease.
2.3 Promptly after the Lease Commencement Date is ascertained,
Landlord and Tenant shall execute a certificate substantially in the form of
Exhibit C hereto and incorporated herein for all purposes affirming the Lease
Commencement Date and the Lease Expiration Date.
ARTICLE III RENT
3.1 Tenant agrees to pay during the term hereof a basic annual
rent of see attached rent schedule:
RENT SCHEDULE
<TABLE>
<CAPTION>
Months
<S> <C>
1-6 -0-
7-26 $14,166.67 per month
27-65 $15,416.67 per month
66-125 $16,666.67 per month
126-186 $19,166.67
</TABLE>
Tenant shall pay the first installment on the execution of this Lease and the
remaining installments in advance on the first day of each and every calendar
month during the Lease Term (commencing with the second month of the Term).
3.2 All rent payments shall be made payable to WRIT and delivered
to WRIT at 10400 Connecticut Avenue, Concourse Level, Kensington, Maryland
20895 or to such other person and place as Landlord may hereafter designate in
writing. Such rent payments shall be paid by check (subject to collection)
drawn on a member bank of the Federal Reserve System, Fifth District.
3.3 [Intentionally Omiteed]
2
<PAGE> 3
3.4 Tenant shall pay to Landlord as additional rent eight point
three four percent (8/34%) (being the stipulated proportion which the rentable
area of the Premises bears to the total rentable area of the Building) of the
increase in real estate taxes (including special assessments, if any, and any
other taxes now or hereafter imposed which are in the nature of or in
substitution for real estate taxes) levied on the Building and the land (the
"Land") on which the Building is situated over the "Base Real Estate Taxes."
For purposes hereof, the Base Real Estate Taxes are stipulated to be the amount
of real estate taxes actually incurred by Landlord with respect to the Building
and the Land during calendar year 1997.
(a) In the event that the actual real estate taxes for
any calendar year during the Term, commencing January 1, 1998, and thereafter,
exceed the Base Real Estate Taxes set out above, Tenant shall pay its
proportionate share of the increase in the real estate taxes for such year over
the Base Real Estate Taxes. Any increase payable by Tenant under this
provision shall be deemed additional rent.
(b) Prior to each January 1st during the Term, Landlord
shall provide Tenant a comparison of the Base Real Estate Taxes and the
projected real estate taxes for the coming year. Commencing each January 1st
during the Term, Tenant shall pay monthly as additional rent, one-twelfth
(1/12th) of Tenant's proportionate share of any projected increase in the
annual real estate taxes over the Base Real Estate Taxes. Landlord shall,
within ninety (90) days for as soon thereafter as possible) after the close of
each calendar year, provide Tenant a statement of such year's actual real
estate taxes, showing the actual increase, if any, in the real estate taxes
over the Base Real Estate Taxes. Within thirty (30) days after Tenant's
receipt of said statement, Tenant shall pay Landlord Tenant's proportionate
share of the excess, if any, of actual real estate taxes over the projected
real estate taxes. If the amount paid by Tenant during the previous year
exceeded tenant's share of actual real estate taxes for the year, Landlord
shall refund such excess to Tenant within thirty (30) days after delivery of
the said statement of such year's actual real estate taxes.
(c) Reasonable expenses incurred by Landlord in obtaining
or attempting to obtain a reduction of real estate taxes shall be added to and
included in the annual statement of real estate taxes. Real estate taxes which
are being contested by Landlord shall nevertheless be included for purposes of
the computation of the liability of Tenant under this Paragraphs provided, that
in the event that Tenant shall have paid any amount of additional rent pursuant
to Paragraph 3.4 and Landlord shall thereafter receive a refund of any portion
of the real estate taxes on which such payment was based. Landlord shall pay
to Tenant its proportionate share of such refund less any costs incurred in
obtaining same. Landlord shall have no obligation to contest, object to, or
litigate the levying or imposition of any real estate
3
<PAGE> 4
taxes and may settle, compromise, consent to, waive, or otherwise determine in
its discretion any real estate taxes without consent or approval of Tenant.
3.5 Tenant shall pay to Landlord as additional rent eight point
three four percent (8.34%) (being the stipulated proportion which the rentable
area of the Premises bears to the total rentable office area of the Building)
of the increase in Operating Expenses during the Term over Initial Operating
Expenses.
(a) "Operating Expenses," as that term is used herein,
shall, subject to the provisions of Addendum Provision No. 3, mean all
expenses, costs and disbursements (but not replacement of capital investment
items or specific costs billed to and paid by specific tenants) of every kind
and nature which Landlord shall pay or become obligated to pay because of or in
connection with the ownership, management, maintenance, repair and operation of
the building including, but not limited to, the following:
(i) Cost of wages and salaries of all employees
engaged in the operation and maintenance of the Building, including
taxes, insurance and benefits:
(ii) Cost of all supplies and materials used in the
operation, maintenance and repair of the Building;
(iii) Cost of all utilities (including surcharges)
including, but not limited to, water, sewer, electricity, heating,
lighting, air conditioning and ventilating for the Building, but
excluding electricity and any other utility separately paid for by
individual tenants;
(iv) Cost of all maintenance and service
agreements for the building and the equipment used therein including,
but not limited to, access control and energy management services,
window cleaning, elevator maintenance and janitorial service;
(v) Cost of insurance relating to the Building,
including, but not limited to, the cost of casualty and liability
insurance applicable to the Building and Landlord's personal property
used in connection therewith;
(vi) Cost of repairs and general maintenance
(excluding repairs and general maintenance paid for by the proceeds of
insurance, or by Tenant or third parties, and alterations attributable
solely to particular tenant spaces within the Building;
(vii) Cost of repairs and general maintenance
(excluding repairs and general maintenance paid for by the proceeds of
insurance, or by Tenant or third parties, and alterations attributable
solely to particular tenant spaces within the Building);
4
<PAGE> 5
(viii) A management fee of three percent (3%) of the
gross revenues of the building;
(ix) Cost of any additional services not provided
to the Building at the Lease Commencement Date, but thereafter
provided by Landlord in the prudent management of the Building;
(x) Cost of audit and accounting services;
(xi) Cost of any capital improvements made to the
Building after the Lease Commencement Date that, in Landlord's
reasonable judgment are intended to reduce other operating expenses or
are required under any governmental law or regulation, that was not
applicable to the Building at the Lease Commencement Date, such cost
thereof to be amortized over the useful life thereof at Landlord shall
reasonably determined; provided, however, that costs of complying with
the requirements of the Americans with Disabilities Act of 1990 and
its implementing regulations applicable to the common areas of the
Building or the structure thereof, shall not be included in Operating
Expenses.
(b) Operating Expenses shall not include the following:
(i) costs of capital improvements other than as set
forth in clause (x) above;
(ii) ground rent and interest on and amortization
of mortgages;
(iii) Landlord's income, excise or franchise taxes;
(iv) salaries of Landlord's employees not engaged
in the operation, management, maintenance or repair of the Building;
(v) legal fees incurred in connection with the
leasing of the Building or in connection with disputes with other
tenants relating to the collection of rent and similar matters not
benefitting the tenants of the Building generally;
(vi) leasing commissions, advertising expenses and
other such expenses incurred in leasing or marketing the space within
the Building.
(vii) the portion of electricity and other
utilities, directly attributable to the (but not the common areas of
the Building) for which tenant pays directly.
(c) Operating Expenses for each calendar year shall be
those actually incurred, provided however, that (i) if the Building was not at
least ninety percent (90%) occupied during the entire calendar year, the
Operating Expenses shall be adjusted to project
5
<PAGE> 6
the Operating Expenses as if the Building were ninety percent (90%) occupied,
and (ii) Landlord shall bear the percentage of Operating Expenses allocable to
unleased space within the Building.
(d) For purposes hereof, the Initial Operating Expenses
are stipulated to be the amount of Operating Expenses actually incurred by
Landlord during calendar year 1997.
(e) In the event that the actual Operating Expenses for
any calendar year during the Term, commencing January 1, 1998 and thereafter,
exceed the Initial Operating Expenses set out above, Tenant shall pay its
proportionate share of the increase in Operating Expenses for such year over
the Initial Operating Expenses. Any increase payable by Tenant under this
provision shall be deemed additional rent.
(f) Prior to each January 1st during the Term, Landlord
shall provide Tenant a comparison of the Initial Operating Expenses and the
projected Operating Expenses for the coming year. Commencing each January 1st
during the Term, Tenant shall pay monthly as additional rent, one twelfth
(1/12th) of Tenant's proportionate share of any projected increase in the
Operating Expenses over the Initial Operating Expenses. Landlord shall, within
ninety (90) days (or as soon thereafter as possible) after the close of each
calendar year, provide Tenant a statement of such year's actual Operating
Expenses, showing the actual increase, if any, in Operating Expenses over the
Initial Operating Expenses. Within thirty (30) days after Tenant's receipt of
said statement, Tenant shall pay Landlord Tenant's proportionate share of the
excess, if any, of actual Operating Expenses over the projected Operating
Expenses. If the amount paid by Tenant during the previous year exceeded
Tenant's share of actual Operating Expenses for the year, Landlord shall refund
such excess to Tenant promptly.
3.6 Should this lease commence or terminate at any time other than
the last day of a calendar year, the amounts due as additional rent pursuant to
Paragraphs 3.31 and 3.32 for the commencement or termination year only shall be
prorated by the following fraction.
Days Under Lease
365
3.7 Tenant at its expense shall have the right during Landlord's
business hours to examine Landlord's books and records relating to the
Operating Expenses and real estate taxes of the Building for any year or years
for which additional rent becomes due; or, at Landlord's sole discretion.
Landlord will provide Tenant with an audited statement.
3.8 Tenant's obligation to pay the amounts due as additional rent
pursuant to Paragraphs 3.4 and 3.5 during the Term shall survive any expiration
or termination of this Lease by lapse of time or otherwise.
6
<PAGE> 7
3.9 The term "Lease Year" shall mean each period of twelve (12)
consecutive months commencing on the Lease Commencement Date, except that if
the Lease Commencement Date is not the first day of a month, then the first
Lease Year shall commence on the Lease Commencement Date and shall continue for
the balance of the month in which the Lease Commencement Date occurs and for a
period of twelve (12) calendar months thereafter and subsequent Lease Years
shall commence on the day following the last day of the preceding Lease Year.
3.10 If the Lease Term begins on other than the first day of a
month, basic annual rent from such date until the first day of the next month
shall be prorated on the basis of the actual number of days in such month and
shall be payable in advance.
3.11 All costs and expenses other than basic annual rent which
Tenant assumes or agrees to pay to Landlord pursuant to this Lease shall be
deemed to be "additional rent" and, in the event of nonpayment: thereof,
Landlord shall have the rights and remedies provided for in the event of
nonpayment of rent, including arrangement of interest and . If such
amounts of charged are not paid at the time provided in this Lease, they shall
nevertheless, if not paid when due, be collectable as additional rent with the
next installment of monthly rent thereafter falling due hereunder, but nothing
herein contained shall be deemed to suspend or delay the payment of any amount
of money or charge at the time the same becomes due and payable hereunder, or
limit any other remedy of Landlord. Basic annual rent and additional rent are
sometimes referred to collectively herein as "rent".
3.12 Tenant agrees to pay to Landlord, as additional rent, a late
fee equal to five percent (5%) of any amount due for monthly rent or other
payments due hereunder if said payments have not been received by Landlord
within five (5) days of the due date. In addition, if Landlord does not
receive such payment within thirty (30) days of such payment's due date, then
such payment and late charge shall bear interest at the rate per annum equal to
the greater of (a) eighteen percent (18%) per annum; provided, however, such
rate is not usurious or (b) the highest non-usurious rate permitted under the
laws of the jurisdiction where the Building is located from the date such
payment was due to the date of payment thereof. Such late charge and interest
shall constitute additional rent due hereunder, shall be paid with the next
monthly installment of basic annual rent coming due hereunder, shall constitute
agreed liquidated damages and not penalties, and shall be in addition to, and
not in lieu of, all other rights and remedies provided to Landlord in this
Lease, at law, or in equity.
ARTICLE IV TENANT'S TAXES
4.1 In the event that any business, rent or other taxes, or any
governmental charges that are now or hereafter levied upon Tenant's use or
occupancy of the Premises or Tenant's business at the Premises are enacted,
changed or altered so that any of such
7
<PAGE> 8
taxes are levied against Landlord, or the mode of collection of payment of such
taxes, Tenant shall pay any and all such taxes to Landlord upon written demand
from Landlord.
ARTICLE V SECURITY DEPOSIT
5.1 Tenant agrees to pay to Landlord at the signing of this Lease
eighteen thousand six hundred seventy and 50/100 Dollars ($18,670.50)
("Security Deposit") as security for compliance with the terms of this Lease.
Upon the occurrence of any default by Tenant, Landlord may, from time to time
in its sole discretion, without prejudice to any other remedy, use and apply
the Security Deposit to the extent necessary to make good any arrearage of rent
and any other damage, injury, expense or liability suffered by Landlord by such
default. Following any such application of the Security Deposit, Tenant shall
pay to Landlord on demand as additional rent the amount so applied in order to
restore the Security Deposit to its original amount. Within approximately
forty-five (45) days after the Lease Expiration Date and after the Premises
have been timely vacated in good order and repair and inspected and the keys
returned to Landlord, then Landlord shall return said Security Deposit to
tenant, without interest, less such portion of the Security Deposit as Landlord
shall have used to satisfy Tenant's obligations under this Lease. If Landlord
transfers the Security Deposit to any transferee of the Building or Landlord's
interest therein, then said transferee shall be liable to Tenant for the return
of the Security Deposit, and Landlord shall be released from all liability for
the return of the Security Deposit. The holder of any mortgage shall not be
liable for the return of the Security Deposit unless such holder actually
receives the Security Deposit.
[ARTICLE VI - INTENTIONALLY OMITTED]
ARTICLE VII ENVIRONMENTAL COVENANTS
7.1 Tenant, its employees, agents, contractors and invitees shall,
at Tenant's own expense, comply with all Environmental Laws, a herein defined,
in connection with its use and occupancy of the Premises and shall obtain,
maintain and comply with all necessary environmental permits, approvals,
registrations and licenses.
7.2 Tenant, its employees, agents, contractors and invitees shall
not use, generate, release, manufacture, treat, refine, produce, process,
store, dump or dispose of any Hazardous Substance, as herein defined, on,
under, or about the Premises or the Building, or transport to or from the
Premises any Hazardous Substance except normal restaurant products, which
products shall be used, stored and disposed of in accordance with all
Environmental Laws.
7.3 Tenant shall, at Tenant's own expense, make all submissions
to, provide all information required by, and comply with all requirements of
all governmental authorities (the
8
<PAGE> 9
"Authorities" of "Authority") under the Environmental Laws. Tenant shall
provide Landlord with copies of any environmental audit prepared by or for
Tenant with respect to the Premises and any report(s) or filing(s) made by
Tenant with any Authority.
7.4 Should Landlord, any Authority or any third party demand that
a clean-up plan be prepared and that a clean-up be undertaken because of any
deposit, spill, discharge, or other increase of Hazardous Substances that
occurs as a result of Tenant's use or occupancy of the Premises, then Tenant
shall, at Tenant's own expense, prepare and submit to Landlord and any
applicable Authority the required plans and all related bonds and other
financial assurances, and Tenant shall carry out all such clean-up plans
following their approval by Landlord and all applicable Authorities.
7.5 Tenant shall promptly provide all information regarding the
use, generation, storage, transportation, or disposal of Hazardous Substances
that is requested by Landlord. If Tenant fails to fulfill any duty imposed
under this Article VI within ten (10) days, Landlord may fulfill such duty on
behalf of Tenant, at Tenant's cost and expense; and in such case, Tenant shall
cooperate with Landlord in other to prepare all documents Landlord deems
necessary or appropriate to determine the applicability of the Environmental
Laws to the Premises and Tenant's use thereof, and for compliance therewith,
and Tenant shall execute all documents promptly upon Landlord's request. No
such action by Landlord and no attempt made by Landlord to mitigate damages
under any Environmental Law shall constitute a waiver of any of Tenant's
obligations under this Article VI.
7.6 Landlord shall have the right, but not the obligation, at all
times during the Lease Term to (1) inspect the Premises; (2) enter upon the
Premises to conduct tests and investigations and take samples to determine
whether Tenant is in compliance with the provisions of this Article VI, or as
otherwise necessary; and (3) request lists of all Hazardous Substances used,
stored or located on the Premises. The cost of all such inspections, tests and
investigations shall be borne by Tenant.
7.7 Tenant's obligations and liabilities under this Article VI
shall survive the expiration or early termination of the Lease. For purposes
of this Article VI, the Building shall include the Land (as defined in Section
10.1 hereof).
7.8 Tenant shall indemnify, defend, protect and hold harmless
Landlord, the manager of the Building, and their respective officers,
directors, trustees, beneficiaries, shareholders, partners, agents and
employees from all fines, suits, procedures, claims, and actions of every kind,
and all costs associated therewith (including without limitation, attorneys'
and consultants' fees and the costs of investigation and settlement of any
claims) arising out of or in any way connected with (1) any deposit, spill,
discharge or other release of Hazardous Substances
9
<PAGE> 10
which arises at any time from Tenant's, its employees' agents', contractors',
or invitees' use or occupancy of the Premises or the Building; (2) any failure
to provide all information, make all submissions and take all steps required by
all Authorities under the Environmental Law; and (3) Tenant's its employees',
agents', contractors', or invitees' breach of this Article VI, whether or not
Tenant has acted negligently with respect to such Hazardous Substances.
7.9 As used in this Article VI, the term "Hazardous Substances"
means:
(a) any substance designated pursuant to Section
311(b)(2)(A) of the Federal Water Pollution Control Act:
(b) any element, compound, mixture, solution or substance
designated pursuant to Section 102 of the Comprehensive Environmental Response,
Compensation and Liability Act;
(c) any hazardous waste having the characteristics
identified under or listed pursuant to Section 3001 of the Solid Waste Disposal
Act;
(d) any toxic pollutant listed under Section 307(a) of
the Federal Water Pollution Control Act;
(e) any hazardous air pollutant listed under Section 112
of the Clean Air Act;
(f) any imminently hazardous chemical substance or
mixture with respect of which the Administrator of the United States
Environmental Protection Agency has taken action pursuant to Section 7 of the
Toxic Substances Control Act; and
(g) any substance, waste or other material considered
hazardous, dangerous or toxic under any state, local or federal law, code,
ordinance or regulation.
7.10 The term "Hazardous Substances" also includes petroleum and
petroleum products, including crude oil or any fraction thereof, which is not
specifically listed or designated as a Hazardous Substance under subsection
7.9(a) through (g) of this Article VI, as well as natural gas, natural gas
liquids, liquified natural gas and synthetic gas usable for fuel and mixtures
of natural gas and such synthetic gas.
7.11 As used in this Article VI, the term "Environmental Laws"
shall mean and refer to the entirety of the federal acts, portions of which are
referenced in Section 7.9, and all other federal and all state and local laws,
codes, ordinances, rules regulations, and directives governing the discharge,
emission or disposal of any pollutant in, to or from the Premises or the
Building or other premises or the environmental and prescribing methods for
storing, handling or otherwise managing Hazardous Substances and wastes
10
<PAGE> 11
including, but not limited to, the then current versions of the following
federal statutes, their state analogs, and the regulations implementing them:
the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.),
the Comprehensive Environmental Response, Compensation and Liability Act (42
U.S.C. Section 9601 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et
seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), and the Toxic
Substances Control Act (15 U.S.C. Section 2601 et seq.).
ARTICLE VIII MAINTENANCE OF PREMISES BY TENANT
8.1 Tenant shall not in any manner deface or injure the Premises
or the Building and will, subject to Addendum Provision No. 8, pay the cost of
repairing any damage or injury done to the Premises or the Building or any part
thereof by Tenant or Tenant's employees, agents, contractors or invitees.
Tenant agrees that it will keep the Premises and the fixtures therein in clean,
safe, sanitary and good order and condition and will, at the expiration or
other termination of the Term hereof, remove all goods and effects not the
property of Landlord and surrender and deliver up the same broom clean to
Landlord, including keys, locks and other fixtures connected therewith, in like
good order and condition as the same now is or shall be at the commencement of
the Lease Term, ordinary wear and tear and damage by the elements, fire, and
other unavoidable casualty excepted.
8.2 Maintenance and repair of equipment such a kitchen, fixtures,
separate air conditioning equipment, or any other type of special equipment,
whether installed by Tenant or by Landlord on behalf of Tenant, shall be the
sole responsibility of Tenant and Landlord shall have no obligation in
connection therewith.
8.3 In the event a balcony is part of the Premises, Tenant agrees
to keep the balcony in clean, safe, sanitary and broom-clean condition. Tenant
shall not place or put any furniture or other items on the balcony without
Landlord's prior written consent. In the event Tenant fails to obtain
Landlord's prior written consent, Landlord shall have the right to remove all
such furniture or other items not approved by Landlord. Tenant shall not use
the balcony for cooking purposes. Landlord shall have no liability for any
person or any furniture or other item which may fail from the balcony.
ARTICLE IX LANDLORD SERVICES
9.1 Landlord covenants and agrees that it will without additional
charge, furnish: water which is submetered and charged back to Tenant; elevator
services.
9.2 It is agreed that Landlord shall not be liable in any way for
any failure to furnish or in any way for any damage or inconvenience caused by
the cessation or interruption of such heating, air conditioning, electricity,
elevator, janitor or car services caused by fire accidents, strikes,
breakdowns, necessary
11
<PAGE> 12
maintenance, alterations, repairs, scarcity of labor or materials, acts of God
or any other causes. It is further agreed that any such failure or inability
to furnish the utilities or services required hereunder shall not be considered
an eviction, actual or constructive, of Tenant from the Premises, and shall not
entitle Tenant to terminate this Lease or to an abatement of rent payable
hereunder. If such failure to provide services continues for five (5)
consecutive days following notice from Tenant to Landlord and the restaurant
must close for this reason only, Tenant shall be entitled to an abatement of
rent until such services are repaired.
ARTICLE X LIABILITY OF LANDLORD
10.1 Landlord, its employees and agents shall not be liable to
Tenant, its employees, agents, invitees or any other person or entity claiming
through Tenant for any damage (including indirect and consequential damage),
injury, loss or claim (including claims for the interruption of or loss of
business) based on or arising out of any cause whatsoever including without
limitation the following: (a) repair to any portion of the Premises or the
Building; (b) interruption in the use of the Premises or any equipment therein;
(c) any accident or damage resulting from any use or operation (by Landlord,
Tenant or any other person or entity) of elevators or heating, cooling,
electrical, sewerage or plumbing equipment or apparatus; (d) termination of
this Lease by reason of damage to the Premises or the building; (e) fire,
robbery, theft, vandalism, mysterious disappearance or any other casualty; (f)
actions of any other tenant of the Building or of any other person or entity;
(g) failure or inability of Landlord to furnish any utility or service
specified in this Lease; and (h) leakage in any part of the Premises or the
Building, or from water, rain, ice or snow that may leak into, or flow from,
any part of the Premises or the Building, or from drains, pipes or plumbing
fixtures in the Premises or the Building. All personal property stored or
placed by tenant or its employees, agents, invitees or any other person or
entity claiming through Tenant in or about the Premises or the Building shall
be at the sole risk of Tenant, and Landlord shall not in any manner be held
responsible therefor. Landlord shall not be liable in damages, nor shall this
Lease be affected, for conditions arising or resulting from, and which may
affect the Building of which the Premises are a part, construction of
contiguous premises. Landlord assumes no liability or responsibility
whatsoever with respect to the conduct and operation of the business to be
conducted in the Premises. For purposes of this Section, the term "Building"
shall be deemed to include the land on which the Building is located ("Land").
Notwithstanding the foregoing, Landlord shall not be released from liability to
Tenant for any physical injury to any natural person caused solely by
Landlord's, or its employees' or agents' gross negligence or willful misconduct
except to the extent covered by Article XVIII of this Lease.
10.2 Tenant and Landlord shall indemnify and hold the other, its
employees and agents harmless from and against all costs,
12
<PAGE> 13
damages, claims, liabilities, fines, suits, expenses and damages of any kind
(including without limitation attorneys' fees and the costs of investigation
and settlement of any claims) asserted by or on behalf of any person, entity or
governmental authority against the other, directly or indirectly, based on or
arising out of (a) Tenant's use and occupancy of the Premises or the business
conducted by Tenant or Landlord, as the case may be therein, (b) any act or
omission of Tenant or Landlord or any employee, agent, or invitee of Tenant in
or on the Premises, and or any accident, injury or damage whatsoever to any
person, or the property of any person, occurring in or on the Premises unless
the same was caused by the sole gross negligence or willful misconduct of
Landlord or Tenant, its employees or Agents.
10.3 If any Landlord hereunder transfers the Building or such
landlord's interest therein, then such landlord shall not be liable for any
obligation or liability based on or arising out of any event or condition
occurring on or after the date of such transfer.
10.4 Tenant shall not have the right to offset or deduct the amount
allegedly owed to Tenant pursuant to any claim against Landlord from any rent
or other sum payable to Landlord. Tenant's sole remedy for recovering upon
such claim against Landlord shall be to institute an independent action against
Landlord. Tenant shall not seek the consolidation of any such action brought
by Tenant with any action brought by Landlord hereunder.
ARTICLE XI SIGNS
11.1 Tenant further agrees that (a) no signs, advertisements or
notices shall be inscribed, painted or affixed on any part of the outside or
inside of the Premises or Building, except on the directories and doors of
offices, and then only in such size, color and style as Landlord shall approve;
(b) Landlord has the right to prohibit any advertisement of Tenant which in
Landlord's opinion tends to impair the reputation of the Building or its
desirability as a Building for offices or for financial, insurance or other
institutions and businesses of like nature, and upon written notice from
Landlord, Tenant shall refrain from and discontinue such advertisement; (c) if
any such sign or advertisement is nevertheless exhibited by Tenant, Landlord
shall have the right to remove the same and Tenant shall be liable for any and
all expenses incurred by Landlord in said removal; (d) Landlord shall have the
right to prescribe the weigh and method of installation and position of safes
or other heavy fixtures or equipment and Tenant will not install in the
Premises any fixtures, equipment or machinery that will place a load upon any
floor exceeding the floor load per square foot area which such floor was
designed to carry; and (e) all damage done to the Building by taking in or
removing a safe or any other article of Tenant's office equipment, or due to
its being in the Premises, shall be repaired at the expense of Tenant. No
freight, furniture or other bulky matter of any description will be received
into the Building or carried in the elevators, except as approved by Landlord.
All moving of
13
<PAGE> 14
furniture, material and equipment shall be under the direct control and
supervision of Landlord who shall, however, not be responsible for any damage
to or charges for moving same. Tenant agrees promptly to remove from the
public area adjacent to the Building any of Tenant's merchandise there
delivered or deposited. Tenant hereby agrees to purchase a door sign in
accordance with Landlord's sign specifications. Notwithstanding the foregoing,
Landlord recognizes Tenant's desire for retail signage and Tenant recognizes
Landlord's desire to maintain the Building's first class image. Tenant shall
submit, for Landlord's approval, a detailed Signage Program. Said Signage
Program shall also be subject to all codes and ordinances of the District of
Columbia and shall not exceed its pro rata share of all retail signage for the
building.
ARTICLE XII ALTERATIONS
12.1 Tenant accepts the Premises in its "AS IS" condition.
Landlord is under no obligation to make any structural or other Alterations,
decorations, additions, improvements, renovations or other changes
(collectively "Alterations") in or to the Premises except as set forth in
Exhibit D or otherwise expressly provided in this Lease.
12.2 Tenant will not make any Alterations, structural or otherwise,
in or to the Premises or any part thereof nor install any equipment of any kind
that will require any Alterations or additions to the use of the water system,
heating system, air conditioning system, ventilation system, electrical system
or plumbing system, without the prior written consent of Landlord. Any
Alterations made by tenant shall be made: (a) in a good, workmanlike
first-class and prompt manner; (b) using new materials only; (c) by a
contractor and in accordance with plans and specifications approved in writing
by Landlord; (d) in accordance with all applicable legal requirements and
requirements of any insurance company insuring the Building or any portion
thereof, including, but not limited to, compliance with Title III of The
Americans with Disabilities Act of 1990, as amended; and (d) after Tenant has
obtained and delivered to Landlord written, unconditional waivers of mechanics'
and materialmen's liens against the Premises and the Building from all proposed
contractors, subcontractors, laborers and material suppliers for all work and
material in connection with such Alterations.
12.3 It is distinctly understood that all Alterations, including
wall to wall carpeting, upon the Premises (whether with or without Landlord's
consent), shall, at the election of Landlord, remain upon the Premises and be
surrendered with the Premises at the expiration of this Lease without
disturbance, molestation or injury. Tenant will not use any floor adhesive in
the installation of any carpeting. Should Landlord elect that Alterations upon
the Premises be removed upon termination of this Lease or upon termination of
any renewal period hereof. Tenant hereby agrees to cause same to be removed at
Tenant's sole cost and expense and should tenant fail to remove the same, then
and in such event
14
<PAGE> 15
Landlord may cause same to be removed at Tenant's expense and Tenant hereby
agrees to reimburse Landlord for the cost of such removal together with any
and all damages which Landlord may suffer and sustain by reason of the failure
of Tenant to remove the same.
ARTICLE XIII SUBLETTING AND ASSIGNMENT
13.1 Tenant shall not assign this Lease or any of Tenant's rights
or obligations hereunder, or sublet or permit anyone to occupy the Premises or
any part thereof, without Landlord's prior written consent, which consent shall
not be unreasonably withheld, conditioned or delayed. No assignment or
transfer of this Lease may be affected by operation of law or otherwise without
Landlord's prior written consent. The consent of Landlord to any assignment or
subletting shall not be construed as a waiver or release of Tenant from
liability for the performance of all covenants and obligations to be performed
by tenant under this Lease. The transfer, whether a single transfer or
multiple transfers, of fifty percent (50%) or more of the ownership interests
of Tenant within a twelve (12) month period shall be deemed equivalent to an
assignment or subletting requiring consent of Landlord, provided there is no
single ownership entity or related entity which then owns more than 50% of
Tenant. Any attempted assignment or subletting made without Landlord's consent
shall at the option of Landlord be deemed an Event of Default under this Lease
if not cured within thirty (30) days after notice from Landlord. Landlord's
acceptance or collection of rent from any assignee, subtenant or occupant shall
not be construed (a) as a consent to or acceptance of such assignee, subtenant
or occupant as a tenant, (b) as a waiver by Landlord of any provision hereof,
(c) as a waiver or release of Tenant from liability for the performance of any
obligation to be performed under this Lease by Tenant, or (d) as relieving
Tenant or any assignee, subtenant or occupant from the obligation of obtaining
Landlord's prior written consent to any subsequent assignment, subletting or
occupancy. Tenant hereby assigns to Landlord any rent due from any assignee,
subtenant or occupant of Tenant as security for Tenant's performance of its
obligations pursuant to this Lease; provided, however, Tenant shall have the
right to collect such rent as long as Tenant is not in default under the terms
of this Lease beyond any applicable notice and cure period. Tenant authorizes
each such assignee, subtenant or occupant to pay such rent directly to Landlord
if such assignee, subtenant or occupant receives written notice from Landlord
specifying that such rent shall be paid directly to Landlord. In the event of
default by any assignee of Tenant or any successor of Tenant in the performance
of any of the terms hereof, Landlord may proceed directly against Tenant
without the necessity of exhausting remedies against such assignee or
successor. Landlord may consent to subsequent assignments or subletting of
this Lease or amendments or modifications to this Lease with assignees of
Tenant, without notifying Tenant, or any successor of Tenant, and without
obtaining its or their consent thereto and such action shall not relieve Tenant
of liability under this Lease. Tenant shall not mortgage this Lease without
Landlord's consent, which consent may be granted
15
<PAGE> 16
or withheld in Landlord's reasonable discretion. All restrictions and
obligations imposed pursuant to this Lease on Tenant shall be deemed to extend
to any subtenant, assignee or occupant, or Tenant, and Tenant shall cause such
persons to comply with all such restrictions and obligations. Tenant shall pay
to Landlord a Three Hundred and no/100 Dollar ($300.00) processing fee as well
as expenses (including reasonable attorneys' fees) incurred by Landlord in
connection with Tenant's request for Landlord to give its consent to any
assignment, subletting, occupancy or mortgage, whether or not Landlord consents
thereto.
13.2 A corporate Tenant may, upon notice to Landlord, assign this
Lease to its parent or subsidiary, provided the same assignee assumes, in full,
the obligations of Tenant under this Lease or may sublease the Premises to any
such parent or subsidiary, and such assignment or sublease shall not, relieve
Tenant of its obligations hereunder. Sections 13.4 and 13.6 shall not be
applicable to any transfer made pursuant to this Section 13.2.
13.3 If at any time Tenant intends to assign, sublet or otherwise
transfer all or part of the Premises or this Lease, then tenant shall give
written notice to Landlord ("Sublease Proposal Notice") of the area proposed to
be assigned or sublet (the "Proposed Sublet Space") and the term for which
Tenant desires to sublet the Proposed Sublet Space, the name of the proposed
subtenant or assignee and such other information as Landlord shall reasonably
request.
13.4 After receipt of Tenant's Sublease Proposal Notice, Landlord
shall also have the right, in its sole and absolute but reasonable discretion,,
in addition to Landlord's rights in Section 13.1, to elect: (a) to consent to
the proposed sublease or assignment (including the character of a Sub-tenant),
(b) to reject the proposed sublease or assignment, or (d) to terminate this
Lease with respect to the Proposed Sublet Space except that, if Tenant is to
assign this Lease to an operator which intends to operate the restaurant under
the same concept and menu as the Grand Havana Room for a period of one year,
then Landlord shall not be permitted to terminate this Lease in accordance with
13.4(d) herein but its consent to such an assignment shall be required and
shall not be unreasonably withheld. If, within the first year following the
assignment the use shall change, or if the operation shall close during the one
year period following the assignment, Landlord shall have the right to
terminate this Lease in accordance with 13.4(d) herein on thirty (30) days
written notice. Landlord shall exercise such right by sending Tenant written
notice within twenty (20) days after Landlord's receipt of the Sublease
Proposal Notice. If the Proposed Sublet Space does not constitute the entire
Premises and Landlord elects to terminate this Lease with respect to the
Proposed Sublet Space, then (1) Tenant shall tender the Proposed Sublet Space
to Landlord on a date specified in Landlord's notice (which date shall not be
more than sixty (60) days after the date of such notice) as if such specified
date had been originally set forth in this Lease as the Expiration Date of the
Lease Term with
16
<PAGE> 17
respect to the Proposed Sublet Space, and (2) as to all portions of the
Premises other than the Proposed Sublet Space, this Lease shall remain in full
force and affect except that the basic annual rent payable pursuant to Article
III shall be reduced pro rata. Tenant shall pay all expenses of construction
required to permit the operation of the Proposed Sublet Space separate from the
balance of the Premises. If the Proposed Sublet Space constitutes the entire
Premises and Landlord elects to terminate this Lease, then (1) Tenant shall
tender the Premises to Landlord on a date specified in Landlord's notice (which
date shall not be more than sixty (60) days after the date of such notice), and
(2) the Lease Term shall terminate on such specified date. Notwithstanding
anything to the contrary in the foregoing provisions of this Section 13.4,
Landlord shall not have the right to sublease the Proposed Sublet Space or to
terminate this Lease with respect to the Proposed Sublet Space in the event
Landlord consents to an assignment of this Lease to a corporation or other
business entity into or with which Tenant shall be merged or consolidated, or
to which substantially all of the assets of Tenant may be transferred, provided
that such successor entity has assumed in writing all of the obligations and
liabilities of Tenant under this Lease.
13.5 In the event Landlord does not exercise its rights to
terminate this Lease with respect thereto, Tenant shall be entitled to seek
Landlord's consent to an acceptable assignee or subtenant for the Proposed
Sublet Space, for a sublease term no longer than that set forth in the Sublease
Proposal Notice. Such consent not to be unreasonably withheld, conditioned or
delayed. Such consent or permission pursuant to Section 13.1 may be withheld
if (a) the subtenant or assignee is of a character or engaged in a business
which is not in keeping with the standards of Landlord for the Building, (b)
the Proposed Sublet Space is not regular in shape with appropriate means of
ingress and egress and suitable for normal renting purposes, (c) in the
reasonable judgment of Landlord, the assignee or sublease does not have the
financial capacity to undertake the obligations of this Lease or the Sublease,
or (d) such a sublease or assignment would violate any term or condition of any
covenant or agreement of Landlord involving the Building, or any other tenant
lease within the Building. IN the event such Assignment or Sublease for the
assignee or subtenant designated in Tenant's Sublease Proposal Notice (which
assignment/sublease and assignee/subtenant are acceptable to and approved by
Landlord) has not been executed by Tenant submitted for within one hundred
fifty (150) days from the date of Tenant's Sublease Proposal Notice. Tenant
shall not be entitled to enter into such assignment or sublease without first
submitting a new Sublease proposal Notice to Landlord and affording Landlord an
opportunity to exercise its rights as set forth in Section 13.4, including its
subletting or termination rights.
13.6 If any sublease, assignment or other transfer (whether by
operation of law or otherwise and whether consented to or not) provides that
the subtenant, assignee or other transferee is to pay any amount in excess of
the rent and other charges due under this
17
<PAGE> 18
Lease (except rent, or other payments received which are attributable to the
amortization of the cost of leasehold improvements made to the sublet or
assigned portion of the Premises by Tenant for the subtenant or assignee, and
other reasonable expenses incident to the subletting or assignment, including
standard leasing commissions and any amounts reasonably allocated to the sale
of the business as a going concern and any inventory or stock or good will
related thereto), then whether such excess is in the form of an increased
monthly or annual rent, a lump sum payment, payment for the sale, transfer or
lease of Tenant's fixtures, leasehold improvements, furniture and other
personal property, or any other form (and it the subleased or assigned space
does not constitute the entire Premises, the existence of such excess shall be
determined on a pro rata basis), then Tenant shall pay to Landlord fifty
percent (50%) of any such excess as additional rent upon such terms as shall be
specified by Landlord and in no event later than ten (10) days after Tenant's
receipt thereof. tenant expressly waives any right that it might have to
retain such fifty percent (50%) of the excess pursuant to the provisions of
section 365(f) of the Bankruptcy Code. Landlord shall have the right to
inspect and audit Tenant's books and records relating to any sublease,
assignment or other transfer. Any sublease, assignment or other transfer shall
be effected on a form approved by Landlord.
ARTICLE XIV RIGHT OF ACCESS
14.1 Landlord, its employees and representatives shall have the
right at any time during the Lease Term, upon reasonable notice except in an
emergency, to enter into and upon any and all parts of the Premises during
business hours (or, in an emergency, at any hour) to (a) view, inspect, secure
and clean the Premises, (b) make repairs to the Premises or Building, or
introduce, replace, repair, alter or make new change existing connections from
any fixture, pipes, wires, ducts, conduits, or other construction thereon, (c)
remove, without being held responsible therefor, placards, signs, lettering,
window or door coverings and the like not expressly consented to or (d) show
the Premises to prospective tenants, purchasers or lenders; and Tenant shall
not be entitled to any abatement or reduction of rent by reason thereof, nor
shall such be deemed to be an actual or constructive eviction. Landlord shall
have the right to use a portion of the Premises for all necessary pipes and
unreasonably interfere with Tenant's use of the Premises. Landlord may, within
one hundred and twenty (120) days preceding the expiration of the Lease Term,
enter the Premises to place and maintain notices for letting, free from
hindrance or control of Tenant. If Tenant shall vacate the Premises during the
last month of the Lease term, Landlord shall have the unrestricted right to
enter the Premise after Tenant's moving to commence preparations for the
succeeding tenant or for any other purpose whatever, without affecting Tenant's
obligation to pay rent for the full Lease Term.
18
<PAGE> 19
ARTICLE XV INCREASE IN LANDLORD'S FIRE INSURANCE
15.1 Tenant will not do or permit anything to be done in the
Premises or the Building or bring or keep anything therein which shall in any
way increase the rate of fire or other insurance for said Building, or on the
property kept therein, or obstruct, or interfere with the rights of other
tenants, or in any way injure or annoy them, or those having business with
them, or conflict with the fire laws or regulations, or with any insurance
policy upon said Building or any part thereof, or with any statutes, rules or
regulations enacted or established by the appropriate governmental authority.
ARTICLE XVI TENANT'S EQUIPMENT
16.1 Tenant will not install or operate in the Premises any
electrically operated equipment or other machinery, other than typewriters,
calculators, personal computers, facsimile machines and such other electrically
operated office machinery and restaurant equipment normally used in modern
offices and restaurants, without first obtaining the prior written consent of
Landlord, who may condition such consent upon the payment by Tenant of
additional rent as compensation for such excess consumption of water and/or
electricity as may be occasioned by the operation of said equipment or
machinery. Tenant shall not install any other equipment of any kind or nature
whatsoever which will or may necessitate any changes, replacements or additions
to or require the use of the water system, plumbing system, heating system, air
conditioning system, ventilation system or the electrical system of the
Premises without the prior written consent of Landlord. Business machines and
mechanical equipment which cause noise or vibration that may be transmitted to
the structure of the Building or to any space therein to such a degree as to be
objectionable to Landlord or to any tenant shall be installed and maintained by
Tenant, at Tenant's expense, on vibration eliminators or other devices
sufficient to eliminate such noise and vibration.
ARTICLE XVII CONDEMNATION
17.1 If all or any portion of the Premises or occupancy thereof
shall be permanently taken or condemned by any governmental or
quasi-governmental authority for any public or quasi-public use or purpose or
sold under threat of such a taking or condemnation (collectively,
"Condemnation"), and such Condemnation shall materially and adversely affect
Tenant's use of the Premises, then this Lease shall terminate on the date
possession thereof is taken by such authority and rent shall be apportioned as
of such date. In the event of the Condemnation of any portion of the Premises
which does not materially and adversely affect Tenant's use of the Premises,
then this Lease shall continue in full force and effect as to the part of the
Premises, then this Lease shall continue in full force and effect as to the
part of the Premises not Condemned, except that as of the date possession is
taken by such authority, Tenant shall not be required to pay the basic annual
rent with
19
<PAGE> 20
respect to the part of the Premises Condemned. Notwithstanding anything herein
to the contrary, if twenty-five percent (25%) or more of the Land or the
Building is Condemned, then whether or not any portion of the Premises is
Condemned, Landlord shall have the right to terminate this Lease as of the date
title vests in such authority.
17.2 All awards, damages and other compensation paid by such
authority on account of such Condemnation shall belong to Landlord, and Tenant
assigns to Landlord all rights to such awards, damages and compensation.
Tenant shall not make any claim against Landlord or the authority for any
portion of such awards, damages or compensation attributable to damage to the
Premises, value of the unexpired portion of the Lease Term, loss of profits or
goodwill, leasehold improvements or severance damages. Tenant may, if allowed
by statute, seek such awards or damages for moving expenses, loss of profits
and fixtures and other equipment installed by it which do not, under the terms
of this Lease, become the property of Landlord at the termination hereof. Such
awards or damages must be made by a Condemnation court or other authority and
must be separate and distinct from any award to Landlord for the Land and
Building and shall not diminish any award of Landlord.
ARTICLE XVIII INSURANCE
18.1 Landlord agrees that it will keep the Building insured against
loss due to fire and other property risks included in standard all risk
coverage insurance policies, and covering loss of income from such property
risk, or in lieu thereof, insure the Building against loss or damage as a self
insurer, provided its net worth is greater than ten times the amount of
insurance required.
18.2 Throughout the Lease Term, Tenant shall insure the contents of
the Premises, including, without limitation, alterations, decorations,
furnishings, fixtures and equipment used or installed in the Premises by or on
behalf of Tenant, and the other personal property of Tenant in the Premises;
against loss due to fire and other property risks included in standard all risk
coverage insurance policies, in an amount equal to the replacement cost thereof
and covering loss of income from such property risk. All insurance carried by
Tenant hereunder shall be primary and not contributing with any insurance
carried by Landlord.
18.3 Landlord and Tenant agree that all insurance policies required
to be carried pursuant to Section 18.1 hereof shall either permit or contain an
express waiver of any right of recovery (by subrogation or otherwise) by the
insurance company against Tenant, and that all insurance policies required to
be carried pursuant to Section 18.2 shall either permit or contain an express
waiver of any right of recovery (by subrogation or otherwise) by the insurance
company against Landlord, its managing agent and any mortgagee of Landlord.
Each party hereby waives any and every right or cause of action for any and all
loss of, or damage to, any of its property (whether or not such loss or damage
is caused by
20
<PAGE> 21
the fault or negligence of the other party or anyone for whom said other party
may be responsible), which loss or damage is covered by valid and collectible
fire, extended coverage, "All Risk" or similar policies, maintained by such
party or required to be maintained by such party under this Lease, to the
extent that such loss or damage is recovered under said insurance policies or
would have been recovered if the insurance policies required hereunder had been
maintained as required pursuant to this Lease. Written notice of the terms of
said mutual waivers shall be given in each insurance carrier and said insurance
policies shall be properly endorsed, if necessary, to prevent the invalidation
of said insurance coverage by reason of said waivers.
18.4 Throughout the Lease Term, Tenant shall obtain and maintain
commercial general liability insurance on an occurrence basis protecting
against any liability occasioned by any occurrence on or about the Premises and
containing contractual liability coverage and business interruption coverage.
Such insurance shall be initially in minimum amounts of One Million Dollars
($1,000,000) per occurrence and Two Million Dollars ($2,000,000) general
aggregate and shall be for a minimum term of one (1) year.
18.5 Tenant shall also maintain throughout the Lease Term, at
Tenant's sole cost and expense, worker's compensation in statutory limits.
18.6 Each of said policies of insurance to be carried by Tenant
hereunder shall name Landlord and Landlord's managing agent as an additional
insured, and if requested by the holder of any mortgage or deed of trust
against the Building, shall also name such holder as an additional insured.
Each policy shall contain an endorsement which provides that no cancellation or
reduction of coverage may be made without first giving Landlord, Landlord's
managing agent and, if named as an additional insured, the holder of any
mortgage or deed of trust on the Building, at least thirty (30) days prior
written notice of such proposed action. All insurance policies required under
this Lease shall be issued by insurance companies licensed to do business in
the jurisdiction wherein the Building is located with a then current Allred M.
Best Company, Inc. general policy holder's rating of "A" or better and a
financial size category of Class XII or higher and which have been in business
for the past five (5) years and which are otherwise reasonably satisfactory to
Landlord. On or before the Lease Commencement Date, and thereafter not less
than fifteen (15) days prior to the expiration dates of said policy or
policies, Tenant shall provide copies of policies or certificates of insurance
(Accord 27) evidencing the coverage required by this Article XVIII. The
aforesaid insurance limits may be reasonably increased from time to time by
Landlord.
ARTICLE XIX FIRE OR CASUALTY
19.1 If the Premises or the Building are totally or partially
damaged or destroyed thereby rendering the Premises totally or
21
<PAGE> 22
partially inaccessible or unusable, then Landlord shall diligently repair and
restore the Premises and the Building to substantially the same condition they
were in prior to such damage or destruction; provided, however, that if (a) in
Landlord's reasonable judgment such repair and restoration cannot be completed
within two hundred seventy (270) days after the occurrence of such damage or
destruction (taking into account the time needed for effecting a satisfactory
settlement with any insurance company involved, removal of debris, preparation
of plans and issuance of all required governmental permits) or (b) twenty
percent (20%) or more of the Premises is damaged and less than six (6) months
would remain of the Term or any removal thereof upon completion of the repairs,
then Landlord or Tenant shall have the right, at its option, to terminate this
Lease as of the sixtieth (60) day after such damage or destruction by giving
written notice of termination to the other party within forty-five (45) days
after the occurrence of such damage or destruction.
19.2 If this Lease is terminated pursuant to Section 19.1 above,
then all rent shall be apportioned (based on the portion of the Premises which
is usable after such damage or destruction) and paid to the date of
termination. If this Lease is not terminated as a result of such damage or
destruction, then until such repair and restoration of the Premises are
substantially complete, Tenant shall be required to pay the basic annual rent
only for the portion of the Premises that is usable while such repair and
restoration are being made. Landlord shall bear the expenses of repairing and
restoring the premises and the building; provided, however, that Landlord shall
not be required to repair or restore the contents of the Premises, including
without limitation, alterations, decorations, furnishings, fixtures and
equipment used or installed in the Premises by or on behalf of Tenant and any
other personal property of Tenant. Tenant shall not be entitled to any
compensation or damages from Landlord for loss of the use of the whole or any
portion of the Premises or for any inconvenience or annoyance occasioned by any
such damage, repair or restoration.
19.3 Notwithstanding anything herein to the contrary, Landlord
shall not be obligated to restore the Premises or the Building and shall have
the right to terminate this Lease if (a) the holder or any mortgage fails or
refuses to make insurance proceeds available for such repair and restoration,
(b) zoning or other applicable laws or regulations do not permit such repair
and restoration, or (c) the cost of repairing and restoring the Building would
exceed fifty percent (50%) of the replacement value of the Building, whether or
not the Premises is damaged or destroyed, provided the leases of all other
tenants in the Building are similarly terminated.
ARTICLE XX DEFAULTS AND REMEDIES
20.1 Each of the following shall constitute an Event of Default:
(a) Tenant's failure to make any payment of the basic annual rent, additional
rent or any other sum within ten (10) days
22
<PAGE> 23
of written notice from Landlord of Tenant's failure to make such payment on
such payment's due date; (b) Tenant's failure to take possession of the
Premises within thirty (30) calendar days after delivery thereof to Tenant; (c)
Tenant's violation or failure to perform or observe any other covenant or
condition of this Lease for a period of thirty (30) days following Landlord's
written notice thereof to Tenant; (d) Tenant's abandonment or vacation of the
Premises; (e) an Event of Bankruptcy as specified in Article XXI with respect
to Tenant. Any general partner of Tenant (a "General Partner") or any
guarantor; or (f) Tenant's dissolution or liquidation.
20.2 If there shall be an Event of Default, including an Event of
Default prior to the Lease commencement Date, then Landlord shall have the
right, at its sole option, to terminate this Lease. In addition, with or
without terminating this Lease, Landlord may reenter the Premises, terminate
Tenant's right of possession and take possession of the Premises. The
provisions of this Section shall operate as a notice to quit, any other notice
to quit or of Landlord's intention to reenter the Premises being hereby
expressly waived. If necessary, Landlord may proceed to recover possession of
the Premises under and by virtue of the laws of the jurisdiction in which the
Building is located, or by such other proceedings, including reentry and
possession, as may be applicable. If Landlord elects to terminate this Lease
and/or elects to terminate Tenant's right of possession, then everything
contained in this Lease to be done and performed by Landlord shall cease,
without prejudice, however, to Landlord's right to recover from Tenant all rent
and other sums due hereunder through the Lease Expiration Date as defined in
Section 2.1. No such re-entry or taking possession of the Premises by Landlord
shall be construed as an election on its part to terminate this Lease unless a
written notice of such intention be given to Tenant or unless the termination
thereof shall result as a matter of law or be decreed by a court of competent
jurisdiction. Whether or not this Lease and/or Tenant's right of possession is
terminated, Landlord may, but shall not be obligated to, relet the Premises or
any part thereof, alone or together with other premises, for such rent and upon
such terms and conditions (which may include concessions, free rent and
alterations of the Premises) as Landlord in its sole discretion, may determine,
but Landlord shall not be liable for, nor shall Tenant's obligations be
diminished by reason of, Landlord's failure to relet the Premises or collect
any rent due upon such reletting, it being agreed and understood that Tenant
shall retain the right to assign the Lease or sublet the Premises, subject to
the terms and conditions set forth in Article 13 of the Lease. Whether or not
this Lease is terminated, Tenant nevertheless shall remain liable for any basic
annual rent, additional rent or damage which may be due or sustained by reason
of such default, and all costs, fees and expenses including without limitation
reasonable attorneys' fees, brokerage fees, expenses incurred in placing the
Premises in rentable condition and tenant finish necessitated to obtain the new
tenant's incurred by Landlord in pursuit to its remedies and in renting the
Premises to others from time to time.
23
<PAGE> 24
Notwithstanding any such reletting without termination, Landlord may at any
time thereafter elect to terminate this Lease for such previous breach. Tenant
shall also be liable to Landlord for additional damages, which shall be, at
Landlord's option, either (a) or (b) below:
(a) an amount equal to the basic annual rent and
additional rent which would have become due during the remainder of the Lease
Term, less the amount of rent. If any, which Landlord receives during such
period from others to whom the Premises may be rented (other than any
additional rent payable as a result of any failure of such other person to
perform any of its obligations), which damages shall be computed and payable in
monthly installments, in advance, on the first day of each calendar month
following Tenant's default and continuing until the date on which the Lease
Term would have expired but for Tenant's default. Separate suits may be
brought to collect any such damages for any month(s), and such suites shall not
in any manner prejudice Landlord's right to collect any such damages for any
subsequent month(s), or Landlord may defer any such suit until after the Lease
Expiration Date, in which event the cause of action shall be deemed not to have
accrued until the Lease Expiration Date; or
(b) an amount equal to the present value (as of the date
of Tenant's default) of the basic annual rent and additional rent which would
have become due during the remainder of the Lease Term, less the rent received
by Landlord under any reletting of the Premises, which damages shall be payable
to Landlord in one lump sum on demand; provided that Landlord has relet the
Premises which reletting may occur at any time up to the Lease Expiration Date.
For purposes of this subsection (2), present value shall be computed by
discounting at a rate equal to one (1) whole percentage point above the
discount rate then in effect at the Federal Reserve Bank of New York.
20.3 Tenant waives any right of redemption, re-entry or restoration
of the operation of this Lease under any present or future law, including any
such right which Tenant would otherwise have if Tenant shall be dispossessed
for any cause.
20.4 If Tenant fails to perform any covenant or observe any
condition to be performed or observed by Tenant hereunder or acts in violation
of any covenant or condition hereof or fails to make any payment to any third
party, and such is not cured within the applicable notice and cure period,
Landlord may, but shall not be required to on behalf of Tenant, perform such
covenant and/or take such steps, including entering the Premises, as may be
necessary or appropriate, in which case Landlord shall have the right to
proceed immediately and all costs and expenses incurred by Landlord in so
doing, including reasonable legal fees, shall be paid by Tenant to Landlord
upon demand, plus interest thereon at the rate per annum equal to the greater
of (a) eighteen percent (18%) per annum; provided, however such rate is not
usurious or (b) the highest non-usurious rate permitted under the laws of the
jurisdiction where
24
<PAGE> 25
the Building is located, from the date of expenditure(s) by Landlord, as
additional rent. Landlord's proceeding under the rights reserved to Landlord
under this Section shall not in any way prejudice or waive any rights Landlord
might otherwise have against Tenant by reason of Tenant's default.
20.5 Landlord's rights and remedies set forth in this Lease are
cumulative and in addition to Landlord's other rights and remedies at law or in
equity, including those available as a result of any anticipatory breach of
this Lease. Landlord's exercise of any such right or remedy shall not prevent
the concurrent or subsequent exercise of any other right or remedy. Landlord's
delay or failure to exercise or enforce any of Landlord's rights or remedies or
Tenant's obligations shall not constitute a waiver of any such rights, remedies
or obligations.
20.6 Notwithstanding anything to the contrary contained in Section
20.1 of this Lease, in the event that Tenant fails to timely pay the basic
annual rent, Real Estate Taxes, Operating Expenses or any other sum due under
the Lease, the Landlord shall give written notice to Quantum Restaurant Group,
Inc., Peasant Holding Corporation and United Restaurants, Inc. t/a Grand Havana
Room of such failure and such parties shall have ten (10) days from the date of
such notice to cure such default, and the ten (10) day cure period contained in
Section 20.1(a) of the Lease shall not apply. Any cure by any of the entities
shall be deemed a cure by Tenant. In the event Quantum Restaurant Group, Inc.,
Peasant Holding Corporation or United Restaurants, Inc. t/a Grand Havana Room
fail to cure such default then an Event of Default shall exist under the terms
of this Lease and Landlord shall have the right to exercise any and all
remedies Landlord may have under this Lease or at law or in equity. In the
event Landlord releases Quantum Restaurant Group, Inc. and Peasant Holding
Corporation, then Landlord shall no longer be obligated to send the foregoing
notices to such entities.
All notices shall be sent pursuant to Article XXX at the following addresses:
Quantum Restaurant Group, Inc.
Mr. Thomas Baldwin, Chief Financial Officer
3333 New Hyde Park Road, Suite 210
New Hyde Park, NY 11042
Peasant Holding Corporation
Mr. Thomas Baldwin Chief Financial Officer
3333 New Hyde Park Road, Suite 210
New Hyde Park, NY 11042
25
<PAGE> 26
United Restaurants, Inc. t/a Grand Havana Room
Mr. Harry Shuster
1990 Westwood Boulevard
Los Angeles, CA 90025
ARTICLE XXI BANKRUPTCY
21.1 The following shall be Events of Bankruptcy under this Lease:
(a) Tenant, a guarantor or a General Partner becoming insolvent, as that term
is defined in Title 11 of the United States Code (the "Bankruptcy Code"), or
under the insolvency laws of any state (the "Insolvency Laws"); (b) appointment
of a receiver or custodian for any property of Tenant, a guarantor or a General
Partner, or the institution of a foreclosure or attachment action upon any
property of Tenant, a guarantor or a General partner; (c) filing of a voluntary
petition by Tenant, a guarantor or a General Partner under the provisions of
the Bankruptcy Code or insolvency laws; (d) filing of an involuntary petition
against Tenant, a guarantor or a General Partner as the subject debtor under
the Bankruptcy Code or insolvency Laws, which either (i) is not dismissed
within sixty (60) days of filing, or (ii) results in the issuance of an order
for relief against the debtor; or (e) Tenant, a guarantor or a General Partner
making or consenting to an assignment for the benefit of creditors or a
composition of creditors.
[ARTICLE XXII - INTENTIONALLY OMITTED]
ARTICLE XXIII LEGAL FEES
23.1 If, as a result of any breach or default in the performance of
any of the provisions of this Lease (whether or not such default is later
cured), Landlord or Tenant uses the services of an attorney in order to secure
compliance with such provisions or recover damages therefor, or to terminate
this Lease or evict Tenant, or if Landlord or Tenant is required to defend
itself or the terms of this Lease and Landlord or Tenant uses the services of
an attorney then Tenant or Landlord shall reimburse the prevailing party upon
demand for any and all attorneys' fees and expenses so incurred by the
prevailing party with such amounts being additional rent in the event Landlord
is the prevailing party.
ARTICLE XXIV DAMAGE
24.1 All injury to the Premises or the Building caused by moving
the property of Tenant into, on, or out of the Building or the Premises and all
breakage done by Tenant, or the agents, servants, employees and visitors of
Tenant, shall be repaired by Tenant, at the expense of Tenant, unless such
damage is covered by Landlord's insurance. In the event that Tenant shall fail
to do so, then Landlord shall have the right to make such necessary repairs,
alterations and replacements (structural, nonstructural or otherwise) and any
charge or cost so incurred by Landlord shall be
26
<PAGE> 27
paid by thereafter falling due under the terms of this Lease. This provision
shall be construed as an additional remedy granted to Landlord and not in
limitation of any other rights and remedies which Landlord has or may have in
said circumstances.
24.2 All Personal Property of Tenant in the Premises or in the
Building shall be at the sole risk of Tenant and Tenant agrees to obtain
insurance for such Personal Property as provided in Section 18.2 of this Lease.
Landlord shall not be liable for any accident to or damage to the Personal
Property of Tenant resulting from the use or operation of elevators or of the
heating, cooling, electrical or plumbing apparatus. Landlord shall not, in any
event, be liable for damages to the Personal Property resulting from water,
steam or other causes. Tenant hereby expressly releases Landlord from any
liability incurred or claim by reason of damage to Tenant's Personal Property.
ARTICLE XXV SUBORDINATION
25.1 This Lease is subject and subordinate at all times to all
ground or underlying leases, all mortgages and/or deeds of trust, all
covenants, restrictions, easements, and encumbrances which may now or hereafter
affect such leases or the real property of which the Premises form a part, and
all future renewals, modifications, consolidations, replacements and extensions
thereof. This clause shall be self- operative and no further instrument of
subordination shall be required by any mortgagee or trustee. In confirmation
of such subordination, Tenant shall promptly execute and deliver without charge
any certificate or document that Landlord may request in a form which
recognizes this Lease and is otherwise reasonably acceptable to Tenant within
ten (10) days following Landlord's written request. Tenant hereby constitutes
and appoints Landlord as Tenant's attorney-in-fact to execute any such
certificate or certificates for and on behalf of Tenant. Provided, however,
that notwithstanding the foregoing, the party secured by any such deed of trust
shall recognize this Lease so long as Tenant is not in default hereunder beyond
any applicable notice and cure period, and in the event of any foreclosure sale
under such deed of trust, this Lease shall continue in full force and effect so
long as Tenant is not in default hereunder beyond any applicable notice and
cure period, in which event Tenant shall attorn to such party secured by such
deed of trust or purchaser as Landlord under this Lease. Upon such attornment
such party secured by such deed of trust or purchaser shall not be (a) bound by
any payment of rent or additional rent more than one (1) month in advance, (b)
bound by any amendment of this Lease made without the consent of the holder of
the deed of trust existing as of the date of such amendment, (c) liable for
damages for any breach, act or omission of any prior Landlord, or (d) subject
to any offsets or defenses which Tenant might have against any prior Landlord;
provided, however, that after succeeding to Landlord's interest, such party
secured by such deed of trust or purchaser shall perform, in accordance with
the terms of this Lease, all obligations of Landlord arising after the date of
Application of title to the Building. Tenant covenants and
27
<PAGE> 28
agrees that it will, at this written request of the party secured by any such
deed of trust, execute, acknowledge and deliver any instrument that has for its
purpose and effect the subordination of said deed of trust to the lien of this
Lease.
25.2 Tenant agrees that neither the cancellation nor termination of
any ground or underlying lease shall by operation of law or otherwise, result
in cancellation or termination of this Lease or the obligations of Tenant
hereunder, and Tenant covenants and agrees to attorn to such Landlord or to any
successor to Landlord's interest in such ground or underlying lease subject to
the attornment provisions set forth in Section 23.1 above. In that event, this
Lease shall continue as a direct lease between Tenant herein and such landlord
or its successor.
ARTICLE XXVI TENANT HOLDOVER
26.1 This Lease shall terminate on the Lease Expiration Date
pursuant to the terms of this Lease without the necessity of notice from either
Landlord or Tenant. Any holding over by Tenant after the Lease Expiration Date
without Landlord's written consent as provided in Section 24.2 shall be an
unlawful detainer and Tenant shall be subject to immediate eviction. During
such hold over, all the terms and conditions set forth in this Lease shall
apply rent in effect during the last month of the Lease term ("Hold Over
Rent"). In addition to paying to Landlord the Hold Over Rent, if Tenant fails
to surrender and vacate the Premises on the Lease Expiration Date, Tenant shall
indemnify and hold Landlord harmless from and against any and all loss,
liability, damages and expenses (including without limitation, attorneys' fees,
the costs of investigation and settlement of any claims) sustained or incurred
by Landlord on account of or resulting from such failure, including, without
limitation, claims made by any succeeding tenant of all or any part of the
Premises or the loss by Landlord of the rent from any succeeding tenant of all
or any part of the Premises.
26.2 If, with the written consent of Landlord, Tenant or any party
claiming by, through or under Tenant remains in possession of the Premises, or
any part thereof, after the Lease Expiration Date, Landlord shall treat such
holding over by Tenant as the creation of a month-to-month tenancy, subject to
all the terms, covenants and conditions set forth in this Lease insofar as the
same are applicable to a month-to-month tenancy, except that Tenant shall pay a
basic annual rent equal to twice the basic annual rent in effect during the
last month of the Lease Term. Tenant shall give to Landlord at least thirty
(30) days prior written notice from the first day of the month of any intention
to quit said Premises, and Tenant shall be entitled to the same thirty (30)
days prior written notice to quit said Premises, except in the event of
non-payment of rent in advance or of any breach of any other covenant by
Tenant, in which event Tenant shall not be entitled to any notice to quit, the
usual thirty (30) days notice to quit being hereby expressly waived: provided,
however, that in the event Tenant shall hold over after the expiration of the
Lease Term, and if Landlord shall
28
<PAGE> 29
desire to regain possession of the Premises promptly at the expiration of the
Lease Term, then at any time prior to Landlord's acceptance of rent from Tenant
on a monthly Tenant hereunder, Landlord, at its option, may forthwith re-enter
and take possession of the Premises without process, or by legal process in
force in the jurisdiction in which the Building is located.
ARTICLE XXVII WAIVER AND NOTICE
27.1 No waiver of any breach of any covenant, condition or
agreement herein contained shall operate as a waiver of the covenant, condition
or agreement itself, or of any subsequent breach thereof. No provision of this
Lease shall be deemed to have been waived by Landlord or Tenant unless such
waiver shall be in writing signed by the other party. If Landlord or Tenant
waives in writing any default, then such waiver shall not be construed as a
waiver of any subsequent, similar default or of any covenant or condition set
forth in this Lease except as to the specific circumstances described in such
written waiver. No payment by Tenant or receipt by Landlord of a lessor amount
than the monthly installments of rent herein stipulated shall be deemed to be a
payment in full of the stipulated rent nor shall any endorsement or statement
on any check or any letter accompanying any check or payment as rent be deemed
an accord and satisfaction, and Landlord may accept such check or payment
without prejudice to Landlord's right to recover the balance of such rent or
pursue any other remedy in this Lease provided. Landlord shall have the right
to apply tenant's payments to any balance or arrearage Tenant has outstanding.
Landlord's re-entry and acceptance of keys shall not be considered an
acceptance of a surrender of this Lease.
ARTICLE XXVIII WAIVER OF JURY TRIAL
28.1 LANDLORD, TENANT, AND ALL GUARANTORS AND GENERAL PARTNERS OF
TENANT AGREE TO AND THEY HEREBY DO WAIVE TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE
OTHER ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH
THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY
OF SAID PREMISES AND/OR ANY CLAIM OF INJURY OR DAMAGE, AND ANY STATUTORY
REMEDY.
28.2 Tenant consents to service of process and any pleading
relating to any such action at the Premises: provided, however, that nothing
herein shall be construed as requiring such service at the Premises. Landlord,
Tenant, all guarantors and all General Partners of Tenant waive any objection
to the venue of any action filed in any court situated in the jurisdiction in
which the Building is located and waive any right under the doctrine of forum
non conveniens or otherwise, to transfer any such action filed in any such
court to any other court.
29
<PAGE> 30
ARTICLE XXIX LIMITATION OF LIABILITY OF LANDLORD
29.1 Pursuant to Article 3 of the Declaration of Trust of
Washington Real Estate investment Trust dated November 18, 1960, as amended,
nothing in this Lease shall be construed in any event whatsoever is impose any
personal liability upon, the trainees, officers or the shareholders of the
Washington Real Estate Investment Trust, as Landlord herein in contract, tort,
or otherwise. Anything contained in this Lease to the contrary
notwithstanding, Tenant agrees that Tenant shall look solely to Landlord's
equity in the Building for the collection of any judgment (or other judicial
process) requiring the payment of money by Landlord in the event of any default
or breach by Landlord with respect to any of the terms and provisions of this
Lease to be kept, observed and performed by Landlord subject, however, to the
prior rights of any ground or underlying landlords or any mortgagee of all or
any part of the Building or the Premises, and no other assets of Landlord shall
be subject to levy, execution or other judicial process for the satisfaction of
Tenant's claim.
ARTICLE XXX NOTICES
30.1 All notices required hereunder by either party to the other
shall be sent by recognized overnight courier with receipt therefor (such as
Federal Express). Notices to Landlord shall be sent to Washington Real Estate
Investment Trust ("WRIT"), 10400 Connecticut Avenue, Concourse Level,
Kensington, Maryland 20895, Attention: Chief Financial Officer, Notices to
Tenant shall be sent to the Premises and to: United Restaurants, Inc., 1990
Westwood Blvd., Los Angeles, CA 90025, ATTN: Harry Shuster. Tenant hereby
elects domicile at the Premises for the purpose of all notices, writs of
summons, or other legal documents, or process, in any suit, action, or
proceeding which Landlord may undertake under this Lease.
ARTICLE XXXI CERTAIN RIGHTS RESERVED BY LANDLORD
31.1 Landlord hereby reserves to itself and its successors and
assigns the following rights (all of which are hereby consented to by Tenant):
(a) to change the street address and/or name of the Building and/or the
arrangement and/or location of entrances, passageways, doors, doorways,
corridors, elevators, stairs, toilets, or other public parts of the Building,
(b) to control and operate the public portions of the Building and the public
facilities, as well as facilities furnished for the common use of the tenants,
in such a manner as it deems best for the benefit o tenants generally, to
erect, use and maintain pipes and conduits in and through the Premises, and (c)
to grant to anyone the exclusive right to conduct any particular business or
undertaking in the Building. Landlord may exercise any or all of the foregoing
rights without being deemed to be guilty of an eviction, actual or
constructive, or a disturbance or interruption of the business of Tenant or of
Tenant's use or occupancy of the Premises.
30
<PAGE> 31
ARTICLE XXXII BROKER
32.1 Landlord recognizes GSC Real Estate Group and as a sub-agent
to GSC, Jones, Lang Wooton ("Broker(s)") as the sole Broker(s) procuring this
Lease and shall pay said Broker(s) a commission therefor pursuant to a separate
agreement between said Broker(s) and Landlord. Landlord and Tenant each
represent and warrant to one another that except as set forth herein neither of
them has employed any broker, agent or finder in carrying on the negotiations
relating to this Lease, Landlord shall indemnify and hold Tenant harmless, and
Tenant shall indemnify and hold Landlord harmless, from and against any claim
or claims for brokerage or other commissions arising from or out of any breach
of the foregoing representation and warranty by the respective indemnitors.
ARTICLE XXXIII ESTOPPEL CERTIFICATE
33.1 Tenant shall from time to time, within ten (10) days after
Landlord shall have requested the same of Tenant, execute, acknowledge and
deliver to Landlord a written instrument in recordable form and otherwise in
such form as required by Landlord (a) certifying that this Lease is in full
force and effect and has not been modified, supplemented or amended in any way
(or, if there have been modifications, supplements or amendments thereto, that
it is in full force and effect as modified, supplemented or amended and stating
such modifications, supplements and amendments); (b) stating the rent payable
and dates to which the rent and other charges hereunder have been paid by
Tenant; (c) stating whether or not to the best knowledge of Tenant, Landlord is
in default in the performance of any covenant, agreement or condition contained
in this Lease, and if so, specifying each such default of which Tenant may have
knowledge; (d) stating the Lease Commencement Date and Lease Expiration Date,
including any optional renewals; and (e) stating any other fact or certifying
any other condition reasonably requested by Landlord or requested by any
mortgages or prospective mortgagee or purchaser of the Building or Land or of
any interest therein. In the event that Tenant shall fail to return a fully
executed copy of such certificate to Landlord within the foregoing ten (10) day
period, then Tenant shall be deemed to have approved and confirmed all of the
terms, certifications and representations contained in such certificate, and
Tenant irrevocably authorizes and appoints Landlord as its attorney-in-fact to
execute such certificate on behalf of Tenant. Any such statement delivered
pursuant hereto may be relied upon by any owner of the Building or the Land,
any mortgagee or prospective mortgagee or purchaser of the Building, Land or
any interest therein or any prospective assignee of any mortgagee.
ARTICLE XXXIV RULES AND REGULATIONS
34.1 Tenant will:
31
<PAGE> 32
(a) not strip, overload, damage or deface the Premises or
hallways, stairways, elevators, parking facilities or other approaches thereto,
of said Building, or the fixtures therein or used therewith, nor permit any
hole to be made in any of the same:
(b) not suffer or permit any trade or occupation to be
carried on or use made of the Premises which shall be unlawful, noisy,
offensive, or injurious to any person or property, or such as to increase the
danger of fire or affect or make void or voidable any insurance on said
Building, or which may render any increased or extra premium payable for such
insurance, or which shall be contrary to any law or ordinance, rule or
regulation from time to time established by any public authority;
(c) not move any furniture or equipment into or out of
the Premises except at such times as Landlord may from time to time designate;
(d) not place upon the interior or exterior of the
Building or any window or any part thereof or door of the Premises any placard,
sign, lettering, window covering, drapes or any other item which Landlord in
its sole discretion deems unsuitable, except such and in such place and manner,
as shall have been first approved in writing by Landlord;
(e) park vehicles only in the are from time to time
designated by Landlord; Landlord reserves the right to determine the number of
parking spaces that shall be used by Tenant;
(f) not install a television antenna or air condition on
the roof, in the windows or upon the exterior of the Premises;
(g) use and allow to be used all plumbing within the
Premises and the Building only for the purposes for which it was designed, and
no foreign substance of any kind shall be thrown therein;
(h) not use any space in the Building for the sale of
goods t the public at large or for the sale at auction of goods or property of
any kind;
(i) not place additional locks or bolts of any kind on
any of the doors or windows, and shall not make any change in any existing lock
or locking mechanism therein, without Landlord's prior written consent;
(j) not use the Premises for lodging or sleeping or for
any immoral or illegal purpose;
(k) not construct, maintain, use or operate within the
Premises any electrical device, writing or apparatus in connection with a loud
speaker system or other sound system without Landlord's prior written consent
and Tenant shall not construct, maintain, use
32
<PAGE> 33
or operate any such loud speaker or sound system outside of the Premises;
(l) not obstruct or encumber or use for any purpose other
than ingress and egress to and from the premises any sidewalk, entrance,
passage, court, elevator, vestibule, stairway, corridor, hall or other part of
the Building not exclusively occupied by Tenant;
(m) comply with all rules or regulations from time to
time established by the appropriate insurance rating organization;
(n) comply with all rules or regulations from time to
time established by Landlord for the operation and maintenance of the Building;
and
(o) not manufacture any commodity therein, without the
prior written consent of Landlord.
34.2 It is understood that employees of Landlord are prohibited as
such from receiving any package or other articles delivered to the Building for
Tenant and that should any such employee receive any such packages or articles,
he or she in so doing shall be the agent of Tenant and not of Landlord.
ARTICLE XXXV FINANCIAL STATEMENTS
35.1 Tenant agrees to provide to Landlord within fourteen (14) days
of Landlord's request the most recent audited (or certified to be true an
correct by the President and Chief Financial Officer) annual financial
statements of Tenant, including balance sheets, income statements, and
financial notes ("Statements"). Tenant consents that Landlord may release the
Statements to Landlord's trustees, officers, employees, subsidiaries,
affiliates, lenders, advisors, joint venture partners, or potential purchasers
of the Building for the purpose of evaluating Tenant's financial condition with
respect to performance under the Lease of to any third party pursuant to any
order of any governmental agency or court. Landlord agrees to keep the
Statements confidential and not to release the statements to third parties
except as set forth herein.
[ARTICLE XXXVI - Intentionally Omitted]
ARTICLE XXXVII QUIET ENJOYMENT
37.1 If Tenant pays all the rent herein reserved and performs and
observes all of the other terms, covenants and conditions of this Lease on
Tenant's part to be performed and observed hereunder, Tenant shall, during the
Term, peaceably and quietly have, hold and enjoy the Premises without
molestation or hindrance by Landlord or any party claiming through or under
Landlord, subject to the provisions of this Lease.
33
<PAGE> 34
ARTICLE XXXVIII MISCELLANEOUS
38.1 No Representations. Tenant acknowledges that neither Landlord
nor any broker, agent or employee of Landlord has made any representations or
promises wit respect to the Premises or the Building except as herein expressly
set forth, and no rights, privileges, easements or licenses are being acquired
by Tenant except as herein expressly set forth.
38.2 No Partnership. Nothing contained in this Lease shall be
deemed or construed to create a partnership or joint venture of or between
Landlord or Tenant, or to create any other relationship between the parties
hereto other than that of landlord and tenant.
38.3 Authority. Landlord and Tenant covenant each for itself, that
each has full right, power and authority to enter into this Lease upon the
terms and conditions herein set forth. If tenant signs as a corporation, each
of the persons executing this Lease on behalf of Tenant does hereby covenant
and warrant that Tenant is a duly authorized and existing corporation,
qualified to do business in the state in which the Building is located, that
the corporation has full right and authority to enter into this lease, and that
each and both persons signing on behalf of the corporation were authorized to
do so; and that the name and address of Tenant's resident agent in the
jurisdiction where the Building is located is . Tenant shall advise
Landlord in writing if the name and address of its resident agent is changed
during the Term hereof.
38.4 Additional Rent. All other costs and expenses which Tenant
assumes or agrees to pay to landlord pursuant to this Lease shall be deemed to
be "additional rent" and, in the event of nonpayment thereof, Landlord shall
have all the rights and remedies provided for in the case of nonpayment of
rent, including assessment of interest and late fees. If such amounts or
charges are not paid at the time provided in this Lease, they shall
nevertheless, if not paid when due, be collectable as additional rent with the
next installment of rent thereafter falling due hereunder, but nothing herein
contained shall be deemed to suspend or delay the payment of any amount of
money or charge at the time the same becomes due and payable hereunder, or
limit any other remedy of Landlord.
38.5 Force Majeure. If Landlord is in any way delayed or prevented
from performing any of its obligations under this Lease due to fire, acts of
God, governmental act or failure to act, strike, labor dispute, inability to
procure materials or any other cause beyond Landlord's reasonable control
(whether similar or dissimilar to the foregoing events), then the time for
performance of such obligation shall be excused for the period of such delay or
prevention.
38.6 No Recording. This Lease shall not be recorded in any office
legally established for the purpose of giving public notice
34
<PAGE> 35
of real estate records and any attempt to do so may be treated by Landlord as
an Event of Default under this Lease. In the event Tenant does record this
Lease or any memorandum thereof, Tenant, by such act, irrevocably constitutes
and appoints Landlord as its special attorney-in-fact to execute any and all
documents required to remove the Lease or any memorandum thereof from the
public records.
38.7 Governing Law. This Lease is governed under the laws of the
jurisdiction in which the Building is located.
38.8 Captions. Section headings are used for convenience and shall
not be considered when construing this Lease.
38.9 Severability. If any term or provision of this Lease or the
application thereof to any person or circumstances shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than those to which it
is invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Lease shall be valid and be enforceable to the fullest extent
permitted by law.
38.10 Tenant Liability. If two or more individuals, corporations,
partnerships or other persons (or any combination of two or more thereof) shall
sign this Lease as Tenant, the liability of each such individual, corporation,
partnership or other persons to pay the rent and perform all other obligations
hereunder shall be deemed to be joint and several.
38.11 Time is of the Essence. Time is of the essence of each
provision of this Lease.
38.12 Entire Agreement. This Lease contains the entire agreement of
the parties in regard to the Premises and this Lease and no representations,
inducements or agreements, oral or otherwise, between the parties not contained
in this Lease shall be of any force or effect. This Lease may not be amended,
modified or changed in whole or in part in any manner other than by an
agreement in writing duly signed by both parties hereto.
38.13 Benefit and Burden. The provisions of this lease shall be
binding upon, and shall inure to the benefit of, the parties hereto and each of
their respective heirs, executors, administrators, successors, and assigns.
Landlord may freely assign its interest hereunder.
38.14 Gender and Number. Feminine or neuter pronouns shall be
substituted for those of the masculine form, and the plural shall be
substituted for the singular number, in any place or placed herein in which the
context may require such substitution or substitutions. Landlord herein for
convenience has been referred to in the neuter form.
35
<PAGE> 36
38.15 Survival. Tenant's liabilities existing as of the expiration
or earlier termination of the Lease Term shall survive such expiration or
earlier termination.
38.16 Submission of Lease. The submission of this Lease for
examination does not constitute a or an option for lease, and the
same shall not be effective as a lease or otherwise until execution and
delivery by both Landlord and Tenant.
38.17 Parking. Landlord hereby grants Tenant a license to use
unreserve parking spaces. Tenant shall pay Landlord, in advance, a monthly
parking fee without abatement, deduction, offset, demand or counterclaim for
the foregoing parking spaces in the amount of
per space per month. The foregoing fee is subject to increase on an
annual basis. Tenant agrees to comply and shall cause its officers, employees,
agents and contractors to comply with all rules and regulations promulgated by
Landlord with respect to the parking of vehicles.
38.18 Addendum. Yes.
SEE ATTACHED ADDENDUM FOR ADDITIONAL PROVISION OF THIS LEASE.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
executed under seal by a duly authorized officer, intending to be legally bound
hereby, as of the day and year first above written. The covenants of Tenant
are joint and several obligations of each party signing as Tenant, and, when
the parties signing as
36
<PAGE> 37
Tenant are partners, shall be the obligation of the firm and of the individual
members thereof.
WITNESS/ATTEST: TENANT:
/s/ Shannon Taylor UNITED RESTAURANTS, INC.
T/A GRAND HAVANA ROOM
Printed Name: Shannon Taylor
By: /s/ Harry Shuster (SEAL)
Title:
By: (SEAL)
Printed Name:
Title:
Social Security Number:
Federal Tax Identification
Number:
WITNESS/ATTEST: LANDLORD:
/s/ WRIT LIMITED PARTNERSHIP
By: WASHINGTON REAL ESTATE
INVESTMENT TRUST,
General Partner
By: /s/ (SEAL)
Printed Name:
Title: SVP & CFO
37
<PAGE> 38
ADDENDUM
THIS ADDENDUM TO LEASE ("Addendum") is entered into this 23rd of
August, 1996 by and between the WASHINGTON REAL ESTATE INVESTMENT TRUST
("Landlord") and UNITED RESTAURANTS, INC., T/A GRAND HAVANA ROOM ("Tenant").
RECITALS:
WHEREAS, Landlord and Tenant are parties to an Office Building Lease
dated ("Lease") whereby Tenant leased certain premises consisting
of approximately 8298 square feet of space ("Premises") and known as LOWER
LEVEL, 1220 19TH STREET, NW, WASHINGTON, DC 20006.
WITNESSETH:
NOW THEREFORE, in consideration of Ten Dollars ($10.00) in hand paid
by each party to the other, the mutual promises herein contained, and other
good and valuable consideration, the receipt and sufficiency of which are
acknowledged, and intending to be legally bound, the parties agree as follows.
1. The recitals contained above are true to the best of
the parties' knowledge and are incorporated by reference herein.
2. Any term used herein that is defined in the Lease
shall have the same meaning as specified in the Lease unless otherwise
specifically provided herein.
3. The following new Articles are hereby added to the
Lease:
Article XXXIX USE OF THE PREMISES AND OPERATION OF BUSINESS
39.1 Permitted Use. Tenant will use and occupy the Premises solely
for the following express use(s) and purpose(s) and for no other use or
purposes: sit-down, white tablecloth restaurant, cigar club and the incidental
sale of related gift items such as pens, private humidors, and similar related
items, it being agreed and understood that Tenant may use that portion of the
Premises located on street level for the retail sale of cigars and related
items to the general public ("Permitted Use") and only in accordance with
applicable zoning and other municipal regulations and for no other purpose
whatsoever. Tenant shall not change such Permitted Use in any manner
whatsoever and shall not make any substantial change or modification in the
method by, or in the manner in which Tenant conducts his business in the
Premises without the prior written approval of Landlord. Tenant
<PAGE> 39
acknowledges and agrees that the Permitted Use of the Premises has been
precisely defined to achieve a balanced and diversified group of tenants,
merchandise and services at the Building. Accordingly, it is understood and
agreed that without Landlord's prior written consent, Tenant shall not sell any
products, offer any services or undertake any line of business which is not in
conformity with the Permitted Use of the Premises. Tenant shall pay to
Landlord, as additional rent, any additional costs incurred by Landlord as a
result of Tenant's Permitted Use or any other sue or purpose of the Premises.
Tenant will not use or occupy the Premises for any unlawful purpose or that
would violate Tenant's certificate of occupancy, or for any purpose that would
constitute a nuisance or unreasonable annoyance to Landlord or any other
tenants of the Building, and Tenant will comply with all present and future
laws, ordinances, regulations, and orders of the United States of America, the
state in which the Building is located, and any other public or quasi-public
authority having jurisdiction over the Building.
39.2 Trade Name: Tenant will conduct business in the Premises in
the trade name of GRAND HAVANA ROOM.
39.3 Operation of Business: Tenant Agrees (1) except as herein
otherwise provided, to continuously and uninterruptedly occupy and use the
entire Premises during the entire Term and any Renewal Term(s) for the uses
herein specified (without consideration of the profitability of the business)
and to conduct Tenant's business therein in a reputable manner; (2) to remain
open for business at least for lunch and for dinner during all such days,
nights and hours as may reasonably be designated by Landlord from time to time
on ten (10) days' prior written notice to Tenant (it being agreed and
understood however that subject only to any applicable laws Tenant may remain
open for business for any hours and on any days that it wishes); however,
Tenant hereby acknowledges, consents and agrees that any and/or all services,
facilities and access by the public to the Premises and/or to the Building may
be suspended in whole or in part, or during any periods of actual or threatened
civil commotion, insurrection or other circumstances beyond Landlord's control,
when Landlord, in Landlord's reasonable judgment, shall deem the suspension of
such services, facilities and access necessary for the protection and/or
preservation of persons and/or property; (3) to maintain displays of
merchandise in the display windows, if any; (4) to keep the display windows and
signs, if any, well lighted during such hours and days as the Building is
lighted by Landlord, including periods in addition the business hours of
Tenant, if in Landlord's judgment such lighting is necessary or desirable; (5)
to keep and maintain the Premises and Tenant's personal property and signs
therein or thereon and the exterior and interior portions of all windows, doors
and all other glass or plate glass in a neat, clean, sanitary and safe
condition and good repair, promptly replacing any glass that is broken or
cracked; (6) to warehouse, store or stock in the Premises only such goods,
wares and merchandise as Tenant intends
2
<PAGE> 40
to offer for sale at retail; (7) to apply for, secure, maintain and comply with
all licenses or permits which may be required for the conduct by Tenant of the
business herein permitted to be conducted in the Premises and to pay, if, as
and when due, all license and permit fees and charges of a similar nature in
connection therewith; (8) neither to solicit business nor to distribute
advertising matter in the parking or other Common Areas or facilities of the
Building except as permitted in writing by Landlord; (9) not to conduct any
auction, distress, fire or bankruptcy sale or any going-out-of-business sale
(whether real or fictitious); (10) not to represent or advertise that it
regularly or customarily sells merchandise at manufacturer's, distributor's,
wholesale, warehouse, discount, fire sale, bankruptcy sale or similar prices
other than at retail, but nothing contained herein shall restrict Tenant from
determining the selling price of its own merchandise or preclude the conducting
of periodic seasonal, promotional or clearance sales; (11) not to conduct any
catalogue, telephone or mail-order sales in or from the Premises except of
merchandise permitted pursuant to Article 41.3 of this Lease; and (12) not to
park or permit to be parked any of Tenant's trucks, employee vehicles or any of
Tenant's delivery vehicles in the parking areas, except armored vehicles and
not to load or unload, or permit to be loaded or unloaded, any trucks or
delivery vehicles in any portion of the Building other than in places
designated for such purposes by Landlord.
XL REPAIRS
40.1 Landlord shall keep and maintain the roof and other exterior
portions of the Premises (exclusive of doors, windows, glass, showcases and
storefronts) in good repair, provided that Tenant shall give Landlord written
notice of the necessity for such repairs, and provided that the damage thereto
shall not have been caused by Tenant, its agents, contractors, invitees or
employees, in which event Tenant shall be responsible therefore and shall
promptly repair such damage. The provisions of this Section 40 shall not apply
in the case of damage or destruction by fire or other casualty or by eminent
domain. Except as provided in this Article 40.1, Landlord shall have no
obligation or liability for repair or maintenance of the Premises, or any part
thereof, nor shall Landlord be under any liability to repair, maintain or
replace any electrical, plumbing heating, air conditioning or other mechanical
installation, nor shall Landlord be obligated to make any improvements of any
kind upon the Premises, or to make any repairs, replacements or improvements to
any equipment, facilities or fixtures contained therein, all of which shall be
the responsibility of Tenant as provided in Article 40.1.
40.2 Tenant, at Tenant's sole cost and expense, shall keep the
interior of the Premises, including but not limited to all doors, windows and
glass, including glass walls, electrical, plumbing, heating, air conditioning
and other mechanical installations and equipment used by or in connection with
the Premises in clean, safe
3
<PAGE> 41
and sanitary condition and in good order and repair, including replacement
thereof, and promptly replace any plate glass which may be broken or damaged
with glass of like kind and quality, and will suffer no waste or injury
thereto, and quit and surrender the Premises at the expiration of the Term in
as good condition as when received, except for ordinary wear and tear. Without
limitation of the generality of the foregoing, Tenant, at Tenant's sole cost
and expense, shall promptly make all repairs and replacements to (i) any pipes,
lines, ducts, wires or conduits contained within the Premises, (ii) Tenant's
signs, (iii) any heating, air conditioning, electrical, ventilating or plumbing
equipment installed in or serving the Premises, (iv) all glass window panes and
doors, and (v) any other mechanical systems serving the Premises. Tenant shall
be responsible, at Tenant's sole cost and expense, for providing all
janitorial, cleaning, pest and termite control services for the Premises. All
such services shall be provided in accordance with standards customarily
maintained for similar shopping centers and Tenant shall maintain, at Tenant's
sole coast and expense, service contracts therefor. Tenant shall provide
Landlord with a copy of a fully executed maintenance contract covering heating,
ventilation and air conditioning equipment within the Premises and Tenant
agrees to keep such contract in force during the Term of this Lease. Such
contract shall be with a contractor licensed to do business in the jurisdiction
in which the Building is located and approved by Landlord, and shall cover all
parts and labor. Tenant ill not overload the electrical wiring and will not
install any additional electrical wiring or plumbing unless it has first
obtained Landlord's written consent thereto, and if such consent is given,
Tenant will install all such wiring or plumbing at its own cost and expense.
Tenant will repair promptly, at its own expense, any damage to the Premises or
Building caused by bringing into the premises or the Building any property for
Tenant's use or by the installation, use or removal of such property,
regardless of fault or by whom such damage shall be caused, unless caused by
Landlord's, its agents', employees' or contractors' gross negligence or willful
misconduct.
40.3 In the event Tenant shall not proceed promptly and diligently
to make any repairs or perform any obligation imposed upon it by the preceding
Articles within seven (7) days after receiving written notice from Landlord to
make such repairs or perform such obligation, then and in such event Landlord
may, at its option, enter the Premises and do and perform the things specified
in said notice at Tenant's cost and expense, without liability on the part of
landlord for any loss or damage resulting from any such action by Landlord, and
Tenant agrees to pay, as additional rent, promptly upon demand any cost or
expense incurred by Landlord in taking such action, plus twelve percent (12%)
for overhead and administration.
4
<PAGE> 42
XLI UTILITIES
41.1 Tenant, at its own expense, shall arrange with the appropriate
utility companies for the provision of any and all utilities. Tenant shall pay
promptly when due the charges for all utility services rendered or furnished to
the Premises, including, without limitation, heat, water, sewer, telephone, gas
and electricity (whether by meter or sub-meter). Landlord will provide and
maintain the necessary mains and electrical conduits to bring water, gas and
electricity to the perimeter of the Premises. Under no circumstances shall
Landlord be liable to Tenant in damages or otherwise (i) if any utility shall
become unavailable from any public utility company, public authority or any
other person or entity supplying or distributing such utility, or (ii) for any
interruption in service of electricity, water, sewer, gas, heat, ventilation,
telephone or air conditioning caused by fire, accidents, strikes, breakdowns,
necessary maintenance, alterations, repairs, acts of God or any other causes;
and the foregoing shall not constitute a termination of this Lease or an actual
or constructive eviction and shall not entitle Tenant to terminate this lease
or to an abatement of rent payable hereunder.
XLII COMPLIANCE WITH LAWS
42.1 Tenant shall comply with all present and future laws, rules,
regulations, orders, directions and requirements of all governmental
departments, bodies, bureaus, agencies and officers, and with all rules,
directions, requirements and recommendations of fire departments, the local
board of fire underwriters and other fire insurance rating organizations for
the area in which the Building is situated, pertaining to the Premises or the
use and occupancy thereof, including the making of such alterations,
modifications and improvements as may be so required. In the event Tenant
shall fail or neglect to comply with any of the aforesaid laws, rules,
regulations, orders, directions, requirements or recommendations, Landlord or
its agents may enter the Premises and take all such action and do all such work
in or to the Premises as may be necessary in order to comply with such laws,
rules, regulations, orders, directions, requirements or recommendations, and
Tenant shall reimburse Landlord promptly upon demand for the expense incurred
by Landlord in taking such action and performing such work. Tenant shall not
do or suffer to be done, or keep or suffer to be kept, anything in, upon or
about the Premises which will contravene Landlord's policies insuring against
loss or damage by fire or other hazards, including but not limited to public
liability, or which will prevent Landlord from procuring such policies in
companies reasonably acceptable to Landlord; and if anything done, omitted to
be done or suffered to be done by Tenant, or kept or suffered by Tenant to be
kept in, upon or about the premises shall cause the cost of fire or other
insurance on the Premises or other property of Landlord in the Building, in
companies reasonably acceptable to landlord, to be increased,
5
<PAGE> 43
Tenant will pay the amount of such increase promptly upon Landlord's demand.
42.2 Tenant shall also make such alterations, modifications,
additions, installations or improvements to the Premises as may be required for
the safety and health of Tenant's employees pursuant to the Williams-Steiger
Occupational Safety and Health Act of 1970 (OSHA), as the same may be amended
or implemented from time to time; but no such alterations, modifications,
additions, installations or improvements, or any other alteration,
modification, addition, installation or improvement Tenant may wish to make,
shall be made unless Landlord shall first have given written approval of the
plans and specifications therefor, and shall have been protected, to Landlord's
satisfaction, against any cost or damage incident thereto, and unless Tenant
shall first have secured al necessary building and other permits; and all
thereof, when made, shall become the property of Landlord and shall remain upon
and be surrendered with said Premises as a part thereof at the end of the Term
of this Lease. Landlord agrees that it will not unreasonably withhold its
consent to any such alterations, modifications, additions, installations or
improvements. If Tenant should make any thereof without Landlord's consent,
Tenant hereby agrees to indemnify Landlord from any liability which may devolve
upon Landlord as a consequence thereof.
XLIII TRASH
43.1 Tenant, at its sole cost and expense, shall keep the Premises
clean, both inside and outside, and will remove all refuse from the premises
and from adjacent areas, all at its own expense. Tenant will not burn any
trash or garbage of any kind in the premises, or the Building, nor permit
refuse, rubbish or garbage to accumulate or fire hazard to exist about the
Premises or the Building. Tenant shall arrange for and maintain a commercial
type trash container of adequate size at the rear of the Premises and arrange
for adequate, regular pickup of trash and garbage, the location of which shall
be approved by Landlord. if Tenant's Premises is designed to keep trash
indoors, no trash shall be stored outside Tenant's Premises.
XLIV MECHANICS LIENS
44.1 Tenant covenants not to suffer or permit any mechanics' or
materialmen's liens (or a petition to establish such lien) or other similar
liens to be filed against the Premises, the fee estate or any leasehold
interest in the Building or any part thereof by reason of work, labor, services
or materials supplied or claimed to have been supplied to Tenant or anyone
holding the Premises or any part thereof through or under Tenant. If any such
lien shall at any time be filed, Tenant shall, within thirty (30) days after
receiving notice of the filing thereof, cause the same to be discharged or
record by payment, deposit, bond, order of a court of competent jurisdiction or
otherwise bonded off. Tenant
6
<PAGE> 44
shall also defend on landlord's behalf and at Tenant's sole cost and expense
any action, suit or proceeding for the enforcement of any such lien, and Tenant
shall pay as additional rent any damages and satisfy and discharge any judgment
entered thereon and indemnify and save Landlord harmless from any fees, costs,
expenses, claims or damages resulting therefrom.
XLV ROOF AND WALLS
45.1 Landlord shall have the exclusive right to use all or any part
of the roof and side walls of the Premises and the Building for any purpose, to
erect additional stores or other structures over or adjacent to all or any part
of the Premises or the Building, and to erect and maintain in connection with
the construction thereof temporary scaffolds and other aids to construction on
the exterior of the Premises or the Building; provided, however, that access to
the interior of the Premises shall not be denied and that there shall be no
encroachment upon the interior of the Premises.
XLVI EXCAVATION
46.1 If any excavation shall be made upon land adjacent to the
premises, Tenant shall permit the party authorized to cause such excavation to
be made to enter upon the Premises for the purpose of doing such work as such
party may deem necessary to preserve the wall of the building of which the
Premises form a part from damage and to support the same by proper foundations
and shoring, and Tenant hereby waives all claims for inconvenience,
disturbance, loss of business or other damages against Landlord therefor and
without in any manner affecting Tenant's obligations under this
7
<PAGE> 45
Lease, nor shall the same constitute any ground for an abatement of any rent
hereunder.
IN WITNESS WHEREOF, Landlord and Tenant have executed under seal and
delivered this Addendum under Seal on the date first above written.
WITNESS/ATTEST: TENANT:
/s/ UNITED RESTAURANTS, INC.
T/A GRAND HAVANA ROOM
/s/ Harry Shuster
WITNESS/ATTEST: LANDLORD:
/s/ WASHINGTON REAL ESTATE
INVESTMENT TRUST
By: /s/ (SEAL)
By: (SEAL)
Name: Larry E. Finger
Title: Sr. V.P. & CFO
8
<PAGE> 46
LEASE ADDENDUM
This LEASE ADDENDUM ("Addendum") is made to the Restaurant Lease and
Exhibits dated as of August 23, 1996 (collectively, the "Lease"), by and
between WASHINGTON REAL ESTATE INVESTMENT TRUST ("Landlord") and UNITED
RESTAURANTS, INC. T/A GRAND HAVANA ROOM ("Tenant").
Tenant and Landlord hereby agree that notwithstanding anything
contained in the Lease to the contrary, the provisions set forth below will be
deemed to be a part of the Lease and shall supersede, to the extent
appropriate, any contrary provision in the Lease. All references in the Lease
and in this Addendum shall be construed to mean the Lease and Exhibits, as
amended and supplemented by this Addendum. All defined terms used in this
Addendum, unless specifically defined in this Addendum, shall have the same
meaning as such terms have in the Lease.
1. Contingencies. Tenant may terminate the Lease, upon written
notice to Landlord, if Tenant is unable to obtain any governmental approvals,
consents, permits or licenses of any kind (collectively, the "Permits")
required in order to construct and operate on the Premises a private club with
complete dining facilities including the sale and consumption of alcoholic
beverages and the sale and the smoking of cigars on site (the "Private Club").
Tenant shall diligently pursue the acquisition of the Permits. If Tenant fails
to obtain any of the Permits Landlord shall be so notified and shall have
ninety (90) days after receipt of such notice to obtain the Permits on behalf
Tenant at Tenant's sole cost and expense; provided, however, in no event shall
Tenant be obligated hereunder for any such costs in excess of $15,000.00.
Tenant shall diligently work Landlord to obtain the Permits. Furthermore, if
at any time during the term of this Lease Tenant, through no fault of its own,
loses the permits necessary to operate the Private Club as described in the
first sentence of this Addendum Provision No. 1 (including, without limitation,
as the result of any kind of governmental determination or finding that
Tenant's use of the Premises for the Private Club constitutes a private club of
the type that may not hold a license for the on-site sale of alcoholic
beverages), then Tenant may, by written notice to Landlord, terminate this
Lease. Any termination by Tenant pursuant to this Addendum Provision No. 1
shall be effective as of the date (the "Effective Date") set forth in Tenant's
notice to Landlord. On or before the Effective Date, Tenant shall vacate the
Premises and return possession thereof to Landlord and from and after the
Effective Date neither party shall have any further liability under this Lease
except that Landlord shall promptly return any prepaid rent or security deposit
to Tenant.
2. Furniture, Fixtures and Equipment. During the entire term of
this Lease Tenant shall have, at no additional cost and expense to Tenant, the
exclusive right to use all of the furniture,
<PAGE> 47
fixtures and equipment listed in Exhibit D attached to the lease (the "FF&E"),
but Landlord shall make no representation to the accuracy of Exhibit D.
Landlord represents and warrants that it has full power and authority to permit
Tenant such exclusive use, free of all prior rights or encumbrances, and
Landlord shall indemnify Tenant and hold Tenant harmless with respect to any
claims or damages suffered by Tenant because of any misrepresentation by
Landlord or because of any prior claims made with respect thereto. If Tenant
wants to remove any of the FF&E from the Premises during the term of the Lease,
then Tenant must first offer any such FF&E to Landlord before removing same.
Upon the expiration or earlier termination of the Lease all of the then
remaining FF&E in the Premises shall be surrendered to Landlord in its then
as-is condition.
3. Exclusions from Operating Expenses.
(a) Notwithstanding anything to the contrary in the
definition of Operating Expenses and Taxes set forth in the Lease, Operating
Expenses and Taxes shall not include the following, except to the extent
specifically permitted by a specific exception to the following:
(i) Expenses in connection with services or other
benefits which are provided to some tenants in the Building but not to
Tenant or for which Tenant is charged for directly;
(ii) Costs incurred by Landlord due to the
violation by Landlord or any tenant of the terms and conditions of any
lease of space in the Building;
(iii) Amounts paid to Landlord or to subsidiaries
or affiliates of Landlord for goods and/or services in or to the
Building to the extent such amounts exceed the costs of such goods
and/or services rendered by unaffiliated third parties on a
competitive basis;
(iv) Landlord's general corporate overhead and
general and administrative expenses;
(v) Any compensation paid to clerks, attendants
or other persons in commercial concessions operated by Landlord or in
the parking garage of the Building or wherever Tenant is granted its
parking privileges and/or all fees paid to any parking facility
operator (on or off Site);
(vi) The cost of any electric power directly used
by any other tenant in the Building;
(vii) Services and utilities provided, taxes
attributable to, and costs incurred in connection with the operation
of the retail and restaurant operations in the Building, except to the
extent that (xx) the square footage of
2
<PAGE> 48
such operations is included in the rentable square feet of the
Building for purposes of calculating Tenant's proportion of increases
in real estate taxes and Operating Expenses and (yy) the services,
utility and tax costs for such operations do not materially exceed the
cost which would have been incurred had the retail and/or restaurant
space been used for general office purposes;
(viii) Costs incurred in connection with upgrading
the Building to comply with disability, life, fire and safety codes,
ordinances, statutes, or other laws in effect prior to the
Commencement Date, including, without limitation, the ADA, including
penalties or damages incurred due to such non-compliance;
(ix) Tax penalties incurred as a result of
Landlord's negligence, inability or unwillingness to make payments
and/or to file any tax or informational returns when due;
(x) Costs arising from the gross negligence or
fault of other tenants or Landlord or its agents, or any vendors,
contractors, or providers of materials or services selected, hired or
engaged by Landlord or its agents including, without limitation, the
selection of Building materials;
(xi) Notwithstanding any contrary provision of the
Lease, including, without limitation, any provision relating to
capital expenditures, any and all costs arising from the presence of
hazardous materials or substances (as defined by Applicable Laws in
effect on the date the Lease is executed) in or about the Premises,
the Building or the Site including, without limitation, hazardous
substances in the ground water or soil, not placed in the Premises,
the Building or the Site by Tenant;
(xii) Costs arising from Landlord's charitable or
political contributions;
(xiii) Costs arising from latent defects in the
base, shell or core of the Building or improvements installed by
Landlord or repair thereof;
(xiv) Costs for sculpture, paintings or other
objects of art;
(xv) Costs (including in connection therewith all
attorneys' fees and costs of settlement judgments and payments in lieu
thereof) arising from claims, disputes or potential disputes in
connection with potential or actual claims litigation or arbitrations
pertaining to Landlord and/or the Building and/or the Site;
3
<PAGE> 49
(xvi) Costs associated with the operation of the
business of the partnership or entity which constitutes Landlord as
the same are distinguished from the costs of operation of the
Building, including partnership accounting (as distinguished from
Building accounting) and legal matters, costs of defending any
lawsuits with any mortgagee (except as the actions of Tenant may be in
issue), costs of selling, syndicating, financing, mortgaging or
hypothecating any of Landlord's interest in the Building, costs of any
disputes between Landlord and its employees (if any) not engaged in
Building operation, disputes of Landlord with Building management, or
outside fees paid in connection with disputes with other tenants;
(xvii) Costs of any "tap fees" or any sewer or water
connection fees for the benefit of any particular tenant in the
Building;
(xviii) Costs incurred in connection with any
environmental clean-up, response action, or remediation on, in, under
or about the Premises or the Building, including but not limited to,
costs and expenses associated with the defense, administration,
settlement, monitoring or management thereof;
(xix) Any expenses incurred by Landlord for use of
any portions of the.Building to accommodate events including, but not
limited to shows, promotions, kiosks, displays, filming, photography,
private events or parties, ceremonies, and advertising beyond the
normal expenses otherwise attributable to providing Building services,
such as lighting and HVAC to such public portions of the Building in
normal Building operations during standard Building hours of
operation;
(xx) Any entertainment or dining expenses for any
purpose;
(xxi) Any flowers, gifts, balloons, etc. provided
to any entity whatsoever, to include, but not limited to, Tenant,
other tenants, employees, vendors, contractors, prospective tenants
and agents;
(xxii) Any cleaning provided to any space in the
Building other than the common areas thereof;
(xxiii) Any "validated" parking for any entity;
(xxiv) Any "finders fees", brokerage commissions,
job placement costs or job advertising cost, other than with respect
to employees stationed at the Building;
4
<PAGE> 50
(xxv) The cost of any magazine, newspaper, trade or
other subscriptions;
(xxvi) Intentionally omitted;
(xxvii) The cost of any "tenant relations" parties,
events or promotion not consented to by an authorized representative
of Tenant in writing;
(xxviii) "In-house" legal and/or accounting fees; and
(xxix) Any other expenses which, in accordance with
generally accepted accounting principles, consistently applied, would
not normally be treated as Operating Expenses by comparable landlords
of Comparable Buildings.
(b) In the event any facilities, services or utilities
used in connection with the Building are provided from another building owned
or operated by Landlord or vice versa or jointly to one or more of Landlord's
buildings, the costs incurred by Landlord in connection therewith shall be
allocated to Operating Expenses by Landlord on or reasonably equitable basis.
(c) Landlord further agrees that since one of the
purposes of Operating Expenses and the gross up provision is to allow Landlord
to require Tenant to pay for the costs attributable to its Premises, Landlord
agrees that (i) Landlord will not collect or be entitled to collect Operating
Expenses from all of its tenants in an amount which is in excess of one hundred
percent (100%) of the Operating Expenses actually paid by Landlord in
connection with the operation of the Building, and (ii) Landlord shall make no
profit from Landlord's collections of Operating Expenses. All assessments and
premiums which are not specifically charged to Tenant because of what Tenant
has done, which are payable over more than one (1) year and/or are allocable to
more than one (1) year, shall, for purposes of calculating Tenant's proportion
on increases in real estate taxes, be deemed paid by Landlord in the maximum
number of installments permitted by law.
(d) Each time Landlord provides Tenant with an actual
and/or estimated statement of Operating Expenses, such statement shall be
itemized on a line item by line item basis, showing the applicable expense for
the applicable year and the year prior to the applicable year.
4. Audit Right. In the event of any dispute regarding the amount
due as Tenant's Pro Rata Share of Taxes or Operating Expenses pursuant to Lease
Sections 3.4 or 3.5, Tenant shall have the right, after reasonable notice and
at reasonable times, to inspect and photocopy Landlord's accounting records at
Landlord's office. If, after such inspection and photocopying, Tenant
continues to dispute the amount of its Pro Rata Share of Taxes or Operating
Expenses, Tenant, or an agent which shall be a Certified
5
<PAGE> 51
Public Accountant designated by Tenant, shall be entitled to audit and/or
review Landlord's records to determine the proper amount of its Pro Rata Share
of Taxes or Operating Expenses. If such audit or review reveals that Landlord
has overcharged Tenant, then within thirty (30) days after the results of such
audit are made available to Landlord, Landlord shall reimburse Tenant the
amount of such overcharge plus interest thereon at the Interest Rate. If the
audit reveals that Tenant was undercharged, then within thirty (30) days after
the results of the audit are made available to Tenant, Tenant shall reimburse
Landlord the amount of such undercharge plus interest thereon at the Interest
Rate. If Landlord desires to contest such audit results, Landlord may do so by
submitting the results of the audit to arbitration pursuant to the then-current
rules and procedures of the American Arbitration Association within thirty (30)
days of receipt of the results of the audit, and the arbitration shall be final
and binding upon Landlord and Tenant. Tenant agrees to pay the cost of such
audit, provided that if the audit reveals that Landlord's determination of
Tenant's Pro Rata Share of Taxes or Operating Expenses as set forth in any
statement sent to Tenant was in error in Landlord's favor by more than four
percent (4%), Landlord shall pay the cost of such audit. Landlord shall be
required to maintain records of all Taxes and Operating Expenses for the
entirety of the three-year period ("Review Period") following Landlord's
delivery to Tenant of each statement setting forth Tenant's Pro Rata Share
thereof. The payment by Tenant of any amounts pursuant to Lease Sections 3.4
or 3.5 shall not preclude Tenant from questioning the correctness of any
statement provided by Landlord at any time during the Review Period, but the
failure of Tenant to object thereto prior to the expiration of the Review
Period shall be conclusively deemed Tenant's approval of the statement.
Notwithstanding anything herein to the contrary, Tenant shall have no right to
audit during any time when Tenant is not current with regard to all amounts due
under this Lease, including any disputed amounts.
5. Intentionally Omitted.
6. Removal of Property. Notwithstanding anything to the contrary
set forth in the Lease, all articles of personal property and all business and
trade fixtures, machinery and equipment, furniture and movable partitions owned
by Tenant or installed by or on behalf of Tenant in the Premises shall remain
the property of Tenant, and may be removed by Tenant at any time during the
Term of the Lease as long as Tenant is not in default hereunder with any
applicable cure period having expired. If Tenant fails to remove all of its
effects from the Premises upon the expiration or earlier termination of the
Lease for any cause whatsoever, Landlord may, at its option, any time after
five (5) days' written notice to Tenant of its intention to remove such
effects, remove, store, dispose of or sell such effects in any manner that
Landlord shall choose without liability to Tenant for loss thereof, and Tenant
shall pay Landlord upon demand any and all expenses incurred in connection with
such removal, including court costs, attorneys' fees, and
6
<PAGE> 52
reasonable storage charges incurred while such effects were in Landlord's
possession.
7. Abatement of Rent When Tenant Is Prevented From Using
Premises. In the event that Tenant is reasonably prevented from using, and
does not use, the Premises or any portion thereof, for three (3) consecutive
business days or ten (10) days in any twelve (12) month period (the
"Eligibility Period") as a result of (a) any damage or destruction to the
Premises, (b) any repair, maintenance or alteration performed by Landlord after
the Commencement Date and required by the Lease, which prevents Tenant's use of
the Premises, (c) any failure by Landlord to provide Tenant with services or
access to the Premises for five (5) days following notice to Landlord, (d)
because of an eminent domain proceeding, or (e) because of the presence of
hazardous substances in, on or around the Premises, the Building or the Site
which could, in Tenant's business judgment and taking into account the
standards, guidances and recommendations included in applicable laws with
respect to hazardous substances, pose a health risk to occupants of the
Premises, then Tenant's Rent shall be abated or reduced, as the case may be,
after expiration of the Eligibility Period for such time that Tenant continues
to be so prevented from using, and does not use, the Premises or a portion
thereof, in the proportion that the rentable area of the portion of the
Premises that Tenant is prevented from using, and does not use, bears to the
total rentable area of the Premises. However, in the event that Tenant is
reasonably prevented from conducting, and does not conduct, its business in any
portion of the Premises for a period of time in excess of the Eligibility
Period, and the remaining portion of the Premises is not sufficient to allow
Tenant to effectively conduct its business therein, and if Tenant does not
conduct its business from such remaining portion, then for such time after
expiration of the Eligibility Period during which Tenant is so prevented from
effectively conducting its business therein, the Rent for the entire Premises
shall be abated; provided, however, if Tenant reoccupies and conducts its
business from any portion of the Premises during such period, the Rent
allocable to such reoccupied portion, based on the proportion that the rentable
area of such reoccupied portion of the Premises bears to the total rentable
area of the Premises, shall be payable by Tenant from the date such business
operations commence. If Tenant's right to abatement occurs because of an
eminent domain taking and/or because of damage or destruction to the Premises
or Tenant's property, Tenant's abatement period shall continue until Tenant has
been given sufficient time and sufficient access to the Premises to rebuild the
portion of the Premises it is required to rebuild, to install its property,
furniture, fixtures, and equipment to the extent the same shall have been
removed as a result of such damage or destruction and to move in over one (1)
weekend. To the extent Tenant is entitled to abatement because of an event
covered by Lease Articles XIX (Fire or Casualty) or XVII (Condemnation) then
the Eligibility Period shall not be applicable.
7
<PAGE> 53
8. Insurance Obligations, Allocation of Risks and Minimizing
Duplication of Insurance Coverage. Notwithstanding anything to the contrary
set forth in the Lease, because Landlord is required to maintain insurance on
the Building and Tenant compensates Landlord for such insurance as part of
Tenant's pro rata share of expenses and because of the existence of waivers of
subrogation set forth in Lease Section 18.3, Landlord hereby indemnifies and
holds Tenant harmless from any loss, cost, liability, damage or expense
(including, but not limited to penalties, fines and actual attorneys' fees and
costs) to any property outside of the Premises to the extent such loss, costs,
liability, damage or expenses are covered by such insurance, even if resulting
from the negligent acts, omissions, or willful misconduct of Tenant or those of
its agents, contractors, servants, employees or licensees. Similarly, since
Tenant must carry insurance pursuant to Lease Article XVIII (Insurance) to
cover its personal property within the Premises, Tenant hereby indemnifies and
holds Landlord harmless from any loss, cost, liability, damage or expense
(including, but not limited to, penalties, fines and actual attorneys' fees and
costs) to any property within the Premises to the extent such loss, costs,
liability, damage or expenses are covered by such insurance, even if resulting
from the negligent acts, omissions or willful misconduct of Landlord or those
of its agents, contractors, servants, employees or licensees. In the event the
Premises and/ or the Building are damaged or destroyed and such damage or
destruction is covered by insurance obtained by Landlord and not covered by
insurance obtained by Tenant, Landlord shall use the proceeds of its insurance
to repair the damage or destruction to the Premises and/or the Building,
subject to any rights either Landlord or Tenant may have to terminate the Lease
in the event such damage or destruction occurs.
9. Entry by Landlord. Notwithstanding anything to the contrary
set forth in the Lease, Landlord and/or those acting on Landlord's behalf may
only enter the Premises upon reasonable prior notice to Tenant, except in cases
of emergency, in which case no such notice shall be required. In any event,
any such entry shall be accomplished as expeditiously as reasonably possible
and in a manner so as to cause as little interference to Tenant as reasonably
possible.
10. Access to Building and Parking. Tenant shall be granted
access to the Building, the Premises, and the parking provided to the Building
twenty-four (24) hours per day, seven (7) days per week, every day of the year.
11. Default by Landlord. Landlord shall be in default in the
performance of any obligation required to be performed by Landlord under the
Lease if Landlord has failed to perform such obligation within thirty (30) days
after the receipt of notice from Tenant specifying in detail Landlord's failure
to perform; provided, however, that if the nature of Landlord's obligation is
such that more than thirty (30) calendar days are required for its
8
<PAGE> 54
performance, Landlord shall not be deemed in default if it shall commence such
performance within thirty (30) days and thereafter diligently pursues the same
to completion. Upon any such default by Landlord, Tenant may exercise any of
its rights provided in law or at equity and shall have the right, but not the
obligation, to cure any such default by Landlord if Landlord falls to commence
to cure such default within the prescribed cure period and thereafter
diligently prosecute such cure to completion .
12. Landlord BankruptcY Proceeding. In the event that the
obligations of Landlord under this Lease are not performed during the pendency
of a bankruptcy or insolvency proceeding involving the Landlord as the debtor,
or following the rejection of this Lease in accordance with Section 365 of the
United States Bankruptcy Code, then notwithstanding any provision of this Lease
to the contrary, Tenant shall have the right to set off against Rents next due
and owing under this Lease (a) any and all damages caused by such
non-performance of Landlord's obligations under this Lease by Landlord,
debtor-in-possession, or the bankruptcy trustee, and (b) any and all damages
caused by the non-performance of Landlord's obligations under this Lease
following any rejection of this Lease in accordance with Section 365 of the
United States Bankruptcy Code.
13. Non-Disturbance Agreement.
(a) Landlord represents and warrants that there are no
ground lessors, mortgage holders or lien holders on the real property of which
the Premises form a part (each, a "Superior Mortgagee") in existence as of the
execution and delivery of this Lease.
(b) Landlord agrees to provide Tenant with commercially
reasonable non-disturbance agreement(s) in favor of Tenant from any Superior
Mortgagee(s) of Landlord who later come(s) into existence at any time prior to
the expiration of the Term of the Lease, as it may be extended, in
consideration of, and as a condition precedent to, Tenant's agreement to be
bound by Lease Article XXV (Subordination). Said non-disturbance agreements
shall be in recordable form and may be recorded at Tenant's election and
expense.
14. Estoppel Certificate. Landlord hereby agrees to provide to
Tenant an estoppel certificate signed by Landlord, containing the same types of
information, and within the same periods of time, as are set forth in Article
XXXIII (Estoppel Certificate), except such changes as are reasonably necessary
to reflect that the estoppel certificate is being granted and signed by
Landlord to Tenant or Tenant's lender, assignee or sublessee, rather than from
Tenant to Landlord or to a lender or purchaser.
15. Rules and Regulations. Landlord agrees that the Rules and
Regulations of the Building shall not be changed, revised or
9
<PAGE> 55
enforced in any unreasonable way by Landlord, nor enforced or changed by
Landlord in such a way as to interfere with the purposes permitted under the
Lease. In the event any other tenant or occupant of the Building fails to
comply with the Rules and Regulations, and such non-compliance unreasonably
interferes with Tenant's use of the Premises, Landlord shall use reasonable
efforts to cause such other tenants and/or occupants comply with the Rules and
Regulations.
16. Tenant's Right to Make Repairs. Notwithstanding any provision
set forth in the Lease to the contrary, if Tenant provides written notice (or
oral notice in the event of an emergency such as damage or destruction to or of
a structural component, or any Building Systems or telecommunications system of
or in the Premises or the Building (including, but not limited to, damage to
the roof, or exterior window or door)) to Landlord of an event or circumstance
which requires the action of Landlord with respect to repair and/or
maintenance, and Landlord fails to provide such action within a reasonable
period of time, given the circumstances, after the receipt of such notice, but
in any event not later than twenty-one (21) days after receipt of such notice,
then Tenant may proceed to take the required action upon delivery of an
additional ten (10) business days' notice to Landlord specifying that Tenant is
taking such required action (provided, however, that such additional notice
shall not be required in the event of an emergency), and if such action was
required under the terms of the Lease to be taken by Landlord and was not taken
by Landlord within such ten (10) day period, then Tenant shall be entitled to
prompt reimbursement by Landlord of Tenant's reasonable costs and expenses in
taking such action plus interest thereon at the Interest Rate. The "Interest
Rate" is defined as the lesser of (a) the rate publicly announced from time to
time, by the largest (as measured by deposits) chartered bank operating in
California, as its prime rate, reference rate or other similar benchmark rate,
plus two percent (2%) or (b) the maximum rate permitted by law. In the event
Tenant takes such action, and such work will affect the Building Systems or the
telecommunication system (including, without limitation, any intrabuilding
network cable) or the structural integrity of the Building, Tenant shall use
only those contractors used by Landlord in the Building for work on such
systems unless such contractors are unwilling or unable to perform, or timely
perform, such work, in which event Tenant may utilize the services of any other
qualified contractor which normally and regularly performs similar work in
comparable buildings. Furthermore, if Landlord does not deliver a detailed
written objection to Tenant within thirty (30) days after receipt of an invoice
by Tenant of its costs of taking action which Tenant claims should have been
taken by Landlord, or if Landlord delivers to Tenant, within thirty (30) days
after receipt of Tenant's invoice, a written objection to the payment of such
invoice, setting forth with reasonable particularity Landlord's reasons for its
claim that such action did not have to be taken by Landlord pursuant to the
terms of the Lease or that the charges are excessive (in which case
10
<PAGE> 56
Landlord shall pay the amount it contends would not have been excessive), or
that the repairs were not performed correctly, then in either such case Tenant
shall not be entitled to any deduction from Rent, but as Tenant's sole remedy,
Tenant may proceed to claim a default by Landlord or, if elected by either
Landlord or Tenant, the matter shall proceed to resolution by the selection of
an arbitrator to resolve the dispute, which arbitrator shall be selected and
qualified pursuant to the then current procedures and practices of the American
Arbitration Association, and whose costs shall be paid for by the losing party,
unless it is not clear that there is a "losing party," in which event the costs
of arbitration shall be shared equally. If Landlord fails to pay Tenant the
amount of any award made to Tenant in any such arbitration proceeding within
thirty (30) days after such award, then Tenant shall be entitled to deduct from
the Rent payable by Tenant under the Lease the unpaid amount of any such award.
17. Alterations and Improvements. Tenant is granted the right to
make non-structural alterations and improvements to the Premises, as long as
(a) Tenant pays for the entire cost of such alterations and improvements, (b)
Tenant agrees to remove said alterations and improvements upon the expiration
or termination of the Lease, if requested by Landlord at the time the
alterations and improvements are approved by Landlord, and (c) such alterations
and improvements will not adversely affect the structural integrity of the
Premises and/or the Building. Any time Tenant proposes to make such
alterations and/or improvements, Tenant shall provide Landlord with ten (10)
days' notice of the proposed alterations and/or improvements, together with the
plans and specifications, and Landlord shall grant its approval within such ten
(10) day period, unless Landlord reasonably determines that such alterations
and/or improvements would adversely affect the structural integrity of the
Premises and/or the Building or would [?] affect the exterior appearance of the
Building.
18. Consent/Duty to Act Reasonably. Except for any reference to
the words "sole" or "absolute" and except for matters (a) which involve
security for the Building, (b) which will have an adverse effect on the (i)
structural integrity of the Building or (ii) the Building's plumbing, heating,
life safety, ventilating, air-conditioning, mechanical or electrical systems
("Building Systems"), or (c) which could affect the exterior appearance of the
Building, whereupon in each such case Landlord's duty is to act in good faith
and in compliance with the Lease, any time the consent of Landlord or Tenant is
required, such consent shall not be unreasonably withheld, conditioned or
delayed.
19. Right to Terminate.
(a) Notwithstanding anything in either Lease Article XIX
(Fire or Casualty) or XVII (Condemnation) to the contrary, and except as
expressly set forth in Subsection (b) immediately below,
11
<PAGE> 57
in the event that Tenant is notified or becomes aware of the fact that, within
nine (9) months of any of the following:
(i) damage or destruction to the Premises and/or
the Building or any part thereof so as to interfere substantially with
Tenant's use of the Premises and/or the Building;
(ii) a taking by eminent domain or exercise of
other governmental authority of the Premises and/or the Building or
any part thereof so as to interfere substantially with Tenant's use of
the Premises and/or the Building;
(iii) the inability of Landlord to provide services
to the Premises and/or the Building so as to interfere substantially
with Tenant's use of the Premises and/or the Building; or
(iv) any discovery of hazardous substances in, on
or around the Premises, the Building not placed in, on or around the
Premises, the Building by Tenant, that may, considering the nature and
amount of the substances involved, interfere with Tenant's use of the
Premises (each of the items set forth in provision (a)(i), (ii), (iii)
and (iv) being referred to herein as a "Trigger Event"),
Tenant cannot be given reasonable use of, and access to, a fully repaired,
restored, safe and healthful Premises and Building (except for minor
"punch-list" items which will be repaired promptly thereafter), and the
utilities and services pertaining to the Premises and the Building, all
suitable for the efficient conduct of Tenant's business therefrom, then Tenant
may elect to exercise an ongoing right to terminate the Lease upon ten (10)
days' written notice sent to Landlord at any time within a period of ninety
(90) days following the particular Trigger Event. If Landlord can deliver a
fully repaired, restored, safe and healthful Premises within nine (9) months of
the occurrence of such Trigger
12
<PAGE> 58
Event, then such termination shall be deemed rescinded without prejudice to any
future exercise of such termination right.
IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered
this Lease Addendum on the date first above written.
TENANT:
UNITED RESTAURANTS, INC.
T/A GRAND HAVANA ROOM
By: /s/
Its:
LANDLORD:
WASHINGTON REAL ESTATE
INVESTMENT TRUST
By: /s/
Its:
13
<PAGE> 1
EXHIBIT 10-40
FINANCING AGREEMENT
THIS FINANCING AGREEMENT ("Agreement") is made and entered
into this 10th day of September, 1996, by and between UNITED LEISURE
CORPORATION ("Leisure"), a Delaware corporation, and UNITED RESTAURANTS, INC.
("Restaurants"), a Delaware corporation.
WHEREAS, Restaurants is in need of a letter of credit in
connection with a proposed lease for a Grand Havana Room in New York City;
WHEREAS, in order to obtain said letter of credit, Restaurants
must provide cash collateral of up to $850,000.00; and
WHEREAS, Leisure is interested in providing such collateral
upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises
contained herein, the parties hereto agree as follows:
1. Leisure hereby agrees to pledge the sum of up to
$850,000.00 in order for Restaurants to obtain a letter of credit for its
proposed lease for a Grand Havana Room in New York City.
2. Restaurants shall use one-half (1/2) of all initial
membership fees received from members of its Grand Havana Rooms in New York
City and Washington, D.C. in order to replace the cash collateral pledged by
Leisure until all of such cash collateral is returned to Leisure. At the end
of eighteen (18) months after Leisure's pledge of the cash collateral,
Restaurants shall cause all of Leisure's remaining cash collateral to be
released and returned to Leisure. It is understood and agreed by and between
the parties hereto that the cash collateral pledged by Leisure hereunder is not
an asset of Restaurants and such cash collateral shall always be deemed an
asset of Leisure.
3. Until such time as all of Leisure's cash collateral
is returned to Leisure, Restaurants shall pay to Leisure an amount equal to ten
percent (10%) per annum on the pledged cash collateral, as it exists from time
to time. Such interest shall be paid on a quarterly basis.
4. Within thirty (30) days after the pledge of the cash
collateral by Leisure, Restaurants shall issue to Leisure the following:
(a) One Hundred Thousand (100,000) shares of
Restaurants $.01 par value common stock.
<PAGE> 2
(b) Warrant to purchase one hundred thousand
(100,000) shares of Restaurants $.01 par value common stock in the form
attached hereto as Exhibit "A".
5. As a condition to the issuance of the aforesaid
common stock and warrant ("Securities"), Leisure hereby represents and warrants
to, and covenants with, Restaurants as follows:
(a) Leisure has received and had the opportunity
to review Restaurants' Form 10-K and Form 10-Q filed with the Securities and
Exchange Commission for the periods ended December 29, 1995 and June 30, 1996,
respectively ("Information") and has been given access to full and complete
information regarding Restaurants, and has utilized such access to Leisure's
satisfaction for the purpose of obtaining such information regarding
Restaurants as Leisure has requested; and, particularly, Leisure has been given
reasonable opportunity to ask questions of, and receive answers from,
representatives of Restaurants concerning the terms and conditions of the
issuance of the Securities offering and to obtain any additional information,
to the extent available;
(b) Leisure was not offered or sold the
Securities, directly or indirectly, by means of any form of general advertising
or general solicitation, including but not limited to the following: (1) any
advertisement, article, notice or other communication published in any
newspaper, magazine, or similar medium of or broadcast over television or
radio; or (2) any seminar or meeting whose attendees had been invited by any
general solicitation or general advertising;
(c) Stop transfer instructions will be placed
with the transfer agent for the Securities, and a legend may be placed on any
instrument or certificate representing the Securities substantially to the
following effect:
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
IN RELIANCE UPON THE EXEMPTIONS FROM REGISTRATION PROVIDED IN THE ACT
AND REGULATION D UNDER THE ACT. AS SUCH, THE PURCHASE OF THIS
SECURITY WAS NECESSARILY WITH THE INTENT OF INVESTMENT AND NOT WITH A
VIEW FOR DISTRIBUTION. THEREFORE, ANY SUBSEQUENT TRANSFER OF THIS
SECURITY OR ANY INTEREST THEREIN WILL BE UNLAWFUL UNLESS IT IS
REGISTERED UNDER THE ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS
AVAILABLE. FURTHERMORE, IT IS UNLAWFUL TO CONSUMMATE A SALE OR
TRANSFER OF THIS SECURITY OR ANY INTEREST THEREIN, WITHOUT THE OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY THAT THE PROPOSED TRANSFER OR
SALE DOES NOT AFFECT THE EXEMPTIONS RELIED UPON BY
2
<PAGE> 3
THE COMPANY IN ORIGINALLY DISTRIBUTING THE SECURITY AND THAT
REGISTRATION IS NOT REQUIRED.
(d) Leisure has been advised and understands that
the Securities have not been registered under the Securities Act of 1933 or
applicable state securities laws and that the Securities are being offered and
sold pursuant to exemptions from such laws. Leisure represents and warrants
that the Securities are being acquired for Leisure's own account and for
investment purposes only, and without the intention of reselling or
redistributing the same; Leisure has made no agreement with others regarding
any of the Securities; and Leisure's financial condition is such that it is not
likely that it will be necessary to dispose of any of such Securities in the
foreseeable future. Leisure further represents and agrees that if, contrary to
the foregoing intentions, Leisure should later desire to dispose of or transfer
any of the Securities in any manner, Leisure shall not do so unless and until
(i) said Securities shall have first been registered under the Act and all
applicable securities laws; or (ii) Leisure shall have first delivered to
Restaurants a written notice declaring such holder's intention to effect such
transfer and describe in sufficient detail the manner and circumstances of the
proposed transfer, which notice shall be accompanied either by a written
opinion of legal counsel who shall be reasonably satisfactory to Restaurants
which opinion shall be addressed to Restaurants and reasonably satisfactory in
form and substance to Restaurants' counsel, to the effect that the proposed
sale or transfer is exempt from the registration provisions of the Act and all
applicable state securities laws, or by a "no action" letter from the
Securities and Exchange Commission to the effect that the transfer of the
Securities without registration will not result in recommendation by the staff
of the Commission that action be taken with respect thereto.
6. This Agreement and the Exhibit hereto contain the
entire understanding and agreement of the parties regarding the subject matter
hereof. This Agreement may not be amended or superseded except by a written
instrument executed by both parties hereto.
7. In the event that either party to this Agreement
institutes legal action against the other party as a result of a breach or
default under this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys fees and court costs.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
UNITED LEISURE CORPORATION
By:/s/
Its: President
By: /s/
Its: Secretary
UNITED RESTAURANTS, INC.
By: /s/
Its: President
By: /s/
Its: Secretary
4
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this
registration statement on Form S-3, to be filed with the Securities and
Exchange Commission on or about November 13, 1996, of our report, dated
November 17, 1995, on our audits of the consolidated financial statements of
United Restaurants, Inc. and subsidiaries. We also consent to the reference of
our firm under the caption "Experts."
Hollander, Gilbert & Co.
Los Angeles, California
November 11, 1996
