EXHIBIT 10.2


 


AMENDMENT

TO

LEASE


 


This Amendment to Lease (this “Amendment”) is dated
this 23rd day of November, 2005, and is made by DLS INVESTMENTS, LLC, as “Lessor” and
McCORMICK & SCHMICK RESTAURANT CORP., a Delaware corporation, as “Lessee.”  This Amendment amends the “Lease” dated June 18,
2004, executed by Lessor and Lessee (together with this Amendment, the “Lease”) for the
leased premises (the “Premises”)
located at the property commonly known as the Maurice Dear Building at 411-417
SW 12th Avenue, Portland, Oregon.


 


R E C I T A L S


 


A.                                   The Original Term of the Lease
expires at midnight on October 12, 2009. At the option of Lessee, the
Lease may be renewed at the end of the Original Term for an additional five (5) year
period (the “First
Renewal Term”), and may be renewed again at the end of the First
Renewal Term for an additional five (5) year period (the “Second Renewal Term”),
on the same terms and conditions, except that the minimum rental for the First
and Second Renewal Terms is as provided in Sections 3.3 and 3.4 of the Lease.


 


B.                                     Lessor and Lessee have agreed to
revise the Lease for the mutual benefit of the parties.


 


C.                                     Lessee
is also the lessee under the lease (“Adjacent Lease”) dated October 13,
1994, between William P. McCormick as lessor, and Lessee’s predecessor in
interest, Jake’s Restaurant, Inc., as lessee, as evidenced by a Memorandum
of Lease recorded October 13, 2001, under recording no. 2001-136839,
records of Multnomah County, Oregon.  The
lessor’s interest under the Adjacent Lease is now held by BOIN PROPERTIES, LLC,
an Oregon limited liability company (the “Adjacent Lessor”).  The Adjacent Lease is for premises (the “Adjacent Premises”)
located in the real property (the “Adjacent Property”) commonly known as 401-409
SW 12th Avenue, Portland, Oregon, and legally described on the
attached Exhibit A.


 


D.                                    Lessee
operates its restaurant business using both the Premises and the Leased
Premises.


 


E.                                      Adjacent
Lessor is seeking financing from PRUDENTIAL MORTGAGE CAPITAL COMPANY, LLC, a Delaware
limited liability company, (“Prudential”) in order to refinance the Adjacent
Property.  Prudential is unwilling to
lend on the Property without the Lease amendments in this Amendment for the
protection of Adjacent Lessor’s mortgagees.


 


A G R E E M E N T


 


THEREFORE, Lessor and Lessee agree as follows:


 


1.                                       Lease Extension.  Lessee hereby exercises the First and Second Renewal Terms, thereby
resulting in a Lease expiration date of midnight on October 12, 2019, and
Lessor hereby accepts Lessee’s exercise of the Renewal Terms.  At the option of the Lessee, the Lease may be
renewed at the end of the Second Renewal Term for an additional five (5) year
period (the “Third
Renewal Term”), and may be renewed again at the end of the Third
Renewal Term for an additional five (5) year period (the “Fourth Renewal Term”),
on the same


 





















 


terms and conditions as contained in the
Lease, except that the Base Rent for said Third and Fourth Renewal Terms shall
be as hereinafter provided.  Lessee shall
exercise the renewal options by written notice to Lessor given at least 180
days prior to expiration of the preceding term.


 


2.                                       Base Rent.  Section 3.1
and Sections 3.3 through 3.5 of the Lease are hereby deleted in their entirety
and replaced with the following:


 


Section 3.1.                                Base
Rent.  Lessee covenants and agrees to
pay to Lessor rentals for the leased Premises in the amount of $10,080.00 for
each and every month during the term of the Lease on or before the first day of
each month, as adjusted pursuant to the provisions of Section 3.5 below. If
a rent escalation or any Renewal Term occurs on other than the first day of a
calendar month, then the corresponding increase in Base Rent shall be prorated
for such partial month.


 


Section 3.3                                   Rent
for First Renewal Term.  The Base Rent
for the first year of the First Renewal Term shall equal the dollar amount
specified in Section 3.1 above increased by the percentage change in the
Consumer Price Index comparing the Consumer Price Index figure for the calendar
month immediately preceding the commencement of the Original Term and the
Consumer Price Index for the calendar month preceding the commencement of the
first lease year of the First Renewal Term; provided, however, that such
fraction shall not in any event result in a decrease in Base Rent.  The Consumer Price Index shall mean the “All
Urban Consumers – All Items – U.S. city average (1982-1984=100)” published by
the United States Department of Labor, provided, however that if it is not so
published for such calendar month, then the most recent calendar month or other
period shall be used and further provided, however, that if hereafter the
Department of Labor shall use a different standard reference base, an
adjustment shall be made therein for purposes of the provisions of this Lease,
using such conversion factor, formula or table for making such adjustments as
is published by the Department of Labor, or if the Department of Labor does not
publish the same, then as published by Prentice Hall, Inc., the Bureau of
National Affairs, Commerce Clearing House or any other nationally recognized
publisher of similar statistical information, as selected by Landlord.  All subsequent adjustments during the First
Renewal Term shall be determined pursuant to Section 3.5 below.


 


Section 3.4                                   Rent
for Second Renewal Term.  The Base
Rent for the first year of the Second Renewal Term shall equal the dollar
amount specified in Section 3.1 above, increased by the percentage change
in the Consumer Price Index comparing the Consumer Price Index figure for the
calendar month immediately preceding the commencement of the Original Term and
the Consumer Price Index for the calendar month preceding the commencement of
the Second Renewal Term; provided, however that such adjustment shall not in
any even result in a decrease in Base Rent. 
All Subsequent adjustments during the Second Renewal Term shall be
determined pursuant to Section 3.5 below.


 


Section 3.5                                   Escalation.  The Base Rent provided in Sections 3.1
(related to the Original Term), 3.3 (related to the First Renewal Term) and 3.4
(related to the Second Renewal Term) shall be adjusted on the third anniversary
of the commencement date of the Original Term, the First Renewal Term and the
Second Renewal Term respectively, and Lessee shall upon such adjustment pay the
adjusted amount as the Base Rent.  The
adjustment shall equal the


 





















 


percentage change in the Consumer Price Index
figure for the calendar month immediately preceding the commencement of the
applicable Original Term or Renewal Term and the Consumer Price Index figure
for the calendar month immediately preceding the effective date of the
adjustment; provided, however that such adjustment shall not in any event
result in a decrease in Base Rent.


 


3.                                       Base
Rent.  The Base
Rent for the balance of the Original Term shall be as provided in Section 3.1,
subject to adjustment pursuant to the provisions of Section 3.5.  The Base Rent for the First Renewal Term
shall be as provided in Section 3.3, subject to adjustment pursuant to the
provisions of Section 3.5.  The Base
Rent for the Second Renewal Term shall be as provided in Section 3.4,
subject to adjustment pursuant to the provisions of Section 3.5.  The Base Rent for the Third and Fourth
Renewal Terms shall be the Fair Market Rental Rate of the Premises but in no
event less than the Base Rent in effect during the last month of the preceding
term.


 


As used herein
“Fair Market Rental Rate” shall mean the annual minimum rental rate that Lessor
should reasonably be able to obtain for the Premises effective the first day of
the applicable Renewal Term.  Fair Market
Rental Rate shall be based upon the prevailing rental rate for space comparable
to the Premises in terms of size, location, condition and other relevant
factors, and taking into account the term of the applicable Renewal Term, the
Permitted Use and the other provisions of this Lease.


 


Lessor shall
provide notice to Lessee of its determination of the Fair Market Rental Rate
within sixty (60) days after Lessee exercises its right to extend the
Term.  Within ten (10) days after
receiving such determination (“Lessee’s Review Period”), Lessee shall elect, in
writing, to do one of the following: (1) accept Lessor’s determination, or
(2) object to Lessor’s determination and with such objection set forth
Lessee’s determination of the Fair Market Rental Rate.  If Lessee fails to so accept or object in
writing within Lessee’s Review Period, Lessee shall conclusively be deemed to
have objected to the Fair Market Rental Rate determined by Lessor.  If Lessee so objects, Lessor and Lessee shall
use good faith to agree upon such Fair Market Rental Rate.  If Lessor and Lessee fail to reach agreement
within fifteen (15) days following Lessee’s Review Period, then the matter
shall be submitted to arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association (or its successor or, if
none, a like organization) then in effect. 
Such determination shall be final and binding upon the parties.  Lessee shall have ten (10) days after
receipt of such determination to irrevocably elect by written notice to Lessor
that it revokes its election to exercise the applicable renewal term and, in
such event, the Lease shall terminate upon the expiration of the Second Renewal
Term or Third Renewal Term, as applicable.


 


The Base Rent
provided above for the Third and Fourth Renewal Terms shall be adjusted on the
third anniversary of the commencement date of the First Renewal Term and Second
Renewal Term, and Lessee shall upon such adjustment pay the adjusted amount as
the Base Rent.  The adjustment shall
equal the percentage change in the Consumer Price Index figure for the calendar
month immediately preceding the commencement of the applicable Renewal Term and
the Consumer Price Index figure for the calendar month immediately preceding
the effective date of the adjustment; provided, however, that such adjustment
shall not in any event result in a decrease in Base Rent.  


 


4.                                       Assignment of Leasehold as Security for Adjacent Lease.  Lessor hereby consents to Lessee’s assignment
of the Lease to Adjacent Lessor as security for Lessee’s obligations under the
Adjacent Lease.  Upon notice from
Adjacent Lessor or Prudential that because of Lessee’s uncured default under
the Adjacent


 





















 


Lease,
Adjacent Lessor has succeeded to Lessee’s rights under the Lease, Lessor shall
accept Adjacent Lessor as successor in interest to Lessee’s interest under the
Lease.


 


5.                                       Lease Defaults.  Lessor agrees to give Adjacent Lessor and
Prudential a duplicate copy by
certified mail of any and all notices of default which Lessor may from time to
time give to or serve upon Lessee pursuant to the provisions of the Lease.  No notice by Lessor to Lessee shall be deemed
to have been given unless and until a copy thereof has been given to Adjacent
Lessor and Prudential.


 


6.                                       Notice to Adjacent Lessor and Prudential &
Opportunity to Cure. 
Lessor agrees that Lessee shall not be in default under the Lease until
sixty (60) days after written notice to Adjacent Lessor and Prudential.  Lessor agrees to accept performance by
Adjacent Lessor or Prudential as curing Lessee’s Lease defaults.  If Lessee fails to cure any default within
the time allowed elsewhere in the Lease, then Lessor may only terminate the
Lease:  (a) upon an additional sixty
(60) days notice to Adjacent Lessor and Prudential; and (b) if Adjacent
Lessor or Prudential fails to cure the defaults described in such notice within
such sixty days; or (c) if the default is non-monetary and cannot
reasonable be cured within such period and Adjacent Lessor or Prudential has
not begun cure within such sixty day period and proceeds diligently and
continuously to complete cure.  All
rights of Lessor to terminate the Lease as the result of any Lessee default are
subject to and conditioned upon Lessor first having given Adjacent Lessor and
Prudential written notice of the Lessee’s default and written notice of Lessee’s
failure to cure the default, and having given Adjacent Lessor and Prudential
opportunity to cure as provided in this Amendment.


 


7.                                       Defaults not Susceptible of Cure.  Neither Adjacent Lessor nor Prudential shall
have any obligation to cure any default which is not susceptible of cure by
Adjacent Lessor or Prudential or are personal to Lessee, if all monetary
obligations due Lessor are current and either Adjacent Lessor or Prudential is
either diligently proceeding to foreclose its lien on the Lease or the Adjacent
Property, or such foreclosure is stayed by court order.  If Adjacent Lessor or Prudential is
prohibited by any process or injunction issued by any court or by reason of any
action by any court having jurisdiction of any bankruptcy, debtor
rehabilitation or insolvency proceedings involving Lessee from commencing or
prosecuting foreclosure or other appropriate proceedings in the nature thereof,
the times specified in this Amendment for commencing or prosecuting such
foreclosure or other proceedings shall be extended for the period of such
prohibition; provided that Adjacent Lessor or Prudential shall have fully cured
any default in the payment of any monetary obligations of Lessee under the
Lease and shall continue to pay currently such monetary obligations as and when
the same fall due; and further provided that Adjacent Lessor or Prudential
diligently attempts to remove any such prohibition.


 


8.                                       Notice of Termination.  Lessor shall give Adjacent Lessor and
Prudential notice if the Lease is terminated for any reason, whether by Lessor’s
election upon a Lease default or through operation of law.  Adjacent Lessor and Prudential have sixty
(60) days from receipt of such notice to enter into a new lease with Lessor on
terms identical to the Lease except that Adjacent Lessor or Prudential, at
Prudential’s sole election, is the Lessee. 
Adjacent Lessor or Prudential shall exercise its right to a new lease by
giving notice to Lessor and paying the amounts listed in Lessor’s statement,
which payment shall be without prejudice to Adjacent Lessor’s or Prudential’s
right to contest the amounts paid.  Upon
Adjacent Lessor’s or Prudential’s exercise of its right to a new Lease, Lessor
covenants to execute such deeds and assignments as may be necessary or
desirable to convey title to improvements, fixtures, personal property and all
other rights appurtenant to the Property to Adjacent Lessor or Prudential which
Lessee had ownership under the Lease. 
The obligations under this paragraph shall survive the termination of
the Lease.


 





















 


9.                                       Adjacent Lessor and Prudential not in Possession.  Lessor agrees that unless Adjacent Lessor or
Prudential acquires the Lessee’s interest through foreclosure of Adjacent
Lessor’s security interest in the Lease or a new lease as provided in this
Amendment, neither Adjacent Lessor nor Prudential has any obligation under the
Lease and has no obligation to cure any defaults.


 


10.                                 Amendments of Lease.  Lessor shall not agree to any mutual
termination nor accept any surrender of the Lease (except upon the expiration
of the term of the Lease as provided for in the Lease) nor shall Lessor consent
to any material amendment or modification of the Lease, without the prior
written consent of Adjacent Lessor and Prudential.


 


11.                                 Reliance.  The Lessor makes this Amendment with
knowledge that Adjacent Lessor and Prudential are relying upon it in connection
with an extension of the Adjacent Lease term and Prudential’s loan to Adjacent
Lessor.


 


12.                                 Notices.  All notices, demands, requests and other
communications made hereunder shall be in writing and shall be properly given
and deemed delivered on the date of delivery if sent by personal delivery or
nationally recognized overnight courier and on the third business day following
mailing if sent by certified or registered mail, postage prepaid, return
receipt requested, as follows:


 


	
  If to Lender:

  	
   

  	
  Prudential Mortgage Capital Company LLC

  
	
   

  	
   

  	
  100 Mulberry Street

  
	
   

  	
   

  	
  Gateway Center Four, 8th Floor

  
	
   

  	
   

  	
  Newark, New Jersey 07102

  
	
   

  	
   

  	
  Attention: Capital Markets Group and Conduit Lending
  Program

  
	
   

  	
   

  	
   

  
	
  With copy to:

  	
   

  	
  Prudential Asset Resources

  
	
   

  	
   

  	
  2200 Ross Avenue, Suite 4900E

  
	
   

  	
   

  	
  Dallas, TX 75201

  
	
   

  	
   

  	
  Attention: Conduit Loans (Loan No. 406106110)

  
	
   

  	
   

  	
   

  
	
  If to Adjacent Lessor:

  	
   

  	
  BOIN Properties, LLC

  
	
   

  	
   

  	
  Attn: Nancy Vernon

  
	
   

  	
   

  	
  P.O. Box 5787

  
	
   

  	
   

  	
  Bend, OR 97708

  
	
   

  	
   

  	
   

  
	
  If to Lessor:

  	
   

  	
  DLS Investments, LLC

  
	
   

  	
   

  	
  Attn: Douglas L. Schmick

  
	
   

  	
   

  	
  3935 SW 91st Avenue

  
	
   

  	
   

  	
  Portland, OR 97225

  
	
   

  	
   

  	
   

  
	
  If to Lessee:

  	
   

  	
  McCormick & Schmick Restaurant Corp.

  
	
   

  	
   

  	
  Attn: Saed Mohseni, CEO

  
	
   

  	
   

  	
  720 SW Washington Street, Suite 550

  
	
   

  	
   

  	
  Portland, OR 97205

  



 





















 


	
  With copy to:

  	
   

  	
  David Gruber, Esq.

  
	
   

  	
   

  	
  Salamon, Gruber, Newman & Blaymore, P.C.

  
	
   

  	
   

  	
  97 Powerhouse Road, Suite 102

  
	
   

  	
   

  	
  Roslyn Heights, NY 11577-2016

  



 


13.                                 Additional Terms.


 


13.1                           Except as amended in this
Amendment, the terms of the Lease remain in full force and are ratified by the
parties.


 


13.2                           The
agreements herein contained shall bind and inure to the benefit of the
successors and assigns in interest of the parties hereto.


 


13.3                           This
Amendment may be executed in any number of counterparts, each of which shall be
effective only upon delivery and thereafter shall be deemed an original, and
all of which shall be taken to be one and the same instrument, for the same
effect as if all parties hereto had signed the same signature page.  Any signature page of this Amendment may
be detached from any counterpart of this Amendment without impairing the legal
effect of any signatures thereon and may be attached to another counterpart of
this Amendment identical in form hereto but having attached to it one or more
additional signature pages.


 


The rest of this page is left
blank intentionally.


 





















 


DATED as first above written.


 


	
   

  	
  DLS INVESTMENTS, LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/DOUGLAS SCHMICK

  	
   

  
	
   

  	
  name:

  	
  Douglas L. Schmick

  	
   

  
	
   

  	
  title:

  	
  Managing Member

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  McCORMICK & SCHMICK RESTAURANT CORP., a
  Delaware

  corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/SAED MOHSENI

  	
   

  
	
   

  	
  name:

  	
  Saed Mohseni

  	
   

  
	
   

  	
  title:

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  
	
  CONSENTED TO and relied upon by:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PRUDENTIAL MORTGAGE CAPITAL COMPANY LLC, a Delaware

  limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/KIRK SCHAFFER

  	
   

  
	
   

  	
   

  	
  Kirk Schaffer, its Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BOIN PROPERTIES, LLC, an Oregon limited liability
  company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ WILLIAM P. MCCORMICK

  	
   

  
	
   

  	
   

  	
  William P. McCormick, Manager