SECOND LETTER OF UNDERSTANDING
This Letter of Understanding (“LOU”) is entered into this 9th day of February, 2022, by and between the CITY OF HERCULES, a municipal corporation (“ City,”) and Lotus Organic LLC through its authorized representative, Mohammed Azam, (“Tenant”) jointly referred to in this LOU as the “ Parties,” and supersedes in its entirety the prior Letter of Understanding entered into on or about December 14, 2021 (“the 2021 LOU”).
WHEREAS, the improved real property known as 1991 Railroad Avenue in Hercules, California (Property) is owned by the City of Hercules; and WHEREAS, the City reha bilitated the existing structure located on the Property and converted it to a full service, sit-down restaurant and bar; and WHEREAS, On or about December 17, 2013, the Hercules City Council authorized execution of a lease agreement with Moses and Sam Abu Gosh (“Lease”) to operate Leila’s By The Bay restaurant at the Property; and
WHEREAS, on or about March 24 th, 2015, the City Council approved the transfer of the existing Lease from Moses and Sam Abu Gosh to Tenant for the continued operation of Leila’s By The Bay restaurant; and
WHEREAS, pursuant to Section 3(d) of the Lease, Tenant is required to pay City rent on the 1st day of each month; and
WHEREAS, over the past several years Tenant has made irregular rent payments , causing the City to issue a Demand Letter /Notice of Default on or about November 1 , 2021, demanding payment of back rent and putting Tenant on notice of default of the L ease terms; and
WHEREAS, the City Council on November 9 th, 2021, authorized the City Manager to enter into a Letter Agreement to provide Tenant the opportunity to continue operations at the Property pursuant to a payment plan and conditioned on Tenant meeting all Lease terms and conditions going forward; and
WHEREAS, an agreement in the form of a Letter of Understanding was entered into between City and Tenant on or about December 14 , 2021 (“the 2021 LOU”) that contained a payment schedule for paying back rent owed and required continued timely payment of monthly rent on an ongoing basis; and
WHEREAS, Tenant has not adhered to the terms of the 2021 LOU by failing to make rent payments by the times specified; and
WHEREAS, because Tenant has not adhered to the terms and conditi ons agreed upon in the 2021 LOU, the Hercules City Council on January 25, 2021, directed the City Manager to enter into a new Letter of Understanding with Tenant that supersedes the 2021 LOU and provides for extending the period by which Tenant must pay past due rent amounts to 12 months.
NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE MUTUAL PROMISES HEREIN CONTAINED, THE PARTIES AGREE AS FOLLOWS:
1. City will not pursue a Default or to take possession of the Property or otherwise seek to terminate the Lease as long as Tenant strictly adheres to the following conditions:
A. Current rent payments: Henceforth Tenant shall promptly pay on or before the date due as specified in the Lease Agreement the amount of monthly rent owed to City.
B. Prior unpaid rent: Tenant shall pay all past due rent amounts, including any penalties, late fees, and interest, pursuant to the following schedule:
By the first business day of each month, delivery of payment to the City, until such time as all past due amounts, including penalties, late fees, and interest, have been fully paid to City, pursuant to the attached Schedule, incorporated by reference to this Agreement.
C. Notwithstanding the above requirements, and to avoid Default, Tenant shall remain in substantial compliance with all Lease terms and conditions at all times and for the remainder of the Lease.
2. By signing this LOU, Tenant understands and acknowledges that City reserves the right to terminate the Lease and obtain lawful possession of the Property in the event Tenant is unable or unwilling to adhere to the terms of this LOU and/or the terms of the Lease.
Entire Agreement. This LOU, together with the documents referenced herein, constitutes the entire understanding of the Parties and supersedes all prior or contemporaneous written or oral agreements with respect thereto.
IN WITNESS WHEREOF, the Parties have caused this LOU to be executed by their duly authorized representatives the day and year first above written.
Leila’s By The Bay City of Hercules
By: By:
Authorized Signatory for Lotus Organic LLC Dante Hall, Hercules City Manager
Date: ________________ Date: _________________
Attachments:
1. Payment Schedule for Second LOU
2. 2021 LOU (Superseded)
3. 2013 Lease
4. 2015 Assignment
5. 2021 Demand Letter/Notice of Default
City of Hercules
Café Leila
Payment Schedule
Applied to Applied to Total
Payment Description Current Rent Date to Cover Payment Due Date Delinquency Current Rent Payment Due Delinquency/catch up plus current rent due February 1, 2022 February 1, 2022 $2,167 $3,652 $5,819 Delinquency/catch up plus current rent due March 1, 2022 March 1, 2022 2,167 3,652 5,819 Delinquency/catch up plus current rent due April 1, 2022 April 1, 2022 2,167 3,652 5,819 Delinquency/catch up plus current rent due May 1, 2022 May 1, 2022 2,167 3,652 5,819 Delinquency/catch up plus current rent due June 1, 2022 June 1, 2022 2,167 3,652 5,819 Delinquency/catch up plus current rent due July 1, 2022 July 1, 2022 2,167 3,762 5,929 Delinquency/catch up plus current rent due August 1, 2022 August 1, 2022 2,167 3,762 5,929 Delinquency/catch up plus current rent due September 1, 2022 September 1, 2022 2,167 3,762 5,929 Delinquency/catch up plus current rent due October 1, 2022 October 1, 2022 2,167 3,762 5,929 Delinquency/catch up plus current rent due November 1, 2022 November 1, 2022 2,167 3,762 5,929 Delinquency/catch up plus current rent due December 1, 2022 December 1, 2022 2,167 3,762 5,929 Delinquency/catch up plus current rent due January 1, 2023 January 1, 2023 2,163 3,762 5,925 Current Rent Due February 1, 2023 February 1, 2023 3,762 3,762 Current Rent Due March 1, 2023 March 1, 2023 3,762 3,762 Current Rent Due April 1, 2023 April 1, 2023 3,762 3,762 Current Rent Due May 1, 2023 May 1, 2023 3,762 3,762 Current Rent Due June 1, 2023 June 1, 2023 3,762 3,762 Current Rent Due July 1, 2023 July 1, 2023 3,875 3,875 Current Rent Due August 1, 2023 August 1, 2023 3,875 3,875 Current Rent Due September 1, 2023 September 1, 2023 3,875 3,875 Current Rent Due October 1, 2023 October 1, 2023 3,875 3,875 Current Rent Due November 1, 2023 November 1, 2023 3,875 3,875 Current Rent Due December 1, 2023 December 1, 2023 3,875 3,875 Current Rent Due January 1, 2024 January 1, 2024 3,875 3,875 Current Rent Due February 1, 2024 February 1, 2024 3,875 3,875 Current Rent Due* March 1, 2024 March 1, 2024 3,875 3,875 Total $26,000 $98,279 $124,279
* Lease Agreement expires on March 30, 2024
City of Hercules
Café Leila
Delinquency and Repayment Calculation
Total Total Outstanding Starting Monthly
Month Rent Penalty Interest Due Payments Balance Term Date Repayment Total Deliquency as of October 2021 $28,390.98 $1,200.00 $2,878.84 $32,469.82 $6,659.84 $26,000.00 12 2/1/2022 $2,166.67 November 1, 2021 Rent 3,651.72 3,651.72 3,651.72 - December 1, 2021 Rent 3,651.72 3,651.72 3,651.72 - January 1, 2022 Rent 3,651.72 3,651.72 3,651.72 - Total, as of 1/26/2022 39,346.15 1,200.00 2,878.84 43,424.99 17,615.00 26,000.00
LETTER OF UNDERSTANDING
This Letter of Understanding (“LOU”) is entered into this 1st day of December, 2021, by and between the CITY OF HERCULES, a municipal corporation (“City,”) and Lotus Organic LLC through its authorized representative, Mohammed Azam, (“Tenant”) jointly referred to in this LOU as the “Parties.”
WHEREAS, the improved real property known as 1991 Railroad Avenue in Hercules, California (Property) is owned by the City of Hercules; and WHEREAS, the City rehabilitated the existing structure located on the Prop erty and converted it to a full service, sit-down restaurant and bar; and WHEREAS, On or about December 17, 2013, the Hercules City Council authorized execution of a lease agreement with Moses and Sam Abu Gosh (“Lease”) to operate Leila’s By The Bay restaurant at the Property; and
WHEREAS, on or about March 24th, 2015, the City Council approved the transfer of the existing Lease from Moses and Sam Abu Gosh to Tenant for the continued operation of Leila’s By The Bay restaurant; and
WHEREAS, pursuant to Section 3(d) of the Lease, Tenant is required to pay City rent on the 1st day of each month; and
WHEREAS, over the past several years Tenant has made irregular rent payments , causing the City to issue a Demand Letter /Notice of Default on or about November 1, 2021, demanding payment of back rent and putting Tenant on notice of default of the Lease terms; and WHEREAS, Tenant met with the City Manager on November 4, 2021 to discuss his intent to pay past due rent owed and to offer a payment plan, if City would not take action to terminate the Lease; and
WHEREAS, the City Council on November 9th, 2021, authorized the City Manager to enter into a Letter Agreement to provide Tenant the opportunity to continue operations at the Property pursuant to a payment plan and conditioned on Tenant meeting all Lease terms and conditions going forward.
NOW, THEREFORE, FOR AND IN CONSIDERATION OF THE MUTUAL PROM ISES HEREIN CONTAINED, THE PARTIES AGREE AS FOLLOWS:
1. City will not pursue a Default or to take possession of the Property or otherwise seek to terminate the Lease as long as Tenant adheres to the following conditions:
A. Henceforth Tenant shall promptly pay in a timely manner the amount of monthly rent owed to City as specified in the Lease Agreement.
B. Tenant shall pay all past due rent amounts, including any penalties, late fees, and interest, pursuant to the following schedule:
DocuSign Envelope ID: 7AFAD3EC-1868-466F-8A75-5849D4201BA6
SUPERSEDED
Every Monday of each week, delivery of payment in the amount of $2,500 to the City, until such time as all past due amounts, including penalties, late fees, and interest, have been fully paid to City.
C. Tenant shall provide proof of compliance with insurance requirements pursuant to Section 8.1 of the Lease, by no later than December 3, 2021.
D. Notwithstanding the above requirements, and to avoid Default, Tenant shall remain in substantial compliance with all Lease terms and conditions at all times and for the duration of the remainder of the Lease.
2. City acknowledges that as of the date of this LOU, Tenant has made several partial payments of past due rent in a total amount of $9,500, leaving an outstanding balance as of the date of this LOU of $32,469.82.
3. By signing this LOU, Tenant understands and acknowledges that City reserves the right to terminate the Lease and obtain lawful possession of the Property in the event Tenant is unable or unwill ing to adhere to the terms of this LOU and/or the terms of the Lease.
Entire Agreement. This LOU, together with the documents referenced herein, constitutes the entire understanding of the Parties and supersedes all prior or contemporaneous written or oral agreements with respect thereto.
IN WITNESS WHEREOF , the Parties have caused this LOU to be executed by their duly authorized representatives the day and year first above written.
Leila’s By The Bay City of Hercules
By: By:
Authorized Signatory for Lotus Organic LLC Dante Hall, Hercules City Manager
Date: ________________ Date: _________________
Attachments:
1. 2013 Lease Agreement
2. 2015 Assignment
3. 2021 Demand Letter/Notice of Default
DocuSign Envelope ID: 7AFAD3EC-1868-466F-8A75-5849D4201BA6 12/7/2021
12/14/2021
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City of Hercules
DIRECTOR OF FINANCE
Edwin Gato, Finance Director
June 14, 2023
Mohammed Azam
1991 Railroad Ave
Hercules, CA 94547
Subject: Rent Reminder
Dear Mr. Azam :
This letter is a courtesy notice to inform you that the Business Assistance Grant you received of $15,000 was applied to your lease from February through May 2023. The rent payment is due in the amount of $3,762 for June 2023. Please remit your payment as soon as possible to avoid late fees.
Payment can be made in person at City Hall or by mail to 111 Civic Drive, Hercules, CA 94547.
Please contact us at (510) 799-8200 or by email at [email protected] with any questions or comments.
Sincerely,
Edwin Gato
Finance Director
Cc: Dante Hall, City Manager
Patrick Tang, City Attorney
City of Hercules
DIRECTOR OF FINANCE
Edwin Gato, Finance Director
December 5, 2022
Mohammed Azam
1991 Railroad Ave
Hercules, CA 94547
Subject: Late Rent Notice
Dear Mr. Azam :
This letter is to inform you that as of the date of this letter, we have yet to receive your rent payment for October, November, and December. Your rent in the amount of $10,395 plus a late fee and interest in the amount of $963 is due immediately. Please see below breakdown:
Payment can be made in person at City Hall or by mail to 111 Civic Drive, Hercules, CA 94547.
Please get in touch with us at (510) 799-8200 or by email at [email protected] with any questions or comments.
Sincerely,
Edwin Gato
Finance Director
Cc: Dante Hall, City Manager
Patrick Tang, City Attorney
(After 15 days) (After 10 days)Rent 10% LateDue Date Balance Interest Fee Total DueOctober 1, 2022 $2,871 $287 $150 $3,308November 1, 2022 $3,762 $376 $150 $4,288December 1, 2022 $3,762 $0 $0 $3,762$10,395 $663 $300$11,358